Exhibit 99.2
ENBRIDGE ENERGY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
| | Three months ended
December 31, | | Year ended
December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
| | (dollars and units in millions,
except per unit amounts) | |
Operating revenue | | $ | 2,084.5 | | $ | 1,334.7 | | $ | 6,476.9 | | $ | 4,291.7 | |
Operating expenses | | | | | | | | | |
Cost of natural gas | | 1,880.9 | | 1,143.3 | | 5,763.3 | | 3,587.1 | |
Operating and administrative | | 89.6 | | 76.3 | | 326.8 | | 274.1 | |
Power | | 21.6 | | 18.8 | | 74.8 | | 72.8 | |
Depreciation and amortization | | 34.3 | | 31.3 | | 138.2 | | 120.5 | |
Gain on sale of assets | | (18.1 | ) | — | | (18.1 | ) | — | |
| | 2,008.3 | | 1,269.7 | | 6,285.0 | | 4,054.5 | |
Operating income | | 76.2 | | 65.0 | | 191.9 | | 237.2 | |
Interest expense | | (28.1 | ) | (22.6 | ) | (107.7 | ) | (88.4 | ) |
Rate refunds | | — | | (1.6 | ) | — | | (13.6 | ) |
Other income | | 1.6 | | 0.8 | | 5.0 | | 3.0 | |
Net income | | $ | 49.7 | | $ | 41.6 | | $ | 89.2 | | $ | 138.2 | |
Net income allocable to common and i-units | | $ | 43.1 | | $ | 35.6 | | $ | 65.7 | | $ | 115.7 | |
Net income per common and i-unit (basic and diluted) | | $ | 0.68 | | $ | 0.61 | | $ | 1.06 | | $ | 2.06 | |
Weighted average units outstanding | | 63.6 | | 59.0 | | 62.1 | | 56.1 | |
ENBRIDGE ENERGY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Year ended
December 31, | |
| | 2005 | | 2004 | |
| | (dollars in millions) | |
Cash provided by operating activities | | | | | |
Net income | | $ | 89.2 | | $ | 138.2 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | | 138.2 | | 120.5 | |
Derivative fair value loss | | 58.4 | | 3.2 | |
Environmental liabilities | | — | | (2.0 | ) |
Gain on sale of asset | | (18.1 | ) | — | |
Other | | (0.3 | ) | 0.4 | |
Changes in operating assets and liabilities, net of cash acquired: | | | | | |
Receivables, trade and other | | (38.0 | ) | (25.4 | ) |
Due from General Partner and affiliates | | (12.4 | ) | (0.5 | ) |
Accrued receivables | | (237.1 | ) | (128.5 | ) |
Inventory | | (57.5 | ) | (60.8 | ) |
Current and long-term other assets | | (2.2 | ) | 15.3 | |
Due to General Partner and affiliates | | 2.6 | | 8.1 | |
Accounts payable and other | | 41.7 | | 36.8 | |
Accrued purchases | | 295.3 | | 120.8 | |
Interest payable | | 8.8 | | 14.5 | |
Property and other taxes payable | | (1.5 | ) | 4.8 | |
Net cash provided by operating activities | | 267.1 | | 245.4 | |
Cash used in investing activities | | | | | |
Additions to property, plant and equipment | | (344.8 | ) | (288.8 | ) |
Changes in construction payables | | 2.8 | | 10.0 | |
Asset acquisitions, net of cash acquired | | (186.4 | ) | (141.0 | ) |
Proceeds from sale of assets | | 105.4 | | — | |
Settlement of natural gas collars | | (16.3 | ) | — | |
Other | | 2.2 | | 0.7 | |
Net cash used in investing activities | | (437.1 | ) | (419.1 | ) |
Cash provided by financing activities | | | | | |
Proceeds from unit issuances, net | | 268.6 | | 194.2 | |
Distributions to partners | | (210.6 | ) | (191.0 | ) |
Repayments under credit facilities, net | | (175.0 | ) | (280.0 | ) |
Borrowings under commercial paper program, net | | 330.0 | | — | |
Borrowings under senior notes, net | | — | | 495.4 | |
Repayments to the General Partner and affiliates | | — | | — | |
Repayments on First Mortgage Notes | | (31.0 | ) | (31.0 | ) |
Other | | (0.5 | ) | — | |
Net cash provided by financing activities | | 181.5 | | 187.6 | |
Net increase in cash and cash equivalents | | 11.5 | | 13.9 | |
Cash and cash equivalents at beginning of year | | 78.3 | | 64.4 | |
Cash and cash equivalents at end of year | | $ | 89.8 | | $ | 78.3 | |
ENBRIDGE ENERGY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| | December 31, | |
| | 2005 | | 2004 | |
| | (dollars in millions) | |
ASSETS | | | | | |
Current assets | | | | | |
Cash and cash equivalents | | $ | 89.8 | | $ | 78.3 | |
Receivables, trade and other, net of allowance for doubtful accounts of $4.5 in 2005 and $4.0 in 2004 | | 109.7 | | 71.7 | |
Due from General Partner and affiliates | | 20.1 | | 7.7 | |
Accrued receivables | | 615.3 | | 378.2 | |
Inventory | | 138.9 | | 84.5 | |
Other current assets | | 11.5 | | 13.4 | |
| | 985.3 | | 633.8 | |
Property, plant and equipment, net | | 3,080.0 | | 2,778.0 | |
Other assets, net | | 22.2 | | 27.7 | |
Goodwill | | 258.2 | | 257.2 | |
Intangibles, net | | 82.7 | | 74.0 | |
| | $ | 4,428.4 | | $ | 3,770.7 | |
LIABILITIES AND PARTNERS’ CAPITAL | | | | | |
Current liabilities | | | | | |
Due to General Partner and affiliates | | $ | 12.5 | | $ | 9.9 | |
Accounts payable and other | | 247.9 | | 136.4 | |
Accrued purchases | | 646.7 | | 351.4 | |
Interest payable | | 11.4 | | 12.3 | |
Property and other taxes payable | | 21.8 | | 23.3 | |
Current maturities of long-term debt | | 31.0 | | 31.0 | |
| | 971.3 | | 564.3 | |
Long-term debt | | 1,682.9 | | 1,559.4 | |
Loans from General Partner and affiliates | | 151.8 | | 142.1 | |
Environmental liabilities | | 4.8 | | 5.3 | |
Other long-term liabilities | | 253.8 | | 101.7 | |
| | 3,064.6 | | 2,372.8 | |
Commitments and contingencies | | | | | |
| | | | | |
Partners’ capital | | | | | |
Class A common units (Units issued—49,938,834 in 2005 and 44,296,134 in 2004) | | 1,142.4 | | 1,021.6 | |
Class B common units (Units issued—3,912,750 in 2005 and 2004) | | 67.2 | | 66.7 | |
i-units (Units issued—11,704,948 in 2005 and 10,902,409 in 2004) | | 421.7 | | 399.4 | |
General Partner | | 34.6 | | 31.0 | |
Accumulated other comprehensive loss | | (302.1 | ) | (120.8 | ) |
| | 1,363.8 | | 1,397.9 | |
| | $ | 4,428.4 | | $ | 3,770.7 | |
NET INCOME PER COMMON AND i-UNIT
Net income per common and i-unit is computed by dividing net income, after deducting the General Partner’s allocation, by the weighted average number of Class A and B common units and i-units outstanding. The General Partner’s allocation is equal to an amount based upon its 2% general partner interest, adjusted to reflect an amount equal to incentive distributions earned and an amount required to reflect depreciation on the General Partner’s historical cost basis for assets contributed on formation of the Partnership. As there are no dilutive securities outstanding, basic and diluted earnings per unit amounts are equal. Net income per common and i-unit was determined as follows:
| | Three months ended
December 31, | | Year ended
December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
| | (dollars and units in millions,
except per unit amounts) | |
Net income | | $ | 49.7 | | $ | 41.6 | | $ | 89.2 | | $ | 138.2 | |
Allocations to the General Partner: | | | | | | | | | |
Net income allocated to General Partner | | (1.0 | ) | (0.9 | ) | (1.8 | ) | (2.8 | ) |
Incentive distributions earned | | (5.6 | ) | (5.1 | ) | (21.6 | ) | (19.6 | ) |
Historical cost depreciation adjustments | | — | | — | | (0.1 | ) | (0.1 | ) |
| | (6.6 | ) | (6.0 | ) | (23.5 | ) | (22.5 | ) |
Net income allocable to common units and i-units | | $ | 43.1 | | $ | 35.6 | | $ | 65.7 | | $ | 115.7 | |
Weighted average units outstanding | | 63.6 | | 59.0 | | 62.1 | | 56.1 | |
Net income per common and i-unit (basic and diluted) | | $ | 0.68 | | $ | 0.61 | | $ | 1.06 | | $ | 2.06 | |
SEGMENT INFORMATION
Our business is divided into operating segments, defined as components of the enterprise, about which financial information is available and evaluated regularly by our Chief Operating Decision Maker in deciding how resources are allocated and performance is assessed.
Each of our reportable segments is a business unit that offers different services and products that is managed separately, since each business segment requires different operating strategies. We have segregated our business activities into three distinct operating segments:
• Liquids;
• Natural Gas; and
• Marketing.
The following table presents certain financial information relating to our business segments:
| | As of and for the three months ended December 31, 2005 | |
| | Liquids | | Natural Gas | | Marketing | | Corporate(1) | | Total | |
| | (in millions) | |
Total revenues | | $ | 114.9 | | $ | 1,765.0 | | $ | 1,225.7 | | $ | — | | $ | 3,105.6 | |
Less: Intersegment revenue | | — | | 957.7 | | 63.4 | | — | | 1,021.1 | |
Operating revenues | | 114.9 | | 807.3 | | 1,162.3 | | — | | 2,084.5 | |
Cost of natural gas | | — | | 718.8 | | 1,162.1 | | — | | 1,880.9 | |
Operating and administrative | | 38.7 | | 48.7 | | 1.0 | | 1.2 | | 89.6 | |
Power | | 21.6 | | — | | — | | — | | 21.6 | |
Depreciation and amortization | | 18.1 | | 16.1 | | 0.1 | | — | | 34.3 | |
Gain on sale of assets | | — | | (18.1 | ) | — | | — | | (18.1 | ) |
Operating income | | 36.5 | | 41.8 | | (0.9 | ) | (1.2 | ) | 76.2 | |
Interest expense | | — | | — | | — | | (28.1 | ) | (28.1 | ) |
Rate refunds | | — | | — | | — | | — | | — | |
Other income | | — | | — | | — | | 1.6 | | 1.6 | |
Minority interest | | — | | — | | — | | — | | — | |
Net income | | $ | 36.5 | | $ | 41.8 | | $ | (0.9 | ) | $ | (27.7 | ) | $ | 49.7 | |
Capital expenditures (excluding acquisitions) | | $ | 25.0 | | $ | 57.3 | | $ | 0.2 | | $ | 0.4 | | $ | 82.9 | |
(1) Corporate consists of interest expense, interest income, minority interest and certain other costs such as franchise taxes, which are not allocated to the other business segments.
| | As of and for the three months ended December 31, 2004 | |
| | Liquids | | Natural Gas | | Marketing | | Corporate(1) | | Total | |
| | (in millions) | |
Total revenues | | $ | 107.8 | | $ | 936.2 | | $ | 765.9 | | $ | — | | $ | 1,809.9 | |
Less: Intersegment revenue | | — | | 460.8 | | 14.4 | | — | | 475.2 | |
Operating revenues | | 107.8 | | 475.4 | | 751.5 | | — | | 1,334.7 | |
Cost of natural gas | | — | | 392.0 | | 751.3 | | — | | 1,143.3 | |
Operating and administrative | | 35.7 | | 39.3 | | 1.0 | | 0.3 | | 76.3 | |
Power | | 18.8 | | — | | — | | — | | 18.8 | |
Depreciation and amortization | | 18.0 | | 13.1 | | 0.2 | | — | | 31.3 | |
Gain on sale of assets | | — | | — | | — | | — | | — | |
Operating income | | 35.3 | | 31.0 | | (1.0 | ) | (0.3 | ) | 65.0 | |
Interest expense | | — | | — | | — | | (22.6 | ) | (22.6 | ) |
Rate refunds | | — | | — | | — | | (1.6 | ) | (1.6 | ) |
Other income | | — | | — | | — | | 0.8 | | 0.8 | |
Minority interest | | — | | — | | — | | — | | — | |
Net income | | $ | 35.3 | | $ | 31.0 | | $ | (1.0 | ) | $ | (23.7 | ) | $ | 41.6 | |
Capital expenditures (excluding acquisitions) | | $ | 25.3 | | $ | 82.9 | | $ | 0.3 | | $ | 5.7 | | $ | 114.2 | |
(1) Corporate consists of interest expense, interest income, minority interest and certain other costs such as franchise taxes, which are not allocated to the other business segments.
| | As of and for the year ended December 31, 2005 | |
| | Liquids | | Natural Gas | | Marketing | | Corporate(1) | | Total | |
| | (in millions) | |
Total revenues | | $ | 418.0 | | $ | 4,945.1 | | $ | 3,884.2 | | $ | — | | $ | 9,247.3 | |
Less: Intersegment revenue | | — | | 2,593.0 | | 177.4 | | — | | 2,770.4 | |
Operating revenues | | 418.0 | | 2,352.1 | | 3,706.8 | | — | | 6,476.9 | |
Cost of natural gas | | — | | 2,018.7 | | 3,744.6 | | — | | 5,763.3 | |
Operating and administrative | | 144.2 | | 175.0 | | 4.1 | | 3.5 | | 326.8 | |
Power | | 74.8 | | — | | — | | — | | 74.8 | |
Depreciation and amortization | | 71.7 | | 66.0 | | 0.5 | | — | | 138.2 | |
Gain on sale of assets | | — | | (18.1 | ) | — | | — | | (18.1 | ) |
Operating income | | 127.3 | | 110.5 | | (42.4 | ) | (3.5 | ) | 191.9 | |
Interest expense | | — | | — | | — | | (107.7 | ) | (107.7 | ) |
Rate refunds | | — | | — | | — | | — | | — | |
Other income | | — | | — | | — | | 5.0 | | 5.0 | |
Minority interest | | — | | — | | — | | — | | — | |
Net income | | $ | 127.3 | | $ | 110.5 | | $ | (42.4 | ) | $ | (106.2 | ) | $ | 89.2 | |
Total assets | | $ | 1,664.0 | | $ | 2,145.9 | | $ | 512.3 | | $ | 106.2 | | $ | 4,428.4 | |
Capital expenditures (excluding acquisitions) | | $ | 77.0 | | $ | 263.8 | | $ | 0.2 | | $ | 3.8 | | $ | 344.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) Corporate consists of interest expense, interest income, minority interest and certain other costs such as franchise taxes, which are not allocated to the other business segments.
| | As of and for the year ended December 31, 2004 | |
| | Liquids | | Natural Gas | | Marketing | | Corporate(1) | | Total | |
| | (in millions) | |
Total revenues | | $ | 409.3 | | $ | 2,890.1 | | $ | 2,686.9 | | $ | — | | $ | 5,986.3 | |
Less: Intersegment revenue | | — | | 1,570.2 | | 124.4 | | — | | 1,694.6 | |
Operating revenues | | 409.3 | | 1,319.9 | | 2,562.5 | | — | | 4,291.7 | |
Cost of natural gas | | — | | 1,031.8 | | 2,555.3 | | — | | 3,587.1 | |
Operating and administrative | | 128.9 | | 138.3 | | 3.4 | | 3.5 | | 274.1 | |
Power | | 72.8 | | — | | — | | — | | 72.8 | |
Depreciation and amortization | | 68.5 | | 51.7 | | 0.2 | | 0.1 | | 120.5 | |
Gain on sale of assets | | — | | — | | — | | — | | — | |
Operating income | | 139.1 | | 98.1 | | 3.6 | | (3.6 | ) | 237.2 | |
Interest expense | | — | | — | | — | | (88.4 | ) | (88.4 | ) |
Rate refunds | | — | | — | | — | | (13.6 | ) | (13.6 | ) |
Other income | | — | | — | | — | | 3.0 | | 3.0 | |
Minority interest | | — | | — | | — | | — | | — | |
Net income | | $ | 139.1 | | $ | 98.1 | | $ | 3.6 | | $ | (102.6 | ) | $ | 138.2 | |
Total assets | | $ | 1,639.8 | | $ | 1,717.2 | | $ | 313.7 | | $ | 100.0 | | $ | 3,770.7 | |
Capital expenditures (excluding acquisitions) | | $ | 81.9 | | $ | 197.4 | | $ | 0.3 | | $ | 9.2 | | $ | 288.8 | |
(1) Corporate consists of interest expense, interest income, minority interest and certain other costs such as franchise taxes, which are not allocated to the other business segments.
