Delaware | 1-11727 | 73-1493906 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
• | Unaudited pro forma condensed consolidated balance sheet as of December 31, 2012; |
• | Unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2012; and |
• | Notes to unaudited pro forma condensed consolidated financial statements. |
Exhibit Number | Description | |
99.1 | Unaudited Pro Forma Condensed Consolidated Financial Statements |
ENERGY TRANSFER PARTNERS, L.P. | ||||
By: | Energy Transfer Partners GP, L.P., | |||
its general partner | ||||
By: | Energy Transfer Partners, L.L.C. | |||
its general partner | ||||
Date: April 4, 2013 | /s/ Martin Salinas, Jr. | |||
Martin Salinas, Jr. | ||||
Chief Financial Officer |
Exhibit Number | Description | |
99.1 | Unaudited Pro Forma Condensed Consolidated Financial Statements |
• | Prior Transactions: |
◦ | The Propane Transaction was completed in January 2012. |
◦ | The Citrus Transaction was completed in March 2012. |
◦ | The Sunoco Transaction was completed in October 2012; prior to the Sunoco Transaction, Sunoco completed the exit from its Northeast refining operations in September 2012. |
◦ | The Holdco Transaction was completed concurrent with the Sunoco Transaction in October 2012. |
• | Pending Transactions: |
◦ | The Local Distribution Company (“LDC”) Dispositions were announced in December 2012. |
◦ | The SUGS Contribution to Regency Energy Partners LP (“Regency”) was announced in February 2013. |
◦ | The Holdco Acquisition was announced in March 2013. |
Pro Forma Adjustments | |||||||||||||||||||
ETP Historical | Holdco Acquisition | LDC Dispositions | SUGS Contribution | ETP Pro Forma | |||||||||||||||
ASSETS | |||||||||||||||||||
CURRENT ASSETS: | |||||||||||||||||||
Cash and cash equivalents | $ | 311 | $ | — | $ | — | $ | — | $ | 311 | |||||||||
Accounts receivable, net of allowance for doubtful accounts | 2,910 | — | — | (79 | ) | b | 2,831 | ||||||||||||
Accounts receivable from related companies | 94 | — | — | 64 | b | 158 | |||||||||||||
Inventories | 1,495 | — | — | (19 | ) | b | 1,476 | ||||||||||||
Exchanges receivable | 55 | — | — | — | 55 | ||||||||||||||
Price risk management assets | 21 | — | — | — | 21 | ||||||||||||||
Current assets held for sale | 184 | — | (184 | ) | a | — | — | ||||||||||||
Other current assets | 334 | — | — | (2 | ) | b | 332 | ||||||||||||
Total current assets | 5,404 | — | (184 | ) | (36 | ) | 5,184 | ||||||||||||
PROPERTY, PLANT AND EQUIPMENT, net | 25,773 | — | — | (1,523 | ) | b | 24,250 | ||||||||||||
NON-CURRENT ASSETS HELD FOR SALE | 985 | — | (985 | ) | a | — | — | ||||||||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3,502 | — | — | 900 | b | 4,402 | |||||||||||||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | 42 | — | — | — | 42 | ||||||||||||||
GOODWILL | 5,606 | — | — | (338 | ) | b | 5,268 | ||||||||||||
INTANGIBLE ASSETS, net | 1,561 | — | — | — | 1,561 | ||||||||||||||
OTHER NON-CURRENT ASSETS, net | 357 | — | — | (2 | ) | b | 355 | ||||||||||||
Total assets | $ | 43,230 | $ | — | $ | (1,169 | ) | $ | (999 | ) | $ | 41,062 |
Pro Forma Adjustments | |||||||||||||||||||
ETP Historical | Holdco Acquisition | LDC Dispositions | SUGS Contribution | ETP Pro Forma | |||||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||||
CURRENT LIABILITIES: | |||||||||||||||||||
Accounts payable | $ | 3,002 | $ | — | $ | — | $ | (24 | ) | b | $ | 2,978 | |||||||
Accounts payable to related companies | 24 | — | — | 4 | b | 28 | |||||||||||||
Exchanges payable | 156 | — | — | (3 | ) | 153 | |||||||||||||
Price risk management liabilities | 110 | — | — | — | 110 | ||||||||||||||
Accrued and other current liabilities | 1,562 | — | — | (112 | ) | b | 1,450 | ||||||||||||
Current maturities of long-term debt | 609 | — | — | — | 609 | ||||||||||||||
Current liabilities held for sale | 85 | — | (85 | ) | a | — | — | ||||||||||||
Total current liabilities | 5,548 | — | (85 | ) | (135 | ) | 5,328 | ||||||||||||
LONG-TERM DEBT, less current maturities | 15,442 | 1,400 | c | (1,015 | ) | a | (600 | ) | b | 15,227 | |||||||||
LONG-TERM NOTES PAYABLE - RELATED PARTY | 166 | — | — | — | 166 | ||||||||||||||
NON-CURRENT LIABILITIES HELD FOR SALE | 142 | — | (142 | ) | a | — | — | ||||||||||||
ACCUMULATED DEFERRED INCOME TAXES | 3,476 | — | — | (95 | ) | b | 3,381 | ||||||||||||
OTHER NON-CURRENT LIABILITIES | 1,124 | — | — | (16 | ) | b | 1,108 | ||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||||||
EQUITY: | |||||||||||||||||||
General Partner | 188 | — | — | — | 188 | ||||||||||||||
Limited Partners | 9,026 | 2,165 | d | 73 | a | (156 | ) | b | 11,108 | ||||||||||
Accumulated other comprehensive income | (13 | ) | — | — | 3 | b | (10 | ) | |||||||||||
Total partners’ capital | 9,201 | 2,165 | 73 | (153 | ) | 11,286 | |||||||||||||
Noncontrolling interest | 8,131 | (3,565 | ) | e | — | — | 4,566 | ||||||||||||
Total equity | 17,332 | (1,400 | ) | 73 | (153 | ) | 15,852 | ||||||||||||
Total liabilities and equity | $ | 43,230 | $ | — | $ | (1,169 | ) | $ | (999 | ) | $ | 41,062 |
Historical | ||||||||||||||||||||||||||||
Acquired | Deconsolidated | |||||||||||||||||||||||||||
ETP Historical | Sunoco Historical | Southern Union Historical | Propane Business Historical | SUGS Historical | Pro forma adjustments | ETP Pro Forma | ||||||||||||||||||||||
REVENUES | $ | 15,702 | $ | 35,258 | $ | 443 | $ | (93 | ) | $ | (909 | ) | $ | (12,175 | ) | f | $ | 38,226 | ||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||
Cost of products sold and operating expenses | 13,166 | 33,142 | 303 | (80 | ) | (833 | ) | (11,098 | ) | f | 34,503 | |||||||||||||||||
(97 | ) | g | ||||||||||||||||||||||||||
Depreciation and amortization | 656 | 168 | 49 | (4 | ) | (68 | ) | 62 | h | 869 | ||||||||||||||||||
6 | i | |||||||||||||||||||||||||||
Selling, general and administrative | 486 | 459 | 10 | (2 | ) | (9 | ) | (117 | ) | j | 827 | |||||||||||||||||
Impairment charges and other | — | 124 | — | — | — | (12 | ) | k | 102 | |||||||||||||||||||
(10 | ) | f | ||||||||||||||||||||||||||
Total costs and expenses | 14,308 | 33,893 | 362 | (86 | ) | (910 | ) | (11,266 | ) | 36,301 | ||||||||||||||||||
OPERATING INCOME | 1,394 | 1,365 | 81 | (7 | ) | 1 | (909 | ) | 1,925 | |||||||||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||||||||||
Interest expense, net of interest capitalized | (665 | ) | (123 | ) | (50 | ) | — | — | (26 | ) | l | (860 | ) | |||||||||||||||
(7 | ) | m | ||||||||||||||||||||||||||
9 | n | |||||||||||||||||||||||||||
2 | o | |||||||||||||||||||||||||||
Equity in earnings of affiliates | 142 | 41 | 16 | — | 9 | 21 | f | 231 | ||||||||||||||||||||
3 | n | |||||||||||||||||||||||||||
(1 | ) | b | ||||||||||||||||||||||||||
Gain on deconsolidation of Propane Business | 1,057 | — | — | — | — | (1,057 | ) | p | — | |||||||||||||||||||
Gain on formation of Philadelphia Energy Solutions | — | 1,144 | — | — | — | (1,144 | ) | f | — | |||||||||||||||||||
Gains (losses) on disposal of assets | (1 | ) | 112 | — | 2 | — | (2 | ) | f | 111 | ||||||||||||||||||
Loss on extinguishment of debt | (115 | ) | — | — | — | — | 115 | q | — | |||||||||||||||||||
Other, net | 8 | 6 | (2 | ) | — | — | — | 12 | ||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 1,820 | 2,545 | 45 | (5 | ) | 10 | (2,996 | ) | 1,419 | |||||||||||||||||||
Income tax expense (benefit) | 63 | 956 | 12 | — | (3 | ) | (873 | ) | r | 155 | ||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | $ | 1,757 | $ | 1,589 | $ | 33 | $ | (5 | ) | $ | 13 | $ | (2,123 | ) | $ | 1,264 | ||||||||||||
BASIC INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT | $ | 4.93 | $ | 1.53 | s | |||||||||||||||||||||||
BASIC AVERAGE NUMBER OF UNITS OUSTANDING | 248,306,746 | 339,594,352 | ||||||||||||||||||||||||||
DILUTED INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT | $ | 4.91 | $ | 1.53 | s | |||||||||||||||||||||||
DILUTED AVERAGE NUMBER OF UNITS OUTSTANDING | 249,039,079 | 340,326,685 |
• | Sunoco Historical. ETP began consolidating Sunoco in October 2012; therefore, Sunoco’s historical results for January 1, 2012 through September 30, 2012 were reflected as “acquired” above. |
• | Southern Union Historical. ETP’s historical results for the year ended December 31, 2012 reflect the consolidation of Southern Union beginning March 26, 2012, the date that Southern Union and ETP came under common control; therefore, Southern Union’s results for January 1, 2012 through March 25, 2012 have been added in the unaudited pro forma condensed consolidated statement of continuing operations above. Southern Union’s results for the period from January 1, 2012 through March 25, 2012 included the earnings from the investment in Citrus. |
• | Propane Historical. ETP deconsolidated the Propane Business in January 2012; therefore, the results of the Propane Business reflected above only include the historical results through the date of deconsolidation. |
• | LDCs Historical. ETP’s historical results reflected the LDCs as discontinued operations for the period that Southern Union was consolidated by ETP (beginning March 26, 2012); therefore, only the results of the LDCs from January 1, 2012 through March 25, 2012 were reflected as “deconsolidated” above. |
• | SUGS Historical. ETP’s historical results included the results of SUGS for the period from March 26, 2012 through December 31, 2012, and Southern Union’s historical results included the results of SUGS for the period from January 1, 2012 through March 25, 2012. Therefore, the results of SUGS for the full twelve months ended December 31, 2012 have been reflected as “deconsolidated” above. SUGS’ stand-alone historical financial statements include two distinct periods for January 1, 2012 through March 25, 2012 (predecessor) and March 26, 2012 through December 31, 2012 (successor); however, those two periods have been combined in the SUGS historical column reflected for ease of understanding. |
a. | To record the pro forma deconsolidation of Southern Union’s LDCs in connection with the expected closing of the sale transaction announced in December 2012 and the impacts of an assumed use of proceeds from the sale transaction to repay $1.015 billion of ETP revolver borrowings. |
b. | To record the pro forma impacts of the contribution of SUGS to Regency and the consideration received including (i) Southern Union’s receipt of Regency common units and Regency Class F units, (ii) use of cash proceeds from the transaction of $600 million to long-term debt and (iii) to record Southern Union’s equity in earnings of affiliates. |
c. | To record borrowings to fund the $1.40 billion cash portion of ETP’s acquisition of ETE’s interest in Holdco. |
d. | To record the issuance of ETP common units to ETE in connection with ETP’s acquisition of ETE’s interest in Holdco. |
e. | To record pro forma adjustments related to ETP’s acquisition of ETE’s interest in Holdco. ETE’s ownership interest in Holdco is reflected as noncontrolling interest on ETP’s historical consolidated balance sheet at December 31, 2012. |
f. | Represents the pro forma adjustments to reflect Sunoco’s exit from its Northeast refining operations and formation of the PES joint venture to (i) eliminate the Northeast refining operations’ historical amounts from Sunoco’s statement of continuing operations including revenues of approximately $23.2 billion for the year ended December 31, 2012, (ii) restore intercompany sales by Sunoco’s Northeast refining operations to its retail marketing segment eliminated above of approximately $11.1 billion for the year ended December 31, 2012, (iii) reflect equity income (loss) related to Sunoco’s 33% interest in PES, and (iv) eliminate the gain recognized by Sunoco in connection with the formation of the PES joint venture. This gain is eliminated from the unaudited pro forma condensed consolidated statement of continuing operations because it would not have a continuing impact on ETP’s results of operations. |
g. | To eliminate merger-related costs incurred by Southern Union in the Citrus Transaction because such costs would not have a continuing impact on results of operations. |
h. | To record incremental depreciation and amortization expense related to estimated fair values recorded in Sunoco purchase accounting. Depreciation expense is estimated based on a weighted average useful life of 28 years. |
i. | To record incremental depreciation and amortization expense related to estimated fair values recorded in Southern Union purchase accounting. Depreciation expense is estimated based on a weighted average useful life of 24 years. |
j. | To eliminate merger-related costs incurred by ETP in the Citrus Transaction because such costs would not have a continuing impact on results of operations. |
k. | To eliminate merger-related costs incurred by Sunoco in the Sunoco Transaction because such costs would not have a continuing impact on results of operations. |
l. | To adjust interest expense at a rate of 5.85% from incremental debt of $1.9 billion in connection with the Citrus Transaction. |
m. | To record interest expense at a rate of 6.2% from incremental debt issued in connection with the Sunoco Transaction. This adjustment is net of $22 million of amortization assumed to be recorded on the fair value debt adjustment. |
n. | 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 amortization related to the pro forma adjustment of Southern Union’s debt to fair value. |
o. | 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 statement of continuing operations includes adjustments to reduce interest expense resulting from the repayment of (i) approximately $400 million of outstanding borrowings on ETP’s revolving credit facility based on the amount outstanding as of January 1, 2012 and (ii) the redemption of $750 million of aggregate principal amount of ETP’s senior notes. |
p. | To eliminate the gain recognized by ETP in connection with the deconsolidation of the Propane Business. This gain is eliminated from the unaudited pro forma condensed consolidated statement of continuing operations because it would not have a continuing impact on ETP’s results of operations. |
q. | To eliminate ETP’s loss on extinguishment of debt recognized during the year ended December 31, 2012. The loss on extinguishment of debt was recognized in connection with the redemption of $750 million of ETP’s senior notes, as discussed above. The loss on extinguishment of debt is eliminated from the unaudited pro forma condensed consolidated statement of continuing operations because it would not have a continuing impact on ETP’s results of operations. |
r. | To record the pro forma income tax impact related to Southern Union pro forma adjustments to pre-tax income and to record pro forma income tax impacts resulting from assumed income recorded by Sunoco with respect to its ownership of ETP’s Class F units, offset by the assumed reduction of Sunoco’s income from the deconsolidation of Sunoco Logistics Partners L.P. Although the assumed change to Sunoco’s income would not impact ETP’s pro forma consolidated pre-tax income, a pro forma income tax adjustment is necessary due to the significantly different effective income tax rates of ETP and Sunoco. |
s. | ETP’s historical and pro forma basic and diluted income from continuing operations per limited partner unit is calculated as follows: |
Historical | Pro Forma | ||||||
Income from continuing operations | $ | 1,757 | $ | 1,264 | |||
Less: Income from continuing operations attributable to noncontrolling interest | 62 | 269 | |||||
Income from continuing operations attributable to partners | 1,695 | 995 | |||||
General partner’s interest in income from continuing operations | 463 | 471 | |||||
Limited partner’s interest in income from continuing operations | 1,232 | 524 | |||||
Additional earnings allocated from General Partner | 1 | 1 | |||||
Distributions on employee unit awards, net of allocation to General Partner | (9 | ) | (9 | ) | |||
Income from continuing operations available to limited partners | $ | 1,224 | $ | 516 | |||
BASIC INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT | $ | 4.93 | $ | 1.53 | |||
BASIC AVERAGE NUMBER OF UNITS OUTSTANDING | 248,306,746 | 339,594,352 | |||||
DILUTED INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT | $ | 4.91 | $ | 1.53 | |||
DILUTED AVERAGE NUMBER OF UNITS OUTSTANDING | 249,039,079 | 340,326,685 |