UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

þ  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___  to  ___.

Commission file number:  1-14323

ENTERPRISE PRODUCTS PARTNERS L.P.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
76-0568219
(State or Other Jurisdiction of
(I.R.S. Employer Identification No.)
Incorporation or Organization)
 
 
 
 
1100 Louisiana Street, 10th Floor
 
 
Houston, Texas 77002
 
 
    (Address of Principal Executive Offices, including Zip Code)
 
 
 
 
 
(713) 381-6500
 
 
(Registrant's Telephone Number, including Area Code)
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ
Accelerated filer o
Non-accelerated filer   o (Do not check if a smaller reporting company)
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o   No þ

There were 910,781,527 common units and 4,520,431 Class B units (which generally vote together with the common units) of Enterprise Products Partners L.P. outstanding at April 30, 2013.  Our common units trade on the New York Stock Exchange under the ticker symbol "EPD."


ENTERPRISE PRODUCTS PARTNERS L.P.
TABLE OF CONTENTS

 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
       5.  Inventories
 
 
 
 
       9.  Debt Obligations
 
 
 
 
 
 
 
 
 
 
 
 
 
 












1

 
PART I.  FINANCIAL INFORMATION.

Item 1.  Financial Statements.

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)

 
 
March 31,
   
December 31,
 
ASSETS
 
2013
   
2012
 
Current assets:
 
   
 
Cash and cash equivalents
 
$
1,280.3
   
$
16.1
 
Restricted cash
   
68.1
     
4.3
 
Accounts receivable – trade, net of allowance for doubtful accounts
of $11.9 at March 31, 2013 and $13.2 at December 31, 2012
   
4,502.2
     
4,350.9
 
Accounts receivable – related parties
   
2.7
     
2.5
 
Inventories
   
1,159.1
     
1,088.4
 
Prepaid and other current assets
   
355.9
     
380.9
 
Total current assets
   
7,368.3
     
5,843.1
 
Property, plant and equipment, net
   
25,222.5
     
24,846.4
 
Investments in unconsolidated affiliates
   
1,679.0
     
1,394.6
 
Intangible assets, net of accumulated amortization of $1,075.7 at
March 31, 2013 and $1,050.0 at December 31, 2012
   
1,539.8
     
1,566.8
 
Goodwill
   
2,086.1
     
2,086.8
 
Other assets
   
205.7
     
196.7
 
Total assets
 
$
38,101.4
   
$
35,934.4
 
 
               
LIABILITIES AND EQUITY
               
Current liabilities:
               
Current maturities of debt (see Note 9)
 
$
1,150.0
   
$
1,546.6
 
Accounts payable – trade
   
790.9
     
764.5
 
Accounts payable – related parties
   
93.1
     
127.1
 
Accrued product payables
   
4,911.5
     
4,476.2
 
Accrued interest
   
185.7
     
300.8
 
Other current liabilities
   
387.4
     
540.5
 
Total current liabilities
   
7,518.6
     
7,755.7
 
Long-term debt (see Note 9)
   
16,393.7
     
14,655.2
 
Deferred tax liabilities
   
16.1
     
22.5
 
Other long-term liabilities
   
182.8
     
205.0
 
Commitments and contingencies (see Note 14)
               
Equity: (see Note 10)
               
Partners' equity:
               
Limited partners:
               
Common units (910,805,527 units outstanding at March 31, 2013
and 898,813,337 units outstanding at December 31, 2012)
   
14,162.1
     
13,439.6
 
Class B units (4,520,431 units outstanding at March 31, 2013 and
December 31, 2012)
   
118.5
     
118.5
 
Total limited partners' equity
   
14,280.6
     
13,558.1
 
Accumulated other comprehensive loss
   
(398.1
)
   
(370.4
)
Total  partners' equity
   
13,882.5
     
13,187.7
 
Noncontrolling interests
   
107.7
     
108.3
 
Total equity
   
13,990.2
     
13,296.0
 
Total liabilities and equity
 
$
38,101.4
   
$
35,934.4
 






See Notes to Unaudited Condensed Consolidated Financial Statements.
 
 
2

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
 (Dollars in millions, except per unit amounts)

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
Revenues:
 
   
 
Third parties
 
$
11,377.2
   
$
11,221.7
 
Related parties
   
5.9
     
30.8
 
Total revenues (see Note 11)
   
11,383.1
     
11,252.5
 
Costs and expenses:
               
Operating costs and expenses:
               
Third parties
   
10,206.2
     
10,318.8
 
Related parties
   
214.2
     
148.4
 
Total operating costs and expenses
   
10,420.4
     
10,467.2
 
General and administrative costs:
               
Third parties
   
19.7
     
23.6
 
Related parties
   
29.8
     
22.7
 
Total general and administrative costs
   
49.5
     
46.3
 
Total costs and expenses (see Note 11)
   
10,469.9
     
10,513.5
 
Equity in income of unconsolidated affiliates
   
44.5
     
9.9
 
Operating income
   
957.7
     
748.9
 
Other income (expense):
               
Interest expense
   
(195.9
)
   
(186.5
)
Interest income
   
0.2
     
0.3
 
Other, net
   
(0.3
)
   
58.4
 
Total other expense, net
   
(196.0
)
   
(127.8
)
Income before income taxes
   
761.7
     
621.1
 
Benefit from (provision for) income taxes
   
(6.4
)
   
34.4
 
Net income
   
755.3
     
655.5
 
Net income attributable to noncontrolling interests (see Note 10)
   
(1.8
)
   
(4.2
)
Net income attributable to limited partners
 
$
753.5
   
$
651.3
 
 
               
Earnings per unit: (see Note 13)
               
Basic earnings per unit
 
$
0.85
   
$
0.76
 
Diluted earnings per unit
 
$
0.83
   
$
0.73
 














See Notes to Unaudited Condensed Consolidated Financial Statements.
 
 
3

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED
COMPREHENSIVE INCOME
(Dollars in millions)

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
 
 
   
 
Net income
 
$
755.3
   
$
655.5
 
Other comprehensive income (loss):
               
Cash flow hedges:
               
Commodity derivative instruments:
               
Changes in fair value of cash flow hedges
   
(47.6
)
   
(59.6
)
Reclassification of losses to net income
   
7.3
     
22.0
 
Interest rate derivative instruments:
               
Changes in fair value of cash flow hedges
   
6.7
     
28.9
 
Reclassification of losses to net income
   
5.9
     
2.7
 
Total cash flow hedges
   
(27.7
)
   
(6.0
)
Change in funded status of pension and postretirement plans, net of tax
   
--
     
(1.2
)
Proportionate share of other comprehensive income of unconsolidated affiliate
   
--
     
1.0
 
Change in fair value of available-for-sale equity securities
   
--
     
15.8
 
Total other comprehensive income (loss)
   
(27.7
)
   
9.6
 
Comprehensive income
   
727.6
     
665.1
 
Comprehensive income attributable to noncontrolling interests
   
(1.8
)
   
(4.2
)
Comprehensive income attributable to limited partners
 
$
725.8
   
$
660.9
 















See Notes to Unaudited Condensed Consolidated Financial Statements.
 
 
4

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
Operating activities:
 
   
 
Net income
 
$
755.3
   
$
655.5
 
Reconciliation of net income to net cash flows provided by operating activities:
               
Depreciation, amortization and accretion
   
292.0
     
266.1
 
Non-cash asset impairment charges (see Note 4)
   
11.0
     
5.4
 
Equity in income of unconsolidated affiliates
   
(44.5
)
   
(9.9
)
Distributions received from unconsolidated affiliates
   
51.3
     
27.0
 
Gains attributable to asset sales and insurance recoveries (see Note 16)
   
(63.9
)
   
(55.8
)
Deferred income tax benefit
   
(6.5
)
   
(67.2
)
Changes in fair market value of derivative instruments
   
12.3
     
(15.4
)
Net effect of changes in operating accounts (see Note 16)
   
(8.0
)
   
(201.1
)
Other operating activities
   
0.9
     
0.3
 
Net cash flows provided by operating activities
   
999.9
     
604.9
 
Investing activities:
               
Capital expenditures
   
(631.6
)
   
(973.1
)
Contributions in aid of construction costs
   
8.7
     
5.0
 
Increase in restricted cash
   
(63.8
)
   
(15.0
)
Investments in unconsolidated affiliates
   
(291.4
)
   
(50.6
)
Proceeds from asset sales and insurance recoveries (see Note 16)
   
130.5
     
998.2
 
Other investing activities
   
0.4
     
--
 
Cash used in investing activities
   
(847.2
)
   
(35.5
)
Financing activities:
               
Borrowings under debt agreements
   
6,174.6
     
1,396.6
 
Repayments of debt
   
(4,826.6
)
   
(1,300.0
)
Debt issuance costs
   
(17.3
)
   
(7.1
)
Monetization of interest rate derivative instruments (see Note 4)
   
(168.8
)
   
(77.6
)
Cash distributions paid to limited partners (see Note 10)
   
(577.6
)
   
(530.4
)
Cash distributions paid to noncontrolling interests (see Note 10)
   
(2.4
)
   
(6.6
)
Cash contributions from noncontrolling interests (see Note 10)
   
--
     
4.9
 
Net cash proceeds from issuance of common units
   
554.1
     
32.8
 
Other financing activities
   
(24.5
)
   
(13.5
)
Cash provided by (used in) financing activities
   
1,111.5
     
(500.9
)
Net change in cash and cash equivalents
   
1,264.2
     
68.5
 
Cash and cash equivalents, January 1
   
16.1
     
19.8
 
Cash and cash equivalents, March 31
 
$
1,280.3
   
$
88.3
 
















See Notes to Unaudited Condensed Consolidated Financial Statements.
 
5

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY
(See Note 10 for Unit History, Accumulated Other Comprehensive
Income (Loss) and Noncontrolling Interests)
(Dollars in millions)

 
 
Partners' Equity
   
   
 
 
 
Limited
Partners
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Noncontrolling
Interests
   
Total
 
Balance, December 31, 2012
 
$
13,558.1
   
$
(370.4
)
 
$
108.3
   
$
13,296.0
 
Net income
   
753.5
     
--
     
1.8
     
755.3
 
Cash distributions paid to limited partners
   
(577.6
)
   
--
     
--
     
(577.6
)
Cash distributions paid to noncontrolling interests
   
--
     
--
     
(2.4
)
   
(2.4
)
Net cash proceeds from issuance of common units
   
554.1
     
--
     
--
     
554.1
 
Amortization of fair value of equity-based awards
   
17.1
     
--
     
--
     
17.1
 
Cash flow hedges
   
--
     
(27.7
)
   
--
     
(27.7
)
Other
   
(24.6
)
   
--
     
--
     
(24.6
)
Balance, March 31, 2013
 
$
14,280.6
   
$
(398.1
)
 
$
107.7
   
$
13,990.2
 



 
 
Partners' Equity
   
   
 
 
 
Limited
Partners
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Noncontrolling
Interests
   
Total
 
Balance, December 31, 2011
 
$
12,464.8
   
$
(351.4
)
 
$
105.9
   
$
12,219.3
 
Net income
   
651.3
     
--
     
4.2
     
655.5
 
Cash distributions paid to limited partners
   
(530.4
)
   
--
     
--
     
(530.4
)
Cash distributions paid to noncontrolling interests
   
--
     
--
     
(6.6
)
   
(6.6
)
Cash contributions from noncontrolling interests
   
--
     
--
     
4.9
     
4.9
 
Net cash proceeds from issuance of common units
   
32.8
     
--
     
--
     
32.8
 
Amortization of fair value of equity-based awards
   
15.6
     
--
     
--
     
15.6
 
Cash flow hedges
   
--
     
(6.0
)
   
--
     
(6.0
)
Change in fair value of available-for-sale equity securities
   
--
     
15.8
     
--
     
15.8
 
Other
   
(13.5
)
   
(0.2
)
   
1.1
     
(12.6
)
Balance, March 31, 2012
 
$
12,620.6
   
$
(341.8
)
 
$
109.5
   
$
12,388.3
 



















See Notes to Unaudited Condensed Consolidated Financial Statements.

6

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
With the exception of per unit amounts, or as noted within the context of each disclosure,
 the dollar amounts presented in the tabular data within these disclosures are
stated in millions of dollars.

KEY REFERENCES USED IN THESE
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unless the context requires otherwise, references to "we," "us," "our," "Enterprise" or "Enterprise Products Partners" are intended to mean the business and operations of Enterprise Products Partners L.P. and its consolidated subsidiaries.  References to "EPO" mean Enterprise Products Operating LLC, which is a wholly owned subsidiary of Enterprise, and its consolidated subsidiaries, through which Enterprise Products Partners L.P. conducts its business.  Enterprise is managed by its general partner, Enterprise Products Holdings LLC ("Enterprise GP"), which is a wholly owned subsidiary of Dan Duncan LLC, a Texas limited liability company.

The membership interests of Dan Duncan LLC are owned of record by a voting trust, the current trustees ("DD LLC Trustees") of which are: (i) Randa Duncan Williams, who is also a director and Chairman of the Board of Enterprise GP; (ii) Dr. Ralph S. Cunningham, who is also a director of Enterprise GP; and (iii) Richard H. Bachmann, who is also a director of Enterprise GP.  Each of the DD LLC Trustees also currently serves as one of the three managers of Dan Duncan LLC.

References to "EPCO" mean Enterprise Products Company, a Texas corporation, and its privately held affiliates.  A majority of the outstanding voting capital stock of EPCO is owned of record by a voting trust, the current trustees ("EPCO Trustees") of which are:  (i) Ms. Williams, who also serves as Chairman of EPCO; (ii) Dr. Cunningham, who also serves as a Vice Chairman of EPCO; and (iii) Mr. Bachmann, who also serves as the President and Chief Executive Officer ("CEO") of EPCO.  Each of the EPCO Trustees is also a director of EPCO. 
  
References to "TEPPCO" mean TEPPCO Partners, L.P. prior to its merger with one of our wholly owned subsidiaries in October 2009 (the "TEPPCO Merger").


Note 1.  Partnership Operations, Organization and Basis of Presentation

General

We are a publicly traded Delaware limited partnership, the common units of which are listed on the New York Stock Exchange ("NYSE") under the ticker symbol "EPD."  We were formed in April 1998 to own and operate certain natural gas liquids ("NGLs") related businesses of EPCO and are now a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. 

Our integrated midstream energy asset network links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States ("U.S."), Canada and the Gulf of Mexico with domestic consumers and international markets.  Our midstream energy operations include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage, and import and export terminals; crude oil gathering and transportation, storage and terminals; offshore production platforms; petrochemical and refined products transportation and services; and a marine transportation business that operates primarily on the U.S. inland and Intracoastal Waterway systems and in the Gulf of Mexico.  Our assets include approximately 50,000 miles of onshore and offshore pipelines; 200 million barrels ("MMBbls") of storage capacity for NGLs, petrochemicals, refined products and crude oil; and 14 billion cubic feet ("Bcf") of natural gas storage capacity.  In addition, our asset portfolio includes 24 natural gas processing plants, 21 NGL and propylene fractionators, six offshore hub platforms located in the Gulf of Mexico, a butane isomerization complex, NGL import and export terminals, and octane enhancement and high-purity isobutylene production facilities.

We have five reportable business segments: (i) NGL Pipelines & Services; (ii) Onshore Natural Gas Pipelines & Services; (iii) Onshore Crude Oil Pipelines & Services; (iv) Offshore Pipelines & Services; and (v) Petrochemical & Refined Products Services.  All activities included in our former sixth reportable business segment,
 
7

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Other Investments, ceased on January 18, 2012, which was the date we discontinued using the equity method to account for our previously held investment in Energy Transfer Equity L.P. (together with its subsidiaries, "Energy Transfer Equity")  (see "Liquidation of Investment in Energy Transfer Equity" under Note 7).

We are 100% owned by our limited partners from an economic perspective.  We are managed and controlled by Enterprise GP, which has a non-economic general partner interest in us.  We, Enterprise GP, EPCO and Dan Duncan LLC are affiliates under the collective common control of the DD LLC Trustees and the EPCO Trustees.  We have no employees.  All of our operating functions and general and administrative support services are provided by employees of EPCO pursuant to an administrative services agreement (the "ASA") or by other service providers.  See Note 12 for information regarding the ASA and other related party matters.


Note 2.  General Accounting Matters

Our results of operations for the three months ended March 31, 2013 are not necessarily indicative of results expected for the full year of 2013.  In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements include all adjustments consisting of normal recurring accruals necessary for fair presentation.  Although we believe the disclosures in these financial statements are adequate and make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").

These Unaudited Condensed Consolidated Financial Statements and the Notes thereto should be read in conjunction with the Audited Consolidated Financial Statements and Notes thereto included in our annual report on Form 10-K for the year ended December 31, 2012 (the "2012 Form 10-K") filed with the SEC on March 1, 2013.

Allowance for Doubtful Accounts

Our allowance for doubtful accounts is determined based on specific identification and estimates of future uncollectible accounts.  The following table presents our allowance for doubtful accounts activity for the periods presented:

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
Balance at beginning of period
 
$
13.2
   
$
13.4
 
Charged to costs and expenses
   
--
     
0.1
 
Deductions
   
(1.3
)
   
(0.5
)
Balance at end of period
 
$
11.9
   
$
13.0
 

Contingencies

Certain conditions may exist as of the date our consolidated financial statements are issued, which may result in a loss to us but which will only be resolved when one or more future events occur or fail to occur.  Management has regular quarterly litigation reviews, including updates from legal counsel, to assess the need for accounting recognition or disclosure of these contingencies, and such assessment inherently involves an exercise in judgment.  In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, our management and legal counsel evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

We accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated.  If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued.  We do not record a contingent liability when the likelihood of loss is probable but the amount cannot be reasonably estimated or when it is believed to be only reasonably possible or remote.
 
8

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For contingencies where an unfavorable outcome is reasonably possible and the impact would be material, we disclose the nature of the contingency and, if feasible, an estimate of the possible loss or range of loss.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  See Note 14 for additional information regarding our contingencies.

Derivative Instruments

We use derivative instruments such as futures, swaps, options, forward contracts and other arrangements to manage price risks associated with inventories, firm commitments, interest rates, foreign currencies and certain anticipated future commodity transactions.  To qualify for hedge accounting, the hedged item must expose us to risk and the related derivative instrument must reduce the exposure to that risk and meet specific hedge documentation requirements related to designation dates, expectations for hedge effectiveness and the probability that hedged future transactions will occur as forecasted.  We formally designate derivative instruments as hedges and document and assess their effectiveness at inception of the hedge and on a monthly basis thereafter.  Forecasted transactions are evaluated for the probability of occurrence and are periodically back-tested once the forecasted period has passed to determine whether similarly forecasted transactions are probable of occurring in the future.

For certain of our physical forward commodity derivative contracts, we apply the normal purchase/normal sale exception, whereby changes in the mark-to-market values of such contracts are not recognized in income.  As a result, the revenues and expenses associated with such physical contract transactions are recognized during the period when volumes are physically delivered or received.  Physical forward commodity contracts subject to this exception are evaluated for the probability of future delivery and are periodically back-tested once the forecasted period has passed to determine whether similar forward contracts are probable of physical delivery in the future.

See Note 4 for additional information regarding our derivative instruments.

Estimates

Preparing our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates that affect amounts presented in the financial statements.  Our most significant estimates relate to (i) the useful lives and depreciation/amortization methods used for fixed and identifiable intangible assets; (ii) measurement of fair value and projections used in impairment testing of fixed and intangible assets (including goodwill); (iii) contingencies; and (iv) revenue and expense accruals.

Actual results could differ materially from our estimates.  On an ongoing basis, we review our estimates based on currently available information.  Any changes in the facts and circumstances underlying our estimates may require us to update such estimates, which could have a material impact on our consolidated financial statements.

Income Tax Benefit

During the first quarter of 2012, we recognized an overall net income tax benefit of $34.4 million, which was primarily due to a $46.5 million net income tax benefit related to the conversion of certain of our subsidiaries to limited liability companies, partially offset by accruals for the Texas Margin Tax.  The $46.5 million net income tax benefit is attributable to the difference between deferred income taxes accrued by the applicable subsidiaries through the date of conversion and any current income tax due in connection with the conversions.  After taking into account certain tax loss carryforward amounts, we paid $22.0 million in federal income taxes in connection with the conversions.

9

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Other Non-Operating Income (Expense)

The following table presents the components of "Other, net" as presented on our Unaudited Condensed Statements of Consolidated Operations for the periods presented:
 
 
 
For the Three Months
Ended March 31,
 
 
 
2013
   
2012
 
Gain on sales of available-for-sale securities of Energy Transfer Equity (1)
 
$
--
   
$
53.3
 
Distribution income from Energy Transfer Equity
   
--
     
4.1
 
Other
   
(0.3
)
   
1.0
 
Total
 
$
(0.3
)
 
$
58.4
 
 
               
(1)   See Note 7 for information regarding the liquidation of our investment in limited partnership units of Energy Transfer Equity.
 

Restricted Cash

Restricted cash represents amounts held in accounts as margin in support of our commodity derivative instruments portfolio and related physical natural gas, crude oil and NGL purchases.  Additional cash may be restricted to maintain this portfolio as commodity prices fluctuate or deposit requirements change.   At March 31, 2013 and December 31, 2012, our restricted cash amounts were $68.1 million and $4.3 million, respectively.  See Note 4 for information regarding derivative instruments and hedging activities.
 

Note 3.  Equity-based Awards

An allocated portion of the fair value of EPCO's equity-based awards is charged to us under the ASA.  The following table summarizes the compensation expense we recognized in connection with equity-based awards for the periods presented:

 
 
For the Three Months
Ended March 31,
 
 
 
2013
   
2012
 
Restricted common unit awards
 
$
16.6
   
$
14.8
 
Unit option awards
   
0.4
     
0.7
 
Other (1)
   
0.2
     
0.9
 
Total
 
$
17.2
   
$
16.4
 
 
               
(1)   Primarily represents expense associated with unit appreciation rights ("UARs"), phantom units and similar awards.
 

The fair value of equity-classified awards (e.g., restricted common unit and unit option awards) is amortized to earnings over the requisite service or vesting period.  Compensation expense for liability-classified awards (e.g., UARs and phantom units) is recognized over the requisite service or vesting period based on the fair value of the award remeasured at each reporting period.  Liability-classified awards are settled in cash upon vesting.

At March 31, 2013, EPCO's significant long-term incentive plans applicable to us were the Enterprise Products 1998 Long-Term Incentive Plan ("1998 Plan") and the Amended and Restated 2008 Enterprise Products Long-Term Incentive Plan ("2008 Plan").  In addition, there were unvested awards outstanding under an inactive plan, the Enterprise Products 2006 TPP Long-Term Incentive Plan.  After giving effect to awards granted under the 1998 Plan and 2008 Plan through March 31, 2013, a total of 877,049 and 4,247,819 additional common units could be issued under these plans, respectively.

Restricted Common Unit Awards

Restricted common unit awards allow recipients to acquire our common units (at no cost to the recipient apart from service or other conditions) once a defined vesting period expires, subject to customary forfeiture
 
10

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
provisions.  As used in the context of EPCO's long-term incentive plans, the term "restricted common unit" represents a time-vested unit.  Restricted common unit awards generally vest at a rate of 25% per year beginning one year after the grant date.  Such awards are non-vested until the required service period expires.  Restricted common units are included in the number of common units presented on our Unaudited Condensed Consolidated Balance Sheets.

The fair value of a restricted common unit award is based on the market price per unit of the underlying security on the date of grant.  Compensation expense is recognized based on the grant date fair value, net of an allowance for estimated forfeitures, over the requisite service or vesting period.

The following table presents information regarding restricted common unit awards for the period presented:

 
 
 
 
 
Number of
Units
   
Weighted-
Average Grant
Date Fair Value
per Unit (1)
 
Restricted common units at December 31, 2012
   
3,893,486
   
$
40.87
 
Granted (2,3)
   
1,723,576
   
$
57.11
 
Vested (3)
   
(939,226
)
 
$
43.42
 
Forfeited
   
(59,460
)
 
$
43.13
 
Restricted common units at March 31, 2013
   
4,618,376
   
$
46.38
 
 
               
(1)   Determined by dividing the aggregate grant date fair value of awards (before an allowance for forfeitures) by the number of awards issued.
(2)   The aggregate grant date fair value of restricted common unit awards issued during 2013 was $98.4 million based on a grant date market price of our common units of $57.11 per unit. An estimated annual forfeiture rate of 3.9% was applied to these awards.
(3)   Includes awards granted to the independent directors of the board of directors of Enterprise GP as part of their annual compensation for 2013. A total of 9,296 restricted common unit awards were issued to the independent directors of Enterprise GP, which immediately vested upon issuance.
 

Typically, each recipient is also entitled to nonforfeitable cash distributions equal to the product of the number of restricted common units outstanding for the participant and the cash distribution per unit paid to limited partners.  Since these restricted common units are participating securities, such distributions are included in "Cash distributions paid to limited partners" as presented on our Unaudited Condensed Statements of Consolidated Cash Flows.

The following table presents supplemental information regarding restricted common unit awards for the periods presented:

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
Cash distributions paid to restricted common unitholders
 
$
2.6
   
$
2.4
 
Total intrinsic value of restricted common unit awards that vested during period
 
$
52.4
   
$
32.6
 

For the EPCO group of companies, the unrecognized compensation cost associated with restricted common unit awards was an aggregate $128.7 million at March 31, 2013, of which our allocated share of the cost is currently estimated to be $118.4 million.  We expect to recognize our share of the unrecognized compensation cost for these awards over a weighted-average period of 2.2 years.

Unit Option Awards

EPCO's long-term incentive plans provide for the issuance of non-qualified incentive options.  These unit option awards are denominated in our common units.  When issued, the exercise price of each unit option award may be no less than the market price of our common units on the date of grant.  In general, unit option awards have a vesting period of four years from the date of grant and expire at the end of the calendar year following the year of vesting (e.g., an option vesting on May 29, 2012 will expire on December 31, 2013).  However, unit option awards
 
11

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
only become exercisable at certain times during the calendar year following the year in which they vest (typically the months of February, May, August and November).

The fair value of each unit option award is estimated on the date of grant using a Black-Scholes option pricing model.  Compensation expense recorded in connection with unit option awards is based on the grant date fair value, net of an allowance for estimated forfeitures, over the requisite service or vesting period.  The following table presents unit option award activity for the period presented:

 
 
Number of
Units
   
Weighted-
Average
Strike Price
(dollars/unit)
   
Weighted-
Average
Remaining
Contractual
Term
(in years)
   
Aggregate
Intrinsic
Value (1)
 
Unit option awards at December 31, 2012
   
2,761,140
   
$
27.41
     
2.0
   
$
13.0
 
Exercised
   
(646,000
)
 
$
30.83
                 
Unit option awards at March 31, 2013
   
2,115,140
   
$
26.36
     
2.1
   
$
27.3
 
Options exercisable at March 31, 2013
   
30,000
   
$
30.93
     
0.8
   
$
0.9
 
 
                               
(1)   Aggregate intrinsic value reflects fully vested unit option awards at the date indicated.
 

In order to fund its unit option award-related obligations, EPCO may purchase common units at fair value either in the open market or directly from us.  When employees exercise unit option awards, we reimburse EPCO for the cash difference between the strike price paid by the employee and the actual purchase price paid by EPCO for the units issued to the employee.

The following table presents supplemental information regarding unit option awards during the periods presented:

 
 
For the Three Months
Ended March 31,
 
 
 
2013
   
2012
 
Total intrinsic value of unit option awards exercised during period
 
$
16.4
   
$
14.0
 
Cash received from EPCO in connection with the exercise of unit option awards
 
$
9.5
   
$
10.2
 
Unit option award-related cash reimbursements to EPCO
 
$
16.4
   
$
14.0
 

For the EPCO group of companies, the unrecognized compensation cost associated with unit option awards was an aggregate $0.5 million at March 31, 2013, of which our allocated share of the cost is currently estimated to be $0.4 million.  We expect to recognize our share of the unrecognized compensation cost for these awards over a weighted-average period of 0.8 years.


Note 4.  Derivative Instruments, Hedging Activities and Fair Value Measurements

In the normal course of our business operations, we are exposed to certain risks, including changes in interest rates and commodity prices.  In order to manage risks associated with assets, liabilities and certain anticipated future transactions, we use derivative instruments such as futures, forward contracts, swaps, options and other instruments with similar characteristics.  Substantially all of our derivatives are used for non-trading activities.

We are required to recognize derivative instruments at fair value as either assets or liabilities on our Unaudited Condensed Consolidated Balance Sheets unless such instruments meet certain normal purchase/normal sale criteria.  While all derivatives are required to be reported at fair value on the balance sheet, changes in fair value of derivative instruments are reported in different ways, depending on the nature and effectiveness of the hedging activities to which they relate.

12

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
After meeting specified conditions, a qualified derivative may be designated as a total or partial hedge of:

§
Changes in the fair value of a recognized asset or liability, or an unrecognized firm commitment In a fair value hedge, gains and losses for both the derivative instrument and the hedged item are recognized in income during the period of change.

§
Variable cash flows of a forecasted transaction In a cash flow hedge, the effective portion of the hedge is reported in other comprehensive income (loss) and is reclassified into earnings when the forecasted transaction affects earnings.

An effective hedge relationship is one in which the change in fair value of a derivative instrument can be expected to offset 80% to 125% of the changes in fair value of a hedged item at inception and throughout the life of the hedging relationship.  The effective portion of a hedge relationship is the amount by which the derivative instrument exactly offsets the change in fair value of the hedged item during the reporting period. Conversely, ineffectiveness represents the change in the fair value of the derivative instrument that does not exactly offset the change in the fair value of the hedged item.  Any ineffectiveness associated with a hedge relationship is recognized in earnings immediately.  Ineffectiveness can be caused by, among other things, changes in the timing of forecasted transactions or a mismatch of terms between the derivative instrument and the hedged item.

A contract designated as a cash flow hedge of an anticipated transaction that is not probable of occurring is immediately recognized in earnings.

Certain of our derivative instruments do not qualify for hedge accounting treatment; therefore, they are accounted for using mark-to-market accounting.

Interest Rate Hedging Activities

We may utilize interest rate swaps, forward starting swaps and similar derivative instruments to manage our exposure to changes in interest rates charged on borrowings under certain consolidated debt agreements.  This strategy is a component in controlling our overall cost of capital associated with such borrowings.  Interest rate swaps exchange the stated interest rate paid on a notional amount of existing debt for the fixed or floating interest rate stipulated in the derivative instrument.  Forward starting swaps perform a similar function except that they are associated with interest rates underlying anticipated future issuances of debt.

The following table summarizes our portfolio of interest rate swaps at March 31, 2013:

Hedged Transaction
Number and Type
of Derivatives
Outstanding
 
Notional
Amount
 
Period of
Hedge
Rate
Swap
Accounting
Treatment
   Senior Notes AA
10 fixed-to-floating swaps
 
$
750.0
 
1/2011 to 2/2016
3.2% to 1.3%
Fair value hedge
   Undesignated swaps
6 floating-to-fixed swaps
 
$
600.0
 
5/2010 to 7/2014
0.3% to 2.0%
Mark-to-market

In February 2012, we settled 11 fixed-to-floating interest rate swaps having an aggregate notional amount of $800.0 million, resulting in gains totaling $37.7 million.  These gains are being amortized to earnings (as a decrease in interest expense) using the effective interest method over the forecasted hedged period of three years.

At December 31, 2012, our portfolio of forward starting interest rate swaps consisted of 16 derivative instruments having a combined notional amount of $1.0 billion.  Forward starting swaps hedge the expected underlying benchmark interest rates related to future issuances of debt. We accounted for these derivative instruments as cash flow hedges.

In connection with the issuance of Senior Notes II and HH in March 2013 (see Note 9), we settled all 16 forward starting swaps, which resulted in cash payments totaling $168.8 million.  These losses are a component of accumulated other comprehensive income and are being amortized to earnings (as an increase in interest expense) over the forecasted hedge period of ten years using the effective interest method.

13

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In connection with the issuance of Senior Notes EE in February 2012, we settled ten forward starting swaps having an aggregate notional amount of $500.0 million, resulting in aggregate cash payments of $115.3 million.  These losses are a component of accumulated other comprehensive income and are being amortized to earnings (as an increase in interest expense) over the forecasted hedge period of ten years using the effective interest method.

Commodity Hedging Activities

The prices of natural gas, NGLs, crude oil, refined products and certain petrochemical products are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control.  In order to manage such price risks, we enter into commodity derivative instruments such as physical forward contracts, futures contracts, fixed-for-float swaps, basis swaps and option contracts.  The following table summarizes our portfolio of commodity derivative instruments outstanding at March 31, 2013 (volume measures as noted):

 
Volume (1)
Accounting
Derivative Purpose
Current (2)
Long-Term (2)
Treatment
Derivatives designated as hedging instruments:
 
 
 
Octane enhancement:
 
 
 
Forecasted purchases of NGLs (MMBbls)
1.5
n/a
Cash flow hedge
Forecasted sales of octane enhancement products (MMBbls)
3.2
n/a
Cash flow hedge
Natural gas marketing:
 
 
 
Forecasted sales of natural gas (Bcf)
0.1
n/a
Cash flow hedge
Natural gas storage inventory management activities (Bcf)
1.9
n/a
Fair value hedge
NGL marketing:
 
 
 
Forecasted purchases of NGLs and related hydrocarbon products (MMBbls)
3.4
n/a
Cash flow hedge
Forecasted sales of NGLs and related hydrocarbon products (MMBbls)
6.5
n/a
Cash flow hedge
Refined products marketing:
 
 
 
Refined products inventory management activities (MMBbls)
0.1
n/a
Fair value hedge
Crude oil marketing:
 
 
 
Forecasted purchases of crude oil (MMBbls)
3.9
n/a
Cash flow hedge
Forecasted sales of crude oil (MMBbls)
8.8
n/a
Cash flow hedge
Derivatives not designated as hedging instruments:
 
 
 
Natural gas risk management activities (Bcf) (3,4)
162.7
25.9
Mark-to-market
Refined products risk management activities (MMBbls) (4)
0.5
n/a
Mark-to-market
Crude oil risk management activities (MMBbls) (4)
3.7
n/a
Mark-to-market
(1)   Volume for derivatives designated as hedging instruments reflects the total amount of volumes hedged whereas volume for derivatives not designated as hedging instruments reflects the absolute value of derivative notional volumes.
(2)   The maximum term for derivatives designated as cash flow hedges, derivatives designated as fair value hedges and derivatives not designated as hedging instruments is March 2014, March 2014 and October 2015, respectively.
(3)   Current volumes include 89.5 Bcf of physical derivative instruments that are predominantly priced at a market-based index plus a premium or minus a discount related to location differences.
(4)   Reflects the use of derivative instruments to manage risks associated with transportation, processing and storage assets.

At March 31, 2013, our predominant commodity hedging strategies consisted of (i) hedging anticipated future contracted sales of NGLs, crude oil, and related products associated with volumes held in inventory and (ii) hedging the fair value of natural gas and refined products in inventory.  The following information summarizes these hedging strategies:

§
The objective of our NGL, crude oil, and related products sales hedging program is to hedge the margins of anticipated future sales of inventory by locking in sales prices through the use of forward physical sales contracts and commodity derivative instruments.

§
The objective of our natural gas and refined products inventory hedging program is to hedge the fair value of natural gas and refined products currently held in inventory by locking in the sales price of the inventory through the use of commodity derivative instruments.

At March 31, 2013, we did not have any hedges in place with respect to gross margins associated with our future natural gas processing activities.  Management continues to evaluate market conditions to determine the appropriate timing to implement this strategy, if at all, during 2013.

14

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Tabular Presentation of Fair Value Amounts, and Gains and Losses on
Derivative Instruments and Related Hedged Items

The following table provides a balance sheet overview of our derivative assets and liabilities at the dates indicated:

 
Asset Derivatives
 
Liability Derivatives
 
 
March 31, 2013
 
December 31, 2012
 
March 31, 2013
 
December 31, 2012
 
Balance
Sheet
Location
Fair
Value
Balance
Sheet
Location
Fair
Value
Balance
Sheet
Location
Fair
Value
Balance
Sheet
Location
Fair
Value
Derivatives designated as hedging instruments 
 
 
 
 
 
 
 
 
 
 
Interest rate derivatives
Other current
assets
 
$
16.1
 
Other current
assets
 
$
19.6
 
Other current
liabilities
 
$
--
 
Other current
liabilities
 
$
175.4
 
Interest rate derivatives
Other assets
   
22.3
 
Other assets
   
25.6
 
Other liabilities
   
--
 
Other liabilities
   
--
 
Total interest rate derivatives
 
   
38.4
 
 
   
45.2
 
 
   
--
 
 
   
175.4
 
Commodity derivatives
Other current
assets
   
45.8
 
Other current
assets
   
45.3
 
Other current
liabilities
   
78.3
 
Other current
liabilities
   
35.4
 
Commodity derivatives
Other assets
   
--
 
Other assets
   
--
 
Other liabilities
   
--
 
Other liabilities
   
0.5
 
Total commodity derivatives
 
   
45.8
 
 
   
45.3
 
 
   
78.3
 
 
   
35.9
 
Total derivatives designated as hedging instruments
 
 
$
84.2
 
 
 
$
90.5
 
 
 
$
78.3
 
 
 
$
211.3
 
 
 
       
 
       
 
       
 
       
Derivatives not designated as hedging instruments 
 
       
 
       
 
       
Interest rate derivatives
Other current
assets
 
$
--
 
Other current
assets
 
$
--
 
Other current
liabilities
 
$
12.1
 
Other current
liabilities
 
$
12.2
 
Interest rate derivatives
Other assets
   
--
 
Other assets
   
--
 
Other liabilities
   
2.6
 
Other liabilities
   
5.0
 
Total interest rate derivatives
 
   
--
 
 
   
--
 
 
   
14.7
 
 
   
17.2
 
Commodity derivatives
Other current
assets
   
6.0
 
Other current
assets
   
15.7
 
Other current
liabilities
   
7.8
 
Other current
liabilities
   
8.9
 
Commodity derivatives
Other assets
   
0.3
 
Other assets
   
0.6
 
Other liabilities
   
1.0
 
Other liabilities
   
0.7
 
Total commodity derivatives
 
   
6.3
 
 
   
16.3
 
 
   
8.8
 
 
   
9.6
 
Total derivatives not designated as hedging instruments
 
 
$
6.3
 
 
 
$
16.3
 
 
 
$
23.5
 
 
 
$
26.8
 
 
15

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Certain of our commodity derivative instruments are subject to master netting arrangements or similar agreements.  The following tables present our derivative instruments subject to such arrangements at the dates indicated:

 
Offsetting of Financial Assets and Derivative Assets
 
 
Gross
Amounts of
Recognized
Assets
   
Gross
Amounts
Offset in the
Balance Sheet
   
Amounts
of Assets
Presented
in the
Balance Sheet
   
Gross Amounts Not Offset
in the Balance Sheet
   
 
 
 
Financial
Instruments
   
Cash
Collateral
Received
   
Amounts That Would Have Been Presented
On Net Basis
 
 
 
(i)
   
(ii)
   
(iii) = (i) – (ii)
   
(iv)
   
(v) = (iii) – (iv)
 
As of March 31, 2013:
 
   
   
   
   
   
 
Commodity derivatives
 
$
52.1
   
$
--
   
$
52.1
   
$
(52.0
)
 
$
--
   
$
0.1
 
As of December 31, 2012:
                                               
Commodity derivatives
 
$
61.6
   
$
--
   
$
61.6
   
$
(38.7
)
 
$
(15.2
)
 
$
7.7
 

 
Offsetting of Financial Liabilities and Derivative Liabilities
 
 
Gross
Amounts of
Recognized
Liabilities
   
Gross
Amounts
Offset in the
Balance Sheet
   
Amounts
of Liabilities
Presented
in the
Balance Sheet
   
Gross Amounts Not Offset
in the Balance Sheet
   
 
 
 
Financial
Instruments
   
Cash
Collateral
Paid
   
Amounts That Would Have Been Presented
On Net Basis
 
 
 
(i)
   
(ii)
   
(iii) = (i) – (ii)
   
(iv)
   
(v) = (iii) – (iv)
 
As of March 31, 2013:
 
   
   
   
   
   
 
Commodity derivatives
 
$
87.1
   
$
--
   
$
87.1
   
$
(52.0
)
 
$
(24.3
)
 
$
10.8
 
As of December 31, 2012:
                                               
Commodity derivatives
 
$
45.5
   
$
--
   
$
45.5
   
$
(38.7
)
 
$
(4.3
)
 
$
2.5
 
 
Derivative assets and liabilities recorded in our Unaudited Condensed Consolidated Balance Sheets are presented on a gross-basis and determined at the individual transaction level.  This presentation method is applied regardless of whether the respective exchange clearing agreements, counterparty contracts or master netting agreements contain netting language often referred to as "rights of offset."  Although derivative amounts are presented on a gross-basis, having rights of offset enable the settlement of a net as opposed to gross receivable or payable amount under a counterparty default or liquidation scenario.

Cash is paid and received as collateral under certain agreements, particularly for those associated with exchange transactions.  For any cash collateral payments or receipts, corresponding assets or liabilities are recorded to reflect the variation margin deposits or receipts with exchange clearing brokers and customers.  These balances are also presented on a gross-basis in our Unaudited Condensed Consolidated Balance Sheets.

The tabular presentation above provides a means for comparing the gross amount of derivative assets and liabilities, excluding associated accounts payable and receivable, to the net amount that would likely be receivable or payable under a default scenario based on the existence of rights of offset in the respective derivative agreements.  Any cash collateral paid or received is reflected in this table, but only to the extent that it represents variation or maintenance margins.  Any amounts associated with derivative prepayments or initial margins that are not influenced by the derivative asset or liability amounts or those that are determined solely on their volumetric notional amounts are excluded from this table.

16

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the effect of our derivative instruments designated as fair value hedges on our Unaudited Condensed Statements of Consolidated Operations for the periods presented:

Derivatives in Fair Value
Hedging Relationships
Location
 
Gain (Loss) Recognized in
Income on Derivative
 
 
  
 
For the Three Months
Ended March 31,
 
 
 
 
2013
   
2012
 
Interest rate derivatives
Interest expense
 
$
(3.5
)
 
$
(1.5
)
Commodity derivatives
Revenue
   
(0.7
)
   
0.7
 
   Total
 
 
$
(4.2
)
 
$
(0.8
)

Derivatives in Fair Value
Hedging Relationships
Location
 
Gain (Loss) Recognized in
Income on Hedged Item
 
 
  
 
For the Three Months
Ended March 31,
 
 
 
 
2013
   
2012
 
Interest rate derivatives
Interest expense
 
$
3.4
   
$
1.1
 
Commodity derivatives
Revenue
   
(6.7
)
   
0.4
 
   Total
 
 
$
(3.3
)
 
$
1.5
 

With respect to our derivative instruments designated as fair value hedges, amounts attributable to ineffectiveness and those excluded from the assessment of hedge effectiveness were not material to our consolidated financial statements during the periods presented.
 
The following tables present the effect of our derivative instruments designated as cash flow hedges on our Unaudited Condensed Statements of Consolidated Operations and Unaudited Condensed Statements of Consolidated Comprehensive Income for the periods presented:

Derivatives in Cash Flow
Hedging Relationships
 
Change in Value
Recognized in Other
Comprehensive
Income (Loss) on
Derivative
(Effective Portion)
 
 
 
For the Three Months
Ended March 31,
 
 
 
2013
   
2012
 
Interest rate derivatives
 
$
6.7
   
$
28.9
 
Commodity derivatives – Revenue (1)
   
(47.6
)
   
(39.6
)
Commodity derivatives – Operating costs and expenses (1)
   
--
     
(20.0
)
   Total
 
$
(40.9
)
 
$
(30.7
)
                                                             
(1)   The fair value of these derivative instruments would be reclassified to their respective locations on the Statement of Consolidated Operations upon settlement of the underlying derivative transactions, as appropriate.

Derivatives in Cash Flow
Hedging Relationships
Location
 
Gain (Loss) Reclassified
from Accumulated Other
Comprehensive
Income (Loss) to Income
(Effective Portion)
 
 
  
 
For the Three Months
 
 
  
 
Ended March 31,
 
 
 
 
2013
   
2012
 
Interest rate derivatives
Interest expense
 
$
(5.9
)
 
$
(2.7
)
Commodity derivatives
Revenue
   
(7.7
)
   
(10.0
)
Commodity derivatives
Operating costs and expenses
   
0.4
     
(12.0
)
   Total
 
 
$
(13.2
)
 
$
(24.7
)

17

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Derivatives in Cash Flow
Hedging Relationships
Location
 
Gain (Loss) Recognized
in Income on Derivative
(Ineffective Portion)
 
 
  
 
For the Three Months
 
 
  
 
Ended March 31,
 
 
 
 
2013
   
2012
 
Commodity derivatives
Operating costs and expenses
 
$
--
   
$
0.3
 
   Total
 
 
$
--
   
$
0.3
 

Over the next twelve months, we expect to reclassify $31.1 million of losses attributable to interest rate derivative instruments from accumulated other comprehensive loss to earnings as an increase in interest expense.  Likewise, we expect to reclassify $30.1 million of losses attributable to commodity derivative instruments from accumulated other comprehensive loss to earnings as a decrease in revenue.

The following table presents the effect of our derivative instruments not designated as hedging instruments on our Unaudited Condensed Statements of Consolidated Operations for the periods presented:

Derivatives Not Designated
as Hedging Instruments
Location
 
Gain (Loss) Recognized in
Income on Derivative
 
 
  
 
For the Three Months
 
 
  
 
Ended March 31,
 
 
 
 
2013
   
2012
 
Interest rate derivatives
Interest expense
 
$
0.1
   
$
(2.2
)
Commodity derivatives
Revenue
   
(5.3
)
   
20.8
 
Commodity derivatives
Operating costs and expenses
   
--
     
(2.8
)
   Total
 
 
$
(5.2
)
 
$
15.8
 

Fair Value Measurements

Our fair value estimates are based on either (i) actual market data or (ii) assumptions that other market participants would use in pricing an asset or liability, including estimates of risk, in the principal market of the asset or liability at a specified measurement date.  Recognized valuation techniques employ inputs such as contractual prices, quoted market prices or rates, operating costs, discount factors and business growth rates.  These inputs may be either readily observable, corroborated by market data or generally unobservable.  In developing our estimates of fair value, we endeavor to utilize the best information available and apply market-based data to the highest extent possible.  Accordingly, we utilize valuation techniques (such as the market approach) that maximize the use of observable inputs and minimize the use of unobservable inputs.

A three-tier hierarchy has been established that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate such fair values.  The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3).  At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

18

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Recurring Fair Value Measurements

The following table sets forth, by level within the fair value hierarchy, the carrying values of our financial assets and liabilities at March 31, 2013.  These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value.  Our assessment of the relative significance of such inputs requires judgment.

 
 
Fair Value Measurements Using
   
 
 
 
Quoted Prices
   
   
   
 
 
 
in Active
   
Significant
   
   
 
 
 
Markets for
   
Other
   
Significant
   
Carrying
 
 
 
Identical Assets
   
Observable
   
Unobservable
   
Value
 
 
 
and Liabilities
   
Inputs
   
Inputs
   
at March 31,
 
 
 
(Level 1)
   
(Level 2)
   
(Level 3)
   
2013
 
Financial assets:
 
   
   
   
 
Interest rate derivatives
 
$
--
   
$
38.4
   
$
--
   
$
38.4
 
Commodity derivatives
   
16.3
     
35.8
     
--
     
52.1
 
Total
 
$
16.3
   
$
74.2
   
$
--
   
$
90.5
 
 
                               
Financial liabilities:
                               
Interest rate derivatives
 
$
--
   
$
14.7
   
$
--
   
$
14.7
 
Commodity derivatives
   
39.1
     
47.4
     
0.6
     
87.1
 
Total
 
$
39.1
   
$
62.1
   
$
0.6
   
$
101.8
 

The following table sets forth a reconciliation of changes in the fair values of our recurring Level 3 financial assets and liabilities on a combined basis for the periods presented:

 
  
 
For the Three Months
 
 
  
 
Ended March 31,
 
Location
 
2013
   
2012
 
Financial Asset (Liability) Balance, Net, January 1
 
 
$
(1.5
)
 
$
0.4
 
Total gains (losses) included in:
 
               
Net income (1)
Revenue
   
(0.6
)
   
0.5
 
Other comprehensive income (loss)
Commodity derivative instruments – changes in fair value of cash flow hedges
   
--
     
0.5
 
Settlements
Revenue
   
1.5
     
(0.5
)
Financial Asset (Liability) Balance, Net, March 31
 
 
$
(0.6
)
 
$
0.9
 
 
 
               
(1)   There were unrealized gains of $0.9 million and $0.1 million included in these amounts for the three months ended March 31, 2013 and 2012, respectively.
 

The following table provides quantitative information about our recurring Level 3 fair value measurements at March 31, 2013:

 
 
Fair Value
 
 
 
   
 
 
Financial
Assets
   
Financial
Liabilities
 
Valuation
Techniques
Unobservable
Input
Range
Commodity derivatives – Crude oil
 
$
--
   
$
0.6
 
Discounted cash flow
Forward commodity prices
$95.75-$112.88/barrel

We believe forward commodity prices are the most significant unobservable inputs in determining our Level 3 recurring fair value measurements at March 31, 2013.  In general, changes in the price of the underlying commodity increases or decreases the fair value of a commodity derivative depending on whether the derivative was purchased or sold.  We generally expect changes in the fair value of our derivative instruments to be offset by corresponding changes in the fair value of our hedged exposures.

We have a risk management policy that covers our Level 3 commodity derivatives.  Governance and oversight of risk management activities for these commodities are provided by our CEO with guidance and support from a risk management committee ("RMC") that meets quarterly (or on a more frequent basis if needed).  Members of executive management attend the RMC meetings, which are chaired by the head of our commodities risk control
 
19

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
group.  This group is responsible for preparing and distributing daily reports and risk analysis to members of the RMC and other appropriate members of management.  These reports include mark-to-market valuations with the one-day and month-to-date changes in fair values.  This group also develops and validates the forward commodity price curves used to estimate the fair values of our Level 3 commodity derivatives.  These forward curves incorporate published indexes, market quotes and other observable inputs to the extent available.

Nonrecurring Fair Value Measurements

We recorded $11.0 million of non-cash asset impairment charges during the three months ended March 31, 2013 related to the abandonment of assets classified as property, plant and equipment.  Of this amount, $10.0 million relates to the abandonment of certain refined products terminal and storage assets located in southeast Texas and $1.0 million relates to an underground storage cavern taken out of service at our Hobbs NGL fractionation facility.

We recorded $5.4 million of non-cash asset impairment charges during the three months ended March 31, 2012.  Of this amount, $5.1 million relates to the abandonment of certain NGL fractionation assets and a pipeline segment located in Texas classified as property, plant and equipment.  The remaining $0.3 million relates to the sale of certain marine transportation assets, which were classified as assets held-for-sale (Level 3) at March 31, 2012.

The following table summarizes our non-cash impairment charges by segment during each of the periods presented:

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
NGL Pipelines & Services
 
$
1.0
   
$
5.1
 
Petrochemical & Refined Products Services
   
10.0
     
0.3
 
Total
 
$
11.0
   
$
5.4
 

Other Fair Value Information

The carrying amounts of cash and cash equivalents (including restricted cash balances), accounts receivable and accounts payable approximate their fair values based on their short-term nature.  The estimated total fair value of our fixed-rate debt obligations was $19.54 billion and $18.42 billion at March 31, 2013 and December 31, 2012, respectively.  The aggregate carrying value of these debt obligations was $17.53 billion and $16.18 billion at March 31, 2013 and December 31, 2012, respectively.  These values are based on quoted market prices for such debt or debt of similar terms and maturities (Level 2), our credit standing and the credit standing of our counterparties.  Changes in market rates of interest affect the fair value of our fixed-rate debt.  The carrying values of our variable-rate long-term debt obligations approximate their fair values since the associated interest rates are market-based.  We do not have any long-term investments in debt or equity securities recorded at fair value.


Note 5.  Inventories

Our available-for-sale inventory amounts by product type were as follows at the dates indicated:

 
 
March 31,
2013
   
December 31,
2012
 
NGLs
 
$
531.4
   
$
594.3
 
Petrochemicals and refined products
   
443.3
     
304.5
 
Crude oil
   
165.6
     
119.4
 
Natural gas
   
18.8
     
70.2
 
Total
 
$
1,159.1
   
$
1,088.4
 

20

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In those instances where we take ownership of inventory volumes through percent-of-liquids contracts and similar arrangements (as opposed to outright purchases from third parties for cash), these volumes are valued at market-based prices during the month in which they are acquired.

Due to fluctuating commodity prices, we recognize lower of cost or market adjustments when the carrying value of our available-for-sale inventories exceeds their net realizable value.  These non-cash charges are a component of cost of sales in the period they are recognized.  To the extent our commodity hedging strategies address inventory-related price risks and are successful, these inventory valuation adjustments are mitigated or offset.  See Note 4 for a description of our commodity hedging activities.

The following table presents our total cost of sales amounts and lower of cost or market adjustments for the periods indicated:

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
Cost of sales (1)
 
$
9,692.5
   
$
9,665.8
 
Lower of cost or market adjustments
 
$
2.7
   
$
5.9
 
(1)   Cost of sales is a component of "Operating costs and expenses," as presented on our Unaudited Condensed Statements of Consolidated Operations. Quarter-to-quarter fluctuations in these amounts are primarily due to changes in energy commodity prices and sales volumes associated with our marketing activities.
 


Note 6.  Property, Plant and Equipment

The historical costs of our property, plant and equipment and related accumulated depreciation balances were as follows at the dates indicated:

 
 
Estimated
Useful Life
in Years
   
March 31,
2013
   
December 31,
2012
 
Plants, pipelines and facilities (1)
  3-45 (6)
 
 
$
26,016.1
   
$
25,382.4
 
Underground and other storage facilities (2)
  5-40 (7)
 
   
1,869.5
     
1,826.3
 
Platforms and facilities (3)
  20-31      
666.9
     
635.2
 
Transportation equipment (4)
  3-10      
133.4
     
136.2
 
Marine vessels (5)
  15-30      
703.2
     
695.0
 
Land
           
175.5
     
167.2
 
Construction in progress
           
1,990.5
     
2,113.1
 
Total
           
31,555.1
     
30,955.4
 
Less accumulated depreciation
           
6,332.6
     
6,109.0
 
Property, plant and equipment, net
         
$
25,222.5
   
$
24,846.4
 
 
                       
(1)   Plants and pipelines include processing plants; NGL, natural gas, crude oil and petrochemical and refined products pipelines; terminal loading and unloading facilities; office furniture and equipment; buildings; laboratory and shop equipment and related assets.
(2)   Underground and other storage facilities include underground product storage caverns; above ground storage tanks; water wells and related assets.
(3)   Platforms and facilities include offshore platforms and related facilities and other associated assets located in the Gulf of Mexico.
(4)   Transportation equipment includes tractor-trailer tank trucks and other vehicles and similar assets used in our operations.
(5)   Marine vessels include tow boats, barges and related equipment used in our marine transportation business.
(6)   In general, the estimated useful lives of major assets within this category are: processing plants, 20-35 years; pipelines and related equipment, 5-45 years; terminal facilities, 10-35 years; office furniture and equipment, 3-20 years; buildings, 20-40 years; and laboratory and shop equipment, 5-35 years.
(7)   In general, the estimated useful lives of assets within this category are: underground storage facilities, 5-35 years; storage tanks, 10-40 years; and water wells, 5-35 years.
 

21

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes our depreciation expense and capitalized interest amounts for the periods presented:

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
Depreciation expense (1)
 
$
245.4
   
$
212.0
 
Capitalized interest (2)
   
31.6
     
30.6
 
(1)   Depreciation expense is a component of "Costs and expenses" as presented on our Unaudited Condensed Statements of Consolidated Operations.
(2)   We capitalize interest cost incurred on funds used to construct property, plant and equipment. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset's estimated useful life as a component of depreciation expense. When capitalized interest is recorded, it reduces interest expense from what it would be otherwise.
 

In January 2013, we sold certain trucking assets devoted to chemical transportation activities to a third party for a net $29.5 million in cash.  As a result of this transaction, we recognized a $0.5 million loss from the sale of these assets.

In March 2013, we sold the Stratton Ridge-to-Mont Belvieu segment of the Seminole Pipeline, along with a related storage cavern, to a third party for $86.9 million in cash.  As a result, net income for the first quarter of 2013 includes a $52.5 million gain from the sale of these assets.  The Seminole Pipeline remains connected to our Mont Belvieu complex through a newly constructed NGL pipeline that we own.

Asset Retirement Obligations

Property, plant and equipment at March 31, 2013 and December 31, 2012 includes $42.2 million and $40.3 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset.

The following table presents information regarding our asset retirement obligations ("AROs") during the three months ended March 31, 2013:

ARO liability balance, December 31, 2012
 
$
105.2
 
   Liabilities settled
   
(1.3
)
   Revisions in estimated cash flows
   
(2.8
)
   Accretion expense
   
1.5
 
ARO liability balance, March 31, 2013
 
$
102.6
 

The following table presents our forecast of accretion expense for the periods indicated:

Remainder
of 2013
   
2014
   
2015
   
2016
   
2017
 
$
4.7
   
$
6.5
   
$
6.3
   
$
6.6
   
$
7.2
 

Certain of our unconsolidated affiliates have AROs recorded at March 31, 2013 and December 31, 2012 relating to contractual agreements and regulatory requirements.  These amounts are immaterial to our consolidated financial statements.
 
22

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Note 7.  Investments in Unconsolidated Affiliates

The following table presents our investments in unconsolidated affiliates by business segment at the dates indicated.  Unless noted otherwise, we account for these investments using the equity method.

 
 
Ownership
Interest at
March 31,
2013
   
March 31,
2013
   
December 31,
2012
 
NGL Pipelines & Services:
 
   
   
 
Venice Energy Service Company, L.L.C.
 
13.1%
 
 
$
29.9
   
$
29.6
 
K/D/S Promix, L.L.C.
 
50%
 
   
46.2
     
46.9
 
Baton Rouge Fractionators LLC
 
32.2%
 
   
20.3
     
20.2
 
Skelly-Belvieu Pipeline Company, L.L.C.
 
50%
 
   
38.7
     
38.2
 
Texas Express Pipeline LLC
 
35%
 
   
196.2
     
144.4
 
Texas Express Gathering LLC
 
45%
 
   
25.4
     
20.9
 
Front Range Pipeline LLC
 
33.3%
 
   
55.4
     
24.4
 
Onshore Natural Gas Pipelines & Services:
                       
White River Hub, LLC
 
50%
 
   
24.6
     
24.9
 
Onshore Crude Oil Pipelines & Services:
                       
Seaway Crude Pipeline Company LLC
 
50%
 
   
463.6
     
341.4
 
Eagle Ford Pipeline LLC
 
50%
 
   
196.7
     
152.4
 
Offshore Pipelines & Services:
                       
Poseidon Oil Pipeline Company, L.L.C. ("Poseidon")
 
36%
 
   
46.2
     
47.3
 
Cameron Highway Oil Pipeline Company
 
50%
 
   
212.2
     
220.0
 
Deepwater Gateway, L.L.C.
 
50%
 
   
88.8
     
90.0
 
Neptune Pipeline Company, L.L.C.
 
25.7%
 
   
45.6
     
46.8
 
Southeast Keathley Canyon Pipeline Company L.L.C.
 
50%
 
   
116.2
     
74.9
 
Petrochemical & Refined Products Services:
                       
Baton Rouge Propylene Concentrator, LLC
 
30%
 
   
8.2
     
8.5
 
Centennial Pipeline LLC ("Centennial")
 
50%
 
   
61.9
     
60.8
 
Other (1)
 
Various
     
2.9
     
3.0
 
Total
         
$
1,679.0
   
$
1,394.6
 
 
                       
(1)   Other unconsolidated affiliates include a 50% interest in a propylene pipeline extending from Mont Belvieu, Texas to La Porte, Texas and a 25% interest in a company that provides logistics communications solutions between petroleum pipelines and their customers.
 
 
The following table presents our equity in income (loss) of unconsolidated affiliates by business segment for the periods presented:

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
NGL Pipelines & Services
 
$
3.9
   
$
5.2
 
Onshore Natural Gas Pipelines & Services
   
1.0
     
1.4
 
Onshore Crude Oil Pipelines & Services
   
36.6
     
0.5
 
Offshore Pipelines & Services
   
6.4
     
6.9
 
Petrochemical & Refined Products Services
   
(3.4
)
   
(6.5
)
Other Investments
   
--
     
2.4
 
Total
 
$
44.5
   
$
9.9
 

The following table presents our unamortized excess cost amounts by business segment at the dates indicated:

 
 
March 31,
2013
   
December 31,
2012
 
NGL Pipelines & Services
 
$
28.6
   
$
28.9
 
Onshore Crude Oil Pipelines & Services
   
18.3
     
18.5
 
Offshore Pipelines & Services
   
13.3
     
13.6
 
Petrochemical & Refined Products Services
   
2.7
     
2.7
 
Total
 
$
62.9
   
$
63.7
 

23

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents our amortization of excess cost amounts by business segment for the periods presented:

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
NGL Pipelines & Services
 
$
0.3
   
$
0.2
 
Onshore Crude Oil Pipelines & Services
   
0.2
     
0.2
 
Offshore Pipelines & Services
   
0.3
     
0.3
 
Petrochemical & Refined Products Services
   
--
     
0.1
 
Other Investments
   
--
     
0.3
 
Total
 
$
0.8
   
$
1.1
 

Liquidation of Investment in Energy Transfer Equity

The Other Investments segment included our noncontrolling ownership interest in Energy Transfer Equity, which was accounted for using the equity method until January 18, 2012.

At December 31, 2011, we owned 29,303,514 common units of Energy Transfer Equity representing 13.1% of its limited partner interests.  On January 18, 2012, we sold 22,762,636 of these common units in a private transaction, which generated cash proceeds of $825.1 million and a gain on the sale of $27.5 million. As a result of the January 18 transaction, our ownership interest in Energy Transfer Equity was reduced below 3%, and we discontinued using the equity method to account for this investment and began accounting for it as an investment in available-for-sale equity securities.  Following the January 18, 2012 transaction, we sold an additional 3,569,232 Energy Transfer Equity common units through March 31, 2012, which generated cash proceeds of $150.8 million and gains on these sales totaling $25.8 million.  The $53.3 million of aggregate gains on the first quarter of 2012 sales are a component of "Other income" on our Unaudited Condensed Statements of Consolidated Operations.  We liquidated our remaining investment in Energy Transfer Equity by April 27, 2012.

All activities included in our former sixth reportable business segment, Other Investments, ceased on January 18, 2012, which was the date we discontinued using the equity method to account for our investment in Energy Transfer Equity.  See Note 11 for additional information regarding our business segments.

Summarized Income Statement Information of Unconsolidated Affiliates

The following table presents unaudited income statement information (on a 100% basis for the periods presented) of our unconsolidated affiliates, aggregated by the business segments to which they relate:

 
 
Summarized Income Statement Information for the Three Months Ended
 
 
 
March 31, 2013
   
March 31, 2012
 
 
 
   
Operating
   
Net
   
   
Operating
   
Net
 
 
 
Revenues
   
Income (Loss)
   
Income (Loss)
   
Revenues
   
Income (Loss)
   
Income (Loss)
 
NGL Pipelines & Services
 
$
83.4
   
$
15.3
   
$
15.2
   
$
110.9
   
$
27.0
   
$
27.0
 
Onshore Natural Gas Pipelines & Services
   
2.9
     
1.9
     
1.9
     
30.9
     
2.6
     
2.6
 
Onshore Crude Oil Pipelines & Services
   
78.5
     
71.7
     
67.9
     
12.3
     
0.8
     
0.8
 
Offshore Pipelines & Services
   
42.3
     
18.0
     
17.3
     
41.1
     
19.1
     
18.4
 
Petrochemical & Refined Products Services
   
6.0
     
(3.9
)
   
(5.8
)
   
5.4
     
(9.4
)
   
(11.4
)

Other

The credit agreements of Poseidon and Centennial restrict their ability to pay cash dividends if a default or event of default (as defined in each credit agreement) has occurred and is continuing at the time such payments are scheduled to be paid.  These businesses were in compliance with the terms of their credit agreements at March 31, 2013.
 
24

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Note 8.  Intangible Assets and Goodwill

The following table summarizes our intangible assets by business segment at the dates indicated:

 
 
March 31, 2013
   
December 31, 2012
 
 
 
Gross
Value
   
Accumulated
Amortization
   
Carrying
Value
   
Gross
Value
   
Accumulated
Amortization
   
Carrying
Value
 
NGL Pipelines & Services:
 
   
   
   
   
   
 
Customer relationship intangibles
 
$
340.8
   
$
(152.3
)
 
$
188.5
   
$
340.8
   
$
(147.6
)
 
$
193.2
 
Contract-based intangibles
   
284.6
     
(162.1
)
   
122.5
     
284.6
     
(157.2
)
   
127.4
 
Segment total
   
625.4
     
(314.4
)
   
311.0
     
625.4
     
(304.8
)
   
320.6
 
Onshore Natural Gas Pipelines & Services:
                                               
Customer relationship intangibles
   
1,163.6
     
(257.8
)
   
905.8
     
1,163.6
     
(250.0
)
   
913.6
 
Contract-based intangibles
   
466.1
     
(316.4
)
   
149.7
     
466.1
     
(311.8
)
   
154.3
 
Segment total
   
1,629.7
     
(574.2
)
   
1,055.5
     
1,629.7
     
(561.8
)
   
1,067.9
 
Onshore Crude Oil Pipelines & Services:
                                               
Customer relationship intangibles
   
10.7
     
(5.2
)
   
5.5
     
10.7
     
(4.9
)
   
5.8
 
Contract-based intangibles
   
0.4
     
(0.3
)
   
0.1
     
0.4
     
(0.3
)
   
0.1
 
Segment total
   
11.1
     
(5.5
)
   
5.6
     
11.1
     
(5.2
)
   
5.9
 
Offshore Pipelines & Services:
                                               
Customer relationship intangibles
   
203.9
     
(141.6
)
   
62.3
     
203.9
     
(138.5
)
   
65.4
 
Contract-based intangibles
   
1.2
     
(0.4
)
   
0.8
     
1.2
     
(0.4
)
   
0.8
 
Segment total
   
205.1
     
(142.0
)
   
63.1
     
205.1
     
(138.9
)
   
66.2
 
Petrochemical & Refined Products Services:
                                               
Customer relationship intangibles
   
104.3
     
(34.7
)
   
69.6
     
104.3
     
(33.4
)
   
70.9
 
Contract-based intangibles
   
39.9
     
(4.9
)
   
35.0
     
41.2
     
(5.9
)
   
35.3
 
Segment total
   
144.2
     
(39.6
)
   
104.6
     
145.5
     
(39.3
)
   
106.2
 
Total all segments
 
$
2,615.5
   
$
(1,075.7
)
 
$
1,539.8
   
$
2,616.8
   
$
(1,050.0
)
 
$
1,566.8
 

The following table presents the amortization expense of our intangible assets by business segment for the periods presented:

 
 
For the Three Months
 
 
 
Ended March 31,
 
 
 
2013
   
2012
 
NGL Pipelines & Services
 
$
9.6
   
$
10.2
 
Onshore Natural Gas Pipelines & Services
   
12.4
     
15.8
 
Onshore Crude Oil Pipelines & Services
   
0.3
     
0.2
 
Offshore Pipelines & Services
   
3.0
     
2.6
 
Petrochemical & Refined Products Services
   
1.6
     
3.5
 
Total
 
$
26.9
   
$
32.3
 

The following table presents our forecast of amortization expense associated with existing intangible assets for the periods indicated:

Remainder
of 2013
   
2014
   
2015
   
2016
   
2017
 
$
79.3
   
$
96.1
   
$
90.1
   
$
91.8
   
$
95.8
 

25

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the amounts assigned to assets acquired and liabilities assumed in the transaction.  The following table presents changes in the carrying amount of goodwill during the three months ended March 31, 2013:

 
 
NGL
Pipelines
& Services
   
Onshore
Natural Gas
Pipelines
& Services
   
Onshore
Crude Oil
Pipelines
& Services
   
Offshore
Pipelines
& Services
   
Petrochemical
& Refined
Products
Services
   
Consolidated
Total
 
Balance at December 31, 2012 (1)
 
$
341.2
   
$
296.3
   
$
311.2
   
$
82.1
   
$
1,056.0
   
$
2,086.8
 
Reclassification to assets held for sale
   
--
     
--
     
--
     
--
     
(0.7
)
   
(0.7
)
Balance at March 31, 2013 (1)
 
$
341.2
   
$
296.3
   
$
311.2
   
$
82.1
   
$
1,055.3
   
$
2,086.1
 
 
                                               
(1)   The total carrying amount of goodwill at March 31, 2013 and December 31, 2012 is net of $1.3 million of accumulated impairment charges. No goodwill impairment charges were recorded during the three months ended March 31, 2013.
 
 
 
26

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Note 9.  Debt Obligations

The following table presents our consolidated debt obligations (arranged by company and maturity date) at the dates indicated:

 
 
March 31,
   
December 31,
 
 
 
2013
   
2012
 
EPO senior debt obligations:
 
   
 
Commercial Paper Notes, fixed-rates ranging from 0.28% to 0.50%
 
$
--
   
$
346.6
 
Senior Notes C, 6.375% fixed-rate, due February 2013
   
--
     
350.0
 
Senior Notes T, 6.125% fixed-rate, due February 2013
   
--
     
182.5
 
Senior Notes M, 5.65% fixed-rate, due April 2013
   
400.0
     
400.0
 
Senior Notes U, 5.90% fixed-rate, due April 2013
   
237.6
     
237.6
 
Senior Notes O, 9.75% fixed-rate, due January 2014
   
500.0
     
500.0
 
Senior Notes G, 5.60% fixed-rate, due October 2014
   
650.0
     
650.0
 
Senior Notes I, 5.00% fixed-rate, due March 2015
   
250.0
     
250.0
 
Senior Notes X, 3.70% fixed-rate, due June 2015
   
400.0
     
400.0
 
Senior Notes FF, 1.25% fixed-rate, due August 2015
   
650.0
     
650.0
 
Senior Notes AA, 3.20% fixed-rate, due February 2016
   
750.0
     
750.0
 
$3.5 Billion Multi-Year Revolving Credit Facility, variable-rate, due September 2016
   
--
     
--
 
Senior Notes L, 6.30% fixed-rate, due September 2017
   
800.0
     
800.0
 
Senior Notes V, 6.65% fixed-rate, due April 2018
   
349.7
     
349.7
 
Senior Notes N, 6.50% fixed-rate, due January 2019
   
700.0
     
700.0
 
Senior Notes Q, 5.25% fixed-rate, due January 2020
   
500.0
     
500.0
 
Senior Notes Y, 5.20% fixed-rate, due September 2020
   
1,000.0
     
1,000.0
 
Senior Notes CC, 4.05% fixed-rate, due February 2022
   
650.0
     
650.0
 
Senior Notes HH, 3.35% fixed-rate, due March 2023
   
1,250.0
     
--
 
Senior Notes D, 6.875% fixed-rate, due March 2033
   
500.0
     
500.0
 
Senior Notes H, 6.65% fixed-rate, due October 2034
   
350.0
     
350.0
 
Senior Notes J, 5.75% fixed-rate, due March 2035
   
250.0
     
250.0
 
Senior Notes W, 7.55% fixed-rate, due April 2038
   
399.6
     
399.6
 
Senior Notes R, 6.125% fixed-rate, due October 2039
   
600.0
     
600.0
 
Senior Notes Z, 6.45% fixed-rate, due September 2040
   
600.0
     
600.0
 
Senior Notes BB, 5.95% fixed-rate, due February 2041
   
750.0
     
750.0
 
Senior Notes DD, 5.70% fixed-rate, due February 2042
   
600.0
     
600.0
 
Senior Notes EE, 4.85% fixed-rate, due August 2042
   
750.0
     
750.0
 
Senior Notes GG, 4.45% fixed-rate, due February 2043
   
1,100.0
     
1,100.0
 
Senior Notes II, 4.85% fixed-rate, due March 2044
   
1,000.0
     
--
 
TEPPCO senior debt obligations:
               
TEPPCO Senior Notes, 6.125% fixed-rate, due February 2013
   
--
     
17.5
 
TEPPCO Senior Notes, 5.90% fixed-rate, due April 2013
   
12.4
     
12.4
 
TEPPCO Senior Notes, 6.65% fixed-rate, due April 2018
   
0.3
     
0.3
 
TEPPCO Senior Notes, 7.55% fixed-rate, due April 2038
   
0.4
     
0.4
 
Total principal amount of senior debt obligations
   
16,000.0
     
14,646.6
 
EPO Junior Subordinated Notes A, fixed/variable-rate, due August 2066
   
550.0
     
550.0
 
EPO Junior Subordinated Notes C, fixed/variable-rate, due June 2067
   
285.8
     
285.8
 
EPO Junior Subordinated Notes B, fixed/variable-rate, due January 2068
   
682.7
     
682.7
 
TEPPCO Junior Subordinated Notes, fixed/variable-rate, due June 2067
   
14.2
     
14.2
 
Total principal amount of senior and junior debt obligations
   
17,532.7
     
16,179.3
 
Other, non-principal amounts:
               
Change in fair value of debt hedged in fair value hedging relationship (1)
   
35.8
     
39.3
 
Unamortized discounts, net of premiums
   
(42.6
)
   
(38.0
)
Other
   
17.8
     
21.2
 
Total other, non-principal amounts
   
11.0
     
22.5
 
Less current maturities of debt (2)
   
(1,150.0
)
   
(1,546.6
)
Total long-term debt
 
$
16,393.7
   
$
14,655.2
 
 
               
(1)   See Note 4 for information regarding our interest rate hedging activities.
(2)   We expect to refinance the current maturities of our debt obligations at or prior to their maturity.
 

27

Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents contractually scheduled maturities of our consolidated debt obligations outstanding at March 31, 2013 for the next five years, and in total thereafter:

 
 
   
Scheduled Maturities of Debt
 
 
 
Total