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): April 28, 2008
ENTERPRISE
PRODUCTS PARTNERS L.P.
(Exact
name of registrant as specified in its charter)
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Delaware
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1-14323
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76-0568219
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(State
or Other Jurisdiction of
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(Commission
File Number)
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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1100
Louisiana, 10th
Floor, Houston, Texas
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77002
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
Telephone Number, including Area Code: (713) 381-6500
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))
Item
2.02. Results of Operations and Financial Condition.
On April
28, 2008, Enterprise Products Partners L.P. (“Enterprise”) issued a press
release announcing its financial results for the three months ended March 31,
2008 and 2007, and held a webcast conference call discussing those
results. A copy of the earnings press release is furnished as
Exhibit 99.1 to this report, which is hereby incorporated by reference into this
Item 2.02. The webcast conference call will be available for replay
on Enterprise’s website at www.epplp.com. The
webcast conference call will be archived on its website for 90
days.
Unless the context requires otherwise,
references to “we,” “us,” “our,” or “Enterprise” within the context of this
Current Report on Form 8-K refer to the consolidated business and operations of
Enterprise. References to “EPCO” refer to EPCO, Inc., an affiliate of
Enterprise and its ultimate parent company. References to “DEP” or
“Duncan Energy Partners” refer to Duncan Energy Partners, L.P., a consolidated
subsidiary of Enterprise. In addition, as generally used in the
energy industry and in this press release and accompanying exhibits, the
identified terms have the following meanings:
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/d
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=
per day
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TBtu
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=
trillion British thermal units
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BBtus
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=
billion British thermal units
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MMBtus
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=
million British thermal units
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MBPD
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=
thousand barrels per day
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Mcf
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=
thousand cubic feet
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MMcf
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=
million cubic feet
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Use
of Non-GAAP financial measures
Our press
release and/or webcast conference call discussions include the non-generally
accepted accounting principle (“non-GAAP”) financial measures of gross operating
margin, distributable cash flow and EBITDA. The press release
provides reconciliations of these non-GAAP financial measures to their most
directly comparable financial measure calculated and presented in accordance
with U.S. generally accepted accounting principles (“GAAP”). Our
non-GAAP financial measures should not be considered as alternatives to GAAP
measures such as net income, operating income, net cash flows provided by
operating activities or any other GAAP measure of liquidity or financial
performance.
Gross
operating margin. We evaluate segment performance based on the
non-GAAP financial measure of gross operating margin. Gross operating
margin (either in total or by individual segment) is an important performance
measure of the core profitability of our operations. This measure
forms the basis of our internal financial reporting and is used by senior
management in deciding how to allocate capital resources among business
segments. We believe that investors benefit from having access to the
same financial measures that senior management uses in evaluating segment
results. The GAAP measure most directly comparable to total
segment gross operating margin is operating income.
We define
total segment gross operating margin as operating income before: (i)
depreciation, amortization and accretion 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) general and administrative costs. Gross
operating margin is exclusive of other income and expense transactions,
provision for income taxes, minority interest, cumulative effect of changes in
accounting principles and extraordinary charges. Gross operating
margin by segment is calculated by subtracting segment operating costs and
expenses (net of the adjustments noted above) from segment revenues, with both
segment totals before the elimination of intercompany
transactions. In accordance with GAAP, intercompany accounts and
transactions are eliminated in consolidation. Our non-GAAP financial
measure of total segment gross operating margin should not be considered as an
alternative to GAAP operating income.
We
include earnings from equity method unconsolidated affiliates in our measurement
of segment gross operating margin. Our equity investments with
industry partners are a vital component of our business
strategy. They are a means by which we conduct our operations to
align our interests with those of our customers, which may be a supplier of raw
materials or a consumer of finished products. This method of
operation enables us to achieve favorable economies of scale relative to the
level of investment and business risk assumed versus what we could accomplish on
a stand-alone basis. Many of these businesses perform
supporting or complementary roles to our other business
operations. As circumstances dictate, we may increase our ownership
interest in equity investments, which could result in their subsequent
consolidation into our operations.
1
Distributable
cash flow. We define distributable cash flow as net income or
loss plus:
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§
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depreciation,
amortization and accretion expense;
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§
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operating
lease expenses for which we do not have the payment
obligation;
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§
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cash
distributions received from unconsolidated affiliates less equity in the
earnings of such unconsolidated
affiliates;
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§
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the
subtraction of sustaining capital
expenditures;
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§
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the
addition of losses or subtraction of gains relating to the sale of
assets;
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§
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cash
proceeds from the sale of assets or return of investment from
unconsolidated affiliates;
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§
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gains
or losses on monetization of financial instruments less related
amortization of such amount to
earnings;
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§
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transition
support payments received from El Paso Corporation related to the merger
of GulfTerra Energy Partners, L.P. with a wholly owned subsidiary of ours
in September 2004 (such payments ceased in the third quarter of
2007);
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§
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minority
interest expense associated with the public unitholders of Duncan Energy
Partners less related distributions to be paid to such holders with
respect to the period of
calculation;
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§
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the
addition of losses or subtraction of gains relating to other miscellaneous
non-cash amounts affecting net income or loss for the period;
and
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§
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the
subtraction of cash expenditures for asset abandonment
activities.
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Sustaining
capital expenditures are capital expenditures (as defined by GAAP) resulting
from improvements to and major renewals of existing
assets. Distributable cash flow is a significant liquidity metric
used by senior management to compare the basic cash flows we generate to the
cash distributions we expect to pay our partners. Using this metric,
senior management can compute the coverage ratio of estimated cash flows to
planned cash distributions.
Distributable
cash flow is also an important non-GAAP financial measure to our limited
partners since it serves as an indicator of our success in providing a cash
return on investment. Specifically, this financial measure indicates
to investors whether or not we are generating cash flows at a level that can
sustain or support an increase in our quarterly cash distribution
rate. Distributable cash flow is also a quantitative standard used by
the investment community with respect to publicly traded partnerships because
the value of a partnership unit is in part measured by its yield (which, in
turn, is based on the amount of cash distributions a partnership pays to a
unitholder). The GAAP measure most directly comparable to
distributable cash flow is cash flow from operating activities.
EBITDA. We
define EBITDA as net income or loss plus interest expense, provision for income
taxes and depreciation, accretion and amortization expense. EBITDA is
commonly used as a supplemental financial measure by senior management and by
external users of our financial statements, such as investors, commercial banks,
research analysts and rating agencies, to assess:
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§
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the
financial performance of our assets without regard to financing methods,
capital structures or historical cost
basis;
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§
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the
ability of our assets to generate sufficient cash to meet debt service
requirements;
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§
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our
operating performance and return on capital as compared to those of other
companies in the midstream energy industry, without regard to financing
and capital structure; and
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§
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the
viability of projects and the overall rates of return on alternative
investment opportunities.
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2
Since EBITDA excludes some, but not
all, items that affect net income or loss and because these measures may vary
among other companies, the EBITDA data presented in our press release may not be
comparable to similarly titled measures of other companies. The
GAAP measure most directly comparable to EBITDA is cash flow from operating
activities.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit
No.
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Description
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99.1
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Enterprise
Products Partners L.P. press release dated April 28,
2008.
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3
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.
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ENTERPRISE
PRODUCTS PARTNERS L.P.
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By: Enterprise
Products GP, LLC,
its
General Partner
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Date:
April 28, 2008
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By: ___/s/
Michael J. Knesek____________________
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Name: Michael
J. Knesek
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Title: Senior
Vice President, Controller and Principal
Accounting Officer of Enterprise Products GP, LLC
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4
Exhibit
Index
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Exhibit
No.
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Description
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99.1
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Enterprise
Products Partners L.P. press release dated April 28,
2008.
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5
Exhibit
99.1
Enterprise
Products Partners L.P.
P.O.
Box 4324
Houston,
TX 77210
(713)
381-6500
Enterprise
Reports Record Results for First Quarter 2008
Houston,
Texas (Monday, April 28, 2008) – Enterprise Products Partners
L.P. (NYSE: “EPD”) today announced its financial results for the
three months ended March 31, 2008. The partnership reported a 132
percent increase in net income to $260 million, or $0.51 per unit on a fully
diluted basis, for the first quarter of 2008 compared to net income of $112
million, or $0.20 per unit on a fully diluted basis, for the first quarter of
2007.
Distributable
cash flow increased 73 percent to $383 million in the first quarter of 2008 from
$222 million in the same quarter of 2007. On April 15, 2008, the
board of directors of Enterprise’s general partner approved an increase in the
partnership’s quarterly cash distribution rate to $0.5075 per unit with respect
to the first quarter of 2008. This represents a 6.8 percent increase
over the $0.475 per unit rate that was paid with respect to the first quarter of
last year. Distributable cash flow for the first quarter of 2008
provided 1.6 times coverage of the cash distribution to be paid by the
partnership to its limited partners. The partnership retained
approximately $126 million of distributable cash flow to reinvest in growth
capital projects and to reduce debt. Distributable cash flow is a
non-generally accepted accounting principle (“non-GAAP”) financial measure that
is defined and reconciled later in this press release to its most directly
comparable GAAP financial measure, net cash flows provided by operating
activities.
“The
first quarter of 2008 was a record quarter for our partnership,” said Michael A.
Creel, president and chief executive officer of Enterprise. “Demand
for NGLs, natural gas and crude oil and our midstream infrastructure services
resulted in each of our business segments having an exceptional
quarter. Cash flow and volume contributions from new assets such as
the Independence project, Meeker and Pioneer as well as solid year-over-year
performance from our other assets resulted in a substantial increase in EBITDA
and distributable cash flow. Enterprise’s pipeline assets transported
in excess of 2 million barrels per day of NGLs, crude oil and petrochemicals and
9 trillion Btus per day of natural gas and for the second consecutive quarter,
our Mid-America and Seminole pipelines transported in excess of 1 million
barrels per day of NGLs.”
“We also
took steps to insulate Enterprise from disruptions in the capital markets for
the remainder of this year as we fund our $1.6 billion growth capital budget for
2008. In addition to retaining one-third of the partnership’s
distributable cash flow for the first quarter of 2008, we also issued $1.1
billion of five- and ten-year notes at attractive interest rates averaging 6.20
percent. We expect that these actions coupled with EBITDA growth,
retained distributable cash flow and proceeds from our distribution reinvestment
plan for the rest of the year will provide the partnership with ample financial
flexibility for 2008. The first quarter gives Enterprise a great
start toward achieving our objective of increasing our year-end 2008 annualized
cash distribution rate to partners to at least $2.12 per unit and retaining over
$200 million of distributable cash flow despite the expected effects of downtime
at Pioneer and Independence,” stated Creel.
Revenue
for the first quarter of 2008 increased to a record $5.7 billion from $3.3
billion in the first quarter of 2007. Gross operating margin
increased 61 percent to a record $522 million for the first quarter of this year
from $324 million for the first quarter of 2007. Operating income was
$367 million for the first quarter of 2008, a 95 percent increase over the $188
million of operating income for the same quarter of 2007. Earnings
before interest, taxes, depreciation and amortization (“EBITDA”) for the first
quarter of 2008 was a record $491 million, a 61 percent increase, compared to
$305 million for the first quarter of 2007. Gross operating margin
and EBITDA are non-GAAP financial measures that are defined and reconciled later
in this press release to their most directly comparable GAAP financial
measures.
Review of Segment
Performance for the First Quarter of 2008
NGL Pipelines & Services –
Gross operating margin for the NGL Pipelines and Services segment increased 52
percent to $290 million for the first quarter of 2008 compared to $191 million
for the same quarter of 2007.
Enterprise’s
natural gas processing business recorded gross operating margin of $178 million
for the first quarter of 2008, a 107 percent increase from $86 million in the
first quarter of 2007. This business benefited from overall strong
demand for NGLs from the petrochemical and motor gasoline refining industries as
well as a return to normal winter weather in the Midwestern United
States. This demand resulted in higher prices for NGLs and coupled
with an increase in equity NGL production generated the record performance for
this business. Equity NGL production, the NGLs that Enterprise earns
and takes title to as a result of providing processing services, increased 44
percent to 101 thousand barrels per day (“MBPD”) for the first quarter of 2008
from 70 MBPD for the same quarter in 2007. Meeker was in operation
for the full first quarter in 2008 and accounted for 30 MBPD of this increase,
while the Pioneer cryogenic facility began operations in February 2008 and
accounted for 8 MBPD of equity NGL production. Natural gas volumes
processed under fee-based contracts increased to approximately 2.7 billion cubic
feet per day (“Bcfd”) this quarter from 2.4 Bcfd in the first quarter of
2007. Enterprise’s NGL marketing business benefited from an increase
in volumes as a result of the strong demand for NGLs.
Gross
operating margin from the partnership’s NGL pipeline and storage business was
$86 million in the first quarter of 2008 compared to $79 million in the first
quarter of 2007. This increase was primarily attributable to a $6
million increase in gross operating margin from the Mid-America and Seminole
pipelines on a 190 MBPD increase in NGL volumes. Volumes associated
with the NGL pipeline and storage business for the first quarter of 2008
increased 13 percent to a record 1.8 million barrels per day from 1.6 million
barrels per day for the first quarter of last year.
Gross
operating margin from Enterprise’s NGL fractionation business was $25 million in
the first quarter of 2008 versus $26 million reported for the same quarter of
2007. Increases in gross operating margin from the partnership’s
Hobbs, Norco and Promix fractionators were offset by a decrease at our Mont
Belvieu facilities which had two of its fractionators out of service during part
of the first quarter of 2008 for scheduled maintenance. NGL
fractionation volumes for the first quarter of this year were 423 MBPD, a 21
percent increase from 351 MBPD recorded in the first quarter of
2007. The Hobbs fractionator, which began operations in August 2007,
had volumes of 73 MBPD for the first quarter of 2008.
Onshore Natural Gas Pipelines &
Services – Enterprise’s Onshore Natural Gas Pipelines and Services
segment reported a 43 percent increase in gross operating margin to $110 million
for the first quarter of 2008 compared to $77 million for the same quarter of
2007.
The
partnership’s onshore natural gas pipeline business generated gross operating
margin of $99 million in the first quarter of 2008, a 39 percent increase over
the $71 million of gross operating margin reported for the first quarter of last
year. Substantially all of Enterprise’s natural gas pipelines
reported improved results compared to 2007. Onshore natural gas
transportation volumes increased 16 percent to a record 7.1 trillion British
thermal units per day (“TBtud”) for the first quarter of 2008 versus 6.1 TBtud
in the same quarter of 2007.
Gross
operating margin from the partnership’s natural gas storage business was $10
million for the first quarter of 2008 compared to $5 million for the same
quarter in 2007. This increase was primarily attributable to Petal
which benefited from new storage capacity being placed into service in the third
quarter of 2007 and an increase in revenues from a related natural gas
pipeline.
Offshore Pipelines &
Services – Gross operating margin for the Offshore Pipelines and Services
segment increased $62 million, or 310 percent, to $82 million in the first
quarter of 2008 from $20 million in the same quarter of 2007. The
Independence project accounted for $51 million of this increase on average
throughput of 867 billion British thermal units per day
(“BBtud”). The remainder of the increase in gross operating margin
was due to improved results for the High Island/East Breaks natural gas pipeline
system and the Cameron Highway Oil Pipeline system.
The
offshore platform services business reported gross operating margin of $44
million for the first quarter of 2008, an increase of $30 million from $14
million reported in the same quarter of 2007. The Independence Hub
platform, which was installed and began earning demand fees in mid-March 2007,
generated $29 million of this increase from a full quarter of demand and
volumetric revenues in 2008. Enterprise’s offshore platform natural
gas and crude oil processing volumes for the first quarter of 2008 increased by
412 percent and 5 percent, respectively, over the same quarter in
2007.
Gross
operating margin from Enterprise’s offshore natural gas pipeline business
increased to $26 million in the first quarter of 2008 from $2 million in the
first quarter of 2007. This increase in gross operating margin was
principally due to a $22 million increase from the Independence Trail pipeline,
which began operations in July 2007, and a $7 million increase from the High
Island/East Breaks system due to higher tariffs. These increases more
than offset the effect of volume declines
on the
Viosca Knoll, Phoenix and Falcon pipeline systems. Transportation
volumes for the offshore natural gas pipeline business were 1.9 TBtud in the
first quarter of 2008 compared to 1.4 TBtud in the same quarter of
2007.
Enterprise’s
offshore oil pipeline business recorded gross operating margin of $12 million
for the first quarter of 2008 compared to $4 million for the first quarter of
2007. This $8 million increase was attributable to an increase in
equity earnings from Enterprise’s 50 percent ownership interest in the Cameron
Highway Oil Pipeline system due to higher volumes and lower interest
expense. Cameron Highway reported net transportation volumes of 95
MBPD for the first quarter of 2008 compared to 34 MBPD for the first quarter of
last year. Overall, offshore oil pipeline transportation volumes for
the first quarter of 2008 increased 35 percent to 206 MBPD from 153 MBPD for the
same quarter of 2007.
Operations
at the Independence Hub platform and Trail pipeline were suspended on April 8,
2008 due to a leak in a flex joint, which is in approximately 85 feet of water
and connects the pipeline to the platform. Repairs to the flex joint
are ongoing. It is still our expectation that Independence will
resume operations during the first half of May. While the
Independence platform and pipeline do not earn volumetric fees during this
period of suspended operations, the Independence Hub still continues to earn its
fixed demand revenues of approximately $5 million per month. The
estimated impact to gross operating margin from downtime at Independence is
approximately $400,000 per day.
Petrochemical Services – Gross
operating margin for the Petrochemical Services segment was $41 million in the
first quarter of 2008, an 8 percent increase, compared to $38 million in the
same quarter of 2007.
Enterprise’s
butane isomerization business reported a 33 percent increase in gross operating
margin to $28 million in the first quarter of 2008 compared to $21 million in
the first quarter of 2007 on continuing strong demand for high-purity isobutane
and higher revenues from sales of NGL by-products. Butane
isomerization volumes for the first quarter of 2008 were 96 MBPD compared to 95
MBPD in the same quarter of 2007.
The
partnership’s propylene fractionation and petrochemical pipeline business earned
$15 million of gross operating margin during the first quarter of 2008 versus
$18 million in the same quarter of 2007. This decrease was primarily
due to lower volumes and sales margins in the first quarter of
2008. Propylene fractionation volumes were 58 MBPD for the first
quarter of 2008 compared to 61 MBPD for the first quarter of last
year. Petrochemical pipeline transportation volumes were 115 MBPD
during the first quarter of 2008 compared to 102 MBPD in the same quarter of
2007.
Enterprise’s
octane enhancement business reported a gross operating margin loss of $2 million
in the first quarter of 2008 compared to a loss of $1 million in the first
quarter of 2007. This facility was out of service for part of the
first quarter of 2008 for scheduled maintenance as it was during the first
quarter of last year. Octane enhancement production was 7 MBPD for
the first quarter of 2008 and the first quarter of 2007.
Capitalization – Total debt
principal outstanding at March 31, 2008 was approximately $7.5 billion,
including $1.25 billion of junior subordinated notes to which the debt rating
agencies ascribe, on average, approximately 58 percent equity
content. Enterprise’s consolidated debt also included $188 million of
debt of Duncan Energy Partners L.P. (“DEP”) for which Enterprise does not have
the payment obligation. Enterprise had total liquidity of
approximately $500 million at March 31, 2008, which included availability under
its $1.75 billion, five-year credit facility and unrestricted
cash. On April 3, 2008, Enterprise issued $400 million of 5.65%
senior notes due 2013 and $700 million of 6.50% senior notes due
2019. After adjusting for the net proceeds from this note offering,
the partnership’s liquidity at March 31, 2008 was approximately $1.6
billion.
Total
capital spending in the first quarter of 2008, net of contributions in aid of
construction, was approximately $625 million. This includes $25
million of sustaining capital expenditures and $7 million of investments in
unconsolidated affiliates.
Interest expense for the first quarter
of 2008 was $92 million on an average debt balance of $7.2 billion compared to
interest expense of $63 million in the first quarter of 2007 which had an
average debt balance of $5.4 billion. The increase in the average
debt balance between the two periods is principally due to funding the
partnership’s capital investment program.
Today,
Enterprise will host a conference call to discuss first quarter
earnings. The call will be broadcast live over the Internet at 9 a.m.
Central Daylight Time and may be accessed by visiting the company’s website at
www.epplp.com.
Use of Non-GAAP Financial
Measures
This
press release and the accompanying schedules include the non-GAAP financial
measures of gross operating margin, EBITDA and distributable cash
flow. The accompanying schedules provide reconciliations of
these non-GAAP financial measures to their most directly comparable financial
measure calculated and presented in accordance with U.S. generally accepted
accounting principles (“GAAP”). Our non-GAAP financial measures
should not be considered as alternatives to GAAP measures such as net income,
operating income, net cash flows provided by operating activities or any other
GAAP measure of liquidity or financial performance.
Gross
operating margin. We evaluate segment performance based on the
non-GAAP financial measure of gross operating margin. Gross operating
margin (either in total or by individual segment) is an important performance
measure of the core profitability of our operations. This measure
forms the basis of our internal financial reporting and is used by senior
management in deciding how to allocate capital resources among business
segments. We believe that investors benefit from having access to the
same financial measures that our management uses in evaluating segment
results. The GAAP measure most directly comparable to total
segment gross operating margin is operating income.
We define
total segment gross operating margin as operating income before: (1)
depreciation, amortization and accretion expense; (2) operating lease expenses
for which we do not have the payment obligation; (3) gains and losses on the
sale of assets; and (4) general and administrative costs. Gross
operating margin is exclusive of other income and expense transactions,
provision for income taxes, minority interest, cumulative effect of changes in
accounting principles and extraordinary charges. Gross
operating margin by segment is calculated by subtracting segment operating costs
and expenses (net of the adjustments noted above) from segment revenues, with
both segment totals before the elimination of intercompany
transactions. In accordance with GAAP, intercompany accounts and
transactions are eliminated in consolidation. Our non-GAAP financial
measure of total segment gross operating margin should not be considered as an
alternative to GAAP operating income.
We
include earnings from equity method unconsolidated affiliates in our measurement
of segment gross operating margin. Our equity investments with
industry partners are a vital component of our business
strategy. They are a means by which we conduct our operations to
align our interests with those of our customers and/or
suppliers. This method of operation also enables us to achieve
favorable economies of scale relative to the level of investment and business
risk assumed versus what we could accomplish on a stand-alone
basis. Many of these businesses perform supporting or
complementary roles to our other business operations. As
circumstances dictate, we may increase our ownership interest in equity
investments, which could result in their subsequent consolidation into our
operations.
EBITDA. We
define EBITDA as net income or loss plus interest expense, provision for income
taxes and depreciation and amortization and accretion expense. EBITDA
is commonly used as a supplemental financial measure by management and by
external users of financial statements, such as investors, commercial banks,
research analysts and rating agencies, to assess: (1) the financial performance
of our assets without regard to financing methods, capital structures or
historical cost basis; (2) the ability of our assets to generate cash sufficient
to pay interest cost and support our indebtedness; (3) our operating performance
and return on capital as compared to those of other companies in the midstream
energy industry, without regard to financing and capital structure; and (4) the
viability of projects and the overall rates of return on alternative investment
opportunities. Because EBITDA excludes some, but not all, items that
affect net income or loss and because these measures may vary among other
companies, the EBITDA data presented in this press release may not be comparable
to similarly titled measures of other companies. The GAAP
measure most directly comparable to EBITDA is net cash flows provided by
operating activities.
Distributable
cash flow. We define distributable cash flow as net income or
loss plus: (1) depreciation, amortization and accretion expense; (2) operating
lease expenses for which we do not have the payment obligation; (3) cash
distributions received from unconsolidated affiliates less equity in the
earnings of such unconsolidated affiliates; (4) the subtraction of sustaining
capital expenditures; (5) the addition of losses or subtraction of gains
relating to the sale of assets; (6) cash proceeds from the sale of assets or
return of investment from unconsolidated affiliates; (7) gains or losses on
monetization of financial instruments less related amortization of such amount
to earnings, if any; (8) transition support payments received from El Paso
Corporation related to the GulfTerra merger; (9) minority interest expense
associated with the public unitholders of DEP less related distributions to be
paid to such holders with respect to the period of calculation; (10) the
addition of losses or subtraction of gains relating to other miscellaneous
non-cash amounts affecting net income for the period; and (11) the subtraction
of cash expenditures for asset abandonment activities. Sustaining capital
expenditures are capital expenditures (as defined by GAAP) resulting from
improvements to and major renewals of existing assets. Distributable
cash flow is a
significant
liquidity metric used by our senior management to compare basic cash flows
generated by us to the cash distributions we expect to pay our
partners. Using this metric, our management can quickly compute the
coverage ratio of estimated cash flows to planned cash
distributions.
Distributable
cash flow is also an important non-GAAP financial measure for our limited
partners since it serves as an indicator of our success in providing a cash
return on investment. Specifically, this financial measure indicates
to investors whether or not we are generating cash flows at a level that can
sustain or support an increase in our quarterly cash
distributions. Distributable cash flow is also a quantitative
standard used by the investment community with respect to publicly-traded
partnerships because the value of a partnership unit is in part measured by its
yield (which in turn is based on the amount of cash distributions a partnership
can pay to a unitholder). The GAAP measure most directly
comparable to distributable cash flow is net cash flows provided by operating
activities.
Company Information and Use
of Forward Looking Statements
Enterprise
Products Partners L.P. is one of the largest publicly traded partnerships with
an enterprise value of approximately $20 billion, and is a leading North
American provider of midstream energy services to producers and consumers of
natural gas, NGLs, crude oil and petrochemicals. Enterprise
transports natural gas, NGLs, crude oil and petrochemical products through
approximately 35,000 miles of onshore and offshore
pipelines. Services include natural gas gathering, processing,
transportation and storage; NGL fractionation (or separation), transportation,
storage and import and export terminaling; crude oil transportation; offshore
production platform services; and petrochemical transportation and
services. For more information, visit Enterprise on the web at www.epplp.com. Enterprise
Products Partners L.P. is managed by its general partner, Enterprise Products
GP, LLC, which is wholly-owned by Enterprise GP Holdings L.P. (NYSE:
EPE). For more information on Enterprise GP Holdings L.P., visit its
website at www.enterprisegp.com.
This
press release contains various 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
Enterprise. When used in this press release, words such as
“anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “intend,”
“could,” “believe,” “may,” and similar expressions and statements regarding the
plans and objectives of Enterprise for future operations, are intended to
identify forward-looking statements. Although Enterprise and its
general partner believe that such expectations reflected in such forward-looking
statements are reasonable, neither Enterprise 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, Enterprise’s 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:
|
·
|
fluctuations
in oil, natural gas and NGL prices and production due to weather and other
natural and economic forces;
|
|
·
|
the
effects of our debt level on its future financial and operating
flexibility;
|
|
·
|
a
reduction in demand for our products by the petrochemical, refining or
heating industries;
|
|
·
|
a
decline in the volumes of NGLs delivered by our
facilities;
|
|
·
|
the
failure of its credit risk management efforts to adequately protect us
against customer non-payment;
|
|
·
|
terrorist
attacks aimed at our facilities;
and
|
|
·
|
the
failure to successfully integrate our operations with companies we may
acquire in the future, if any.
|
Enterprise
has no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.
Contacts: Randy Burkhalter, Vice President,
Investor Relations, (713) 381-6812, www.epplp.com
Rick Rainey, Director, Media Relations, (713) 381-3635
###
|
Exhibit
A
|
||||||||
|
Condensed
Statements of Consolidated Operations - UNAUDITED
|
||||||||
|
For
the Three Months Ended March 31, 2008 and 2007
|
||||||||
|
($
in 000s, except per unit amounts)
|
||||||||
|
For
the Three Months
|
||||||||
|
Ended
March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Revenue
|
$ | 5,684,535 | $ | 3,322,854 | ||||
|
Costs and
expenses:
|
||||||||
|
Operating
costs and expenses
|
5,311,190 | 3,124,479 | ||||||
|
General
and administrative costs
|
21,205 | 16,630 | ||||||
|
Total
costs and expenses
|
5,332,395 | 3,141,109 | ||||||
|
Equity in income of
unconsolidated affiliates
|
14,592 | 6,179 | ||||||
|
Operating
income
|
366,732 | 187,924 | ||||||
|
Other income
(expense):
|
||||||||
|
Interest
expense
|
(91,946 | ) | (63,358 | ) | ||||
|
Other,
net
|
891 | 1,928 | ||||||
|
Total
other expense
|
(91,055 | ) | (61,430 | ) | ||||
|
Income before
provision for income taxes, and minority interest
|
275,677 | 126,494 | ||||||
|
Provision
for income taxes
|
(3,657 | ) | (8,788 | ) | ||||
|
Income before minority
interest
|
272,020 | 117,706 | ||||||
|
Minority
interest
|
(12,411 | ) | (5,661 | ) | ||||
|
Net
income
|
$ | 259,609 | $ | 112,045 | ||||
|
Net income
allocation:
|
||||||||
|
Limited
partners’ interest in net income
|
$ | 225,162 | $ | 85,049 | ||||
|
General
partner interest in net income
|
$ | 34,447 | $ | 26,996 | ||||
|
Per unit data (fully
diluted):
|
||||||||
|
Net
income per unit (1)
|
$ | 0.51 | $ | 0.20 | ||||
|
Average
LP units outstanding (in 000s)
|
435,950 | 433,272 | ||||||
|
Other financial
data:
|
||||||||
|
Net
cash flows provided by operating activities
|
$ | 265,065 | $ | 420,751 | ||||
|
Net
cash used in investing activities
|
$ | 568,569 | $ | 614,921 | ||||
|
Net
cash provided by financing activities
|
$ | 329,612 | $ | 231,126 | ||||
|
Distributable
cash flow
|
$ | 382,765 | $ | 221,985 | ||||
|
EBITDA
|
$ | 491,058 | $ | 305,280 | ||||
|
Depreciation,
amortization and accretion
|
$ | 135,976 | $ | 121,221 | ||||
|
Distributions
received from unconsolidated affiliates
|
$ | 28,576 | $ | 16,947 | ||||
|
Total
debt principal outstanding at end of period
|
$ | 7,469,500 | $ | 5,478,068 | ||||
|
Capital
spending:
|
||||||||
|
Capital
expenditures, net of contributions in aid of
|
||||||||
|
construction
costs, for property, plant and equipment
|
$ | 617,263 | $ | 574,890 | ||||
|
Cash
used for business combinations,
|
||||||||
|
net
of cash received
|
1 | 312 | ||||||
|
Investments
in unconsolidated affiliates
|
7,432 | 38,973 | ||||||
|
Total
|
$ | 624,696 | $ | 614,175 | ||||
|
(1) For
purposes of computing basic and diluted earnings per unit, in periods
when our aggregate net income exceeds
the aggregate distributions for such periods, an increased amount of
earnings is allocated to EPGP in applying Emerging Issues Task Force
Issue (“EITF’) No. 03-6, "Participating Securities and the Two-Class
Method under FASB Statement No. 128" ("EITF 03-6"). Historically, our
distributions to owners have exceeded earnings and as a result EITF 03-6
had no effect on our earnings per unit calculations. Pro forma net
income available to our limited partners’ and general partner for the
three months ended March 31, 2008 was $223,432 and $36,177,
respectively. Additional earnings allocated to our general partner
for earnings per unit calculations were $1,730.
|
||||||||
| Enterprise Products Partners L.P. |
Exhibit
B
|
|||||||
|
Condensed
Operating Data - UNAUDITED
|
||||||||
|
For
the Three Months Ended March 31, 2008 and 2007
|
||||||||
|
($
in 000s)
|
||||||||
|
For
the Three Months
|
||||||||
|
Ended
March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Gross operating margin
by segment:
|
||||||||
|
NGL
Pipelines & Services
|
$ | 289,742 | $ | 190,694 | ||||
|
Onshore
Natural Gas Pipelines & Services
|
109,905 | 76,515 | ||||||
|
Offshore
Pipelines & Services
|
81,571 | 19,707 | ||||||
|
Petrochemical
Services
|
41,003 | 37,583 | ||||||
|
Total
non-GAAP gross operating margin
|
$ | 522,221 | $ | 324,499 | ||||
|
Adjustments
to reconcile non-GAAP gross operating
|
||||||||
|
margin
to GAAP operating income:
|
||||||||
|
Depreciation,
amortization and accretion in operating
|
||||||||
|
costs
and expenses
|
(133,922 | ) | (119,492 | ) | ||||
|
Operating
lease expense paid by EPCO in operating
|
||||||||
|
costs
and expenses
|
(527 | ) | (526 | ) | ||||
|
Gain
on sale of assets in operating costs and expenses
|
165 | 73 | ||||||
|
General
and administrative costs
|
(21,205 | ) | (16,630 | ) | ||||
|
Operating
income per GAAP
|
$ | 366,732 | $ | 187,924 | ||||
|
Selected operating
data: (1)
|
||||||||
|
NGL
Pipelines & Services, net:
|
||||||||
|
NGL
transportation volumes (MBPD)
|
1,831 | 1,607 | ||||||
|
NGL
fractionation volumes (MBPD)
|
423 | 351 | ||||||
|
Equity
NGL production (MBPD)
|
101 | 70 | ||||||
|
Fee-based
natural gas processing (MMcf/d)
|
2,669 | 2,401 | ||||||
|
Onshore
Natural Gas Pipelines & Services, net:
|
||||||||
|
Natural
gas transportation volumes (BBtus/d)
|
7,100 | 6,086 | ||||||
|
Offshore
Pipelines & Services, net:
|
||||||||
|
Natural
gas transportation volumes (BBtus/d)
|
1,936 | 1,384 | ||||||
|
Crude
oil transportation volumes (MBPD)
|
206 | 153 | ||||||
|
Platform
gas processing (MMcf/d)
|
830 | 162 | ||||||
|
Platform
oil processing (MBPD)
|
21 | 20 | ||||||
|
Petrochemical
Services, net:
|
||||||||
|
Butane
isomerization volumes (MBPD)
|
96 | 95 | ||||||
|
Propylene
fractionation volumes (MBPD)
|
58 | 61 | ||||||
|
Octane
additive production volumes (MBPD)
|
7 | 7 | ||||||
|
Petrochemical
transportation volumes (MBPD)
|
115 | 102 | ||||||
|
Total,
net:
|
||||||||
|
NGL,
crude oil and petrochemical transportation volumes (MBPD)
|
2,152 | 1,862 | ||||||
|
Natural
gas transportation volumes (BBtus/d)
|
9,036 | 7,470 | ||||||
|
Equivalent
transportation volumes (MBPD) (2)
|
4,530 | 3,828 | ||||||
|
(1) Operating
rates are net of third party ownership interests and include volumes for
newly constructed assets from the related in-service dates and for
recently purchased assets
from the related acquisition dates.
(2) Reflects
equivalent energy volumes where 3.8 MMBtus of natural gas are equivalent
to one barrel of NGLs.
|
||||||||
| Enterprise Products Partners L.P. |
Exhibit
C
|
|||||||
|
Reconciliation
of Unaudited GAAP Financial Measures to Our Non-GAAP Financial
Measures
|
||||||||
|
Distributable
Cash Flow
|
||||||||
|
For
the Three Months Ended March 31, 2008 and 2007
|
||||||||
|
($
in 000s)
|
||||||||
|
For
the Three Months
|
||||||||
|
Ended
March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Reconciliation of
non-GAAP "Distributable cash flow" to GAAP "Net
|
||||||||
|
income" and GAAP "Net
cash flows provided by operating activities"
|
||||||||
|
Net
income
|
$ | 259,609 | $ | 112,045 | ||||
|
Adjustments
to derive Distributable Cash Flow
|
||||||||
|
(add
or subtract as indicated by sign of number):
|
||||||||
|
Amortization
in interest expense
|
130 | 132 | ||||||
|
Depreciation,
amortization and accretion in costs and expenses
|
135,846 | 121,089 | ||||||
|
Operating
lease expense paid by EPCO
|
527 | 526 | ||||||
|
Deferred
income tax expense
|
(913 | ) | 1,596 | |||||
|
Monetization
of interest rate swaps
|
6,251 | -- | ||||||
|
Amortization
of net gain from treasury locks
|
(1,590 | ) | (965 | ) | ||||
|
Equity
in income of unconsolidated affiliates
|
(14,592 | ) | (6,179 | ) | ||||
|
Distributions
received from unconsolidated affiliates
|
28,576 | 16,947 | ||||||
|
Gain
on sale of assets
|
(165 | ) | (73 | ) | ||||
|
Proceeds
from sale of assets
|
119 | 91 | ||||||
|
Sustaining
capital expenditures
|
(25,012 | ) | (25,511 | ) | ||||
|
Changes
in fair market value of financial instruments
|
662 | 104 | ||||||
|
Minority
interest expense – DEP public unitholders
|
4,353 | 2,831 | ||||||
|
Distribution
to be paid to DEP public unitholders with respect to
period
|
(6,130 | ) | (3,648 | ) | ||||
|
Cash
expenditures for asset abandonment activities
|
(4,906 | ) | -- | |||||
|
El
Paso transition support payments
|
-- | 3,000 | ||||||
|
Distributable
cash flow
|
382,765 | 221,985 | ||||||
|
Adjustments
to Distributable cash flow to derive Net cash flows provided by
operating
|
||||||||
|
activities
(add or subtract as indicated by sign of number):
|
||||||||
|
Monetization
of interest rate swaps
|
(6,251 | ) | -- | |||||
|
Amortization
of net gain from treasury locks
|
1,590 | 965 | ||||||
|
Proceeds
from sale of assets
|
(119 | ) | (91 | ) | ||||
|
Sustaining
capital expenditures
|
25,012 | 25,511 | ||||||
|
El
Paso transition support payments
|
-- | (3,000 | ) | |||||
|
Minority
interest
|
12,411 | 5,661 | ||||||
|
Minority
interest expense – DEP public unitholders
|
(4,353 | ) | (2,831 | ) | ||||
|
Distribution
to be paid to DEP public unitholders with respect to
period
|
6,130 | 3,648 | ||||||
|
Cash
expenditures for asset abandonment activities
|
4,906 | -- | ||||||
|
Effect
of pension settlement recognition
|
(114 | ) | -- | |||||
|
Net
effect of changes in operating accounts
|
(156,912 | ) | 168,903 | |||||
|
Net
cash flows provided by operating activities
|
$ | 265,065 | $ | 420,751 | ||||
| Enterprise Products Partners L.P. |
Exhibit
D
|
|||||||
|
Reconciliation
of Unaudited GAAP Financial Measures to Our Non-GAAP Financial
Measures
|
||||||||
|
EBITDA
|
||||||||
|
For
the Three Months Ended March 31, 2008 and 2007
|
||||||||
|
($
in 000s)
|
||||||||
|
For
the Three Months
|
||||||||
|
Ended
March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Reconciliation of
non-GAAP "EBITDA" to GAAP "Net income" and
|
||||||||
|
GAAP "Net cash flows
provided by operating activities"
|
||||||||
|
Net
income
|
$ | 259,609 | $ | 112,045 | ||||
|
Additions
to net income to derive EBITDA:
|
||||||||
|
Interest
expense (including related amortization)
|
91,946 | 63,358 | ||||||
|
Provision
for income taxes
|
3,657 | 8,788 | ||||||
|
Depreciation,
amortization and accretion in costs and expenses
|
135,846 | 121,089 | ||||||
|
EBITDA
|
491,058 | 305,280 | ||||||
|
Adjustments
to EBITDA to derive net cash flows provided by operating
|
||||||||
|
activities
(add or subtract as indicated by sign of number):
|
||||||||
|
Interest
expense
|
(91,946 | ) | (63,358 | ) | ||||
|
Provision
for income taxes
|
(3,657 | ) | (8,788 | ) | ||||
|
Equity
in income of unconsolidated affiliates
|
(14,592 | ) | (6,179 | ) | ||||
|
Amortization
in interest expense
|
130 | 132 | ||||||
|
Deferred
income tax expense
|
(913 | ) | 1,596 | |||||
|
Distributions
received from unconsolidated affiliates
|
28,576 | 16,947 | ||||||
|
Operating
lease expense paid by EPCO
|
527 | 526 | ||||||
|
Minority
interest
|
12,411 | 5,661 | ||||||
|
Gain
on sale of assets
|
(165 | ) | (73 | ) | ||||
|
Changes
in fair market value of financial instruments
|
662 | 104 | ||||||
|
Effect
of pension settlement recognition
|
(114 | ) | -- | |||||
|
Net
effect of changes in operating accounts
|
(156,912 | ) | 168,903 | |||||
|
Net
cash flows provided by operating activities
|
$ | 265,065 | $ | 420,751 | ||||