Enterprise Announces Record Earnings and Cash Flow; Quarterly Earnings Increase Over 340%.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--Jan. 27, 2000 Enterprise Products Partners L.P. (NYSE NYSE See: New York Stock Exchange :EPD EPD expected progeny difference. ) today announced record earnings and cash flow for both the fourth quarter and full year 1999. Net income for the fourth quarter of 1999 was $54.3 million, or $0.66 per unit on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, compared to net income of $12.3 million, or $0.18 per unit on a fully diluted basis, for the fourth quarter of 1998. The average number of units outstanding for the fourth quarter of 1999 was 81.2 million, versus 67.0 million for the fourth quarter of 1998. Net income for the full year 1999 was $120.3 million, or $1.64 per unit, compared to an adjusted $37.3 million, or $0.62 per unit, for 1998. Included in net income for 1999 was a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for the cumulative effect of a change in accounting principle related to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of deferred start-up Start-up The earliest stage of a new business venture. costs of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.5 million, or $0.02 per unit. Reported net income for 1998 was $10.1 million, or a $0.17 per unit, which includes a $27.2 million extraordinary charge for the prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of debt. The average number of units outstanding for 1999 was 72.8 million versus 60.1 million for 1998. Enterprise generated the highest level of distributable cash flow in the Company's history during the fourth quarter of 1999. Distributable cash flow for the fourth quarter was $62.3 million, or $1.37 per unit based on common units and $0.93 per unit on both common and subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. units. This provided cash flow coverage of the $0.50 per unit quarterly distribution of 274% on common units only and 186% on common and subordinated units. The 14.5 million Special Units outstanding were not considered as they do not participate in distributions until their conversion into common units, which will occur over the next three years beginning Aug. 1, 2000. Distributable cash flow generated for the full year of 1999 was $164.3 million, or $3.61 per unit on common units only and $2.45 per unit on common and subordinated units. This provides cash distribution coverage on common units of 195% and coverage of common and subordinated units of 133%. &uot;Enterprise had a tremendous quarter and year. During the year, we registered strong growth in earnings and cash flow and we have significantly broadened our platform in the NGL NGL - A dialect of IGL. industry from which to pursue other midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. investment opportunities,&uot; stated O.S. &uot;Dub&uot; Andras Andras demon of discord. [Occultism: Jobes, 93] See : Discord , president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Enterprise. Andras continued, &uot;We saw a substantial expansion of cash flows from our fee-based businesses as the result of recent acquisitions and new projects that began commercial operations during the year. Also, our natural gas processing Natural gas processing plants, or fractionators, are used to purify the raw natural gas extracted from underground gas fields and brought up to the surface by gas wells. The processed natural gas, used as fuel by residential, commercial and industial consumers, is almost pure segment was a significant contributor as the result of increased production, which surpassed our expectations, and a strong price environment that favored the extraction extraction /ex·trac·tion/ (eks-trak´shun) 1. the process or act of pulling or drawing out. 2. the preparation of an extract. of natural gas liquids from natural gas.&uot; &uot;To provide our unitholders with a distribution that is stable and not impacted by quarterly changes in commodity prices or the conversion of the Special Units, our policy will be to establish our distribution rate based principally on the cash flows generated from our large foundation of fee businesses and considering all partnership units outstanding. The expansion of our fee business cash flows supported the 11% increase in our quarterly distribution rate to $0.50 per unit that will be paid in February February: see month. ,&uot; Andras said. &uot;We will reinvest re·in·vest tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. the cash generated in excess of the distribution requirement in the growth of the company through capital investment and acquisitions or paydown Paydown A payment made towards an outstanding loan balance. Notes: Every time you make a mortgage payment you are "paying down" your loan. See also: Loan, Mortgage, Principal paydown In a corporate or U.S. debt. Our goal is to grow the fee-based component of the company which would provide the basis for future distribution increases,&uot; stated Andras. Revenues for the fourth quarter of 1999 more than tripled to $575.1 million from $181.0 million for the fourth quarter of 1998. For the full year of 1999, revenues were $1.346 billion versus $755 million for 1998. Gross margin increased 213% during the fourth quarter to $73.2 million from $23.4 million during 1998. For the full year 1999, gross margin was $179.2 million versus $99.6 million in 1998, an 80% increase. The growth in gross margin both for the quarter and the full year was due to substantial increases in the Fractionation fractionation /frac·tion·a·tion/ (frak?shun-a´shun) 1. in radiology, division of the total dose of radiation into small doses administered at intervals. 2. and Processing segments of the company. Gross margin represents earnings before depreciation, lease expense obligations retained by the Company's largest unitholder, Enterprise Products Company (&uot;EPCO&uot;), and general and administrative expenses. Enterprise's equity earnings from unconsolidated affiliates are included in gross margin. To better reflect the performance and business activities of the Company, Enterprise's financial reporting will be separated into five operating segments effective with results of the fourth quarter. The five segments and a description of the businesses included in each are shown below.
Operating Segment: Description:
Fractionation NGL fractionation, polymer grade propylene
fractionation and butane isomerization
(converting normal butane into isobutane
and fractionating to high purity) services
Pipeline Pipeline, storage and import/export terminal
services
Processing Natural gas processing and NGL merchant
businesses
Octane Enhancement The company's 33 1/3% ownership interest in
a facility that produces motor gasoline
additives to enhance octane, currently
producing MTBE
Other Fee-based marketing services, other plant
support functions and eliminations
Fractionation -- Gross operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for Fractionation during the fourth quarter of 1999 increased 127% to $29.8 million from $13.2 million in the fourth quarter of 1998. This growth was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to earnings from facilities acquired during the year, a 22% increase in propylene propylene /pro·pyl·ene/ (pro´pi-len) a gaseous hydrocarbon, CH3CHdbondCH2. propylene glycol a colorless viscous liquid used as a humectant and solvent in pharmaceutical preparations. production volumes and a 4% increase in butane butane (by  `tān), C4H10, gaseous alkane, a hydrocarbon that is obtained from natural gas or by refining petroleum. isomerization isomerization /isom·er·iza·tion/ (i-som?er-i-za´shun) the process whereby any isomer is converted into another isomer, usually requiring special conditions of temperature, pressure, or catalysts. volumes.For the full year 1999, Fractionation gross margin was $106.3 million compared to $66.6 million for 1998, an increase of 60%. This improvement was primarily attributable to a recovery in margins and volume growth in the isomerization and propylene businesses and from assets acquired during 1999. Pipelines -- Pipeline's gross margin in the current fourth quarter was $12.9 million, an increase of 62% over $8.0 million in 1998. For the full year 1999, gross margin from Pipeline was $27.0 million versus $27.3 million in the prior year. For the quarter, margin improvement was led by 156% volume growth on the Louisiana Louisiana (ləwē'zēăn`ə, l ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. NGL
pipeline system and equity earnings from the Tri-States and Wilprise
NGL pipelines which began commercial operations during 1999.Processing -- Processing had a breakthrough fourth quarter with a gross margin of $26.8 million compared to a loss of $0.4 million in 1998. Enterprise's equity NGL production averaged 68,000 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. and processing margins benefited from a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing environment where the ratio of crude oil to natural gas prices averaged 9.9 during the quarter. For 1999, gross margin from Processing, which represents five months of earnings from the processing assets acquired during 1999, was $36.8 million versus a loss of $0.7 million in 1998. Several adjustments to net income are required to calculate distributable cash. These adjustments include the addition of (1) non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) such as depreciation and amortization expense; (2) lease expenses for which the payment obligation was retained by EPCO EPCO Explorer Pipeline Company, Inc ; (3) principal payments on notes receivable held by the company; (4) actual cash distributions from unconsolidated affiliates as compared to book earnings, and (5) other miscellaneous adjustments, less maintenance capital expenditures. Enterprise Products Partners L.P., with an enterprise value of approximately $2 billion, is one of the leading midstream energy service companies in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , providing complete services of processing, fractionation, transportation and storage to producers of NGLs and consumers of NGL products. Enterprise has ownership interests in and operates some of the largest natural gas processing and NGL fractionation facilities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , the largest commercial isobutane isobutane (ī'səby `tān): see butane. complex in the United States, two propylene fractionation
facilities, an NGL import/export terminal, approximately 43.7 million
barrels of net storage capacity, a 2,400-mile network of pipelines and
an MTBE MTBE Methyl-tert-butyl-ether Surgery An aliphatic ether that rapidly dissolves cholesterol stones in vivo, introduced under local anesthesia via a percutaneous transhepatic cholecystectomy catheter, as a non-invasive method for treating gallstones; after injection, production facility, all located on the U.S. Gulf Coast. The
Gulf Coast accounts for approximately 55% of U.S. NGL production and
75% of U.S. demand for NGLs.This press release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 21E of the Securities Exchange Act of 1934 based on the beliefs of the company, as well as assumptions made by, and information currently available to, management. Although Enterprise believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
Enterprise Products Partners L.P.
Statement of Consolidated Operations - UNAUDITED
For the three months and year ended December 31, 1999
($ in 000s, except per unit amounts)
For the three months ended
--------------------------
Dec. 31, Dec. 31, % Increase
1999 1998 (Decrease)
---------- ---------- -----------
Revenue
Revenue from
consolidated operations $569,187 $176,199 223.0%
Equity income in
unconsolidated affiliates 5,886 4,847 21.4%
-------- --------
Total Revenue 575,073 181,046 217.6%
Costs and Expenses:
Operating costs
and expenses 511,956 164,732 210.8%
Selling, general
and administrative 3,300 2,854 15.6%
-------- --------
Total Costs and Expenses 515,256 167,586 207.5%
-------- --------
Operating Income 59,817 13,460 344.4%
Other Income (Expense):
Interest expense (6,922) (1,392) 397.3%
Interest income
from unconsolidated
affiliates 571 469 21.7%
Dividend income
from unconsolidated
affiliates 3,435 -- NM
Interest income - other (228) 127 -279.8%
Other, net (1,776) (191) 830.1%
-------- --------
Total Other
Income (Expense) (4,922) (987) 398.7%
-------- --------
Income before
extraordinary item and
minority interest 54,895 12,473 340.1%
Extraordinary
charge on early
extinguishment of debt NM
-------- --------
Income before
minority interest 54,895 12,473 NM
Minority interest (554) (125) NM
-------- --------
Net income $54,341 $12,348 NM
======== ========
Allocation of Net Income to:
Limited partners $53,798 $12,225 NM
General partner $543 $123 NM
Per Unit data (Diluted):
Net income per
Common, Subordinated &
Special Units $0.66 $0.18 NM
Average LP Common,
Subordinated &
Special Units
Outstanding (000s) 81,195.6 66,962.8
Other Financial data:
Depreciation and
Amortization $8,034 $4,398
Leases paid by EPCO $3,327 $683
Collection of
notes receivable
from unconsolidated
affiliates $3,260 $3,686
Distributions
from or (cash calls to)
unconsolidated affiliates $1,401 $2,516
Maintenance capital
expenditures $774 $2,101
Total Capital Expenditures $10,861 $1,201
Investments in and advances to
unconsolidated affiliates $3,427 $6,854
Inventory balance at end
of period $46,131 $17,574
Total Debt balance at end
of period $295,000 $90,000
For the year ended
--------------------
Dec. 31, Dec. 31, % Increase
1999 1998 (Decrease)
--------- ---------- ------------
Revenue
Revenue from
consolidated operations 1,332,979 $738,902 80.4%
Equity income in
unconsolidated affiliates 13,477 15,671 -14.0%
--------- --------
Total Revenue 1,346,456 754,573 78.4%
Costs and Expenses:
Operating costs
and expenses 1,200,206 686,160 74.9%
Selling, general
and administrative 12,500 18,216 -31.4%
--------- --------
Total Costs and Expenses 1,212,706 704,376 72.2%
--------- --------
Operating Income 133,750 50,197 166.5%
Other Income (Expense):
Interest expense (14,917) (14,696) 39.9%
Interest income
from unconsolidated
affiliates 1,667 809 106.0%
Dividend income
from unconsolidated
affiliates 3,435 NM
Interest income - other 886 772 14.7%
Other, net (3,298) 273 -1308.2%
--------- --------
Total Other
Income (Expense) (12,229) (12,842) -4.8%
--------- --------
Income before extraordinary
item and minority interest 121,521 37,355 225.3%
Extraordinary
charge on early
extinguishment of debt (27,176) NM
--------- --------
Income before
minority interest 121,521 10,179 NM
Minority interest (1,226) (102) NM
--------- --------
Net income $120,295 $10,077 NM
========= ========
Allocation of Net Income to:
Limited partners $119,092 $9,976 NM
General partner $1,203 $101 NM
Per Unit data (Diluted):
Net income per
Common, Subordinated &
Special Units $1.64 $0.17 NM
Average LP
Common, Subordinated &
Special Units
Outstanding (000s) 72,788.5 60,124.4
Other Financial data:
Depreciation and
Amortization $25,314 $19,194
Leases paid by EPCO $13,309 $4,010
Collection of
notes receivable
from unconsolidated
affiliates $19,979 $7,228
Distributions
from or (cash calls to)
unconsolidated
affiliates $6,008 $9,117
Maintenance
capital expenditures $2,440 $7,670
Total Capital
Expenditures $21,464 $8,360
Investments in
and advances to
unconsolidated
affiliates $61,887 $26,842
Inventory balance at end
of period $46,131 $17,574
Total Debt balance at end
of period $295,000 $90,000
NM - Not meaningful.
Enterprise Products Partners L.P.
Operating Data by Segment - UNAUDITED
For the three months and year ended December 31, 1999
$ in 000s
For the three months ended
----------------------------------
Dec. 31, Dec. 31, % Increase
1999 1998 (Decrease)
--------- ---------- -----------
Gross Operating
Margin by Segment:
Fractionation $29,811 $13,153 126.6%
Pipeline 12,859 7,962 61.5%
Processing 26,807 (371) NM
Octane Enhancement 3,427 3,191 7.4%
Other 257 (537) NM
--------- ---------
Total Gross
Operating Margin 73,161 23,400 212.7%
Depreciation 7,467 3,928 90.1%
Retained Lease
Expense, net 2,578 3,158 -18.4%
General and
Administrative
Expense 3,300 2,854 15.6%
--------- ---------
Operating Income $59,817 $13,460 344.4%
========= ========= =======
Operating Volume
Data - 000s of
Barrels per Day:
Fractionation:
Mont Belvieu NGL
Fractionation 161 173 -6.8%
Mont Belvieu
Isomerization 76 73 4.3%
Mont Belvieu
Propylene Production 31 25 22.2%
Mont Belvieu
DIB Processing 43 44 -3.2%
Norco Fractionation 48 -- NM
Pipeline:
Oil Tanking
Import Terminal 7 6 16.1%
Channel Pipeline 112 101 10.6%
Louisiana Pipeline
System 118 46 155.6%
Chunchula Pipeline
System 5 4 31.2%
Processing:
Gas Processing
Plants (equity prod) 68 -- NM
Octane Enhancement:
MTBE Production 16 16 -1.6%
Average Benchmark
Commodity Prices:
------------------
Natural Gas
Henry Hub Avg
Daily Prices
($/MMBtu) $2.48 $1.90 30.5%
Crude Oil
Cushing Avg
Daily Prices
($/Barrel) $24.56 $12.87 90.8%
Natural Gas
Liquids
Mont Belvieu
Avg. Daily
Prices
($/Barrel) $17.03 $8.44 101.8%
For the year ended
----------------------------------
Dec. 31, Dec. 31, % Increase
1999 1998 (Decrease)
--------- ---------- -----------
Gross Operating
Margin by Segment:
Fractionation $106,266 $66,627 59.5%
Pipeline 27,037 27,334 -1.1%
Processing 36,799 (652) NM
Octane Enhancement 8,183 9,800 -16.5%
Other 908 (3,484) NM
--------- --------
Total Gross
Operating Margin 179,195 99,626 79.9%
Depreciation 22,449 18,579 20.8%
Retained Lease
Expense, net 10,496 12,635 -16.9%
General and
Administrative
Expense 12,500 18,216 -31.4%
--------- --------
Operating Income $133,750 $50,197 166.5%
========= ========
Operating Volume
Data - 000s of
Barrels per Day:
Fractionation:
Mont Belvieu NGL
Fractionation 157 191 -18.0%
Mont Belvieu
Isomerization 74 67 9.8%
Mont Belvieu
Propylene Production 28 26 6.4%
Mont Belvieu
DIB Processing 24 34 -29.0%
Norco Fractionation 48 -- NM
Pipeline:
Oil Tanking
Import Terminal 14 31 -55.7%
Channel Pipeline 99 107 -7.4%
Louisiana Pipeline
System 104 40 159.1%
Chunchula Pipeline
System 5 5 6.1%
Processing:
Gas Processing
Plants (equity prod) 67 -- NM
Octane Enhancement:
MTBE Production 14 14 -1.0%
Average Benchmark
Commodity Prices:
Natural Gas
Henry Hub Avg
Daily Prices
($/MMBtu) $2.27 $2.08 9.1%
Crude Oil
Cushing Avg
Daily Prices
($/Barrel) $19.29 $14.41 33.9%
Natural Gas
Liquids
Mont Belvieu
Avg. Daily
Prices
($/Barrel) $13.18 $9.47 39.2%
NM - Not meaningful.
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