Enterprise Reports Third Quarter 2003 Results.Energy Editors/Business Editors HOUSTON--(BUSINESS WIRE)--Nov. 3, 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 three and nine months ended Sept. 30, 2003. Enterprise reported adjusted net income for the third quarter of 2003 of $19.2 million, or $0.07 per unit, in line with the Partnership's earnings guidance issued on Oct. 9, 2003. Adjusted net income for the third quarter of 2003 excludes 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. of $22.5 million for the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of the book value of the Partnership's ownership interest in an 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 production facility. Including this charge, Enterprise reported a net loss for the third quarter of 2003 of $3.3 million, or a loss of $0.04 per unit, compared to net income of $34.9 million, or $0.18 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, for the third quarter of 2002. For the first nine months of 2003, excluding the impairment charge incurred in the third quarter, adjusted net income was $92.8 million, or $0.39 per unit. Including the impairment charge, reported net income was $70.3 million, or $0.28 per unit on a fully diluted basis, versus reported net income of $40.0 million, or $0.19 per unit, for the same period in 2002. Distributable Cash Flow for the third quarter of 2003 was $41.5 million compared to $60.6 million in the third quarter of 2002. For the first nine months of 2003, Distributable Cash Flow was $200.0 million versus Distributable Cash Flow of $136.5 million for the comparable period in 2002. "As we previously announced, the third quarter was a difficult quarter for our partnership due to weak 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. (the most prevalent prevalent widespread occurrence. NGL NGL - A dialect of IGL. product) as a result of the prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. recession in the manufacturing sector and higher natural gas prices," said O.S. "Dub" Andras Andras demon of discord. [Occultism: Jobes, 93] See : Discord , president and chief executive officer of Enterprise. "We believe business conditions hit a low point in June June: see month. and July July: see month. and the improvement we saw in August and September September: see month. has continued into October October: see month. and November November: see month. . "It appears that demand for ethane 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 bottomed out in June and July at an average of 574,000 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. , which was 23% below the five-year average of 750,000 barrels per day. Average demand for August, September and October has increased to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 700,000 barrels per day. As a result of increased demand for ethane and a moderation in natural gas prices, the indicative indicative: see mood. gross processing spread on the U.S. Gulf Coast for the month of October averaged approximately $0.15 per gallon gallon: see English units of measurement. ," stated Andras. "We are encouraged by the improvements we have seen in our businesses over the last few months. While we have not yet returned to a normalized level of business activity, we do believe our partnership's financial results will improve with the overall growth in the U.S. economy and the manufacturing sector. Our focus is to manage through the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. challenges associated with this business cycle while positioning our partnership to benefit from future growth opportunities that will create long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. value for our partnership and an attractive total return for our investors," said Andras. Enterprise reported revenue of $1.2 billion for the third quarter of 2003 compared to $943.3 million of revenue 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: for the third quarter of 2003 was $68.5 million, which includes the $22.5 million non-cash impairment charge related to the octane enhancement facility. Gross operating margin for the third quarter of 2002 was $107.2 million. 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. for the third quarter of 2003 was $30.6 million, which also includes the $22.5 million impairment charge. Operating income was $68.3 million for the third quarter of 2002. "Our financial results for the third quarter of 2003 were primarily affected by lower volumes and gross operating margin from our 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. pipelines, lower unit margins in our NGL marketing business and lower gross operating margin from 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 activities," stated Andras. Pipelines -- Gross operating margin from the Pipeline segment for the third quarter of 2003 increased to $66.6 million compared to $63.9 million for the same period in 2002. Net Pipeline segment volumes during the third quarter of 2003 were 1,678,000 equivalent barrels per day ("BPDE BPDE Benzo A-Pyrene-Diol-Epoxide ") compared to 1,682,000 BPDE for the third quarter of 2002. The increase in gross operating margin was primarily due to a 141,000 barrel barrel: see English units of measurement. per day ("BPD Borderline personality disorder (BPD) A pattern of behavior characterized by impulsive acts, intense but chaotic relationships with others, identity problems, and emotional instability. ") aggregate increase in NGL import volumes during the third quarter of 2003, which utilized Enterprise's import facility 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 related Channel pipeline system. Volumes also increased by 38,000 BPD 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. Pipeline System and 25,000 BPD on the Port Neches Port Neches (nĕch`ĭz), city (1990 pop. 12,974), Jefferson co., SE Tex., on the Neches River; inc. 1927. It is an oil-shipping port on the deepwater Sabine-Neches Canal. isobutane isobutane (ī'səby`tān): see butane. pipeline we acquired in March 2003.Gross operating margin from the Mid-America and Seminole pipelines for the third quarter of 2003 increased by $2.6 million to $32.7 million on aggregate volume of 735,000 BPD. Gross operating margin from these pipelines for the two months that Enterprise owned them during the third quarter of 2002 was $30.1 million on aggregate volume of 868,000 BPD. Volumes and gross operating margin for the third quarter of this year were less than normal due to weak demand for NGLs and poor processing economics for most of the quarter, which caused natural gas processing plants in 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. to reduce the amount of ethane extracted. This resulted in lower transportation volumes on both the Mid-America and Seminole pipeline systems. Gross operating margin on the Mid-America pipeline was also reduced for expenses associated with pipeline integrity work. Pipeline integrity expense during the third quarter of 2003 was approximately $1.7 million and is expected to be approximately $4.6 million in the fourth quarter of 2003. 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 was $30.6 million for the third quarter of 2003 compared to $34.6 million for the third quarter of 2002. The decrease in the gross operating margin for the segment was primarily due to lower unit margins and a slight decrease in volumes from Enterprise's 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. fractionation business due to weak demand for polymer-grade propylene and higher operating costs operating costs npl → gastos mpl operacionales . Increases in unit margins and volumes at Enterprise's Mont Belvieu NGL fractionator and in-kind in-kind adj. Given in goods, commodities, or services rather than money: cash and in-kind benefits. fractionation fees and volumes at the Partnership's Norco NGL fractionator offset a decrease in gross operating margin from the partnership's remaining NGL fractionators due to a decrease in volumes. Overall, NGL fractionation volumes decreased by approximately 14,000 BPD to 233,000 BPD reflecting weak demand for NGLs and below average natural gas processing economics that reduced the amount of NGLs extracted from natural gas and available for fractionation. The 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. business benefited from an increase in
unit margins that more than offset the effect of a decrease in volumes.
Butane isomerization volumes for the third quarter of 2003 were 77,000
BPD compared to 88,000 BPD in the same quarter of 2002.Processing -- Gross operating margin for the Processing segment was a loss of $6.9 million for the third quarter of 2003 compared to gross operating margin of $8.4 million for the third quarter of 2002. Gross operating margin from NGL marketing and support activities in the third quarter of 2003 decreased by approximately $7.9 million from the same period in 2002. This decrease was primarily due to lower sales margins. Gross operating margin from natural gas processing was $1.6 million, a decrease of $7.3 million compared to the third quarter of last year. This decrease was due to depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. processing economics early in the current quarter as a result of weak demand for NGLs and higher gas prices. Gross processing spreads on the Gulf Coast for the third quarter of 2003 averaged approximately $0.09 per gallon compared to $0.13 per gallon during the third quarter of 2002. Equity NGL production for the third quarter of 2003 was 57,000 BPD compared to 78,000 BPD in the third quarter of 2002 due to the weaker processing economics in the third quarter of 2003. Effective Aug. 1, 2003, approximately 200 million cubic feet per day of natural gas production volume flowing into the partnership's facilities for processing, or approximately 10% of the total amount of gas processed by Enterprise, that had been historically processed under keepwhole arrangements was converted to fee-based arrangements. Under the fee-based processing arrangements, Enterprise receives a tolling fee based on the volume of gas processed, does not earn title to the NGLs extracted and does not bear the economic cost of plant fuel to process the gas. Enterprise processes approximately 2.1 billion cubic feet of gas per day. For the remainder of 2003 and for 2004, we estimate that approximately 49% of this gas will be processed under a margin band agreement with Shell; approximately 40% will be processed under percent-of-liquids arrangements; 10% under fee-based agreements and 1% under legacy keepwhole arrangements. Octane Enhancement -- Gross operating margin for the Octane Enhancement segment for the third quarter of 2003 was a loss of $21.2 million, which includes the non-cash impairment charge of $22.5 million. This compares to gross operating margin of $1.2 million for the same period last year. Enterprise's octane enhancement facility 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 . As we have previously discussed, several states are implementing bans on the usage of MTBE at the beginning of 2004. These states accounted for approximately 45% of the demand for MTBE in 2002. Some producers of motor gasoline have already started to phase out the use of the additive. Given the reduced demand for MTBE, Enterprise has evaluated alternative uses for the facility. Based on this evaluation, we recorded a non-cash charge of $22.5 million in the third quarter of 2003 to reduce the book value of our investment in this facility. Distributable Cash Flow is reduced for sustaining capital expenditures, which for the third quarter of 2003 and the first nine months of 2003 includes approximately $5.9 million and $6.4 million, respectively, for a major project to reroute reroute Verb [-routing, -routed] to send or direct by a different route reroute vt → desviar reroute vt [+ fourteen miles of 10-inch and 16-inch diameter diameter - The diameter of a graph is the maximum value of the minimum distance between any two nodes. pipeline on the Mid-America Pipeline system. This project is associated with the development of a dam and reservoir reservoir (rĕz`əvôr, -vwär), storage tank or wholly or partly artificial lake for storing water. Building an embankment or dam to preserve a supply of water for irrigation is an ancient practice; India and Egypt have many old and by the Bureau of Reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. . The total cost of this non-routine project is expected to be approximately $10.4 million and should be completed in the fourth quarter of 2003. 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 operating 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 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 hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. 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. For the three months and nine months ended Sept. 30, 2003, EBITDA includes the non-cash impairment charge related to the octane enhancement production facility. 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 $7.0 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 third 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 9:30 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 Incorrect means to not be correct and may also refer to:
-- 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 Nine Months Ended Sept. 30, 2003 and 2002
----------------------------------------------------------------------
($ in 000s, except per unit amounts)
For the Three Months For the Nine Months
Ended Sept. 30, Ended Sept. 30,
------------------------ ------------------------
2003 2002 2003 2002
----------- ------------ ----------- ------------
Revenue
-------
Revenue from
consolidated
operations $1,234,780 $943,313 $3,927,025 $2,391,624
----------- ------------ ----------- ------------
Total Revenue 1,234,780 943,313 3,927,025 2,391,624
----------- ------------ ----------- ------------
Costs and Expenses:
-------------------
Operating costs
and expenses 1,178,703 868,662 3,699,437 2,278,869
Selling, general
and administrative 7,415 12,289 28,939 27,991
----------- ------------ ----------- ------------
Total Costs and
Expenses 1,186,118 880,951 3,728,376 2,306,860
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Equity in income
(loss) of
unconsolidated
affiliates (18,040) 5,963 (16,647) 22,258
--------------- ----------- ------------ ----------- ------------
Operating Income 30,622 68,325 182,002 107,022
----------------
Other Income
(Expense):
-----------
Interest expense (32,559) (30,690) (107,750) (68,235)
Dividend income
from unconsolidated
affiliates 156 4,551 2,196
Other, net 300 567 572 2,366
----------- ------------ ----------- ------------
Total Other Income
(Expense) (32,103) (30,123) (102,627) (63,673)
----------- ------------ ----------- ------------
Income (loss) before
provision for taxes
and minority interest (1,481) 38,202 79,375 43,349
----------------------
Provision for taxes (1,023) (2,056) (4,628) (2,056)
----------- ------------ ----------- ------------
Income (loss) before
minority interest (2,504) 36,146 74,747 41,293
--------------------
Minority interest (757) (1,296) (4,398) (1,326)
----------- ------------ ----------- ------------
Net income (loss) $(3,261) $34,850 $70,349 $39,967
----------------- =========== ============ =========== ============
Allocation of Net
Income (Loss )to:
------------------
Limited partners $(8,273) $32,076 $56,123 $33,299
General partner $5,012 $2,774 $14,226 $6,668
Per Unit data (Fully
Diluted):
--------------------
Net income (loss)
per unit $(0.04) $0.18 $0.28 $0.19
Average LP Units
Outstanding (000s) 207,801 174,019 203,154 174,274
Other Financial data:
--------------------
Operating
activities cash
inflow (outflow) $95,536 $124,926 $228,569 $170,109
Investing
activities cash
inflow (outflow) $(41,311) $(1,245,776) $(153,460) $(1,677,431)
Financing
activities cash
inflow (outflow) $(32,966) $1,172,658 $(48,694) $1,429,954
Distributable cash
flow $41,547 $60,618 $199,985 $136,472
Depreciation and
amortization $28,615 $27,558 $96,081 $62,907
Operating lease
expense paid by
EPCO $2,273 $2,274 $6,820 $6,852
Distributions
received from
unconsolidated
affiliates $4,838 $11,001 $25,703 $40,114
Non-cash
impairment loss
in equity earnings
from
unconsolidated
affiliates $(22,494) $(22,494)
Non-cash income
(loss) related to
hedging activities
(mark-to-market
valuations) $2 $6,872 $25 $(12,830)
Sustaining capital
expenditures $9,436 $2,610 $14,958 $4,374
Total capital
expenditures $43,471 $20,203 $97,968 $46,958
Investments in and
advances to (from)
unconsolidated
affiliates $4,356 $3,056 $29,414 $13,193
Total debt
principal
outstanding at
end of period $1,894,000 $2,527,000 $1,894,000 $2,527,000
Enterprise Products Partners L.P.
Operating Data - UNAUDITED
For the Three and Nine Months Ended Sept. 30, 2003 and 2002
----------------------------------------------------------------------
For the Three For the Nine
Months Months
Ended Sept. 30, Ended Sept. 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Gross Operating Margin by
Segment ($000s):
--------------------------
Pipelines $66,589 $63,887 $210,490 $128,745
Fractionation 30,617 34,585 95,535 92,815
Processing (6,884) 8,417 25,757 (26,141)
Octane enhancement(a) (21,195) 1,155 (27,864) 7,038
Other (593) (870) (2,463) (2,095)
------------------- -------------------
Total gross operating margin $68,534 $107,174 $301,455 $200,362
------------------- -------------------
Depreciation and
amortization 28,259 24,292 83,761 58,491
Operating lease expense paid
by EPCO 2,273 2,274 6,820 6,852
Loss (gain) on sale of
assets (35) (6) (67) 6
Selling, general and
administrative expenses 7,415 12,289 28,939 27,991
------------------- -------------------
Operating income $30,622 $68,325 $182,002 $107,022
=================== ===================
(a) Includes impairment charge of $22.5 million in the three
months and nine months ended Sept. 30, 2003.
Selected Volumetric Operating Data:
-----------------------------------
MBPD, net
---------
NGL and petrochemical
pipelines 1,400 1,353 1,366 1,375
NGL fractionation 233 247 223 233
Propylene fractionation 54 55 57 55
Isomerization 77 88 80 82
Equity NGL production 57 78 53 78
Octane enhancement 4 5 4 5
BBtus per day, net
------------------
Natural gas pipelines 1,058 1,250 1,042 1,254
Equivalent MBPD, net
--------------------
NGL, petrochemical and natural
gas pipelines 1,678 1,682 1,640 1,705
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 For the Nine
Months Months
Ended Sept. 30, Ended Sept 30,
------------------ -------------------
2003 2002 2003 2002
-------- --------- --------- ---------
Reconciliation of Non-GAAP
"Total Gross Operating Margin"
to
-------------------------------
GAAP "Operating Income"
-----------------------------
Operating Income $30,622 $68,325 $182,002 $107,022
Adjustments to derive Total
Gross Operating Margin:
Depreciation and
amortization in
operating costs and
expenses 28,259 24,292 83,761 58,491
Retained lease expense,
net, in operating costs
and expenses 2,273 2,274 6,820 6,852
Loss (gain) on sale of
assets in operating
costs and expenses (35) (6) (67) 6
Selling, general and
administrative costs 7,415 12,289 28,939 27,991
-------- --------- --------- ---------
Total Gross Operating Margin $68,534 $107,174 $301,455 $200,362
======== ========= ========= =========
Reconciliation of Non-GAAP
"Adjusted Net Income" to
-------------------------------
GAAP "Net Income (Loss)"
-----------------------------
Net income (loss) $(3,261) $34,850 $70,349 $39,967
Adjustments to derive
Adjusted Net Income:
Impairment charge related
to BEF MTBE facility
included in equity
earnings from
unconsolidated
affiliates 22,494 22,494
-------- --------- --------- ---------
Adjusted Net Income $19,233 $34,850 $92,843 $39,967
======== ========= ========= =========
Reconciliation of Non-GAAP
"Adjusted Fully Diluted
Earnings Per Unit"
--------------------------------
to GAAP "Fully Diluted
Earnings Per Unit"
-----------------------------
Fully Diluted Earnings Per Unit $(0.04) $0.18 $0.28 $0.19
Adjustments to derive
Adjusted Fully Diluted
Earnings Per Unit:
Impairment charge related
to BEF MTBE facility
included in equity
earnings from
unconsolidated
affiliates 0.11 0.11
-------- --------- --------- ---------
Adjusted Fully Diluted Earnings
Per Unit $0.07 $0.18 $0.39 $0.19
======== ========= ========= =========
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 For the Nine
Months Months
Ended Sept. 30, Ended Sept. 30,
------------------ -------------------
2003 2002 2003 2002
-------- --------- --------- ---------
Reconciliation of Non-GAAP
"EBITDA" to GAAP "Net Income"
and
-------------------------------
GAAP "Operating Activities
Cash Flows"
-----------------------------
Net income (loss) $(3,261) $34,850 $70,349 $39,967
Adjustments to derive
EBITDA:
Interest expense
(including amortization
component) 32,559 30,690 107,750 68,235
Provision for income taxes 1,023 2,056 4,628 2,056
Other depreciation and
amortization 28,293 24,331 83,844 58,544
-------- --------- --------- ---------
EBITDA $58,614 $91,927 $266,571 $168,802
Reconciliation of "EBITDA"
to "Operating Activities
Cash Flows":
Leases paid by EPCO, net
(excluding minority
interest portion) 2,250 2,248 6,752 6,782
Deferred income tax
expense, net of provision
for current period income
taxes (2,305) (1,527) (446) (1,527)
Changes in fair market
value of financial
instruments (2) (6,872) (25) 12,830
Minority interest 1,234 1,296 2,930 1,326
Interest expense, net of
amortization component (32,237) (27,463) (95,513) (63,872)
Equity in income (loss)
of unconsolidated
affiliates 18,040 (5,963) 16,647 (22,258)
Distributions received
from unconsolidated
affiliates 4,838 11,001 25,703 40,114
Net effect of changes
in operating accounts 45,011 60,285 3,944 27,906
Loss (gain) on sale of
assets (35) (6) (67) 6
Other 128 2,073
-------- --------- --------- ---------
Operating Activities Cash
Flows $95,536 $124,926 $228,569 $170,109
======== ========= ========= =========
Reconciliation of Non-GAAP
"Distributable Cash Flow" to
GAAP
-------------------------------
"Net Income (Loss)" and GAAP
"Operating Activities Cash
Flows"
-----------------------------
Net income (loss) $(3,261) $34,850 $70,349 $39,967
Adjustments to derive
Distributable Cash Flow:
Leases paid by EPCO, net
(excluding minority
interest portion) 2,250 2,248 6,752 6,782
Minority interest in
leases paid by EPCO 23 26 68 70
Equity in loss (income)
of unconsolidated
affiliates 18,040 (5,963) 16,647 (22,258)
Distributions received
from unconsolidated
affiliates 4,838 11,001 25,703 40,114
Loss (gain) on sale
of assets (35) (6) (67) 6
Proceeds from sale of
assets 69 6 177 18
Sustaining capital
expenditures (9,436) (2,610) (14,958) (4,374)
Changes in fair market
value of financial
instruments (2) (6,872) (25) 12,830
Amortization in interest
expense 322 3,227 12,237 4,363
Other depreciation and
amortization 28,293 24,331 83,844 58,544
Other 446 380 (742) 410
-------- --------- --------- ---------
Distributable Cash Flow 41,547 60,618 199,985 136,472
Reconciliation of
"Distributable Cash Flow"
to "Operating Activities
Cash Flows":
Sustaining capital
expenditures 9,436 2,610 14,958 4,374
Deferred income tax
expense (1,282) 529 4,182 529
Proceeds from sale of
assets (69) (6) (177) (18)
Minority interest in
income (loss) not
included in calculation
of Distributable Cash
Flow 788 916 3,672 916
Minority interest of
General Partner in
Operating Partnership's
allocation of leases
paid by EPCO (23) (26) (68) (70)
Net effect of changes in
operating accounts not
already included in
calculation of
Distributable Cash Flow 45,011 60,285 3,944 27,906
Other 128 2,073
-------- --------- --------- ---------
Operating Activities Cash
Flows $95,536 $124,926 $228,569 $170,109
======== ========= ========= =========
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