Enterprise Reports Second Quarter 2003 Results.Energy Editors/Business Editors HOUSTON--(BUSINESS WIRE)--July 31, 2003 Enterprise Products Partners L.P. (NYSE NYSE See: New York Stock Exchange :EPD EPD expected progeny difference. ) today announced its financial results for the second quarter ending June June: see month. 30, 2003. Net income for the second quarter of 2003 increased to $33.1 million, or $0.14 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 $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 de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. for the second quarter of 2003 on common and subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. 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 Aug. 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 Andras demon of discord. [Occultism: Jobes, 93] See : Discord , president and chief executive officer of Enterprise. "The combination of a severe decrease in the demand for NGLs and 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. by the petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. 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 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 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 irrespective of prep. Without consideration of; regardless of. irrespective of preposition despite the timing of improvements in the general economy. In fact, preliminary information for July July: see month. indicates that the petrochemical industry's demand for ethane ethane (ĕth`ān), CH3CH3, gaseous hydrocarbon. It is a continuous-chain alkane. As a constituent of natural gas, it is used for fuel. It can be prepared by cracking and fractional distillation of petroleum. and propane propane, CH3CH2CH3, colorless, gaseous alkane. It is readily liquefied by compression and cooling. It melts at −189.9°C; and boils at −42.2°C;. increased by approximately 64,000 BPD Borderline personality disorder (BPD) A pattern of behavior characterized by impulsive acts, intense but chaotic relationships with others, identity problems, and emotional instability. , 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 rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective with improvements in NGL NGL - A dialect of IGL. 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 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 deepwater Deepwater or Deep Water may refer to:
Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east and the Rocky Mountains Rocky Mountains, major mountain system of W North America and easternmost belt of the North American cordillera, extending more than 3,000 mi (4,800 km) from central N.Mex. to NW Alaska; Mt. Elbert (14,431 ft/4,399 m) in Colorado is the highest peak. ," 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 Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: 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 Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. 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 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. ("BPDE BPDE Benzo A-Pyrene-Diol-Epoxide ") from 841,000 BPDE for the same period in 2002. The increase in Pipeline gross operating margin and volume was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the acquisition of the Mid-America and Seminole Seminole, Native North Americans whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). They separated (their name means "separatist") from the Creek in the early 18th cent. 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 The Houston Ship Channel in Houston, Texas is part of the Port of Houston—one of the United States's busiest sea ports. The channel is a conduit between the continental interior and the Gulf of Mexico for both petrochemical products and Midwestern grain. and the Channel Pipeline system and an increase in volumes on the Lou-Tex Propylene and Lou-Tex NGL pipelines. 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. - 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 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. 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 in-kind adj. Given in goods, commodities, or services rather than money: cash and in-kind benefits. 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 ab·nor·mal adj. Not typical, usual, or regular; not normal; deviant. [Alteration (influenced by ab-1) of obsolete anormal, from Medieval Latin 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 dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: 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 extraction /ex·trac·tion/ (eks-trak´shun) 1. the process or act of pulling or drawing out. 2. the preparation of an extract. 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 oc·tane n. 1. Any of various isomeric paraffin hydrocarbons with the formula C8H18, found in petroleum and used as a fuel and solvent. 2. An octane number. Enhancement - Enterprise's Octane Enhancement segment includes its one-third ownership in a facility that currently produces 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, , a high-octane high-oc·tane adj. 1. Having a high octane number and thus reducing knock and increasing efficiency in high-performance engines: high-octane gas. 2. additive additive In foods, any of various chemical substances added to produce desirable effects. Additives include such substances as artificial or natural colourings and flavourings; stabilizers, emulsifiers, and thickeners; preservatives and humectants (moisture-retainers); and for motor gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by . 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 Noun 1. phase-out - the act or instance of a planned discontinuation discontinuance, discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) of MTBE from the motor gasoline pool in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). 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 ethanol (ĕth`ənōl') or ethyl alcohol, CH3CH2OH, a colorless liquid with characteristic odor and taste; commonly called grain alcohol or simply alcohol. in March 1999. We are working with our partners in this facility, Sunoco and Devon Energy Devon Energy Corporation (NYSE: DVN), headquartered in downtown Oklahoma City, Oklahoma, USA, is one of the world’s leading independent oil and gas exploration and production companies. , on a feasibility study "A Feasibility Study" is an episode of the original The Outer Limits television show. It first aired on 13 April, 1964, during the first season. It was remade in 1997 as part of the revived The Outer Limits series with a minor title change. 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 alkylate to treat with an alkylating agent. 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 rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. 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 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) the addition of operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. 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 subtraction, fundamental operation of arithmetic; the inverse of addition. If a and b are real numbers (see number), then the number a−b is that number (called the difference) which when added to b (the subtractor) equals 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 (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become 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 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. energy partnership with an enterprise value of approximately $6.5 billion. Enterprise is a leading North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at 10:00 a.m. Eastern Time and may be accessed by visiting the company's Web site at www.epplp.com. Participants should access the "Investor Information" section of the Web site at least ten minutes prior to the start of the conference call to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. This press release contains various 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. 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 ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , 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 refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar 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 non-payment Noun failure to pay money owed non-payment n → Nichtzahlung f, Zahlungsverweigerung f non-payment n ; -- 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.
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 For the Six Months
Ended June 30, 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 For the Six Months
Months Ended Ended
June 30, 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
(Dollars in thousands)
For the Three
Months Ended For the Six Months
June 30, 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
========= ======== ========= ========
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
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