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

November 9, 2009 4:20 PM EST

DALLAS--(BUSINESS WIRE)-- Energy Transfer Partners, L.P. (NYSE:ETP) today reported EBITDA, as adjusted, distributable cash flow, and net income for the quarter ended September 30, 2009. EBITDA, as adjusted, for the three months ended September 30, 2009 totaled $281.8 million, a decrease of $51.0 million from the three months ended September 30, 2008. Distributable cash flow for the three months ended September 30, 2009 totaled $155.6 million, a decrease of $54.3 million from the three months ended September 30, 2008. Net income for the three months ended September 30, 2009 totaled $72.5 million, a decrease of $148.6 million from the three months ended September 30, 2008. The decreases in these metrics between the periods were primarily attributable to the impacts of lower natural gas prices and weaker price differentials mainly across Texas.

For the nine months ended September 30, 2009, EBITDA, as adjusted, totaled $1.03 billion, a decrease of $34.9 million from the nine months ended September 30, 2008. Distributable cash flow for the nine months ended September 30, 2009 was $731.7 million, a decrease of $77.5 million from the nine months ended September 30, 2008. Net income for the nine months ended September 30, 2009 totaled $530.4 million, a decrease of $184.7 million from the nine months ended September 30, 2008.

ETP also announced that it has filed its quarterly report on Form 10-Q for the quarter ended September 30, 2009 with the Securities and Exchange Commission. ETP 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.

EBITDA, as adjusted, 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 EBITDA, as adjusted, and distributable cash flow with appropriate GAAP financial measures is included in the summarized financial information included in this release.

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 intrastate 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.

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

The information contained in this press release is available on the Partnership's website at www.energytransfer.com.

ENERGY TRANSFER PARTNERS, 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                   $ 50,059        $ 91,902

Marketable securities                         12,682          5,915

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

Accounts receivable from related companies    35,972          17,895

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     67,680          75,215

Total current assets                          861,971         1,183,401

PROPERTY, PLANT AND EQUIPMENT                 9,616,309       8,996,911

ACCUMULATED DEPRECIATION                      (905,624   )    (700,826   )

                                              8,710,685       8,296,085

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

GOODWILL                                      736,347         743,694

INTANGIBLES AND OTHER ASSETS, net             394,767         394,199

Total assets                                $ 11,254,720    $ 10,627,489

ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

                                                  September 30,   December 31,

                                                  2009            2008

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:

Accounts payable                                  $ 253,892       $ 381,135

Accounts payable to related companies               7,591           34,547

Exchanges payable                                   22,400          54,636

Customer advances and deposits                      101,258         106,679

Accrued and other current liabilities               247,466         311,988

Price risk management liabilities                   18,279          94,978

Interest payable                                    110,744         106,259

Income taxes payable                                5,481           14,538

Deferred income taxes                               -               589

Current maturities of long-term debt                46,078          45,198

Total current liabilities                           813,189         1,150,547

LONG-TERM DEBT, less current maturities             6,166,083       5,618,549

DEFERRED INCOME TAXES                               105,156         100,597

OTHER NON-CURRENT LIABILITIES                       21,076          14,727

COMMITMENTS AND CONTINGENCIES

                                                    7,105,504       6,884,420

PARTNERS' CAPITAL:

General Partner                                     169,038         161,159

Limited Partners:

Common Unitholders (168,834,045 and 152,102,471
units authorized, issued and outstanding at         3,994,530       3,578,997
September 30, 2009 and December 31, 2008,
respectively)

Class E Unitholders (8,853,832 units authorized,
issued and outstanding - held by subsidiary and     -               -
reported as treasury units)

Accumulated other comprehensive income (loss)       (14,352    )    2,913

Total partners' capital                             4,149,216       3,743,069

Total liabilities and partners' capital           $ 11,254,720    $ 10,627,489

ENERGY TRANSFER PARTNERS, 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                 23,397           28,799           77,449           90,575

Total revenues        1,129,596        2,206,215        3,911,513        7,499,062

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                   81,684           70,508           230,461          191,757
amortization

Selling,
general and           33,534           44,252           143,015          136,632
administrative

Total costs           952,249          1,945,707        3,154,093        6,639,239
and expenses

OPERATING             177,347          260,508          757,420          859,823
INCOME

OTHER INCOME
(EXPENSE):

Interest
expense, net          (101,503    )    (67,792     )    (284,228    )    (191,757    )
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         (18,241     )    394              32,327           149
interest rate
derivatives

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

Other, net            3,433            (805        )    4,400            9,486

INCOME BEFORE
INCOME TAX            69,559           213,898          538,955          723,811
EXPENSE
(BENEFIT)

Income tax
expense               (2,897      )    (7,150      )    8,594            8,754
(benefit)

NET INCOME            72,456           221,048          530,361          715,057

GENERAL
PARTNER'S             88,927           80,252           266,396          233,599
INTEREST IN
NET INCOME

LIMITED
PARTNERS'
INTEREST IN     (1) $ (16,471     )  $ 140,796        $ 263,965        $ 481,458
NET INCOME
(LOSS)

BASIC NET
INCOME (LOSS)   (2) $ (0.10       )  $ 0.94           $ 1.60           $ 3.32
PER LIMITED
PARTNER UNIT

BASIC AVERAGE
NUMBER OF             168,815,563      149,839,499      164,183,538      145,160,079
UNITS
OUTSTANDING

DILUTED NET
INCOME (LOSS)   (2) $ (0.10       )  $ 0.94           $ 1.59           $ 3.31
PER LIMITED
PARTNER UNIT

DILUTED
AVERAGE NUMBER        168,815,563      150,248,194      164,886,492      145,615,088
OF UNITS
OUTSTANDING

(1) Based on the declared distribution rate of $0.89375 per Common Unit, distributions to be paid for the three months ended September 30, 2009, are $249.5 million in total, which exceeds net income for the period by $177.0 million. Accordingly, the distributions to be paid to the General Partner, including incentive distributions, further exceeded the net income for the three months ended September 30, 2009, and as a result, a net loss was allocated to the Limited Partners for the period.

(2) Basic and diluted net income per limited partner unit amounts for the three and nine months ended September 30, 2008 have been restated to reflect the retrospective adoption of certain accounting principles on January 1, 2009. See our quarterly report on Form 10-Q for the quarter ended September 30, 2009 for a more detailed discussion.

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

SUPPLEMENTAL      2009         2008             2009           2008
INFORMATION:

(unaudited)

Reconciliation
of net income
to EBITDA, as
adjusted:

Net income      $ 72,456     $ 221,048        $ 530,361      $ 715,057

Interest
expense, net      101,503      67,792           284,228        191,757
of interest
capitalized

Income tax
expense           (2,897  )    (7,150  )        8,594          8,754
(benefit)

Depreciation
and               81,684       70,508           230,461        191,757
amortization

Non-cash
compensation      6,459        2,378            20,942         14,338
expense

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

(Gains) losses
on non-hedged     18,241       (394    )        (32,327   )    (149      )
interest rate
derivatives

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

Proportionate
share of joint
ventures'
interest,
depreciation
and

allowance for
equity funds      6,698        -                9,651          -
used during
construction

Other, net        (3,433  )    805              (4,400    )    (9,486    )

EBITDA, as      $ 281,769    $ 332,740        $ 1,030,225    $ 1,065,169
adjusted (a)

Reconciliation
of net income
to
distributable
cash flow:

Net income      $ 72,456     $ 221,048        $ 530,361      $ 715,057

Amortization
of finance        2,234        1,665            6,386          4,240
costs charged
to interest

Deferred          (6,040  )    (4,672  )        3,663          (3,781    )
income taxes

Depreciation
and               81,684       70,508           230,461        191,757
amortization

Non-cash
compensation      6,459        2,378            20,942         14,338
expense

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

(Gains) losses
on non-hedged     18,241       (394    )        (32,327   )    (149      )
interest rate
derivatives

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

Unrealized
(gains) losses
on commodity
derivatives
not

in fair value
hedging           (13,472 )    (34,390 )        32,657         5,838
relationships

Unrealized
(gains) losses
on commodity
derivatives
and related

hedged
inventory in
fair value        16,361       -                3,863          -
hedging
relationships

Inventory
lower of cost     9,408        -                54,029         -
or market
adjustments

Effect of
previously
recognized
inventory
hedging and
lower of

cost or market
adjustments on    -            -                (23,551   )    -
margin during
the period

Distributions
over (under)      (5,266  )    1,414            (5,696    )    4,723
equity in
earnings, net

Maintenance
capital           (27,483 )    (25,357 )        (71,766   )    (75,931   )
expenditures

Distributable   $ 155,640    $ 209,953        $ 731,737      $ 809,233
cash flow (a)

(a) The Partnership has disclosed in this press release EBITDA, as adjusted, and distributable cash flow which are non-GAAP financial measures. Management believes EBITDA, as adjusted, and distributable cash flow provide useful information to investors as measure of comparison with peer companies, including companies that may have different financing and capital structures. The presentation of EBITDA, as adjusted, and distributable cash flow also allows investors to view our performance in a manner similar to the methods used by management and provides additional insight to our operating results.

There are material limitations to using measures such as EBITDA, as adjusted, and distributable cash flow, including the difficulty associated with using either as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company's net income or loss or cash flows. In addition, our calculations of EBITDA, as adjusted, and distributable cash flow may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP, such as gross margin, operating income, net income, and cash flow from operating activities.

Definition of EBITDA, as Adjusted

The Partnership defines EBITDA, as adjusted, as total partnership earnings before interest, taxes, depreciation, amortization and other non-cash items, such as compensation charges for unit issuances to employees and other expenses. Non-cash compensation expense represents charges for the value of the grants awarded under the Partnership's compensation plans over the vesting terms of those plans and are charges which do not, or will not, require cash settlement. Non-cash income or loss such as the gain or loss arising from disposal of assets is not included when determining EBITDA, as adjusted.

EBITDA, as adjusted, is used by management to determine our operating performance and, along with other data, as internal measures for setting annual operating budgets, assessing financial performance of our numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation.

Definition of Distributable Cash Flow

The Partnership defines distributable cash flow as total partnership earnings, adjusted for certain non-cash amounts recorded in earnings, less maintenance capital expenditures. Non-cash amounts recorded in earnings include depreciation and amortization, deferred taxes, impairment losses, allowance for equity funds used during construction, and certain realized and unrealized gains and losses. Distributable cash flow also reflects earnings from affiliates on a cash basis.

Distributable cash flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and distributable cash flow is calculated to evaluate our ability to fund distributions through cash generated by our operations.

REPORTABLE
SEGMENTS
(unaudited)

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

                   2009            2008            2009            2008

Intrastate
transportation
and storage:

Natural gas
MMBtu/d -          11,111,011      11,613,933      12,769,022      10,515,132
transported

Natural gas        886,463         1,409,348       879,861         1,556,524
MMBtu/d - sold

Revenues
(including       $ 466,713       $ 1,509,555     $ 1,589,298     $ 4,862,641
intersegment)

Cost of            278,868         1,150,799       895,433         3,965,931
products sold

Gross margin       187,845         358,756         693,865         896,710

Operating          45,053          86,332          155,461         227,026
expenses

Depreciation
and                27,188          23,820          78,080          60,293
amortization

Selling,
general and        5,823           18,683          49,899          55,251
administrative

Segment
operating        $ 109,781       $ 229,921       $ 410,425       $ 554,140
income

Interstate
transportation:

Natural gas
MMBtu/d -          1,688,388       1,862,781       1,706,199       1,750,592
transported

Natural gas        19,060          14,784          19,481          13,094
MMBtu/d - sold

Revenues         $ 71,415        $ 62,023        $ 203,349       $ 176,663

Operating          13,718          13,278          46,427          39,128
expenses

Depreciation
and                12,521          9,637           36,017          28,204
amortization

Selling,
general and        3,566           5,410           19,150          17,917
administrative

Segment
operating        $ 41,610        $ 33,698        $ 101,755       $ 91,414
income

Midstream:

Natural gas        1,021,963       1,344,033       1,009,547       1,361,295
MMBtu/d - sold

NGLs Bbls/d -      39,486          24,019          40,345          27,618
sold

Revenues
(including       $ 573,066       $ 1,435,157     $ 1,750,466     $ 4,555,340
intersegment)

Cost of            480,746         1,352,658       1,510,030       4,271,788
products sold

Gross margin       92,320          82,499          240,436         283,552

Operating          16,054          16,661          50,858          50,792
expenses

Depreciation
and                18,091          16,669          51,792          44,004
amortization

Selling,
general and        14,761          9,307           41,183          31,239
administrative

Segment
operating        $ 43,414        $ 39,862        $ 96,603        $ 157,517
income

Retail propane
and other
retail propane
related:

Retail propane
gallons (in        87,569          90,386          398,202         422,109
thousands)

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

Other retail
propane related    22,063          24,736          72,570          76,524
revenues

Retail propane
cost of            80,232          187,799         378,524         744,316
products sold

Other retail
propane related    4,796           7,604           14,495          17,099
cost of
products sold

Gross margin       99,259          68,163          509,452         401,526

Operating          81,298          79,843          259,768         253,193
expenses

Depreciation
and                23,031          20,255          63,477          58,828
amortization

Selling,
general and        11,480          7,793           34,128          27,800
administrative

Segment
operating        $ (16,550    )  $ (39,728    )  $ 152,079       $ 61,705
income (loss)

All other        $ (3,021     )  $ (186       )  $ (4,803     )  $ (528       )

Selling,
general and
administrative     2,113           (3,059     )    1,361           (4,425     )
expenses not
allocated to
segments

Total operating  $ 177,347       $ 260,508       $ 757,420       $ 859,823
income

Other items not
allocated by
segment:

Interest
expense, net of  $ (101,503   )  $ (67,792    )  $ (284,228   )  $ (191,757   )
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      (18,241    )    394             32,327          149
interest rate
derivatives

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

Other, net         3,433           (805       )    4,400           9,486

Income tax         2,897           7,150           (8,594     )    (8,754     )
expense

                   (104,891   )    (39,460    )    (227,059   )    (144,766   )

Net income       $ 72,456        $ 221,048       $ 530,361       $ 715,057

    Source: Energy Transfer Partners, L.P.

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