Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K/A - Energy Transfer LP | ete60820128-kx12312011prof.htm |
| EX-99.2 - SOUTHERN UNION COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 - Energy Transfer LP | ex992southernunion12311110.htm |
| EX-23.1 - CONSENT OF PRICEWATERHOUSECOOPERS LLP - Energy Transfer LP | ex231ete8-kconsentofaccoun.htm |
ENERGY TRANSFER EQUITY, L.P.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information of Energy Transfer Equity, L.P. (“ETE”) reflects the pro forma impacts of (i) Energy Transfer Partners, L.P. ("ETP") contribution of its propane operations to AmeriGas Partners, L.P. (“AmeriGas”) in exchange for approximately $1.46 billion in cash and approximately 29.6 million common units representing limited partner interests in AmeriGas (the “Propane Transaction”) and (ii) the Southern Union Merger (as defined below).
The unaudited pro forma condensed consolidated balance sheet gives effect to the Propane Transaction and the Southern Union Merger as if both had occurred on December 31, 2011; the unaudited pro forma condensed consolidated statement of operations assumes that both transactions were consummated on January 1, 2011. The unaudited pro forma condensed balance sheet and condensed consolidated statements of operations should be read in conjunction with ETE's Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2012.
The unaudited pro forma condensed consolidated financial statements are for illustrative purposes only and are not necessarily indicative of the financial results that would have occurred if the Propane Transaction and/or the Southern Union Merger had been consummated on the dates indicated, nor are they necessarily indicative of the results of operations in the future. The pro forma adjustments, as described in the accompanying notes, are based upon available information and certain assumptions that are believed to be reasonable as of the date of this document.
Propane Transaction
On January 12, 2012, ETP contributed its propane operations, consisting of Heritage Operating, L.P. ("HOLP") and Titan Energy Partners, L.P. ("Titan") (collectively, the “Propane Business”) to AmeriGas. ETP received approximately $1.46 billion in cash and approximately 29.6 million AmeriGas Common Units valued at $1.12 billion at the time of the contribution. AmeriGas also assumed approximately $71.0 million of existing HOLP debt. The cash proceeds were used to complete the redemption of $750 million of aggregate principal amount of ETP senior notes and to repay borrowings on ETP's revolving credit facility.
Southern Union Merger
On March 26, 2012, Sigma Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of ETE, completed its acquisition of Southern Union. Southern Union is the surviving entity in the merger and will continue to operate as a wholly-owned subsidiary of ETE.
Under the terms of the merger agreement, Southern Union stockholders were able to elect to exchange each outstanding share of Southern Union common stock for $44.25 in cash or 1.00 ETE Common Unit, with no more than 60% of the aggregate merger consideration payable in cash and no more than 50% of the merger consideration payable in ETE Common Units. Based on the final results of the merger consideration, elections were as follows:
• | approximately 54% of outstanding Southern Union shares, or 67,985,929 shares, received cash for total cash consideration of $3.01 billion; and |
• | approximately 46% of outstanding Southern Union shares, or 56,981,860 shares, received ETE Common Units valued at $2.35 billion at the time of the merger. |
In connection with the Southern Union Merger on March 26, 2012, ETP completed its acquisition of CrossCountry Energy LLC ("CrossCountry"), a subsidiary of Southern Union which owns an indirect 50%
interest in Citrus Corp. ETP paid $1.895 billion in cash and issued $105 million of ETP Common Units (the “Citrus Transaction”). ETP used cash proceeds from its completed public offering of $2 billion Senior Notes to fund the cash portion of the purchase price of the Citrus Transaction. ETE agreed to relinquish its rights to approximately $220 million of the IDR's from ETP that ETE would otherwise be entitled to receive over 16 consecutive quarters.
Pending Sunoco Merger
On April 30, 2012, ETP announced its entry into a definitive merger agreement whereby ETP will acquire Sunoco, Inc. ("Sunoco") in a common unit and cash transaction valued at $5.3 billion based on the closing price of ETP's common units on April 27, 2012. This transaction is expected to close in the third or fourth quarter of 2012, subject to approval by Sunoco's shareholders and customary regulatory approvals. The following unaudited pro forma condensed consolidated financial information of ETE does not reflect this pending merger, which was announced subsequent to the consummation of the Southern Union Merger and Citrus Transaction.
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 2011
(in thousands)
ETE Historical | Propane Transaction Pro Forma Adjustments | ETE as Adjusted for Propane Transaction | Southern Union Historical | Southern Union Merger Pro Forma Adjustments | ETE Pro Forma | ||||||||||||||||||
ASSETS | |||||||||||||||||||||||
CURRENT ASSETS: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 126,342 | $ | (52,799 | ) | a | $ | 333,043 | $ | 23,640 | $ | — | $ | 356,683 | |||||||||
259,500 | b | ||||||||||||||||||||||
Marketable securities | 1,229 | (1,218 | ) | a | 11 | — | — | 11 | |||||||||||||||
Accounts receivable, net of allowance for doubtful accounts | 680,491 | (126,935 | ) | a | 553,556 | 270,741 | — | 824,297 | |||||||||||||||
Accounts receivable from related companies | 100,406 | — | 100,406 | 10,467 | — | 110,873 | |||||||||||||||||
Inventories | 327,963 | (98,149 | ) | a | 229,814 | 204,235 | — | 434,049 | |||||||||||||||
Exchanges receivable | 21,307 | — | 21,307 | 54,549 | — | 75,856 | |||||||||||||||||
Price risk management assets | 15,802 | — | 15,802 | 6,124 | — | 21,926 | |||||||||||||||||
Other current assets | 181,904 | (21,938 | ) | a | 159,966 | 87,267 | — | 247,233 | |||||||||||||||
Total current assets | 1,455,444 | (41,539 | ) | 1,413,905 | 657,023 | — | 2,070,928 | ||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, net | 14,558,562 | (732,848 | ) | a | 13,825,714 | 5,726,336 | 1,395,599 | c | 20,947,649 | ||||||||||||||
ADVANCES TO AND INVESTMENTS IN AFFILIATES | 1,496,600 | 1,123,007 | b | 2,619,607 | 1,633,289 | 389,495 | c | 4,642,391 | |||||||||||||||
LONG-TERM PRICE RISK MANAGEMENT ASSETS | 26,011 | — | 26,011 | — | — | 26,011 | |||||||||||||||||
GOODWILL | 2,038,975 | (615,826 | ) | a | 1,423,149 | 89,227 | 1,866,464 | c | 3,378,840 | ||||||||||||||
INTANGIBLE ASSETS, net | 1,321,201 | (154,841 | ) | a | 1,166,360 | 164,984 | 45,118 | c | 1,376,462 | ||||||||||||||
Total assets | $ | 20,896,793 | $ | (422,047 | ) | $ | 20,474,746 | $ | 8,270,859 | $ | 3,696,676 | $ | 32,442,281 | ||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 2011
(in thousands)
ETE Historical | Propane Transaction Pro Forma Adjustments | ETE as Adjusted for Propane Transaction | Southern Union Historical | Southern Union Merger Pro Forma Adjustments | ETE Pro Forma | ||||||||||||||||||
LIABILITIES | |||||||||||||||||||||||
CURRENT LIABILITIES: | |||||||||||||||||||||||
Accounts payable | $ | 512,023 | $ | (45,172 | ) | a | $ | 466,851 | $ | 194,127 | $ | — | $ | 660,978 | |||||||||
Accounts payable to related companies | 33,208 | (27,770 | ) | a | 5,438 | — | — | 5,438 | |||||||||||||||
Exchanges payable | 17,957 | — | 17,957 | 145,212 | — | 163,169 | |||||||||||||||||
Price risk management liabilities | 90,053 | (4,061 | ) | a | 85,992 | 58,598 | — | 144,590 | |||||||||||||||
Accrued and other current liabilities | 763,912 | (143,639 | ) | a | 620,273 | 183,099 | 232,023 | d | 1,035,395 | ||||||||||||||
Current maturities of long-term debt | 424,160 | (24,117 | ) | a | 108,043 | 543,254 | — | 651,297 | |||||||||||||||
(292,000 | ) | b | |||||||||||||||||||||
Total current liabilities | 1,841,313 | (536,759 | ) | 1,304,554 | 1,124,290 | 232,023 | 2,660,867 | ||||||||||||||||
LONG-TERM DEBT, less current maturities | 10,946,864 | (56,927 | ) | a | 10,117,437 | 3,160,372 | 3,413,269 | c | 16,691,078 | ||||||||||||||
(772,500 | ) | b | |||||||||||||||||||||
SERIES A CONVERTIBLE PREFERRED UNITS | 322,910 | — | 322,910 | — | — | 322,910 | |||||||||||||||||
LONG-TERM PRICE RISK MANAGEMENT LIABILITIES | 81,415 | (61 | ) | a | 81,354 | 65,429 | — | 146,783 | |||||||||||||||
ACCUMULATED DEFERRED INCOME TAXES | — | — | — | 1,044,877 | 726,530 | c | 1,771,407 | ||||||||||||||||
OTHER NON-CURRENT LIABILITIES | 244,202 | (3,484 | ) | a | 240,718 | 236,280 | — | 476,998 | |||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||||||||||
PREFERRED UNITS OF SUBSIDIARY | 71,144 | — | 71,144 | — | — | 71,144 | |||||||||||||||||
PARTNERS’ CAPITAL: | |||||||||||||||||||||||
General Partner | 321 | (1,103 | ) | a | 1,019 | 2,639,611 | (2,639,611 | ) | c | 1,019 | |||||||||||||
1,801 | b | ||||||||||||||||||||||
Limited Partners: | |||||||||||||||||||||||
Common Unitholders | 52,485 | (355,794 | ) | a | 277,464 | — | 1,964,465 | c | 2,241,929 | ||||||||||||||
580,773 | b | ||||||||||||||||||||||
Accumulated other comprehensive income | 678 | (233 | ) | a | 445 | — | — | 445 | |||||||||||||||
Total partners’ equity | 53,484 | 225,444 | 278,928 | 2,639,611 | (675,146 | ) | 2,243,393 | ||||||||||||||||
Noncontrolling interest | 7,335,461 | 722,240 | a, b | 8,057,701 | — | — | 8,057,701 | ||||||||||||||||
Total equity | 7,388,945 | 947,684 | 8,336,629 | 2,639,611 | (675,146 | ) | 10,301,094 | ||||||||||||||||
Total liabilities and equity | $ | 20,896,793 | $ | (422,047 | ) | $ | 20,474,746 | $ | 8,270,859 | $ | 3,696,676 | $ | 32,442,281 | ||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2011
(dollars in thousands, except per unit data)
ETE Historical | Propane Transaction Pro Forma Adjustments | ETE as Adjusted for Propane Transaction | Southern Union Historical | Southern Union Merger Pro Forma Adjustments | ETE Pro Forma | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Natural gas operations | $ | 2,985,471 | — | $ | 2,985,471 | 803,650 | $ | — | $ | 3,789,121 | ||||||||||||||
NGL sales | 1,735,242 | — | 1,735,242 | — | — | 1,735,242 | ||||||||||||||||||
Gathering, transportation and other fees | 1,845,267 | — | 1,845,267 | 1,846,330 | — | 3,691,597 | ||||||||||||||||||
Retail propane sales | 1,360,653 | (1,314,420 | ) | a | 46,233 | — | — | 46,233 | ||||||||||||||||
Other | 314,070 | (113,094 | ) | a | 200,976 | 15,974 | — | 216,950 | ||||||||||||||||
Total revenues | 8,240,703 | (1,427,514 | ) | 6,813,189 | 2,665,954 | — | 9,479,143 | |||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||
Cost of products sold - natural gas operations | 5,182,999 | (845,369 | ) | a | 4,337,630 | 1,362,177 | — | 5,699,807 | ||||||||||||||||
Operating expenses | 918,918 | (328,137 | ) | a | 590,781 | 498,255 | (15,708 | ) | f | 1,073,328 | ||||||||||||||
Depreciation and amortization | 611,809 | (78,256 | ) | a | 533,553 | 237,690 | 58,150 | g | 829,393 | |||||||||||||||
Selling, general and administrative | 292,158 | (46,776 | ) | a | 245,382 | 89,974 | (21,352 | ) | f | 314,004 | ||||||||||||||
Total costs and expenses | 7,005,884 | (1,298,538 | ) | 5,707,346 | 2,188,096 | 21,090 | 7,916,532 | |||||||||||||||||
OPERATING INCOME | 1,234,819 | (128,976 | ) | 1,105,843 | 477,858 | (21,090 | ) | 1,562,611 | ||||||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||||||
Interest expense, net of interest capitalized | (739,811 | ) | 8,700 | a | (669,011 | ) | (219,232 | ) | (157,853 | ) | h | (1,007,959 | ) | |||||||||||
62,100 | b | 38,137 | i | |||||||||||||||||||||
Equity in earnings (losses) of affiliates | 117,188 | 55,298 | b | 172,486 | 98,935 | — | 271,421 | |||||||||||||||||
Gains (losses) on disposal of assets | (816 | ) | 2,837 | a | 2,021 | — | — | 2,021 | ||||||||||||||||
Gains (losses) on non-hedged interest rate derivatives | (77,806 | ) | — | (77,806 | ) | — | — | (77,806 | ) | |||||||||||||||
Allowance for equity funds used during construction | 957 | — | 957 | 957 | ||||||||||||||||||||
Impairment of investment in affiliate | (5,355 | ) | — | (5,355 | ) | (5,355 | ) | |||||||||||||||||
Other, net | 15,954 | (616 | ) | a | 15,338 | 1,643 | — | 16,981 | ||||||||||||||||
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) | 545,130 | (657 | ) | 544,473 | 359,204 | (140,806 | ) | 762,871 | ||||||||||||||||
Income tax expense (benefit) | 16,883 | (3,593 | ) | a | 13,290 | 103,780 | (13,268 | ) | g, i | 103,802 | ||||||||||||||
NET INCOME | 528,247 | 2,936 | 531,183 | 255,424 | (127,538 | ) | 659,069 | |||||||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | 218,436 | 2,176 | e | 220,612 | — | 27,140 | j | 247,752 | ||||||||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 309,811 | 760 | 310,571 | 255,424 | (154,678 | ) | 411,317 | |||||||||||||||||
GENERAL PARTNER'S INTEREST IN NET INCOME | 959 | 3 | e | 962 | — | 52 | k | 1,014 | ||||||||||||||||
LIMITED PARTNERS' INTEREST IN NET INCOME (LOSS) | $ | 308,852 | $ | 757 | e | $ | 309,609 | $ | 255,424 | $ | (154,730 | ) | $ | 410,303 | ||||||||||
BASIC NET INCOME (LOSS) PER LIMITED PARTNER UNIT | $ | 1.39 | $ | 1.47 | ||||||||||||||||||||
BASIC AVERAGE NUMBER OF UNITS OUTSTANDING | 222,968,261 | 279,950,121 | l | |||||||||||||||||||||
DILUTED NET INCOME (LOSS) PER LIMITED PARTNER UNIT | $ | 1.38 | $ | 1.46 | ||||||||||||||||||||
DILUTED AVERAGE NUMBER OF UNITS OUTSTANDING | 222,968,261 | 279,950,121 | l | |||||||||||||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
ENERGY TRANSFER EQUITY, L.P.
NOTES TO UNAUDITED PRO FORMA INFORMATION
(a) | To record the deconsolidation of ETP's propane operations in connection with the Propane Transaction with AmeriGas. |
(b) | To record the pro forma impacts from the consideration received in connection with the Propane Transaction, including (i) ETP's receipt of AmeriGas common units representing approximately 34% of the limited partner interests in AmeriGas, and (ii) ETP's use of cash proceeds from the transaction to redeem long-term debt. The unaudited pro forma condensed consolidated statements of operations include adjustments to reduce interest expense resulting from the repayment of (i) $402.3 million of outstanding borrowings on ETP's revolving credit facility based on the amount outstanding as of January 1, 2011 and (ii) the redemption of $750 million of aggregate principal amount of ETP's senior notes. |
The unaudited pro forma condensed consolidated statements of operations also include adjustments to equity in earnings of affiliates to reflect net impact of (i) ETP's proportionate share of limited partners' interest in net income attributable to AmeriGas and (ii) amortization of the pro forma excess fair value associated with ETP's interest in AmeriGas. ETP's equity in earnings of AmeriGas reflected in its unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2011 are based on the pro forma earnings of AmeriGas for the twelve month period ended December 31, 2011 including the earnings of the Propane Business.
(c) | Under the terms of the merger agreement, Southern Union stockholders were able to elect to exchange each outstanding share of Southern Union common stock for $44.25 in cash or 1.00 ETE Common Unit, with certain limitations. Based on the stockholder elections the merger consideration was as follows: |
• | approximately 54% of outstanding Southern Union shares, or 67,985,929 shares, received cash for total cash consideration of $3.01 billion; and |
• | approximately 46% of outstanding Southern Union shares, or 56,981,860 shares, received ETE Common Units valued at $2.35 billion at the time of the merger. |
The following table summarizes the preliminary assets acquired and liabilities assumed recognized as of the merger date:
Total current assets | $ | 560,041 | |
Property, plant and equipment | 7,121,935 | ||
Goodwill | 1,955,691 | ||
Intangible assets | 47,000 | ||
Regulatory assets | 136,280 | ||
Investments in unconsolidated affiliates | 2,022,784 | ||
Other assets | 26,822 | ||
11,870,553 | |||
Total current liabilities | 886,908 | ||
Long-term debt obligations | 3,565,260 | ||
Deferred income taxes | 1,771,407 | ||
Other non-current liabilities | 284,110 | ||
6,507,685 | |||
Total consideration | 5,362,868 | ||
Cash received | 36,613 | ||
Total consideration, net of cash received | $ | 5,326,255 | |
The adjustment to long-term debt reflects both the fair value adjustment recorded in connection with purchase accounting and incremental borrowings of $3.01 billion to fund the cash portion of the consideration.
(d) | To accrue merger related costs incurred in the three months ended March 31, 2012 in connection with the Southern Union Merger. This adjustment includes amounts incurred by Southern Union. |
(e) | To reflect changes in amounts attributable to general partners, limited partners and noncontrolling interest based on the impacts of pro forma adjustments (a) and (b) above. |
(f) | To eliminate the merger-related costs incurred by ETE and Southern Union. ETE merger-related costs were $21.4 million for the year ended December 31, 2011. Southern Union merger-related costs were $15.7 million for the the year ended December 31, 2011, which include change in control and severance costs. These costs are eliminated from ETE's pro forma income statement, because such costs would not have a continuing impact on ETE's results of operations. |
(g) | To record depreciation expense on the $1.4 billion of excess purchase price allocated to property, plant and equipment based on a weighted average useful life of 24 years and record the related income tax impact. |
(h) | To record interest expense at ETE's actual rate of 4.22% from borrowings of approximately $1.1 billion in connection with the Southern Union Merger. This adjustment also includes interest expense on ETP's borrowings of $1.895 billion at an actual weighted average rate of 5.85% to fund the Citrus Transaction. |
(i) | To adjust amortization included in interest expense to (i) reverse historical amortization of financing costs and fair value adjustments related to debt and (ii) record pro forma amortization related to the pro forma adjustment of Southern Union’s debt to fair value and record the related income tax impact. |
(j) | To record the change in net income attributable to ETP’s public unitholders as a result of the Citrus Transaction. This adjustment includes the impacts from (i) incremental income recorded by ETP from its equity method investment in Citrus Corp., (ii) the change in the relative ownership interests among the general partner and the limited partners as a result of ETP’s issuance of $105 million of ETP common in connection with the Citrus Transaction, and (iii) the impact for the periods presented of ETE’s relinquishment of $13.75 million per quarter of incentive distributions in connection with the Citrus Transaction. |
(k) | To record change to the general partner’s interest in net income resulting from (i) changes in net income resulting from consolidation of Southern Union and the Citrus Transaction and (ii) changes in the general partner’s ownership percentage as a result of the issuance of 56,981,860 additional ETE common units. |
(l) | The pro forma average number of limited partner units outstanding reflects ETE's issuance of $2.35 billion of ETE Common Units issued in connection with the Southern Union Merger. |