Energy Transfer Partners Reports Fourth Quarter and Annual Results

Energy Transfer Partners Reports Fourth Quarter and Annual Results

DALLAS--(BUSINESS WIRE)-- Energy Transfer Partners, L.P. (NYSE: ETP) today reported its financial results for the fourth quarter ended December 31, 2012.

Adjusted EBITDA for the three months ended December 31, 2012 totaled $948 million, an increase of $455 million over the three months ended December 31, 2011. Distributable Cash Flow for the three months ended December 31, 2012 totaled $488 million, an increase of $169 million over the three months ended December 31, 2011. Income from continuing operations for the three months ended December 31, 2012 totaled $334 million, an increase of $118 million from the three months ended December 31, 2011.


Adjusted EBITDA for the year ended December 31, 2012 totaled $2.74 billion, an increase of $963 million over the year ended December 31, 2011. Distributable Cash Flow for the year ended December 31, 2012 totaled $1.49 billion, an increase of $335 million over the year ended December 31, 2011. Income from continuing operations for the year ended December 31, 2012 totaled $1.76 billion, an increase of $1.06 billion over the year ended December 31, 2011.

The quarter ended December 31, 2012 included the following significant achievements:

  • Sunoco Merger. On October 5, 2012, ETP completed its merger with Sunoco, Inc. ("Sunoco"). Under the terms of the merger agreement, Sunoco shareholders received 54,971,725 ETP Common Units and $2.6 billion of cash. Prior to the contribution of Sunoco to Holdco, as discussed below, Sunoco contributed $2.0 billion of cash and its interests in Sunoco Logistics Partners L.P. ("Sunoco Logistics") to ETP in exchange for 90,706,000 Class F Units representing limited partner interests in ETP ("Class F Units"). The Class F Units are entitled to 35% of the quarterly cash distribution generated by ETP and its subsidiaries other than Holdco, subject to a maximum cash distribution of $3.75 per Class F Unit per year, which is the current distribution level. As a result ETP, now owns the general partner interest, 100% of the incentive distribution rights, and 33,350,637 common units of Sunoco Logistics. Due to this ownership, ETP consolidated Sunoco Logistics into its financial statements as of the merger date.

  • Holdco Transaction. Immediately following the closing of the Sunoco Merger, Energy Transfer Equity, L.P. ("ETE") contributed its interest in Southern Union Company ("Southern Union") to ETP Holdco Corporation ("Holdco"), an ETP-controlled entity, in exchange for a 60% equity interest in Holdco. In conjunction with ETE's contribution, ETP contributed its interest in Sunoco to Holdco and retained a 40% equity interest in Holdco. Pursuant to a stockholders agreement between ETE and ETP, ETP controls Holdco. Consequently, ETP consolidated Holdco (including Sunoco and Southern Union) in its financial statements subsequent to the consummation of the Holdco Transaction. In connection with this transaction, ETE relinquished its rights to $210 million of incentive distributions from ETP that ETE would otherwise be entitled to receive over 12 consecutive quarters.

  • Strategic Asset Sale. In December 2012, Southern Union entered into a purchase and sale agreement pursuant to which subsidiaries of Laclede Gas Company, Inc. have agreed to acquire the assets of Southern Union's Missouri Gas Energy and New England Gas Company divisions. Total consideration is expected to be $1.04 billion, subject to customary closing adjustments, less the assumption of $19 million of debt. For the period from March 26, 2012 to December 31, 2012, the distribution operations have been reclassified to discontinued operations. The assets and liabilities of the disposal group have been reclassified and reported as assets and liabilities held for sale as of December 31, 2012.

  • Lone Star Fractionator. In December 2012, we announced that Lone Star's 100,000 Bbls/d NGL fractionation facility at Mont Belvieu, Texas is now in service. We will utilize a substantial amount of this fractionation capacity to handle NGL barrels we will deliver from the new processing facility we plan to build in Jackson County, Texas, a facility supported by multiple 10-year contracts with producers as part of our Eagle Ford Shale projects.

  • Lone Star West Texas Gateway NGL Pipeline. In December 2012, we completed construction of the 570-mile, 209,000 Bbls/d Lone Star West Texas Gateway NGL Pipeline ahead of schedule.

An analysis of the Partnership's segment results and other supplementary data is provided after the financial tables shown below. The Partnership has scheduled a conference call for 8:30 a.m. Central Time, Thursday, February 21, 2013 to discuss the 2012 results. The conference call will be broadcast live via an internet web cast which can be accessed through www.energytransfer.com and will also be available for replay on the Partnership's website for a limited time.

Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures used by industry analysts, investors, lenders, and rating agencies to assess the financial performance and the operating results of the Partnership's fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, cash flows from operating activities, or other GAAP measures. A table reconciling Adjusted EBITDA and Distributable Cash Flow with appropriate GAAP financial measures is included in the summarized financial information included in this release. Beginning with the quarter ended December 31, 2012 and applied retroactively to all periods presented, the Partnership has revised its calculation of Adjusted EBITDA and Distributable Cash Flow. (See notes under "Supplemental Information" for further information.)

Energy Transfer Partners, L.P. (NYSE: ETP) is a master limited partnership owning and operating one of the largest and most diversified portfolios of energy assets in the United States. ETP currently has natural gas operations that include approximately 24,000 miles of gathering and transportation pipelines, treating and processing assets, and storage facilities. ETP also owns the general partner interests, 100% of the incentive distribution rights, and a 32.4% limited partnership interest in Sunoco Logistics Partners L.P. (NYS: SXL) , which operates a geographically diverse portfolio of crude oil and refined products pipelines, terminalling and crude oil acquisition and marketing assets. ETP also holds a 70% interest in Lone Star NGL, a joint venture that owns and operates natural gas liquids storage, fractionation and transportation assets in Texas, Louisiana and Mississippi. In addition, ETP holds controlling interest in a corporation (ETP Holdco Corporation) that owns Southern Union Company and Sunoco, Inc. ETP's general partner is owned by Energy Transfer Equity, L.P. (NYS: ETE) . For more information, visit the Energy Transfer Partners, L.P. website at www.energytransfer.com.

Energy Transfer Equity, L.P. is a master limited partnership, which owns the general partner and 100% of the incentive distribution rights of Energy Transfer Partners, L.P. (NYS: ETP) and approximately 50.2 million ETP limited partner units; and owns the general partner and 100% of the IDRs of Regency Energy Partners LP (NYS: RGP) and approximately 26.3 million RGP limited partner units. ETE also owns a non-controlling interest in a corporation (ETP Holdco Corporation) that owns Southern Union Company and Sunoco, Inc. The ETE family of companies owns approximately 69,000 miles of natural gas, natural gas liquids, refined products, and crude pipelines. For more information, visit the Energy Transfer Equity, L.P. website at www.energytransfer.com.

Sunoco Logistics Partners L.P. (NYSE: SXL) , headquartered in Philadelphia, is a master limited partnership that owns and operates a logistics business consisting of a geographically diverse portfolio of complementary crude oil & refined product pipeline, terminalling, and acquisition & marketing assets. SXL's general partner is owned by Energy Transfer Partners, L.P. (NYS: ETP) . For more information, visit the Sunoco Logistics Partners L.P. web site atwww.sunocologistics.com.

The information contained in this press release is available on our website at www.energytransfer.com.

ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

(unaudited)

December 31,

2012

2011

ASSETS

CURRENT ASSETS

$

5,404

$

1,275

PROPERTY, PLANT AND EQUIPMENT, net

25,773

12,306

NON-CURRENT ASSETS HELD FOR SALE

985

ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES

3,502

201

NON-CURRENT PRICE RISK MANAGEMENT ASSETS

42

26

GOODWILL

5,606

1,220

INTANGIBLE ASSETS, net

1,561

331

OTHER NON-CURRENT ASSETS, net

357

160

Total assets

$

43,230

$

15,519

LIABILITIES AND EQUITY

CURRENT LIABILITIES

$

5,548

$

1,586

NON-CURRENT LIABILITIES HELD FOR SALE

142

LONG-TERM DEBT, less current maturities

15,442

7,388

LONG-TERM NOTES PAYABLE - RELATED PARTY

166

NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES

129

42

DEFERRED INCOME TAXES

3,476

126

OTHER NON-CURRENT LIABILITIES

995

27

COMMITMENTS AND CONTINGENCIES

EQUITY:

Total partners' capital

9,201

5,721

Noncontrolling interest

8,131

629

Total equity

17,332

6,350

Total liabilities and equity

$

43,230

$

15,519

ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions, except per unit data)

(unaudited)

Three Months Ended
December 31,

Years Ended
December 31,

2012

2011

2012 (1)

2011

REVENUES

$

10,981

$

1,805

$

15,702

$

6,799

COSTS AND EXPENSES:

Cost of products sold

9,660

1,108

12,266

4,175

Operating expenses

407

197

900

760

Depreciation and amortization

237

110

656

405

Selling, general and administrative

214

54

486

212

Total costs and expenses

10,518

1,469

14,308

5,552

OPERATING INCOME

463

336

1,394

1,247

OTHER INCOME (EXPENSE):

Interest expense, net of interest capitalized

(186

)

(126

)

(665

)

(474

)

Equity in earnings of unconsolidated affiliates

78

12

142

26

Gain on deconsolidation of Propane Business

1,057

Loss on extinguishment of debt

(115

)

Gains (losses) on non-hedged interest rate derivatives

5

(13

)

(4

)

(77

)

Other, net

1

5

11

(3

)

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE

361

214

1,820

719

Income tax expense (benefit)

27

(2

)

63

19

INCOME FROM CONTINUING OPERATIONS

334

216

1,757

700

Income (loss) from discontinued operations

27

1

(109

)

(3

)

NET INCOME

361

217

1,648

697

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

54

11

79

28

NET INCOME ATTRIBUTABLE TO PARTNERS

307

206

1,569

669

GENERAL PARTNER'S INTEREST IN NET INCOME

119

115

461

433

LIMITED PARTNERS' INTEREST IN NET INCOME

$

188

$

91

$

1,108

$

236

INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT:

Basic

$

0.56

$

0.41

$

4.93

$

1.12

Diluted

$

0.56

$

0.41

$

4.91

$

1.12

NET INCOME PER LIMITED PARTNER UNIT:

Basic

$

0.62

$

0.41

$

4.43

$

1.10

Diluted

$

0.62

$

0.41

$

4.42

$

1.10

(1) In accordance with generally accepted accounting principles, amounts previously reported for interim periods in 2012 have been revised to reflect the retrospective consolidation of Southern Union into ETP as a result of the Holdco Transaction as the transfer of Southern Union into Holdco met the definition of a transaction between entities under common control. Thus, Southern Union is retroactively consolidated beginning March 26, 2012, the date that ETE completed its merger with Southern Union.

SUPPLEMENTAL INFORMATION

(Dollars in millions)

(unaudited)

Three Months Ended
December 31,

Years Ended
December 31,

2012

2011

2012 (a)

2011

Reconciliation of net income to Adjusted EBITDA and Distributable Cash Flow (b):

(Revised - see (c) below)

(Revised - see (c) below)

(Revised - see (c) below)

Net income

$

361

$

217

$

1,648

$

697

Interest expense, net of interest capitalized

186

126

665

474

Income tax expense (benefit)

27

(2

)

63

19

Depreciation and amortization

237

110

656

405

Gain on deconsolidation of Propane Business

(1,057

)

Loss on extinguishment of debt

115

Non-cash compensation expense

11

7

42

38

(Gains) losses on non-hedged interest rate derivatives

(5

)

13

4

77

Unreali