UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2016

OR

  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
Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
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    No

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes    No

There were 2,081,508,834 common units of Enterprise Products Partners L.P. outstanding at the close of business on April 29, 2016.  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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1

PART I.  FINANCIAL INFORMATION.

Item 1. Financial Statements.

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

   
March 31,
2016
   
December 31,
2015
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
160.6
   
$
19.0
 
Restricted cash
   
136.9
     
15.9
 
Accounts receivable – trade, net of allowance for doubtful accounts
of $11.9 at March 31, 2016 and $12.1 at December 31, 2015
   
2,449.4
     
2,569.9
 
Accounts receivable – related parties
   
1.1
     
1.2
 
Inventories
   
1,232.1
     
1,038.1
 
Derivative assets
   
234.9
     
258.6
 
Prepaid and other current assets
   
377.6
     
395.6
 
Total current assets
   
4,592.6
     
4,298.3
 
Property, plant and equipment, net
   
32,673.3
     
32,034.7
 
Investments in unconsolidated affiliates
   
2,684.1
     
2,628.5
 
Intangible assets, net of accumulated amortization of $1,282.1 at
March 31, 2016 and $1,235.8 at December 31, 2015 (see Note 6)
   
3,990.9
     
4,037.2
 
Goodwill (see Note 6)
   
5,745.2
     
5,745.2
 
Other assets
   
51.3
     
58.3
 
Total assets
 
$
49,737.4
   
$
48,802.2
 
 
               
LIABILITIES AND EQUITY
               
Current liabilities:
               
Current maturities of debt (see Note 7)
 
$
835.9
   
$
1,863.9
 
Accounts payable – trade
   
743.5
     
860.1
 
Accounts payable – related parties
   
37.4
     
84.1
 
Accrued product payables
   
2,690.1
     
2,484.4
 
Accrued liability related to EFS Midstream acquisition
   
996.5
     
993.2
 
Accrued interest
   
193.9
     
352.1
 
Other current liabilities
   
516.1
     
528.8
 
Total current liabilities
   
6,013.4
     
7,166.6
 
Long-term debt (see Note 7)
   
21,919.8
     
20,676.9
 
Deferred tax liabilities
   
50.2
     
46.1
 
Other long-term liabilities
   
407.7
     
411.5
 
Commitments and contingencies (see Note 14)
               
Equity:
               
Partners' equity:
               
Limited partners:
               
Common units (2,055,907,178 units outstanding at March 31, 2016
and 2,012,553,024 units outstanding at December 31, 2015)
   
21,397.4
     
20,514.3
 
Accumulated other comprehensive loss
   
(268.5
)
   
(219.2
)
Total  partners' equity
   
21,128.9
     
20,295.1
 
Noncontrolling interests
   
217.4
     
206.0
 
Total equity
   
21,346.3
     
20,501.1
 
Total liabilities and equity
 
$
49,737.4
   
$
48,802.2
 




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,
 
 
 
2016
   
2015
 
Revenues:
           
Third parties
 
$
4,989.7
   
$
7,466.4
 
Related parties
   
15.6
     
6.1
 
Total revenues (see Note 9)
   
5,005.3
     
7,472.5
 
Costs and expenses:
               
Operating costs and expenses:
               
Third parties
   
3,866.3
     
6,384.3
 
Related parties
   
280.6
     
232.1
 
Total operating costs and expenses
   
4,146.9
     
6,616.4
 
General and administrative costs:
               
Third parties
   
14.3
     
20.3
 
Related parties
   
29.6
     
29.0
 
Total general and administrative costs
   
43.9
     
49.3
 
Total costs and expenses (see Note 9)
   
4,190.8
     
6,665.7
 
Equity in income of unconsolidated affiliates
   
101.1
     
89.2
 
Operating income
   
915.6
     
896.0
 
Other income (expense):
               
Interest expense
   
(240.6
)
   
(239.1
)
Other, net
   
3.6
     
0.5
 
Total other expense, net
   
(237.0
)
   
(238.6
)
Income before income taxes
   
678.6
     
657.4
 
Provision for income taxes
   
(8.4
)
   
(6.8
)
Net income
   
670.2
     
650.6
 
Net income attributable to noncontrolling interests (see Note 8)
   
(9.0
)
   
(14.5
)
Net income attributable to limited partners
 
$
661.2
   
$
636.1
 
 
               
Earnings per unit: (see Note 10)
               
Basic earnings per unit
 
$
0.32
   
$
0.33
 
Diluted earnings per unit
 
$
0.32
   
$
0.32
 


















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,
 
 
 
2016
   
2015
 
 
           
Net income
 
$
670.2
   
$
650.6
 
Other comprehensive income (loss):
               
Cash flow hedges:
               
Commodity derivative instruments:
               
Changes in fair value of cash flow hedges
   
(1.2
)
   
30.8
 
Reclassification of gains to net income
   
(57.2
)
   
(61.1
)
Interest rate derivative instruments:
               
Reclassification of losses to net income
   
9.2
     
8.7
 
Total cash flow hedges
   
(49.2
)
   
(21.6
)
Other
   
(0.1
)
   
--
 
Total other comprehensive loss
   
(49.3
)
   
(21.6
)
Comprehensive income
   
620.9
     
629.0
 
Comprehensive income attributable to noncontrolling interests
   
(9.0
)
   
(14.5
)
Comprehensive income attributable to limited partners
 
$
611.9
   
$
614.5
 






























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,
 
 
 
2016
   
2015
 
Operating activities:
           
Net income
 
$
670.2
   
$
650.6
 
Reconciliation of net income to net cash flows provided by operating activities:
               
Depreciation, amortization and accretion
   
382.1
     
367.4
 
Non-cash asset impairment charges (see Note 12)
   
1.7
     
33.3
 
Equity in income of unconsolidated affiliates
   
(101.1
)
   
(89.2
)
Distributions received on earnings from unconsolidated affiliates
   
106.7
     
134.4
 
Net losses (gains) attributable to asset sales (see Note 15)
   
4.9
     
(0.1
)
Deferred income tax expense
   
4.1
     
1.5
 
Changes in fair market value of derivative instruments
   
20.1
     
(4.6
)
Net effect of changes in operating accounts (see Note 15)
   
(186.4
)
   
(139.0
)
Other operating activities
   
(2.6
)
   
(0.3
)
Net cash flows provided by operating activities
   
899.7
     
954.0
 
Investing activities:
               
Capital expenditures
   
(1,007.2
)
   
(812.8
)
Contributions in aid of construction costs
   
12.2
     
19.6
 
Increase in restricted cash
   
(121.0
)
   
(28.2
)
Investments in unconsolidated affiliates
   
(70.4
)
   
(68.3
)
Distributions received for return of capital from unconsolidated affiliates
   
9.1
     
--
 
Proceeds from asset sales (see Note 15)
   
13.4
     
0.5
 
Other investing activities
   
--
     
0.1
 
Cash used in investing activities
   
(1,163.9
)
   
(889.1
)
Financing activities:
               
Borrowings under debt agreements
   
20,000.6
     
9,182.5
 
Repayments of debt
   
(19,797.4
)
   
(8,953.2
)
Debt issuance costs
   
--
     
(0.1
)
Cash distributions paid to limited partners (see Note 8)
   
(788.3
)
   
(703.8
)
Cash payments made in connection with distribution equivalent rights
   
(2.0
)
   
(1.2
)
Cash distributions paid to noncontrolling interests
   
(8.7
)
   
(16.5
)
Cash contributions from noncontrolling interests
   
11.1
     
4.0
 
Net cash proceeds from the issuance of common units
   
1,011.5
     
468.4
 
Other financing activities
   
(21.0
)
   
(38.3
)
Cash provided by (used in) financing activities
   
405.8
     
(58.2
)
Net change in cash and cash equivalents
   
141.6
     
6.7
 
Cash and cash equivalents, January 1
   
19.0
     
74.4
 
Cash and cash equivalents, March 31
 
$
160.6
   
$
81.1
 












See Notes to Unaudited Condensed Consolidated Financial Statements.
5


ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY
(See Note 8 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, 2015
 
$
20,514.3
   
$
(219.2
)
 
$
206.0
   
$
20,501.1
 
Net income
   
661.2
     
--
     
9.0
     
670.2
 
Cash distributions paid to limited partners
   
(788.3
)
   
--
     
--
     
(788.3
)
Cash payments made in connection with distribution equivalent rights
   
(2.0
)
   
--
     
--
     
(2.0
)
Cash distributions paid to noncontrolling interests
   
--
     
--
     
(8.7
)
   
(8.7
)
Cash contributions from noncontrolling interests
   
--
     
--
     
11.1
     
11.1
 
Net cash proceeds from the issuance of common units
   
1,011.5
     
--
     
--
     
1,011.5
 
Amortization of fair value of equity-based awards
   
22.3
     
--
     
--
     
22.3
 
Cash flow hedges
   
--
     
(49.2
)
   
--
     
(49.2
)
Other
   
(21.6
)
   
(0.1
)
   
--
     
(21.7
)
Balance, March 31, 2016
 
$
21,397.4
   
$
(268.5
)
 
$
217.4
   
$
21,346.3
 

 
 
Partners' Equity
             
 
 
Limited
Partners
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Noncontrolling
Interests
   
Total
 
Balance, December 31, 2014
 
$
18,304.8
   
$
(241.6
)
 
$
1,629.0
   
$
19,692.2
 
Net income
   
636.1
     
--
     
14.5
     
650.6
 
Cash distributions paid to limited partners
   
(703.8
)
   
--
     
--
     
(703.8
)
Cash payments made in connection with distribution equivalent rights
   
(1.2
)
   
--
     
--
     
(1.2
)
Cash distributions paid to noncontrolling interests
   
--
     
--
     
(16.5
)
   
(16.5
)
Cash contributions from noncontrolling interests
   
--
     
--
     
4.0
     
4.0
 
Common units issued in connection with Step 2 of Oiltanking acquisition
   
1,408.7
     
--
     
(1,408.7
)
   
--
 
Net cash proceeds from the issuance of common units
   
468.4
     
--
     
--
     
468.4
 
Amortization of fair value of equity-based awards
   
23.3
     
--
     
--
     
23.3
 
Cash flow hedges
   
--
     
(21.6
)
   
--
     
(21.6
)
Other
   
(37.4
)
   
--
     
0.1
     
(37.3
)
Balance, March 31, 2015
 
$
20,098.9
   
$
(263.2
)
 
$
222.4
   
$
20,058.1
 


















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 privately held Texas limited liability company.

The membership interests of Dan Duncan LLC are owned 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 Directors (the "Board") of Enterprise GP; (ii) Richard H. Bachmann, who is also a director and Vice Chairman of the Board of Enterprise GP; and (iii) Dr. Ralph S. Cunningham.  Ms. Duncan Williams and Mr. Bachmann also currently serve as managers of Dan Duncan LLC along with W. Randall Fowler, who is also a director and President of Enterprise GP.

References to "EPCO" mean Enterprise Products Company, a privately held Texas corporation, and its privately held affiliates.  A majority of the outstanding voting capital stock of EPCO is owned by a voting trust, the current trustees ("EPCO Trustees") of which are:  (i) Ms. Duncan Williams, who serves as Chairman of EPCO; (ii) Dr. Cunningham, who serves as Vice Chairman of EPCO; and (iii) Mr. Bachmann, who serves as the President and Chief Executive Officer of EPCO.  Ms. Duncan Williams and Mr. Bachmann also currently serve as directors of EPCO along with Mr. Fowler, who is also the Executive Vice President and Chief Administrative Officer of EPCO. EPCO, together with its privately held affiliates, owned approximately 33.3% of our limited partner interests at March 31, 2016.
  
References to "Oiltanking" and "Oiltanking GP" mean Oiltanking Partners, L.P. and OTLP GP, LLC, the general partner of Oiltanking, respectively. In October 2014, we acquired approximately 65.9% of the limited partner interests of Oiltanking, all of the member interests of Oiltanking GP and the incentive distribution rights ("IDRs") held by Oiltanking GP from Oiltanking Holding Americas, Inc. ("OTA"), a U.S. corporation, as the first step of a two-step acquisition of Oiltanking. In February 2015, we completed the second step of this transaction consisting of the acquisition of the noncontrolling interests in Oiltanking.

References to "TEPPCO" mean TEPPCO Partners, L.P. prior to its merger with one of our wholly owned subsidiaries in October 2009.

References to "Offshore Business" refer to the Gulf of Mexico operations we sold to Genesis Energy, L.P. ("Genesis") in July 2015.

References to "EFS Midstream" mean EFS Midstream LLC, which we acquired in July 2015 from affiliates of Pioneer Natural Resources Company and Reliance Industries Limited.


Note 1.  Partnership Operations, Organization and Basis of Presentation

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 liquid ("NGL") related businesses of EPCO and are a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, petrochemicals and refined products. 
7

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

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 currently include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage, and import and export terminals (including liquefied petroleum gas or "LPG"); crude oil gathering, transportation, storage and terminals; petrochemical and refined products transportation, storage and terminals, and related services; and a marine transportation business that operates primarily on the U.S. inland and Intracoastal Waterway systems.  Our assets currently include approximately 49,000 miles of pipelines; 250 million barrels ("MMBbls") of storage capacity for NGLs, crude oil, petrochemicals and refined products; and 14 billion cubic feet ("Bcf") of natural gas storage capacity.  

We conduct substantially all of our business through EPO and are owned 100% by our limited partners from an economic perspective.  Enterprise GP manages our partnership and owns 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.  Like many publicly traded partnerships, we have no employees. All of our management, administrative and operating functions are performed by employees of EPCO pursuant to an administrative services agreement (the "ASA") or by other service providers. See Note 13 for information regarding the ASA and other related party matters.

Our historical operations are reported under five business segments: (i) NGL Pipelines & Services, (ii) Crude Oil Pipelines & Services, (iii) Natural Gas Pipelines & Services, (iv) Petrochemical & Refined Products Services and (v) Offshore Pipelines & Services. On July 24, 2015, we completed the sale of our Offshore Business, which primarily consisted of our Offshore Pipelines & Services segment. Our consolidated financial statements reflect ownership of the Offshore Business through July 24, 2015. See Note 9 for additional information regarding our business segments.

As a result of our acquisition of the member interests of EFS Midstream effective July 1, 2015, we began consolidating the financial statements of EFS Midstream as of that date.

Effective January 1, 2016, we applied the provisions of Accounting Standard Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires bond issuance costs to be presented on the balance sheet as a deduction from the carrying value of the associated debt. The guidance was applied on a retrospective basis; therefore, we adjusted our December 31, 2015 consolidated balance sheet to reflect the reclassification of $14.7 million of bond issuance costs from prepaid and other current assets and $135.1 million from other assets to reduce the carrying amount of long-term debt by an aggregate $149.8 million. See Note 7 for additional information regarding our long-term debt.


Note 2.  General Accounting and Disclosure Matters

Our results of operations for the three months ended March 31, 2016 are not necessarily indicative of results expected for the full year of 2016.  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 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, 2015 (the "2015 Form 10-K") filed with the SEC on February 26, 2016.
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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 the likelihood of loss is believed to be only reasonably possible or remote.  For contingencies where an unfavorable outcome is reasonably possible and the impact would be material to our consolidated financial statements, we disclose the nature of the contingency and, where 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 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 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 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 12 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.
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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Restricted Cash
Restricted cash represents amounts held in segregated bank accounts by our clearing brokers as margin in support of our commodity derivative instruments portfolio and related physical purchases and sales of natural gas, NGLs, crude oil and refined products.  Additional cash may be restricted to maintain our commodity derivative instruments portfolio as prices fluctuate or deposit requirements change.  At March 31, 2016 and December 31, 2015, our restricted cash amounts were $136.9 million and $15.9 million, respectively.  See Note 12 for information regarding our derivative instruments and hedging activities.


Note 3.  Inventories

Our inventory amounts by product type were as follows at the dates indicated:

 
 
March 31,
2016
   
December 31,
2015
 
NGLs
 
$
625.8
   
$
639.9
 
Petrochemicals and refined products
   
335.7
     
148.0
 
Crude oil
   
248.7
     
222.1
 
Natural gas
   
21.9
     
28.1
 
Total
 
$
1,232.1
   
$
1,038.1
 

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.  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,
 
 
 
2016
   
2015
 
Cost of sales (1)
 
$
3,208.3
   
$
5,678.1
 
Lower of cost or market adjustments
   
5.3
     
3.5
 
   
(1) Cost of sales is a component of "Operating costs and expenses" as presented on our Unaudited Condensed Statements of Consolidated Operations. Fluctuations in these amounts are primarily due to changes in energy commodity prices and sales volumes associated with our marketing activities.
 


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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4.  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,
2016
   
December 31,
2015
 
Plants, pipelines and facilities (1)
 
3-45 (5)
 
 
$
33,096.3
   
$
32,525.0
 
Underground and other storage facilities (2)
 
5-40 (6)
 
   
3,147.1
     
3,000.5
 
Transportation equipment (3)
 
3-10
     
161.6
     
159.9
 
Marine vessels (4)
 
15-30
     
774.0
     
769.8
 
Land
           
262.7
     
262.7
 
Construction in progress
           
4,087.4
     
3,894.0
 
Total
           
41,529.1
     
40,611.9
 
Less accumulated depreciation
           
8,855.8
     
8,577.2
 
Property, plant and equipment, net
         
$
32,673.3
   
$
32,034.7
 
   
(1) Plants, pipelines and facilities include processing plants; NGL, natural gas, crude oil and petrochemical and refined products pipelines; terminal loading and unloading facilities; buildings; office furniture and equipment; 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) Transportation equipment includes tractor-trailer tank trucks and other vehicles and similar assets used in our operations.
(4) Marine vessels include tow boats, barges and related equipment used in our marine transportation business.
(5) 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; buildings, 20-40 years; office furniture and equipment, 3-20 years; and laboratory and shop equipment, 5-35 years.
(6) 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.
 

The following table summarizes our depreciation expense and capitalized interest amounts for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2016
   
2015
 
Depreciation expense (1)
 
$
295.9
   
$
291.3
 
Capitalized interest (2)
   
42.5
     
29.6
 
   
(1) Depreciation expense is a component of "Costs and expenses" as presented on our Unaudited Condensed Statements of Consolidated Operations.
(2) We capitalize interest costs incurred on funds used to construct property, plant and equipment while the asset is in its construction phase. 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.
 

Asset Retirement Obligations
We record asset retirement obligations ("AROs") in connection with legal requirements to perform specified retirement activities under contractual arrangements and/or governmental regulations.  Our contractual AROs primarily result from right-of-way agreements associated with our pipeline operations and real estate leases associated with our plant sites.  In addition, we record AROs in connection with governmental regulations associated with the abandonment or retirement of above-ground brine storage pits and certain marine vessels.  We also record AROs in connection with regulatory requirements associated with the renovation or demolition of certain assets containing hazardous substances such as asbestos.  We typically fund our AROs using cash flow from operations.

Property, plant and equipment at March 31, 2016 and December 31, 2015 includes $17.5 million and $17.6 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset.

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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
The following table presents information regarding our AROs since December 31, 2015:

ARO liability balance, December 31, 2015
 
$
58.5
 
Liabilities settled
   
(1.5
)
Revisions in estimated cash flows
   
1.7
 
Accretion expense
   
0.9
 
ARO liability balance, March 31, 2016
 
$
59.6
 


Note 5.  Investments in Unconsolidated Affiliates

The following table presents our investments in unconsolidated affiliates by business segment at the dates indicated.  We account for these investments using the equity method.

 
 
Ownership
Interest at
March 31,
2016
   
March 31,
2016
   
December 31,
2015
 
NGL Pipelines & Services:
                 
Venice Energy Service Company, L.L.C.
 
13.1%
 
 
$
25.7
   
$
25.9
 
K/D/S Promix, L.L.C.
 
50%
 
   
38.3
     
38.3
 
Baton Rouge Fractionators LLC
 
32.2%
 
   
17.9
     
18.5
 
Skelly-Belvieu Pipeline Company, L.L.C.
 
50%
 
   
39.1
     
39.8
 
Texas Express Pipeline LLC
 
35%
 
   
338.1
     
342.0
 
Texas Express Gathering LLC
 
45%
 
   
36.6
     
36.8
 
Front Range Pipeline LLC
 
33.3%
 
   
171.1
     
171.2
 
Delaware Basin Gas Processing LLC
 
50%
 
   
73.3
     
46.2
 
Crude Oil Pipelines & Services:
                      
Seaway Crude Pipeline Company LLC
 
50%
 
   
1,420.0
     
1,396.0
 
Eagle Ford Pipeline LLC
 
50%
 
   
389.5
     
388.8
 
Eagle Ford Terminals Corpus Christi LLC
 
50%
 
   
39.1
     
28.6
 
Natural Gas Pipelines & Services:
                      
White River Hub, LLC
 
50%
 
   
22.3
     
22.5
 
Petrochemical & Refined Products Services:
                      
Baton Rouge Propylene Concentrator, LLC
 
30%
 
   
5.3
     
5.4
 
Centennial Pipeline LLC
 
50%
 
   
64.6
     
65.6
 
 Other 
 
Various
     
3.2
     
2.9
 
Total
         
$
2,684.1
   
$
2,628.5
 

The following table presents our equity in income (loss) of unconsolidated affiliates by business segment for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2016
   
2015
 
NGL Pipelines & Services
 
$
15.1
   
$
11.6
 
Crude Oil Pipelines & Services
   
90.1
     
59.9
 
Natural Gas Pipelines & Services
   
1.0
     
0.9
 
Petrochemical & Refined Products Services
   
(5.1
)
   
(3.4
)
Offshore Pipelines & Services
   
--
     
20.2
 
Total
 
$
101.1
   
$
89.2
 

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

 
 
March 31,
2016
   
December 31,
2015
 
NGL Pipelines & Services
 
$
25.0
   
$
25.3
 
Crude Oil Pipelines & Services
   
19.1
     
19.3
 
Petrochemical & Refined Products Services
   
2.3
     
2.3
 
Total
 
$
46.4
   
$
46.9
 

In total, amortization of excess cost amounts were $0.5 million and $2.6 million for the three months ended March 31, 2016 and 2015, respectively.
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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Summarized Combined Financial Information of Unconsolidated Affiliates
Combined results of operations data for the periods indicated for our unconsolidated affiliates are summarized in the following table (all data presented on a 100% basis):

   
For the Three Months
Ended March 31,
 
   
2016
   
2015
 
Income Statement Data:
           
Revenues
 
$
345.5
   
$
349.5
 
Operating income
   
213.7
     
196.6
 
Net income
   
215.2
     
193.4
 


Note 6.  Intangible Assets and Goodwill

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

 
 
March 31, 2016
   
December 31, 2015
 
 
 
Gross
Value
   
Accumulated
Amortization
   
Carrying
Value
   
Gross
Value
   
Accumulated
Amortization
   
Carrying
Value
 
NGL Pipelines & Services:
                                   
Customer relationship intangibles
 
$
447.4
   
$
(160.9
)
 
$
286.5
   
$
447.4
   
$
(156.9
)
 
$
290.5
 
Contract-based intangibles
   
283.0
     
(197.0
)
   
86.0
     
283.0
     
(193.2
)
   
89.8
 
Segment total
   
730.4
     
(357.9
)
   
372.5
     
730.4
     
(350.1
)
   
380.3
 
Crude Oil Pipelines & Services:
                                               
Customer relationship intangibles
   
2,204.4
     
(52.1
)
   
2,152.3
     
2,204.4
     
(39.1
)
   
2,165.3
 
Contract-based intangibles
   
281.4
     
(83.9
)
   
197.5
     
281.4
     
(69.2
)
   
212.2
 
Segment total
   
2,485.8
     
(136.0
)
   
2,349.8
     
2,485.8
     
(108.3
)
   
2,377.5
 
Natural Gas Pipelines & Services:
                                               
Customer relationship intangibles
   
1,350.3
     
(372.4
)
   
977.9
     
1,350.3
     
(366.3
)
   
984.0
 
Contract-based intangibles
   
464.7
     
(363.5
)
   
101.2
     
464.7
     
(361.0
)
   
103.7
 
Segment total
   
1,815.0
     
(735.9
)
   
1,079.1
     
1,815.0
     
(727.3
)
   
1,087.7
 
Petrochemical & Refined Products Services:
                                               
Customer relationship intangibles
   
185.5
     
(39.7
)
   
145.8
     
185.5
     
(38.3
)
   
147.2
 
Contract-based intangibles
   
56.3
     
(12.6
)
   
43.7
     
56.3
     
(11.8
)
   
44.5
 
Segment total
   
241.8
     
(52.3
)
   
189.5
     
241.8
     
(50.1
)
   
191.7
 
Total intangible assets
 
$
5,273.0
   
$
(1,282.1
)
 
$
3,990.9
   
$
5,273.0
   
$
(1,235.8
)
 
$
4,037.2
 

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

 
 
For the Three Months
Ended March 31,
 
 
 
2016
   
2015
 
NGL Pipelines & Services
 
$
7.8
   
$
7.5
 
Crude Oil Pipelines & Services
   
27.7
     
16.7
 
Natural Gas Pipelines & Services
   
8.6
     
9.9
 
Petrochemical & Refined Products Services
   
2.2
     
2.4
 
Offshore Pipelines & Services
   
--
     
2.3
 
Total
 
$
46.3
   
$
38.8
 

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

Remainder
of 2016
   
2017
   
2018
   
2019
   
2020
 
$
133.3
   
$
176.3
   
$
171.7
   
$
167.1
   
$
166.4
 

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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 since December 31, 2015:

 
 
NGL
Pipelines
& Services
   
Crude Oil
Pipelines
& Services
   
Natural Gas
Pipelines
& Services
   
Petrochemical
& Refined
Products
Services
   
Consolidated
Total
 
Balance at December 31, 2015
 
$
2,651.7
   
$
1,841.0
   
$
296.3
   
$
956.2
   
$
5,745.2
 
Balance at March 31, 2016
 
$
2,651.7
   
$
1,841.0
   
$
296.3
   
$
956.2
   
$
5,745.2
 

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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Note 7.  Debt Obligations

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

 
 
March 31,
2016
   
December 31,
2015
 
EPO senior debt obligations:
           
Commercial Paper Notes, variable-rates
 
$
2,072.0
   
$
1,114.1
 
Senior Notes AA, 3.20% fixed-rate, due February 2016
   
--
     
750.0
 
364-Day Credit Agreement, 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 OO, 1.65% fixed-rate, due May 2018
   
750.0
     
750.0
 
Senior Notes N, 6.50% fixed-rate, due January 2019
   
700.0
     
700.0
 
Senior Notes LL, 2.55% fixed-rate, due October 2019
   
800.0
     
800.0
 
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
 
Multi-Year Revolving Credit Facility, variable-rate, due September 2020
   
--
     
--
 
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
     
1,250.0
 
Senior Notes JJ, 3.90% fixed-rate, due February 2024
   
850.0
     
850.0
 
Senior Notes MM, 3.75% fixed-rate, due February 2025
   
1,150.0
     
1,150.0
 
Senior Notes PP, 3.70% fixed-rate, due February 2026
   
875.0
     
875.0
 
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
   
1,400.0
     
1,400.0
 
Senior Notes KK, 5.10% fixed-rate, due February 2045
   
1,150.0
     
1,150.0
 
Senior Notes QQ, 4.90% fixed-rate, due May 2046
   
875.0
     
875.0
 
Senior Notes NN, 4.95% fixed-rate, due October 2054
   
400.0
     
400.0
 
TEPPCO senior debt obligations:
               
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
   
21,472.0
     
21,264.1
 
EPO Junior Subordinated Notes A, fixed/variable-rate, due August 2066 (1)
   
521.1
     
521.1
 
EPO Junior Subordinated Notes C, fixed/variable-rate, due June 2067 (2)
   
256.4
     
256.4
 
EPO Junior Subordinated Notes B, fixed/variable-rate, due January 2068 (3)
   
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
   
22,946.4
     
22,738.5
 
Other, non-principal amounts
   
(190.7
)
   
(197.7
)
Less current maturities of debt
   
(835.9
)
   
(1,863.9
)
Total long-term debt
 
$
21,919.8
   
$
20,676.9
 
   
(1) Fixed rate of 8.375% through August 1, 2016 (i.e., first call date without a make-whole redemption premium); thereafter, variable rate based on 3-month LIBOR plus 3.708%.
(2) Fixed rate of 7.000% through September 1, 2017 (i.e., first call date without a make-whole redemption premium); thereafter, variable rate based on 3-month LIBOR plus 2.778%.
(3) Fixed rate of 7.034% through January 15, 2018 (i.e., first call date without a make-whole redemption premium); thereafter, the rate will be the greater of 7.034% or a variable rate based on 3-month LIBOR plus 2.680%.
 

At December 31, 2015, we reclassified $149.8 million of bond issuance costs, which were previously accounted for as assets on our consolidated balance sheet, to long-term debt in connection with the adoption of ASU 2015-03 (see Note 1).  These amounts are a component of "Other, non-principal amounts" in the preceding table.

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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, 2016 for the next five years, and in total thereafter:

 
       
Scheduled Maturities of Debt
 
 
 
Total
   
Remainder
of 2016
   
2017
   
2018
   
2019
   
2020
   
Thereafter
 
Commercial Paper Notes
 
$
2,072.0
   
$
2,072.0
   
$
--
   
$
--
   
$
--
   
$
--
   
$
--
 
Senior Notes
   
19,400.0
     
--
     
800.0
     
1,100.0
     
1,500.0
     
1,500.0
     
14,500.0
 
Junior Subordinated Notes
   
1,474.4
     
--
     
--
     
--
     
--
     
--
     
1,474.4
 
Total
 
$
22,946.4
   
$
2,072.0
   
$
800.0
   
$
1,100.0
   
$
1,500.0
   
$
1,500.0
   
$
15,974.4
 

Parent-Subsidiary Guarantor Relationships
Enterprise Products Partners L.P. acts as guarantor of the consolidated debt obligations of EPO, with the exception of the remaining debt obligations of TEPPCO.  If EPO were to default on any of its guaranteed debt, Enterprise Products Partners L.P. would be responsible for full and unconditional repayment of that obligation.

Issuance of $1.25 Billion of Senior Notes in April 2016
In April 2016, EPO issued $575 million in principal amount of 2.85% senior notes due April 2021 ("Senior Notes RR"), $575 million in principal amount of 3.95% senior notes due February 2027 ("Senior Notes SS") and $100 million in principal amount of 4.90% reopened senior notes due May 2046 ("Senior Notes QQ").  Senior Notes RR, SS and QQ were issued at 99.898%, 99.760% and 95.516% of their principal amounts, respectively. We issued these senior notes using our 2013 Shelf (see Note 8).

Net proceeds from the issuance of these senior notes were used as follows: (i) the repayment of amounts then outstanding under EPO's commercial paper program, which included amounts we used to repay $750 million in principal amount of Senior Notes AA that matured in February 2016, and (ii) for general company purposes.

Enterprise Products Partners L.P. has unconditionally guaranteed these senior notes on an unsecured and unsubordinated basis.  These senior notes rank equal with EPO's existing and future unsecured and unsubordinated indebtedness and are senior to any existing and future subordinated indebtedness of EPO.  These senior notes are subject to make-whole redemption rights and were issued under an indenture containing certain covenants, which generally restrict EPO's ability (with certain exceptions) to incur debt secured by liens and engage in sale and leaseback transactions.

Letters of Credit
At March 31, 2016, EPO had $2.5 million of letters of credit outstanding related to operations at our facilities and motor fuel tax obligations.

Lender Financial Covenants
We were in compliance with the financial covenants of our consolidated debt agreements at March 31, 2016.

Information Regarding Variable Interest Rates Paid
The following table presents the range of interest rates and weighted-average interest rates paid on our consolidated variable-rate debt during the three months ended March 31, 2016:

 
Range of Interest
Rates Paid
Weighted-Average
Interest Rate Paid
Commercial Paper Notes
0.56% to 1.18%
0.89%
Multi-Year Revolving Credit Facility
1.43% to 1.43%
1.43%


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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8.  Equity and Distributions

Partners Equity
Partners' equity reflects the limited partner interests (i.e., common units, including restricted common units) that we have outstanding.  The following table summarizes changes in the number of our outstanding units from December 31, 2015 to March 31, 2016:

   
Common
Units
(Unrestricted)
   
Restricted
Common
Units
   
Total
Common
Units
 
Number of units outstanding at December 31, 2015
   
2,010,592,504
     
1,960,520
     
2,012,553,024
 
Common units issued in connection with ATM program
   
35,396,147
     
--
     
35,396,147
 
Common units issued in connection with DRIP and EUPP
   
7,282,006
     
--
     
7,282,006
 
Common units issued in connection with the vesting of phantom unit awards
   
1,053,117
     
--
     
1,053,117
 
Common units issued in connection with the vesting of restricted common unit awards
   
1,167,578
     
(1,167,578
)
   
--
 
Forfeiture of restricted common unit awards
   
--
     
(9,350
)
   
(9,350
)
Acquisition and cancellation of treasury units in connection with the
vesting of equity-based awards
   
(388,396
)
   
--
     
(388,396
)
Other
   
20,630
     
--
     
20,630
 
Number of units outstanding at March 31, 2016
   
2,055,123,586
     
783,592
     
2,055,907,178
 

The net cash proceeds we received from the issuance of common units during the three months ended March 31, 2016 were used to temporarily reduce amounts outstanding under EPO's commercial paper program and revolving credit facilities and for general company purposes.

Universal shelf registration statement
We expect to issue additional equity and debt securities to assist us in meeting our future liquidity requirements, including those related to capital spending. We have a universal shelf registration statement (the "2013 Shelf") on file with the SEC. The 2013 Shelf allows Enterprise Products Partners L.P. and EPO (each on a standalone basis) to issue an unlimited amount of equity and debt securities, respectively. See Note 7 for information regarding an offering of senior notes we completed in April 2016 using the 2013 Shelf.

The 2013 Shelf will expire in June 2016, at which time we expect to file a replacement universal shelf registration statement.

ATM program
We have a registration statement on file with the SEC in connection with our "at-the-market" program (or "ATM program"). Pursuant to this program, we may sell common units under an equity distribution agreement between Enterprise Products Partners L.P. and certain broker-dealers from time-to-time by means of ordinary brokers' transactions through the NYSE at market prices, in block transactions or as otherwise agreed to with the broker-dealer parties to the agreement.  

During the three months ended March 31, 2016, we sold 35,396,147 common units under the ATM program for aggregate gross proceeds of $856.5 million.  This includes 3,830,256 common units sold in January 2016 to privately held affiliates of EPCO, which generated gross proceeds of $100 million.  After taking into account applicable costs, our transactions under the ATM program resulted in aggregate net cash proceeds of $849.0 million during the three months ended March 31, 2016.  During the three months ended March 31, 2015, we issued 12,350,761 common units under this program for aggregate gross cash proceeds of $407.8 million, resulting in total net cash proceeds of $404.2 million.  

During the period April 1, 2016 through April 8, 2016, we sold an additional 25,550,931 common units under the ATM program for aggregate gross proceeds of $594.1 million, resulting in net cash proceeds of $592.0 million. After taking into account the aggregate sales price of common units sold under our ATM program through April 8, 2016, our capacity under the applicable registration statement was reduced to $415.7 million.  On April 22, 2016, we filed a registration statement with the SEC that (when declared effective) will replace our existing registration statement with respect to the ATM program and increase the available capacity under the ATM program to allow us to issue up to an aggregate $2.17 billion of additional common units, inclusive of the remaining capacity under such existing registration statement.
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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Distribution reinvestment plan
We also have registration statements on file with the SEC collectively authorizing the issuance of up to 140,000,000 of our common units in connection with a distribution reinvestment plan ("DRIP").  The DRIP provides unitholders of record and beneficial owners of our common units a voluntary means by which they can increase the number of our common units they own by reinvesting the quarterly cash distributions they receive from us into the purchase of additional new common units.  We issued a total of 7,162,744 common units under our DRIP during the three months ended March 31, 2016, which generated net cash proceeds of $159.8 million.  During the three months ended March 31, 2015, we issued 1,869,079 common units under our DRIP, which generated net cash proceeds of $61.7 million.  Privately held affiliates of EPCO reinvested $100 million through the DRIP during the three months ended March 31, 2016 (this amount being a component of the net cash proceeds presented).  After taking into account the number of common units issued under the DRIP through March 31, 2016, we have the capacity to issue an additional 7,905,254 common units under this plan.  We expect to file a new registration statement during the second quarter of 2016 to increase the number of common units available for issuance under the DRIP.

Employee unit purchase plan
In addition to the DRIP, we have registration statements on file with the SEC authorizing the issuance of up to 8,000,000 of our common units in connection with our employee unit purchase plan ("EUPP").  We issued 119,262 common units under our EUPP during the three months ended March 31, 2016, which generated net cash proceeds of $2.7 million.  During the three months ended March 31, 2015, we issued 71,753 common units under our EUPP, which generated net cash proceeds of $2.5 million.  After taking into account the number of common units issued under the EUPP through March 31, 2016, we may issue an additional 6,653,244 common units under this plan.

Noncontrolling Interests
Noncontrolling interests represent third party equity ownership interests in our consolidated subsidiaries.

Accumulated Other Comprehensive Loss
The following tables present the components of accumulated other comprehensive income (loss) as reported on our Unaudited Condensed Consolidated Balance Sheets at the dates indicated:

 
 
Gains (Losses) on
Cash Flow Hedges
             
 
 
Commodity
Derivative
Instruments
   
Interest Rate
Derivative
Instruments
   
Other
   
Total
 
Balance, December 31, 2015
 
$
56.6
   
$
(279.5
)
 
$
3.7
   
$
(219.2
)
Other comprehensive loss before reclassifications
   
(1.2
)
   
--
     
(0.1
)
   
(1.3
)
Amounts reclassified from accumulated other comprehensive loss (income)
   
(57.2
)
   
9.2
     
--
     
(48.0
)
Total other comprehensive income (loss)
   
(58.4
)
   
9.2
     
(0.1
)
   
(49.3
)
Balance, March 31, 2016
 
$
(1.8
)
 
$
(270.3
)
 
$
3.6
   
$
(268.5
)

 
 
Gains (Losses) on
Cash Flow Hedges
             
 
 
Commodity
Derivative
Instruments
   
Interest Rate
Derivative
Instruments
   
Other
   
Total
 
Balance, December 31, 2014
 
$
69.9
   
$
(314.8
)
 
$
3.3
   
$
(241.6
)
Other comprehensive income before reclassifications
   
30.8
     
--
     
--
     
30.8
 
Amounts reclassified from accumulated other comprehensive loss (income)
   
(61.1
)
   
8.7
     
--
     
(52.4
)
Total other comprehensive income (loss)
   
(30.3
)
   
8.7
     
--
     
(21.6
)
Balance, March 31, 2015
 
$
39.6
   
$
(306.1
)
 
$
3.3
   
$
(263.2
)

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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
The following table presents reclassifications out of accumulated other comprehensive income (loss) into net income during the periods indicated:

 
  
 
For the Three Months
Ended March 31,
 
 
 Location  
2016
   
2015
 
Losses (gains) on cash flow hedges:
             
Interest rate derivatives
Interest expense
 
$
9.2
   
$
8.7
 
Commodity derivatives
Revenue
   
(58.8
)
   
(61.1
)
Commodity derivatives
Operating costs and expenses
   
1.6
     
--
 
Total
 
 
$
(48.0
)
 
$
(52.4
)

Cash Distributions
The following table presents Enterprise's declared quarterly cash distribution rates per common unit with respect to the quarter indicated:

 
 
Distribution Per
Common Unit
 
Record
Date
Payment
Date
2015:
            
1st Quarter
 
$
0.3750
 
4/30/2015
5/7/2015
2016:
       
 
    
1st Quarter
 
$
0.3950
 
4/29/2016
5/6/2016

In November 2010, we completed our merger with Enterprise GP Holdings L.P. (the "Holdings Merger"). In connection with the Holdings Merger, a privately held affiliate of EPCO agreed to temporarily waive the regular cash distributions it would otherwise receive from us with respect to a certain number of our common units it owns (the "Designated Units"). Distributions paid to partners during 2015 excluded 35,380,000 Designated Units. The temporary distribution waiver expired in November 2015; therefore, distributions to be paid, if any, during calendar year 2016 will include all common units owned by the privately held affiliates of EPCO.


Note 9.  Business Segments

Our historical operations are reported under five business segments: (i) NGL Pipelines & Services, (ii) Crude Oil Pipelines & Services, (iii) Natural Gas Pipelines & Services, (iv) Petrochemical & Refined Products Services and (v) Offshore Pipelines & Services. Our business segments are generally organized and managed according to the types of services rendered (or technologies employed) and products produced and/or sold.

Our consolidated financial statements reflect ownership of the Offshore Business through July 24, 2015, which was the closing date of the sales transaction.

Segment revenues include intersegment and intrasegment transactions, which are generally based on transactions made at market-based rates.  Our consolidated revenues reflect the elimination of intercompany transactions.  Substantially all of our consolidated revenues are earned in the U.S. and derived from a wide customer base.

We evaluate segment performance based on the non-GAAP financial measure of gross operating margin.  Gross operating margin (either in total or by individual segment) is an important performance measure of the core profitability of our operations.  This measure forms the basis of our internal financial reporting and is used by our executive management in deciding how to allocate capital resources among business segments.  We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results.  The GAAP financial measure most directly comparable to total segment gross operating margin is operating income.
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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In total, gross operating margin represents operating income exclusive of (1) depreciation, amortization and accretion expenses, (2) impairment charges, (3) gains and losses attributable to asset sales and (4) general and administrative costs.  Gross operating margin includes equity in income of unconsolidated affiliates and non-refundable deferred transportation revenues relating to the make-up rights of committed shippers associated with certain pipelines.  Gross operating margin by segment is calculated by subtracting segment operating costs and expenses (net of the adjustments noted above) from segment revenues, with both segment totals before the elimination of intercompany transactions.  In accordance with GAAP, intercompany accounts and transactions are eliminated in consolidation.  Gross operating margin is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges.  Gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests.

Segment assets consist of property, plant and equipment, investments in unconsolidated affiliates, intangible assets and goodwill.  The carrying values of such amounts are assigned to each segment based on each asset's or investment's principal operations and contribution to the gross operating margin of that particular segment.  Since construction-in-progress amounts (a component of property, plant and equipment) generally do not contribute to segment gross operating margin, such amounts are excluded from segment asset totals until the underlying assets are placed in service.  Intangible assets and goodwill are assigned to each segment based on the classification of the assets to which they relate.  Substantially all of our plants, pipelines and other fixed assets are located in the U.S. The remainder of our consolidated total assets, which consist primarily of working capital assets, are excluded from segment assets since these amounts are not attributable to one specific segment (e.g. cash).

The following table presents our measurement of non-GAAP total segment gross operating margin for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2016
   
2015
 
Revenues
 
$
5,005.3
   
$
7,472.5
 
Subtract operating costs and expenses
   
(4,146.9
)
   
(6,616.4
)
Add equity in income of unconsolidated affiliates
   
101.1
     
89.2
 
Add depreciation, amortization and accretion expense amounts not reflected in gross operating margin
   
358.2
     
345.3
 
Add impairment charges not reflected in gross operating margin
   
1.7
     
33.3
 
Add net losses or subtract net gains attributable to asset sales not reflected in gross operating margin
   
4.9
     
(0.1
)
Add non-refundable deferred revenues attributable to shipper make-up rights on major
new pipeline projects reflected in gross operating margin
   
7.1
     
30.7
 
Subtract subsequent recognition of deferred revenues attributable to make-up rights not reflected in
gross operating margin
   
(12.9
)
   
(20.1
)
Total segment gross operating margin
 
$
1,318.5
   
$
1,334.4
 

The following table presents a reconciliation of total segment gross operating margin to operating income and further to income before income taxes for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2016
   
2015
 
Total segment gross operating margin
 
$
1,318.5
   
$
1,334.4
 
Adjustments to reconcile total segment gross operating margin to operating income:
               
Subtract depreciation, amortization and accretion expense amounts not reflected in gross operating margin
   
(358.2
)
   
(345.3
)
Subtract impairment charges not reflected in gross operating margin
   
(1.7
)
   
(33.3
)
Add net gains or subtract net losses attributable to asset sales not reflected in gross operating margin
   
(4.9
)
   
0.1
 
Subtract non-refundable deferred revenues attributable to shipper make-up rights on major
     new pipeline projects reflected in gross operating margin
   
(7.1
)
   
(30.7
)
Add subsequent recognition of deferred revenues attributable to make-up rights not reflected in
     gross operating margin
   
12.9
     
20.1
 
Subtract general and administrative costs not reflected in gross operating margin
   
(43.9
)
   
(49.3
)
Operating income
   
915.6
     
896.0
 
Other expense, net
   
(237.0
)
   
(238.6
)
Income before income taxes
 
$
678.6
   
$
657.4
 

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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Information by business segment, together with reconciliations to our consolidated financial statement totals, is presented in the following table:

 
 
Reportable Business Segments
             
 
 
NGL
Pipelines
& Services
   
Crude Oil
Pipelines
& Services
   
Natural Gas
Pipelines
& Services
   
Petrochemical
& Refined
Products
Services
   
Offshore
Pipelines
& Services
   
Adjustments
and
Eliminations
   
Consolidated
Total
 
Revenues from third parties:
                                         
Three months ended March 31, 2016
 
$
2,402.0
   
$
1,277.5
   
$
547.3
   
$
762.9
   
$
--
   
$
--
   
$
4,989.7
 
Three months ended March 31, 2015
   
2,674.8
     
2,677.0
     
730.9
     
1,349.1
     
34.6
     
--
     
7,466.4
 
Revenues from related parties:
                                                       
Three months ended March 31, 2016
   
1.8
     
11.1
     
2.7
     
--
     
--
     
--
     
15.6
 
Three months ended March 31, 2015
   
1.5
     
1.0
     
3.0
     
--
     
0.6
     
--
     
6.1
 
Intersegment and intrasegment revenues:
                                                       
Three months ended March 31, 2016
   
3,174.8
     
1,499.4
     
124.7
     
242.7
     
--
     
(5,041.6
)
   
--
 
Three months ended March 31, 2015
   
2,443.1
     
1,277.1
     
170.0
     
285.6
     
0.4
     
(4,176.2
)
   
--
 
Total revenues:
                                                       
Three months ended March 31, 2016
   
5,578.6
     
2,788.0
     
674.7
     
1,005.6
     
--
     
(5,041.6
)
   
5,005.3
 
Three months ended March 31, 2015
   
5,119.4
     
3,955.1
     
903.9
     
1,634.7
     
35.6
     
(4,176.2
)
   
7,472.5
 
Equity in income (loss) of unconsolidated affiliates:
                                                       
Three months ended March 31, 2016
   
15.1
     
90.1
     
1.0
     
(5.1
)
   
--
     
--
     
101.1
 
Three months ended March 31, 2015
   
11.6
     
59.9
     
0.9
     
(3.4
)
   
20.2
     
--
     
89.2
 
Gross operating margin:
                                                       
Three months ended March 31, 2016
   
783.7
     
202.3
     
177.7
     
154.8
     
--
     
--
     
1,318.5
 
Three months ended March 31, 2015
   
695.2
     
214.0
     
204.5
     
174.6
     
46.1
     
--
     
1,334.4
 
Property, plant and equipment, net:
(see Note 4)
                                                       
At March 31, 2016
   
12,934.9
     
3,896.6
     
8,551.1
     
3,203.3
     
--
     
4,087.4
     
32,673.3
 
At December 31, 2015
   
12,909.7
     
3,550.3
     
8,620.0
     
3,060.7
     
--
     
3,894.0
     
32,034.7
 
Investments in unconsolidated affiliates:
(see Note 5)
                                                       
At March 31, 2016
   
740.1
     
1,848.6
     
22.3
     
73.1
     
--
     
--
     
2,684.1
 
At December 31, 2015
   
718.7
     
1,813.4
     
22.5
     
73.9
     
--
     
--
     
2,628.5
 
Intangible assets, net: (see Note 6)
                                                       
At March 31, 2016
   
372.5
     
2,349.8
     
1,079.1
     
189.5
     
--
     
--
     
3,990.9
 
At December 31, 2015
   
380.3
     
2,377.5
     
1,087.7
     
191.7
     
--
     
--
     
4,037.2
 
Goodwill: (see Note 6)
                                                       
At March 31, 2016
   
2,651.7
     
1,841.0
     
296.3
     
956.2
     
--
     
--
     
5,745.2
 
At December 31, 2015
   
2,651.7
     
1,841.0
     
296.3
     
956.2
     
--
     
--
     
5,745.2
 
Segment assets:
                                                       
At March 31, 2016
   
16,699.2
     
9,936.0
     
9,948.8
     
4,422.1
     
--
     
4,087.4
     
45,093.5
 
At December 31, 2015
   
16,660.4
     
9,582.2
     
10,026.5
     
4,282.5
     
--
     
3,894.0
     
44,445.6
 

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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
The following table presents additional information regarding our consolidated revenues and costs and expenses for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2016
   
2015
 
NGL Pipelines & Services:
           
Sales of NGLs and related products
 
$
1,943.5
   
$
2,242.2
 
Midstream services
   
460.3
     
434.1
 
Total
   
2,403.8
     
2,676.3
 
Crude Oil Pipelines & Services:
               
Sales of crude oil
   
1,121.1
     
2,570.7
 
Midstream services
   
167.5
     
107.3
 
Total
   
1,288.6
     
2,678.0
 
Natural Gas Pipelines & Services:
               
Sales of natural gas
   
315.0
     
476.3
 
Midstream services
   
235.0
     
257.6
 
Total
   
550.0
     
733.9
 
Petrochemical & Refined Products Services:
               
Sales of petrochemicals and refined products
   
553.2
     
1,151.0
 
Midstream services
   
209.7
     
198.1
 
Total
   
762.9
     
1,349.1
 
Offshore Pipelines & Services:
               
Sales of crude oil
   
--
     
1.1
 
Midstream services
   
--
     
34.1
 
Total
   
--
     
35.2
 
Total consolidated revenues
 
$
5,005.3
   
$
7,472.5
 
 
               
Consolidated costs and expenses
               
Operating costs and expenses:
               
Cost of sales
 
$
3,208.3
   
$
5,678.1
 
Other operating costs and expenses (1)
   
573.8
     
559.8
 
Depreciation, amortization and accretion
   
358.2
     
345.3
 
Net losses (gains) attributable to asset sales
   
4.9
     
(0.1
)
Non-cash asset impairment charges
   
1.7
     
33.3
 
General and administrative costs
   
43.9
     
49.3
 
Total consolidated costs and expenses
 
$
4,190.8
   
$
6,665.7
 
   
(1) Represents cost of operating our plants, pipelines and other fixed assets, excluding depreciation, amortization and accretion charges.
 

Fluctuations in our product sales revenues and related cost of sales amounts are explained in part by changes in energy commodity prices.  In general, lower energy commodity prices result in a decrease in our revenues attributable to product sales; however, these lower commodity prices also decrease the associated cost of sales as purchase costs decline.  The same correlation would be true in the case of higher energy commodity sales prices and purchase costs.

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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 10.  Earnings Per Unit

The following table presents our calculation of basic and diluted earnings per unit for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2016
   
2015
 
BASIC EARNINGS PER UNIT
           
Net income attributable to limited partners
 
$
661.2
   
$
636.1
 
Undistributed earnings allocated and cash payments on phantom unit awards (1)
   
(3.2
)
   
(2.2
)
Net income available to common unitholders
 
$
658.0
   
$
633.9
 
 
               
Basic weighted-average number of common units outstanding
   
2,033.6
     
1,926.4
 
 
               
Basic earnings per unit
 
$
0.32
   
$
0.33
 
 
               
DILUTED EARNINGS PER UNIT
               
Net income attributable to limited partners
 
$
661.2
   
$
636.1
 
 
               
Diluted weighted-average number of units outstanding:
               
Distribution-bearing common units
   
2,033.6
     
1,926.4
 
Designated Units
   
--
     
35.4
 
Phantom units (1)
   
6.9
     
4.5
 
Incremental option units
   
--
     
0.4
 
Total
   
2,040.5
     
1,966.7
 
 
               
Diluted earnings per unit
 
$
0.32
   
$
0.32
 
   
(1)   Each phantom unit award includes a DER, which entitles the recipient to receive cash payments equal to the product of the number of phantom unit awards and the cash distribution per unit paid to our common unitholders. Cash payments made in connection with DERs are nonforfeitable. As a result, the phantom units are considered participating securities for purposes of computing basic earnings per unit.
 


Note 11.  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 compensation expense we recognized in connection with equity-based awards for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2016
   
2015
 
Equity-classified awards:
           
Phantom unit awards
 
$
19.4
   
$
17.2
 
Restricted common unit awards
   
2.2
     
6.1
 
    Profits interests awards
   
0.7
     
--
 
Liability-classified awards
   
0.1
     
0.1
 
Total
 
$
22.4
   
$
23.4
 

The fair value of equity-classified awards is amortized into earnings over the requisite service or vesting period.  Equity-classified awards are expected to result in the issuance of common units upon vesting.  Compensation expense for liability-classified awards is recognized over the requisite service or vesting period based on the fair value of the award remeasured at each reporting date.  Liability-classified awards are settled in cash upon vesting.
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ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At March 31, 2016, EPCO's significant long-term incentive plans applicable to us were the Enterprise Products 1998 Long-Term Incentive Plan ("1998 Plan") and the 2008 Enterprise Products Long-Term Incentive Plan (Third Amendment and Restatement) ("2008 Plan").  Up to 14,000,000 of our common units may be issued as awards under the 1998 Plan.  The maximum number of common units available for issuance under the 2008 Plan was 35,000,000 at March 31, 2016.  This amount will automatically increase under the terms of the 2008 Plan by 5,000,000 common units on January 1, 2017 and will continue to automatically increase annually on January 1 thereafter during the term of the 2008 Plan; provided, however, that in no event shall the maximum aggregate number exceed 70,000,000 common units.  After giving effect to awards granted under the 1998 Plan and 2008 Plan through March 31, 2016, a total of 3,245,652 and 17,981,493 additional common units were available for issuance under these plans, respectively.

In addition, in February 2016, EPCO formed three limited partnerships (generally referred to as "Employee Partnerships") to serve as incentive arrangements for key employees of EPCO by providing them a "profits interest" in an Employee Partnership.  The names of the Employee Partnerships are EPD PubCo Unit I L.P. ("EPD PubCo I"), EPD PubCo Unit II L.P. ("EPD PubCo II") and EPD PrivCo Unit I L.P. ("EPD PrivCo I").  The Employee Partnerships are discussed later in this note.

Phantom Unit Awards
Phantom unit awards allow recipients to acquire our common units (at no cost to the recipient apart from fulfilling service and other conditions) once a defined vesting period expires, subject to customary forfeiture provisions.  Phantom unit awards generally vest at a rate of 25% per year beginning one year after the grant date and are non-vested until the required service periods expire.

At March 31, 2016, substantially all of our phantom unit awards are expected to result in the issuance of common units upon vesting; therefore, the applicable awards are accounted for as equity-classified awards.  The grant date fair value of a phantom unit award is based on the market price per unit of our common units 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 phantom unit award activity for the period indicated:

 
 
Number of
Units
   
Weighted-
Average Grant
Date Fair Value
per Unit (1)
 
Phantom unit awards at December 31, 2015
   
5,426,949
   
$
33.63
 
Granted (2)
   
4,467,730
   
$
21.86
 
Vested
   
(1,586,493
)
 
$
33.56
 
Forfeited
   
(41,673
)
 
$
31.11
 
Phantom unit awards at March 31, 2016