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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
 
February 21, 2018
Date of Report (Date of earliest event reported)
 
ENERGY TRANSFER EQUITY, L.P.
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
 
Delaware
 
1-32740
 
30-0108820
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification Number)
 
8111 Westchester Drive, Suite 600,
Dallas, Texas 75225
(Address of principal executive offices)
 
(214) 981-0700
(Registrant's telephone number, including area code)
 

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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company. ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new of revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨






Item 2.02. Results of Operations and Financial Condition.
On February 21, 2018, Energy Transfer Equity, L.P. (the “Partnership”) issued a press release announcing its financial and operating results for the fourth quarter ended December 31, 2017. A copy of this press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 2.02 and in the attached exhibit shall be deemed to be “furnished” and not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.

Exhibit Number
 
Description of the Exhibit
 




SIGNATURE

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 hereunto duly authorized.


 
Energy Transfer Equity, L.P.
 
By:LE GP, LLC,
its general partner
 
 
Date: February 21, 2018
/s/ Thomas E. Long
 
Thomas E. Long
 
Group Chief Financial Officer (duly authorized to sign on behalf of the registrant)


Exhibit


https://cdn.kscope.io/962125c659e38e51e7dde13d22c4bbec-etc_logoa09.jpg
ENERGY TRANSFER EQUITY
REPORTS FOURTH QUARTER RESULTS
Dallas - February 21, 2018 - Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the “Partnership”) today reported financial results for the fourth quarter ended December 31, 2017.
ETE’s net income attributable to partners was $251 million for the three months ended December 31, 2017 compared to $233 million for the three months ended December 31, 2016. Distributable Cash Flow, as adjusted, was $263 million for the three months ended December 31, 2017 compared to $299 million for the three months ended December 31, 2016. The decrease in Distributable Cash Flow, as adjusted, is primarily driven by a reduction in incentive distributions as previously agreed to between ETE and Energy Transfer Partners, L.P. (“ETP”). These incentive distribution waivers, the majority of which were originally provided to support ETP’s funding of its growth capital projects, are scheduled to reduce significantly as ETP’s projects are completed and volumes ramp up in the near term.
The Partnership’s recent key accomplishments and other developments include the following:
•
In October 2017, ETE issued $1 billion aggregate principal amount of 4.25% senior notes due 2023. The $990 million net proceeds from the offering were used to repay a portion of the outstanding indebtedness under its term loan facility and for general partnership purposes.
•
In October 2017, ETE amended its existing senior secured term loan agreement to reduce the applicable margin for LIBOR rate loans from 2.75% to 2.0% and for base rate loans 1.75% to 1.0%.
•
In January 2018, ETE announced an agreement to acquire the general partner of USA Compression Partners, LP (“USAC”) and approximately 12.5 million USAC common units from USA Compression Holdings. The transaction is subject to customary closing conditions and is expected to close in the first half of 2018.
•
In January 2018, Sunoco LP redeemed all outstanding Sunoco LP Series A Preferred Units held by ETE for an aggregate redemption amount of approximately $313 million. The redemption amount included the original consideration of $300 million and a 1% call premium plus accrued and unpaid quarterly distributions.
•
On February 20, 2018, the Partnership paid a quarterly distribution of $0.305 per ETE common unit for the fourth quarter ended December 31, 2017, or $1.22 per unit on an annualized basis.
•
As of December 31, 2017, ETE’s $1.50 billion revolving credit facility had $1.19 billion of outstanding borrowings and its leverage ratio, as defined by the credit agreement, was 3.68x.
The Partnership has scheduled a conference call for 8:00 a.m. Central Time, Thursday, February 22, 2018 to discuss its fourth quarter 2017 results. The conference call will be broadcast live via an internet webcast, which can be accessed through www.energytransfer.com and will also be available for replay on the Partnership’s website for a limited time.
The Partnership’s principal sources of cash flow are derived from distributions related to its direct and indirect investments in the limited and general partner interests in Energy Transfer Partners, L.P. (“ETP”) and Sunoco LP, including 100% of ETP’s and Sunoco LP’s incentive distribution rights, as well as the Partnership’s ownership of Lake Charles LNG. The Partnership’s primary cash requirements are for general and administrative expenses, debt service requirements and distributions to its partners.
Energy Transfer Equity, L.P. (NYSE: ETE) is a master limited partnership that owns the general partner and 100% of the incentive distribution rights (IDRs) of Energy Transfer Partners, L.P. (NYSE: ETP) and Sunoco LP (NYSE: SUN). ETE also owns Lake Charles LNG Company. On a consolidated basis, ETE’s family of companies owns and operates a diverse portfolio of natural gas, natural gas liquids, crude oil and refined products assets, as well as retail and wholesale motor fuel operations and LNG terminalling. For more information, visit the Energy Transfer Equity, L.P. website at www.energytransfer.com.
Energy Transfer Partners, L.P. (NYSE: ETP) is a master limited partnership that owns and operates one of the largest and most diversified portfolios of energy assets in the United States. Strategically positioned in all of the major U.S. production basins, ETP

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owns and operates a geographically diverse portfolio of complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; NGL fractionation assets; and various acquisition and marketing assets. ETP’s general partner is owned by Energy Transfer Equity, L.P. (NYSE: ETE). For more information, visit the Energy Transfer Partners, L.P. website at www.energytransfer.com.
Sunoco LP (NYSE: SUN) is a master limited partnership that distributes motor fuel to approximately 9,200 convenience stores, independent dealers, commercial customers and distributors located in more than 30 states. SUN’s parent -- Energy Transfer Equity, L.P. (NYSE: ETE) -- owns SUN’s general partner and incentive distribution rights. For more information, visit the Sunoco LP website at www.sunocolp.com.
Forward-Looking Statements
This press release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in the Partnership’s Annual Reports on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.
The information contained in this press release is available on our web site at www.energytransfer.com.
Contacts
 
 
Investor Relations:
 
 
Energy Transfer
 
 
Lyndsay Hannah, Brent Ratliff, Helen Ryoo
 
214-981-0795
 
 
 
 
 
Media Relations:
 
 
Vicki Granado
 
 
214-840-5820
 
 






2



ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
 
December 31,
 
2017
 
2016*
ASSETS
 
 
 
 
 
 
 
Current assets (including assets held for sale of $3.31 billion as of December 31, 2017)
$
10,683

 
$
6,899

 
 
 
 
Property, plant and equipment, net
61,088

 
53,578

 
 
 
 
Advances to and investments in unconsolidated affiliates
2,705

 
3,040

Other non-current assets, net
886

 
815

Intangible assets, net
6,116

 
5,512

Goodwill
4,768

 
5,670

Non-current assets held for sale
—

 
3,411

Total assets
$
86,246

 
$
78,925

 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
Current liabilities (including liabilities held for sale of $75 million as of December 31, 2017)
$
7,897

 
$
7,277

 
 
 
 
Non-current liabilities held for sale
—

 
48

Long-term debt, less current maturities
43,671

 
42,608

Long-term notes payable - related company
—

 
250

Deferred income taxes
3,315

 
5,112

Non-current derivative liabilities
145

 
76

Other non-current liabilities
1,217

 
1,075

 
 
 
 
Commitments and contingencies
 
 
 
Preferred units of subsidiary
—

 
33

Redeemable noncontrolling interest
21

 
15

 
 
 
 
Equity:
 
 
 
Total partners’ deficit
(1,196
)
 
(1,694
)
Noncontrolling interest
31,176

 
24,125

Total equity
29,980

 
22,431

Total liabilities and equity
$
86,246

 
$
78,925

*
During the fourth quarter of 2017, ETP changed its accounting policy related to certain inventories. Certain crude oil, refined product and NGL inventories associated with the legacy Sunoco Logistics business were changed from the last-in, first-out (“LIFO”) method to the weighted average cost method. These changes have been applied retrospectively to all periods presented, and the prior period amounts reflected below have been adjusted from those amounts previously reported.



3


ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
 
Three Months Ended
December 31,
 
Years Ended
December 31,
 
2017
 
2016*
 
2017
 
2016*
REVENUES:
$
11,452

 
$
9,323

 
$
40,523

 
$
31,792

COSTS AND EXPENSES:
 
 
 
 
 
 
 
Cost of products sold
9,108

 
7,184

 
30,966

 
23,693

Operating expenses
318

 
599

 
2,644

 
2,307

Depreciation, depletion and amortization
677

 
586

 
2,554

 
2,216

Selling, general and administrative
127

 
189

 
607

 
693

Impairment losses
937

 
1,040

 
1,039

 
1,040

Total costs and expenses
11,167

 
9,598

 
37,810

 
29,949

OPERATING INCOME (LOSS)
285

 
(275
)
 
2,713

 
1,843

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Interest expense, net of interest capitalized
(450
)
 
(468
)
 
(1,922
)
 
(1,804
)
Equity in earnings (losses) of unconsolidated affiliates
(84
)
 
65

 
144

 
270

Impairment of investments in unconsolidated affiliates
(313
)
 
—

 
(313
)
 
(308
)
Gain on acquisitions
—

 
83

 
—

 
83

Losses on extinguishments of debt
(64
)
 
—

 
(89
)
 
—

Gains (losses) on interest rate derivatives
(9
)
 
167

 
(37
)
 
(12
)
Other, net
45

 
33

 
214

 
132

INCOME (LOSS) BEFORE INCOME TAX BENEFIT
(590
)
 
(395
)
 
710

 
204

Income tax benefit from continuing operations
(1,747
)
 
(124
)
 
(1,833
)
 
(258
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
1,157

 
(271
)
 
2,543

 
462

Income (loss) from discontinued operations, net of income taxes
11

 
(463
)
 
(177
)
 
(462
)
NET INCOME (LOSS)
1,168

 
(734
)
 
2,366

 
—

Less: Net income (loss) attributable to noncontrolling interest
917

 
(967
)
 
1,412

 
(995
)
NET INCOME ATTRIBUTABLE TO PARTNERS
251

 
233

 
954

 
995

General Partner’s interest in net income
—

 
1

 
2

 
3

Convertible Unitholders’ interest in income
12

 
6

 
37

 
9

Limited Partners’ interest in net income
$
239

 
$
226

 
$
915

 
$
983

NET INCOME PER LIMITED PARTNER UNIT:
 
 
 
 
 
 
 
Basic
$
0.22

 
$
0.22

 
$
0.85

 
$
0.94

Diluted
$
0.22

 
$
0.21

 
$
0.83

 
$
0.92

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:
 
 
 
 
 
 
 
Basic
1,079.2

 
1,046.9

 
1,078.2

 
1,045.5

Diluted
1,151.5

 
1,105.3

 
1,150.8

 
1,078.6

*
During the fourth quarter of 2017, ETP changed its accounting policy related to certain inventories. Certain crude oil, refined product and NGL inventories associated with the legacy Sunoco Logistics business were changed from the LIFO method to the weighted average cost method. These changes have been applied retrospectively to all periods presented, and the prior period amounts reflected below have been adjusted from those amounts previously reported.

4


ENERGY TRANSFER EQUITY, L.P.
SUPPLEMENTAL INFORMATION
(In millions)
(unaudited)
 
Three Months Ended
 December 31,
 
Years Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Cash distributions from ETP associated with: (1)
 
 
 
 
 
 
 
Limited partner interest
$
16

 
$
20

 
$
61

 
$
28

Class H Units
—

 
94

 
—

 
357

General partner interest
4

 
8

 
16

 
32

Incentive distribution rights
434

 
351

 
1,638

 
1,363

IDR relinquishments, net of Class I distributions (2)
(174
)
 
(138
)
 
(656
)
 
(409
)
Total cash distributions from ETP
280

 
335

 
1,059

 
1,371

Cash distributions from Sunoco LP (2)
31

 
22

 
115

 
88

Cash distributions from investments in subsidiaries
$
311

 
$
357

 
$
1,174

 
$
1,459

 
 
 
 
 
 
 
 
Distributable cash flow attributable to Lake Charles LNG:
 
 
 
 
 
 
 
Revenues
$
49

 
$
49

 
$
197

 
$
197

Operating expenses
(4
)
 
(3
)
 
(19
)
 
(16
)
Maintenance capital expenditures
(1
)
 
—

 
(2
)
 
—

Selling, general and administrative expenses
(1
)
 
—

 
(3
)
 
(2
)
Distributable cash flow attributable to Lake Charles LNG
$
43

 
$
46

 
$
173

 
$
179

 
 
 
 
 
 
 
 
Expenses of the Parent Company on a cash basis:
 
 
 
 
 
 
 
Selling, general and administrative expenses, excluding certain non-cash expenses
$
5

 
$
8

 
$
24

 
$
80

Management fee to ETP (3)
—

 
24

 
5

 
95

Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate swaps
87

 
80

 
338

 
315

Total Parent Company expenses
$
92

 
$
112

 
$
367

 
$
490

 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
Cash distributions to be paid to the partners of ETE:
 
 
 
 
 
 
 
Distributions to be paid to limited partners (4)
$
265

 
$
250

 
$
1,022

 
$
971

Distributions to be paid to general partner
1

 
1

 
3

 
3

Total cash distributions to be paid to the partners of ETE
$
266

 
$
251

 
$
1,025

 
$
974

 
 
 
 
 
 
 
 
Common units outstanding — end of period
1,079.1

 
1,046.9

 
1,079.1

 
1,046.9

(1) 
Following the merger of Legacy ETP and Sunoco Logistics in April 2017, the Post-Merger ETP partnership agreement contains distribution requirements consistent with those of Sunoco Logistics prior to the merger.
(2) 
IDR relinquishments for the three month ended December 31, 2017 include the impact of incentive distribution reductions agreed to between ETE and Legacy ETP in addition to incentive distribution reductions previously agreed to between Legacy ETP and Sunoco Logistics.
(3) 
ETE previously paid Legacy ETP certain fees for management services under agreements which expired in the first quarter of 2017.
(4) 
Includes distributions of $0.11 per common unit for the three months ended December 31, 2017 and 2016, and $0.44 per common unit for the years ended December 31, 2017 and 2016, to unitholders who elected to participate in a plan to forgo a portion of their future potential cash distributions on common units for a period of up to nine fiscal quarters, commencing with the with distributions for the quarter ended March 31, 2016, and reinvest those distributions in the Convertible Units representing limited partner interest in the Partnership.

5


SUPPLEMENTAL INFORMATION
RECONCILIATION OF DISTRIBUTABLE CASH FLOW
(Dollars in millions)
(unaudited)
 
Three Months Ended
December 31,
 
Years Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Net income attributable to partners
$
251

 
$
233

 
$
954

 
$
995

Equity in earnings related to investments in ETP and Sunoco LP
(335
)
 
(309
)
 
(1,243
)
 
(1,374
)
Total cash distributions from investments in subsidiaries
311

 
357

 
1,174

 
1,459

Amortization included in interest expense (excluding ETP and Sunoco LP)
2

 
3

 
9

 
12

Lake Charles LNG maintenance capital expenditures
(1
)
 
—

 
(2
)
 
—

Other non-cash (excluding ETP and Sunoco LP)
34

 
7

 
88

 
56

Distributable Cash Flow
262

 
291

 
980

 
1,148

Transaction-related expenses
1

 
8

 
9

 
59

Distributable Cash Flow, as adjusted
$
263

 
$
299

 
$
989

 
$
1,207

 
 
 
 
 
 
 
 
Total cash distributions to be paid to the partners of ETE
266

 
251

 
1,025

 
974

 
 
 
 
 
 
 
 
Distribution coverage ratio(1)
0.99x

 
1.19x

 
0.96x

 
1.24x

(1) 
This press release and accompanying schedules include the non-generally accepted accounting principle (“non-GAAP”) financial measures of Distributable Cash Flow, Distributable Cash Flow, as adjusted, and Distributable Cash Flow, as adjusted, per Unit. The Partnership’s non-GAAP financial measures should not be considered as alternatives to GAAP financial measures such as net income, cash flow from operating activities or any other GAAP measure of liquidity or financial performance.
Distributable Cash Flow and Distributable Cash Flow, as adjusted. The Partnership defines Distributable Cash Flow and Distributable Cash Flow, as adjusted, for a period as cash distributions expected to be received in respect of such period in connection with the Partnership’s investments in limited and general partner interests, net of the Partnership’s cash expenditures for general and administrative costs and interest expense. The Partnership’s definitions of Distributable Cash Flow and Distributable Cash Flow, as adjusted, also include distributable cash flow from Lake Charles LNG to the Partnership. For Distributable Cash Flow, as adjusted, certain transaction-related expenses that are included in net income are excluded.
Distributable Cash Flow is a significant liquidity measure used by the Partnership’s senior management to compare net cash flows generated by the Partnership to the distributions the Partnership expects to pay its unitholders. Due to cash expenses incurred from time to time in connection with the Partnership’s merger and acquisition activities and other transactions, Distributable Cash Flow, as adjusted, is also a significant liquidity measure used by the Partnership’s senior management to compare net cash flows generated by the Partnership to the distributions the Partnership expects to pay its unitholders. Using these measures, the Partnership’s management can compute the coverage ratio of estimated cash flows for a period to planned cash distributions for such period.
Distributable Cash Flow and Distributable Cash Flow, as adjusted, are also important non-GAAP financial measures for our limited partners since these indicate to investors whether the Partnership’s investments are generating cash flows at a level that can sustain or support an increase in quarterly cash distribution levels. Financial measures such as Distributable Cash Flow and Distributable Cash Flow, as adjusted, are quantitative standards used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is in part measured by its yield (which in turn is based on the amount of cash distributions a partnership can pay to a unitholder). The GAAP measure most directly comparable to Distributable Cash Flow, and Distributable Cash Flow, as adjusted, is net income for ETE on a stand-alone basis (the “Parent Company”).
Distribution Coverage Ratio. The Partnership defines Distribution Coverage Ratio for a period as Distributable Cash Flow, as adjusted, divided by total cash distributions expected to be paid to the partners of ETE in respect of such period.

6


SUPPLEMENTAL INFORMATION
FINANCIAL STATEMENTS FOR PARENT COMPANY
Following are condensed balance sheets and statements of operations of the Parent Company on a stand-alone basis.
BALANCE SHEETS
(In millions)
(unaudited)
 
 
December 31,
 
2017
 
2016
ASSETS
 
 
 
Current assets
$
67

 
$
57

Property, plant and equipment, net
27

 
36

Advances to and investments in unconsolidated affiliates
6,082

 
5,088

Intangible assets, net
—

 
1

Goodwill
9

 
9

Other non-current assets, net
8

 
10

Total assets
$
6,193

 
$
5,201

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
Current liabilities
$
70

 
$
92

Long-term debt, less current maturities
6,700

 
6,358

Note payable to affiliate
617

 
443

Other non-current liabilities
2

 
2

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Partners’ deficit:
 
 
 
General Partner
(3
)
 
(3
)
Limited Partners:
 
 
 
Common unitholders
(1,643
)
 
(1,871
)
Series A Convertible Preferred Units
450

 
180

Total partners’ deficit
(1,196
)
 
(1,694
)
Total liabilities and partners’ deficit
$
6,193

 
$
5,201


7


STATEMENTS OF OPERATIONS
(In millions)
(unaudited)

 
 
Three Months Ended
December 31,
 
Years Ended
December 31,
 
2017
 
2016
 
2017
 
2016
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
$
(6
)
 
$
(29
)
 
$
(31
)
 
$
(185
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Interest expense, net of interest capitalized
(90
)
 
(83
)
 
(347
)
 
(327
)
Equity in earnings of unconsolidated affiliates
369

 
345

 
1,381

 
1,511

Loss on extinguishments of debt
(22
)
 
—

 
(47
)
 
—

Other, net
—

 
—

 
(2
)
 
(4
)
NET INCOME
251

 
233

 
954

 
995

General Partner’s interest in net income
—

 
1

 
2

 
3

Convertible Unitholders’ interest in income
12

 
6

 
37

 
9

Limited Partners’ interest in net income
$
239

 
$
226

 
$
915

 
$
983



8