EX-99.1 2 exhibit.htm PRO FORMA INCOME STATEMENT 2009 Q1 exhibit.htm

Unaudited Pro Forma Condensed Consolidated Financial Information

This unaudited pro forma condensed consolidated financial income satement has been prepared to reflect Regency Energy Partners LP’s (“the Partnership”) disposition of Regency Intrastate Gas LP as described in Item 1.01 of Form 8-K filed on March 18, 2009.  This disposition enabled the Partnership to form a joint venture securing financing for the Partnership’s Haynesville Expansion Project.

The Partnership applied the guidance of Statement of Financial Accounting Standard No. 141 (R), “Business Combinations.”  The pro forma adjustments were prepared applying the rules established by the Securities and Exchange Commission in Article 11 of Regulation S-X.

The income statement for the three-month period ended March 31, 2009 reflects the pro forma adjustments as though the disposition occurred on January 1, 2008.  No pro forma balance sheet is required, as the transaction is reflected on the Partnership’s balance sheet as of March 31, 2009 filed on Form 10-Q.

The historical financial information included in the column entitled “March 31, 2009” was derived from the Partnership’s financial statements included in its Form 10-Q for the three-month period ended March 31, 2009.

The historical financial information included in the columns entitled “Regency Intrastate Gas LP” was derived from unaudited financial statements for the three-month period ended March 31, 2009.  Amounts shown as reductions in this column represent the disposition of Regency Intrastate Gas LP.

The unaudited pro forma combined financial information is based on assumptions that the Partnership believes are reasonable under the circumstances and are intended for informational purposes only.  Actual results may differ from the estimates and assumptions used.  They are not necessarily indicative of the financial results that would have occurred if this disposition had taken place on the dates indicated, nor are they indicative of future consolidated results.
 
 
Pro Forma Condensed Consolidated Income Statement
  
Unaudited
  
(in thousands except unit data and per unit data)
  
                       
   
Three Months Ended March 31, 2009
  
Regency Intrastate Gas LP
  
Pro Forma Adjustments
      
Pro Forma Combined
  
                       
REVENUES
                      
Gas sales
   $ 148,270   $ (2,014 )         $ 146,256  
NGL sales
     49,585     (6 )           49,579  
Gathering, transportation and other fees, including related party amounts of $811 
     72,621     (10,267 )           62,354  
Net realized and unrealized gain (loss) from risk management activities
     14,455     -             14,455  
Other
     5,194     (42 )           5,152  
    Total revenues
     290,125     (12,329 )   -         277,796  
                               
OPERATING COSTS AND EXPENSES
                              
Cost of sales, including related party amounts of $247 
     182,901     (775 )             182,126  
Operation and maintenance
     36,042     (2,286 )             33,756  
General and administrative
     14,852     (20 )   (1,274 )
a
     13,558  
Gain on asset sales, net of transaction costs of $5,158
     (133,932 )   -     133,940  
b
     8  
Management services termination fee
     -     -               -  
Depreciation and amortization
     27,889     (2,448 )             25,441  
     Total operating costs and expenses
     127,752     (5,529 )   132,666         254,889  
                               
OPERATING INCOME
     162,373     (6,800 )   (132,666 )       22,907  
                               
Income from unconsolidated subsidiary
     336     -     1,079  
c
     1,415  
Interest expense, net
     (14,227 )   -     968  
d
     (13,259 )
Other income and deductions, net
     42     -               42  
INCOME BEFORE INCOME TAXES
     148,524     (6,800 )   (130,619 )       11,105  
Income tax expense
     100     -     -         100  
NET INCOME
   $ 148,424   $ (6,800 ) $ (130,619 )     $ 11,005  
Net income attributable to noncontrolling interest
     (35 )   -     -         (35 )
NET INCOME ATTRIBUTABLE TO REGENCY ENERGY PARTNERS LP
   $ 148,389   $ (6,800 ) $ (130,619 )     $ 10,970  
                               
General partner's interest, including IDR
     3,533                     785  
Allocation of net income to restricted units
     1,354                     90  
Beneficial conversion feature for Class D common units
     820                     820  
Limited partners' interest
   $ 142,682                   $ 9,275  
                               
Basic and Diluted earnings per unit:
                              
Amount allocated to common and subordinated units
   $ 142,682                   $ 9,275  
Weighted average number of common and subordinated units outstanding
     77,271,886                     77,271,886  
Basic income per common and subordinated unit
   $ 1.85                   $ 0.12  
Diluted income per common and subordinated unit 
   $ 1.78                   $   0.12  
Distributions per unit
   $ 0.445                   $ 0.445  
                               
Amount allocated to Class D common units
   $ 820                   $ 820  
Total number of Class D common units outstanding
     7,276,506                     7,276,506  
Income per Class D common unit due to beneficial conversion feature
   $ 0.11                   $ 0.11  
Distributions per unit
   $ -                   $ -  
                               
                               
See accompanying notes to unaudited pro forma condensed consolidated financial statements
  
 
 
Regency Energy Partners LP
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information


Pro Forma Adjustment Explanations
 
a.  
Represents the Partnership’s fee for operating the RIGS Haynesville Partnership Co. under the Master Services Agreement.
 
b.  
Represents the Partnership’s gain upon disposition of Regency Intrastate Gas LP as calculated in accordance with Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51.”
 
c.  
Represents equity income from unconsolidated subsidiary calculated as 38 percent of Regency Intrastate Gas LP net income.

d.  
Represents the interest savings from the debt repayment of $80,607,000 using a 5.69 percent annual rate for 76 days.