FORM 10-Q
Washington, D.C. 20549
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the Quarterly Period Ended November 30, 2004 | ||
| OR | ||
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to
Commission file number 1-11727
ENERGY TRANSFER PARTNERS, L.P.
| Delaware | 73-1493906 | |
| (state or other jurisdiction or incorporation or organization) |
(I.R.S. Employer Identification No.) |
2838 Woodside Street
Dallas, Texas 75204
(Address of principal
executive offices
and zip code)
(214)981-0700
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes þ No ¨
At January 9, 2005, the registrant had units outstanding as follows:
FORM 10-Q
INDEX TO FINANCIAL STATEMENTS
Energy Transfer Partners, L.P. and Subsidiaries
(Formerly Energy Transfer Company and surviving legal entity in the Energy Transfer Transactions)
i
Forward-Looking Statements
Certain matters discussed in this report, excluding historical information, as well as some statements by Energy Transfer Partners, L.P., (Energy Transfer Partners or the Partnership) in periodic press releases and some oral statements of Energy Transfer Partners officials during presentations about the Partnership, include certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements using words such as “anticipate,” “believe,” “intend,” “project,” “plan,” “continue,” “estimate,” “forecast,” “may,” “will,” or similar expressions help identify forward-looking statements. Although the Partnership believes such forward-looking statements are based on reasonable assumptions and current expectations and projections about future events, no assurance can be given that every objective will be reached.
Actual results may differ materially from any results projected, forecasted, estimated or expressed in forward-looking statements since many of the factors that determine these results are subject to uncertainties and risks, difficult to predict, and beyond management’s control. For additional discussion of risks, uncertainties and assumptions, see the Partnership’s Annual Report on Form 10-K for the fiscal year ended August 31, 2004 filed with the Securities and Exchange Commission on November 15, 2004.
Definitions
The following is a list of certain acronyms and terms generally used in the energy industry and throughout this document:
| /d | per day | |||
| Bbls | barrels | |||
| Btu | British thermal unit, an energy measurement | |||
| Mcf | thousand cubic feet | |||
| MMBtu | million British thermal unit | |||
| MMcf | million cubic feet | |||
| Bcf | billion cubic feet | |||
| NGL | natural gas liquid, such as propane, butane and natural gasoline | |||
| LIBOR | London Interbank Offered Rate | |||
| Nymex | New York Mercantile Exchange |
ii
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
( FORMERLY ENERGY TRANSFER COMPANY)
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
| November 30, | August 31, | |||||||
| 2004 | 2004 | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 59,245 | $ | 81,745 | ||||
Marketable securities |
1,873 | 2,464 | ||||||
Accounts receivable, net of allowance for doubtful accounts |
340,334 | 275,424 | ||||||
Accounts receivable from related companies |
166 | 34 | ||||||
Exchanges receivable |
8,274 | 8,852 | ||||||
Inventories |
74,922 | 53,324 | ||||||
Deposits paid to vendors |
11,179 | 3,023 | ||||||
Price risk management assets |
20,941 | 4,615 | ||||||
Prepaid expenses and other |
13,763 | 7,401 | ||||||
Total current assets |
530,697 | 436,882 | ||||||
PROPERTY, PLANT AND EQUIPMENT, net |
1,557,053 | 1,467,649 | ||||||
INVESTMENT IN AFFILIATES |
8,013 | 8,010 | ||||||
GOODWILL |
309,645 | 313,720 | ||||||
INTANGIBLES AND OTHER ASSETS, net |
109,586 | 100,844 | ||||||
Total assets |
$ | 2,514,994 | $ | 2,327,105 | ||||
1
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
( FORMERLY ENERGY TRANSFER COMPANY)
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
| November 30, | August 31, | |||||||
| 2004 | 2004 | |||||||
LIABILITIES AND PARTNERS’ CAPITAL |
||||||||
CURRENT LIABILITIES: |
||||||||
Working capital facility |
$ | 33,096 | $ | 14,550 | ||||
Accounts payable |
378,238 | 274,122 | ||||||
Accounts payable to related companies |
3,737 | 4,276 | ||||||
Exchanges payable |
6,464 | 2,846 | ||||||
Customer deposits |
13,952 | 11,378 | ||||||
Accrued and other current liabilities |
67,094 | 55,394 | ||||||
Price risk management liabilities |
5,660 | 1,262 | ||||||
Income taxes payable |
2,004 | 2,252 | ||||||
Current maturities of long-term debt |
33,220 | 30,957 | ||||||
Total current liabilities |
543,465 | 397,037 | ||||||
LONG-TERM DEBT, less current maturities |
1,122,370 | 1,070,871 | ||||||
DEFERRED TAXES |
108,385 | 109,896 | ||||||
OTHER NONCURRENT LIABILITIES |
835 | 846 | ||||||
MINORITY INTERESTS |
1,936 | 1,475 | ||||||
| 1,776,991 | 1,580,125 | |||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
PARTNERS’ CAPITAL: |
||||||||
Common Unitholders (44,639,306 and
44,559,031 units authorized, issued and
outstanding at November 30, 2004 and August
31, 2004, respectively) |
710,610 | 720,187 | ||||||
Class C Unitholders (1,000,000 units
authorized, issued and outstanding at
November 30, 2004 and August 31, 2004 ,
respectively) |
— | — | ||||||
Class E Unitholders (4,426,916 authorized,
issued and outstanding at November 30, 2004
and August 31, 2004, respectively – held by
subsidiary and reported as treasury units) |
— | — | ||||||
General Partner |
28,686 | 26,761 | ||||||
Accumulated other comprehensive income (loss) |
(1,293 | ) | 32 | |||||
Total partners’ capital |
738,003 | 746,980 | ||||||
Total liabilities and partners’ capital |
$ | 2,514,994 | $ | 2,327,105 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
2
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
( FORMERLY ENERGY TRANSFER COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit and unit data)
(unaudited)
| Three Months | ||||||||||||
| Ended November 30, | ||||||||||||
| 2004 | 2003 | 2003 | ||||||||||
| (Energy Transfer | ||||||||||||
| Company) | (Heritage) | |||||||||||
REVENUES: |
||||||||||||
Midstream and transportation |
$ | 737,150 | $ | 419,097 | $ | — | ||||||
Propane |
151,233 | — | 104,730 | |||||||||
Other |
19,279 | — | 18,996 | |||||||||
Total revenues |
907,662 | 419,097 | 123,726 | |||||||||
COSTS AND EXPENSES: |
||||||||||||
Cost of products sold |
765,570 | 381,681 | 66,370 | |||||||||
Operating expenses |
61,461 | 7,386 | 38,042 | |||||||||
Depreciation and amortization |
20,269 | 4,147 | 9,415 | |||||||||
Selling, general and administrative |
11,310 | 4,879 | 3,190 | |||||||||
Total costs and expenses |
858,610 | 398,093 | 117,017 | |||||||||
OPERATING INCOME |
49,052 | 21,004 | 6,709 | |||||||||
OTHER INCOME (EXPENSE): |
||||||||||||
Interest expense |
(17,331 | ) | (3,834 | ) | (8,166 | ) | ||||||
Equity in earnings of affiliates |
36 | 147 | 219 | |||||||||
Gain (loss) on disposal of assets |
(91 | ) | — | 173 | ||||||||
Interest income and other |
134 | 86 | (46 | ) | ||||||||
INCOME (LOSS) BEFORE MINORITY INTERESTS AND
INCOME TAXES |
31,800 | 17,403 | (1,111 | ) | ||||||||
Minority interests |
(158 | ) | — | (135 | ) | |||||||
INCOME (LOSS) BEFORE INCOME TAXES |
31,642 | 17,403 | (1,246 | ) | ||||||||
Income tax expense |
1,032 | 1,709 | 50 | |||||||||
NET INCOME (LOSS) |
30,610 | 15,694 | (1,296 | ) | ||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME (LOSS) |
6,089 | 314 | 311 | |||||||||
LIMITED PARTNERS’ INTEREST IN NET INCOME (LOSS) |
$ | 24,521 | $ | 15,380 | $ | (1,607 | ) | |||||
BASIC NET INCOME (LOSS) PER LIMITED PARTNER UNIT |
$ | 0.55 | $ | 2.32 | $ | (0.09 | ) | |||||
BASIC AVERAGE NUMBER OF UNITS OUTSTANDING |
44,621,955 | 6,621,737 | 18,020,137 | |||||||||
DILUTED NET INCOME (LOSS) PER LIMITED PARTNER
UNIT |
$ | 0.55 | $ | 2.32 | $ | (0.09 | ) | |||||
DILUTED AVERAGE NUMBER OF UNITS OUTSTANDING |
44,695,921 | 6,621,737 | 18,020,137 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
( FORMERLY ENERGY TRANSFER COMPANY)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
| Three Months Ended November 30, | ||||||||||||
| 2004 | 2003 | 2003 | ||||||||||
| (Energy Transfer | ||||||||||||
| Company) | (Heritage) | |||||||||||
Net income (loss) |
$ | 30,610 | $ | 15,694 | $ | (1,296 | ) | |||||
Other comprehensive income (loss) |
||||||||||||
Reclassification adjustment for losses on
derivative instruments included in net income
accounted for as hedges |
14,787 | 481 | — | |||||||||
Change in value of derivative instruments
accounted for as hedges |
(15,522 | ) | (999 | ) | — | |||||||
Change in value of available-for-sale securities |
(590 | ) | — | 131 | ||||||||
Comprehensive income (loss) |
$ | 29,285 | $ | 15,176 | $ | (1,165 | ) | |||||
Reconciliation of Accumulated Other Comprehensive
Income (Loss) |
||||||||||||
Balance, beginning of period |
$ | 32 | $ | — | $ | (349 | ) | |||||
Current period reclassification to earnings |
14,787 | 481 | — | |||||||||
Current period change |
(16,112 | ) | (999 | ) | 131 | |||||||
Balance, end of period |
$ | (1,293 | ) | $ | (518 | ) | $ | (218 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements.
4
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
( FORMERLY ENERGY TRANSFER COMPANY)
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in thousands, except unit data)
(unaudited)
| Accumulated | ||||||||||||||||||||||||||||
| Number of | Other | |||||||||||||||||||||||||||
| Common | General | Comprehensive | ||||||||||||||||||||||||||
| Units | Common | Class C | Class E | Partner | Income (Loss) | Total | ||||||||||||||||||||||
Balance, August 31, 2004 |
44,559,031 | $ | 720,187 | $ | — | $ | — | $ | 26,761 | $ | 32 | $ | 746,980 | |||||||||||||||
Unit distribution |
— | (36,809 | ) | — | — | (4,215 | ) | — | (41,024 | ) | ||||||||||||||||||
General Partner capital
contribution |
— | — | — | — | 51 | — | 51 | |||||||||||||||||||||
Issuance of Common
Units in connection
with certain
acquisitions |
60,275 | 2,500 | — | — | — | — | 2,500 | |||||||||||||||||||||
Issuance of restricted
Common Units |
20,000 | — | — | — | — | — | — | |||||||||||||||||||||
Net change in
accumulated other
comprehensive income
per accompanying
statement |
— | — | — | — | — | (1,325 | ) | (1,325 | ) | |||||||||||||||||||
Other |
— | 211 | — | — | — | — | 211 | |||||||||||||||||||||
Net income |
— | 24,521 | — | — | 6,089 | — | 30,610 | |||||||||||||||||||||
Balance, November 30,
2004 |
44,639,306 | $ | 710,610 | $ | — | $ | — | $ | 28,686 | $ | (1,293 | ) | $ | 738,003 | ||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
( FORMERLY ENERGY TRANSFER COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended November 30, | ||||||||||||
| 2004 | 2003 | 2003 | ||||||||||
| (Energy Transfer | (Heritage) | |||||||||||
| Company) | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||
Net income (loss) |
$ | 30,610 | $ | 15,694 | $ | (1,296 | ) | |||||
Reconciliation of net income to net cash provided by
(used in) operating activities: |
||||||||||||
Depreciation and amortization |
20,269 | 4,147 | 9,415 | |||||||||
Amortization of deferred finance costs charged to
interest expense |
664 | 884 | — | |||||||||
Provision for loss on accounts receivable |
168 | — | 298 | |||||||||
(Gain) loss on disposal of assets |
91 | — | (173 | ) | ||||||||
Deferred compensation on restricted units and long-term
incentive plan |
402 | — | 90 | |||||||||
Undistributed earnings of affiliates |
(3 | ) | (147 | ) | (193 | ) | ||||||
Deferred income taxes |
(1,511 | ) | 385 | — | ||||||||
Minority interests |
461 | — | (5 | ) | ||||||||
Other, net |
— | 37 | — | |||||||||
Changes in assets and liabilities, net of effect of
acquisitions: |
||||||||||||
Accounts receivable |
(65,457 | ) | (35,621 | ) | (16,571 | ) | ||||||
Accounts receivable from related companies |
(133 | ) | — | — | ||||||||
Inventories |
(21,451 | ) | (955 | ) | (11,889 | ) | ||||||
Deposits paid to vendors |
(8,156 | ) | (1,045 | ) | — | |||||||
Exchanges receivable |
579 | 227 | — | |||||||||
Prepaid expenses and other |
(6,208 | ) | (937 | ) | (2,904 | ) | ||||||
Intangibles and other assets |
(77 | ) | — | (457 | ) | |||||||
Accounts payable |
103,476 | 15,908 | 11,958 | |||||||||
Accounts payable to related companies |
(538 | ) | (947 | ) | 574 | |||||||
Exchanges payable |
3,618 | 699 | — | |||||||||
Deposits from customers |
2,574 | (8,520 | ) | — | ||||||||
Accrued and other current liabilities |
10,198 | (85 | ) | 1,525 | ||||||||
Other long-term liabilities |
(10 | ) | 6 | — | ||||||||
Income taxes payable |
(248 | ) | (1,135 | ) | — | |||||||
Price risk management assets and liabilities, net |
(12,663 | ) | 1,569 | — | ||||||||
Net cash provided by (used in) operating activities |
56,655 | (9,836 | ) | (9,628 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||
Cash paid for acquisitions, net of cash acquired |
(67,267 | ) | — | (6,799 | ) | |||||||
Capital expenditures |
(43,382 | ) | (11,830 | ) | (12,240 | ) | ||||||
Proceeds from the sale of assets |
1,275 | 4 | 592 | |||||||||
Net cash used in investing activities |
(109,374 | ) | (11,826 | ) | (18,447 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||
Proceeds from borrowings |
91,214 | — | 73,298 | |||||||||
Principal payments on debt |
(19,831 | ) | (7,500 | ) | (32,371 | ) | ||||||
Other |
(191 | ) | — | — | ||||||||
Capital contribution from General Partner |
51 | — | — | |||||||||
Unit distributions |
(41,024 | ) | — | (12,149 | ) | |||||||
Net cash provided by (used in) financing activities |
30,219 | (7,500 | ) | 28,778 | ||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(22,500 | ) | (29,162 | ) | 703 | |||||||
CASH AND CASH EQUIVALENTS, beginning of period |
81,745 | 53,122 | 7,117 | |||||||||
CASH AND CASH EQUIVALENTS, end of period |
$ | 59,245 | $ | 23,960 | $ | 7,820 | ||||||
6
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
( FORMERLY ENERGY TRANSFER COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended November 30, | |||||||||||||
| 2004 | 2003 | 2003 | |||||||||||
| (Energy Transfer | |||||||||||||
| Company) | (Heritage) | ||||||||||||
NONCASH FINANCING ACTIVITIES: |
|||||||||||||
Notes payable incurred
on noncompete agreements and other long term debt |
$ | 925 | $ | — | $ | 455 | |||||||
Issuance of Common Units in connection with
certain acquistions |
$ | 2,500 | $ | — | $ | — | < | ||||||