Delaware
|
76-0568219
|
||
(State
or Other Jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
||
Incorporation
or Organization)
|
|||
1100
Louisiana, 10th Floor
|
|||
Houston,
Texas 77002
|
|||
(Address
of Principal Executive Offices, Including Zip Code)
|
|||
(713)
381-6500
|
|||
(Registrant’s
Telephone Number, Including Area Code)
|
Large
accelerated filer þ
|
Accelerated
filer o
|
Non-accelerated
filer o
(Do not check if a smaller reporting company)
|
Smaller
reporting company o
|
Page
No.
|
||
September
30,
|
December
31,
|
|||||||
ASSETS
|
2009
|
2008
|
||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 73.8 | $ | 35.4 | ||||
Restricted
cash
|
102.8 | 203.8 | ||||||
Accounts
and notes receivable – trade, net of allowance for doubtful
accounts of
$14.4 at September 30, 2009 and $15.1 at December 31, 2008
|
1,471.4 | 1,185.5 | ||||||
Accounts
receivable – related parties
|
37.9 | 61.6 | ||||||
Inventories
(see Note 5)
|
1,147.5 | 362.8 | ||||||
Derivative
assets (see Note 4)
|
197.0 | 202.8 | ||||||
Prepaid
and other current assets
|
118.6 | 111.8 | ||||||
Total
current assets
|
3,149.0 | 2,163.7 | ||||||
Property,
plant and equipment, net
|
13,661.6 | 13,154.8 | ||||||
Investments
in unconsolidated affiliates
|
901.0 | 949.5 | ||||||
Intangible
assets, net of accumulated amortization of $492.5 at September
30, 2009 and $429.9 at December 31, 2008
|
793.0 | 855.4 | ||||||
Goodwill
|
706.9 | 706.9 | ||||||
Deferred
tax asset
|
1.1 | 0.4 | ||||||
Other
assets
|
144.9 | 126.8 | ||||||
Total
assets
|
$ | 19,357.5 | $ | 17,957.5 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable – trade
|
$ | 327.1 | $ | 300.5 | ||||
Accounts
payable – related parties
|
47.2 | 39.6 | ||||||
Accrued
product payables
|
1,675.6 | 1,142.4 | ||||||
Accrued
interest payable
|
117.4 | 151.9 | ||||||
Other
accrued expenses
|
46.1 | 48.8 | ||||||
Derivative
liabilities (see Note 4)
|
263.1 | 287.2 | ||||||
Other
current liabilities
|
220.9 | 252.7 | ||||||
Total
current liabilities
|
2,697.4 | 2,223.1 | ||||||
Long-term debt: (see
Note 9)
|
||||||||
Senior
debt obligations – principal
|
7,912.3 | 7,813.4 | ||||||
Junior
subordinated notes – principal
|
1,232.7 | 1,232.7 | ||||||
Other
|
53.3 | 62.3 | ||||||
Total
long-term debt
|
9,198.3 | 9,108.4 | ||||||
Deferred
tax liabilities
|
69.6 | 66.1 | ||||||
Other
long-term liabilities
|
95.8 | 81.3 | ||||||
Commitments
and contingencies
|
||||||||
Equity: (see Note
10)
|
||||||||
Enterprise
Products Partners L.P. partners’ equity:
|
||||||||
Limited
Partners:
|
||||||||
Common
units (475,293,998 units outstanding at September 30, 2009 and
439,354,731 units outstanding at December 31, 2008)
|
6,670.8 | 6,036.9 | ||||||
Restricted
common units (2,658,850 units outstanding at September 30, 2009
and
2,080,600 units outstanding at December 31, 2008)
|
34.1 | 26.2 | ||||||
General
partner
|
136.6 | 123.6 | ||||||
Accumulated
other comprehensive loss
|
(67.1 | ) | (97.2 | ) | ||||
Total
Enterprise Products Partners L.P. partners’ equity
|
6,774.4 | 6,089.5 | ||||||
Noncontrolling
interest
|
522.0 | 389.1 | ||||||
Total
equity
|
7,296.4 | 6,478.6 | ||||||
Total
liabilities and equity
|
$ | 19,357.5 | $ | 17,957.5 |
For
the Three Months
|
For
the Nine Months
|
|||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenues:
|
||||||||||||||||
Third
parties
|
$ | 4,444.7 | $ | 5,997.7 | $ | 11,006.1 | $ | 17,498.4 | ||||||||
Related
parties
|
151.4 | 300.2 | 521.0 | 823.7 | ||||||||||||
Total
revenues (see Note 11)
|
4,596.1 | 6,297.9 | 11,527.1 | 18,322.1 | ||||||||||||
Costs
and expenses:
|
||||||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Third
parties
|
3,983.2 | 5,806.7 | 9,740.1 | 16,766.0 | ||||||||||||
Related
parties
|
237.0 | 165.2 | 655.6 | 477.1 | ||||||||||||
Total
operating costs and expenses
|
4,220.2 | 5,971.9 | 10,395.7 | 17,243.1 | ||||||||||||
General
and administrative costs:
|
||||||||||||||||
Third
parties
|
17.1 | 8.4 | 33.5 | 22.4 | ||||||||||||
Related
parties
|
16.8 | 13.4 | 51.2 | 44.6 | ||||||||||||
Total
general and administrative costs
|
33.9 | 21.8 | 84.7 | 67.0 | ||||||||||||
Total
costs and expenses
|
4,254.1 | 5,993.7 | 10,480.4 | 17,310.1 | ||||||||||||
Equity
in income of unconsolidated affiliates
|
22.5 | 14.9 | 18.3 | 48.1 | ||||||||||||
Operating
income
|
364.5 | 319.1 | 1,065.0 | 1,060.1 | ||||||||||||
Other
income (expense):
|
||||||||||||||||
Interest
expense
|
(128.0 | ) | (102.7 | ) | (374.6 | ) | (290.4 | ) | ||||||||
Interest
income
|
0.2 | 2.1 | 1.4 | 4.7 | ||||||||||||
Other,
net
|
(0.2 | ) | (0.9 | ) | (0.5 | ) | (1.9 | ) | ||||||||
Total
other expense, net
|
(128.0 | ) | (101.5 | ) | (373.7 | ) | (287.6 | ) | ||||||||
Income
before provision for income taxes
|
236.5 | 217.6 | 691.3 | 772.5 | ||||||||||||
Provision
for income taxes
|
(6.6 | ) | (6.6 | ) | (24.0 | ) | (17.2 | ) | ||||||||
Net
income
|
229.9 | 211.0 | 667.3 | 755.3 | ||||||||||||
Net
income attributable to noncontrolling interest
|
(17.0 | ) | (7.9 | ) | (42.5 | ) | (29.3 | ) | ||||||||
Net
income attributable to Enterprise Products Partners L.P.
|
$ | 212.9 | $ | 203.1 | $ | 624.8 | $ | 726.0 | ||||||||
Net
income allocated to:
|
||||||||||||||||
Limited
partners
|
$ | 171.3 | $ | 167.6 | $ | 504.6 | $ | 620.5 | ||||||||
General
partner
|
$ | 41.6 | $ | 35.5 | $ | 120.2 | $ | 105.5 | ||||||||
Basic and diluted earnings per
unit (see Note 13)
|
$ | 0.36 | $ | 0.38 | $ | 1.09 | $ | 1.41 |
For
the Three Months
|
For
the Nine Months
|
|||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
income
|
$ | 229.9 | $ | 211.0 | $ | 667.3 | $ | 755.3 | ||||||||
Other
comprehensive income (loss):
|
||||||||||||||||
Cash
flow hedges:
|
||||||||||||||||
Commodity
derivative instrument losses during period
|
(8.3 | ) | (244.0 | ) | (146.9 | ) | (124.1 | ) | ||||||||
Reclassification
adjustment for losses included in net income related
to commodity derivative instruments
|
77.8 | 28.5 | 176.3 | 15.8 | ||||||||||||
Interest
rate derivative instrument gains (losses) during period
|
(8.0 | ) | (1.1 | ) | 7.1 | (22.9 | ) | |||||||||
Reclassification
adjustment for (gains) losses included in net income related
to interest rate derivative instruments
|
1.3 | -- | 3.3 | (2.4 | ) | |||||||||||
Foreign
currency derivative gains (losses)
|
0.2 | -- | (10.3 | ) | (1.3 | ) | ||||||||||
Total
cash flow hedges
|
63.0 | (216.6 | ) | 29.5 | (134.9 | ) | ||||||||||
Foreign
currency translation adjustment
|
1.1 | 0.4 | 1.7 | 0.5 | ||||||||||||
Change
in funded status of pension and postretirement plans, net of
tax
|
-- | -- | -- | (0.3 | ) | |||||||||||
Total
other comprehensive income (loss)
|
64.1 | (216.2 | ) | 31.2 | (134.7 | ) | ||||||||||
Comprehensive
income (loss)
|
294.0 | (5.2 | ) | 698.5 | 620.6 | |||||||||||
Comprehensive
income attributable to noncontrolling interest
|
(17.3 | ) | (7.6 | ) | (43.6 | ) | (28.7 | ) | ||||||||
Comprehensive
income attributable to Enterprise Products Partners L.P.
|
$ | 276.7 | $ | (12.8 | ) | $ | 654.9 | $ | 591.9 |
For
the Nine Months
|
||||||||
Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Operating
activities:
|
||||||||
Net
income
|
$ | 667.3 | $ | 755.3 | ||||
Adjustments
to reconcile net income to net cash flows
provided by operating activities:
|
||||||||
Depreciation,
amortization and accretion
|
476.9 | 413.6 | ||||||
Equity
in income of unconsolidated affiliates
|
(18.3 | ) | (48.1 | ) | ||||
Distributions
received from unconsolidated affiliates
|
63.6 | 69.9 | ||||||
Operating
lease expense paid by EPCO, Inc.
|
0.5 | 1.5 | ||||||
Gain
from asset sales and related transactions
|
(0.4 | ) | (1.7 | ) | ||||
Non-cash
impairment charge
|
1.7 | -- | ||||||
Deferred
income tax expense
|
2.5 | 5.6 | ||||||
Changes
in fair market value of derivative instruments
|
11.7 | 5.4 | ||||||
Effect
of pension settlement recognition
|
(0.1 | ) | (0.1 | ) | ||||
Net
effect of changes in operating accounts (see Note 16)
|
(590.0 | ) | (228.4 | ) | ||||
Net
cash flows provided by operating activities
|
615.4 | 973.0 | ||||||
Investing
activities:
|
||||||||
Capital
expenditures
|
(851.1 | ) | (1,485.6 | ) | ||||
Contributions
in aid of construction costs
|
12.8 | 21.2 | ||||||
Decrease
(increase) in restricted cash
|
100.8 | (112.2 | ) | |||||
Cash
used for business combinations
|
(24.5 | ) | (57.1 | ) | ||||
Acquisition
of intangible assets
|
-- | (5.1 | ) | |||||
Investments
in unconsolidated affiliates
|
(14.5 | ) | (72.0 | ) | ||||
Other
proceeds from investing activities
|
5.1 | 1.7 | ||||||
Cash
used in investing activities
|
(771.4 | ) | (1,709.1 | ) | ||||
Financing
activities:
|
||||||||
Borrowings
under debt agreements
|
3,818.9 | 6,360.4 | ||||||
Repayments
of debt
|
(3,724.2 | ) | (4,824.0 | ) | ||||
Debt
issuance costs
|
(5.2 | ) | (8.8 | ) | ||||
Cash
distributions paid to partners
|
(860.6 | ) | (770.9 | ) | ||||
Cash
distributions paid to noncontrolling interest (see Note
10)
|
(47.9 | ) | (39.2 | ) | ||||
Net
cash proceeds from issuance of common units
|
878.2 | 57.2 | ||||||
Cash
contributions from noncontrolling interest (see Note 10)
|
137.4 | -- | ||||||
Acquisition
of treasury units
|
(1.8 | ) | (0.8 | ) | ||||
Monetization
of interest rate derivative instruments
|
-- | (22.1 | ) | |||||
Cash
provided by financing activities
|
194.8 | 751.8 | ||||||
Effect
of exchange rate changes on cash
|
(0.4 | ) | -- | |||||
Net
change in cash and cash equivalents
|
38.8 | 15.7 | ||||||
Cash
and cash equivalents, January 1
|
35.4 | 39.7 | ||||||
Cash
and cash equivalents, September 30
|
$ | 73.8 | $ | 55.4 |
Enterprise
Products Partners L.P.
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Other
|
||||||||||||||||||||
Limited
|
General
|
Comprehensive
|
Noncontrolling
|
|||||||||||||||||
Partners
|
Partner
|
Loss
|
Interest
|
Total
|
||||||||||||||||
Balance,
December 31, 2008
|
$ | 6,063.1 | $ | 123.6 | $ | (97.2 | ) | $ | 389.1 | $ | 6,478.6 | |||||||||
Net
income
|
504.6 | 120.2 | -- | 42.5 | 667.3 | |||||||||||||||
Operating
leases paid by EPCO, Inc.
|
0.5 | -- | -- | -- | 0.5 | |||||||||||||||
Cash
distributions to partners
|
(735.2 | ) | (124.9 | ) | -- | -- | (860.1 | ) | ||||||||||||
Unit
option reimbursements to EPCO, Inc.
|
(0.5 | ) | -- | -- | -- | (0.5 | ) | |||||||||||||
Cash
distributions paid to noncontrolling interest (see Note
10)
|
-- | -- | -- | (47.9 | ) | (47.9 | ) | |||||||||||||
Net
cash proceeds from issuance of common units
|
860.2 | 17.5 | -- | -- | 877.7 | |||||||||||||||
Cash
proceeds from exercise of unit options
|
0.5 | -- | -- | -- | 0.5 | |||||||||||||||
Cash
contributions from noncontrolling interest (see Note 10)
|
-- | -- | -- | 137.4 | 137.4 | |||||||||||||||
Amortization
of equity awards
|
13.5 | 0.2 | -- | -- | 13.7 | |||||||||||||||
Acquisition
of treasury units
|
(1.8 | ) | -- | -- | -- | (1.8 | ) | |||||||||||||
Foreign
currency translation adjustment
|
-- | -- | 1.7 | -- | 1.7 | |||||||||||||||
Cash
flow hedges
|
-- | -- | 28.4 | 1.1 | 29.5 | |||||||||||||||
Other
|
-- | -- | -- | (0.2 | ) | (0.2 | ) | |||||||||||||
Balance,
September 30, 2009
|
$ | 6,704.9 | $ | 136.6 | $ | (67.1 | ) | $ | 522.0 | $ | 7,296.4 |
Enterprise
Products Partners L.P.
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Other
|
||||||||||||||||||||
Limited
|
General
|
Comprehensive
|
Noncontrolling
|
|||||||||||||||||
Partners
|
Partner
|
Income
(Loss)
|
Interest
|
Total
|
||||||||||||||||
Balance,
December 31, 2007
|
$ | 5,992.9 | $ | 122.3 | $ | 19.1 | $ | 427.8 | $ | 6,562.1 | ||||||||||
Net
income
|
620.5 | 105.5 | -- | 29.3 | 755.3 | |||||||||||||||
Operating
leases paid by EPCO, Inc.
|
1.5 | -- | -- | -- | 1.5 | |||||||||||||||
Cash
distributions to partners
|
(663.9 | ) | (106.4 | ) | -- | -- | (770.3 | ) | ||||||||||||
Unit
option reimbursements to EPCO, Inc.
|
(0.6 | ) | -- | -- | -- | (0.6 | ) | |||||||||||||
Cash
distributions paid to noncontrolling interest (see Note
10)
|
-- | -- | -- | (39.2 | ) | (39.2 | ) | |||||||||||||
Net
cash proceeds from issuance of common units
|
55.4 | 1.1 | -- | -- | 56.5 | |||||||||||||||
Cash
proceeds from exercise of unit options
|
0.7 | -- | -- | -- | 0.7 | |||||||||||||||
Amortization
of equity awards
|
8.7 | 0.1 | -- | -- | 8.8 | |||||||||||||||
Interest
acquired from noncontrolling interest
|
-- | -- | -- | (7.6 | ) | (7.6 | ) | |||||||||||||
Acquisition
of treasury units
|
(0.8 | ) | -- | -- | -- | (0.8 | ) | |||||||||||||
Foreign
currency translation adjustment
|
-- | -- | 0.5 | -- | 0.5 | |||||||||||||||
Change
in funded status of pension and postretirement plans
|
-- | -- | (0.3 | ) | -- | (0.3 | ) | |||||||||||||
Cash
flow hedges
|
-- | -- | (134.3 | ) | (0.6 | ) | (134.9 | ) | ||||||||||||
Balance,
September 30, 2008
|
$ | 6,014.4 | $ | 122.6 | $ | (115.0 | ) | $ | 409.7 | $ | 6,431.7 |
September
30, 2009
|
December
31, 2008
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Financial
Instruments
|
Value
|
Value
|
Value
|
Value
|
||||||||||||
Financial
assets:
|
||||||||||||||||
Cash
and cash equivalents and restricted cash
|
$ | 176.6 | $ | 176.6 | $ | 239.2 | $ | 239.2 | ||||||||
Accounts
receivable
|
1,509.3 | 1,509.3 | 1,247.1 | 1,247.1 | ||||||||||||
Financial
liabilities:
|
||||||||||||||||
Accounts
payable and accrued expenses
|
2,213.4 | 2,213.4 | 1,683.2 | 1,683.2 | ||||||||||||
Other
current liabilities
|
220.9 | 220.9 | 252.7 | 252.7 | ||||||||||||
Fixed-rate
debt (principal amount)
|
7,986.7 | 8,324.5 | 7,704.3 | 6,639.0 | ||||||||||||
Variable-rate
debt
|
1,158.3 | 1,158.3 | 1,341.8 | 1,341.8 |
§
|
eliminates
the scope exception for qualifying special-purpose
entities;
|
§
|
amends
certain guidance for determining whether an entity is a
VIE;
|
§
|
expands
the list of events that trigger reconsideration of whether an entity is a
VIE;
|
§
|
requires
a qualitative rather than a quantitative analysis to determine the primary
beneficiary of a VIE;
|
§
|
requires
continuous assessments of whether a company is the primary beneficiary of
a VIE; and
|
§
|
requires
enhanced disclosures about a company’s involvement with a
VIE.
|
Weighted-
|
||||||||||||||||
Weighted-
|
Average
|
|||||||||||||||
Average
|
Remaining
|
Aggregate
|
||||||||||||||
Number
of
|
Strike
Price
|
Contractual
|
Intrinsic
|
|||||||||||||
Units
|
(dollars/unit)
|
Term
(in years)
|
Value
(1)
|
|||||||||||||
Outstanding
at December 31, 2008
|
2,168,500 | $ | 26.32 | |||||||||||||
Granted
(2)
|
30,000 | $ | 20.08 | |||||||||||||
Exercised
|
(56,000 | ) | $ | 15.66 | ||||||||||||
Forfeited
|
(365,000 | ) | $ | 26.38 | ||||||||||||
Outstanding
at September 30, 2009
|
1,777,500 | $ | 26.54 | 4.6 | $ | 3.0 | ||||||||||
Options
exercisable at
|
||||||||||||||||
September
30, 2009
|
652,500 | $ | 23.71 | 4.7 | $ | 3.0 | ||||||||||
(1)
Aggregate
intrinsic value reflects fully vested unit options at September 30,
2009.
(2)
Aggregate
grant date fair value of these unit options issued during 2009 was $0.2
million based on the following assumptions: (i) a grant date market price
of our common units of $20.08 per unit; (ii) expected life of options of
5.0 years; (iii) risk-free interest rate of 1.81%; (iv) expected
distribution yield on our common units of 10%; and (v) expected unit price
volatility on our common units of 72.76%.
|
Weighted-
|
||||||||
Average
Grant
|
||||||||
Number
of
|
Date
Fair Value
|
|||||||
Units
|
per Unit
(1)
|
|||||||
Restricted
units at December 31, 2008
|
2,080,600 | |||||||
Granted
(2)
|
1,016,950 | $ | 20.65 | |||||
Vested
|
(244,300 | ) | $ | 26.66 | ||||
Forfeited
|
(194,400 | ) | $ | 28.92 | ||||
Restricted
units at September 30, 2009
|
2,658,850 | |||||||
(1)
Determined
by dividing the aggregate grant date fair value of awards by the number of
awards issued. The weighted-average grant date fair value per unit
for forfeited and vested awards is determined before an allowance for
forfeitures.
(2)
Net
of forfeitures, aggregate grant date fair value of restricted unit awards
issued during 2009 was $21.0 million based on grant date market prices of
our common units ranging from $20.08 to $27.66 per unit. Estimated
forfeiture rates ranged between 4.6% and 17%.
|
Weighted-
|
||||||||||||
Weighted-
|
Average
|
|||||||||||
Average
|
Remaining
|
|||||||||||
Number
of
|
Strike
Price
|
Contractual
|
||||||||||
Units
|
(dollars/unit)
|
Term
(in years)
|
||||||||||
Outstanding
at December 31, 2008
|
795,000 | $ | 30.93 | |||||||||
Granted
(1)
|
1,430,000 | $ | 23.53 | |||||||||
Forfeited
|
(90,000 | ) | $ | 30.93 | ||||||||
Outstanding at September 30,
2009 (2)
|
2,135,000 | $ | 25.97 | 4.9 | ||||||||
(1)
Net
of forfeitures, aggregate grant date fair value of these unit options
issued during 2009 was $6.5 million based on the following assumptions:
(i) a weighted-average grant date market price of our common units of
$23.53 per unit; (ii) weighted-average expected life of options of 4.9
years; (iii) weighted-average risk-free interest rate of 2.14%; (iv)
expected weighted-average distribution yield on our common units of 9.37%;
(v) expected weighted-average unit price volatility on our common units of
57.11%. An estimated forfeiture rate of 17% was applied to awards
granted during 2009.
(2)
No
unit options were exercisable as of September 30, 2009.
|
§
|
Changes
in the fair value of a recognized asset or liability, or an unrecognized
firm commitment - In a fair value hedge, all gains and losses (of both the
derivative instrument and the hedged item) are recognized in income during
the period of change.
|
§
|
Variable
cash flows of a forecasted transaction - In a cash flow hedge, the
effective portion of the hedge is reported in other comprehensive income
(“OCI”) and is reclassified into earnings when the forecasted transaction
affects earnings.
|
§
|
Foreign
currency exposure, such as through an unrecognized firm
commitment.
|
Number
and Type of
|
Notional
|
Period
of
|
Rate
|
Accounting
|
|
Hedged
Transaction
|
Derivative
Employed
|
Amount
|
Hedge
|
Swap
|
Treatment
|
Enterprise
Products Partners:
|
|||||
Senior
Notes C
|
1
fixed-to-floating swap
|
$100.0
|
1/04
to 2/13
|
6.4%
to 2.8%
|
Fair
value hedge
|
Senior
Notes G
|
3
fixed-to-floating swaps
|
$300.0
|
10/04
to 10/14
|
5.6%
to 2.6%
|
Fair
value hedge
|
Senior
Notes P
|
7
fixed-to-floating swaps
|
$400.0
|
6/09
to 8/12
|
4.6%
to 2.7%
|
Fair
value hedge
|
Duncan
Energy Partners:
|
|||||
Variable-interest
rate borrowings
|
3
floating-to-fixed swaps
|
$175.0
|
9/07
to 9/10
|
0.3%
to 4.6%
|
Cash
flow hedge
|
Number
and Type of
|
Notional
|
Period
of
|
Average
Rate
|
Accounting
|
|
Hedged
Transaction
|
Derivative
Employed
|
Amount
|
Hedge
|
Locked
|
Treatment
|
Enterprise
Products Partners:
|
|||||
Future
debt offering
|
1
forward starting swap
|
$50.0
|
6/10
to 6/20
|
3.3%
|
Cash
flow hedge
|
Future
debt offering
|
2
forward starting swaps
|
$200.0
|
2/11
to 2/21
|
3.6%
|
Cash
flow hedge
|
Volume
(1)
|
Accounting
|
||
Derivative
Purpose
|
Current
|
Long-Term
(2)
|
Treatment
|
Derivatives
designated as hedging instruments:
|
|||
Enterprise
Products Partners:
|
|||
Natural
gas processing:
|
|||
Forecasted
natural gas purchases for plant thermal reduction (“PTR”)
(3)
|
16.6
Bcf
|
n/a
|
Cash
flow hedge
|
Forecasted
NGL sales
|
1.0
MMBbls
|
n/a
|
Cash
flow hedge
|
Octane
enhancement:
|
|||
Forecasted
purchases of NGLs
|
0.1
MMBbls
|
n/a
|
Cash
flow hedge
|
Forecasted
sales of NGLs
|
n/a
|
0.1
MMBbls
|
Cash
flow hedge
|
Forecasted
sales of octane enhancement products
|
1.0
MMBbls
|
n/a
|
Cash
flow hedge
|
Natural
gas marketing:
|
|||
Natural
gas storage inventory management activities
|
7.2
Bcf
|
n/a
|
Fair
value hedge
|
Forecasted
purchases of natural gas
|
n/a
|
3.0
Bcf
|
Cash
flow hedge
|
Forecasted
sales of natural gas
|
4.2
Bcf
|
0.9
Bcf
|
Cash
flow hedge
|
NGL
marketing:
|
|||
Forecasted
purchases of NGLs and related hydrocarbon products
|
2.7
MMBbls
|
0.1
MMBbls
|
Cash
flow hedge
|
Forecasted
sales of NGLs and related hydrocarbon products
|
7.0
MMBbls
|
0.4
MMBbls
|
Cash
flow hedge
|
Derivatives
not designated as hedging instruments:
|
|||
Enterprise
Products Partners:
|
|||
Natural
gas risk management activities (4) (5)
|
313.3
Bcf
|
34.4
Bcf
|
Mark-to-market
|
Duncan
Energy Partners:
|
|||
Natural
gas risk management activities (5)
|
1.7
Bcf
|
n/a
|
Mark-to-market
|
(1)
Volume
for derivatives designated as hedging instruments reflects the total
amount of volumes hedged whereas volume for derivatives not designated as
hedging instruments reflects the absolute value of derivative notional
volumes.
(2)
The
maximum term for derivatives included in the long-term column is December
2012.
(3)
PTR
represents the British thermal unit equivalent of the NGLs extracted from
natural gas by a processing plant, and includes the natural gas used as
plant fuel to extract those liquids, plant flare and other
shortages. See the discussion below for the primary objective
of this strategy.
(4)
Volume
includes approximately 61.8 billion cubic feet (“Bcf”) of physical
derivative instruments that are predominantly priced as an index plus a
premium or minus a discount.
(5)
Reflects
the use of derivative instruments to manage risks associated with natural
gas transportation, processing and storage
assets.
|
§
|
the
forward sale of a portion of our expected equity NGL production at fixed
prices through December 2009, and
|
§
|
the
purchase, using commodity derivative instruments, of the amount of natural
gas expected to be consumed as PTR in the production of such equity NGL
production.
|
Asset
Derivatives
|
Liability
Derivatives
|
||||||||||||||
September
30, 2009
|
December
31, 2008
|
September
30, 2009
|
December
31, 2008
|
||||||||||||
Balance
Sheet
|
Fair
|
Balance
Sheet
|
Fair
|
Balance
Sheet
|
Fair
|
Balance
Sheet
|
Fair
|
||||||||
Location
|
Value
|
Location
|
Value
|
Location
|
Value
|
Location
|
Value
|
||||||||
Derivatives
designated as hedging instruments:
|
|||||||||||||||
Interest
rate derivatives
|
Derivative
assets
|
$ | 23.2 |
Derivative
assets
|
$ | 7.8 |
Derivative
liabilities
|
$ | 6.0 |
Derivative
liabilities
|
$ | 5.9 | |||
Interest
rate derivatives
|
Other
assets
|
33.4 |
Other
assets
|
39.0 |
Other
liabilities
|
2.0 |
Other
liabilities
|
3.9 | |||||||
Total
interest rate derivatives
|
56.6 | 46.8 | 8.0 | 9.8 | |||||||||||
Commodity
derivatives
|
Derivative
assets
|
51.9 |
Derivative
assets
|
150.5 |
Derivative
liabilities
|
133.2 |
Derivative
liabilities
|
253.5 | |||||||
Commodity
derivatives
|
Other
assets
|
0.2 |
Other
assets
|
-- |
Other
liabilities
|
2.1 |
Other
liabilities
|
0.2 | |||||||
Total
commodity derivatives (1)
|
52.1 | 150.5 | 135.3 | 253.7 | |||||||||||
Foreign
currency derivatives (2)
|
Derivative
assets
|
0.3 |
Derivative
assets
|
9.3 |
Derivative
liabilities
|
-- |
Derivative
liabilities
|
-- | |||||||
Total
derivatives designated as hedging instruments
|
$ | 109.0 | $ | 206.6 | $ | 143.3 | $ | 263.5 | |||||||
Derivatives
not designated as hedging instruments:
|
|||||||||||||||
Commodity
derivatives
|
Derivative
assets
|
$ | 121.6 |
Derivative
assets
|
$ | 35.2 |
Derivative
liabilities
|
$ | 123.9 |
Derivative
liabilities
|
$ | 27.7 | |||
Commodity
derivatives
|
Other
assets
|
1.1 |
Other
assets
|
-- |
Other
liabilities
|
2.4 |
Other
liabilities
|
-- | |||||||
Total
commodity derivatives
|
122.7 | 35.2 | 126.3 | 27.7 | |||||||||||
Foreign
currency derivatives
|
Derivative
assets
|
-- |
Derivative
assets
|
-- |
Derivative
liabilities
|
-- |
Derivative
liabilities
|
0.1 | |||||||
Total
derivatives not designated as hedging instruments
|
$ | 122.7 | $ | 35.2 | $ | 126.3 | $ | 27.8 | |||||||
(1)
Represent
commodity derivative instrument transactions that either have not settled
or have settled and not been invoiced. Settled and invoiced
transactions are reflected in either accounts receivable or accounts
payable depending on the outcome of the transaction.
(2)
Relates
to the hedging of our exposure to fluctuations in the foreign currency
exchange rate related to our Canadian NGL marketing
subsidiary.
|
Derivatives
in
|
|||||||||||||||||
Fair
Value
|
Gain/(Loss)
Recognized in
|
||||||||||||||||
Hedging
Relationships
|
Location
|
Income
on Derivative
|
|||||||||||||||
For
the Three Months
|
For
the Nine Months
|
||||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||
Interest
rate derivatives
|
Interest
expense
|
$ | 12.0 | $ | 4.2 | $ | (4.2 | ) | $ | (1.7 | ) | ||||||
Commodity
derivatives
|
Revenue
|
0.6 | -- | (0.1 | ) | -- | |||||||||||
Total
|
$ | 12.6 | $ | 4.2 | $ | (4.3 | ) | $ | (1.7 | ) |
Derivatives
in
|
|||||||||||||||||
Fair
Value
|
Gain/(Loss)
Recognized in
|
||||||||||||||||
Hedging
Relationships
|
Location
|
Income
on Hedged Item
|
|||||||||||||||
For
the Three Months
|
For
the Nine Months
|
||||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||
Interest
rate derivatives
|
Interest
expense
|
$ | (14.5 | ) | $ | (4.2 | ) | $ | 1.1 | $ | 1.7 | ||||||
Commodity
derivatives
|
Revenue
|
(0.5 | ) | -- | 0.6 | -- | |||||||||||
Total
|
$ | (15.0 | ) | $ | (4.2 | ) | $ | 1.7 | $ | 1.7 |
Derivatives
in
|
Change
in Value
|
|||||||||||||||
Cash
Flow
|
Recognized
in OCI on
|
|||||||||||||||
Hedging
Relationships
|
Derivative
(Effective Portion)
|
|||||||||||||||
For
the Three Months
|
For
the Nine Months
|
|||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Interest
rate derivatives
|
$ | (8.0 | ) | $ | (1.1 | ) | $ | 7.1 | $ | (22.9 | ) | |||||
Commodity
derivatives – Revenue
|
(21.3 | ) | (25.3 | ) | 44.5 | (30.2 | ) | |||||||||
Commodity
derivatives – Operating costs and expenses
|
13.0 | (218.7 | ) | (191.4 | ) | (93.9 | ) | |||||||||
Foreign
currency derivatives
|
0.2 | -- | (10.3 | ) | (1.3 | ) | ||||||||||
Total
|
$ | (16.1 | ) | $ | (245.1 | ) | $ | (150.1 | ) | $ | (148.3 | ) |
Derivatives
in
|
Location
of Gain/(Loss)
|
Amount
of Gain/(Loss)
|
|||||||||||||||
Cash
Flow
|
Reclassified
from AOCI
|
Reclassified
from AOCI
|
|||||||||||||||
Hedging
Relationships
|
into
Income (Effective Portion)
|
to
Income (Effective Portion)
|
|||||||||||||||
For
the Three Months
|
For
the Nine Months
|
||||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||
Interest
rate derivatives
|
Interest
expense
|
$ | (1.3 | ) | $ | -- | $ | (3.3 | ) | $ | 2.4 | ||||||
Commodity
derivatives
|
Revenue
|
(12.5 | ) | (17.2 | ) | 7.2 | (23.3 | ) | |||||||||
Commodity
derivatives
|
Operating
costs and expenses
|
(65.3 | ) | (11.3 | ) | (183.5 | ) | 7.5 | |||||||||
Total
|
$ | (79.1 | ) | $ | (28.5 | ) | $ | (179.6 | ) | $ | (13.4 | ) |
Location
of Gain/(Loss)
|
Amount
of Gain/(Loss)
|
||||||||||||||||
Derivatives
in
|
Recognized
in Income
|
Recognized
in Income on
|
|||||||||||||||
Cash
Flow
|
on
Ineffective Portion
|
Ineffective
Portion of
|
|||||||||||||||
Hedging
Relationships
|
of
Derivative
|
Derivative
|
|||||||||||||||
For
the Three Months
|
For
the Nine Months
|
||||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||
Commodity
derivatives
|
Revenue
|
$ | 0.8 | $ | -- | $ | 0.1 | $ | -- | ||||||||
Commodity
derivatives
|
Operating
costs and expenses
|
(1.0 | ) | (5.7 | ) | (2.3 | ) | (2.9 | ) | ||||||||
Total
|
$ | (0.2 | ) | $ | (5.7 | ) | $ | (2.2 | ) | $ | (2.9 | ) |
Derivatives
Not Designated
|
Gain/(Loss)
Recognized in
|
||||||||||||||||
as Hedging
Instruments
|
Location
|
Income
on Derivative
|
|||||||||||||||
For
the Three Months
|
For
the Nine Months
|
||||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||
Commodity
derivatives (1)
|
Revenue
|
$ | (6.1 | ) | $ | 38.1 | $ | 25.4 | $ | 35.2 | |||||||
Commodity
derivatives
|
Operating
costs and expenses
|
-- | 1.9 | -- | (7.1 | ) | |||||||||||
Foreign
currency derivatives
|
Other
income
|
-- | -- | (0.1 | ) | -- | |||||||||||
Total
|
$ | (6.1 | ) | $ | 40.0 | $ | 25.3 | $ | 28.1 | ||||||||
(1)
Amounts
for the three and nine months ended September 30, 2009 include $0.9
million and $3.8 million of gains on derivatives excluded from the
assessment of hedge effectiveness under fair value hedging relationships,
respectively.
|
§
|
Level
1 fair values are based on quoted prices, which are available in active
markets for identical assets or liabilities as of the measurement
date. Active markets are defined as those in which transactions
for identical assets or liabilities occur with sufficient frequency so as
to provide pricing information on an ongoing basis (e.g., the New York
Mercantile Exchange). Our Level 1 fair values primarily consist
of financial assets and liabilities such as exchange-traded commodity
financial instruments.
|
§
|
Level
2 fair values are based on pricing inputs other than quoted prices in
active markets (as reflected in Level 1 fair values) and are either
directly or indirectly observable as of the measurement
date. Level 2 fair values include instruments that are valued
using financial models or other appropriate valuation
methodologies. Such financial models are primarily
industry-standard models that consider various assumptions, including
quoted forward prices for commodities, the time value of money, volatility
factors, current market and contractual prices for the underlying
instruments and other relevant economic measures. Substantially
all of these assumptions are (i) observable in the marketplace throughout
the full term of the instrument, (ii) can be derived from observable data
or (iii) are validated by inputs other than quoted prices (e.g., interest
rate and yield curves at commonly quoted intervals). Our Level
2 fair values primarily consist of commodity financial instruments such as
forwards, swaps and other instruments transacted on an exchange or over
the counter. The fair values of these derivatives are based on
observable price quotes for similar products and locations. The
value of our interest rate
|
§
|
Level
3 fair values are based on unobservable inputs. Unobservable
inputs are used to measure fair value to the extent that observable inputs
are not available, thereby allowing for situations in which there is
little, if any, market activity for the asset or liability at the
measurement date. Unobservable inputs reflect the reporting
entity’s own ideas about the assumptions that market participants would
use in pricing an asset or liability (including assumptions about
risk). Unobservable inputs are based on the best information
available in the circumstances, which might include the reporting entity’s
internally developed data. The reporting entity must not ignore
information about market participant assumptions that is reasonably
available without undue cost and effort. Level 3 inputs are
typically used in connection with internally developed valuation
methodologies where management makes its best estimate of an instrument’s
fair value. Our Level 3 fair values largely consist of ethane
and normal butane-based contracts with a range of two to twelve months in
term. We rely on broker quotes for these
products.
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
Financial
assets:
|
||||||||||||||||
Interest
rate derivative instruments
|
$ | -- | $ | 56.6 | $ | -- | $ | 56.6 | ||||||||
Commodity
derivative instruments
|
10.9 | 151.8 | 12.1 | 174.8 | ||||||||||||
Foreign
currency derivative instruments
|
-- | 0.3 | -- | 0.3 | ||||||||||||
Total
|
$ | 10.9 | $ | 208.7 | $ | 12.1 | $ | 231.7 | ||||||||
Financial
liabilities:
|
||||||||||||||||
Interest
rate derivative instruments
|
$ | -- | $ | 8.0 | $ | -- | $ | 8.0 | ||||||||
Commodity
derivative instruments
|
36.7 | 211.1 | 13.8 | 261.6 | ||||||||||||
Total
|
$ | 36.7 | $ | 219.1 | $ | 13.8 | $ | 269.6 |
For
the Nine Months
|
||||||||
Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Balance,
January 1
|
$ | 32.6 | $ | (4.6 | ) | |||
Total
gains (losses) included in:
|
||||||||
Net
income (1)
|
12.5 | (2.3 | ) | |||||
Other
comprehensive income (loss)
|
1.5 | 2.4 | ||||||
Purchases,
issuances, settlements
|
(12.5 | ) | 1.9 | |||||
Balance,
March 31
|
34.1 | (2.6 | ) | |||||
Total
gains (losses) included in:
|
||||||||
Net
income (1)
|
7.7 | 0.3 | ||||||
Other
comprehensive income (loss)
|
(23.1 | ) | (2.4 | ) | ||||
Purchases,
issuances, settlements
|
(7.7 | ) | 0.1 | |||||
Transfers
out of Level 3
|
(0.2 | ) | -- | |||||
Balance,
June 30
|
10.8 | (4.6 | ) | |||||
Total
gains (losses) included in:
|
||||||||
Net
income (1)
|
6.5 |