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): February 25,
2010
ENTERPRISE
GP HOLDINGS L.P.
(Exact name of registrant as specified in
its charter)
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Delaware
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1-32610
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13-4297064
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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 77002
(Address
of Principal Executive Offices, including Zip Code)
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(713)
381-6500
(Registrant’s
Telephone Number, including Area
Code)
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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
February 25, 2010, Enterprise GP Holdings L.P. issued a press release regarding
its consolidated and parent-only financial results for the three months and year
ended December 31, 2009. A copy of the earnings press release is
furnished as Exhibit 99.1 to this Current Report on Form 8-K, which is
incorporated by reference into this Item 2.02.
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
GP Holdings L.P. press release dated February 25,
2010.
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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
GP HOLDINGS L.P.
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|||||||
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By:
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EPE
Holdings, LLC,
as
general partner
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||||||
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Date:
February 25, 2010
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By:
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/s/ Michael J. Knesek |
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||||
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Name:
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Michael
J. Knesek
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||||||
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Title:
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Senior
Vice President, Controller and Principal
Accounting
Officer of the general partner
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||||||
1
Exhibit
Index
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Exhibit No.
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Description
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99.1
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Enterprise
GP Holdings L.P. press release dated February 25,
2010.
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2
Exhibit
99.1
P.O.
Box 4323
Houston,
TX 77210
(713)
381-6500
Enterprise
GP Holdings Reports Fourth Quarter 2009 Results:
Record
Distributable Cash Flow
Houston,
Texas (Thursday, February 25, 2010) – Enterprise GP Holdings L.P. (NYSE: EPE)
today announced its consolidated and parent-only financial results for the three
months and year ended December 31, 2009. Enterprise GP Holdings L.P.,
the Parent Company, reported record distributable cash flow of $83.6 million for
the fourth quarter of 2009, a 23 percent increase from distributable cash flow
of $67.9 million reported for the fourth quarter of 2008. For 2009,
Enterprise GP Holdings generated record distributable cash flow of $309.5
million compared to $250 million of distributable cash flow reported in
2008.
On
January 12, 2010, the Board of Directors of Enterprise GP Holdings’ general
partner approved an increase in the partnership’s quarterly cash distribution
rate to $0.53 per Unit with respect to the fourth quarter of
2009, which is 12.8 percent higher than the $0.47 per Unit that was paid with
respect to the fourth quarter of 2008. Distributable cash flow
provided 1.1 times coverage of the quarterly cash distribution which was paid on
February 5, 2010. 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 U.S. GAAP
measure, which is net cash flow provided by operating activities.
The
Parent Company received $94.0 million of cash distributions from its investments
with respect to the fourth quarter of 2009. This represents a 9.2
percent increase from the $86.1 million of cash distributions it received with
respect to the fourth quarter of 2008. The increase in cash
distributions is primarily due to higher cash distribution rates from Enterprise
Products Partners and Energy Transfer Equity with respect to the fourth quarter
of 2009 as compared to the same period of 2008, as well as additional common
units issued by each partnership in 2009. Cash distributions received
from Enterprise Products Partners and EPGP with respect to the fourth quarter of
2009 reflect the common units and other consideration it received in connection
with the merger of TEPPCO and TEPPCO GP with Enterprise Products Partners on
October 26, 2009.
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(Amounts in millions)
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4th
Qtr 2009 (1)
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4th Qtr
2008 (1)
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||||||
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Enterprise
and TEPPCO
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$ | 72.8 | $ | 66.0 | ||||
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Energy
Transfer Equity & LE GP
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21.2 | 20.1 | ||||||
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Total
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$ | 94.0 | $ | 86.1 | ||||
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(1)
See Exhibit A for detailed information regarding distributions the Parent
Company received from its investments.
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||||||||
Consolidated
net income attributable to Enterprise GP Holdings was $76.8 million, or $0.55
per unit on a fully diluted basis, for the fourth quarter of 2009 compared to
$26.0 million, or $0.21 per unit on a fully diluted basis, for the fourth
quarter of 2008. Enterprise GP Holdings benefited from strong results
recorded by Enterprise Products Partners in the fourth quarter 2009 supported by
record natural gas liquid (“NGL”) pipeline volumes, NGL fractionation volumes
and equity NGL production, and near record natural gas pipeline
volumes. Net income attributable to Enterprise Products Partners for
the fourth quarter of 2009 was positively impacted by notable items totaling $49
million, consisting of $24 million related to
the
settlement of a rate case for its Mid-America pipeline, and $25 million from
insurance proceeds associated with Hurricanes Ike and Katrina and for repairs to
the Independence Trail pipeline.
Parent
Company interest expense for the fourth quarter of 2009 decreased to $9.1
million from $16.8 million recorded in the fourth quarter of 2008, primarily due
to lower interest rates.
“This
year was exceptional for our partnership, highlighted by record distributable
cash flow recorded in each quarter,” said Dr. Ralph S. Cunningham, president and
chief executive officer of Enterprise GP Holdings. “The fourth
quarter was the seventh consecutive quarter of reporting record distributable
cash flow as our partnership continues to benefit from the underlying businesses
of Enterprise Products Partners, which posted record results in the fourth
quarter and 2009. We continue to benefit from the diversified base of
assets of the partnerships in which we are invested as they consistently
generate solid results. The incentive distribution rights associated
with our general partner interests should enhance our prospects for long-term
cash distribution growth, which should allow us to continue our track record of
increasing quarterly cash distributions paid to our partners,” continued
Cunningham.
Parent Company
Financial Information
In order
for the unitholders of Enterprise GP Holdings and others to more fully
understand the Parent Company’s business and financial statements on a
standalone basis, our press release includes information devoted exclusively to
the Parent Company apart from that of our consolidated Partnership. A
key difference between the non-consolidated Parent Company financial information
and those of our consolidated Partnership is that the Parent Company views each
of its investments (i.e., in Enterprise Products Partners and Energy Transfer
Equity) as unconsolidated affiliates and records its share of the net income of
each as equity earnings. In accordance with GAAP, we eliminate the
equity earnings related to Enterprise Products Partners in the preparation of
our consolidated financial statements.
Use of Non-GAAP Financial
Measures
The press
release and accompanying schedules include the non-GAAP financial measure of
distributable cash flow. Exhibit C provides a reconciliation of this
non-GAAP financial measure to its most directly comparable financial measure
calculated in accordance with GAAP. Distributable cash flow should
not be considered an alternative to GAAP financial measures such as net income,
net cash flow provided by operating activities or any other GAAP measure of
liquidity or financial performance. We define distributable cash flow
as follows:
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§
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Cash
distributions received with respect to a given period from the Parent
Company’s investments in limited and general partner interests; less the
sum of,
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§
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Parent
Company general and administrative costs on a standalone
basis;
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§
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Parent
Company interest expense on a standalone basis, before non-cash
amortization; and
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§
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the
general and administrative costs, on a standalone basis, of the general
partner of Enterprise Products
Partners.
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Distributable
cash flow is a significant liquidity metric used by senior management to compare
net cash flow generated by the Parent Company’s investments to the cash
distributions the Parent Company is expected to pay its
partners. Using this metric, senior management can compute the
coverage ratio of estimated cash flow to planned cash
distributions.
Distributable cash flow is an important
non-GAAP financial measure for the Parent Company’s unitholders since it
indicates to investors whether or not the Parent Company’s investments are
generating cash flow at a level that can sustain or support an increase in
quarterly cash distribution levels. Financial metrics such as
distributable cash flow are quantitative standards used by the investment
community
2
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).
Company Information and
Forward-Looking Statements
Enterprise
GP Holdings L.P. is one of the largest publicly traded GP partnerships and it
owns the general partner and certain limited partner interests in Enterprise
Products Partners L.P., as well as certain noncontrolling general partner and
limited partner interests in Energy Transfer Equity, L.P. 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 GP Holdings’ beliefs and those of its general partner,
as well as assumptions made by and information currently available to Enterprise
GP Holdings. 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 GP Holdings, Enterprise Products Partners,
Energy Transfer Equity or Energy Transfer Partners (the “Related Companies”) for
future operations, are intended to identify forward-looking
statements. Although Enterprise GP Holdings and its general partner
believe that such expectations reflected in such forward-looking statements are
reasonable, neither Enterprise GP Holdings 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 GP Holdings’ actual results may vary
materially from those it anticipated, estimated, projected or
expected. Among the key risk factors that may have a direct bearing
on the Related Companies’ and, in turn, Enterprise GP Holdings’ results of
operations and financial condition are:
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§
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fluctuations
in oil, natural gas and natural gas liquid prices and production due to
weather and other natural and economic
forces;
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§
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the
effects of the Related Companies’ debt level on its future financial and
operating flexibility;
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§
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a
reduction in demand for the Related Companies’ products by the
petrochemical, refining, heating or other
industries;
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§
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a
decline in the volumes delivered by the Related Companies’
facilities;
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§
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the
failure of any of the Related Companies’ credit risk management efforts to
adequately protect it against customer
non-payment;
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§
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terrorist
attacks aimed at the Related Companies’ facilities;
and
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§
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the
failure to successfully integrate the Related Companies’ operations with
companies, if any, that they may acquire in the
future.
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Enterprise
GP Holdings 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, Investor Relations (713) 381-6812 or (866)
230-0745
Rick
Rainey, Media Relations (713) 381-3635
###
3
Exhibit
A
Enterprise
GP Holdings L.P. – Parent Company
Selected
Financial Data– UNAUDITED
For
the Three Months and Years Ended December 31, 2009 and 2008
(Amounts
in millions)
The following table presents
distributable cash flow, summarized income statement data and selected balance
sheet information for the Parent Company with respect to the periods shown and
at the dates indicated:
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For
the Three Months
Ended
December 31,
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For
the Year
Ended
December 31,
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|||||||||||||||
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2009
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2008
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2009
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2008
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|||||||||||||
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Cash distributions from
investees: (1)
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||||||||||||||||
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Enterprise Products Partners
and EPGP: (2)
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||||||||||||||||
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From
common units of Enterprise Products Partners
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$ | 11.9 | $ | 7.2 | $ | 38.1 | $ | 28.0 | ||||||||
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From
2% general partner interest and related IDRs
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60.9 | 40.2 | 203.9 | 150.0 | ||||||||||||
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TEPPCO and TEPPCO GP:
(3,4)
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||||||||||||||||
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From
units of TEPPCO
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n/a | 3.2 | 6.4 | 12.6 | ||||||||||||
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From
2% general partner interest and related IDRs
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n/a | 15.4 | 31.0 | 58.1 | ||||||||||||
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Energy Transfer Equity and LE
GP:
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||||||||||||||||
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From
common units of Energy Transfer Equity
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21.0 | 19.9 | 83.2 | 74.4 | ||||||||||||
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From
member interest in LE GP
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0.2 | 0.2 | 0.7 | 0.5 | ||||||||||||
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Total
cash distributions from investees
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94.0 | 86.1 | 363.3 | 323.6 | ||||||||||||
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Cash
expenses, primarily Parent Company
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(10.4 | ) | (18.2 | ) | (53.8 | ) | (73.6 | ) | ||||||||
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Distributable
cash flow
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$ | 83.6 | $ | 67.9 | $ | 309.5 | $ | 250.0 | ||||||||
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Distributions
by Parent Company
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$ | 73.8 | $ | 57.9 | $ | 282.6 | $ | 220.5 | ||||||||
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Coverage
ratio
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1.1 | x | 1.2 | x | 1.1 | x | 1.1 | x | ||||||||
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Parent
Company summarized income statement data:
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||||||||||||||||
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Equity
in income of investees (5)
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$ | 87.5 | $ | 44.8 | $ | 259.8 | $ | 238.8 | ||||||||
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General
and administrative costs
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1.6 | 2.0 | 10.3 | 7.3 | ||||||||||||
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Operating
income
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85.9 | 42.8 | 249.5 | 231.5 | ||||||||||||
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Interest
expense, net
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(9.1 | ) | (16.8 | ) | (45.4 | ) | (67.5 | ) | ||||||||
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Net
income attributable to Enterprise GP Holdings L.P.
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$ | 76.8 | $ | 26.0 | $ | 204.1 | $ | 164.0 | ||||||||
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Parent
Company debt principal outstanding at end of period
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$ | 1,081.5 | $ | 1,077.0 | $ | 1,081.5 | $ | 1,077.0 | ||||||||
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(1)
Represents
cash distributions received with respect to such quarter. With respect to
cash distributions for the fourth quarter of 2009, we received the
distributions shown for Enterprise Products Partners and its general
partner on February 4, 2010. We received the distributions shown for
Energy Transfer Equity and its general partner on February 19,
2010.
(2)
Cash
distributions from Enterprise Products Partners and EPGP with respect to
the fourth quarter of 2009 reflect the common units and other
consideration received by the Parent Company in connection the merger of
TEPPCO and TEPPCO GP with Enterprise Products Partners on October 26, 2009
(see notes 3 and 4 below).
(3)
We
did not receive any distributions from TEPPCO with respect to the third
and fourth quarters of 2009. The TEPPCO merger was completed on
October 26, 2009. Under the terms of the merger agreement, each of
TEPPCO’s unitholders (including the Parent Company) received 1.24 common
units of Enterprise Products Partners for each TEPPCO unit owned
immediately prior to the merger. As a result, the Parent Company
received 5,456,000 common units of Enterprise Products Partners in
exchange for the 4,400,000 TEPPCO units that it owned immediately prior to
the merger.
(4)
Immediately
prior to and as a condition to the TEPPCO merger, TEPPCO GP merged with a
wholly owned subsidiary of Enterprise Products Partners. In
connection with this merger, the Parent Company, as owner of TEPPCO GP and
EPGP, received an additional 1,331,681 common units of Enterprise Products
Partners and an increase in the capital account of EPGP sufficient to
maintain EPGP’s 2% general partner interest in Enterprise Products
Partners.
(5)
Represents
the Parent Company’s share of net income of Enterprise Products Partners,
TEPPCO (pre-merger), Energy Transfer Equity and their respective general
partners.
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4
Exhibit
B
Enterprise
GP Holdings L.P.
Condensed
Statements of Consolidated Operations – UNAUDITED
For
the Three Months and Year Ended December 31, 2009 and 2008
(Amounts
in millions, except per unit amounts)
The Parent Company owns the general
partner of (and therefore controls) Enterprise Products Partners; thus, our
consolidated financial statements include the consolidated financial results of
Enterprise Products Partners. The net income of Enterprise Products
Partners allocated to limited partner interests not owned by the Parent Company
is allocated to noncontrolling interests. The following table
presents summarized income statement data for the consolidated Partnership for
the periods indicated:
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For
the Three Months
Ended
December 31,
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For
the Year
Ended
December 31,
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|||||||||||||||
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2009
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2008
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2009
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2008
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|||||||||||||
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Revenue
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$ | 8,400.3 | $ | 5,925.5 | $ | 25,510.9 | $ | 35,469.6 | ||||||||
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Costs
and expenses:
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||||||||||||||||
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Operating
costs and expenses
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7,769.0 | 5,468.7 | 23,565.8 | 33,618.9 | ||||||||||||
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General
and administrative costs
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40.7 | 38.9 | 182.8 | 144.8 | ||||||||||||
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Total
costs and expenses
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7,809.7 | 5,507.6 | 23,748.6 | 33,763.7 | ||||||||||||
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Equity
in income (loss) of unconsolidated affiliates
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34.6 | (2.1 | ) | 92.3 | 66.2 | |||||||||||
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Operating
income
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625.2 | 415.8 | 1,854.6 | 1,772.1 | ||||||||||||
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Other
income (expense):
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||||||||||||||||
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Interest
expense
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(179.1 | ) | (161.1 | ) | (687.3 | ) | (608.3 | ) | ||||||||
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Other,
net
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(3.9 | ) | 7.0 | (1.7 | ) | 12.3 | ||||||||||
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Total
other income (expense)
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(183.0 | ) | (154.1 | ) | (689.0 | ) | (596.0 | ) | ||||||||
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Income
before provision for income taxes
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442.2 | 261.7 | 1,165.6 | 1,176.1 | ||||||||||||
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Provision
for income taxes
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1.5 | (10.9 | ) | (25.3 | ) | (31.0 | ) | |||||||||
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Net
income
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443.7 | 250.8 | 1,140.3 | 1,145.1 | ||||||||||||
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Net
income attributable to noncontrolling interest
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(366.9 | ) | (224.8 | ) | (936.2 | ) | (981.1 | ) | ||||||||
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Net
income attributable to Enterprise GP Holdings L.P.
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$ | 76.8 | $ | 26.0 | $ | 204.1 | $ | 164.0 | ||||||||
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Allocation
of net income to:
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||||||||||||||||
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Limited
partners
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$ | 76.8 | $ | 26.0 | $ | 204.1 | $ | 164.0 | ||||||||
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General
partner
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* | * | * | * | ||||||||||||
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Earnings
per Unit, basic and fully diluted:
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||||||||||||||||
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Net
income per Unit
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$ | 0.55 | $ | 0.21 | $ | 1.48 | $ | 1.33 | ||||||||
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Average
LP Units outstanding
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139.2 | 123.2 | 137.8 | 123.2 | ||||||||||||
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* Amount
is negligible
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||||||||||||||||
5
Exhibit
C
Enterprise
GP Holdings L.P. – Parent Company
Non-GAAP
Reconciliations – UNAUDITED
For
the Three Months and Year Ended December 31, 2009 and 2008
(Amounts
in millions)
The following table presents a
reconciliation of the Parent Company’s non-GAAP distributable cash flow amounts
to GAAP net cash flow provided by operating activities:
|
For
the Three Months
Ended
December 31,
|
For
the Year
Ended
December 31,
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|||||||||||||||
|
2009
|
2008
|
2009
|
2008
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|||||||||||||
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Distributable
Cash Flow (Exhibit A)
|
$ | 83.6 | $ | 67.9 | $ | 309.5 | $ | 250.0 | ||||||||
|
Adjustments
to derive net cash flow provided by
|
||||||||||||||||
|
operating
activities (add or subtract as indicated
|
||||||||||||||||
|
by
sign of number):
|
||||||||||||||||
|
Distributions
to be received from investees
|
||||||||||||||||
|
with
respect to period indicated (Exhibit A) (1)
|
(94.0 | ) | (86.1 | ) | (363.3 | ) | (323.6 | ) | ||||||||
|
Distributions
received from investees
|
||||||||||||||||
|
during
period
|
90.8 | 82.3 | 355.4 | 313.5 | ||||||||||||
|
Expenses
of EPGP and TEPPCO GP
|
0.1 | -- | 0.2 | 0.1 | ||||||||||||
|
Net
effect of changes in operating accounts
|
0.3 | 0.5 | (3.2 | ) | (5.3 | ) | ||||||||||
|
Net
cash flow provided by operating activities
|
$ | 80.8 | $ | 64.6 | $ | 298.6 | $ | 234.7 | ||||||||
|
(1)
Represents
cash distributions collected subsequent to the end of each reporting
period.
|
||||||||||||||||
6