Energy Transfer Equity Reports Fourth Quarter and Annual Results
Distributable Cash Flow, as adjusted, for the year ended December 31,
2012 was
Distributable Cash Flow, as adjusted, was
The quarter ended
-
Sunoco Merger. On
October 5, 2012 ,Energy Transfer Partners, L.P. ("ETP") completed its merger withSunoco, Inc. ("Sunoco"). Under the terms of the merger agreement, Sunoco shareholders received 54,971,725 ETP Common Units and a total of approximately$2.6 billion in cash. -
Holdco Transaction. Immediately following the closing of
the Sunoco Merger, ETE contributed its interest in
Southern Union Company ("Southern Union ") toETP Holdco Corporation ("Holdco"), an ETP-controlled entity, in exchange for a 60% equity interest in Holdco. In conjunction with ETE's contribution, ETP contributed its interest in Sunoco to Holdco and retained a 40% equity interest in Holdco. Prior to the contribution of Sunoco to Holdco, Sunoco contributed$2.0 billion of cash and its interests inSunoco Logistics Partners L.P. ("Sunoco Logistics ") to ETP in exchange for 90,706,000 Class F Units representing limited partner interests in ETP ("Class F Units"). The Class F Units are entitled to 35% of the quarterly cash distribution generated by ETP and its subsidiaries other than Holdco, subject to a maximum cash distribution of$3.75 per Class F Unit per year, which is the current distribution level. Pursuant to a stockholders agreement between ETE and ETP, ETP controls Holdco. Consequently, ETP consolidated Holdco (includingSunoco and Southern Union ) in its financial statements subsequent to consummation of the Holdco Transaction. In connection with this transaction, ETE relinquished its rights to$210 million of incentive distributions from ETP that ETE would otherwise be entitled to receive over 12 consecutive quarters. -
Strategic Asset Sale. In
December 2012 ,Southern Union entered into a purchase and sale agreement pursuant to which subsidiaries ofLaclede Gas Company, Inc. have agreed to acquire the assets ofSouthern Union's Missouri Gas Energy andNew England Gas Company divisions. Total consideration is expected to be$1.04 billion , subject to customary closing adjustments, less the assumption of$19 million of debt. For the period fromMarch 26, 2012 toDecember 31, 2012 , the distribution operations have been reclassified to discontinued operations. The assets and liabilities of the disposal group have been reclassified and reported as assets and liabilities held for sale as ofDecember 31, 2012 .
The Partnership has scheduled a conference call for
The Partnership’s principal sources of cash flow historically have
derived from distributions related to its direct and indirect
investments in the limited and general partner interests in
Use of Non-GAAP Financial Measures
This press release and accompanying schedules include the non-generally accepted accounting principle (“non-GAAP”) financial measures of Distributable Cash Flow. The accompanying schedules provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with GAAP. The Partnership's 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 Partnership's investments in limited and general
partner interests of ETP and Regency, net of the Partnership's cash
expenditures for general and administrative costs and interest expense.
The Partnership's definition of Distributable Cash Flow also includes
distributable cash flow related to
Distributable Cash Flow is a significant liquidity measure used by the Partnership's senior management to compare net cash flows generated by the Partnership to the distributions the Partnership expects to pay its unitholders. Using this measure, the Partnership's 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
Partnership's 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 twelve months
ended
Distributable Cash Flow, as adjusted. The
Partnership defines Distributable Cash Flow, as adjusted, for a period
as cash distributions expected to be received from ETP and Regency in
respect of such period in connection with the Partnership's investments
in limited and general partner interests of ETP and Regency, plus the
distributable cash flow related to
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) (unaudited) |
|||||||
December 31, | |||||||
2012 | 2011 | ||||||
ASSETS |
|||||||
CURRENT ASSETS | $ | 5,597 | $ | 1,455 | |||
PROPERTY, PLANT AND EQUIPMENT, net | 28,284 | 14,559 | |||||
NON-CURRENT ASSETS HELD FOR SALE | 985 | — | |||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 4,737 | 1,497 | |||||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | 43 | 26 | |||||
GOODWILL | 6,434 | 2,039 | |||||
INTANGIBLES ASSETS, net | 2,291 | 1,072 | |||||
OTHER NON-CURRENT ASSETS, net | 533 | 249 | |||||
Total assets | $ | 48,904 | $ | 20,897 | |||
LIABILITIES AND EQUITY |
|||||||
CURRENT LIABILITIES | $ | 5,845 | $ | 1,841 | |||
NON-CURRENT LIABILITIES HELD FOR SALE | 142 | — | |||||
LONG-TERM DEBT, less current maturities | 21,440 | 10,947 | |||||
DEFERRED INCOME TAXES | 3,566 | 217 | |||||
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES | 162 | 81 | |||||
SERIES A CONVERTIBLE PREFERRED UNITS | 331 | 323 | |||||
OTHER NON-CURRENT LIABILITIES | 995 | 29 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
PREFERRED UNITS OF SUBSIDIARY | 73 | 71 | |||||
EQUITY: | |||||||
Total partners' capital | 2,113 | 53 | |||||
Noncontrolling interest | 14,237 | 7,335 | |||||
Total equity | 16,350 | 7,388 | |||||
Total liabilities and equity | $ | 48,904 | $ | 20,897 |
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in millions, except per unit data) (unaudited) |
|||||||||||||||||
Three Months Ended |
Years Ended |
||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
REVENUES: | $ | 11,313 | $ | 2,166 | $ | 16,964 | $ | 8,190 | |||||||||
COSTS AND EXPENSES: | |||||||||||||||||
Cost of products sold | 9,883 | 1,362 | 13,088 | 5,169 | |||||||||||||
Operating expenses | 451 | 239 | 1,065 | 906 | |||||||||||||
Depreciation and amortization | 300 | 159 | 871 | 586 | |||||||||||||
Selling, general and administrative | 227 | 67 | 580 | 292 | |||||||||||||
Total costs and expenses | 10,861 | 1,827 | 15,604 | 6,953 | |||||||||||||
OPERATING INCOME | 452 | 339 | 1,360 | 1,237 | |||||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||
Interest expense, net of interest capitalized | (286 | ) | (197 | ) | (1,018 | ) | (740 | ) | |||||||||
Bridge loan related fees | — | — | (62 | ) | — | ||||||||||||
Equity in earnings of unconsolidated affiliates | 94 | 35 | 212 | 117 | |||||||||||||
Gain on deconsolidation of Propane Business | — | — | 1,057 | — | |||||||||||||
Losses on extinguishments of debt | — | — | (123 | ) | — | ||||||||||||
Gains (losses) on non-hedged interest rate derivatives | 4 | (13 | ) | (19 | ) | (78 | ) | ||||||||||
Other, net | 2 | (5 | ) | 30 | 12 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 266 | 159 | 1,437 | 548 | |||||||||||||
Income tax expense (benefit) | 21 | (2 | ) | 54 | 17 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS | 245 | 161 | 1,383 | 531 | |||||||||||||
Income (loss) from discontinued operations | 27 | 1 | (109 | ) | (3 | ) | |||||||||||
NET INCOME | 272 | 162 | 1,274 | 528 | |||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | 223 | 76 | 970 | 218 | |||||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 49 | 86 | 304 | 310 | |||||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME | 1 | — | 2 | 1 | |||||||||||||
LIMITED PARTNERS’ INTEREST IN NET INCOME | $ | 48 | $ | 86 | $ | 302 | $ | 309 | |||||||||
INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: | |||||||||||||||||
Basic | $ | 0.05 | $ | 0.37 | $ | 1.87 | $ | 1.42 | |||||||||
Diluted | $ | 0.05 | $ | 0.37 | $ | 1.87 | $ | 1.41 | |||||||||
NET INCOME PER LIMITED PARTNER UNIT: | |||||||||||||||||
Basic | $ | 0.17 | $ | 0.38 | $ | 1.13 | $ | 1.39 | |||||||||
Diluted | $ | 0.17 | $ | 0.38 | $ | 1.13 | $ | 1.38 | |||||||||
DISTRIBUTABLE
CASH FLOW
(Tabular amounts in millions)
(unaudited)
The following table presents the calculation and reconciliation of
Distributable Cash Flow and Distributable Cash Flow, as adjusted, of
Three Months Ended |
Years Ended |
||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
Cash distributions from ETP associated with: (1) | |||||||||||||||||
General partner interest | $ | 5 | $ | 5 | $ | 20 | $ | 20 | |||||||||
Incentive distribution rights | 148 | 112 | 529 | 422 | |||||||||||||
Limited partner interest | 45 | 45 | 180 | 180 | |||||||||||||
Total | 198 | 162 | 729 | 622 | |||||||||||||
IDR relinquishment related to Citrus Dropdown and Sunoco Merger | (31 | ) | — | (90 | ) | — | |||||||||||
Total cash distributions from ETP | 167 | 162 | 639 | 622 | |||||||||||||
Cash distributions from Regency associated with: (2) | |||||||||||||||||
General partner interest | 1 | 1 | 5 | 5 | |||||||||||||
Incentive distribution rights | 2 | 2 | 8 | 6 | |||||||||||||
Limited partner interest | 12 | 12 | 48 | 48 | |||||||||||||
Total cash distributions from Regency | 15 | 15 | 61 | 59 | |||||||||||||
Cash dividends from Holdco (3) | 75 | — | 75 | — | |||||||||||||
Total cash distributions and dividends received from ETP, Regency and Holdco | 257 | 177 | 775 | 681 | |||||||||||||
Distributable cash flow attributable to Southern Union (including acquisition-related expenses) from March 26, 2012 through October 5, 2012 (4) | — | — | 82 | — | |||||||||||||
Deduct expenses of the Parent Company on a stand-alone basis: | |||||||||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense (5) | (4 | ) | (4 | ) | (52 | ) | (30 | ) | |||||||||
Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate swaps (5) |
(60 | ) | (41 | ) | (232 | ) | (161 | ) | |||||||||
Bridge financing costs | — | — | (62 | ) | — | ||||||||||||
Distributable Cash Flow (6) | 193 | 132 | 511 | 490 | |||||||||||||
Acquisition-related expenses (5) | — | 3 | 157 | 21 | |||||||||||||
Distributable Cash Flow, as adjusted | $ | 193 | $ | 135 | $ | 668 | $ | 511 | |||||||||
Cash distributions to be paid to the partners of ETE: (6) | |||||||||||||||||
Distributions to be paid to limited partners | $ | 178 | $ | 139 | $ | 703 | $ | 543 | |||||||||
Distributions to be paid to general partner | — | — | 1 | 2 | |||||||||||||
Total cash distributions to be paid to the partners of ETE | $ | 178 | $ | 139 | $ | 704 | $ | 545 | |||||||||
Reconciliation of Non-GAAP “Distributable Cash Flow” and “Distributable Cash Flow, as adjusted,” to GAAP “Net income”: | |||||||||||||||||
Net income attributable to partners | $ | 49 | $ | 86 | $ | 304 | $ | 310 | |||||||||
Equity in income related to investments in ETP, Regency and Holdco | (114 | ) | (140 | ) | (676 | ) | (509 | ) | |||||||||
Total cash distributions and dividends from ETP, Regency and Holdco | 257 | 177 | 775 | 681 | |||||||||||||
Amortization included in interest expense (excluding ETP and Regency) | 3 | 1 | 13 | 3 | |||||||||||||
Fair value adjustment of ETE Preferred Units | 3 | 8 | 8 | 5 | |||||||||||||
Other non-cash (excluding ETP, Regency and Holdco) | (5 | ) | — | 87 | — | ||||||||||||
Distributable Cash Flow | 193 | 132 | 511 | 490 | |||||||||||||
Acquisition-related expenses (5) | — | 3 | 157 | 21 | |||||||||||||
Distributable Cash Flow, as adjusted | $ | 193 | $ | 135 | $ | 668 | $ | 511 |
(1) |
For the three months ended December 31, 2012, cash distributions received from ETP consist of cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012. For the three months ended December 31, 2011, cash distributions received from ETP consist of cash distributions paid on February 14, 2012 in respect of the quarter ended December 31, 2011. | |
For the year ended December 31, 2012, cash distributions received from ETP consist of cash distributions paid on May 15, 2012 in respect of the quarter ended March 31, 2012, cash distributions paid on August 14, 2012 in respect of the quarter ended June 30, 2012, cash distributions paid on November 14, 2012 in respect of the quarter ended September 30, 2012 and cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012. For the year ended December 31, 2011, cash distributions received from ETP consist of cash distributions paid on May 16, 2011 in respect of the quarter ended March 31, 2011, cash distributions paid on August 15, 2011 in respect of the quarter ended June 30, 2011, cash distributions paid on November 14, 2011 in respect of the quarter ended September 30, 2011 and cash distributions paid on February 14, 2012 in respect of the quarter ended December 31, 2011. | ||
(2) |
For the three months ended December 31, 2012, cash distributions received from Regency consist of cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012. For the three months ended December 31, 2011, cash distributions received from Regency consist of cash distributions paid on February 14, 2012 in respect of the quarter ended December 31, 2011. | |
For the year ended December 31, 2012, cash distributions received from Regency consist of cash distributions paid on May 14, 2012 in respect of the quarter ended March 31, 2012, cash distributions paid on August 14, 2012 in respect of the quarter ended June 30, 2012, cash distributions paid on November 14, 2012 in respect of the quarter ended September 30, 2012 and cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012. For the year ended December 31, 2011, cash distributions received from Regency consist of cash distributions paid on May 13, 2011 in respect of the quarter ended March 31, 2011, cash distributions paid on August 12, 2011 in respect of the quarter ended June 30, 2011, cash distributions paid on November 14, 2011 in respect of the quarter ended September 30, 2011 and cash distributions paid on February 14, 2012 in respect of the quarter ended December 31, 2011. | ||
(3) |
For the three months ended December 31, 2012, cash dividends received from Holdco consist of cash dividends paid on February 13, 2013 in respect of the quarter ended December 31, 2012. | |
(4) |
Distributable cash flow attributable to Southern Union relates to the period while Southern Union was our wholly-owned subsidiary, from our acquisition on March 26, 2012 to our contribution of Southern Union in connection with the Holdco Transaction on October 5, 2012. Distributable cash flow attributable to Southern Union was calculated as follows (in millions): |
Period from Acquisition | |||||
(March 26, 2012) to | |||||
October 5, 2012 | |||||
Net income | $ | 5 | |||
Amortization of finance costs charged to interest | (21 | ) | |||
Depreciation and amortization | 137 | ||||
Deferred income taxes | 18 | ||||
Non-cash equity-based compensation, accretion expense and amortization of regulatory assets | 5 | ||||
Other non-cash gains/revenues or losses/expenses | 24 | ||||
Distributions received from unconsolidated investments | 4 | ||||
Maintenance capital expenditures | (90 | ) | |||
Distributable cash flow attributable to Southern Union | 82 | ||||
Acquisition-related expenses recognized by Southern Union | 57 | ||||
Distributable cash flow, as adjusted, attributable to Southern Union | $ | 139 |
Distributable cash flow attributable to Southern Union for the period from our acquisition to December 31, 2012 reflected above included change in control payments and legal and other outside service costs totaling $72 million offset by benefit plan curtailment gains of $15 million. The net amount of $57 million was included in merger-related expenses that were added back to calculate ETE's Distributable Cash Flow, as adjusted. | ||
(5) |
Transaction costs for the year ended December 31, 2012 related to ETE's acquisition of Southern Union consisted of $62 million bridge financing costs, $38 million of selling, general and administrative expenses incurred by ETE and $57 million of merger-related expenses that were incurred directly by Southern Union. | |
(6) |
For the three months ended December 31, 2012, cash distributions to be paid by ETE consist of cash distributions paid on February 19, 2013 in respect of the quarter ended December 31, 2012. For the three months ended December 31, 2011, cash distributions paid by ETE consist of cash distributions paid on February 17, 2012 in respect of the quarter ended December 31, 2011. | |
For the year ended December 31, 2012 cash distributions paid or expected to be paid by ETE consist of cash distributions paid on May 18, 2012 in respect of the quarter ended March 31, 2012, cash distributions paid on August 17, 2012 in respect of the quarter ended June 30, 2012, cash distributions paid on November 16, 2012 in respect of the quarter ended September 30, 2012 and cash distributions paid on February 19, 2013 in respect of the quarter ended December 31, 2012. For the year ended December 31, 2011, cash distributions paid by ETE consist of cash distributions paid on May 19, 2011 in respect of the quarter ended March 31, 2011, cash distributions paid on August 19, 2011 in respect of the quarter ended June 30, 2011, cash distributions paid on November 18, 2011 in respect of the quarter ended September 30, 2011 and cash distributions paid on February 17, 2012 in respect of the quarter ended December 31, 2011. | ||
SUPPLEMENTAL INFORMATION
RESULTS
OF OPERATIONS FOR HOLDCO
(Tabular amounts in millions)
(unaudited)
Supplemental Data
Following is a summary of Holdco's Distributable Cash Flow for the year
ended
Period from October 5, 2012 to December 31, 2012 | |||||||||||||||||
Southern Union | Sunoco | Other | Total | ||||||||||||||
Net income (loss) | $ | 49 | $ | (14 | ) | $ | (47 | ) | $ | (12 | ) | ||||||
Depreciation and amortization | 42 | 32 | — | 74 | |||||||||||||
Depreciation, amortization, interest and income taxes of discontinued operations | 16 | — | — | 16 | |||||||||||||
LIFO valuation reserve |
— |
|
75 | — | 75 | ||||||||||||
Equity in earnings (losses) from unconsolidated affiliates | 6 | (70 | ) | (2 | ) | (66 | ) | ||||||||||
Distributions from unconsolidated affiliates | 2 | 85 | 3 | 90 | |||||||||||||
Maintenance capital expenditures | (60 | ) | (25 | ) | — | (85 | ) | ||||||||||
Other, net | 4 | 1 | — | 5 | |||||||||||||
Distributable Cash Flow | 59 | 84 | (46 | ) | 97 | ||||||||||||
Acquisition-related expenses | — | 49 | — | 49 | |||||||||||||
Distributable cash flow, as adjusted | $ | 59 | $ | 133 | $ | (46 | ) | $ | 146 | ||||||||
Total Holdco dividends paid in respect of the quarter ending
Source:
Investor Relations:
Energy Transfer
Brent Ratliff,
214-981-0700
or
Media Relations:
Granado
Communications Group
Vicki Granado, 214-599-8785
cell:
214-498-9272