Energy Transfer Equity Reports Quarterly Results for the Period Ended September 30th

November 9, 2009 4:18 PM EST

DALLAS--(BUSINESS WIRE)-- Energy Transfer Equity, L.P. (NYSE:ETE) today reported Distributable Cash of $123.2 million and net income of $34.3 million for the three months ended September 30, 2009. Distributable Cash is a "non-GAAP measure" as explained below.

For the three months ended September 30, 2009, ETE's Distributable Cash was $123.2 million, an increase of $14.4 million over the three months ended September 30, 2008. For the nine months ended September 30, 2009, ETE's Distributable Cash was $362.1 million, an increase of $56.9 million over the nine months ended September 30, 2008. The Partnership's principal sources of cash flow are distributions it receives from its investments in the limited and general partner interests in Energy Transfer Partners, L.P. ("ETP"). ETE currently has no operating activities apart from those conducted by ETP and its operating subsidiaries. ETE's principal uses of cash are for distributions to its general and limited partners, expenses, debt service and, at ETE's election, capital contributions to ETP in respect of ETE's general partner interest in ETP.

ETE's net income attributable to its partners decreased $58.4 million for the three months ended September 30, 2009 to $47.0 million as compared to $105.4 million for the three months ended September 30, 2008. Net income attributable to its partners decreased $49.6 million for the nine months ended September 30, 2009 to $302.9 million as compared to $352.5 million for the nine months ended September 30, 2008.

ETE also announced that it has filed its quarterly report on Form 10-Q for the three months ended September 30, 2009 with the Securities and Exchange Commission. ETE has posted a copy of this Form 10-Q on its website at www.energytransfer.com. The Partnership has scheduled a conference call for 9:00 a.m. Central Time, Tuesday, November 10, 2009 to discuss the third quarter results. The conference call will be broadcast live via an internet web cast, which can be accessed through www.energytransfer.com. The call will be available for replay on the Partnership's website for a limited time.

Use of Non-GAAP Financial Measures

This press release and accompanying schedules include the non-generally accepted accounting principle ("non-GAAP") financial measure of Distributable Cash. The accompanying schedules provide a reconciliation of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with GAAP. The Partnership's Distributable Cash should not be considered as an alternative to GAAP financial measures such as net income, cash flow from operating activities or any other GAAP measure of liquidity or financial performance.

Distributable Cash. The Partnership defines Distributable Cash for a period as cash distributions expected to be received from ETP in respect of such period in connection with the Partnership's investments in limited and general partner interests of ETP, net of the Partnership's expenditures for general and administrative costs and debt service. Distributable Cash is a significant liquidity measure used by the Partnership's senior management to compare net cash flows generated by the Partnership's equity investments in ETP to the distributions the Partnership expects to pay its unitholders. Using this measure, the Partnership's management can compute the coverage ratio of estimated cash flows to planned cash distributions.

Distributable Cash is an important non-GAAP financial measure for our limited partners since it indicates to investors whether or not the Partnership's investments are generating cash flows at a level that can sustain or support an increase in quarterly cash distribution levels. Financial measures such as Distributable Cash are quantitative standards used by the investment community with respect to publicly-traded partnerships because the value of a partnership unit is in part measured by its yield (which in turn is based on the amount of cash distributions a partnership can pay to a unitholder). The GAAP measures most directly comparable to Distributable Cash are net income and cash flow from operating activities for ETE on a stand-alone basis ("Parent Company"). The accompanying analysis of Distributable Cash is presented for the three and nine months ended September 30, 2009 and 2008 for comparative purposes.

Energy Transfer Equity, L.P. (NYSE:ETE) is a publicly traded partnership, which owns the general partner of Energy Transfer Partners, L.P. and approximately 62.5 million ETP limited partner units.

Energy Transfer Partners, L.P. (NYSE:ETP) is a publicly traded partnership owning and operating a diversified portfolio of energy assets. ETP has pipeline operations in Arizona, Colorado, Louisiana, New Mexico, and Utah, and owns the largest intrastate pipeline system in Texas. ETP's natural gas operations include gathering and transportation pipelines, treating and processing assets, and three storage facilities located in Texas. ETP currently has more than 17,500 miles of pipeline in service and has a 50% interest in joint ventures that have approximately 500 miles of interstate pipeline in service. ETP is also one of the three largest retail marketers of propane in the United States, serving more than one million customers across the country.

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

ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

                                            September 30,   December 31,

                                              2009            2008

ASSETS

CURRENT ASSETS:

Cash and cash equivalents                   $ 50,192        $ 92,023

Marketable securities                         12,682          5,915

Accounts receivable, net of allowance for     352,838         591,257
doubtful accounts

Accounts receivable from related companies    30,807          15,142

Inventories                                   221,148         272,348

Deposits paid to vendors                      99,317          78,237

Exchanges receivable                          15,434          45,209

Price risk management assets                  6,841           5,423

Prepaid expenses and other current assets     69,152          75,441

Total current assets                          858,411         1,180,995

PROPERTY, PLANT AND EQUIPMENT                 10,051,273      9,464,548

ACCUMULATED DEPRECIATION                      (943,305   )    (762,014   )

                                              9,107,968       8,702,534

ADVANCES TO AND INVESTMENTS IN AFFILIATES     550,950         10,110

GOODWILL                                      765,935         773,283

INTANGIBLES AND OTHER ASSETS, net             401,244         402,980

Total assets                                $ 11,684,508    $ 11,069,902

ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

                                                 September 30,  December 31,

                                                 2009           2008

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Accounts payable                                 $ 254,044      $ 381,933

Accounts payable to related companies            7,265          34,495

Exchanges payable                                22,400         54,636

Customer advances and deposits                   101,258        106,679

Accrued and other current liabilities            247,919        313,140

Price risk management liabilities                82,697         142,432

Interest payable                                 115,455        115,487

Income taxes payable                             5,234          14,298

Deferred income taxes                            -              589

Current maturities of long-term debt             46,115         45,232

Total current liabilities                        882,387        1,208,921

LONG-TERM DEBT, less current maturities          7,740,135      7,190,357

LONG-TERM PRICE RISK MANAGEMENT LIABILITIES      89,990         121,710

DEFERRED INCOME TAXES                            197,257        194,871

OTHER NON-CURRENT LIABILITIES                    21,076         14,727

COMMITMENTS AND CONTINGENCIES

                                                 8,930,845      8,730,586

EQUITY:

Partners' Capital (Deficit):

General Partner                                  149            155

Limited Partners:

Common Unitholders (222,898,248 and 222,829,956
units authorized, issued and outstanding at      (17,399)       (15,762)
September 30, 2009 and December 31, 2008,
respectively)

Accumulated other comprehensive loss             (67,257)       (67,825)

Total partners' deficit                          (84,507)       (83,432)

Noncontrolling interest                          2,838,170      2,422,748

Total equity                                     2,753,663      2,339,316

Total liabilities and equity                     $ 11,684,508   $11,069,902

ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit and unit data)

(unaudited)

                Three Months Ended September 30,  Nine Months Ended September 30,

                  2009             2008             2009             2008

REVENUES:

Natural gas     $ 943,975        $ 1,938,586      $ 3,004,163      $ 6,322,070
operations

Retail propane    162,224          238,830          829,901          1,086,417

Other             23,650           28,674           77,449           90,199

Total revenues    1,129,849        2,206,090        3,911,513        7,498,686

COSTS AND
EXPENSES:

Cost of
products sold     591,797          1,435,308        1,865,914        4,965,145
- natural gas
operations

Cost of
products sold     80,232           187,799          378,524          744,316
- retail
propane

Cost of
products sold     6,119            10,347           18,842           27,783
- other

Operating         158,883          197,493          517,337          573,606
expenses

Depreciation
and               84,738           73,563           239,626          200,922
amortization

Selling,
general and       34,579           45,316           146,640          140,781
administrative

Total costs       956,348          1,949,826        3,166,883        6,652,553
and expenses

OPERATING         173,501          256,264          744,630          846,133
INCOME

OTHER INCOME
(EXPENSE):

Interest
expense, net      (120,100    )    (90,300     )    (341,050    )    (261,297    )
of interest
capitalized

Equity in
earnings          9,581            (654        )    11,751           (749        )
(losses) of
affiliates

Gains (losses)
on disposal of    (1,088      )    2,520            (1,333      )    1,584
assets

Gains (losses)
on non-hedged     (35,589     )    (9,152      )    24,373           (13,610     )
interest rate
derivatives

Allowance for
equity funds      30               19,727           18,618           45,275
used during
construction

Other, net        4,235            (1,163      )    4,559            8,356

INCOME BEFORE
INCOME TAX        30,570           177,242          461,548          625,692
EXPENSE
(BENEFIT)

Income tax
expense           (3,697      )    (7,874      )    5,773            6,600
(benefit)

NET INCOME        34,267           185,116          455,775          619,092

LESS: NET
INCOME (LOSS)
ATTRIBUTABLE
TO

NONCONTROLLING    (12,704     )    79,737           152,893          266,614
INTEREST

NET INCOME
ATTRIBUTABLE      46,971           105,379          302,882          352,478
TO PARTNERS

GENERAL
PARTNER'S         147              326              938              1,091
INTEREST IN
NET INCOME

LIMITED
PARTNERS'       $ 46,824         $ 105,053        $ 301,944        $ 351,387
INTEREST IN
NET INCOME

BASIC NET
INCOME PER      $ 0.21           $ 0.47           $ 1.35           $ 1.58
LIMITED
PARTNER UNIT

BASIC AVERAGE
NUMBER OF         222,898,248      222,829,956      222,898,188      222,829,956
UNITS
OUTSTANDING

DILUTED NET
INCOME PER      $ 0.21           $ 0.47           $ 1.35           $ 1.57
LIMITED
PARTNER UNIT

DILUTED
AVERAGE NUMBER    222,898,248      222,829,956      222,898,188      222,829,956
OF UNITS
OUTSTANDING

ENERGY TRANSFER EQUITY, L.P.

DISTRIBUTABLE CASH

(Dollars in thousands, except per unit)

(unaudited)

The following table presents the calculation and reconciliation of
Distributable Cash of Energy Transfer Equity, L.P. with respect to the
following periods:

                 Three Months Ended September  Nine Months Ended September 30,
                 30,

                   2009          2008            2009          2008

Distributable
Cash:

Cash
distributions
expected from
Energy Transfer
Partners, L.P.
associated
with:

General partner
interest (1):

Standard
distribution     $ 4,867       $ 4,384         $ 14,588      $ 12,740
rights

Incentive
distribution       87,498        75,804          255,808       219,298
rights

Less: Expected
General Partner
contribution to    -             -               (3,354   )    (13,098  )
ETP to maintain
its 2% interest

Limited partner
interest (1):

62,500,797         55,860        55,860          167,580       166,018
Common units

Total cash
expected from
Energy Transfer    148,225       136,048         434,622       384,958
Partners, L.P.
(1)

Deduct expenses
of the Parent
Company on a
stand-alone
basis:

Parent
Company-related    398           (1,544   )      (2,205   )    (5,600   )
expenses

Interest
expense, net of
amortization of
financing
costs, interest    (25,454  )    (25,762  )      (70,342  )    (74,218  )
income, and
realized gains
and losses on
interest rate
derivatives

Distributable    $ 123,169     $ 108,742       $ 362,075     $ 305,140
Cash

Cash
distributions
to be paid to
the partners of
Energy Transfer
Equity, L.P.
(2):

Distribution
per limited
partner unit as  $ 0.5350      $ 0.4800        $ 0.5350      $ 0.4800
of the end of
the period

Distributions
to be paid to      119,250       106,958         355,523       311,961
limited
partners

Distributions
to be paid to      370           332             1,104         969
general partner

Total cash
distributions
to be paid by
Energy Transfer  $ 119,620     $ 107,290       $ 356,627     $ 312,930
Equity, L.P. to
its limited and
general
partners (2)

Reconciliation
of Non-GAAP
"Distributable
Cash" to GAAP
"Net Income"
and GAAP "Net
cash provided
by operating
activities" for
the Parent
Company on a
stand-alone
basis:

Net income
attributable to  $ 46,971      $ 105,379       $ 302,882     $ 352,478
partners

Adjustments to
derive
Distributable
Cash:

Equity in
income of          (82,661  )    (138,955 )      (370,195 )    (441,299 )
unconsolidated
affiliates

Quarterly
distribution
expected to be     148,225       136,048         434,622       384,958
received from
Energy Transfer
Partners, L.P.

Amortization
included in        1,074         751             5,236         2,255
interest
expense

Other non-cash     138           4               415           14

Unrealized
gains and
losses on          9,422         5,515           (10,885  )    6,734
non-hedged
interest rate
swaps

Distributable      123,169       108,742         362,075       305,140
Cash

Adjustments to
Distributable
Cash to derive
Net Cash
Provided by
Operating
Activities:

Quarterly
distribution
expected from      (148,225 )    (136,048 )      (434,622 )    (384,958 )
Energy Transfer
Partners, L.P.

Cash
distribution
received from      144,733       122,831         425,938       399,295
Energy Transfer
Partners, L.P.
(3)

Deferred income    (76      )    -               (649     )    -
taxes

Net changes in
operating          (846     )    1,141           (3,348   )    9,673
assets and
liabilities

Net cash
provided by
operating
activities for   $ 118,755     $ 96,666        $ 349,394     $ 329,150
Parent Company
on a
stand-alone
basis

(1) For the three months ended September 30, 2009, cash distributions expected to be received from Energy Transfer Partners, L.P. consists of cash distributions in respect of the three months ended September 30, 2009 payable on November 16, 2009 to holders of record on the close of business on November 9, 2009. For the three months ended September 30, 2008, cash distributions received from Energy Transfer Partners, L.P. consists of cash distributions paid on November 14, 2008 for the three months ended September 30, 2008.

For the nine months ended September 30, 2009, cash distributions received or expected to be received from Energy Transfer Partners, L.P. consists of cash distributions paid on May 15, 2009 in respect of the quarter ended March 31, 2009, cash distributions paid on August 14, 2009 in respect of the quarter ended June 30, 2009 and cash distributions in respect of the three months ended September 30, 2009 payable on November 16, 2009 to holders of record on the close of business on November 9, 2009. For the nine months ended September 30, 2008, cash distributions received from Energy Transfer Partners, L.P. consists of cash distributions paid on May 15, 2008 in respect of the quarter ended March 31, 2008, cash distributions paid on August 14, 2008 in respect of the quarter ended June 30, 2008 and cash distributions in respect of the three months ended September 30, 2008 paid on November 14, 2008.

(2) For the three months ended September 30, 2009, cash distributions expected to be paid from Energy Transfer Equity, L.P. consists of cash distributions in respect of the three months ended September 30, 2009 payable on November 19, 2009 to holders of record on November 9, 2009. For the three months ended September 30, 2008, cash distributions paid or expected to be paid from Energy Transfer Equity, L.P. consists of cash distributions paid on November 19, 2008 for the three months ended September 30, 2008.

For the nine months ended September 30, 2009, cash distributions paid or expected to be paid by Energy Transfer Equity, L.P. consist of cash distributions paid on May 19, 2009 in respect of the quarter ended March 31, 2009, cash distributions paid on August 19, 2009 in respect of the quarter ended June 30, 2009 and cash distributions in respect of the three months ended September 30, 2009 payable on November 19, 2009 to holders of record on the close of business on November 9, 2009. For the nine months ended September 30, 2008, cash distributions by Energy Transfer Equity, L.P. consist of cash distributions paid on May 15, 2008 in respect of the quarter ended March 31, 2008, cash distributions paid on August 14, 2008 in respect of the quarter ended June 30, 2008 and cash distributions in respect of the three months ended September 30, 2008 paid on November 19, 2008.

(3) Cash distributions received from Energy Transfer Partners, L.P. for the nine months ended September 30, 2008 reflect a one-time distribution for the four-month transition period related to Energy Transfer Partners, L.P.'s change of its fiscal year from August 31 to December 31 during 2007.

    Source: Energy Transfer Equity, L.P.

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