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8-K - FORM 8-K - Energy Transfer LP | c20952e8vk.htm |
Exhibit 99.1
ENERGY TRANSFER EQUITY
REPORTS QUARTERLY RESULTS
REPORTS QUARTERLY RESULTS
Dallas August 3, 2011 Energy Transfer Equity, L.P. (NYSE:ETE) today reported
Distributable Cash Flow and net income attributable to partners for the quarter ended June 30,
2011, both of which were impacted by acquisition-related costs incurred by ETE in connection with
its proposed merger with Southern Union Company (NYSE:SUG). Distributable Cash Flow before
acquisition-related expenses was $124.6 million for the three months ended June 30, 2011, as
compared to $126.2 million for the three months ended June 30, 2010. ETEs net income attributable
to partners was $66.3 million for the three months ended June 30, 2011 as compared to $19.3 million
for the three months ended June 30, 2010.
In June 2011, ETE entered into a plan of merger, whereby Southern Union Company would become a
wholly owned subsidiary of ETE, and, in July 2011, ETE entered into an amended and restated plan of
merger which modified many of the terms of the original agreement. ETE incurred $9.0 million of
general and administrative costs for the three months ended June 30, 2011 associated with this
transaction. For the three months ended June 30, 2010, ETE incurred $12.8 million of general and
administrative costs associated with its acquisition of a controlling interest in Regency Energy
Partners LP (Nasdaq:RGNC).
For the quarter ended June 30, 2011, ETE significantly raised its cash distribution on its
outstanding limited partner interests to $0.625 per limited partner unit ($2.50 annualized), an
increase of approximately 11.6%. The cash distribution for the quarter ended June 30, 2011 will be
paid on August 19, 2011 to Unitholders of record as of the close of business on August 5, 2011.
Distributable Cash Flow before acquisition-related expenses for the six months ended June 30, 2011
was $249.7 million, as compared to $254.5 million for the six months ended June 30, 2010. ETEs
net income attributable to partners was $154.9 million for the six months ended June 30, 2011, an
increase of $22.9 million over the six months ended June 30, 2010.
The Partnerships principal sources of cash flow are distributions it receives from its investments
in the limited and general partner interests in Energy Transfer Partners, L.P. (ETP) and Regency
Energy Partners LP (Regency), including 100% of ETPs and Regencys incentive distribution
rights, approximately 50.2 million of ETPs common units and approximately 26.3 million of
Regencys common units. ETE currently has no operating activities apart from those conducted by
ETP and Regency and their operating subsidiaries. ETEs principal uses of cash are for general and
administrative expenses, debt service requirements, distributions to its general partners, limited
partners and holders of the Series A Convertible Preferred Units, and capital contributions to ETP
and Regency in respect of ETEs general partner interests in ETP and Regency at ETEs election.
The Partnership has scheduled a conference call for 8:30 a.m. Central Time, Thursday, August 4,
2011 to discuss its second quarter 2011 results. The conference call will be broadcast live via an
internet web cast, which can be accessed through www.energytransfer.com and will also be
available for replay on the Partnerships website for a limited time.
Use of Non-GAAP Financial Measures
This press release and accompanying schedules include the non-generally accepted accounting
principle (non-GAAP) financial measure of Distributable Cash Flow. The accompanying schedules
provide a reconciliation of this non-GAAP financial measure to its most directly comparable
financial measure calculated and presented in accordance with GAAP. The Partnerships
Distributable Cash Flow should not be considered as an alternative to GAAP financial measures such
as net income, cash flow from operating activities or any other GAAP measure of liquidity or
financial performance.
Distributable Cash Flow. The Partnership defines Distributable Cash Flow for a period as
cash distributions expected to be received from ETP and Regency in respect of such period in
connection with the Partnerships investments in limited and general partner interests of ETP and
Regency, net of the Partnerships cash expenditures for general and administrative costs and
interest expense. Distributable Cash Flow is a significant liquidity measure used by the
Partnerships senior management to compare net cash flows generated by the Partnerships equity
investments in ETP and Regency to the distributions the Partnership expects to pay its unitholders.
Using this measure, the Partnerships management can compute the coverage ratio of estimated cash
flows for a period to planned cash distributions for such period.
Distributable Cash Flow is also an important non-GAAP financial measure for our limited partners
since it indicates to investors whether the Partnerships investments are generating cash flows at
a level that can sustain or support an increase in quarterly cash distribution levels. Financial
measures such as Distributable Cash Flow are quantitative standards used by the investment
community with respect to publicly traded partnerships because the value of a partnership unit is
in part measured by its yield (which in turn is based on the amount of cash distributions a
partnership can pay to a unitholder). The GAAP measure most directly comparable to Distributable
Cash Flow is net income for ETE on a stand-alone basis (Parent Company). The accompanying
analysis of Distributable Cash Flow is presented for the three and six months ended June 30, 2011
and 2010 for comparative purposes.
Distributable Cash Flow (before acquisition-related expenses). The Partnership defines
Distributable Cash Flow (before acquisition-related expenses) for a period as cash distributions
expected to be received from ETP and Regency in respect of such period in connection with the
Partnerships investments in limited and general partner interests of ETP and Regency, net of the
Partnerships cash expenditures for general and administrative costs and interest expense and net
of realized losses on termination of interest rate swaps. Due to the cash expenses that were
incurred during the three months ended June 30, 2011 and 2010 in connection with the Partnerships
merger and acquisition activities, Distributable Cash Flow (before acquisition-related expenses)
for the three months and six months ended June 30, 2011 and 2010 is a significant liquidity measure
used by the Partnerships senior management to compare net cash flows generated by the
Partnerships equity investments in ETP and Regency to the distributions the Partnership expects to
pay its unitholders. Using this measure, the Partnerships management can compute the coverage
ratio of estimated cash flows for a period to planned cash distributions for such period. The GAAP
measure most directly comparable to Distributable Cash Flow (before acquisition-related expenses)
is net income (loss) for the Parent Company on a stand-alone basis. The accompanying analysis of
Distributable Cash Flow (before acquisition-related expenses) is presented for the three and six
months ended June 30, 2011 and 2010 for comparative purposes.
Energy Transfer Equity, L.P. (NYSE:ETE) is a publicly traded partnership, which owns the
general partner and 100 percent of the incentive distribution rights (IDRs) of Energy Transfer
Partners and approximately 50.2 million ETP limited partner units; and owns the general partner and
100 percent of the IDRs of Regency Energy Partners and approximately 26.3 million Regency limited
partner units. For more information, visit the Energy Transfer Equity, L.P. web site at
www.energytransfer.com.
Energy Transfer Partners, L.P. (NYSE:ETP) is a publicly traded partnership owning and operating a
diversified portfolio of energy assets. ETP currently has natural gas operations that include more
than 17,500 miles of gathering and transportation pipelines, treating and processing assets, and
three storage facilities located in Texas. ETP also holds a 70% interest in Lone Star NGL LLC
(Lone Star), a joint venture that owns and operates NGL storage, fractionation and transportation
assets in Texas, Louisiana and Mississippi. ETP is also one of the three largest retail marketers
of propane in the United States, serving more than one million customers across the country. For
more information, visit the Energy Transfer Partners, L.P. web site at
www.energytransfer.com.
Regency Energy Partners LP (Nasdaq: RGNC) is a growth-oriented, midstream energy
partnership engaged in the gathering, contract compression, processing, marketing and transporting
of natural gas and natural gas liquids. Regency also owns the remaining 30% interest in Lone Star.
Regencys general partner is owned by ETE. For more information, visit the Regency Energy
Partners LP Web site at www.regencyenergy.com.
more
Contacts
Investor Relations:
Energy Transfer
Brent Ratliff
214-981-0700 (office)
Investor Relations:
Energy Transfer
Brent Ratliff
214-981-0700 (office)
Media Relations:
Vicki Granado
Granado Communications Group
214-599-8785 (office)
214-498-9272 (cell)
Vicki Granado
Granado Communications Group
214-599-8785 (office)
214-498-9272 (cell)
more
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
CURRENT ASSETS |
$ | 1,398,971 | $ | 1,291,010 | ||||
PROPERTY, PLANT AND EQUIPMENT, net |
13,774,472 | 11,852,732 | ||||||
ADVANCES TO AND INVESTMENTS IN AFFILIATES |
1,350,627 | 1,359,979 | ||||||
LONG-TERM PRICE RISK MANAGEMENT ASSETS |
7,468 | 13,971 | ||||||
GOODWILL |
2,008,896 | 1,600,611 | ||||||
INTANGIBLES AND OTHER ASSETS, net |
1,325,724 | 1,260,427 | ||||||
Total assets |
$ | 19,866,158 | $ | 17,378,730 | ||||
LIABILITIES AND EQUITY |
||||||||
CURRENT LIABILITIES |
$ | 1,259,420 | $ | 1,081,075 | ||||
LONG-TERM DEBT, less current maturities |
11,123,820 | 9,346,067 | ||||||
SERIES A CONVERTIBLE PREFERRED UNITS |
334,170 | 317,600 | ||||||
LONG-TERM PRICE RISK MANAGEMENT LIABILITIES |
60,934 | 79,465 | ||||||
OTHER NON-CURRENT LIABILITIES |
252,892 | 235,848 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
PREFERRED UNITS OF SUBSIDIARY |
71,040 | 70,943 | ||||||
EQUITY: |
||||||||
Total partners capital (deficit) |
(23,541 | ) | 120,668 | |||||
Noncontrolling interest |
6,787,423 | 6,127,064 | ||||||
Total equity |
6,763,882 | 6,247,732 | ||||||
Total liabilities and equity |
$ | 19,866,158 | $ | 17,378,730 | ||||
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit data)
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit data)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
REVENUES: |
||||||||||||||||
Natural gas operations |
$ | 1,728,951 | $ | 1,140,768 | $ | 3,157,908 | $ | 2,447,477 | ||||||||
Retail propane |
220,296 | 197,147 | 748,762 | 730,586 | ||||||||||||
Other |
25,659 | 24,613 | 57,356 | 56,446 | ||||||||||||
Total revenues |
1,974,906 | 1,362,528 | 3,964,026 | 3,234,509 | ||||||||||||
COSTS AND EXPENSES: |
||||||||||||||||
Cost of products sold natural gas operations |
1,122,857 | 723,835 | 2,006,626 | 1,636,441 | ||||||||||||
Cost of products sold retail propane |
134,728 | 110,282 | 445,592 | 415,263 | ||||||||||||
Cost of products sold other |
6,567 | 6,336 | 13,360 | 13,614 | ||||||||||||
Operating expenses |
222,717 | 179,745 | 443,413 | 350,493 | ||||||||||||
Depreciation and amortization |
148,530 | 98,035 | 287,786 | 184,366 | ||||||||||||
Selling, general and administrative |
78,946 | 65,038 | 142,445 | 116,147 | ||||||||||||
Total costs and expenses |
1,714,345 | 1,183,271 | 3,339,222 | 2,716,324 | ||||||||||||
OPERATING INCOME |
260,561 | 179,257 | 624,804 | 518,185 | ||||||||||||
OTHER INCOME (EXPENSE): |
||||||||||||||||
Interest expense, net of interest capitalized |
(181,517 | ) | (129,036 | ) | (349,446 | ) | (250,707 | ) | ||||||||
Equity in earnings of affiliates |
28,819 | 12,193 | 54,260 | 18,374 | ||||||||||||
(Losses) gains on disposal of assets |
(681 | ) | 1,375 | (2,435 | ) | (489 | ) | |||||||||
Gains (losses) on non-hedged interest rate derivatives |
1,883 | (22,468 | ) | 3,403 | (36,892 | ) | ||||||||||
Impairment of investment in affiliate |
| (52,620 | ) | | (52,620 | ) | ||||||||||
Other, net |
2,811 | (5,213 | ) | (9,715 | ) | (3,070 | ) | |||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAX EXPENSE |
111,876 | (16,512 | ) | 320,871 | 192,781 | |||||||||||
Income tax expense |
5,224 | 4,053 | 15,127 | 9,264 | ||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
106,652 | (20,565 | ) | 305,744 | 183,517 | |||||||||||
Income from discontinued operations |
| 86 | | 86 | ||||||||||||
NET INCOME (LOSS) |
106,652 | (20,479 | ) | 305,744 | 183,603 | |||||||||||
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTEREST |
40,367 | (39,747 | ) | 150,819 | 51,558 | |||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS |
66,285 | 19,268 | 154,925 | 132,045 | ||||||||||||
GENERAL PARTNERS INTEREST IN NET INCOME |
205 | 60 | 479 | 409 | ||||||||||||
LIMITED PARTNERS INTEREST IN NET INCOME |
$ | 66,080 | $ | 19,208 | $ | 154,446 | $ | 131,636 | ||||||||
BASIC NET INCOME PER LIMITED PARTNER UNIT |
$ | 0.30 | $ | 0.09 | $ | 0.69 | $ | 0.59 | ||||||||
BASIC AVERAGE NUMBER OF UNITS OUTSTANDING |
222,972,708 | 222,941,172 | 222,963,741 | 222,941,140 | ||||||||||||
DILUTED NET INCOME PER LIMITED PARTNER UNIT |
$ | 0.30 | $ | 0.09 | $ | 0.69 | $ | 0.59 | ||||||||
DILUTED AVERAGE NUMBER OF UNITS OUTSTANDING |
222,972,708 | 222,941,172 | 222,963,741 | 222,941,140 | ||||||||||||
ENERGY TRANSFER EQUITY, L.P.
DISTRIBUTABLE CASH FLOW
(Dollars in thousands)
(unaudited)
DISTRIBUTABLE CASH FLOW
(Dollars in thousands)
(unaudited)
The following table presents the calculation and reconciliation of Distributable Cash Flow of
Energy Transfer Equity, L.P.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Distributable Cash Flow: |
||||||||||||||||
Cash distributions from Energy Transfer Partners, L.P. (ETP)
associated with: (1) |
||||||||||||||||
General partner interest: |
||||||||||||||||
Standard distribution rights |
$ | 4,896 | $ | 4,874 | $ | 9,792 | $ | 9,754 | ||||||||
Incentive distribution rights |
103,358 | 89,834 | 206,540 | 184,751 | ||||||||||||
Limited partner interest |
44,890 | 44,890 | 89,780 | 100,750 | ||||||||||||
Total cash distributions from ETP |
153,144 | 139,598 | 306,112 | 295,255 | ||||||||||||
Cash distributions from Regency Energy Partners LP (Regency)
associated with: (2) |
||||||||||||||||
General partner interest: |
||||||||||||||||
Standard distribution rights |
1,287 | 1,105 | 2,556 | 1,105 | ||||||||||||
Incentive distribution rights |
1,338 | 915 | 2,452 | 915 | ||||||||||||
Limited partner interest |
11,820 | 11,689 | 23,509 | 11,689 | ||||||||||||
Total cash distributions from Regency |
14,445 | 13,709 | 28,517 | 13,709 | ||||||||||||
Total cash distributions from Subsidiaries |
167,589 | 153,307 | 334,629 | 308,964 | ||||||||||||
Net pro rata cash settlement related to Regency Transactions
(3) |
| 3,015 | | 3,015 | ||||||||||||
Total cash distributions expected from ETP and Regency including
net pro rata settlement |
167,589 | 156,322 | 334,629 | 311,979 | ||||||||||||
Deduct expenses of the Parent Company on a stand-alone basis: |
||||||||||||||||
Selling, general and administrative expenses, excluding
non-cash compensation expense |
(11,950 | ) | (14,917 | ) | (13,705 | ) | (17,161 | ) | ||||||||
Interest expense, net of amortization of financing costs,
interest income, and realized gains and losses on interest
rate swaps (4) |
(40,119 | ) | (28,007 | ) | (80,238 | ) | (53,160 | ) | ||||||||
Distributable Cash Flow |
115,520 | 113,398 | 240,686 | 241,658 | ||||||||||||
Acquisition-related expenses included in selling, general and
administrative expenses |
9,039 | 12,830 | 9,039 | 12,830 | ||||||||||||
Distributable Cash Flow, before acquisition-related expenses |
$ | 124,559 | $ | 126,228 | $ | 249,725 | $ | 254,488 | ||||||||
Cash distributions to be paid to the partners of ETE: (5) |
||||||||||||||||
Distributions to be paid to limited partners |
$ | 139,358 | $ | 120,388 | $ | 264,206 | $ | 240,776 | ||||||||
Distributions to be paid to general partner |
433 | 374 | 821 | 748 | ||||||||||||
Total cash distributions to be paid to the partners of ETE |
$ | 139,791 | $ | 120,762 | $ | 265,027 | $ | 241,524 | ||||||||
Reconciliation of Non-GAAP Distributable Cash Flow and
Distributable Cash Flow, before acquisition-related expenses to
GAAP Net income for the Parent Company on a stand-alone basis: |
||||||||||||||||
Net income for the Parent Company on a stand-alone basis |
$ | 66,285 | $ | 19,268 | $ | 154,925 | $ | 132,045 | ||||||||
Adjustments to derive Distributable Cash Flow: |
||||||||||||||||
Equity in income of unconsolidated affiliates |
(120,626 | ) | (75,362 | ) | (267,268 | ) | (221,740 | ) | ||||||||
Cash distributions from Subsidiaries |
167,589 | 153,307 | 334,629 | 308,964 | ||||||||||||
Net pro rata cash settlement related to Regency
Transactions (3) |
| 3,015 | | 3,015 | ||||||||||||
Amortization included in interest expense |
466 | 1,455 | 1,280 | 2,153 | ||||||||||||
Fair value adjustment of ETE Preferred Units |
1,530 | | 16,570 | | ||||||||||||
Other non-cash |
276 | 228 | 550 | 457 | ||||||||||||
Unrealized losses on non-hedged interest rate swaps |
| 11,487 | | 16,764 | ||||||||||||
Distributable Cash Flow |
115,520 | 113,398 | 240,686 | 241,658 | ||||||||||||
Acquisition-related expenses included in selling, general and
administrative expenses |
9,039 | 12,830 | 9,039 | 12,830 | ||||||||||||
Distributable Cash Flow, before acquisition-related expenses |
$ | 124,559 | $ | 126,228 | $ | 249,725 | $ | 254,488 | ||||||||
(1) | For the three months ended June 30, 2011, cash distributions expected to be received from
ETP consist of cash distributions in respect of the quarter ended June 30, 2011 payable on
August 15, 2011 to holders of record on the close of business August 5, 2011. For the three
months ended June 30, 2010, cash distributions received from ETP consist of cash distributions
paid on August 16, 2010 in respect of the quarter ended June 30, 2010. |
|
For the six months ended June 30, 2011, cash distributions received or expected to be received
from ETP consist of cash distributions paid on May 16, 2011 in respect of the quarter ended
March 31, 2011 and cash distributions in respect of the three months ended June 30, 2011 payable
on August 15, 2011 to holders of record on August 5, 2011. For the six months ended June 30,
2010, cash distributions received from ETP consist of cash distributions paid on May 17, 2010 in
respect of the quarter ended March 31, 2010 and cash distributions paid on August 16, 2010 in
respect of the quarter ended June 30, 2010. |
||
(2) | On May 26, 2010, ETE contributed a 49.9% interest in MEP to Regency in exchange for
26,266,791 Regency common units. Total cash distributions expected from Regency for the three
months ended June 30, 2010 reflect full-quarter distributions from the Regency common units
and general partner interests held by ETE as of the end of the period. |
|
For the three months ended June 30, 2011, cash distributions expected to be received from
Regency consist of cash distributions in respect of the quarter ended June 30, 2011 payable on
August 12, 2011 to holders of record on the close of business August 5, 2011. For the three
months ended June 30, 2010, cash distributions received from Regency consist of cash
distributions paid on August 13, 2010 in respect of the quarter ended June 30, 2010. |
||
For the six months ended June 30, 2011, cash distributions received or expected to be received
from Regency consist of cash distributions paid on May 13, 2011 in respect of the quarter ended
March 31, 2011 and cash distributions in respect of the three months ended June 30, 2011 payable
on August 12, 2011 to holders of record on August 5, 2011. For the six months ended June 30,
2010, cash distributions received from Regency consist of cash distributions paid on August 13,
2010 in respect of the quarter ended June 30, 2010. |
||
(3) | Upon closing the transactions to transfer a 49.9% interest in MEP from ETP to Regency, the
purchase price of each transaction included an adjustment relating to the pro ration of the
distributions for the period from April 1, 2010 to May 26, 2010. The transfer of the MEP
interest, along with ETEs acquisition of a controlling interest in Regency on May 26, 2010,
are collectively referred to as the Regency Transactions. |
|
(4) | Interest expense included distributions on ETEs Series A Convertible preferred units of $6.0
million and $12.0 million for the three and six months ended June 30, 2011, respectively.
Interest expense included distributions on ETEs convertible preferred units of $2.4 million
for the three and six months ended June 30, 2010 which reflected a pro rata amount for the
period subsequent to our acquisition of a controlling interest in Regency on May 26, 2010. |
|
(5) | For the three months ended June 30, 2011, cash distributions expected to be paid by ETE
consist of cash distributions in respect of the quarter ended June 30, 2011 payable on August
19, 2011 to holders of record on August 5, 2011. For the three months ended June 30, 2010,
cash distributions paid by ETE consist of cash distributions paid on August 19, 2010 in
respect of the quarter ended June 30, 2010. |
|
For the six months ended June 30, 2011, cash distributions paid or expected to be paid by ETE
consist of cash distributions paid on May 19, 2011 in respect of the quarter ended March 31,
2011 and cash distributions in respect of the three months ended June 30, 2011 payable on August
19, 2011 to holders of record on August 5, 2011. For the six months ended June 30, 2010, cash
distributions paid by ETE consist of cash distributions paid on May 19, 2010 in respect of the
quarter ended March 31, 2010 and cash distributions paid on August 19, 2010 in respect of the
quarter ended June 30, 2010. |
ENERGY TRANSFER EQUITY, L.P.
SUPPLEMENTAL INFORMATION
(Dollars in thousands)
(unaudited)
SUPPLEMENTAL INFORMATION
(Dollars in thousands)
(unaudited)
The following summarizes the key components of the stand-alone results of operations of the
Parent Company for the periods indicated:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Selling, general and
administrative expenses |
$ | (12,037 | ) | $ | (15,079 | ) | $ | (13,879 | ) | $ | (17,415 | ) | ||||
Interest expense |
(40,587 | ) | (20,210 | ) | (81,526 | ) | (36,916 | ) | ||||||||
Equity in earnings of affiliates |
120,626 | 75,362 | 267,268 | 221,740 | ||||||||||||
Losses on non-hedged interest
rate derivatives |
| (20,753 | ) | | (35,177 | ) | ||||||||||
Other, net |
(1,653 | ) | (88 | ) | (16,812 | ) | (212 | ) |
Selling, general and administrative. For the three and six months ended June 30, 2011 compared to
the same period in the prior year, selling, general and administrative expense decreased primarily
due to a decrease in acquisition-related costs. The three and six months ended June 30, 2011
reflect approximately $9.0 million in expenses incurred in connection with our pending acquisition
of Southern Union Company, while the three and six months ended June 30, 2010 reflect approximately
$12.8 million in expenses incurred related to our acquisition of a controlling interest in Regency
in May 2010.
Interest Expense. For the three and six months ended June 30, 2011 compared to the same period in
the prior year, interest expense increased primarily due to the issuance of $1.8 billion aggregate
principal amount of 7.5% senior notes in September 2010 the proceeds from which were used to repay
all of the outstanding indebtedness under our then existing revolving credit facility and term loan
facility, to fund the cost to terminate interest rate swaps, and for general partnership purposes.
In addition, interest expense for the periods presented reflects distributions on the ETE Preferred
Units issued by ETE in connection with the acquisition of a controlling interest in Regency in May
2010.
Equity in Earnings of Affiliates. Equity in earnings of affiliates represents earnings of the
Parent Company related to its investment in ETP and Regency. The increases between the three and
six months period were primarily related to the Parent Companys equity in earnings of ETP.
Losses on Non-Hedged Interest Rate Derivatives. The Parent Company terminated its interest rate
swaps that were not accounted for as hedges in September 2010 in connection with the issuance of
$1.8 billion of senior notes. Prior to that settlement, changes in the fair value of and cash
payments related to these swaps were recorded directly in earnings. For the three and six months
ended June 30, 2011, we recorded unrealized losses on our interest rate swaps as a result of
decreases in the relevant floating index rates during the period.
Other, net. Other expenses increased between periods primarily due to non-cash charges recorded to
increase the carrying value of the preferred units that were issued by the Parent Company in
connection with the acquisition of a controlling interest in Regency in May 2010.