EXHIBIT 99.1
ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction
The following pro forma financial information has been prepared to assist in your analysis of the financial effects of strategic
acquisitions we have completed since January 2001. These pro forma statements also give effect to our October 2002 equity offering
of 9,800,000 Common Units. Unless the context requires otherwise, references to "we", "us", "our" , "Enterprise" or "the Company"
are intended to mean the consolidated business and operations of Enterprise Products Partners L.P., which includes Enterprise
Products Operating L.P. and its subsidiaries. References to "General Partner" are intended to mean Enterprise Products GP, LLC.
Since January 2001, we have completed a number of strategic business acquisitions including:
|X| controlling interests in the natural gas liquid ("NGL") pipeline systems owned by Mid-America Pipeline Company, LLC
("Mid-America") and Seminole Pipeline Company ("Seminole") from affiliates of The Williams Companies Inc. ("Williams") in
July 2002;
|X| a propylene fractionation business from affiliates of Valero Energy Corporation and Koch Industries, Inc. (collectively,
"Diamond-Koch") in February 2002;
|X| an NGL and petrochemical storage business from Diamond-Koch in January 2002; and the
|X| Acadian Gas natural gas pipeline business from an affiliate of Shell Oil Company ("Shell") in April 2001.
The pro forma consolidated balance sheet presents the financial effects of the equity offering assuming it had occurred on September
30, 2002. Our September 30, 2002 historical balance sheet already reflects the previously noted acquisitions. The pro forma
consolidated income statements assume the acquisitions and equity offering had occurred as of the beginning of the period
presented. In general, the pro forma financial information is based on the following information:
|X| The audited and unaudited financial statements of Enterprise, which includes Enterprise Products Operating L.P. and its
subsidiaries.
|X| The audited and unaudited income statements of the acquired businesses. The unaudited information was derived from
the records of the previous owners and is believed to be reliable.
|X| Earnings from the acquired businesses are included in the financial statements of Enterprise from the date of their
respective acquisition. For example, our historical statement of consolidated operations for the first nine months of 2002
reflects the earnings of Mid-America and Seminole since July 31, 2002 (e.g., for August and September). The earnings of
Mid-America and Seminole for the first seven months of 2002 are reflected in the columns labeled "Mid-America Historical"
and "Seminole Historical".
The unaudited pro forma financial statements should be read in conjunction with and are qualified in their entirety by reference to
the notes accompanying such pro forma consolidated financial statements and with the historical financial statements and related
notes of Enterprise, Mid-America Pipeline System and Seminole included in our Annual Report on Form 10-K for the year ended December
31, 2001, our Current Report on Form 8-K/A filed with the Securities and Exchange Commission on September 26, 2002, and our Quarterly
Report on Form 10-Q for the nine months ended September 30, 2002.
The unaudited pro forma information is not necessarily indicative of the financial results that would have occurred if the
acquisitions described herein had taken place on the dates indicated or if we had issued equity and borrowed funds on the dates
indicated, nor is it indicative of our future consolidated financial results.
ENTERPRISE PRODUCTS PARTNERS L.P.
PRO FORMA STATEMENT OF CONSOLIDATED OPERATIONS
For the Nine Months Ended September 30, 2002
(Amounts in thousands, except per Unit amounts)
(Unaudited)
Mid-
Enterprise America Seminole Enterprise
Historical Historical Historical Other Adjustments Pro Forma
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REVENUES
Revenues from consolidated operations $2,391,624 $125,796 $41,281 $17,434 $(2,442) (a) $2,573,693
Equity income in unconsolidated affiliates 22,258 (109) 22,149
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Total 2,413,882 125,796 41,281 17,325 (2,442) 2,595,842
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COST AND EXPENSES
Operating costs and expenses 2,278,675 48,485 20,672 16,122 (2,442) (a) 2,362,756
126 (b)
1,118 (c)
Selling, general and administrative 27,991 16,871 1,004 260 46,126
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Total 2,306,666 65,356 21,676 16,382 (1,198) 2,408,882
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OPERATING INCOME 107,216 60,440 19,605 943 (1,244) 186,960
OTHER INCOME (EXPENSE)
Interest expense (68,235) (5,407) (2,340) 4,777 (d) (98,656)
(8,750) (e)
(22,410) (f)
4,340 (g)
(631) (h)
Interest income from unconsolidated
affiliates 120 120
Dividend income from unconsolidated
affiliates 2,196 2,196
Interest income - other 2,009 2,009
Other, net 43 (743) (7) (707)
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Other income (expense) (63,867) (6,150) (2,347) (22,674) (95,038)
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INCOME BEFORE PROVISION FOR
TAXES AND MINORITY INTEREST 43,349 54,290 17,258 943 (23,918) 91,922
PROVISION FOR TAXES (2,056) (20,050) (6,231) 20,050 (i) (8,287)
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INCOME BEFORE MINORITY INTEREST 41,293 34,240 11,027 943 (3,868) 83,635
MINORITY INTEREST (1,326) (3,562) (j) (4,888)
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NET INCOME $ 39,967 $ 34,240 $11,027 $ 943 $(7,430) $ 78,747
================================================================== ==============
ALLOCATION OF NET INCOME TO:
Limited Partners $ 33,299 $38,392 (k) $ 71,691
============== ============= ==============
General Partner $ 6,668 $388 (k) $ 7,056
============== ============= ==============
BASIC EARNINGS PER LIMITED
PARTNER UNIT:
Number of Units used in computing
Basic Earnings per Unit 149,519 9,800 (g) 159,319
============== ============= ==============
Income before minority interest $ 0.23 $ 0.48
============== ==============
Net income per Unit $ 0.22 $ 0.45
============== ==============
DILUTED EARNINGS PER LIMITED
PARTNER UNIT:
Number of Units used in computing
Diluted Earnings per Unit 174,274 9,800 (g) 184,074
============== ============ ==============
Income before minority interest $ 0.20 $ 0.42
============== ==============
Net income per Unit $ 0.19 $ 0.39
============== ==============
The accompanying notes are an integral part of these unaudited pro forma condensed financial statements.
ENTERPRISE PRODUCTS PARTNERS L.P.
PRO FORMA STATEMENT OF CONSOLIDATED OPERATIONS
For the Year Ended December 31, 2001
(Amounts in thousands, except per Unit amounts)
(Unaudited)
Mid-
Enterprise America Seminole Enterprise
Historical Historical Historical Other Adjustments Pro Forma
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REVENUES
Revenues from consolidated operations $3,154,369 $214,518 $65,800 $522,622 $ (4,413) (a) $3,952,896
Equity income in unconsolidated affiliates 25,358 (1,879) 23,479
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Total 3,179,727 214,518 65,800 520,743 (4,413) 3,976,375
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COST AND EXPENSES
Operating costs and expenses 2,861,743 125,349 33,539 507,869 (4,413) (a) 3,527,322
1,740 (b)
1,495 (c)
Selling, general and administrative 30,296 28,364 1,535 4,477 64,672
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Total 2,892,039 153,713 35,074 512,346 (1,178) 3,591,994
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OPERATING INCOME 287,688 60,805 30,726 8,397 (3,235) 384,381
OTHER INCOME (EXPENSE)
Interest expense (52,456) (12,700) (5,160) 8,400 (d) (118,540)
(15,000) (e)
(38,418) (f)
5,787 (g)
(8,993) (h)
Interest income from unconsolidated
affiliates 31 31
Dividend income from unconsolidated
affiliates 3,462 3,462
Interest income - other 7,029 7,029
Other, net (1,104) (1,035) 662 (1,477)
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Other income (expense) (43,038) (13,735) (4,498) (48,224) (109,495)
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INCOME BEFORE PROVISION FOR
TAXES AND MINORITY INTEREST 244,650 47,070 26,228 8,397 (51,459) 274,886
PROVISION FOR TAXES - (17,445) (9,470) 17,445 (i) (9,470)
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INCOME BEFORE MINORITY INTEREST 244,650 29,625 16,758 8,397 (34,014) 265,416
MINORITY INTEREST (2,472) (4,729) (j) (7,201)
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NET INCOME $ 242,178 $ 29,625 $16,758 $ 8,397 $(38,743) $ 258,215
================================================================== ==============
ALLOCATION OF NET INCOME TO:
Limited Partners $ 236,570 $ 15,877 (k) $ 252,447
============== ============= ==============
General Partner $ 5,608 $ 160 (k) $ 5,768
============== ============= ==============
BASIC EARNINGS PER LIMITED
PARTNER UNIT:
Number of Units used in computing
Basic Earnings per Unit 139,452 9,800 (g) 149,252
============== ============= ==============
Income before minority interest $ 1.71 $ 1.74
============== ==============
Net income per Unit $ 1.70 $ 1.69
============== ==============
DILUTED EARNINGS PER LIMITED
PARTNER UNIT:
Number of Units used in computing
Diluted Earnings per Unit 170,786 9,800 (g) 180,586
============== ============ ==============
Income before minority interest $ 1.40 $ 1.44
============== ==============
Net income per Unit $ 1.39 $ 1.40
============== ==============
The accompanying notes are an integral part of these unaudited pro forma condensed financial statements.
ENTERPRISE PRODUCTS PARTNERS L.P.
PRO FORMA CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 2002
(Dollars in thousands, Unaudited)
Enterprise Enterprise
Historical Adjustments Pro Forma
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ASSETS
Current Assets
Cash and cash equivalents $ 61,976 $ 178,629 (g) $ 61,976
3,645 (g)
(182,274) (g)
Accounts and notes receivable - trade, net 322,441 322,441
Accounts receivable - affiliates 319 319
Inventories 227,058 227,058
Prepaid and other current assets 46,221 46,221
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Total current assets 658,015 - 658,015
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Property, Plant and Equipment, Net 2,823,249 2,823,249
Investments in and Advances to Unconsolidated Affiliates 401,088 401,088
Intangible assets 281,279 281,279
Goodwill 81,547 81,547
Other Assets 9,776 9,776
------------------------------ ----------------
Total $4,254,954 $ - $4,254,954
============================== ================
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities
Current maturities of debt $1,215,000 $(178,629) (g) $1,036,371
Accounts payable - trade 85,972 85,972
Accounts payable - affiliates 52,380 52,380
Accrued gas payables 397,442 397,442
Accrued expenses 24,766 24,766
Accrued interest 15,491 15,491
Other current liabilities 45,025 45,025
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Total current liabilities 1,836,076 (178,629) 1,657,447
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Long-Term Debt 1,313,507 (3,645) (g) 1,309,862
Other Long-Term Liabilities 8,020 8,020
Minority Interest 67,142 1,841 (g) 68,983
Commitments and Contingencies
Partners' Equity
Common Units 731,876 178,629 (g) 910,505
Subordinated Units 161,735 161,735
Special Units 143,926 143,926
Treasury Units (17,808) (17,808)
General Partner 10,480 1,804 (g) 12,284
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Total Partners' Equity 1,030,209 180,433 1,210,642
------------------------------ ----------------
Total $4,254,954 $ - $4,254,954
============================== ================
The accompanying notes are an integral part of these unaudited pro forma condensed financial statements.
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and September 30, 2002
(Amounts in millions)
These unaudited pro forma consolidated financial statements and underlying pro forma adjustments are based upon currently available
information and certain estimates and assumptions made by us; therefore, actual results will differ from pro forma results. However,
we believe the assumptions provide a reasonable basis for presenting the significant effects of the transactions noted herein. We
believe the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the pro forma financial
information.
The September 30, 2002 historical balance sheet of Enterprise reflects all acquisitions we have made through that date, including the
$1.2 billion Mid-America and Seminole acquisition we completed on July 31, 2002. The initial allocation of the purchase price of
the Mid-America and Seminole acquisition was as follows:
Current assets $40.9
Property, plant and equipment 1,283.6
Other assets 3.2
Current liabilities (24.0)
Long-term debt (60.0)
Other long-term liabilities (0.1)
Minority interest (55.6)
-----------------
$1,188.0
=================
The column labeled "Other" represents the historical financial amounts of the propylene fractionation and NGL and petrochemical
storage businesses we acquired from Diamond-Koch in the first quarter of 2002 and the natural gas pipeline business we acquired
from Shell in the second quarter of 2001 through their respective dates of acquisition. The pro forma adjustments we have made
are described as follows:
(a) Reflects the elimination of material intercompany revenues and expenses between acquired businesses and Enterprise as
appropriate in consolidation.
(b) As a result of the businesses we purchased from Diamond-Koch during the first quarter of 2002 (included in the pro forma
statement of operations under the column titled "Other"), we acquired certain contract-based intangible assets that are
subject to amortization. On a pro forma basis, amortization expense associated with these intangible assets increased by
$1.7 million for the year ended December 31, 2001 and $0.1 million for the nine months ended September 30, 2002.
(c) Reflects the pro forma depreciation expense adjustment for the Mid-America and Seminole pipeline assets. For purposes of
calculating pro forma depreciation expense, we have applied the straight-line method using an estimated remaining useful
life of the Mid-America and Seminole assets of 35 years to our new basis in these assets of approximately $1.3 billion.
After adjusting for historical depreciation recorded on Mid-America and Seminole, pro forma depreciation expense increased
$1.5 million for the year ended December 31, 2001 and $1.1 million for the nine months ended September 30, 2002.
(d) Reflects the removal of interest expense associated with Mid-America's $90.0 million in private placement debt, which was
extinguished prior to our purchase of the Mid-America interest. The pro forma entries give effect to the removal of
interest expense associated with this debt of $8.4 million in 2001 and $4.8 million for the first nine months of 2002.
(e) Reflects the amortization of $15.0 million in prepaid loan costs associated with the debt we incurred to finance the
Mid-America and Seminole acquisitions. The amortization of this prepaid amount is on a straight-line basis over the
one-year term of the underlying debt. The pro forma entries reflect an increase in amortization expense of $15.0 million
for the year ended December 31, 2001 and $8.8 million for the nine months ended September 30, 2002.
(f) Reflects an increase in variable-rate interest expense due to the $1.2 billion in debt we incurred to finance the
Mid-America and Seminole acquisitions. These pro forma entries give effect to an increase in interest expense of $38.4
million in 2001 and $22.4 million for the first nine months of 2002. These pro forma adjustments are before the
application of net proceeds from the October 2002 equity offering against the underlying debt, which would have the effect
of lowering interest expense (see "g" below). If the underlying variable interest rate used in such pro forma calculations
were to increase by 0.125%, pro forma interest expense would increase by $1.5 million for the year ended December 31, 2001
and by $0.9 million for the nine months ended September 30, 2002.
(g) Reflects the sale of 9,800,000 Common Units at an offering price of $18.99 per Unit on October 8, 2002. The net proceeds
from this offering were approximately $178.6 million after deducting underwriting discounts, commissions and estimated
offering expenses of $7.5 million. In connection with this offering, our General Partner made a net capital contribution of
$3.6 million to the Company to maintain its approximate 2% combined General Partner interest in the Company. The net
proceeds from this equity offering were used to partially repay the debt we incurred to finance the Mid-America and Seminole
acquisitions, and the proceeds of $3.6 million from our General Partner's capital contribution were used to repay other
debt. As a result, pro forma interest expense savings were $5.8 million for the year ended December 31, 2001 and $4.3
million for the nine months ended September 30, 2002. If the underlying variable interest rate used in such calculation
were to increase by 0.125%, pro forma interest savings would increase by $0.2 million for the 2001 period and $0.1 million
for the 2002 period.
(h) Of the cumulative $612.3 million paid to acquire Shell's Acadian Gas and Diamond-Koch's propylene fractionation and storage
businesses, we financed $482.2 million of this amount using fixed and variable-rate debt. The pro forma entries give effect
to the increase in interest expense associated with this debt of $9.0 million for the year ended December 31, 2001 and $0.6
million for the nine months ended September 30, 2002. If the underlying variable interest rate used in such pro forma
calculations were to increase by 0.125%, pro forma interest expense would increase by $0.3 million for the year ended
December 31, 2001 and by less than $0.1 million for the nine months ended September 30, 2002.
(i) In connection with the Mid-America acquisition, immediately prior to the acquisition's effective date, Williams converted
Mid-America from a corporation to a limited liability company. The pro forma adjustments reflect this change in
Mid-America's tax structure by eliminating historical income tax-related expense amounts. The impact on Mid-America's pro
forma earnings was the elimination of $17.4 million in income tax expense for the year ended December 31, 2001 and $20.1
million for the nine months ended September 30, 2002.
(j) Reflects the allocation of pro forma earnings to minority interest holders. Williams has a 2% interest in Mid-America and
Seminole. The other owners of Seminole hold a 20% minority interest. Finally, our General Partner holds an approximate 1%
minority interest in the earnings of our Operating Partnership.
(k) Reflects the adjustments necessary to allocate pro forma earnings between our Limited Partners and General Partner.
