UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : April 11, 2007
ENERGY TRANSFER EQUITY, L.P.
(Exact name of registrant as specified in its charter)
| Delaware |
001-32740 |
30-0108820 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
2828 Woodside Street
Dallas, Texas 75204
(Address of principal executive offices) (Zip Code)
(214) 981-0700
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
On April 11, 2007, Energy Transfer Equity, L.P. (the “Partnership”), issued a press release announcing the Partnership’s earnings for the three and six month periods ended February 28, 2007.
A copy of the press release is furnished as an exhibit to this Current Report.
In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 7.01 and in the attached exhibits shall be deemed to be “furnished” and not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Item 9.01. Financial Statement and Exhibits.
| (d) | Exhibits. |
In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached exhibit are deemed to be furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.
| EXHIBIT NUMBER |
DESCRIPTION | |||
| 99.1 | — | Press release dated April 11, 2007. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ENERGY TRANSFER EQUITY, L.P. | ||||
| By: | LEGP, LLC, its general partner | |||
| Date: April 11, 2007 | By: | /s/ John W. McReynolds | ||
| John W. McReynolds, | ||||
| President and Chief Financial Officer | ||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press release dated April 11, 2007. |
Exhibit 99.1
FOR IMMEDIATE RELEASE
ENERGY TRANSFER EQUITY REPORTS RECORD
SECOND QUARTER AND YEAR-TO-DATE RESULTS
Dallas, Texas – April 11, 2007 – Energy Transfer Equity, L.P. (NYSE:ETE) today reported net income of $147.4 million and Distributable Cash of $80.3 million for the second quarter ended February 28, 2007. The Partnership raised its cash distribution on its outstanding limited partner interests to $0.356 per limited partner unit ($1.424 annualized). Distributable Cash is a “non-GAAP measure”, as explained below.
The Partnership’s 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”). ETE currently has no other operating activities apart from those conducted by the operating subsidiaries within ETP. ETE’s principal uses of cash are for administrative expenses, debt service and distributions to its general and limited partners.
ETE’s net income increased $123 million for the second quarter ended February 28, 2007 to $147.4 million as compared to $24.4 million for the second quarter ended February 28, 2006. Net income for the six months ended February 28, 2007 was $178.4 million as compared to $64 million for the six months ended February 28, 2006. These increases are due to the increased earnings of ETP and the decrease in minority interest expense. The increased earnings of ETP is primarily as a result of the acquisition of Titan Propane in June 2006 and Transwestern Pipeline in the fall of 2006. The minority interest expense primarily represents partnership interests in ETP that ETE does not own. The decrease in minority interest expense is due to the increase in ETE’s average ownership in ETP’s limited and general partner interests for the second quarter ended February 28, 2007 to approximately 47% as compared to approximately 33% for the second quarter ended February 28, 2006 and the increase in ETE’s income allocation from ETP due to ETE’s current ownership of 100% of the incentive distribution rights of ETP.
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. 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 Partnership’s Distributable Cash 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. The Partnership defines Distributable Cash as cash distributions received or expected to be received from ETP in connection with the Partnership’s investments in limited and
general partner interests of ETP, net of the Partnership’s expenditures for general and administrative costs and debt service. Distributable Cash is a significant liquidity measure used by the Partnership’s senior management to compare net cash flows generated by the Partnership’s equity investments in ETP to the distributions the Partnership expects to pay its unitholders. Using this measure, the Partnership’s management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions.
Distributable Cash is an important non-GAAP financial measure for our limited partners since it indicates to investors whether or not 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 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 measures most directly comparable to Distributable Cash are net income and cash flow from operating activities for ETE on a stand-alone basis (“Parent Company”).
The accompanying analysis of Distributable Cash is presented only for the three and six month periods ended February 28, 2007. Prior period information is not comparable or meaningful due to ETE’s initial public offering in February 2006.
Energy Transfer Equity, L.P. (NYSE:ETE) owns the general partner of Energy Transfer Partners and approximately 62.5 million ETP limited partner units. Together ETP and ETE have a combined enterprise value approaching $20 billion.
Energy Transfer Partners, L.P. (NYSE:ETP) is a publicly traded partnership owning and operating a diversified portfolio of energy assets. ETP’s natural gas transportation and storage operations include intrastate and interstate natural gas gathering and transportation pipelines, natural gas treating and processing assets located in Texas and Louisiana, and three natural gas storage facilities located in Texas. These assets include approximately 12,200 miles of intrastate pipeline in service, with an additional 500 miles of intrastate pipeline under construction, and 2,400 miles of interstate pipeline. ETP is one of the three largest retail marketers of propane in the United States, serving more than one million customers from over 400 customer service locations extending from coast to coast.
The information contained in this press release is available on our website at www.energytransfer.com.
Contacts:
Investor Relations:
Renee Lorenz
Energy Transfer
214-981-0700
Media Relations:
Vicki Granado
Gittins & Granado
214-361-0400
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
| February 28, | August 31, | |||||||
| 2007 | 2006 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 90,073 | $ | 26,204 | ||||
| Marketable securities |
4,026 | 2,817 | ||||||
| Accounts receivable, net of allowance for doubtful accounts |
717,957 | 675,545 | ||||||
| Inventories |
194,690 | 387,140 | ||||||
| Deposits paid to vendors |
32,970 | 87,806 | ||||||
| Exchanges receivable |
38,185 | 23,221 | ||||||
| Price risk management assets |
18,616 | 56,851 | ||||||
| Prepaid expenses and other |
38,507 | 43,151 | ||||||
| Total current assets |
1,135,024 | 1,302,735 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, net |
5,526,350 | 3,748,614 | ||||||
| GOODWILL |
751,992 | 633,998 | ||||||
| INTANGIBLES AND OTHER LONG-TERM ASSETS, net |
373,867 | 238,794 | ||||||
| Total assets |
$ | 7,787,233 | $ | 5,924,141 | ||||
| LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT) | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ | 533,493 | $ | 603,527 | ||||
| Exchanges payable |
38,526 | 24,722 | ||||||
| Customer advances and deposits |
47,101 | 108,836 | ||||||
| Accrued and other current liabilities |
246,217 | 206,177 | ||||||
| Price risk management liabilities |
20,139 | 36,918 | ||||||
| Current maturities of long-term debt |
40,587 | 40,607 | ||||||
| Total current liabilities |
926,063 | 1,020,787 | ||||||
| LONG-TERM DEBT, less current maturities |
4,914,625 | 3,205,646 | ||||||
| DEFERRED INCOME TAXES |
204,075 | 207,877 | ||||||
| OTHER NON-CURRENT LIABILITIES |
25,557 | 4,953 | ||||||
| MINORITY INTERESTS |
1,905,490 | 1,439,127 | ||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| 7,975,810 | 5,878,390 | |||||||
| PARTNERS’ CAPITAL (DEFICIT): |
||||||||
| General Partner |
91 | (69 | ) | |||||
| Limited Partners: |
||||||||
| Common Unitholders (215,300,501 and 124,360,520 units authorized, issued and outstanding at February 28, 2007 and August 31, 2006, respectively) |
(250,817 | ) | (9,586 | ) | ||||
| Class B Unitholders (2,521,570 units authorized, issued and outstanding |
53,715 | 53,130 | ||||||
| (197,011 | ) | 43,475 | ||||||
| Accumulated other comprehensive income |
8,434 | 2,276 | ||||||
| Total partners’ capital (deficit) |
(188,577 | ) | 45,751 | |||||
| Total liabilities and partners’ capital (deficit) |
$ | 7,787,233 | $ | 5,924,141 | ||||
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit and unit data)
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| February 28, | February 28, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| REVENUES: |
||||||||||||||||
| Midstream and transportation and storage |
$ | 1,492,838 | $ | 2,083,303 | $ | 2,555,282 | $ | 4,291,837 | ||||||||
| Propane and other |
569,642 | 366,513 | 895,643 | 574,599 | ||||||||||||
| Total revenues |
2,062,480 | 2,449,816 | 3,450,925 | 4,866,436 | ||||||||||||
| COSTS AND EXPENSES: |
||||||||||||||||
| Cost of products sold, midstream and transportation and storage |
1,138,709 | 1,785,053 | 2,022,692 | 3,744,422 | ||||||||||||
| Cost of products sold, propane and other |
347,107 | 223,778 | 550,467 | 355,036 | ||||||||||||
| Operating expenses |
133,809 | 99,696 | 266,190 | 202,367 | ||||||||||||
| Depreciation and amortization |
48,415 | 32,070 | 85,279 | 62,037 | ||||||||||||
| Selling, general and administrative |
42,589 | 85,506 | 71,359 | 110,995 | ||||||||||||
| Total costs and expenses |
1,710,629 | 2,226,103 | 2,995,987 | 4,474,857 | ||||||||||||
| OPERATING INCOME |
351,851 | 223,713 | 454,938 | 391,579 | ||||||||||||
| OTHER INCOME (EXPENSE): |
||||||||||||||||
| Interest expense, net of interest capitalized |
(65,077 | ) | (39,096 | ) | (133,624 | ) | (78,239 | ) | ||||||||
| Loss on extinguishment of debt |
— | (5,060 | ) | — | (5,060 | ) | ||||||||||
| Equity in earnings (losses) of affiliates |
(514 | ) | 106 | 4,373 | (168 | ) | ||||||||||
| Gain (loss) on disposal of assets |
(3,229 | ) | 662 | (1,285 | ) | 534 | ||||||||||
| Interest and other income, net |
1,652 | 2,432 | 3,169 | 3,496 | ||||||||||||
| INCOME BEFORE INCOME TAX EXPENSE AND MINORITY INTERESTS |
284,683 | 182,757 | 327,571 | 312,142 | ||||||||||||
| Income tax expense |
2,576 | 3,289 | 5,449 | 24,976 | ||||||||||||
| INCOME BEFORE MINORITY INTERESTS |
282,107 | 179,468 | 322,122 | 287,166 | ||||||||||||
| Minority interests |
(134,751 | ) | (155,033 | ) | (143,726 | ) | (223,130 | ) | ||||||||
| NET INCOME |
147,356 | 24,435 | 178,396 | 64,036 | ||||||||||||
| GENERAL PARTNER’S INTEREST IN NET INCOME |
467 | 144 | 612 | 392 | ||||||||||||
| BASIC NET INCOME PER LIMITED PARTNER UNIT |
$ | 0.67 | $ | 0.18 | $ | 0.96 | $ | 0.54 | ||||||||
| BASIC AVERAGE NUMBER OF UNITS OUTSTANDING |
217,821,530 | 131,468,542 | 186,054,317 | 118,826,222 | ||||||||||||
| DILUTED NET INCOME PER LIMITED PARTNER UNIT |
$ | 0.67 | $ | 0.18 | $ | 0.95 | $ | 0.53 | ||||||||
| DILUTED AVERAGE NUMBER OF UNITS OUTSTANDING |
217,821,530 | 131,468,542 | 186,054,317 | 118,826,222 | ||||||||||||
| VOLUMES SOLD THROUGH ENERGY TRANSFER PARTNERS, L.P.: |
Three Months Ended February 28, |
Six Months Ended February 28, | ||||||
| 2007 | 2006 | 2007 | 2006 | |||||
| Midstream |
||||||||
| Natural gas MMBtu/d – sold |
819,611 | 1,529,856 | 900,238 | 1,528,616 | ||||
| NGLs Bbls/d – sold |
15,901 | 9,537 | 13,723 | 9,879 | ||||
| Transportation and storage |
||||||||
| Natural gas MMBtu/d – transported |
5,030,631 | 4,231,797 | 4,918,191 | 4,349,137 | ||||
| Natural gas MMBtu/d – sold |
1,655,278 | 1,868,486 | 1,481,724 | 1,709,049 | ||||
| Interstate transportation |
||||||||
| Natural gas MMBtu/d – transported |
1,728,056 | — | 1,728,056 | — | ||||
| Propane operations (in gallons) |
||||||||
| Retail propane |
253,715 | 165,758 | 394,346 | 254,496 | ||||
| Wholesale |
32,428 | 28,243 | 55,711 | 47,844 | ||||
ENERGY TRANSFER EQUITY, L.P. – PARENT COMPANY
DISTRIBUTABLE CASH
(Dollars in thousands, except per unit)
(unaudited)
The following table presents the calculation and reconciliation of Distributable Cash of the Parent Company with respect to the three and six months ended February 28, 2007:
| Three Months Ended |
Six Months Ended |
|||||||
| February 28, | February 28, | |||||||
| 2007 | 2007 | |||||||
| Distributable Cash: |
||||||||
| Cash distributions received or expected to be received from Energy Transfer Partners, L.P. associated with: |
||||||||
| General partner interest (1): |
||||||||
| Standard distribution rights |
$ | 3,374 | $ | 6,646 | ||||
| Incentive distribution rights |
54,345 | 106,225 | ||||||
| Limited partner interest (1): |
||||||||
| 36,413,840 common units |
28,676 | 56,669 | ||||||
| 26,086,957 class G units |
20,544 | 40,598 | ||||||
| Total cash received or expected to be received from Energy Transfer Partners, L.P. (1) |
106,939 | 210,138 | ||||||
| Deduct expenses of the Parent Company on a stand-alone basis: |
||||||||
| General and administrative expenses |
(3,464 | ) | (5,437 | ) | ||||
| Interest expense, net of amortization of financing costs |
(23,211 | ) | (49,797 | ) | ||||
| Distributable Cash |
$ | 80,264 | $ | 154,904 | ||||
| Cash distributions paid or expected to be paid to the partners of Energy Transfer Equity, L.P. (2): |
||||||||
| Distribution per limited partner unit as of the end of the period |
$ | 0.356 | $ | 0.696 | ||||
| Distributions to be paid to public unitholders |
$ | 33,791 | $ | 64,362 | ||||
| Distributions to be paid to affiliates |
45,536 | 89,024 | ||||||
| Distributions to be paid to general partner |
246 | 482 | ||||||
| Total cash distributions paid or expected to be paid by Energy Transfer Equity, L.P. to its limited and general partners (2) |
||||||||
| $ | 79,573 | $ | 153,868 | |||||
| Reconciliation of Non-GAAP “Distributable Cash” to GAAP “Net Income” and GAAP “Net cash provided by operating activities” for the Parent Company on a stand-alone basis: |
||||||||
| Net income |
$ | 147,356 | $ | 178,396 | ||||
| Adjustments to derive Distributable Cash: |
||||||||
| Equity in income of unconsolidated affiliates |
(174,790 | ) | (234,769 | ) | ||||
| Quarterly distribution received or expected to be received from Energy Transfer Partners, L.P. (1) |
106,939 | 210,138 | ||||||
| Amortization of financing costs and other non-cash items |
759 | 1,139 | ||||||
| Distributable Cash |
80,264 | 154,904 | ||||||
| Adjustments to Distributable Cash to derive Net Cash Provided by Operating Activities: |
||||||||
| Quarterly distribution received or expected to be received from Energy Transfer Partners, L.P. (1) |
(106,939 | ) | (210,138 | ) | ||||
| Cash distribution actually received from Energy Transfer Partners, L.P. during the period |
99,927 | 149,833 | ||||||
| Net effect of changes in operating accounts |
1,843 | (6,740 | ) | |||||
| Net cash provided by operating activities for Parent Company on stand-alone basis |
$ | 75,095 | $ | 87,859 | ||||
(1) For the three months ended February 28, 2007, cash distributions received or expected to be received from Energy Transfer Partners, L.P. consists of cash distributions in respect of the fiscal quarter ended February 28, 2007 payable on April 13, 2007 to holders of record on April 6, 2007. For the six months ended February 28, 2007, cash distributions received or expected to be received from Energy Transfer Partners, L.P. consist of cash distributions received on January 15, 2007 in respect of the fiscal quarter ended November 30, 2006 as well as the cash distributions in respect of the fiscal quarter ended February 28, 2007 described in the preceding sentence.
(2) For the three months ended February 28, 2007, cash distributions received or expected to be received from Energy Transfer Equity, L.P. consists of cash distributions in respect of the fiscal quarter ended February 28, 2007 payable on April 16, 2007 to holders of record on April 9, 2007. For the six months ended February 28, 2007, cash distributions paid or payable by Energy Transfer Equity, L.P. consist of cash distributions paid on January 19, 2007 in respect of the fiscal quarter ended November 30, 2006 as well as the cash distributions in respect of the fiscal quarter ended February 28, 2007 as described in the preceding sentence.