Note 9. Equity and Distributions

Partners Equity

Partners’ equity reflects the various classes of limited partner interests (i.e., common units, including restricted common units) outstanding. The following table summarizes changes in the number of our outstanding units since January 1, 2015:

	Common Units (Unrestricted)			Restricted Common Units			Total Common Units
Number of units outstanding at January 1, 2015		1,933,095,027			4,229,790			1,937,324,817
Common units issued in connection with ATM program		25,520,424			--			25,520,424
Common units issued in connection with DRIP and EUPP		12,793,913			--			12,793,913
Common units issued in connection with Step 2 of Oiltanking acquisition		36,827,517			--			36,827,517
Common units issued in connection with the vesting and exercise of unit options		396,158			--			396,158
Common units issued in connection with the vesting of phantom unit awards		618,395			--			618,395
Common units issued in connection with the vesting of restricted common unit awards		2,009,970			(2,009,970	)		--
Forfeiture of restricted common unit awards		--			(259,300	)		(259,300	)
Cancellation of treasury units acquired in connection with the vesting of equity-based awards		(683,954	)		--			(683,954	)
Other		15,054			--			15,054
Number of units outstanding at December 31, 2015		2,010,592,504			1,960,520			2,012,553,024
Common units issued in connection with ATM program		87,867,037			--			87,867,037
Common units issued in connection with DRIP and EUPP		16,316,534			--			16,316,534
Common units issued in connection with the vesting of phantom unit awards		1,761,455			--			1,761,455
Common units issued in connection with the vesting of restricted common unit awards		1,234,502			(1,234,502	)		--
Forfeiture of restricted common unit awards		--			(43,724	)		(43,724	)
Cancellation of treasury units acquired in connection with the vesting of equity-based awards		(1,000,619	)		--			(1,000,619	)
Other		134,707			--			134,707
Number of units outstanding at December 31, 2016		2,116,906,120			682,294			2,117,588,414
Common units issued in connection with ATM program		21,807,726			--			21,807,726
Common units issued in connection with DRIP and EUPP		19,046,019			--			19,046,019
Common units issued in connection with the vesting of phantom unit awards		2,485,580			--			2,485,580
Common units issued in connection with the vesting of restricted common unit awards		681,044			(681,044	)		--
Forfeiture of restricted common unit awards		--			(1,250	)		(1,250	)
Cancellation of treasury units acquired in connection with the vesting of equity-based awards		(1,027,798	)		--			(1,027,798	)
Common units issued in connection with employee compensation		1,176,103			--			1,176,103
Other		14,685			--			14,685
Number of units outstanding at December 31, 2017		2,161,089,479			--			2,161,089,479

Our common units represent limited partner interests, which give the holders thereof the right to participate in distributions and to exercise the other rights or privileges available to them under our Sixth Amended and Restated Agreement of Limited Partnership (as amended from time to time, the “Partnership Agreement”). We are managed by our general partner, Enterprise GP.

In accordance with our Partnership Agreement, capital accounts are maintained for our limited partners. The capital account provisions of our Partnership Agreement incorporate principles established for U.S. Federal income tax purposes and are not comparable to the equity amounts presented in our consolidated financial statements prepared in accordance with GAAP. Earnings and cash distributions are allocated to holders of our common units in accordance with their respective percentage interests.

The net cash proceeds we received from the issuance of common units during the year ended December 31, 2017 were used to temporarily reduce amounts outstanding under EPO’s commercial paper program and revolving credit facilities and for general partnership purposes.

Universal shelf registration statement. We have a universal shelf registration statement (the “2016 Shelf”) on file with the SEC which allows Enterprise Products Partners L.P. and EPO (each on a standalone basis) to issue an unlimited amount of equity and debt securities, respectively. In total, EPO issued $1.7 billion of junior notes, and $1.25 billion and $2.5 billion of senior notes during the years ended December 31, 2017, 2016 and 2015, respectively. See Note 8 for information regarding an offering of junior notes we completed in August 2017 using the 2016 Shelf.

See Note 22, Subsequent Events, for information regarding the issuance of senior notes and junior subordinated notes in February 2018 using the 2016 Shelf.

At-the-Market (“ATM”) Program. In November 2017, we filed an amended registration statement with the SEC covering the issuance of up to $2.54 billion of our common units in amounts, at prices and on terms to be determined by market conditions and other factors at the time of such offerings in connection with our ATM program. Pursuant to this program, we may sell common units under an equity distribution agreement between Enterprise Products Partners L.P. and certain broker-dealers from time-to-time by means of ordinary brokers’ transactions through the NYSE at market prices, in block transactions or as otherwise agreed to with the broker-dealer parties to the agreement. The new registration statement was declared effective on November 20, 2017 and replaced our prior registration statement with respect to the ATM program.

During 2017, we issued 21,807,726 common units under the ATM program for aggregate gross cash proceeds of $603.1 million, resulting in total net cash proceeds of $597.0 million. During 2016, we issued 87,867,037 common units under the ATM program for aggregate gross cash proceeds of $2.17 billion, resulting in total net cash proceeds of $2.16 billion. This includes 3,830,256 common units sold in January 2016 to privately held affiliates of EPCO, which generated gross proceeds of $100 million. During 2015, we issued 25,520,424 common units under the ATM for aggregate gross cash proceeds of $825.4 million, resulting in total net cash proceeds of $817.4 million. This includes 3,225,057 common units sold in March 2015 to a privately held affiliate of EPCO, which generated gross proceeds of $100 million.

Following the effectiveness of the new registration statement and after taking into account the aggregate sales price of common units sold under the ATM program through December 31, 2017, we have the capacity to issue additional common units under the ATM program up to an aggregate sales price of $2.54 billion.

Distribution reinvestment plan. We have a registration statement on file with the SEC in connection with our distribution reinvestment plan (“DRIP”). The DRIP provides unitholders of record and beneficial owners of our common units a voluntary means by which they can increase the number of our common units they own by reinvesting the quarterly cash distributions they receive from us into the purchase of additional new common units at a discount ranging from 0% to 5% (currently set at 2.5% beginning with the distribution declared with respect to the fourth quarter of 2017 and paid in February 2018).

Activity under our DRIP for the last three years was as follows: 18,541,355 common units issued during 2017, which generated net cash proceeds of $462.9 million; 15,809,503 common units issued during 2016, which generated net cash proceeds of $374.0 million; and 12,413,351 common units issued during 2015, which generated net cash proceeds of $359.8 million. Privately held affiliates of EPCO reinvested $100 million through the DRIP in each of the years ended December 31, 2017, 2016 and 2015 (this amount being a component of the net cash proceeds presented for each period).

After taking into account the number of common units issued under the DRIP through December 31, 2017, we have the capacity to issue an additional 80,717,140 common units under this plan.

Employee unit purchase plan. In addition to the DRIP, we have registration statements on file with the SEC in connection with our employee unit purchase plan (“EUPP”). Activity under our EUPP for the last three years was as follows: 504,664 common units issued during 2017, which generated net cash proceeds of $13.5 million; 507,031 common units issued during 2016, which generated net cash proceeds of $12.7 million; and 380,562 common units issued during 2015, which generated net cash proceeds of $11.4 million.

After taking into account the number of common units issued under the EUPP through December 31, 2017, we may issue an additional 5,760,811 common units under this plan.

Completion of Oiltanking Acquisition. In accordance with the merger agreement and Oiltanking’s partnership agreement, the merger was submitted to a vote of Oiltanking’s common unitholders, with the required majority of unitholders (including our ownership interests) voting to approve the merger on February 13, 2015. Upon approval of the merger, a total of 36,827,517 of our common units were issued to Oiltanking’s former public unitholders.

Step 2 of the acquisition was accounted for in accordance with ASC Topic 810, Consolidations – Overall – Changes in Parent’s Ownership Interest in a Subsidiary. Since we had a controlling financial interest in Oiltanking before and after completion of Step 2, the increase in our ownership interest in Oiltanking was accounted for as an equity transaction with no gain or loss recognized. Step 2 represented our acquisition of the noncontrolling interests in Oiltanking; therefore, approximately $1.4 billion of noncontrolling interests attributable to Oiltanking was reclassified to limited partners’ equity to reflect the February 2015 issuance of 36,827,517 new common units.

Registration Rights Agreement. In order to fund the equity consideration paid in Step 1 of the Oiltanking acquisition (see Note 12), we issued 54,807,352 common units to OTA on October 1, 2014 in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, and we granted OTA registration rights with respect to these common units under a Registration Rights Agreement between us and OTA (the “Registration Rights Agreement”). The Registration Rights Agreement provides that, subject to the terms and conditions set forth therein, at any time after the earlier of (i) 90 days after October 1, 2014 and (ii) the execution of definitive agreements to acquire (through merger or otherwise) all or substantially all of the Oiltanking common units not owned by Enterprise or its affiliates, OTA may request that we prepare and file a registration statement to permit and otherwise facilitate the public resale of all or a portion of the 54,807,352 Enterprise common units that OTA owns. Our obligation to OTA to effect such transactions is limited to five registration statements and underwritten offerings.

Common units issued in connection with employee compensation. In February 2017, the dollar value of discretionary employee bonus payments with respect to the year ended December 31, 2016 (less any retirement plan deductions and withholding taxes) was remitted through the issuance of an equivalent value of newly issued Enterprise common units under EPCO’s 2008 Enterprise Products Long-Term Incentive Plan (Third Amendment and Restatement) (“2008 Plan”). We issued 1,176,103 common units, which had a value of $33.7 million, in connection with the employee bonus payments. The compensation expense associated with this issuance of common units was recognized during the year ended December 31, 2016. See Note 13 for additional information regarding the 2008 Plan.

Treasury Units. In December 1998, we announced a common unit repurchase program whereby we, together with certain affiliates, intended to repurchase up to 4,000,000 of our common units. A total of 2,763,200 common units were repurchased under this program; however, no repurchases have been made since 2002. As of December 31, 2017, we and our affiliates could repurchase up to 1,236,800 additional common units under this program.

A total of 681,044 restricted common unit awards granted to employees of EPCO vested and converted to common units during the year ended December 31, 2017. Of this amount, 229,910 were sold back to us by employees to cover related withholding tax requirements. In addition, 797,888 units were sold back to us by employees to cover withholding tax requirements related to the vesting of phantom unit awards. The total cost of these treasury unit purchases was approximately $29.5 million. We cancelled such treasury units immediately upon acquisition. See Note 13 for additional information regarding our equity-based awards.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive income (loss) primarily reflects the effective portion of the gain or loss on derivative instruments designated and qualified as cash flow hedges. Gain or loss amounts related to cash flow hedges recorded in accumulated other comprehensive income (loss) are reclassified to earnings in the same period(s) in which the underlying hedged forecasted transactions affect earnings. If it becomes probable that a forecasted transaction will not occur, the related net gain or loss in accumulated other comprehensive income (loss) is immediately reclassified into earnings.

The following tables present the components of accumulated other comprehensive income (loss) as reported on our Consolidated Balance Sheets at the dates indicated:

	Gains (Losses) on Cash Flow Hedges
	Commodity Derivative Instruments			Interest Rate Derivative Instruments			Other			Total
Balance, December 31, 2015	$	56.6		$	(279.5	)	$	3.7		$	(219.2	)
Other comprehensive income (loss) before reclassifications		(193.8	)		42.3			(0.1	)		(151.6	)
Amounts reclassified from accumulated other comprehensive loss		53.4			37.4			--			90.8
Total other comprehensive income (loss)		(140.4	)		79.7			(0.1	)		(60.8	)
Balance, December 31, 2016		(83.8	)		(199.8	)		3.6			(280.0	)
Other comprehensive income (loss) before reclassifications		(38.5	)		(5.7	)		(0.1	)		(44.3	)
Amounts reclassified from accumulated other comprehensive loss		112.2			40.4			--			152.6
Total other comprehensive income (loss)		73.7			34.7			(0.1	)		108.3
Balance, December 31, 2017	$	(10.1	)	$	(165.1	)	$	3.5		$	(171.7	)

The following table presents reclassifications out of accumulated other comprehensive income (loss) into net income during the periods indicated:

		For the Year Ended December 31,
	Location	2017		2016
Losses (gains) on cash flow hedges:
Interest rate derivatives	Interest expense	$	40.4	$	37.4
Commodity derivatives	Revenue		111.6		53.6
Commodity derivatives	Operating costs and expenses		0.6		(0.2	)
Total		$	152.6	$	90.8

Noncontrolling Interests

Noncontrolling interests represent third party equity ownership interests in our consolidated subsidiaries.

We reclassified approximately $1.4 billion of noncontrolling interests to limited partners’ equity in connection with completing Step 2 of the Oiltanking acquisition in February 2015 (see Note 12). Cash distributions paid in the first quarter of 2015 to the limited partners of Oiltanking other than EPO and its subsidiaries are presented as amounts paid to noncontrolling interests.

The following table presents the components of net income attributable to noncontrolling interests as presented on our Statements of Consolidated Operations for the periods indicated:

	For the Year Ended December 31,
	2017		2016		2015
Limited partners of Oiltanking other than EPO	$	--	$	--	$	7.8
Joint venture partners		56.3		39.9		29.4
Total	$	56.3	$	39.9	$	37.2

The following table presents cash distributions paid to and cash contributions received from noncontrolling interests as presented on our Statements of Consolidated Cash Flows and Statements of Consolidated Equity for the periods indicated:

	For the Year Ended December 31,
	2017		2016		2015
Cash distributions paid to noncontrolling interests:
Limited partners of Oiltanking other than EPO	$	--	$	--	$	8.1
Joint venture partners		49.2		47.4		39.9
Total	$	49.2	$	47.4	$	48.0

Cash contributions from noncontrolling interests:
Joint venture partners	$	0.4	$	20.4	$	54.0

Cash Distributions

The following table presents Enterprise’s declared quarterly cash distribution rates per common unit with respect to the quarter indicated. Actual cash distributions are paid by Enterprise within 45 days after the end of each fiscal quarter.

	Distribution Per Common Unit		Record Date	Payment Date
2015:
1st Quarter	$	0.3750	4/30/2015	5/7/2015
2nd Quarter	$	0.3800	7/31/2015	8/7/2015
3rd Quarter	$	0.3850	10/30/2015	11/6/2015
4th Quarter	$	0.3900	1/29/2016	2/5/2016
2016:
1st Quarter	$	0.3950	4/29/2016	5/6/2016
2nd Quarter	$	0.4000	7/29/2016	8/5/2016
3rd Quarter	$	0.4050	10/31/2016	11/7/2016
4th Quarter	$	0.4100	1/31/2017	2/7/2017
2017:
1st Quarter	$	0.4150	4/28/2017	5/8/2017
2nd Quarter	$	0.4200	7/31/2017	8/7/2017
3rd Quarter	$	0.4225	10/31/2017	11/7/2017
4th Quarter	$	0.4250	1/31/2018	2/7/2018

In October 2017, management announced plans to recommend to the Board cash distribution increases per quarter of $0.0025 per unit with respect to each of the six fiscal quarters beginning with the third quarter of 2017 and ending with the fourth quarter of 2018. Management currently expects to recommend to the Board the following quarterly cash distributions with respect to each quarter of 2018: $0.4275, first quarter of 2018; $0.4300, second quarter of 2018; $0.4325, third quarter of 2018; and $0.4350, fourth quarter of 2018.

The payment of any quarterly cash distribution is subject to Board approval and management’s evaluation of our financial condition, results of operations and cash flows in connection with such payment. Management will propose recommendations to the Board regarding our cash distribution growth rate for 2019 as we consider future investment opportunities and alternatives for returning capital to investors.

In November 2010, we completed our merger with Enterprise GP Holdings L.P. (the “Holdings Merger”). In connection with the Holdings Merger, a privately held affiliate of EPCO agreed to temporarily waive the regular cash distributions it would otherwise receive from us with respect to a certain number of our common units it owns (the “Designated Units”). Distributions paid by us to this privately held affiliate of EPCO during calendar year 2015 excluded 35,380,000 Designated Units. The temporary distribution waiver expired in November 2015; therefore, distributions paid during calendar years 2016 and 2017 were paid on all outstanding common units.