Form 8-K ENBRIDGE ENERGY PARTNERS For: May 02

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

Date of report (Date of earliest event reported): May 2, 2016

 

ENBRIDGE ENERGY PARTNERS, L.P.

(Exact Name of Registrant as Specified in Charter)

 

DELAWARE	1-10934	39-1715850
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

1100 LOUISIANA, SUITE 3300, HOUSTON, TEXAS 77002

(Address of Principal Executive Offices) (Zip Code)

 

(713) 821-2000

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition.

 

We issued a press release on May 2, 2016 announcing our financial results for the three months ended March 31, 2016, which is attached hereto as Exhibit 99.1. As noted in the press release, a copy of our unaudited condensed consolidated financial statements for the three months ended March 31, 2016 is available on our website at www.enbridgepartners.com and is attached hereto as Exhibit 99.2. This information is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any registration statements filed under the Securities Act of 1933, as amended.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Reference is made to the “Index of Exhibits” following the signature page, which is hereby incorporated into this Item.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	ENBRIDGE ENERGY PARTNERS, L.P. (Registrant)
	By:	Enbridge Energy Management, L.L.C.
		as delegate of Enbridge Energy Company, Inc., its General Partner
Date: May 2, 2016	By:	/s/ Noor Kaissi
		Noor Kaissi Controller (Duly Authorized Officer)

 

Index of Exhibits

 

Exhibit Number		Description
99.1		Press release of Enbridge Energy Partners, L.P., dated May 2, 2016 reporting financial results for the three months ended March 31, 2016
99.2		Unaudited condensed consolidated financial statements of Enbridge Energy Partners, L.P. for the three months ended March 31, 2016

 

 

 

Exhibit 99.1

 

 

News Release

 

Enbridge Energy Partners, L.P. Reports Earnings for First Quarter 2016

 

HOUSTON — (May 2, 2016) -

 

FIRST QUARTER HIGHLIGHTS

 

·

Record liquids pipeline systems deliveries of 3.3 million barrels per day in the first quarter; 15 percent higher than the first quarter 2015.

 

·

Reported first quarter adjusted EBITDA and DCF of $466.2 million and $244.5 million, respectively.

 

Enbridge Energy Partners, L.P. (NYSE: EEP) ("Enbridge Partners" or "the Partnership") reports adjusted EBITDA and distributable cash flow for the three months ended March 31, 2016 of $466.2 million and $244.5 million, respectively.

 

As previously announced, the board of directors of the delegate of the Partnership’s general partner declared a quarterly cash distribution of $0.583 per unit, or $2.332 per unit on an annualized basis, on all of the Partnership’s outstanding units for the quarter ended March 31, 2016. The approved distribution remains unchanged from the previous quarter and represents an increase of 2.3 percent over the first quarter of 2015. The distribution is payable on May 13, 2016, to unitholders of record at the close of business on May 6, 2016.

 

“The Partnership’s financial results for the first quarter are in line with our expectations and supported by the record deliveries on our liquids pipeline systems, which averaged 3.3 million barrels per day in the first quarter. The increase in system deliveries over the fourth quarter of 2015 is due to new market access that entered service on the Enbridge system during the fourth quarter, specifically the reversal and expansion of Line 9B to Eastern Canada and the Southern Access Extension into the Patoka, Ill. market. With our liquids pipeline systems’ premier connectivity to North American refining centers, our competitive transportation rates and our expanded market access, we expect demand for our liquids pipeline systems to remain strong,” said Mark Maki, president for the Partnership.

 

“Western Canada and the Bakken region both have inadequate pipeline takeaway capacity and our pipeline systems provide our customers with reliable economic access to premium markets. This provides us with a high level of confidence in the continued high system utilization in our core liquids pipelines business,” Maki continued.

 

“Our liquids pipelines system cash flows are underpinned by long-term, low-risk contract structures such as cost-of-service and take-or-pay, which largely mitigate the sensitivity to volume and commodity prices to our business’s cash available for distribution. Furthermore, more than 90 percent of our revenues are derived from investment grade counterparties. Our growth capital expenditures in both our liquids and natural gas businesses are forecast to be significantly lower in 2016 than recent years. Strategically, the Partnership has initiated a process to evaluate a range of alternatives for our natural gas business unit and we will update investors on this process when we have concluded the evaluation,” Maki concluded.

 

 

Natural Gas Business Strategic Alternatives Evaluation

 

In light of the low commodity price environment and the ongoing challenges it presents to us, EEP will continue to evaluate opportunities to strengthen its business. As part of this evaluation, EEP is exploring strategic alternatives for its investments in each of Midcoast Operating, L.P. and Midcoast Energy Partners, L.P. (MEP). EEP has begun working with MEP to explore and evaluate a broad range of strategic alternatives to address the challenges within our Natural Gas business. These various strategic alternatives may include, but are not necessarily limited to: asset sales; mergers, joint ventures, reorganizations or recapitalizations; and further reductions in operating and capital expenditures for the Natural Gas business. The evaluation process is in the early stages and is ongoing, and no decision on any particular alternative has been reached. In addition, EEP cannot assure that any particular alternative will be pursued or effected. Neither EEP nor MEP intend to disclose further developments with respect to this evaluation process except to the extent that a specific course of action is approved, the process is concluded or it is required by law or otherwise deemed appropriate.

 

The Partnership’s key financial results for the three months ended March 31, 2016, compared to the same period in 2015, were as follows:

 

		Three months ended
		March 31,
(unaudited; dollars in millions, except per unit amounts)		2016				2015
Net income (1)		$	80.0			$	140.1
Net income per unit			0.07				0.26
Adjusted EBITDA(2)			466.2				432.2
Adjusted net income(1)			113.8				142.8
Adjusted net income per unit			0.17				0.26

 

(1)

Net income and adjusted net income attributable to general and limited partner ownership interests in Enbridge Partners.

 

(2)

Includes non-controlling interest.

 

Adjusted net income for the three months ended March 31, 2016, as reported above, eliminates the effect of: (a) non-cash, mark-to-market net gains and losses; (b) environmental costs, net of insurance recoveries, associated with the Line 6B incident; (c) Line 2 hydrotest expenses, net of recoveries; and other adjustments. Refer to the Non-GAAP Reconciliations section below for additional details.

 

Adjusted net income of $113.8 million for the first quarter of 2016 was $29.0 million lower than the same period from the prior year. Higher operating income in our liquids pipeline business attributable to growth projects placed into service were more than offset by higher interest expense.

 

During the first quarter, the Partnership attributed approximately $22.5 million of earnings to its outstanding Series 1 Preferred units. This amount is deducted from net income to arrive at the amount of net income attributable to the general and limited partners. Preferred distributions are accrued at an annual rate of 7.5 percent.

 

 

COMPARATIVE EARNINGS STATEMENT
		Three months ended
		March 31,
(unaudited; dollars in millions except per unit amounts)		2016				2015
Operating revenue		$	1,061.6			$	1,428.6
Operating expenses:
Commodity cost			348.0				779.1
Environmental costs, net of recoveries			16.9				0.8
Operating and administrative			215.0				217.1
Power			72.8				63.6
Depreciation and amortization			140.9				128.4
Operating income			268.0				239.6
Interest expense, net			(112.9	)			(48.3	)
Allowance for equity used during construction			12.3				23.0
Other income			7.5				5.9
Income before income tax expense			174.9				220.2
Income tax expense			(2.5	)			(2.4	)
Net income			172.4				217.8
Less: Net income attributable to:
Noncontrolling interest			68.8				51.3
Series 1 preferred unit distributions			22.5				22.5
Accretion of discount on Series 1 preferred units			1.1				3.9
Net income attributable to general and limited partner
ownership interests in Enbridge Energy Partners, L.P.		$	80.0			$	140.1
Less: Allocations to general partner			55.9				54.2
Net income allocable to common units and i-units		$	24.1			$	85.9
Weighted average common units and i-units (basic and diluted)			344.7				332.6
Net income per common unit and i-unit (basic and diluted)		$	0.07			$	0.26

 

COMPARISON OF QUARTERLY RESULTS

 

Following are explanations for significant changes in the Partnership’s financial results, comparing the three months ended March 31, 2016 with the same period of 2015. The comparison refers to adjusted operating income, which excludes the effect of non-cash and other items that are not indicative of our core operating results (see Non-GAAP Reconciliations section below).

 

		Three months ended
Adjusted Operating Income		March 31,
(unaudited; dollars in millions)		2016				2015
Liquids		$	310.5			$	272.4
Natural Gas			(1.6	)			7.1
Corporate			(3.5	)			(4.0	)
Adjusted operating income		$	305.4			$	275.5

 

 

Liquids - First quarter adjusted operating income for the Liquids segment increased $38.1 million to $310.5 million over the comparable period in 2015. Revenues from our liquids pipeline systems increased due to higher transportation rates attributable to new assets placed into service related to our Mainline Expansion project. In addition, revenues increased due to higher system deliveries. Higher segment revenues were partially offset by increased power and operating expenses. Depreciation expense increased approximately $11.3 million over the same period from prior year due to new assets placed into service.

		Three months ended
Liquids Systems Volumes		March 31,
(thousand barrels per day)		2016				2015
Lakehead			2,735				2,330
Mid-Continent			168				199
North Dakota			402				342
Total			3,305				2,871

 

Natural Gas – First quarter adjusted operating income for the Natural Gas segment decreased $8.7 million to ($1.6) million over the comparable period in 2015. The decrease in adjusted operating income was predominantly attributable to lower natural gas and NGL system production volumes, in addition to lower commodity prices, net of hedges. Lower system volumes were primarily attributable to the continued low commodity price environment for hydrocarbons, which has resulted in reductions in drilling activity from producers in the areas we operate. The decrease in segment operating income was partially offset by reductions in operating and administrative expenses from enacted cost reduction measures.

 

		Three months ended
Natural Gas Throughput		March 31,
(MMBtu per day)		2016				2015
East Texas			948,000				1,007,000
Anadarko			652,000				831,000
North Texas			216,000				287,000
Total			1,816,000				2,125,000

 

		Three months ended
NGL Production		March 31,
(Barrels per day)		2016				2015
Total System Production			73,499				81,046

  

MANAGEMENT REVIEW OF QUARTERLY RESULTS

 

Enbridge Partners will host a conference call at 10 a.m. Eastern Time on Monday, May 2, 2016 to review its first quarter 2016 financial results. The call will be webcast live over the internet and may be accessed on Enbridge Partners’ website under “Events and Presentations” or directly at http://edge.media-server.com/m/p/bkoemk7q.

 

Presentation slides and condensed financial statements will also be available on the Partnership’s website at the link below.

 

http://www.enbridgepartners.com under “Events and Presentations”

 

 

Replay Information

 

A webcast replay will be available at the link above approximately two hours after the conclusion of the event. A transcript will be posted to the website within approximately 24 hours. 

 

 

NON-GAAP RECONCILIATIONS

 

Adjusted net income and adjusted operating income for the principal business segments are provided to illustrate trends in income excluding non-cash unrealized derivative fair value losses and gains and other items that are not indicative of our core operating results and business outlook. The derivative non-cash losses and gains result from marking to market certain financial derivatives used by the Partnership for hedging purposes that do not qualify for hedge accounting treatment in accordance with the authoritative accounting guidance as prescribed under generally accepted accounting principles in the United States.

 

		Three months ended
Adjusted Earnings		March 31,
(unaudited; dollars in millions except per unit amounts)		2016				2015
Net income attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P.		$	80.0			$	140.1
Noncash derivative fair value losses (gains)
-Liquids			1.7				3.9
-Natural Gas			20.7				26.7
-Corporate			1.9				(28.6	)
Accretion of discount on Series 1 preferred units			1.1				3.9
Make-up rights adjustment			1.0				(2.6	)
Line 2 hydrotest expenses, net of recoveries			(8.5	)			0.4
Line 6B incident expenses, net of recoveries			15.0				-
Option premium amortization			0.9				(1.0	)
Adjusted net income			113.8				142.8
Less: Allocations to general partner			56.6				54.3
Adjusted net income allocable to common units and i-units		$	57.2			$	88.5
Weighted average common units and i-units outstanding (millions)			344.7				332.6
Adjusted net income per common unit and i-unit (dollars)		$	0.17			$	0.26

 

		Three months ended
Liquids		March 31,
(unaudited; dollars in millions)		2016				2015
Operating income		$	301.4			$	270.2
Noncash derivative fair value losses			1.7				3.9
Make-up rights adjustment			0.9				(2.1	)
Line 2 hydrotest expenses, net of recoveries			(8.5	)			0.4
Line 6B incident expenses, net of recoveries			15.0				-
Adjusted operating income		$	310.5			$	272.4

 

		Three months ended
Natural Gas		March 31,
(unaudited; dollars in millions)		2016				2015
Operating loss		$	(29.9	)		$	(26.6	)
Noncash derivative fair value losses			27.1				35.1
Option premium amortization			1.2				(1.4	)
Adjusted operating income		$	(1.6	)		$	7.1

 

 

ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW

 

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is used as a supplemental financial measurement to assess liquidity and the ability to generate cash sufficient to pay interest costs and make cash distributions to unitholders. The following reconciliation of net cash provided by operating activities to adjusted EBITDA is provided because EBITDA is not a financial measure recognized under generally accepted accounting principles.

 

		Three months ended
Adjusted EBITDA		March 31,
(unaudited; dollars in millions)		2016				2015
Net cash provided by operating activities		$	266.3			$	380.5
Changes in operating assets and liabilities, net of cash acquired			89.1				(42.6	)
Interest expense, net(1)			104.4				76.9
Income tax expense			2.5				2.4
Allowance for equity used during construction			12.3				23.0
Option premium amortization			1.2				(1.4	)
Line 2 hydrotest expense, net of recoveries			(8.5	)			0.4
Other			(1.1	)			(7.0	)
Adjusted EBITDA		$	466.2			$	432.2
Interest expense, net(1)			(104.4	)			(76.9	)
Income tax expense			(2.5	)			(2.4	)
Distributions in excess of equity earnings			1.5				1.5
Maintenance capital expenditures			(8.1	)			(16.1	)
Non-controlling interests			(107.8	)			(84.6	)
Distribution support agreement(2)			(0.4	)			-
Distributable cash flow		$	244.5			$	253.7

 

(1)	Excludes unrealized mark-to-market net losses of $1.9 million and net gains of $28.6 million for the three months ended March 31, 2016 and 2015, respectively. Also excludes $6.6 million of amortization related to pre-issuance interest swaps for the three months ended March 31, 2016.
(2)	Distribution agreement in place with MEP to support 1.0x coverage each quarter with respect to any declared distribution through 2017, and no requirement for MEP to reimburse EEP for adjusted distributions.

 

About Enbridge Energy Partners, L.P.

Enbridge Energy Partners, L.P. owns and operates a diversified portfolio of crude oil and, through its interests in Midcoast Energy Partners, L.P. (“Midcoast Partners”), natural gas transportation systems in the United States. Its principal crude oil system is the largest pipeline transporter of growing oil production from western Canada and the North Dakota Bakken formation. The system's deliveries to refining centers and connected carriers in the United States account for approximately 17 percent of total U.S. oil imports. Midcoast Partners’ natural gas gathering, treating, processing and transmission assets, which are principally located onshore in the active U.S. Mid-Continent and Gulf Coast areas, deliver approximately 2.0 billion cubic feet of natural gas daily. Enbridge Partners is recognized by Forbes as one of the 100 Most Trustworthy Companies in America.

 

About Enbridge Energy Management, L.L.C.

Enbridge Management manages the business and affairs of Enbridge Partners, and its sole asset is an approximate 16 percent limited partner interest in Enbridge Partners. Enbridge Energy Company, Inc., an indirect wholly owned subsidiary of Enbridge Inc. of Calgary, Alberta, Canada (NYSE: ENB) (TSX: ENB) is the general partner of Enbridge Partners and holds an approximate 42 percent interest in Enbridge Partners together with all of the outstanding preferred units and Class B, D and E units in Enbridge Partners. Enbridge Management is the delegate of the general partner of Enbridge Partners.

 

 

Forward-Looking Statements

This news release includes forward-looking statements and projections, which are statements that do not relate strictly to historical or current facts. These statements frequently use the following words, variations thereon or comparable terminology: “anticipate,” “believe,” “consider,” “continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,” “forecast,” “intend,” “may,” “opportunity,” “plan,” “position,” “projection,” “should,” “strategy,” “target,” “will” and similar words. Although the Partnership believes that such forward-looking statements are reasonable based on currently available information, such statements involve risks, uncertainties and assumptions and are not guarantees of performance. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond the Partnership’s ability to control or predict. Specific factors that could cause actual results to differ from those in the forward-looking statements include: (1) changes in the demand for or the supply of, forecast data for, and price trends related to crude oil, liquid petroleum, natural gas and NGLs, including the rate of development of the Alberta Oil Sands; (2) the Partnership’s ability to successfully complete and finance expansion projects or drop-down opportunities; (3) the effects of competition, in particular, by other pipeline systems; (4) shut-downs or cutbacks at the Partnership’s facilities or refineries, petrochemical plants, utilities or other businesses for which the Partnership transports products or to whom the Partnership sells products; (5) hazards and operating risks that may not be covered fully by insurance, including those related to Line 6B and any additional fines and penalties assessed in connection with the crude oil release on that line; (6) changes in or challenges to the Partnership’s tariff rates; (7) changes in laws or regulations to which the Partnership is subject, including compliance with environmental and operational safety regulations that may increase costs of system integrity testing and maintenance; and (8) permitting at federal, state and local levels in regards to the construction of new assets.

 

“Enbridge” refers collectively to Enbridge Inc. and its subsidiaries other than the Partnership and our subsidiaries.

 

Forward-looking statements regarding “drop-down” growth opportunities from Enbridge are further qualified by the fact that Enbridge is under no obligation to offer to sell us interests in its U.S. projects, and we are under no obligation to buy any such interests.    Similarly, any forward-looking statements regarding potential “drop-down” transactions of interests in Midcoast Operating to Midcoast Energy Partners are further qualified by the fact that we are under no obligation to sell to Midcoast Energy Partners, L.P. any such interests, and Midcoast Energy Partners, L.P. is under no obligation to buy any such interests.  As a result, we do not know when or if any such transactions will occur.

 

Except to the extent required by law, we assume no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Reference should also be made to the Partnership’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including its Annual Report on Form 10-K for the year ended December 31, 2015 and any subsequently filed Quarterly Report on Form 10-Q for additional factors that may affect results. These filings are available to the public over the Internet at the SEC’s web site (www.sec.gov) and at the Partnership’s web site.

 

Tax Notification

This release serves as qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that 100 percent of Enbridge Energy Partners, L.P.’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of Enbridge Energy Partners, L.P.’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not Enbridge Energy Partners, L.P., are treated as withholding agents responsible for withholding distributions received by them on behalf of foreign investors.

 

 

FOR FURTHER INFORMATION PLEASE CONTACT

 

Investor Relations Contact:	Media Contact:
Sanjay Lad, CFA	Terri Larson, APR
Toll-free: (866) EEP INFO or (866) 337-4636	Toll-free: (877) 496-8142
E-mail: [email protected]	E-mail: [email protected]
Website: www.enbridgepartners.com

 

# # #

 

 

 

 

Exhibit 99.2

 

ENBRIDGE ENERGY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
		For the three months
		ended March 31,
		2016				2015
		(unaudited; in millions, except per unit amounts)
Operating revenues:
Commodity sales		$	377.8			$	800.9
Commodity sales - affiliate			5.2				21.8
Transportation and other services			656.0				574.7
Transportation and other services - affiliate			22.6				31.2
			1,061.6				1,428.6
Operating expenses:
Commodity costs			335.4				761.2
Commodity costs - affiliate			12.6				17.9
Environmental costs, net of recoveries			16.9				0.8
Operating and administrative			96.5				98.2
Operating and administrative - affiliate			118.5				118.9
Power			72.8				63.6
Depreciation and amortization			140.9				128.4
			793.6				1,189.0
Operating income			268.0				239.6
Interest expense, net			(112.9	)			(48.3	)
Allowance for equity used during construction			12.3				23.0
Other income			7.5				5.9
Income before income tax expense			174.9				220.2
Income tax expense			(2.5	)			(2.4	)
Net income			172.4				217.8
Less: Net income attributable to:
Noncontrolling interest			68.8				51.3
Series 1 preferred unit distributions			22.5				22.5
Accretion of discount on Series 1 preferred units			1.1				3.9
Net income attributable to general and limited partner
ownership interests in Enbridge Energy Partners, L.P.		$	80.0			$	140.1
Net income allocable to common units and i-units		$	24.1			$	85.9
Net income per common unit and i-unit (basic and diluted)		$	0.07			$	0.26
Weighted average common units and i-units outstanding (basic and diluted)			344.7				332.6

 

 

ENBRIDGE ENERGY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
		For the three months
		ended March 31,
		2016				2015
			(unaudited; in millions)
Cash provided by operating activities:
Net income		$	172.4			$	217.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			140.9				128.4
Derivative fair value net losses			30.7				10.3
Inventory market price adjustments			-				4.6
Environmental costs, net of recoveries			15.9				(0.2	)
Distributions from investments in joint ventures			7.1				5.7
Equity earnings from investments in joint ventures			(7.1	)			(5.7	)
Allowance for equity used during construction			(12.3	)			(23.0	)
Amortization of debt issuance and hedging costs			10.6				2.8
Other			(1.9	)			1.6
Changes in operating assets and liabilities, net of acquisitions:
Receivables, trade and other			9.8				10.6
Due from General Partner and affiliates			(32.6	)			(55.6	)
Accrued receivables			35.6				190.4
Inventory			19.8				56.2
Current and long-term other assets			5.8				(13.9	)
Due to General Partner and affiliates			(30.3	)			12.9
Accounts payable and other			(81.4	)			(36.2	)
Environmental liabilities			(5.0	)			(7.7	)
Accrued purchases			(32.1	)			(121.3	)
Interest payable			23.6				(0.8	)
Property and other taxes payable			(3.2	)			3.6
Net cash provided by operating activities			266.3				380.5
Cash used in investing activities:
Additions to property, plant and equipment			(389.7	)			(460.0	)
Asset acquisitions			-				(85.1	)
Changes in restricted cash			11.6				40.4
Investments in joint ventures			-				(1.9	)
Distributions from investments in joint ventures in excess of cumulative earnings			4.2				2.4
Other			(0.5	)			0.2
Net cash used in investing activities			(374.4	)			(504.0	)
Cash provided by financing activities:
Net proceeds from unit issuances			-				294.8
Distributions to partners			(216.0	)			(194.2	)
Repayments to General Partner			-				(306.0	)
Net borrowings under credit facilities			405.0				155.0
Net commercial paper borrowings (repayments)			(136.4	)			165.0
Contributions from noncontrolling interest			54.4				199.5
Distributions to noncontrolling interest			(7.6	)			(107.0	)
Other			(0.8	)			-
Net cash provided by financing activities			98.6				207.1
Net increase (decrease) in cash and cash equivalents			(9.5	)			83.6
Cash and cash equivalents at beginning of year			148.1				197.9
Cash and cash equivalents at end of period		$	138.6			$	281.5

 

 

ENBRIDGE ENERGY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
		March 31,				December 31,
		2016				2015
ASSETS		(unaudited; in millions)
Current assets:
Cash and cash equivalents		$	138.6			$	148.1
Restricted cash			23.0				37.6
Receivables, trade and other, net of allowance for doubtful accounts of $2.6 million
and $2.5 million at March 31, 2016 and December 31, 2015, respectively			17.1				25.2
Due from General Partner and affiliates			92.0				59.4
Accrued receivables			42.3				77.9
Inventory			15.3				35.1
Other current assets			143.7				173.0
			472.0				556.3
Property, plant and equipment, net			17,572.6				17,412.4
Intangible assets, net			274.6				280.0
Other assets, net			508.0				525.6
		$	18,827.2			$	18,774.3
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Due to General Partner and affiliates		$	160.6			$	190.9
Accounts payable and other			493.2				654.9
Environmental liabilities			108.3				95.8
Accrued purchases			114.0				146.1
Interest payable			122.5				98.9
Property and other taxes payable			100.5				103.7
Current maturities of long-term debt			300.0				300.0
			1,399.1				1,590.3
Long-term debt			7,997.7				7,728.4
Due to General Partner and affiliates			260.8				238.3
Other long-term liabilities			354.4				305.2
			10,012.0				9,862.2
Commitments and contingencies
Partners’ capital:
Series 1 preferred units (48,000,000 authorized and issued at March 31, 2016 and
December 31, 2015)			1,187.9				1,186.8
Class D units (66,100,000 authorized and issued at March 31, 2016 and
December 31, 2015)			2,517.5				2,517.6
Class E units (18,114,975 authorized and issued at March 31, 2016 and
December 31, 2015)			778.3				778.2
Class A common units (262,208,428 authorized and issued at March 31, 2016
and December 31, 2015)			-				-
Class B common units (7,825,500 authorized and issued at March 31, 2016
and December 31, 2015)			-				-
i-units (75,911,421 and 73,285,739 authorized and issued at March 31, 2016 and
December 31, 2015, respectively)			92.0				212.6
Incentive distribution units (1,000 authorized and issued at March 31, 2016 and
December 31, 2015)			495.1				495.0
General Partner			131.9				147.4
Accumulated other comprehensive loss			(447.6	)			(370.0	)
Total Enbridge Energy Partners, L.P. partners’ capital			4,755.1				4,967.6
Noncontrolling interest			4,060.1				3,944.5
Total partners’ capital			8,815.2				8,912.1
		$	18,827.2			$	18,774.3

 

 

NET INCOME PER LIMITED PARTNER UNIT

 

We allocate our net income among our Series 1 Preferred Units, or Preferred Units, our General Partner interest and our limited partner units using the two-class method in accordance with applicable authoritative accounting guidance. Under the two-class method, we allocate our net income attributable to our General Partner and our limited partners according to the distribution formula for available cash as set forth in our partnership agreement. We allocate our net income to our limited partners owning Class D units and Class E units equal to the distributions that they receive. We also allocate any earnings in excess of distributions to our General Partner and limited partners owning Class A and Class B common units and i-units utilizing the distribution formula for available cash specified in our partnership agreement. We allocate any distributions in excess of earnings for the period to our General Partner and limited partners owning Class A and B common units and i-units based on their sharing of losses of 2% and 98%, respectively, as set forth in our partnership agreement. We calculate distributions to the General Partner and limited partners based upon the distribution rates and percentages set forth in the following table:

  

 

Distribution Targets		Portion of Quarterly Distribution Per Unit		Percentage Distributed to General Partner and IDUs (1)		Percentage Distributed to Limited partners
Minimum Quarterly Distribution		Up to $0.5435		2%		98%
First Target Distribution		> $0.5435		25%		75%

 

(1)	For distributions in excess of the Minimum Quarterly Distribution, this percentage includes both the General Partner's distributions of 2% and the distribution to the Incentive Distribution Unit holder, a wholly-owned subsidiary of our General Partner.

We determined basic and diluted net income per limited partner unit as follows:

 

We determined basic and diluted net income per limited partner unit as follows:

 

		For the three months
		ended March 31,
		2016				2015
		(in millions, except per unit amounts)
Net income		$	172.4			$	217.8
Less: Net income attributable to:
Noncontrolling interest			(68.8	)			(51.3	)
Series 1 preferred unit distributions			(22.5	)			(22.5	)
Accretion of discount on Series 1 preferred units			(1.1	)			(3.9	)
Net income attributable to general and limited partner
interests in Enbridge Energy Partners, L.P.			80.0				140.1
Less: distributions:
Incentive distributions			(5.2	)			(3.4	)
Distributed earnings attributed to our General Partner			(5.2	)			(5.0	)
Distributed earnings attributed to Class D and Class E units			(49.1	)			(48.0	)
Total distributed earnings to our General Partner, Class D and
Class E units and IDUs			(59.5	)			(56.4	)
Total distributed earnings attributed to our common units and
i-units			(201.7	)			(193.5	)
Total distributed earnings			(261.2	)			(249.9	)
Overdistributed earnings		$	(181.2	)		$	(109.8	)
Weighted average common units and i-units outstanding			344.7				332.6
Basic and diluted earnings per unit:
Distributed earnings per common unit and i-unit (1)		$	0.59			$	0.58
Overdistributed earnings per common unit and i-unit (2)			(0.52	)			(0.32	)
Net income per common unit and i-unit (basic and diluted) (3)		$	0.07			$	0.26

 

(1)	Represents the total distributed earnings to common units and i-units divided by the weighted average number of common units and i-units outstanding for the period.
(2)	Represents the common units' and i-units' share (98%) of distributions in excess of earnings divided by the weighted average number of common units and i-units outstanding for the period and overdistributed earnings allocated to the common units and i-units based on the distribution waterfall that is outlined in our partnership agreement.
(3)	For the three months ended March 31, 2016 and 2015, 43,201,310 anti-dilutive Preferred units, 66,100,000 anti-dilutive Class D units and 18,114,975 anti-dilutive Class E units were excluded from the if-converted method of calculating diluted earnings per unit.

 

 

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, collectively comprised of our senior management, 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 are managed separately, because each business segment requires different operating strategies. We have segregated our business activities into two distinct operating segments:

 

•

Liquids; and

 

•

Natural Gas.

 

The following tables present certain financial information relating to our business segments and corporate activities:

  

 

		As of and for the three months ended March 31, 2016
		Liquids				Natural Gas				Corporate (1)				Total
		(in millions)
Operating revenues: (2)
Commodity sales		$	-			$	383.0			$	-			$	383.0
Transportation and other services			629.7				48.9				-				678.6
			629.7				431.9				-				1,061.6
Operating expenses:
Commodity costs			-				348.0				-				348.0
Environmental costs, net of recoveries			16.9				-				-				16.9
Operating and administrative			137.2				74.3				3.5				215.0
Power			72.8				-				-				72.8
Depreciation and amortization			101.4				39.5				-				140.9
			328.3				461.8				3.5				793.6
Operating income (loss)			301.4				(29.9	)			(3.5	)			268.0
Interest expense, net			-				-				(112.9	)			(112.9	)
Allowance for equity used during construction			-				-				12.3				12.3
Other income			-				7.1	(3)			0.4				7.5
Income (loss) before income tax expense			301.4				(22.8	)			(103.7	)			174.9
Income tax expense			-				-				(2.5	)			(2.5	)
Net income (loss)			301.4				(22.8	)			(106.2	)			172.4
Less: Net income attributable to:
Noncontrolling interest			-				-				68.8				68.8
Series 1 preferred unit distributions			-				-				22.5				22.5
Accretion of discount on Series 1 preferred units			-				-				1.1				1.1
Net income (loss) attributable to general and limited partner
ownership interests in Enbridge Energy Partners, L.P.		$	301.4			$	(22.8	)		$	(198.6	)		$	80.0
Total assets		$	13,650.3			$	5,026.4	(4)		$	150.5			$	18,827.2
Capital expenditures (excluding acquisitions)		$	264.3			$	18.6			$	(0.9	)		$	282.0

 

(1)	Corporate consists of interest expense, interest income, allowance for equity used during construction, noncontrolling interest and other costs such as income taxes, which are not allocated to the business segments.
(2)	There were no intersegment revenues for the three months ended March 31, 2016.
(3)	Other income (expense) for our Natural Gas segment includes our equity investment in the Texas Express NGL system.
(4)	Total assets for our Natural Gas segment includes $368.0 million for our equity investment in the Texas Express NGL system.

 

  

		As of and for the three months ended March 31, 2015
		Liquids				Natural Gas				Corporate (1)				Total
		(in millions)
Operating revenues: (2)
Commodity sales		$	-			$	822.7			$	-			$	822.7
Transportation and other services			555.1				50.8				-				605.9
			555.1				873.5				-				1,428.6
Operating expenses:
Commodity costs			-				779.1				-				779.1
Environmental costs, net of recoveries			0.8				-				-				0.8
Operating and administrative			130.4				82.7				4.0				217.1
Power			63.6				-				-				63.6
Depreciation and amortization			90.1				38.3				-				128.4
			284.9				900.1				4.0				1,189.0
Operating income (loss)			270.2				(26.6	)			(4.0	)			239.6
Interest expense, net			-				-				(48.3	)			(48.3	)
Allowance for equity used during construction			-				-				23.0				23.0
Other income			-				5.7	(3)			0.2				5.9
Income (loss) before income tax expense			270.2				(20.9	)			(29.1	)			220.2
Income tax expense			-				-				(2.4	)			(2.4	)
Net income (loss)			270.2				(20.9	)			(31.5	)			217.8
Less: Net income attributable to:
Noncontrolling interest			-				-				51.3				51.3
Series 1 preferred unit distributions			-				-				22.5				22.5
Accretion of discount on Series 1 preferred units			-				-				3.9				3.9
Net income (loss) attributable to general and limited partner
ownership interests in Enbridge Energy Partners, L.P.		$	270.2			$	(20.9	)		$	(109.2	)		$	140.1
Total assets		$	12,143.3			$	5,482.9	(4)		$	430.5			$	18,056.7
Capital expenditures (excluding acquisitions)		$	456.3			$	55.5			$	-			$	511.8

 

(1)	Corporate consists of interest expense, interest income, allowance for equity used during construction, noncontrolling interest and other costs such as income taxes, which are not allocated to the business segments.
(2)	There were no intersegment revenues for the three months ended March 31, 2015.
(3)	Other income (expense) for our Natural Gas segment includes our equity investment in the Texas Express NGL system.
(4)	Total assets for our Natural Gas segment includes $380.1 million for our equity investment in the Texas Express NGL system.

 

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