epdform8k_042709.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): April 27, 2009
ENTERPRISE
PRODUCTS PARTNERS L.P.
(Exact
name of registrant as specified in its charter)
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Delaware
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1-14323
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76-0568219
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(State
or Other Jurisdiction of
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(Commission
File Number)
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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1100
Louisiana, 10th
Floor, Houston, Texas
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77002
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
Telephone Number, including Area Code: (713) 381-6500
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
¨ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02. Results of Operations and Financial Condition.
On April
27, 2009, Enterprise Products Partners L.P. (“Enterprise”) issued a press
release announcing its financial and operating results for the three months
ended March 31, 2009, 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
Our press
release and/or the webcast conference call discussion include the non-generally
accepted accounting principle (“non-GAAP”) financial measures of gross operating
margin, distributable cash flow and Adjusted EBITDA. The press
release provides reconciliations of these non-GAAP financial measures to their
most directly comparable financial measures 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 measure of financial
performance calculated and presented in accordance with GAAP. Our
non-GAAP financial measures may not be comparable to similarly-titled measures
of other companies because they may not calculate such measures in the same
manner as we do.
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 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: (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, cumulative effect of changes
in accounting principles, extraordinary charges and earnings attributable to
noncontrolling interests. 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 equity earnings from 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 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 standalone
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 attributable to
Enterprise Products Partners L.P. adjusted for:
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the
addition of depreciation, amortization and accretion
expense;
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the
addition of operating lease expense for which we do not have the payment
obligation;
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the
addition of cash distributions received from unconsolidated affiliates,
less equity earnings from unconsolidated
affiliates;
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the
subtraction of sustaining capital expenditures and cash payments to settle
asset retirement obligations;
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the
addition of losses or subtraction of gains relating to asset sales and
related transactions;
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the
addition of cash proceeds from asset sales, the return of an investment in
an unconsolidated affiliate or related
transactions;
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the
addition of losses or subtraction of gains on the monetization of
financial instruments recorded in accumulated other comprehensive income
(loss), if any, less related amortization of such amounts to
earnings;
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the
addition of net income attributable to the noncontrolling interest
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
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the
addition or subtraction of other miscellaneous non-cash amounts (as
applicable) that affect net income or loss for the
period.
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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.
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 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 net cash flows provided by operating
activities.
Adjusted
EBITDA. We define Adjusted EBITDA as net income or loss
attributable to Enterprise Products Partners L.P. less equity earnings from
unconsolidated affiliates; plus distributions received from unconsolidated
affiliates, interest expense, provision for income taxes and depreciation,
amortization and accretion expense. Adjusted EBITDA is commonly used
as a supplemental financial measure by management and by external users of our
financial statements, such as investors, commercial banks, research analysts and
rating agencies, to assess:
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the
financial performance of our assets without regard to financing methods,
capital structures or historical cost
basis;
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the
ability of our assets to generate cash sufficient to pay interest cost and
support our indebtedness; and
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the
viability of projects and the overall rates of return on alternative
investment opportunities.
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Since Adjusted EBITDA excludes some,
but not all, items that affect net income or loss attributable to Enterprise
Products Partners L.P. and because these measures may vary among other
companies, the Adjusted 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 Adjusted EBITDA is net cash flows provided
by operating activities.
Presentation
of Noncontrolling Interests in Consolidated Financial Statements
Effective
January 1, 2009, we adopted the provisions of Statement of Financial Accounting
Standards (“SFAS”) 160, Noncontrolling Interests in Consolidated Financial
Statements. SFAS 160 established accounting and reporting standards
for noncontrolling interests, which were previously identified as minority
interest in our financial statements. This new standard requires,
among other things, that (i) noncontrolling interests be presented as a
component of partners’ equity on our consolidated balance sheet (i.e.,
elimination of the “mezzanine” presentation previously used for minority
interest); and (ii) elimination of minority interest amounts as a deduction in
deriving net income or loss and, as a result, that net income or loss be
allocated between our unitholders and general partner on one hand and
noncontrolling interests on the other. Earnings per unit
amounts are not affected by these changes. The consolidated financial
statements accompanying the press release reflect our adoption of SFAS 160 and
the required presentation of noncontrolling interests.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit
No.
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Description
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99.1
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Enterprise
Products Partners L.P. press release dated April 27,
2009.
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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
PRODUCTS PARTNERS L.P.
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By:
Enterprise Products GP, LLC,
its
General Partner
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Date:
April 27, 2009
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By:
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/s/
Michael J. Knesek
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Name:
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Michael
J. Knesek
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Title:
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Senior
Vice President, Controller and Principal
Accounting
Officer of Enterprise Products GP,
LLC
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Exhibit
Index
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Exhibit
No.
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Description
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99.1
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Enterprise
Products Partners L.P. press release dated April 27,
2009.
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5