EEP Enbridge Energy, L.P. Class A Common Units (delisted)

 

 

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): April 30, 2015

 

 

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))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

Enbridge Energy Partners, L.P., referred to herein as “we” or “our,” issued a press release on April 30, 2015 announcing its financial results for the three month period ended March 31, 2015, 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 month period ended March 31, 2015 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.

 

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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: April 30, 2015		By:		/s/ Noor Kaissi
				Noor Kaissi Controller (Duly Authorized Officer)

 

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Index of Exhibits

 

Exhibit Number		Description
99.1		Press release of Enbridge Energy Partners, L.P., dated April 30, 2015 reporting financial results for the three month period ended March 31, 2015
99.2		Unaudited condensed consolidated financial statements of Enbridge Energy Partners, L.P. for the three month period ended March 31, 2015

 

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Exhibit 99.1

 

News Release

Enbridge Energy Partners, L.P. Declares Distribution and Reports Earnings for First Quarter 2015

HOUSTON — (April 30, 2015) - Enbridge Energy Partners, L.P. (NYSE:EEP) (“Enbridge Partners” or “the Partnership”) announced today that the board of directors of the delegate of its general partner has declared a cash distribution of $0.57 per unit, or $2.28 per unit on an annualized basis, payable on May 15, 2015 to unitholders of record as of the close of business on May 8, 2015.

FIRST QUARTER HIGHLIGHTS

 

•

Strong liquids pipeline system deliveries: ~17 percent higher than first quarter 2014.

 

•

First quarter adjusted EBITDA and distributable cash flow of $432.2 and $253.7 million, respectively.

 

•

Completed $1 billion Alberta Clipper drop-down acquisition from Enbridge Inc. (“Enbridge”).

 

•

Minnesota Administrative Law Judge recommends that the Minnesota Public Utility Commission (PUC) grant a Certificate of Need permit for the Partnership’s proposed Sandpiper Pipeline Project.

 

•

Enbridge is progressing its review of potential transfer of U.S. liquids pipeline assets to the Partnership.

“We are pleased with the Partnership’s solid start to 2015. Our first quarter financial performance is attributable to strong deliveries on our Lakehead and North Dakota liquids pipeline systems, complemented by strong cash flow contributions from the completion of portions of our multi-billion dollar organic growth program. We expect deliveries on our liquids pipeline systems to remain strong as we progress our market access programs, providing our customers with expanded pipeline connectivity to premium North American crude oil markets. Our expansion programs are predominantly underpinned by long-term, low-risk commercial structures, such as cost of service and take-or-pay. These structures largely mitigate the sensitivity of our business’s distributable cash flow to volume and commodity prices. Looking forward, our organic growth program is proceeding well, and we expect to place several projects into service during 2015 that will further increase our cash flows,” said Mark Maki, president for the Partnership.

“A key future growth project for the Partnership is our joint venture Sandpiper Pipeline Project (Sandpiper). We are pleased by the positive recommendation made recently by a Minnesota Administrative Law Judge, who recommended that the Minnesota PUC grant a Certificate of Need permit for Sandpiper. The Minnesota PUC is expected to take the Administrative Law Judge’s recommendation into account and render a decision on the Sandpiper Certificate of Need in June. A separate PUC review of the proposed pipeline route follows. Subject to regulatory approval, the pipeline is targeted to begin service in 2017. We welcome the judge’s recommendation and appreciate the thoroughness of his review, in addition to the support received from communities, labor and business leaders.”

 

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“Finally, Enbridge continues to progress its review of a potential restructuring plan that would involve the transfer of U.S. liquids pipeline assets to the Partnership, and we expect this review to be concluded around mid-year. The Partnership’s current organic growth underway, together with the accelerated asset drop-down potential from our general partner and future low cost system expansion opportunities support our confidence in the Partnership’s long-term growth outlook,” noted Maki.

The Partnership’s key financial results for the three months ended March 31, 2015, compared to the same period in 2014, are as follows:

 

		Three months ended March 31,
(unaudited; dollars in millions, except per unit amounts)		2015				2014
Net income(1)		$	140.1			$	93.3
Net income per unit			0.26				0.18
Adjusted EBITDA(2)			432.2				338.7
Adjusted net income(1)			142.8				102.9
Adjusted net income per unit			0.26				0.20

 

(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 month period ended March 31, 2015, as reported above, eliminates the effect of non-cash, mark-to-market net gains and losses and other adjustments. Refer to the Non-GAAP Reconciliations section below for additional details.

Adjusted net income of $142.8 million for the first quarter of 2015 was $39.9 million higher than the same period from the prior year. Higher earnings were primarily attributable to additional assets placed into service, the Partnership’s drop-down acquisition of the 66.7 percent interest in the U.S. segment of the Alberta Clipper pipeline from Enbridge and higher revenues attributable to an increase in deliveries on our liquids pipeline systems.

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 through June 30, 2015. The Partnership may defer payment of those accrued amounts until the earlier of May 8, 2018 or the date on which the Partnership redeems the preferred units.

 

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COMPARATIVE EARNINGS STATEMENT

 

		Three months ended March 31,
(unaudited; dollars in millions except per unit amounts)		2015				2014
Operating revenue		$	1,428.6			$	2,079.6
Operating expenses:
Commodity cost			779.1				1,488.7
Environmental costs, net of recoveries			0.8				5.0
Operating and administrative			217.1				217.0
Power			63.6				50.4
Depreciation and amortization			128.4				103.8
Operating income			239.6				214.7
Interest expense			48.3				76.9
Allowance for equity used during construction			23.0				20.7
Other income (expense)			5.9				(0.8	)
Income before income tax expense			220.2				157.7
Income tax expense			2.4				2.0
Net income			217.8				155.7
Less: Net income attributable to:
Noncontrolling interest			51.3				36.3
Series 1 preferred unit distributions			22.5				22.5
Accretion of discount on Series 1 preferred units			3.9				3.6
Net income attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P.		$	140.1			$	93.3
Less: Allocations to general partner			54.2				34.4
Net income allocable to common units and i-units		$	85.9			$	58.9
Weighted average common units and i-units (basic)			332.6				326.4
Net income per limited partner unit (basic)		$	0.26			$	0.18
Weighted average common units and i-units (diluted)			332.6				326.4
Net income per common unit and i-unit (diluted)		$	0.26			$	0.18

COMPARISON OF QUARTERLY RESULTS

Following are explanations for significant changes in the Partnership’s financial results, comparing the three month period ended March 31, 2015 with the same period of 2014. The comparison refers to adjusted operating income, which excludes the effect of non-cash and nonrecurring items (see Non-GAAP Reconciliations section below).

 

Adjusted Operating Income		Three months ended March 31,
(unaudited; dollars in millions)		2015				2014
Liquids		$	272.4			$	205.2
Natural Gas			7.1				6.7
Corporate			(4.0	)			0.3
Adjusted operating income		$	275.5			$	212.2

 

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Liquids – First quarter adjusted operating income for the Liquids segment increased $67.2 million to $272.4 million over the comparable period in 2014. Higher revenues in the first quarter were collectively attributable to an increase in transportation rates and higher deliveries on our liquids pipeline systems, in addition to meaningful contributions from growth projects placed into service in 2014. Total liquids system deliveries increased approximately 17 percent over the same period from the prior year. The Partnership placed approximately $2.5 billion of growth projects into service in 2014 through the completion of a large component of its Eastern Access Program, specifically the Line 6B Replacement project from Griffith, Indiana to the International Border, and the first phase of our Mainline Expansions. Collectively, these growth projects were the main drivers for the increase in revenues and system deliveries during the first quarter of 2015 over the comparable period in 2014.

 

Liquids Systems Volumes		Three months ended March 31,
(thousand barrels per day)		2015				2014
Lakehead			2,330				2,000
Mid-Continent			199				211
North Dakota			342				245
Total			2,871				2,456

Natural Gas – First quarter adjusted operating income for the Natural Gas segment was $0.4 million higher compared to the same period of 2014. The increase in adjusted operating income was predominantly attributable to higher natural gas system volumes, as prior year volumes were impacted by freeze-offs due to unusual extreme weather conditions. Additionally, lower operating and administrative costs attributable to workforce reductions and other cost savings measures enacted in December 2014 contributed to higher current period operating income. The increase in operating income was partially offset by lower seasonal optimization opportunities in our natural gas marketing business due to tighter natural gas basis differentials versus prior year.

 

		Three months ended
Natural Gas Throughput		March 31,
(MMBtu per day)		2015				2014
East Texas			1,007,000				971,000
Anadarko			831,000				824,000
North Texas			287,000				272,000
Total			2,125,000				2,067,000
NGL Production		Three months ended March 31,
(Barrels per day)		2015				2014
Total System Production			81,046				80,899

Partnership Financing – In March 2015, the Partnership closed an underwritten public offering and sale of 8,000,000 of its Class A Common Units, representing limited partner interests, at a price to the public of $36.70 per Class A Common Unit. The Partnership received proceeds, net of underwriting commissions and offering costs, of approximately $288.6 million. The Partnership used the net proceeds from the offering to fund a portion of its capital expansion projects and for general partnership purposes.

 

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ENBRIDGE ENERGY MANAGEMENT DISTRIBUTION

Enbridge Energy Management, L.L.C. (NYSE: EEQ) (“Enbridge Management”) today declared a distribution of $0.57 per share payable on May 15, 2015 to shareholders of record on May 8, 2015. The distribution will be paid in the form of additional shares of Enbridge Energy Management valued at the average closing price of the shares for the 10 trading days prior to the ex-dividend date on May 6, 2015. Enbridge Management’s sole asset is its approximate 14.6 percent limited partner interest in Enbridge Partners. Enbridge Management’s results of operations, financial condition and cash flows depend on the results of operations, financial condition and cash flows of Enbridge Partners, which are summarized herein for the first quarter of 2015.

MANAGEMENT REVIEW OF QUARTERLY RESULTS

Enbridge Partners will host a conference call at 10 a.m. Eastern Time on Friday, May 1, 2015 to review its first quarter 2015 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/2xaguiwt

A replay will be available shortly afterward. Presentation slides and condensed financial statements will also be available at the link below.

EEP Events and Presentations:

www.enbridgepartners.com/Investor-Relations/EEP/Events-and-Presentations

Webcast link: http://edge.media-server.com/m/p/2xaguiwt

The audio portion of the live presentation will be accessible by telephone at (844) 298-9821 (Passcode: 24875823) and can be replayed for 14 days after the call by calling (855) 859-2056 (Passcode: 24875823). An audio replay will also be available for download in MP3 format from either of the website addresses above.

 

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NON-GAAP RECONCILIATIONS

Adjusted net income and adjusted operating income for the principal business segments are provided to illustrate trends in income excluding derivative fair value losses and gains and other nonrecurring items that affect earnings. 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.

 

Adjusted Earnings		Three months ended March 31,
(unaudited; dollars in millions except per unit amounts)		2015				2014
Net income attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P.		$	140.1			$	93.3
Noncash derivative fair value (gains) losses
-Liquids			3.9				2.2
-Natural Gas			26.7				(3.8	)
-Corporate			(28.6	)			5.7
Option premium amortization			(1.0	)			(0.7	)
Make-up rights adjustment			(2.6	)			2.6
Line 2 hydrotest			0.4				—
Accretion of discount on Series 1 preferred units			3.9				3.6
Adjusted net income			142.8				102.9
Less: Allocations to general partner			54.3				34.6
Adjusted net income allocable to common units and i-units		$	88.5			$	68.3
Weighted average common units and i-units (millions)			332.6				326.4
Adjusted net income per common unit and i-unit (dollars)		$	0.26			$	0.20

 

Liquids		Three months ended March 31,
(unaudited; dollars in millions)		2015				2014
Operating income		$	270.2			$	202.1
Noncash derivative fair value losses			3.9				2.2
Make-up rights adjustment			(2.1	)			0.9
Line 2 hydrotest			0.4				—
Adjusted operating income		$	272.4			$	205.2

 

Natural Gas		Three months ended March 31,
(unaudited; dollars in millions)		2015				2014 (1)
Operating income (loss)		$	(26.6	)		$	12.3
Noncash derivative fair value (gains) losses			35.1				(4.6	)
Option premium amortization			(1.4	)			(1.0	)
Adjusted operating income		$	7.1			$	6.7

 

(1)	Prior year adjusted operating income was revised to reclassify make-up rights adjustment to other income.

 

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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.

 

Adjusted EBITDA		Three months ended March 31,
(unaudited; dollars in millions)		2015				2014
Net cash provided by operating activities		$	380.5			$	210.8
Changes in operating assets and liabilities, net of cash acquired			(42.6	)			36.9
Interest expense(1)			76.9				71.2
Income tax expense			2.4				2.0
Allowance for equity used during construction			23.0				20.7
Option premium amortization			(1.4	)			(1.0	)
Other			(6.6	)			(1.9	)
Adjusted EBITDA		$	432.2			$	338.7

 

(1)	Interest expense excludes unrealized mark-to-market net gains of $28.6 million and unrealized mark-to-market net losses of $5.7 million for the three month periods ended March 31, 2015 and 2014, respectively.

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 2.2 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 14.6 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,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “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

 

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expansion projects; (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 us 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, 2014 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.

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		Telephone: (877) 496-8142
E-mail: eep@enbridge.com		E-mail: usmedia@enbridge.com
Website: www.enbridgepartners.com

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Exhibit 99.2

ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

 

		For the three-month period ended March 31,
		2015				2014
		(unaudited; in millions, except per unit amounts)
Operating revenues:
Commodity sales		$	800.9			$	1,542.3
Commodity sales - affiliate			21.8				57.2
Transportation and other services			574.7				462.2
Transportation and other services - affiliate			31.2				17.9
			1,428.6				2,079.6
Operating expenses:
Commodity costs			761.2				1,458.5
Commodity costs - affiliate			17.9				30.2
Environmental costs, net of recoveries			0.8				5.0
Operating and administrative			98.2				96.6
Operating and administrative - affiliate			118.9				120.4
Power			63.6				50.4
Depreciation and amortization			128.4				103.8
			1,189.0				1,864.9
Operating income			239.6				214.7
Interest expense, net			48.3				76.9
Allowance for equity used during construction			23.0				20.7
Other income (expense)			5.9				(0.8	)
Income before income tax expense			220.2				157.7
Income tax expense			2.4				2.0
Net income			217.8				155.7
Less: Net income attributable to:
Noncontrolling interest			51.3				36.3
Series 1 preferred unit distributions			22.5				22.5
Accretion of discount on Series 1 preferred units			3.9				3.6
Net income attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P		$	140.1			$	93.3
Net income allocable to common units and i-units		$	85.9			$	58.9
Net income per common unit and i-unit (basic)		$	0.26			$	0.18
Weighted average common units and i-units outstanding (basic)			332.6				326.4
Net income per common unit and i-unit (diluted)		$	0.26			$	0.18
Weighted average common units and i-units outstanding (diluted)			332.6				326.4

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ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		For the three-month period ended March 31,
		2015				2014
		(unaudited; in millions)
Cash provided by operating activities:
Net income		$	217.8			$	155.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			128.4				103.8
Derivative fair value net losses			10.3				3.3
Inventory market price adjustments			4.6				1.5
Environmental costs, net of recoveries			(0.2	)			4.4
Distributions from investments in joint ventures			5.7				1.6
Equity loss (earnings) from investments in joint ventures			(5.7	)			1.3
Allowance for equity used during construction			(23.0	)			(20.7	)
Other			4.4				2.7
Changes in operating assets and liabilities, net of acquisitions:
Receivables, trade and other			10.6				(14.5	)
Due from General Partner and affiliates			(55.6	)			4.5
Accrued receivables			190.4				74.6
Inventory			56.2				26.9
Current and long-term other assets			(13.9	)			(4.8	)
Due to General Partner and affiliates			12.9				(11.0	)
Accounts payable and other			(36.2	)			(85.0	)
Environmental liabilities			(7.7	)			(42.0	)
Accrued purchases			(121.3	)			(6.3	)
Interest payable			(0.8	)			5.7
Property and other taxes payable			3.6				9.1
Net cash provided by operating activities			380.5				210.8
Cash used in investing activities:
Additions to property, plant and equipment			(460.0	)			(612.8	)
Asset acquisitions			(85.1	)			—
Changes in restricted cash			40.4				52.6
Investments in joint ventures			(1.9	)			(7.3	)
Distributions from investments in joint ventures in excess of cumulative earnings			2.4				—
Other			0.2				(0.3	)
Net cash used in investing activities			(504.0	)			(567.8	)
Cash provided by financing activities:
Net proceeds from unit issuances			294.8				—
Distributions to partners			(194.2	)			(178.4	)
Repayments to General Partner			(306.0	)			(6.0	)
Net borrowings (repayments) under credit facility			155.0				(85.0	)
Net commercial paper borrowings			165.0				390.1
Contributions from noncontrolling interest			199.5				289.7
Distributions to noncontrolling interest			(107.0	)			(16.3	)
Net cash provided by financing activities			207.1				394.1
Net increase in cash and cash equivalents			83.6				37.1
Cash and cash equivalents at beginning of year			197.9				164.8
Cash and cash equivalents at end of period		$	281.5			$	201.9

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ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

		March 31,				December 31,
		2015				2014
		(unaudited; in millions)
ASSETS
Current assets:
Cash and cash equivalents		$	281.5			$	197.9
Restricted cash			74.6				97.0
Receivables, trade and other, net of allowance for doubtful accounts of $1.8 million at March 31, 2015 and December 31, 2014			35.6				46.2
Due from General Partner and affiliates			97.1				41.4
Accrued receivables			69.9				260.3
Inventory			33.4				94.2
Other current assets			194.6				218.4
			786.7				955.4
Property, plant and equipment, net			16,157.9				15,692.7
Goodwill			246.7				246.7
Intangible assets, net			285.1				254.8
Other assets, net			580.3				597.3
		$	18,056.7			$	17,746.9
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Due to General Partner and affiliates		$	156.6			$	143.7
Accounts payable and other			857.8				777.7
Environmental liabilities			125.4				141.7
Accrued purchases			254.4				375.7
Interest payable			73.8				74.6
Property and other taxes payable			100.1				96.5
Note payable to General Partner			—				306.0
			1,568.1				1,915.9
Long-term debt			6,995.5				6,675.2
Due to General Partner and affiliates			170.8				148.3
Other long-term liabilities			351.3				278.1
			9,085.7				9,017.5
Commitments and contingencies
Partners’ capital:
Series 1 preferred units (48,000,000 authorized and issued at March 31, 2015 and December 31, 2014)			1,179.5				1,175.6
Class D units (66,100,000 authorized and issued at March 31, 2015 and December 31, 2014)			2,516.8				2,516.8
Class E units (18,114,975 authorized and issued at March 31, 2015)			778.0				—
Class A common units (262,208,428 and 254,208,428 authorized and issued at March 31, 2015 and December 31, 2014, respectively)			208.8				235.5
Class B common units (7,825,500 authorized and issued at March 31, 2015 and December 31, 2014)			0.1				—
i-units (69,343,562 and 68,305,187 authorized and issued at March 31, 2015 and December 31, 2014, respectively)			609.6				712.6
Incentive distribution units (1,000 authorized and issued at March 31, 2015 and December 31, 2014)			493.2				493.0
General Partner			194.1				198.3
Accumulated other comprehensive loss			(357.5	)			(211.4	)
Total Enbridge Energy Partners, L.P. partners’ capital			5,622.6				5,120.4
Noncontrolling interest			3,348.4				3,609.0
Total partners’ capital			8,971.0				8,729.4
		$	18,056.7			$	17,746.9

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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 also allocate any earnings in excess of distributions to our General Partner and limited partners 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 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.

Equity Restructuring Transaction

On July 1, 2014, we entered into an equity restructuring transaction, or Equity Restructuring, with the General Partner in which the General Partner irrevocably waived its right to receive cash distributions and allocations of items of income, gain, deduction and loss in excess of 2% in respect of its general partner interest in the incentive distribution rights, or Previous IDRs, in exchange for the issuance to a wholly-owned subsidiary of the General Partner of (i) 66.1 million units of a new class of limited partner interests designated as Class D units, and (ii) 1,000 units of a new class of limited partner interests designated as Incentive Distribution Units, or IDUs. Prior to this transaction, and for the three-month period ended March 31, 2014, we allocated distributions to the General Partner and limited partners as follows:

 

Distribution Targets		Portion of Quarterly Distribution Per Unit		Percentage Distributed to General Partner		Percentage Distributed to Limited partners
Minimum Quarterly Distribution		Up to $0.295		2%		98%
First Target Distribution		> $0.295 to $0.35		15%		85%
Second Target Distribution		> $0.35 to $0.495		25%		75%
Over Second Target Distribution		In excess of $0.495		50%		50%

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

 

		For the three-month period ended March 31,
		2015				2014
		(in millions, except per unit amounts)
Net income		$	217.8			$	155.7
Less Net income attributable to:
Noncontrolling interest			(51.3	)			(36.3	)
Series 1 preferred unit distributions			(22.5	)			(22.5	)
Accretion of discount on Series 1 preferred units			(3.9	)			(3.6	)
Net income attributable to general and limited partner interests in
Enbridge Energy Partners, L.P.			140.1				93.3
Less distributions:
Incentive distributions			(3.4	)			(33.2	)
Distributed earnings attributed to our General Partner			(5.0	)			(3.6	)
Distributed earnings attributed to Class D and Class E units			(48.0	)			—
Total distributed earnings to our General Partner, Class D and Class E units and IDUs			(56.4	)			(36.8	)
Total distributed earnings attributed to our common units and i-units			(193.5	)			(177.7	)
Total distributed earnings			(249.9	)			(214.5	)
Overdistributed earnings		$	(109.8	)		$	(121.2	)
Weighted average common units and i-units outstanding			332.6				326.4
Basic and diluted earnings per unit:
Distributed earnings per common unit and i-unit (1)		$	0.58			$	0.54
Overdistributed earnings per common unit and i-unit (2)			(0.32	)			(0.36	)
Net income per common unit and i-unit (basic and diluted) (3)		$	0.26			$	0.18

 

(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-month period ended March 31, 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. For the three-month period ended March 31, 2014, 43,201,310 anti-dilutive Preferred units were excluded from the if-converted method of calculating diluted earnings per unit.

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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-month period 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
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-month period 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 long term equity investment in the Texas Express NGL system.

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		As of and for the three-month period ended March 31,  2014
		Liquids				Natural Gas				Corporate (1)				Total
		(in millions)
Operating revenues:
Commodity sales		$	—			$	1,599.5			$	—			$	1,599.5
Transportation and other services			432.7				47.4				—				480.1
			432.7				1,646.9	(2)			—				2,079.6
Commodity costs			—				1,488.7				—				1,488.7
Environmental costs, net of recoveries			5.0				—				—				5.0
Operating and administrative			108.4				108.9				(0.3	)			217.0
Power			50.4				—				—				50.4
Depreciation and amortization			66.8				37.0				—				103.8
			230.6				1,634.6				(0.3	)			1,864.9
Operating income			202.1				12.3				0.3				214.7
Interest expense, net			—				—				76.9				76.9
Allowance for equity used during construction			—				—				20.7				20.7
Other income (expense)			—				(1.3	) (3)			0.5				(0.8	)
Income (loss) before income tax expense			202.1				11.0				(55.4	)			157.7
Income tax expense			—				—				2.0				2.0
Net income (loss)			202.1				11.0				(57.4	)			155.7
Less: Net income attributable to
Noncontrolling interest			—				—				36.3				36.3
Series 1 preferred unit distributions			—				—				22.5				22.5
Accretion of discount on Series 1 preferred units			—				—				3.6				3.6
Net income (loss) attributable to general and limited partner ownership interests in Enbridge Energy Partners, L.P.		$	202.1			$	11.0			$	(119.8	)		$	93.3
Total assets		$	9,854.0			$	5,194.9	(4)		$	304.0			$	15,352.9
Capital expenditures (excluding acquisitions)		$	495.0			$	50.2			$	5.3			$	550.5

 

(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)

Total segment revenue and intersegment revenue for the natural gas segment for the three-month period ended March 31, 2014 was corrected to eliminate intra-segment revenue of $318.7 million that was recorded in error and previously reported on our Quarterly Report on Form 10-Q for the three-month period ended March 31, 2014. This error did not impact previously reported segment operating revenue or consolidated operating revenue for the three-month period ended March 31, 2014.

(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 $375.7 million for our long term equity investment in the Texas Express NGL system.