ENBRIDGE ENERGY PARTNERS LP - FORM 8-K - EX-99.2 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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8-K - FORM 8-K - ENBRIDGE ENERGY PARTNERS LP	d248775d8k.htm
EX-99.1 - PRESS RELEASE - ENBRIDGE ENERGY PARTNERS LP	d248775dex991.htm

Exhibit 99.2

ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF INCOME


	For the three month period ended September 30,						For the nine month period ended September 30,
	2011			2010			2011			2010
	(unaudited; in millions, except per unit amounts)

Operating revenue	$	2,372.2		$	1,889.3		$	7,033.1		$	5,567.9

Operating expenses
Cost of natural gas		1,805.4			1,455.6			5,496.2			4,250.2
Environmental costs, net of recoveries		56.1			477.6			44.8			482.1
Oil measurement adjustments		(2.8	)		(0.2	)		(61.5	)		(0.2	)
Operating and administrative		181.3			142.3			516.0			410.1
Power		37.7			36.7			107.2			105.5
Depreciation and amortization		78.9			79.7			256.9			225.2
Impairment charge		—			10.3			—			10.3

		2,156.6			2,202.0			6,359.6			5,483.2

Operating income (loss)		215.6			(312.7	)		673.5			84.7
Interest expense		78.7			70.1			236.6			199.0
Other income (expense)		—			(0.6	)		6.0			16.1

Income (loss) before income tax expense		136.9			(383.4	)		442.9			(98.2	)
Income tax expense		2.1			2.9			5.3			7.5

Net income (loss)		134.8			(386.3	)		437.6			(105.7	)
Less: Net income attributable to noncontrolling interest		12.2			20.1			41.0			45.3

Net income (loss) attributable to general and limited partner ownership interest in Enbridge Energy Partners, L.P.	$	122.6		$	(406.4	)	$	396.6		$	(151.0	)


Net income (loss) allocable to limited partner interests	$	95.9		$	(415.2	)	$	322.9		$	(195.7	)


Net income (loss) per limited partner unit (basic and diluted)	$	0.36		$	(1.74	)	$	1.26		$	(0.82	)


Weighted average limited partner units outstanding		264.6			238.1			257.6			236.8

ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the nine month period ended September 30,
	2011			2010
	(unaudited; in millions)

Cash provided by operating activities
Net income (loss)	$	437.6		$	(105.7	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		256.9			225.2
Derivative fair value net gains		(53.9	)		(10.7	)
Inventory market price adjustments		2.0			3.6
Environmental costs, net of recoveries		94.7			481.5
Impairment charge		—			10.3
Other		12.8			2.2
Changes in operating assets and liabilities, net of acquisitions:
Receivables, trade and other		(51.9	)		7.4
Due from General Partner and affiliates		8.8			(2.5	)
Accrued receivables		91.5			(31.4	)
Inventory		(11.5	)		(82.5	)
Current and long-term other assets		(7.7	)		(5.1	)
Due to General Partner and affiliates		19.1			14.6
Accounts payable and other		37.2			23.2
Environmental liabilities		(148.7	)		(147.3	)
Accrued purchases		(50.0	)		(9.2	)
Interest payable		19.2			32.8
Property and other taxes payable		15.3			8.4
Settlement of interest rate derivatives		(18.8	)		(3.0	)

Net cash provided by operating activities		652.6			411.8


Cash used in investing activities
Additions to property, plant and equipment		(755.8	)		(529.1	)
Changes in construction payables		132.2			(5.9	)
Asset acquisitions		(26.7	)		(703.1	)
Other		(10.5	)		(3.3	)

Net cash used in investing activities		(660.8	)		(1,241.4	)


Cash provided by financing activities
Net proceeds from unit issuances		557.6			52.2
Distributions to partners		(412.6	)		(356.8	)
Repayments to General Partner		(12.4	)		(330.7	)
Net proceeds from issuances of long-term debt		740.7			890.5
Net repayments under credit facility		—			(438.0	)
Net commercial paper borrowings (repayments)		(509.8	)		594.8
Borrowings from General Partner		7.0			403.7
Contribution from noncontrolling interest		3.3			96.6
Distributions to noncontrolling interest		(61.1	)		(17.2	)
Other		(5.7	)		(2.5	)

Net cash provided by financing activities		307.0			892.6

Net increase in cash and cash equivalents		298.8			63.0
Cash and cash equivalents at beginning of year		144.9			143.6

Cash and cash equivalents at end of period	$	443.7		$	206.6

ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


	September 30, 2011			December 31, 2010
	(unaudited; dollars in millions)
ASSETS
Current assets
Cash and cash equivalents	$	443.7		$	144.9
Receivables, trade and other, net of allowance for doubtful accounts of $1.8 in 2011 and 2010		269.6			171.2
Due from General Partner and affiliates		18.3			27.1
Accrued receivables		591.0			683.7
Inventory		144.2			134.7
Other current assets		48.3			58.3

		1,515.1			1,219.9
Property, plant and equipment, net		9,173.6			8,641.6
Goodwill		246.7			246.7
Intangibles, net		267.9			276.4
Other assets, net		119.3			56.4

	$	11,322.6		$	10,441.0

LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities
Due to General Partner and affiliates	$	70.1		$	53.3
Accounts payable and other		427.9			289.2
Environmental liabilities		207.4			227.0
Accrued purchases		554.8			596.4
Interest payable		79.5			60.3
Property and other taxes payable		64.4			49.1
Note payable to General Partner		12.0			11.6
Current maturities of long-term debt		31.0			31.0

		1,447.1			1,317.9
Long-term debt		5,015.9			4,778.9
Note payable to General Partner		330.0			335.8
Other long-term liabilities		245.8			122.9

		7,038.8			6,555.5

Commitments and contingencies

Partners’ capital
Class A common units (228,268,964 and 209,084,106 at September 30, 2011 and December 31, 2010 respectively)		3,076.5			2,641.0
Class B common units (7,825,500 at September 30, 2011 and December 31, 2010)		74.7			64.9
i-units (37,053,946 and 35,285,422 at September 30, 2011 and December 31, 2010, respectively)		658.0			579.1
General Partner		275.8			256.8
Accumulated other comprehensive income (loss)		(249.8	)		(121.7	)

Total Enbridge Energy Partners, L.P. partners’ capital		3,835.2			3,420.1
Noncontrolling interest		448.6			465.4

Total partners’ capital		4,283.8			3,885.5

	$	11,322.6		$	10,441.0

NET INCOME PER LIMITED PARTNER AND GENERAL PARTNER INTEREST

In February 2011, the board of directors of Enbridge Energy Management, L.L.C., or Enbridge Management, as delegate of Enbridge Energy Company, Inc., our General Partner, approved a split of our units, which was effected by a distribution on April 21, 2011 of one common unit for each common unit outstanding and one i-unit for each i-unit outstanding to unit holders of record on April 7, 2011. As a result of this unit split, we have retrospectively restated the computation of our “Net income per limited partner unit (basic and diluted)” in the table below and restated the number of units in our consolidated statement of financial position to present the current and prior year amounts on a split-adjusted basis. Additionally, the formula for distributing available cash among our General Partner and limited partners was revised to reflect this unit split, as set forth in our partnership agreement, as amended, and is presented below.


Distribution Targets	Portion of Quarterly Distribution Per Unit	Percentage Distributed to General Partner	Percentage Distributed to Limited partners
Minimum Quarterly Distribution	Up to $0.295	2 %	98 %
First Target Distribution	> $0.295 to $0.35	15 %	85 %
Second Target Distribution	> $0.35 to $0.495	25 %	75 %
Over Second Target Distribution	In excess of $0.495	50 %	50 %

We allocate our net income among our General Partner and limited partners using the two-class method in accordance with applicable authoritative accounting guidance. Under the two-class method, we allocate our net income, including any incentive distribution rights, or IDRs, embedded in the general partner interest, to our General Partner and our limited partners according to the distribution formula for available cash as set forth in our partnership agreement. We also allocate any earnings in excess of distributions to our General Partner and limited partners utilizing the distribution formula for available cash specified in our partnership agreement. We allocate any distributions in excess of earnings for the period to our General Partner and limited partners based on their sharing of losses of 2 percent and 98 percent, respectively, as set forth in our partnership agreement.

We determined basic and diluted net income (loss) per limited partner unit as follows:


	For the three month period ended September 30,						For the nine month period ended September 30,
	2011			2010			2011			2010
	(in millions, except per unit amounts)
Net income (loss)	$	134.8		$	(386.3	)	$	437.6		$	(105.7	)
Less: Net income (loss) attributable to noncontrolling interest		12.2			20.1			41.0			45.3

Net income (loss) attributable to general and limited partner interests in Enbridge Energy Partners, L.P.		122.6			(406.4	)		396.6			(151.0	)
Less distributions paid:
Incentive distributions to our General Partner		(24.7	)		(17.3	)		(67.1	)		(48.7	)
Distributed earnings allocated to our General Partner		(3.0	)		(2.5	)		(8.5	)		(7.4	)

Total distributed earnings to our General Partner		(27.7	)		(19.8	)		(75.6	)		(56.1	)
Total distributed earnings to our limited partners		(145.5	)		(123.2	)		(416.8	)		(363.5	)

Total distributed earnings		(173.2	)		(143.0	)		(492.4	)		(419.6	)

Overdistributed earnings	$	(50.6	)	$	(549.4	)	$	(95.8	)	$	(570.6	)


Weighted average limited partner units outstanding		264.6			238.1			257.6			236.8


Basic and diluted earnings per unit:
Distributed earnings per limited partner unit⁽¹⁾	$	0.55		$	0.52		$	1.62		$	1.54
Overdistributed earnings per limited partner unit⁽²⁾		(0.19	)		(2.26	)		(0.36	)		(2.36	)


Net income (loss) per limited partner unit (basic and diluted)	$	0.36		$	(1.74	)	$	1.26		$	(0.82	)

⁽¹⁾	Represents the total distributed earnings to limited partners divided by the weighted average number of limited partner interests outstanding for the period.

⁽²⁾

Represents the limited partners’ share (98 percent) of distributions in excess of earnings divided by the weighted average number of limited partner interests outstanding for the period and under distributed earnings allocated to the limited partners based on the distribution waterfall that is outlined in our partnership agreement.

SEGMENT INFORMATION

Our business is divided into operating segments, defined as components of the enterprise, about which financial information is available and evaluated regularly by our Chief Operating Decision Maker in deciding how resources are allocated and performance is assessed.

Each of our reportable segments is a business unit that offers different services and products that is managed separately, since each business segment requires different operating strategies. We have segregated our business activities into three distinct operating segments: Liquids, Natural Gas, and Marketing.

The following tables present financial information about our business segments and corporate activities:


	For the three month period ended September 30, 2011
	Liquids			Natural Gas		Marketing			Corporate⁽¹⁾			Total
	(in millions)
Total revenue	$	363.3		$	1,832.1	$	584.2		$	—		$	2,779.6
Less: Intersegment revenue		0.3			395.7		11.4			—			407.4

Operating revenue		363.0			1,436.4		572.8			—			2,372.2
Cost of natural gas		—			1,233.3		572.1			—			1,805.4
Environmental costs, net of recoveries		56.1			—		—			—			56.1
Oil measurement adjustments		(2.8	)		—		—			—			(2.8	)
Operating and administrative		74.4			104.5		1.9			0.5			181.3
Power		37.7			—		—			—			37.7
Depreciation and amortization		49.2			29.7		—			—			78.9

Operating income (loss)		148.4			68.9		(1.2	)		(0.5	)		215.6
Interest expense		—			—		—			78.7			78.7

Income (loss) from continuing operations before income tax expense		148.4			68.9		(1.2	)		(79.2	)		136.9
Income tax expense		—			—		—			2.1			2.1

Net income (loss)		148.4			68.9		(1.2	)		(81.3	)		134.8
Less: Net income attributable to the noncontrolling interest		—			—		—			12.2			12.2

Net income (loss) attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P.	$	148.4		$	68.9	$	(1.2	)	$	(93.5	)	$	122.6

⁽¹⁾	Corporate consists of interest expense, interest income, allowance for equity during construction, noncontrolling interest and other costs such as income taxes, which are not allocated to the business segments.


	For the three month period ended September 30, 2010
	Liquids			Natural Gas		Marketing		Corporate⁽¹⁾			Total
	(in millions)
Total revenue	$	301.4		$	1,385.6	$	599.7	$	—		$	2,286.7
Less: Intersegment revenue		0.3			388.7		8.4		—			397.4

Operating revenue		301.1			996.9		591.3		—			1,889.3
Cost of natural gas		—			869.1		586.5		—			1,455.6
Environmental costs, net of recoveries		477.6			—		—		—			477.6
Oil measurement adjustments		(0.2	)		—		—		—			(0.2	)
Operating and administrative		59.6			78.3		2.3		2.1			142.3
Power		36.7			—		—		—			36.7
Depreciation and amortization		48.0			31.6		0.1		—			79.7
Impairment charge		10.3			—		—		—			10.3

Operating income (loss)		(330.9	)		17.9		2.4		(2.1	)		(312.7	)
Interest expense		—			—		—		70.1			70.1
Other expense		—			—		—		0.6			0.6

Income (loss) from continuing operations before income tax expense		(330.9	)		17.9		2.4		(72.8	)		(383.4	)
Income tax expense		—			—		—		2.9			2.9

Net income (loss)		(330.9	)		17.9		2.4		(75.7	)		(386.3	)
Less: Net income attributable to the noncontrolling interest		—			—		—		20.1			20.1

Net income (loss) attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P.	$	(330.9	)	$	17.9	$	2.4	$	(95.8	)	$	(406.4	)

⁽¹⁾	Corporate consists of interest expense, interest income, allowance for equity during construction, noncontrolling interest and other costs such as income taxes, which are not allocated to the business segments.


	As of and for the nine month period ended September 30, 2011
	Liquids			Natural Gas			Marketing			Corporate⁽¹⁾			Total
	(in millions)
Total revenue	$	975.7		$	5,528.0		$	1,704.5		$	—		$	8,208.2
Less: Intersegment revenue		1.0			1,143.8			30.3			—			1,175.1

Operating revenue		974.7			4,384.2			1,674.2			—			7,033.1
Cost of natural gas		—			3,826.8			1,669.4			—			5,496.2
Environmental costs, net of recoveries		45.2			(0.4	)		—			—			44.8
Oil measurement adjustments		(61.5	)		—			—			—			(61.5	)
Operating and administrative		218.5			289.8			5.2			2.5			516.0
Power		107.2			—			—			—			107.2
Depreciation and amortization		146.5			110.4			—			—			256.9

Operating income (loss)		518.8			157.6			(0.4	)		(2.5	)		673.5
Interest expense		—			—			—			236.6			236.6
Other income		—			—			—			6.0			6.0

Income (loss) from continuing operations before income tax expense		518.8			157.6			(0.4	)		(233.1	)		442.9
Income tax expense		—			—			—			5.3			5.3

Net income (loss)		518.8			157.6			(0.4	)		(238.4	)		437.6
Less: Net income attributable to the noncontrolling interest		—			—			—			41.0			41.0

Net income (loss) attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P.	$	518.8		$	157.6		$	(0.4	)	$	(279.4	)	$	396.6

Total assets	$	6,050.6		$	4,682.4		$	209.7		$	379.9		$	11,322.6

Capital expenditures (excluding acquisitions)	$	444.9		$	302.7		$	—		$	8.2		$	755.8

⁽¹⁾	Corporate consists of interest expense, interest income, allowance for equity during construction, noncontrolling interest and other costs such as income taxes, which are not allocated to the business segments.


	As of and for the nine month period ended September 30, 2010
	Liquids			Natural Gas		Marketing		Corporate⁽¹⁾			Total
	(in millions)
Total revenue	$	883.6		$	4,022.8	$	1,842.5	$	—		$	6,748.9
Less: Intersegment revenue		0.9			1,152.6		27.5		—			1,181.0

Operating revenue		882.7			2,870.2		1,815.0		—			5,567.9
Cost of natural gas		—			2,447.7		1,802.5		—			4,250.2
Environmental costs, net of recoveries		482.1			—		—		—			482.1
Oil measurement adjustments		(0.2	)		—		—		—			(0.2	)
Operating and administrative		184.0			215.8		7.0		3.3			410.1
Power		105.5			—		—		—			105.5
Depreciation and amortization		131.7			93.3		0.2		—			225.2
Impairment charge		10.3			—		—		—			10.3

Operating income (loss)		(30.7	)		113.4		5.3		(3.3	)		84.7
Interest expense		—			—		—		199.0			199.0
Other income		—			—		—		16.1			16.1

Income (loss) from continuing operations before income tax expense		(30.7	)		113.4		5.3		(186.2	)		(98.2	)
Income tax expense		—			—		—		7.5			7.5

Net income (loss)		(30.7	)		113.4		5.3		(193.7	)		(105.7	)
Less: Net income attributable to the noncontrolling interest		—			—		—		45.3			45.3

Net income (loss) attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P.	$	(30.7	)	$	113.4	$	5.3	$	(239.0	)	$	(151.0	)

Total assets	$	5,399.9		$	4,308.3	$	205.0	$	249.0		$	10,162.2

Capital expenditures (excluding acquisitions)	$	317.2		$	206.2	$	—	$	5.7		$	529.1

⁽¹⁾	Corporate consists of interest expense, interest income, allowance for equity during construction, noncontrolling interest and other costs such as income taxes, which are not allocated to the business segments.

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