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): October 23,
2008
ENTERPRISE
PRODUCTS PARTNERS L.P.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
1-14323
|
76-0568219
|
|
(State
or Other Jurisdiction of
|
(Commission
File Number)
|
(I.R.S.
Employer
|
|
Incorporation
or Organization)
|
Identification
No.)
|
|
1100
Louisiana, 10th
Floor, Houston, Texas
|
77002
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
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:
¨ 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
October 23, 2008, Enterprise Products Partners L.P. (“Enterprise”) issued a
press release announcing its financial and operating results for the three and
nine months ended September 30, 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 Current Report, which is hereby
incorporated by reference into this Item 2.02. The webcast conference
call will be archived and available for replay on Enterprise’s website at www.epplp.com for 90
days.
Unless the context requires otherwise,
references to “we,” “us,” “our,” or “Enterprise” within the context of this
Current Report refer to the consolidated business and operations of Enterprise
Products Partners L.P. References to “EPCO” refer to EPCO, Inc., a
private company 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.
Use
of Non-GAAP financial measures
The press
release and related conference call discussion 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 from
asset sales and related transactions; 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.
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.
Distributable
cash flow. We define distributable cash flow, which we view as
a non-GAAP measure of liquidity, as net income or loss adjusted
for:
|
§
|
the
addition of depreciation, amortization and accretion
expense;
|
|
§
|
the
addition of operating lease expenses for which we do not have the payment
obligation;
|
|
§
|
the
addition of cash distributions received from unconsolidated affiliates,
less equity in the earnings of such unconsolidated
affiliates;
|
|
§
|
the
subtraction of sustaining capital expenditures and cash payments to settle
asset retirement obligations;
|
1
|
§
|
the
addition of losses or subtraction of gains relating to asset sales and
related transactions;
|
|
§
|
the
addition of cash proceeds from asset sales, the return of investment from
unconsolidated affiliates or related
transactions;
|
|
§
|
the
addition of losses or subtraction of gains on the monetization of
financial instruments recorded in accumulated other comprehensive income,
if any, less related amortization of such amount to
earnings;
|
|
§
|
the
addition of 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);
|
|
§
|
the
addition of minority interest expense associated with the public
unitholders of Duncan Energy Partners, less related cash distributions to
be paid to such holders with respect to the period of calculation;
and
|
|
§
|
the
addition or subtraction of other miscellaneous non-cash amounts (as
applicable) that affect net income or loss for the
period.
|
Sustaining
capital expenditures are capital expenditures (as defined by GAAP) resulting
from improvements to and major renewals of existing assets. Such
expenditures serve to maintain existing operations but do not generate
additional revenues.
Senior
management compares the distributable cash flow we generate to the cash
distributions we expect to pay our partners. Using this data, management
computes our distribution coverage ratio. 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 before 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:
|
§
|
the
financial performance of our assets without regard to financing methods,
capital structures or historical cost
basis;
|
|
§
|
the
ability of our assets to generate cash sufficient to pay interest cost and
support our indebtedness; and
|
|
§
|
the
viability of projects and the overall rates of return on alternative
investment opportunities.
|
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.
|
Exhibit No.
|
Description
|
|
99.1
|
Enterprise
Products Partners L.P. press release dated October 23,
2008.
|
2
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:
October 23, 2008
|
By:
|
/s/
Michael J. Knesek
|
|
|
Name:
|
Michael
J. Knesek
|
||
|
Title:
|
Senior
Vice President, Controller and Principal
Accounting
Officer of Enterprise Products GP,
LLC
|
||
3
Exhibit
Index
|
Exhibit No.
|
Description
|
|
99.1
|
Enterprise
Products Partners L.P. press release dated October 23,
2008.
|
4
EXHIBIT
99.1
Enterprise
Products Partners L.P.
P.O. Box
4324
Houston,
TX 77210
(713)
381-6500
Enterprise
Reports 72 Percent Increase in Net Income for Third Quarter 2008
Houston,
Texas (Thursday, October 23, 2008) – Enterprise Products Partners
L.P. (NYSE: “EPD”) today announced its financial results for the
three and nine months ended September 30, 2008.
Third
Quarter 2008 Highlights:
|
·
|
Enterprise
reported strong results for operating income, gross operating margin,
EBITDA and net income, which were reduced by total hurricane effects of
$89 million consisting of $46 million of accrued and actual expenses for
property damage repair costs and $43 million for estimated lost business
due to the hurricanes;
|
|
3rd
Quarter
2008
|
||||||||||||||||
|
3rd
|
Estimated
|
3rd
|
2nd
|
|||||||||||||
|
Quarter
|
Hurricane
|
Quarter
|
Quarter
|
|||||||||||||
|
$Millions,
except per unit
|
2008
|
Effects
|
2007
|
2008
|
||||||||||||
|
Operating
Income
|
$ | 319 | $ | 89 | $ | 211 | $ | 374 | ||||||||
|
Gross
Operating Margin
|
$ | 479 | $ | 89 | $ | 364 | $ | 534 | ||||||||
|
EBITDA
|
$ | 454 | $ | 89 | $ | 341 | $ | 506 | ||||||||
|
Net
Income
|
$ | 203 | $ | 87 | $ | 118 | $ | 263 | ||||||||
|
Net
Income per unit
|
$ | 0.38 | $ | 0.20 | $ | 0.20 | $ | 0.52 | ||||||||
|
·
|
Enterprise
increased its cash distribution rate applicable to third quarter of 2008
to $0.5225 per unit, a 6.6 percent increase from the same period last year
and its 17th
consecutive quarterly increase and 26th
increase since its IPO in 1998;
|
|
·
|
Enterprise
reported distributable cash flow of $316 million that provided 1.2 times
coverage of the $0.5225 per unit cash distribution declared to limited
partners despite being reduced by approximately $47 million for estimated
hurricane effects. Enterprise has retained approximately $50
million and $261 million of distributable cash flow for the three and nine
months ended September 30, 2008;
|
|
·
|
NGL,
crude oil and petrochemical transportation volumes were 2.0 million
barrels per day and natural gas transportation volumes were 8.8 trillion
Btu per day, an increase of 8 percent and 12 percent, respectively, over
the same quarter in 2007. In a sequential comparison to the
partnership’s all time record second quarter of 2008, NGL, crude oil and
petrochemical transportation volumes decreased by only 5 percent and
natural gas transportation volumes increased 3 percent, respectively,
despite the effect of Hurricanes Gustav and
Ike;
|
|
·
|
Enterprise
had total capital expenditures during the quarter of $464 million,
including $61 million of sustaining capital expenditures and $16 million
of investments in unconsolidated affiliates;
and
|
|
·
|
Construction
of three major growth capital projects representing $1.1 billion of
investment is expected to be completed over the next four
months.
|
Review and Comment on Third
Quarter 2008 Results
Enterprise
Products Partners L.P. reported a 72 percent increase in net income to $203
million, or $0.38 per unit on a fully diluted basis, for the third quarter of
2008 compared to net income of $118 million, or $0.20 per unit on a fully
diluted basis, for the third quarter of 2007. Operating income for
the third quarter of 2008 was reduced by approximately $89 million due to the
effects of Hurricane Gustav and Ike, consisting of $46 million of accruals for
property damage repairs and approximately $43 million for estimated lost
business.
Distributable
cash flow increased 42 percent to $316 million in the third quarter of 2008 from
$223 million in the same quarter of 2007. Distributable cash flow for
the third quarter of 2008 was reduced by approximately $47 million for hurricane
effects related to estimated lost business and actual repair costs and $17
million for the reimbursement to EPCO, Inc. (“EPCO”) for certain Enterprise
related sustaining capital expenditures that were borne by EPCO in prior
periods. On October 8, 2008, the Board of Directors of Enterprise’s
general partner approved an increase in the partnership’s quarterly cash
distribution rate to $0.5225 per unit with respect to the third quarter of
2008. This represents a 6.6 percent increase over the $0.49 per unit
rate that was paid with respect to the third quarter of last
year. Distributable cash flow for the third quarter of 2008 provided
1.2 times coverage of the cash distribution to be paid to limited
partners. Before the $64 million of effects related to the hurricanes
and the reimbursement of sustaining capital expenditures noted above, we
estimate coverage of limited partner distributions would have been approximately
1.5 times. For the three and nine months ended September 30, 2008,
Enterprise has retained $50 million and $261 million of distributable cash flow,
respectively. This retained distributable cash flow is available to
reinvest in growth capital projects, to reduce debt, and to reduce the need to
issue additional equity. 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.
“Enterprise’s
broad geographic and business diversification was highlighted by the
partnership’s strong operating and earnings performance in the third quarter of
2008 despite two major hurricanes impacting our Gulf of Mexico and Gulf Coast
operations,” said Michael A. Creel, president and chief executive officer of
Enterprise. “The partnership’s results were driven by our diversified
NGL and natural gas pipeline and storage businesses.”
“Over the
next four months, three large capital growth projects are expected to be
mechanically complete and scheduled to begin operations shortly
thereafter. These projects are the 750 million cubic feet per day
expansion of our Meeker natural gas processing plant and the completion of the
200 million cubic feet per day Exxon central treating facility in the growing
Piceance basin and the 1.1 billion cubic feet per day Sherman Extension
expansion to our Texas Intrastate natural gas pipeline system serving the
prolific Barnett Shale area. We have also taken actions to lock in
the costs for a significant amount of the
steel and
the pumps and turbines for the Texas Offshore Port and Pipeline
System. We currently expect our growth capital expenditure program
for 2009 to be approximately $700 to $800 million for committed projects,” said
Creel.
“As a
result of the significant disruption in the global capital markets and the
resulting higher cost of incremental capital, we have been deliberate in
prioritizing our growth capital projects that are in the development stage based
on relative return and business risk. This capital discipline led us
to withdraw from the Pathfinder natural gas pipeline project. While
we believe the Pathfinder pipeline may be an attractive pipeline solution out of
the Rockies, we have several other projects under consideration that we believe
could provide better returns on investment along with additional value chain
profit opportunities,” added Creel.
Revenue
for the third quarter of 2008 increased 53 percent to $6.3 billion from $4.1
billion in the same quarter of 2007. Gross operating margin increased
32 percent to $479 million for the third quarter of this year from $364 million
for the third quarter of last year. Operating income was $319 million
for the third quarter of 2008, a 51 percent increase over the $211 million of
operating income for the same quarter of 2007. Earnings before
interest, taxes, depreciation and amortization (“EBITDA”) for the third quarter
of 2008 increased 33 percent to a record $454 million from $341 million for the
third quarter of 2007. Gross operating margin, operating income and
EBITDA for the third quarter of 2008 were each reduced by the approximately $89
million from the charges and estimated lost business associated with Hurricanes
Gustav and Ike. 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 Third Quarter of 2008
NGL Pipelines & Services –
Gross operating margin for the NGL Pipelines and Services segment increased 77
percent to $336 million for the third quarter of 2008 compared to $190 million
for the same quarter of 2007. Gross operating margin for the third
quarter of 2008 included $10 million for accruals for storm-related property
damage repairs. In addition, estimated lost business for this segment
in the third quarter of 2008 due to the hurricanes was approximately $17
million. Gross operating margin for the third quarter of 2007
included $1 million of business interruption insurance proceeds.
Enterprise’s
natural gas processing business recorded gross operating margin of $238 million
for the third quarter of 2008, a 145 percent increase from $97 million in the
third quarter of 2007. Gross operating margin for the third quarter
of 2008 includes $8 million of accruals for property damage repairs, while the
third quarter of 2007 includes $1 million of business interruption
proceeds. Estimated lost business for this activity in the third
quarter of 2008 due to the hurricanes was approximately $12
million. This business benefited from strong natural gas processing
margins, an increase in marketing volumes and a 70 percent increase in equity
NGL production from 64 thousand barrels per day (“MBPD”) to 109
MBPD. The increase in equity NGL production, the NGLs that Enterprise
earns as a result of providing processing services, was primarily attributable
to the Meeker and Pioneer natural gas processing plants that went into
commercial operations in October 2007 and February 2008,
respectively.
Gross
operating margin from the partnership’s NGL pipeline and storage business was
$73 million in the third quarter of 2008, which includes $2 million of property
damage repair accruals, compared to $71 million in the third quarter of
2007. Estimated lost business for the NGL pipeline and storage
business in the third quarter of 2008 due to the hurricanes was approximately $1
million. This increase was primarily attributable to a $6 million
increase in gross operating margin from the Mid-America and
Seminole
pipelines generated by a 138 MBPD increase in NGL volumes and higher tariffs
that went into effect July 1, 2008 that was partially offset by higher fuel
costs. Enterprise’s NGL storage facility at Mont Belvieu reported a
$4 million increase in gross operating margin while the Dixie pipeline reported
a $4 million decrease in gross operating margin due to higher maintenance and
pipeline integrity costs. The partnership’s export facility on the
Houston Ship Channel reported a $2 million decrease due to lower volumes and
higher maintenance expenses. Total volumes associated with the NGL
pipeline and storage business for the third quarter of 2008 were 1.8 million
barrels per day compared to 1.6 million barrels per day for the same quarter
last year.
Gross
operating margin from Enterprise’s NGL fractionation business was $26 million in
the third quarter of 2008, including $1 million of accruals for property damage
repairs, versus $21 million reported for the same quarter of
2007. Estimated lost business for the NGL fractionation business in
the third quarter of 2008 due to the hurricanes was approximately $4
million. Gross operating margin for this business was higher with the
addition of the Hobbs fractionator and higher fees at the Mont Belvieu
fractionator. This was partially offset by a decrease in gross
operating margin at the Norco, Mont Belvieu and Baton Rouge facilities due to
downtime and lower volumes as a result of upstream production disruptions caused
by the hurricanes. NGL fractionation volumes for the third quarter of
this year increased 11 percent or 42 MBPD, to 413 MBPD from 371 MBPD recorded in
the third quarter of last year.
Onshore Natural Gas Pipelines &
Services – Enterprise’s Onshore Natural Gas Pipelines and Services
segment reported a 17 percent increase in gross operating margin to $88 million
for the third quarter of 2008 compared to $75 million for the second quarter of
last year. There was no material accrual for property damage repair
or estimated lost business associated with the hurricanes for this
segment.
Gross
operating margin for the partnership’s onshore natural gas pipeline business
increased 14 percent to $77 million for the third quarter of this year from $68
million reported for the third quarter of 2007. The San Juan system
reported a $17 million increase in gross operating margin on higher revenues
from transportation fees indexed to natural gas prices and from condensate
sales. The Texas Intrastate natural gas pipeline system reported a $3
million increase in gross operating margin from a 0.6 trillion British thermal
units per day (“TBtud”) increase in volume which was partially offset by higher
pipeline integrity expenses. The partnership also reported increases
in gross operating margin at its Jonah, Meeker, Acadian and Waha natural gas
pipeline systems. Total onshore natural gas transportation volumes
increased 15 percent to a record 7.6 TBtud for the third quarter of 2008 versus
6.6 TBtud in the same quarter of 2007. Enterprise’s natural gas
marketing business reported a loss of $17 million for third quarter of
2008. This loss includes (i) approximately $14 million of non-cash
charges for lower of cost or market adjustments and mark to market adjustments
for natural gas that has been sold in 2009 at an economic profit that is
expected to be recognized in 2009 and (ii) a $5 million charge for the cash
settlement of financial instruments at the end of September 2008 used to
economically hedge the sale of natural gas in October at an economic profit that
will be recognized in October 2008.
Gross
operating margin from the partnership’s natural gas storage business was $11
million for the third quarter of 2008 compared to $8 million for the same
quarter in 2007. This increase was primarily attributable to our
Petal facility, which benefited from new storage capacity being placed into
service in the third quarter of 2007, and the continuing progress of restoring
commercial operations at the Wilson storage facility that has been under repairs
during most of 2007 and 2008.
Offshore Pipelines &
Services – Gross operating margin for the Offshore Pipelines and Services
segment decreased to $17 million in the third quarter of 2008 from $47 million
in the same quarter of 2007. The gross operating margin for the third
quarter of 2008 includes $35 million of accruals for storm related property
damage repairs and $3 million of expenses to complete repairs to the flex joint
on the Independence Trail pipeline. Estimated lost business due to
the hurricanes in the third quarter of 2008 for this segment was $16
million.
The
offshore platform services business reported gross operating margin of $35
million for the third quarter of 2008, including $3 million of accruals for
property damage repairs, compared to $29 million for the same quarter of
2007. Estimated lost business for this activity in the third quarter
of 2008 due to the hurricanes was approximately $5 million. The
Independence Hub platform, which resumed service one day after the passage of
Hurricane Ike, reported an $11 million increase in gross operating margin to $28
million. Contributions from the Independence Hub were partially
offset by lower demand revenues and a decline in volumes at the Falcon Platform,
and lower volumes at all of our platforms due to disruptions caused by the
hurricanes. For the third quarter of 2008, Enterprise’s offshore
platform natural gas processing volumes increased 137 percent to 583 million
cubic feet per day while crude oil processing volumes decreased to 14 MBPD
during the third quarter of 2008 from 24 MBPD for the same quarter last
year.
Gross
operating margin from Enterprise’s offshore natural gas pipeline business for
the third quarter of 2008 was a loss of $23 million, including $32 million of
accruals for property damage repairs, compared to $9 million in the third
quarter of last year. Total estimated lost business for the offshore
natural gas pipeline business in the third quarter of 2008 due to the hurricanes
was approximately $7 million. Gross operating margin on the
Independence Trail pipeline increased $10 million to $13 million despite lost
revenue due to the inspection and completion of repairs to its flex joint and
disruptions caused by the hurricanes in the third quarter of
2008. This increase was partially offset by lower gross operating
margin at the partnership’s other offshore natural gas pipelines due to the
downtime and upstream volume disruptions associated with the
storms. Transportation volumes for the offshore natural gas pipeline
business were 1.2 TBtud in the third quarter of 2008 compared to 1.3 TBtud in
the same quarter of 2007.
Enterprise’s
offshore oil pipeline business recorded gross operating margin of $6 million for
the third quarter of 2008, which includes less than $1 million of accruals for
property damage repairs, compared to $9 million for the third quarter of
2007. Estimated lost business in the third quarter of 2008 due to the
hurricanes was approximately $4 million. This decrease was primarily
attributable to lower volumes due to downtime and upstream volume disruptions
associated with the hurricanes. Offshore oil pipeline transportation
volumes for the third quarter of 2008 decreased 10 percent to 147 MBPD from 163
MBPD for the same quarter of 2007.
Petrochemical Services – Gross
operating margin for the Petrochemical Services segment was $37 million in the
third quarter of 2008 compared to $51 million in the same quarter of
2007. This segment did not have any material accruals for hurricane
related property damage repair costs. Estimated lost business for the
Petrochemical Services segment in the third quarter of 2008 due to the
hurricanes was approximately $10 million.
Enterprise’s
butane isomerization business reported gross operating margin of $19 million in
the third quarter of 2008 versus $29 million in the same period last year
principally due to a 26 percent decrease in volumes between the two
periods. Estimated lost business for the third quarter of 2008 due to
the hurricanes was approximately $3 million. The decrease in volume
was largely due to the hurricane
related
downtime, lower demand due to operational issues at the partnership’s isooctane
facility and lower demand by producers of motor gasoline.
The
partnership’s propylene fractionation and petrochemical pipeline business
reported a $17 million increase in gross operating margin to $31 million for the
third quarter of 2008 versus $14 million in the same quarter of
2007. Estimated lost business for the third quarter of 2008 due to
the hurricanes was approximately $1 million. The increase in gross
operating margin was primarily due to higher sales margins between polymer grade
and refinery grade propylene which more than offset a decrease in propylene
fractionation and transportation volumes. Propylene fractionation
volumes were 58 MBPD for the third quarter of 2008 compared to 68 MBPD for the
same quarter of last year. Petrochemical pipeline transportation
volumes were 95 MBPD during the third quarter of 2008 compared to 108 MBPD in
the third quarter of 2007.
Enterprise’s
octane enhancement business reported a gross operating margin loss of $13
million in the third quarter of 2008 compared to a profit of $9 million in the
third quarter of 2007. During the third quarter of 2008, in addition
to downtime associated with Hurricane Ike, the octane enhancement facility had
operating issues that resulted in higher operating expense, downtime, a decrease
in production volumes and certain production volumes that did not meet quality
specifications. Repairs to the plant were completed in September and
the plant has returned to normal operations. Estimated lost business
in the third quarter of 2008 due to the hurricanes was approximately $6
million. Octane enhancement production was 8 MBPD for the third
quarter of 2008 compared to 11 MBPD for the third quarter of last
year.
Review of Current Status of
Enterprise-Operated Assets Still Impacted by Hurricanes
Most of
the partnerships facilities that were down due to power outages or that incurred
damage have returned to service. The High Island Offshore natural gas
pipeline and the North Terrebone natural gas processing facility are expected to
return to service in November. A number of our facilities are still
operating at lower volumes due to additional repairs that are required to our
facilities as well as in some cases repairs to upstream and downstream
facilities. The Constitution oil and natural gas pipeline and the
Marco Polo pipeline and platform are expected to be either in limited service or
out of service for the remainder of 2008 due to repairs required to our Anaconda
natural gas pipeline and the gas pipelines downstream of our Anaconda
pipeline.
We
currently estimate lost business will reduce gross operating margin in the
fourth quarter of 2008 by $25 to $35 million without consideration of any future
recoveries from business interruption insurance, which will be reflected in
income when received. Generally, under Enterprise’s business
interruption insurance program, there is a 60-day and 75-day deductible period
with respect to wind storm damage to onshore and offshore assets,
respectively.
“I would
like to recognize the tireless efforts of our operating, engineering and support
personnel to return our assets to service as soon as possible. Our
NGL storage facilities at Mont Belvieu resumed service within hours of the
passage of Hurricane Ike. This critical logistical service provided
assurance to natural gas producers upstream of our facility that their
production would not be shut-in due to NGL takeaway limitations,” said
Creel.
Capitalization
Total
debt principal outstanding at September 30, 2008 was approximately $8.5 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 $212 million of
debt of Duncan Energy Partners L.P. (“DEP”) for which Enterprise does not have
the payment obligation. Enterprise had liquidity of approximately
$700 million at September 30, 2008, which included availability under the
partnership’s credit facilities and unrestricted cash.
Total
capital spending in the third quarter of 2008, net of contributions in aid of
construction, was approximately $464 million. This includes $61
million of sustaining capital expenditures and $16 million of investments in
unconsolidated affiliates.
Interest expense for the third quarter
of 2008 was $103 million on an average debt balance of $8.1 billion, compared to
interest expense of $85 million in the third quarter of 2007 which had an
average debt balance of $6.5 billion. The increase in the average
debt balance between the two periods was primarily due to debt incurred to fund
the partnership’s capital investment program. Interest expense for
the third quarter of 2008 also included a charge of $3 million to write-off the
fair market value of an interest rate swap that had six years remaining on its
term with an affiliate of Lehman Brothers Holdings, Inc. that filed for
bankruptcy in the third quarter.
Conference Call to Discuss
Third Quarter Earnings
Today,
Enterprise will host a conference call to discuss third 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 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 from asset
sales and related transactions; 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.
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.
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 before: (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 from
asset sales and related transactions; (6) cash proceeds from asset sales, the
return of investment from unconsolidated affiliates or related transactions; (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 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
###
|
Enterprise
Products Partners L.P.
|
Exhibit
A
|
|||||||||||||||
|
Condensed
Statement of Consolidated Operations - UNAUDITED
|
||||||||||||||||
|
For the Three and Nine Months
Ended September 30, 2008 and 2007
|
||||||||||||||||
|
($
in 000s, except per unit amounts)
|
||||||||||||||||
|
For
the Three Months
|
For
the Nine Months
|
|||||||||||||||
|
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Revenues
|
$ | 6,297,902 | $ | 4,111,996 | $ | 18,322,052 | $ | 11,647,656 | ||||||||
|
Costs and expenses:
|
||||||||||||||||
|
Operating
costs and expenses
|
5,971,942 | 3,896,411 | 17,243,070 | 10,981,562 | ||||||||||||
|
General
and administrative costs
|
21,720 | 18,715 | 66,901 | 66,706 | ||||||||||||
|
Total
costs and expenses
|
5,993,662 | 3,915,126 | 17,309,971 | 11,048,268 | ||||||||||||
|
Equity in earnings of unconsolidated
affiliates
|
14,876 | 13,960 | 48,037 | 13,928 | ||||||||||||
|
Operating income
|
319,116 | 210,830 | 1,060,118 | 613,316 | ||||||||||||
|
Other income (expense):
|
||||||||||||||||
|
Interest
expense
|
(102,657 | ) | (85,075 | ) | (290,412 | ) | (219,708 | ) | ||||||||
|
Other,
net
|
1,178 | 1,706 | 2,740 | 6,381 | ||||||||||||
|
Total
other expense
|
(101,479 | ) | (83,369 | ) | (287,672 | ) | (213,327 | ) | ||||||||
|
Income before provision for income taxes and
minority interest
|
217,637 | 127,461 | 772,446 | 399,989 | ||||||||||||
|
Provision
for income taxes
|
(6,610 | ) | (2,073 | ) | (17,193 | ) | (9,001 | ) | ||||||||
|
Income before minority
interest
|
211,027 | 125,388 | 755,253 | 390,988 | ||||||||||||
|
Minority
interest
|
(7,946 | ) | (7,782 | ) | (29,293 | ) | (19,183 | ) | ||||||||
|
Net income
|
$ | 203,081 | $ | 117,606 | $ | 725,960 | $ | 371,805 | ||||||||
|
Allocation of net income
to:
|
||||||||||||||||
|
Limited
partners’ interest in net income
|
$ | 167,625 | $ | 88,408 | $ | 620,494 | $ | 286,984 | ||||||||
|
General
partner interest in net income
|
$ | 35,456 | $ | 29,198 | $ | 105,466 | $ | 84,821 | ||||||||
|
Per unit data (fully
diluted):
|
||||||||||||||||
|
Net
income per unit
|
$ | 0.38 | $ | 0.20 | $ | 1.42 | $ | 0.66 | ||||||||
|
Average
LP units outstanding (in 000s)
|
437,778 | 434,813 | 436,864 | 434,074 | ||||||||||||
|
Other financial data:
|
||||||||||||||||
|
Net
cash flows provided by operating activities
|
$ | 276,336 | $ | 385,786 | $ | 973,044 | $ | 937,835 | ||||||||
|
Cash
used in investing activities
|
$ | 677,155 | $ | 652,308 | $ | 1,709,203 | $ | 2,039,495 | ||||||||
|
Cash
provided by financing activities
|
$ | 431,618 | $ | 246,303 | $ | 751,820 | $ | 1,122,575 | ||||||||
|
Distributable
cash flow
|
$ | 316,318 | $ | 223,310 | $ | 1,046,412 | $ | 738,821 | ||||||||
|
EBITDA
|
$ | 453,694 | $ | 341,493 | $ | 1,450,303 | $ | 982,165 | ||||||||
|
Depreciation,
amortization and accretion
|
$ | 139,297 | $ | 136,970 | $ | 413,577 | $ | 382,083 | ||||||||
|
Distributions
received from unconsolidated affiliates
|
$ | 13,842 | $ | 17,317 | $ | 69,852 | $ | 52,343 | ||||||||
|
Total
debt principal outstanding at end of period
|
$ | 8,458,195 | $ | 6,796,568 | $ | 8,458,195 | $ | 6,796,568 | ||||||||
|
Capital spending:
|
||||||||||||||||
|
Capital
expenditures, net of contributions in aid of
|
||||||||||||||||
|
construction
costs, for property, plant and equipment
|
$ | 391,035 | $ | 551,300 | $ | 1,464,439 | $ | 1,631,993 | ||||||||
|
Cash
used for business combinations,
|
||||||||||||||||
|
net
of cash received
|
57,089 | -- | 57,090 | 785 | ||||||||||||
|
Acquisition
of intangible assets
|
-- | -- | 5,126 | -- | ||||||||||||
|
Investments
in unconsolidated affiliates
|
15,747 | 23,893 | 35,307 | 318,491 | ||||||||||||
|
Total
|
$ | 463,871 | $ | 575,193 | $ | 1,561,962 | $ | 1,951,269 | ||||||||
|
Enterprise
Products Partners L.P.
|
Exhibit
B
|
|||||||||||||||
|
Condensed
Operating Data - UNAUDITED
|
||||||||||||||||
|
For the Three and Nine Months
Ended September 30, 2008 and 2007
|
||||||||||||||||
|
($
in 000s)
|
||||||||||||||||
|
For
the Three Months
|
For
the Nine Months
|
|||||||||||||||
|
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Gross operating margin by
segment:
|
||||||||||||||||
|
NGL
Pipelines & Services
|
$ | 336,054 | $ | 190,209 | $ | 943,445 | $ | 589,708 | ||||||||
|
Onshore
Natural Gas Pipelines & Services
|
88,160 | 75,424 | 321,237 | 235,102 | ||||||||||||
|
Offshore
Pipelines & Services
|
17,465 | 46,676 | 134,353 | 97,429 | ||||||||||||
|
Petrochemical
Services
|
37,243 | 51,412 | 136,465 | 139,329 | ||||||||||||
|
Total
non-GAAP gross operating margin
|
$ | 478,922 | $ | 363,721 | $ | 1,535,500 | $ | 1,061,568 | ||||||||
|
Adjustments
to reconcile non-GAAP gross operating
|
||||||||||||||||
|
margin
to GAAP operating income:
|
||||||||||||||||
|
Depreciation,
amortization and accretion in operating
|
||||||||||||||||
|
costs
and expenses
|
(138,417 | ) | (133,869 | ) | (408,601 | ) | (374,522 | ) | ||||||||
|
Operating
lease expense paid by EPCO in operating
|
||||||||||||||||
|
costs
and expenses
|
(526 | ) | (526 | ) | (1,579 | ) | (1,579 | ) | ||||||||
|
Gain
(loss) from asset sales and related transactions in
|
||||||||||||||||
|
operating
costs and expenses
|
857 | 219 | 1,699 | (5,445 | ) | |||||||||||
|
General
and administrative costs
|
(21,720 | ) | (18,715 | ) | (66,901 | ) | (66,706 | ) | ||||||||
|
Operating
income per GAAP
|
$ | 319,116 | $ | 210,830 | $ | 1,060,118 | $ | 613,316 | ||||||||
|
Selected operating data:
(1)
|
||||||||||||||||
|
NGL
Pipelines & Services, net:
|
||||||||||||||||
|
NGL
transportation volumes (MBPD)
|
1,758 | 1,575 | 1,788 | 1,626 | ||||||||||||
|
NGL
fractionation volumes (MBPD)
|
413 | 371 | 424 | 379 | ||||||||||||
|
Equity
NGL production (MBPD)
|
109 | 64 | 108 | 67 | ||||||||||||
|
Fee-based
natural gas processing (MMcf/d)
|
2,064 | 2,269 | 2,469 | 2,358 | ||||||||||||
|
Onshore
Natural Gas Pipelines & Services, net:
|
||||||||||||||||
|
Natural
gas transportation volumes (BBtus/d)
|
7,562 | 6,597 | 7,309 | 6,576 | ||||||||||||
|
Offshore
Pipelines & Services, net:
|
||||||||||||||||
|
Natural
gas transportation volumes (BBtus/d)
|
1,244 | 1,271 | 1,449 | 1,407 | ||||||||||||
|
Crude
oil transportation volumes (MBPD)
|
147 | 163 | 190 | 164 | ||||||||||||
|
Platform
gas processing (MMcf/d)
|
583 | 246 | 588 | 265 | ||||||||||||
|
Platform
oil processing (MBPD)
|
14 | 24 | 19 | 24 | ||||||||||||
|
Petrochemical
Services, net:
|
||||||||||||||||
|
Butane
isomerization volumes (MBPD)
|
71 | 96 | 85 | 93 | ||||||||||||
|
Propylene
fractionation volumes (MBPD)
|
58 | 68 | 59 | 69 | ||||||||||||
|
Octane
additive production volumes (MBPD)
|
8 | 11 | 9 | 9 | ||||||||||||
|
Petrochemical
transportation volumes (MBPD)
|
95 | 108 | 110 | 104 | ||||||||||||
|
Total,
net:
|
||||||||||||||||
|
NGL,
crude oil and petrochemical transportation volumes (MBPD)
|
2,000 | 1,846 | 2,088 | 1,894 | ||||||||||||
|
Natural
gas transportation volumes (BBtus/d)
|
8,806 | 7,868 | 8,758 | 7,983 | ||||||||||||
|
Equivalent
transportation volumes (MBPD) (2)
|
4,317 | 3,917 | 4,393 | 3,995 | ||||||||||||
|
(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 and Nine Months
Ended September 30, 2008 and 2007
|
||||||||||||||||
|
($
in 000s)
|
||||||||||||||||
|
For
the Three Months
|
For
the Nine Months
|
|||||||||||||||
|
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Reconciliation of non-GAAP "Distributable cash
flow" to GAAP "Net
|
||||||||||||||||
|
income" and GAAP "Net cash flows provided by
operating activities"
|
||||||||||||||||
|
Net
income
|
$ | 203,081 | $ | 117,606 | $ | 725,960 | $ | 371,805 | ||||||||
|
Adjustments
to derive Distributable cash flow
|
||||||||||||||||
|
(add
or subtract as indicated by sign of number):
|
||||||||||||||||
|
Amortization
in interest expense
|
(2,049 | ) | 231 | (3,161 | ) | 432 | ||||||||||
|
Depreciation,
amortization and accretion in costs and expenses
|
141,346 | 136,739 | 416,738 | 381,651 | ||||||||||||
|
Operating
lease expense paid by EPCO, Inc.
|
526 | 526 | 1,579 | 1,579 | ||||||||||||
|
Deferred
income tax expense
|
3,051 | 1,454 | 5,580 | 5,542 | ||||||||||||
|
Monetization
of interest rate hedging financial instruments
|
-- | 6,626 | (22,144 | ) | 48,895 | |||||||||||
|
Amortization
of net gains related to monetization of financial
instruments
|
(800 | ) | (1,172 | ) | (3,983 | ) | (3,193 | ) | ||||||||
|
Equity
in earnings of unconsolidated affiliates
|
(14,876 | ) | (13,960 | ) | (48,037 | ) | (13,928 | ) | ||||||||
|
Distributions
received from unconsolidated affiliates
|
13,842 | 17,317 | 69,852 | 52,343 | ||||||||||||
|
Loss
(gain) from asset sales and related transactions
|
(858 | ) | (219 | ) | (1,710 | ) | 5,445 | |||||||||
|
Proceeds
from asset sales and related transactions
|
1,171 | 918 | 1,685 | 1,933 | ||||||||||||
|
Sustaining
capital expenditures
|
(60,721 | ) | (46,681 | ) | (129,364 | ) | (119,792 | ) | ||||||||
|
Changes
in fair market value of financial instruments
|
(4,119 | ) | 3,813 | 5,461 | 3,511 | |||||||||||
|
Minority
interest expense – DEP public unitholders
|
2,744 | 3,242 | 11,863 | 9,356 | ||||||||||||
|
Distribution
to be paid to DEP public unitholders with respect to
period
|
(6,279 | ) | (6,130 | ) | (18,688 | ) | (15,758 | ) | ||||||||
|
Cash
expenditures for asset abandonment activities
|
(1,676 | ) | -- | (7,154 | ) | -- | ||||||||||
|
Accrued
property damage repair costs related to Hurricanes Ike and
Gustav
|
41,935 | -- | 41,935 | -- | ||||||||||||
|
El
Paso transition support payments
|
-- | 3,000 | -- | 9,000 | ||||||||||||
|
Distributable
cash flow
|
316,318 | 223,310 | 1,046,412 | 738,821 | ||||||||||||
|
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 hedging financial instruments
|
-- | (6,626 | ) | 22,144 | (48,895 | ) | ||||||||||
|
Amortization
of net gains related to monetization of financial
instruments
|
800 | 1,172 | 3,983 | 3,193 | ||||||||||||
|
Proceeds
from asset sales and related transactions
|
(1,171 | ) | (918 | ) | (1,685 | ) | (1,933 | ) | ||||||||
|
Sustaining
capital expenditures
|
60,721 | 46,681 | 129,364 | 119,792 | ||||||||||||
|
El
Paso transition support payments
|
-- | (3,000 | ) | -- | (9,000 | ) | ||||||||||
|
Minority
interest
|
7,946 | 7,782 | 29,293 | 19,183 | ||||||||||||
|
Minority
interest expense – DEP public unitholders
|
(2,744 | ) | (3,242 | ) | (11,863 | ) | (9,356 | ) | ||||||||
|
Distribution
to be paid to DEP public unitholders with respect to
period
|
6,279 | 6,130 | 18,688 | 15,758 | ||||||||||||
|
Cash
expenditures for asset abandonment activities
|
1,676 | -- | 7,154 | -- | ||||||||||||
|
Accrued
property damage repair costs related to Hurricanes Ike and
Gustav
|
(41,935 | ) | -- | (41,935 | ) | -- | ||||||||||
|
Effect
of pension settlement recognition
|
-- | -- | (114 | ) | -- | |||||||||||
|
Net
effect of changes in operating accounts
|
(71,554 | ) | 114,497 | (228,397 | ) | 110,272 | ||||||||||
|
Net
cash flows provided by operating activities
|
$ | 276,336 | $ | 385,786 | $ | 973,044 | $ | 937,835 | ||||||||
|
Enterprise
Products Partners L.P.
|
Exhibit
D
|
|||||||||||||||
|
Reconciliation
of Unaudited GAAP Financial Measures to Our Non-GAAP Financial
Measures
|
||||||||||||||||
|
EBITDA
|
||||||||||||||||
|
For the Three and Nine Months
Ended September 30, 2008 and 2007
|
||||||||||||||||
|
($
in 000s)
|
||||||||||||||||
|
For
the Three Months
|
For
the Nine Months
|
|||||||||||||||
|
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Reconciliation of non-GAAP "EBITDA" to GAAP "Net
income" and
|
||||||||||||||||
|
GAAP "Net cash flows provided by operating
activities"
|
||||||||||||||||
|
Net
income
|
$ | 203,081 | $ | 117,606 | $ | 725,960 | $ | 371,805 | ||||||||
|
Additions
to net income to derive EBITDA:
|
||||||||||||||||
|
Interest expense (including related amortization)
|
102,657 | 85,075 | 290,412 | 219,708 | ||||||||||||
|
Provision for income taxes
|
6,610 | 2,073 | 17,193 | 9,001 | ||||||||||||
|
Depreciation, amortization and accretion in costs and
expenses
|
141,346 | 136,739 | 416,738 | 381,651 | ||||||||||||
|
EBITDA
|
453,694 | 341,493 | 1,450,303 | 982,165 | ||||||||||||
|
Adjustments
to EBITDA to derive net cash flows provided by operating
|
||||||||||||||||
|
activities
(add or subtract as indicated by sign of number):
|
||||||||||||||||
|
Interest
expense
|
(102,657 | ) | (85,075 | ) | (290,412 | ) | (219,708 | ) | ||||||||
|
Provision
for income taxes
|
(6,610 | ) | (2,073 | ) | (17,193 | ) | (9,001 | ) | ||||||||
|
Equity
in earnings of unconsolidated affiliates
|
(14,876 | ) | (13,960 | ) | (48,037 | ) | (13,928 | ) | ||||||||
|
Amortization
in interest expense
|
(2,049 | ) | 231 | (3,161 | ) | 432 | ||||||||||
|
Deferred
income tax expense
|
3,051 | 1,454 | 5,580 | 5,542 | ||||||||||||
|
Distributions
received from unconsolidated affiliates
|
13,842 | 17,317 | 69,852 | 52,343 | ||||||||||||
|
Operating
lease expense paid by EPCO, Inc.
|
526 | 526 | 1,579 | 1,579 | ||||||||||||
|
Minority
interest
|
7,946 | 7,782 | 29,293 | 19,183 | ||||||||||||
|
Loss
(gain) from asset sales and related transactions
|
(858 | ) | (219 | ) | (1,710 | ) | 5,445 | |||||||||
|
Changes
in fair market value of financial instruments
|
(4,119 | ) | 3,813 | 5,461 | 3,511 | |||||||||||
|
Effect
of pension settlement recognition
|
-- | -- | (114 | ) | -- | |||||||||||
|
Net
effect of changes in operating accounts
|
(71,554 | ) | 114,497 | (228,397 | ) | 110,272 | ||||||||||
|
Net
cash flows provided by operating activities
|
$ | 276,336 | $ | 385,786 | $ | 973,044 | $ | 937,835 | ||||||||