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): July 31, 2003
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 | (I.R.S. Employer |
| Incorporation or Organization) | File Number) | Identification No.) |
| 2727 North Loop West, Houston, Texas | 77008-1037 |
|---|---|
| (Address of Principal Executive Offices) | (Zip Code) |
(713) 880-6500
(Registrant's Telephone Number, including Area Code)
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
| (c) | Exhibits. |
| 99.1 | Enterprise Products Partners L.P. press release dated July 31, 2003. |
Items 5 and 12. OTHER EVENTS AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 31, 2003, Enterprise Products Partners L.P. issued a press release regarding its financial results for the three and six month periods ended June 30, 2003 and held a webcast conference call discussing those results. A copy of this earnings press release is filed as Exhibit 99.1 to this report. The webcast conference call will be available for replay on Enterprise Products Partners L.P.‘s website at www.epplp.com. The conference call will be archived on our website for 90 days.
Our earnings press release includes 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 in accordance with generally accepted accounting principles (“GAAP”). Our non-GAAP financial statistics should not be considered as alternatives to GAAP measures such as net income, operating income, cash flow from operating activities or any other GAAP measure of financial performance.
We define gross operating margin as operating income before: (1) depreciation and amortization 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) selling, general and administrative expenses. Gross operating margin 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. The GAAP measure most directly comparable to gross operating margin is operating income.
We define distributable cash flow as net income plus: (1) depreciation and amortization 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; (7) the addition of decreases or the subtraction of increases in the value of our financial instrument portfolios; and (8) the addition of losses or subtraction of gains relating to other miscellaneous non-cash amounts affecting net income for the period. Sustaining capital expenditures are capital expenditures (as defined by GAAP) generally resulting from improvements to and major renewals of existing assets. Distributable cash flow is a significant liquidity metric used by senior management to compare basic cash flows generated by the partnership to the cash distributions we expect to pay our limited and general partners. Using this metric, 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 the partnership’s success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the partnership is generating cash flows at a level that can sustain or support an increase in our quarterly cash distribution rates. Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a partnership unit is generally determined 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 cash flows from operating activities.
We define EBITDA as net income plus interest expense, provision for income taxes and depreciation and amortization expense. EBITDA is 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 sector, 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 and these measures may vary among other companies, the EBITDA data presented in the press release may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to EBITDA is cash flows from operating activities.
SIGNATURESPursuant 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, as general partner | ||
| Date: July 31, 2003 | By: | /s/ Michael A. Creel | |
| Michael A. Creel | |||
| Executive Vice President, Chief Financial Officer and | |||
| Principal Financial Officer of | |||
| Enterprise Products GP, LLC | |||
EXHIBIT 99.1
| Enterprise Products Partners L.P. | |
| [Company Logo] | P.O. Box 4324 |
| Houston, TX 77210 | |
| (713) 880-6500 |
Enterprise Reports Second Quarter 2003 Results
Houston, Texas (Thursday, July 31, 2003) - Enterprise Products Partners L.P. (NYSE: "EPD") today announced its financial results for the second quarter ending June 30, 2003.
Net income for the second quarter of 2003 increased to $33.1 million, or $0.14 per unit on a fully diluted basis, compared to net income of $22.3 million, or $0.11 per unit on a fully diluted basis, for the second quarter of 2002. For the first six months of 2003, net income increased to $73.6 million, or $0.32 per unit on a fully diluted basis, versus net income for the first six months of 2002 of $5.1 million, or $0.01 per unit.
Distributable Cash Flow for the second quarter of 2003 increased to $64.2 million from $38.1 million in the second quarter of 2002. Distributable Cash Flow provided 0.8 times coverage of the quarterly cash distribution rate of $0.3625 per unit declared for the second quarter of 2003 on common and subordinated units. Had the 10.0 million special units been eligible to participate in the cash distribution during this period, Distributable Cash Flow would have also provided 0.8 times coverage of the distribution on all units. Both the subordinated and special units will convert to common units on August 1, 2003.
For the first six months of 2003, Distributable Cash Flow increased to $158.4 million, which provided 1.0 times coverage of the cash distributions declared on common and subordinated units and also on a fully diluted basis including the special units. Distributable Cash Flow for the first six months of 2002 was $75.9 million.
“While our partnership reported increases in many financial measures for the second quarter, it was clearly a disappointing quarter that did not meet our expectations,” said O.S. “Dub” Andras, President and Chief Executive Officer of Enterprise. “The combination of a severe decrease in the demand for NGLs and propylene by the petrochemical industry (this industry accounts for approximately 75% of total demand for NGLs) and high natural gas prices relative to all other forms of energy for the entire quarter led to reduced profitability in our natural gas processing operations and a decrease in volumes in several of our fee-based businesses.”
“We do not believe the performance of our partnership during the second quarter is indicative of our demonstrated ability to generate attractive and consistent cash returns on investment. We believe that the petrochemical industry’s low level of demand for NGLs in the second quarter cannot be sustained irrespective of the timing of improvements in the general economy. In fact, preliminary information for July indicates that the petrochemical industry’s demand for ethane and propane increased by approximately 64,000 BPD, or 8%, compared to the low levels of June. We believe industry demand could increase by another 50,000 to 100,000 BPD in August,” said Andras.
“Periodically over the past three years, our businesses have been challenged by high natural gas prices and, in those periods, our partnership generated substantial cash flow from our fee-based businesses. We believe the performance of our assets will rebound with improvements in NGL demand. Our platform of assets is well situated to serve and benefit from increased natural gas and NGL production in the two most important basins in the United States, the deepwater Gulf of Mexico and the Rocky Mountains,” stated Andras.
Enterprise reported revenue of $1.2 billion for the second quarter of 2003, a 54% increase from $786.3 million for the same period of last year. Gross operating margin increased 59% to $106.5 million for the second quarter of 2003 compared to $66.9 million for the second quarter of 2002. Operating income also increased to $66.3 million for the second quarter of 2003 compared to $39.9 million for the same period last year.
Pipelines – Gross operating margin from the Pipeline segment increased to $72.0 million for the second quarter compared to $32.2 million for the second quarter of 2002. Net Pipeline volumes for the second quarter increased 86% to 1,567,000 equivalent barrels per day (“BPDE”) from 841,000 BPDE for the same period in 2002.
The increase in Pipeline gross operating margin and volume was primarily attributable to the acquisition of the Mid-America and Seminole pipeline systems on July 31, 2002. These pipelines earned gross operating margin of $39.9 million on volumes of 759,000 barrels per day (“BPD”) in the second quarter of 2003. Volumes and margin for the second quarter were less than normal due to weak demand for NGLs and poor processing economics for a majority of the quarter, which caused natural gas processing plants in the Rocky Mountains to reduce the amount of NGLs extracted. This resulted in lower transportation volumes on both the Mid-America and Seminole pipeline systems. Net volumes on the two pipelines for the second quarter of 2003 were approximately 92,000 BPD, or 11%, below their historical second quarter of 2002.
Excluding volumes associated with the Mid-America and Seminole pipelines, NGL and petrochemical pipeline volumes for the second quarter of 2003 increased by 7%, or 37,000 BPD, versus the same period in 2002. Contributing to the increase in volumes and margin were greater volumes of NGLs imported through the partnership’s terminal on the Houston Ship Channel and the Channel Pipeline system and an increase in volumes on the Lou-Tex Propylene and Lou-Tex NGL pipelines.
Fractionation – Gross operating margin for the Fractionation segment increased to $35.9 million from $33.9 million for the second quarter of 2002. Gross operating margin from the NGL fractionation and butane isomerization businesses increased by a total of $6.2 million, which more than offset a decline in the gross operating margin in the propylene fractionation business.
NGL fractionation volumes decreased by approximately 36,000 BPD to 201,000 BPD due to weak demand for NGLs and poor processing economics that reduced the amount of NGLs extracted from natural gas and available for fractionation. The effect of the decrease in volumes on gross operating margin was more than offset by gains from the periodic measurement of mixed NGLs in storage pending fractionation and from higher in-kind fees at the Norco fractionator.
The butane isomerization business benefited from an increase in fees that more than offset the effect of a decrease in volumes. Butane isomerization volumes were 82,000 BPD in the second quarter of 2003 compared to 86,000 BPD in the same quarter of 2002.
During the second quarter of 2003, gross operating margin from the propylene fractionation business was $3.7 million lower than the second quarter of 2002 due to abnormally weak demand for polymer-grade propylene by the petrochemical industry and lower unit margins on spot market fractionation arrangements. Propylene fractionation volumes for the second quarters of both 2003 and 2002 were 58,000 BPD.
Processing – The Processing segment recorded gross operating margin of $2.7 million for the second quarter of 2003 compared to a loss of $1.2 million for the second quarter of 2002. Gross operating margin in 2002 included a $5.8 million charge for losses related to hedging activities, which were discontinued in 2002.
During the second quarter of 2003, weak demand for NGLs and unfavorable gas processing economics reduced equity NGL production from 74,000 BPD in the second quarter of 2002 to 47,000 BPD in the second quarter of 2003. At full extraction rates, equity NGL production would have been approximately 75,000 BPD.
“Thus far in the third quarter, we have seen a modest recovery in processing economics on the Gulf Coast, which has resulted in higher NGL extraction rates at some of our plants,” said Andras.
Octane Enhancement – Enterprise’s Octane Enhancement segment includes its one-third ownership in a facility that currently produces MTBE, a high-octane additive for motor gasoline. Gross operating margin for this segment for the second quarter of 2003 was a loss of $3.2 million compared to a profit of $2.9 million for the same period in 2002. Net volumes for this segment were 3,000 BPD versus 6,000 BPD for the second quarter of 2002. The decrease in margin and volumes for the second quarter of 2003 were primarily attributable to
a decrease in domestic demand for the additive due to the phase-out of MTBE from the motor gasoline pool in California and soft demand for reformulated motor gasoline in general.
“We are beginning to see the first signs of the long-expected phase-out of MTBE for which we have been planning since California first announced its intentions of replacing MTBE with ethanol in March 1999. We are working with our partners in this facility, Sunoco and Devon Energy, on a feasibility study to convert the plant to an alternative purpose that will provide our partnership with an attractive return on investment and a new source of sustainable cash flow. The most likely use of the facility will be for the production of alkylate or iso-octane. We believe these high-octane additives will be needed in greater demand by the motor gasoline industry to offset the deficiencies of ethanol in gasoline,” stated Andras.
“We will continue to produce MTBE when it is economical for the partnership to do so. While we do not expect the margins for this business to be as good as they were in 2002 and 2001, we believe there will be future opportunities to generate cash from this business,” continued Andras.
Gross operating margin represents operating income before depreciation, amortization, lease expense for which Enterprise does not have the payment obligation, general and administrative expenses and gain or loss on sale of assets. Enterprise’s equity earnings from unconsolidated affiliates are included in gross margin. Pipeline volumes expressed in terms of BPDE are on an energy equivalent basis where 3.8 MMBtu of natural gas is equivalent to one barrel of NGLs. We have reconciled gross operating margin (a non-GAAP liquidity measure) to operating income.
Several adjustments to net income are required to calculate distributable cash flow. These adjustments include: (1) the addition of non-cash expenses such as depreciation and amortization expense; (2) the addition of operating lease expenses for which the partnership does not have the payment obligation; (3) the addition of actual cash distributions received from unconsolidated affiliates less the related equity in income from unconsolidated affiliates; (4) other miscellaneous non-cash adjustments such as the addition of decreases or the subtraction of increases in the value of financial instruments related to hedging activities; and (5) the subtraction of sustaining capital expenditures. Distributable cash flow is before reserves established for the purpose of funding future expansion or sustaining capital expenditures; debt reduction and cash distributions to the limited partners and general partner. We have reconciled distributable cash flow (a non-GAAP liquidity measure) to cash flow from operating activities.
EBITDA is defined as net income plus interest expense, provision for income taxes and depreciation and amortization amounts. Our measure of adjusted EBITDA excludes equity in income (loss) from unconsolidated affiliates but includes cash distributions from such investments. We have reconciled EBITDA (a non-GAAP liquidity measure) to cash flow from operating activities.
Enterprise Products Partners L.P. is the second largest publicly traded midstream energy partnership with an enterprise value of approximately $6.5 billion. Enterprise is a leading North American provider of midstream energy services to producers and consumers of natural gas and natural gas liquids (“NGLs”). The Company’s services include natural gas transportation, processing and storage and NGL fractionation (or separation), transportation, storage and import/export terminaling.
Today, Enterprise will host a conference call to discuss second quarter earnings. The call will be broadcast live over the Internet at 10:00 a.m. Eastern Time and may be accessed by visiting the company’s website at www.epplp.com. Participants should access the “Investor Information” section of the website at least ten minutes prior to the start of the conference call to download and install any necessary audio software.
This press release contains various forward-looking statements and information that are based on the Company’s beliefs and those of its general partner, as well as assumptions made by and information currently available to the Company. 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 the Company for future operations, are intended to identify forward-looking statements. Although the Company and its general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither the Company 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, the Company’s actual results may vary materially from those the Company anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on the Company’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; |
| • | a reduction in demand for the Company's products by the petrochemical, refining or heating industries; |
| • | a decline in the volumes of NGLs delivered by the Company's facilities; |
| • | the failure of the Company's credit risk management efforts to adequately protect it against customer non-payment; |
| • | the failure to successfully integrate new acquisitions; and |
| • | terrorist attacks aimed at the Company's facilities. |
The Company has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Contact: Randy Burkhalter, Director of Investor Relations, Enterprise Products Partners L.P. (713) 880-6812, www.epplp.com
###
| Enterprise Products Partners L.P. | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Statement of Consolidated Operations - UNAUDITED | ||||||||||||||||||
| For the Three and Six Months Ended June 30, 2003 and 2002 | ||||||||||||||||||
| ($ in 000s, except per unit amounts) | ||||||||||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, | |||||||||||||||||
| 2003 |
2002 |
2003 |
2002 | |||||||||||||||
| Revenue | ||||||||||||||||||
| Revenue from consolidated operations | $ | 1,210,659 | $ | 786,257 | $ | 2,692,245 | $ | 1,448,311 | ||||||||||
| Total Revenue | 1,210,659 | 786,257 | 2,692,245 | 1,448,311 | ||||||||||||||
| Costs and Expenses: | ||||||||||||||||||
| Operating costs and expenses | 1,134,030 | 745,655 | 2,520,734 | 1,410,207 | ||||||||||||||
| Selling, general and administrative | 10,053 | 7,740 | 21,524 | 15,702 | ||||||||||||||
| Total Costs and Expenses | 1,144,083 | 753,395 | 2,542,258 | 1,425,909 | ||||||||||||||
| Equity (loss) in income of unconsolidated affiliates | (228 | ) | 7,068 | 1,393 | 16,295 | |||||||||||||
| Operating Income | 66,348 | 39,930 | 151,380 | 38,697 | ||||||||||||||
| Other Income (Expense): | ||||||||||||||||||
| Interest expense | (33,280 | ) | (19,032 | ) | (75,191 | ) | (37,545 | ) | ||||||||||
| Dividend income from unconsolidated affiliates | 1,794 | 1,242 | 4,395 | 2,196 | ||||||||||||||
| Interest income - other | 164 | 241 | 364 | 1,575 | ||||||||||||||
| Other, net | (126 | ) | 142 | (92 | ) | 224 | ||||||||||||
| Total Other Income (Expense) | (31,448 | ) | (17,407 | ) | (70,524 | ) | (33,550 | ) | ||||||||||
| Income before provision for taxes and minority interest | 34,900 | 22,523 | 80,856 | 5,147 | ||||||||||||||
| Provision for taxes | (476 | ) | - | (3,605 | ) | - | ||||||||||||
| Income before minority interest | 34,424 | 22,523 | 77,251 | 5,147 | ||||||||||||||
| Minority interest | (1,319 | ) | (203 | ) | (3,641 | ) | (30 | ) | ||||||||||
| Net income | $ | 33,105 | $ | 22,320 | $ | 73,610 | $ | 5,117 | ||||||||||
| Allocation of Net Income to: | ||||||||||||||||||
| Limited partners | $ | 28,028 | $ | 19,672 | $ | 64,396 | $ | 1,223 | ||||||||||
| General partner | $ | 5,077 | $ | 2,648 | $ | 9,214 | $ | 3,894 | ||||||||||
| Per Unit data (Fully Diluted): | ||||||||||||||||||
| Net income per Common, Subordinated & Special Units | $ | 0.14 | $ | 0.11 | $ | 0.32 | $ | 0.01 | ||||||||||
| Average LP Common, Subordinated & Special Units | ||||||||||||||||||
| Outstanding (000s) | 201,935 | 174,284 | 199,079 | 174,404 | ||||||||||||||
| Other Financial data: | ||||||||||||||||||
| Operating activities cash inflow (outflow) | $ | (18,516 | ) | $ | 55,156 | $ | 133,033 | $ | 45,183 | |||||||||
| Investing activities cash inflow (outflow) | (39,056 | ) | (35,170 | ) | (112,149 | ) | (431,655 | ) | ||||||||||
| Financing activities cash inflow (outflow) | 53,956 | (47,123 | ) | (15,728 | ) | 257,296 | ||||||||||||
| Distributable cash flow | 64,218 | 38,147 | 158,438 | 75,854 | ||||||||||||||
| Depreciation and amortization | 28,205 | 17,402 | 67,466 | 35,349 | ||||||||||||||
| Leases paid by EPCO | 2,274 | 2,273 | 4,547 | 4,578 | ||||||||||||||
| Distributions received from | ||||||||||||||||||
| unconsolidated affiliates | 5,239 | 14,675 | 20,865 | 29,113 | ||||||||||||||
| Non-cash income (loss) related to hedging | ||||||||||||||||||
| activities (mark-to-market valuations) | (5 | ) | 10,439 | 23 | (19,702 | ) | ||||||||||||
| Sustaining capital expenditures | 3,270 | 1,219 | 5,522 | 1,764 | ||||||||||||||
| Total capital expenditures | 30,662 | 9,643 | 54,497 | 26,755 | ||||||||||||||
| Investments in and advances to (from) | ||||||||||||||||||
| unconsolidated affiliates | 4,549 | (615 | ) | 25,058 | 10,137 | |||||||||||||
| Total debt principal outstanding at end of period | 1,879,000 | 1,222,000 | 1,879,000 | 1,222,000 | ||||||||||||||
| Enterprise Products Partners L.P. | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Data - UNAUDITED | ||||||||||||||||||
| For the Three and Six Months Ended June 30, 2003 and 2002 | ||||||||||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, | |||||||||||||||||
| 2003 |
2002 |
2003 |
2002 | |||||||||||||||
| Gross Operating Margin by Segment ($000s): | ||||||||||||||||||
| Pipelines | $ | 71,969 | $ | 32,190 | $ | 143,901 | $ | 58,230 | ||||||||||
| Fractionation | 35,871 | 33,853 | 64,918 | 64,858 | ||||||||||||||
| Processing | 2,685 | (1,182 | ) | 32,641 | (34,558 | ) | ||||||||||||
| Octane enhancement | (3,228 | ) | 2,877 | (6,669 | ) | 5,883 | ||||||||||||
| Other | (814 | ) | (834 | ) | (1,870 | ) | (1,225 | ) | ||||||||||
| Total gross operating margin | $ | 106,483 | $ | 66,904 | $ | 232,921 | $ | 93,188 | ||||||||||
| Depreciation and amortization | 27,844 | 16,963 | 55,502 | 34,199 | ||||||||||||||
| Retained lease expense, net | 2,274 | 2,273 | 4,547 | 4,578 | ||||||||||||||
| Loss (gain) on sale of assets | (36 | ) | (2 | ) | (32 | ) | 12 | |||||||||||
| Selling, general and administrative expenses | 10,053 | 7,740 | 21,524 | 15,702 | ||||||||||||||
| Operating income | $ | 66,348 | $ | 39,930 | $ | 151,380 | $ | 38,697 | ||||||||||
| Selected Volumetric Operating Data: | ||||||||||||||||||
| MBPD, net | ||||||||||||||||||
| NGL and petrochemical pipelines | 1,295 | 499 | 1,332 | 518 | ||||||||||||||
| NGL fractionation | 201 | 237 | 218 | 226 | ||||||||||||||
| Propylene fractionation | 58 | 58 | 59 | 55 | ||||||||||||||
| Isomerization | 82 | 86 | 81 | 80 | ||||||||||||||
| Equity NGL production | 47 | 74 | 51 | 78 | ||||||||||||||
| Octane enhancement | 3 | 6 | 3 | 5 | ||||||||||||||
| BBtus per day, net | ||||||||||||||||||
| Natural gas pipelines | 1,033 | 1,300 | 1,033 | 1,262 | ||||||||||||||
| Equivalent MBPD, net | ||||||||||||||||||
| NGL, petrochemical and natural gas pipelines | 1,567 | 841 | 1,604 | 850 | ||||||||||||||
| Enterprise Products Partners L.P. | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Unaudited GAAP Financial Measures to Our Non-GAAP Financial Measures - Part I | ||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, | |||||||||||||||||
| 2003 |
2002 |
2003 |
2002 | |||||||||||||||
| Reconciliation of Non-GAAP “Total Gross Operating Margin” to | ||||||||||||||||||
| GAAP “Operating Income” | ||||||||||||||||||
| Operating Income | $ | 66,348 | $ | 39,930 | $ | 151,380 | $ | 38,697 | ||||||||||
| Adjustments to derive Total Gross Operating Margin: | ||||||||||||||||||
| Depreciation and amortization in operating costs and expenses | 27,844 | 16,963 | 55,502 | 34,199 | ||||||||||||||
| Retained lease expense, net, in operating costs and expenses | 2,274 | 2,273 | 4,547 | 4,578 | ||||||||||||||
| Loss (gain) on sale of assets in operating costs and expenses | (36 | ) | (2 | ) | (32 | ) | 12 | |||||||||||
| Selling, general and administrative costs | 10,053 | 7,740 | 21,524 | 15,702 | ||||||||||||||
| Total Gross Operating Margin | $ | 106,483 | $ | 66,904 | $ | 232,921 | $ | 93,188 | ||||||||||
| Reconciliation of Non-GAAP “EBITDA” to GAAP “Net Income” and | ||||||||||||||||||
| GAAP “Operating Activities Cash Flows” | ||||||||||||||||||
| Net income | $ | 33,105 | $ | 22,320 | $ | 73,610 | $ | 5,117 | ||||||||||
| Adjustments to derive EBITDA: | ||||||||||||||||||
| Interest expense (including amortization component) | 33,280 | 19,032 | 75,191 | 37,545 | ||||||||||||||
| Provision for income taxes | 476 | - | 3,605 | - | ||||||||||||||
| Other depreciation and amortization | 27,872 | 16,968 | 55,551 | 34,213 | ||||||||||||||
| EBITDA | $ | 94,733 | $ | 58,320 | $ | 207,957 | $ | 76,875 | ||||||||||
| Reconciliation of “EBITDA” to “Operating Activities Cash Flows”: | ||||||||||||||||||
| Leases paid by EPCO, net (excluding minority interest portion) | 2,251 | 2,253 | 4,502 | 4,534 | ||||||||||||||
| Deferred income tax expense, net of provision for | ||||||||||||||||||
| current period income taxes | 2,255 | - | 1,859 | - | ||||||||||||||
| Changes in fair market value of financial instruments | 5 | (10,439 | ) | (23 | ) | 19,702 | ||||||||||||
| Minority interest | (625 | ) | 203 | 1,696 | 30 | |||||||||||||
| Interest expense, net of amortization component | (32,947 | ) | (18,598 | ) | (63,276 | ) | (36,409 | ) | ||||||||||
| Equity in income of unconsolidated affiliates | 228 | (7,068 | ) | (1,393 | ) | (16,295 | ) | |||||||||||
| Distributions received from unconsolidated affiliates | 5,239 | 14,675 | 20,865 | 29,113 | ||||||||||||||
| Net effect of changes in operating accounts | (89,619 | ) | 15,812 | (39,122 | ) | (32,379 | ) | |||||||||||
| Loss (gain) on sale of assets | (36 | ) | (2 | ) | (32 | ) | 12 | |||||||||||
| Operating Activities Cash Flows | $ | (18,516 | ) | $ | 55,156 | $ | 133,033 | $ | 45,183 | |||||||||
| Enterprise Products Partners L.P. | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Unaudited GAAP Financial Measures to Our Non-GAAP Financial Measures - Part II | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, | |||||||||||||
| 2003 |
2002 |
2003 |
2002 | |||||||||||
| Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP | ||||||||||||||
| “Net Income” and GAAP “Operating Activities Cash Flows” | ||||||||||||||
| Net income | $ | 33,105 | $ | 22,320 | $ | 73,610 | $ | 5,117 | ||||||
| Adjustments to derive Distributable Cash Flow: | ||||||||||||||
| Leases paid by EPCO, net (excluding minority interest portion) | 2,251 | 2,253 | 4,502 | 4,534 | ||||||||||
| Minority interest in leases paid by EPCO | 23 | 20 | 45 | 44 | ||||||||||
| Equity in income of unconsolidated affiliates | 228 | (7,068 | ) | (1,393 | ) | (16,295 | ) | |||||||
| Distributions received from unconsolidated affiliates | 5,239 | 14,675 | 20,865 | 29,113 | ||||||||||
| Loss (gain) on sale of assets | (36 | ) | (2 | ) | (32 | ) | 12 | |||||||
| Proceeds from sale of assets | 74 | 2 | 108 | 12 | ||||||||||
| Sustaining capital expenditures | (3,270 | ) | (1,219 | ) | (5,522 | ) | (1,764 | ) | ||||||
| Changes in fair market value of financial instruments | 5 | (10,439 | ) | (23 | ) | 19,702 | ||||||||
| Amortization in interest expense | 333 | 434 | 11,915 | 1,136 | ||||||||||
| Other depreciation and amortization | 27,872 | 16,968 | 55,551 | 34,213 | ||||||||||
| Other | (1,606 | ) | 203 | (1,188 | ) | 30 | ||||||||
| Distributable Cash Flow | 64,218 | 38,147 | 158,438 | 75,854 | ||||||||||
| Reconciliation of “Distributable Cash Flow” to | ||||||||||||||
| “Operating Activities Cash Flows”: | ||||||||||||||
| Sustaining capital expenditures | 3,270 | 1,219 | 5,522 | 1,764 | ||||||||||
| Deferred income tax expense | 2,731 | - | 5,464 | - | ||||||||||
| Proceeds from sale of assets | (74 | ) | (2 | ) | (108 | ) | (12 | ) | ||||||
| Minority interest in income (loss) not included in | ||||||||||||||
| calculation of Distributable Cash Flow | 981 | - | 2,884 | - | ||||||||||
| Minority interest of General Partner in Operating | ||||||||||||||
| Partnership's allocation of leases paid by EPCO | (23 | ) | (20 | ) | (45 | ) | (44 | ) | ||||||
| Net effect of changes in operating accounts not | ||||||||||||||
| included in calculation of Distributable Cash Flow | (89,619 | ) | 15,812 | (39,122 | ) | (32,379 | ) | |||||||
| Operating Activities Cash Flows | $ | (18,516 | ) | $ | 55,156 | $ | 133,033 | $ | 45,183 | |||||