Williams Partners Reports Third-Quarter 2012 Financial Results

Williams Partners L.P. (NYSE: WPZ):
Summary Financial Information     3Q       YTD
Amounts in millions, except per-unit amounts. 2012     2011 2012     2011
(Unaudited)
 
Net income $ 237 $ 342 $ 778 $ 987
Net income per common L.P. unit $ 0.38 $ 0.91 $ 1.47 $ 2.63
                           
 
Distributable cash flow (DCF) (1) $ 316 $ 368 $ 1,084 $ 1,206
Cash distribution coverage ratio (1) 0.80x 1.25x 0.96x 1.41x
 

(1) Distributable Cash Flow and Cash Distribution Coverage Ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.
 

Williams Partners L.P. (NYSE: WPZ) today announced unaudited third-quarter 2012 net income of $237 million, or $0.38 per common limited-partner unit, compared with third-quarter 2011 net income of $342 million, or $0.91 per common limited-partner unit.

Year-to-date through Sept. 30, Williams Partners reported net income of $778 million, or $1.47 per common limited-partner unit, compared with $987 million, or $2.63 per common limited-partner unit, for the first nine months of 2011.

The decline in net income during the third quarter and year-to-date 2012 periods is due to a significant decline in natural gas liquid (NGL) margins, primarily driven by a sharp decline in NGL prices in the second quarter of 2012, which led to lower results in the partnership’s midstream business. Other factors, including higher expenses associated with developing businesses acquired earlier this year, also contributed to the lower results in 2012. An increase in fee-based revenue, including a third-quarter 2012 increase of 12 percent in the partnership’s midstream business, partially offset the negative impacts of lower NGL prices and other factors.

There is a more detailed analysis of the partnership’s businesses later in this news release.

3Q Distributable Cash Flow

For third-quarter 2012, Williams Partners generated $316 million in distributable cash flow, compared with $368 million in third-quarter 2011. For the first nine months of 2012, Williams Partners generated $1.08 billion in distributable cash flow, compared with $1.21 billion for the first nine months of 2011.

The previously noted significant decline in NGL margins was the key driver of the decline in distributable cash flow. Higher fee-based revenue in the midstream business partially offset the lower NGL margins. Although third-quarter 2012 distributable cash flow declined compared with third-quarter 2011, it increased 8 percent sequentially compared with the second-quarter 2012 amount of $293 million.

Williams Partners recently announced that it increased its quarterly cash distribution to unitholders to $0.8075 per unit, an 8 percent increase over the year-ago amount. As planned, the partnership’s previously strong cash distribution coverage enabled it to continue its cash distribution growth during a period of significantly unfavorable commodity prices. Also, the partnership has issued a significant amount of equity this year to finance numerous projects that are in the early stages of development.

Gulf Olefins Acquisition Expected to Shift Commodity Exposure to Ethylene, Drive More Certainty in Cash Flows

In a separate announcement today, Williams Partners and Williams announced an agreement for Williams Partners to acquire Williams’ 83.3-percent interest in the Geismar olefins production facility, as well as Williams’ refinery-grade propylene splitter and pipelines in the Gulf region, for approximately $2.36 billion. Williams Partners plans to fund the acquisition with the issuance to Williams of 42.8 million WPZ limited-partner units, $25 million in cash, and an increase to the general partner’s capital account to maintain Williams’ 2-percent general-partner interest.

The partnership expects the addition of olefins production to its business would bring more certainty to cash flows that today are exposed to the market for ethane, which is projected to experience periods of volatility as feedstock demand lags new supplies from shale-gas production. Low-cost, light-NGL feedstock demand is expected to remain strong, given its economic advantage over higher-cost crude-oil based feedstock. Williams Partners will be responsible for the completion of the ongoing expansion of the Geismar facility. The partnership’s overall undivided ownership interest in Geismar following the ongoing expansion will be approximately 88 percent.

Please see the separate news release for more details on the acquisition.

CEO Perspective

Alan Armstrong, chief executive officer of Williams Partners’ general partner, made the following comments:

“In the third quarter, fee-based revenue in our midstream business grew 12 percent, but that growth was offset by unfavorable commodity prices and downtime in the Gulf related to Hurricane Isaac.

“The acquisition of Williams’ Gulf Olefins assets, which was announced today, should provide the partnership with some significant benefits. It will add additional scale to the business, providing greater earnings and cash flow; but more importantly, it will provide a natural hedge by neutralizing our exposure to the over-supplied ethane markets.

“We’ve updated our guidance to reflect the Gulf Olefins acquisition, as well as a near-term lowering of our gathering volume growth rate. However, our long-term focus hasn’t changed – we continue to be bullish on long-term natural gas demand growth, and we have visibility to a diverse set of attractive infrastructure projects.”

Guidance Updated to Reflect Geismar Drop-Down, Lower Expected Growth Rate in Gathered Volumes; Strong Distribution Guidance Unchanged

Williams Partners is updating its 2012-14 earnings, distributable cash flow and capital expenditure guidance to reflect the acquisition of the Geismar and Gulf Olefins assets, as well as lower expected overall rate of growth in gathering volumes.

Williams Partners’ previous guidance on cash distributions to its unitholders is unchanged. The partnership continues to expect to pay unitholders a full-year 2012 distribution of $3.14 per unit at guidance midpoint, an 8 percent increase over 2011. As well, the partnership confirmed it expects the midpoint of guidance for the full-year distribution it pays unitholders in each 2013 and 2014 to increase by 9 percent – to $3.43 and $3.75, respectively.

The partnership’s current commodity price assumptions and the corresponding guidance for its earnings, distributable cash flow and capital expenditures are displayed in the following table:
       
Commodity Price Assumptions and Average NGL Margins     2012     2013     2014  

As of Oct. 31, 2012
           
Low   Mid   High   Low   Mid   High   Low   Mid   High
Commodity Price Assumptions
Ethane ($ per gallon) $ 0.41 $ 0.44 $ 0.46 $ 0.45 $ 0.55 $ 0.65 $ 0.45 $ 0.55 $ 0.65
Propane ($ per gallon) $ 0.97 $ 1.04 $ 1.10 $ 1.05 $ 1.25 $ 1.45 $ 1.05 $ 1.25 $ 1.45
Natural Gas - NYMEX ($/MMBtu) $ 2.50 $ 2.50 $ 2.50 $ 2.75 $ 3.25 $ 3.75 $ 3.25 $ 3.75 $ 4.25
Ethylene Spot ($ per gallon) $ 0.53 $ 0.56 $ 0.58 $ 0.40 $ 0.50 $ 0.59 $ 0.53 $ 0.63 $ 0.73
Crude Oil - WTI ($ per barrel) $ 88 $ 93 $ 98 $ 70 $ 85 $ 100 $ 70 $ 85 $ 100
 
Crude to Gas Ratio 35.2x 37.2x 39.2x 25.5x 26.1x 26.7x 21.5x 22.5x 23.5x
NGL to Crude Oil Relationship (1) 41% 41% 41% 54% 52% 49% 54% 52% 49%
 
Average NGL Margins ($ per gallon) $ 0.64 $ 0.67 $ 0.69 $ 0.64 $ 0.71 $ 0.78 $ 0.54 $ 0.63 $ 0.71
Composite Frac Spread ($ per gallon) (2) $ 0.65 $ 0.70 $ 0.74 $ 0.68 $ 0.78 $ 0.87 $ 0.63 $ 0.73 $ 0.83
 
Williams Partners Guidance                                      
Amounts are in millions except coverage ratio.
Low   Mid   High   Low   Mid   High   Low   Mid   High
DCF attributable to partnership ops. (3) $ 1,460 $ 1,500 $ 1,540 $ 1,925 $ 2,075 $ 2,225 $ 2,525 $ 2,700 $ 2,875
 
Total Cash Distribution (4) $ 1,570 $ 1,586 $ 1,601 $ 1,981 $ 2,032 $ 2,082 $ 2,304 $ 2,407 $ 2,509
 
Cash Distribution Coverage Ratio (3) 0.93x 0.95x 0.96x 0.97x 1.02x 1.07x 1.10x 1.12x 1.15x
 
Adjusted Segment Profit (3):
Gas Pipeline $ 680 $ 700 $ 720 $ 725 $ 750 $ 775 $ 775 $ 800 $ 825
Midstream   975       1,025       1,075       1,225       1,400       1,575       1,800       2,000       2,200  
Total Adjusted Segment Profit $ 1,655 $ 1,725 $ 1,795 $ 1,950 $ 2,150 $ 2,350 $ 2,575 $ 2,800 $ 3,025
 
Adjusted Segment Profit + DD&A:
Gas Pipeline $ 1,040 $ 1,070 $ 1,100 $ 1,095 $ 1,130 $ 1,165 $ 1,165 $ 1,200 $ 1,235
Midstream   1,305       1,365       1,425       1,625       1,810       1,995       2,295       2,505       2,715  
Total Adjusted Segment Profit + DD&A $ 2,345 $ 2,435 $ 2,525 $ 2,720 $ 2,940 $ 3,160 $ 3,460 $ 3,705 $ 3,950
 
Capital Expenditures:
Maintenance $ 425 $ 460 $ 495 $ 335 $ 370 $ 405 $ 380 $ 415 $ 450
Growth   7,604       7,707       7,809       2,690       2,855       3,020       1,320       1,485       1,650  
Total Capital Expenditures $ 8,029 $ 8,167 $ 8,304 $ 3,025 $ 3,225 $ 3,425 $ 1,700 $ 1,900 $ 2,100
 
(1) This is calculated as the price of natural gas liquids as a percentage of the price of crude oil on an equal volume basis.
(2) Composite frac spread is based on Henry Hub natural gas and Mont Belvieu NGLs.

(3) Distributable Cash Flow, Cash Distribution Coverage Ratio and Adjusted Segment Profit are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

(4) The cash distributions in guidance are on an accrual basis and reflect an approximate 8% (low), 9% (midpoint), and 10% (high) increase in quarterly limited partner cash distributions annually through 2014.
 

Business Segment Performance

Williams Partners’ operations are reported through two business segments, Gas Pipeline and Midstream Gas & Liquids.
Consolidated Segment Profit   3Q   YTD
Amounts in millions 2012   2011 2012   2011
 
Gas Pipeline $ 155 $ 170 $ 482 $ 497
Midstream Gas & Liquids   218   301   718   882
Total Segment Profit $ 373 $ 471 $ 1,200 $ 1,379
 
Adjustments   11   6   25   9
 
Adjusted Segment Profit* $ 384 $ 477 $ 1,225 $ 1,388
 
* A schedule reconciling segment profit to adjusted segment profit is attached to this press release.
 
             
Key Operational Metrics 2011 2012

1Q
 

2Q
 

3Q
 

4Q

1Q
 

2Q
 

3Q
3Q Change
Fee-based Revenues (millions) Year-over-year Sequential
Gas Pipeline $ 361 $ 359 $ 368 $ 384 $ 384 $ 366 $ 372 1.1 % 1.6 %
Midstream Gas & Liquids   217     230     249     248   258     274     278   11.6 %   1.5 %
Total $ 578 $ 589 $ 617 $ 632 $ 642 $ 640 $ 650 5.3 % 1.6 %
 
NGL Margins
NGL margins (millions) $ 207 $ 253 $ 234 $ 287 $ 242 $ 189 $ 167 -28.6 % -11.6 %
NGL equity volumes (gallons in millions) 289 308 274 317 308 295 301 9.9 % 2.0 %
Per-unit NGL margins ($/gallon) $ 0.71 $ 0.83 $ 0.85 $ 0.91 $ 0.79 $ 0.64 $ 0.55 -35.3 % -14.1 %
 

Gas Pipeline

Williams Partners owns two major interstate natural gas pipeline systems – Transco and Northwest Pipeline – and owns 50 percent of Gulfstream. These systems have a combined peak day delivery capacity of more than 14 billion cubic feet per day (Bcf/d), and transport approximately 14 percent of the natural gas consumed in the United States.

Gas Pipeline reported segment profit of $155 million for third-quarter 2012, compared with $170 million for third-quarter 2011. The decline in the third quarter segment profit was primarily due to an increase in certain costs, including pipeline maintenance, employee-related, and selling, general and administrative expenses.

For the first nine months of 2012, Gas Pipeline reported segment profit of $482 million, compared with $497 million for the same time period in 2011. The previously noted higher costs, plus higher project feasibility costs were the primary drivers of the decline in segment profit in the year-to-date period. Increased transportation revenue associated with expansion projects and higher equity earnings from an increased interest in Gulfstream partially offset the negative impacts in the year-to-date period.

Midstream Gas & Liquids

Midstream provides natural gas gathering, treating, and processing; deepwater production handling and oil transportation; and NGL fractionation, storage and transportation services.

The business reported segment profit of $218 million for third-quarter 2012, compared with segment profit of $301 million for third-quarter 2011.

Significantly lower NGL prices, partially offset by lower natural gas prices, was the primary driver of the lower segment profit in the third quarter. Higher operating costs and selling, general and administrative (SG&A) expenses, both partially attributable to developing businesses acquired earlier this year, also contributed to the lower segment profit in the third quarter.

A 12-percent increase in fee-based revenues partially offset the negative impacts described above. The increase in fee-based revenues was primarily due to higher volumes in the Marcellus Shale area including new volumes on the recently acquired Ohio Valley Midstream system and Susquehanna Supply Hub gathering assets, partially offset by unfavorable impacts related to Hurricane Isaac in the eastern Gulf of Mexico.

For the first nine months of 2012, Midstream reported segment profit of $718 million, compared with $882 million for the first nine months of 2011. The previously mentioned lower NGL prices, partially offset by lower natural gas prices, as well as lower marketing margins driven by a significant and rapid decline in NGL prices during the second quarter of 2012, were the primary drivers of the lower segment profit in the first nine months of 2012. The year-to-date period also was impacted by the previously noted higher operating and SG&A expenses.

An increase in fee-based revenues partially offset these factors in the first nine months of the year. The increase in fee revenues is primarily due to higher volumes in the Marcellus Shale, including new volumes on the recently acquired gathering and processing assets in our Ohio Valley Midstream and Susquehanna Supply Hub businesses; higher volumes in the western deepwater Gulf of Mexico, including higher volumes on the Perdido Norte natural gas and oil pipelines; and higher volumes in the Piceance Basin.

Third-Quarter Materials to be Posted Shortly, Q&A Webcast Scheduled for Tomorrow

Williams Partners’ third-quarter 2012 financial results package will be posted shortly at www.williamslp.com. The package will include the data book and analyst package, and the investor presentation with a recorded commentary from Alan Armstrong, CEO of Williams Partners’ general partner.

The partnership will host the third-quarter Q&A live webcast on Thursday, Nov. 1 at 11 a.m. EDT. A link to the live webcast, as well as replays of the third-quarter webcast in both streaming and downloadable podcast formats following the event, will be available at www.williamslp.com. A limited number of phone lines will be available at (800) 768-6569. International callers should dial (785) 830-7992.

Definitions of Non-GAAP Financial Measures

This press release includes certain financial measures – distributable cash flow, cash distribution coverage ratio, and adjusted segment profit – that are non-GAAP financial measures as defined under the rules of the SEC.

For Williams Partners L.P., adjusted segment profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes adjusted segment profit provides investors meaningful insight into Williams Partners L.P.'s results from ongoing operations.

For Williams Partners L.P. we define distributable cash flow as net income plus depreciation and amortization and cash distributions from our equity investments less our earnings from our equity investments, distributions to noncontrolling interests and maintenance capital expenditures. We also adjust for payments and/or reimbursements under omnibus agreements with Williams and certain other items.

For Williams Partners L.P. we also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income.

This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the Partnership's assets and the cash that the business is generating. Neither adjusted segment profit nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

About Williams Partners L.P. (NYSE: WPZ)

Williams Partners L.P. is a leading diversified master limited partnership focused on natural gas transportation; gathering, treating, and processing; storage; natural gas liquid (NGL) fractionation; and oil transportation. The partnership owns interests in three major interstate natural gas pipelines that, combined, deliver 14 percent of the natural gas consumed in the United States. The partnership’s gathering and processing assets include large-scale operations in the U.S. Rocky Mountains and both onshore and offshore along the Gulf of Mexico. Williams (NYSE: WMB) owns approximately 66 percent of Williams Partners, including the general-partner interest. More information is available at www.williamslp.com, where the partnership routinely posts important information.

Williams Partners L.P. is a limited partnership formed by The Williams Companies, Inc. (Williams). Our reports, filings, and other public announcements may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You typically can identify forward-looking statements by various forms of words such as "anticipates," "believes," "seeks," "could," "may," "should," "continues," "estimates," "expects," “assumes,” "forecasts," "intends," "might," "goals," "objectives," "targets," "planned," "potential," "projects," "scheduled," "will," “guidance,” “outlook,” “in service date,” or other similar expressions. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management and include, among others, statements regarding:
  • Amounts and nature of future capital expenditures;
  • Expansion and growth of our business and operations;
  • Financial condition and liquidity;
  • Business strategy;
  • Cash flow from operations or results of operations;
  • The levels of cash distributions to unitholders;
  • Seasonality of certain business components; and
  • Natural gas, natural gas liquids, and crude oil prices and demand.

Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this announcement. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:
  • Whether we have sufficient cash from operations to enable us to pay current and expected levels of cash distributions following establishment of cash reserves and payment of fees and expenses, including payments to our general partner;
  • Availability of supplies, market demand, volatility of prices, and the availability and cost of capital;
  • Inflation, interest rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers);
  • The strength and financial resources of our competitors;
  • Ability to acquire new businesses and assets and integrate those operations and assets into our existing businesses, as well as expand our facilities;
  • Development of alternative energy sources;
  • The impact of operational and development hazards;
  • Costs of, changes in, or the results of laws, government regulations (including safety and climate change regulation and changes in natural gas production from exploration and production areas that we serve), environmental liabilities, litigation and rate proceedings;
  • Our allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates;
  • Changes in maintenance and construction costs;
  • Changes in the current geopolitical situation;
  • Our exposure to the credit risk of our customers and counterparties;
  • Risks related to strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit;
  • Risks associated with future weather conditions;
  • Acts of terrorism, including cybersecurity threats and related disruptions; and
  • Additional risks described in our filings with the Securities and Exchange Commission (SEC).

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or to announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this announcement. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. Investors are urged to closely consider the disclosures and risk factors in our annual report on Form 10-K filed with the SEC on February 28, 2012, and our quarterly reports on Form 10-Q available from our offices or from our website.
   
Reconciliation of Non-GAAP Measures

(UNAUDITED)
                   
 
2011 2012
(Dollars in millions, except coverage ratios)     1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year 1st Qtr   2nd Qtr   3rd Qtr   Year
                                           
Williams Partners L.P.
Reconciliation of Non-GAAP "Distributable cash flow" to GAAP "Net income"
 
Net income $ 307 $ 338 $ 342 $ 391 $ 1,378 $ 348 $ 193 $ 237 $ 778
Depreciation and amortization 150 154 155 152 611 156 168 179 503
 
Non-cash amortization of debt issuance costs included in interest expense 5 5 3 4 17 4 3 4 11
Equity earnings from investments (25 ) (36 ) (40 ) (41 ) (142 ) (30 ) (27 ) (30 ) (87 )
Gain on sale of assets - - - - - - (6 ) - (6 )
Acquisition and transition-related costs - - - - - - 19 4 23
Allocated reorganization-related costs - - - - - - 7 6 13
Impairment of certain gathering assets - - - - - - - 6 6
Net reimbursements from Williams under omnibus agreements 8 2 6 15 31 6 1 4 11
Maintenance capital expenditures   (34 )     (106 )     (148 )     (126 )     (414 )   (61 )     (111 )     (128 )     (300 )
 
Distributable cash flow excluding equity investments 411 357 318 395 1,481 423 247 282 952
Plus: Equity investments cash distributions to Williams Partners L.P.   30       40       50       49       169     52       46       34       132  
 
Distributable cash flow $ 441     $ 397     $ 368     $ 444     $ 1,650   $ 475     $ 293     $ 316     $ 1,084  
 
 
Total cash distributed: $ 276 $ 286 $ 294 $ 311 $ 1,167 $ 362 $ 373 $ 394 $ 1,129
 
Coverage ratios:
Distributable cash flow divided by Total cash distributed   1.60       1.39       1.25       1.43       1.41     1.31       0.79       0.80       0.96  
 
Net income divided by Total cash distributed   1.11       1.18       1.16       1.26       1.18     0.96       0.52       0.60       0.69  
 
 
Reconciliation of GAAP "Segment Profit" to Non-GAAP "Adjusted Segment Profit"
(UNAUDITED)                        
   
2011 2012
(Dollars in millions)     1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year 1st Qtr   2nd Qtr   3rd Qtr   Year
                                         
 
Gas Pipeline $ 175 $ 152 $ 170 $ 176 $ 673 $ 180 $ 147 $ 155 $ 482
Midstream Gas & Liquids 262 319 301 341 1,223 308 192 218 718
                               
Segment Profit $ 437     $ 471   $ 471   $ 517   $ 1,896   $ 488   $ 339     $ 373   $ 1,200  
 
Adjustments:
 

Gas Pipeline
Loss related to Eminence storage facility leak 4 3 6 2 15 1 - 1 2
Gain on sale of base gas from Hester storage field   (4 )     -     -     -     (4 )   -     -       -     -  
Total Gas Pipeline adjustments - 3 6 2 11 1 - 1 2

Midstream Gas & Liquids
Acquisition and transition-related costs - - - - - - 19 4 23
Gain on sale of certain assets - - - - - - (6 ) - (6 )
Impairment of certain assets   -       -     -     -     -     -     -       6     6  
Total Midstream Gas & Liquids adjustments - - - - - - 13 10 23
 
Total adjustments included in segment profit - 3 6 2 11 1 13 11 25
                               
Adjusted segment profit $ 437     $ 474   $ 477   $ 519   $ 1,907   $ 489   $ 352     $ 384   $ 1,225  
 
                       

Williams Partners L.P. 2012 Forecast Guidance— Reported to Adjusted
     
 
2012 Guidance 2013 Guidance 2014 Guidance
(Dollars in millions, except coverage ratios) Low   Midpoint   High Low   Midpoint   High Low   Midpoint   High
                                                 
Reconciliation of Non-GAAP "Distributable Cash Flow" to GAAP "Net income"
 
Net income $ 1,080 $ 1,130 $ 1,180 $ 1,440 $ 1,605 $ 1,770 $ 1,950 $ 2,140 $ 2,330
Depreciation and amortization 690 710 730 770 790 810 885 905 925
Maintenance capital expenditures (425 ) (460 ) (495 ) (335 ) (370 ) (405 ) (380 ) (415 ) (450 )
Gain on sale of assets (6 ) (6 ) (6 ) - - - - - -
Impairment of certain assets 6 6 6 - - - - - -
Acquisition and transition-related costs 23 23 23 - - - - - -
Allocated reorganization-related costs 13 13 13 - - - - - -
Other / Rounding   79       84       89     50       50       50     70       70       70  
 
Distributable cash flow $ 1,460     $ 1,500     $ 1,540   $ 1,925     $ 2,075     $ 2,225   $ 2,525     $ 2,700     $ 2,875  
 
Total cash to be distributed * $ 1,570 $ 1,586 $ 1,601 $ 1,981 $ 2,032 $ 2,082 $ 2,304 $ 2,407 $ 2,509
 
Coverage ratios:
 
Distributable cash flow divided by Total cash to be distributed*   0.93       0.95       0.96     0.97       1.02       1.07     1.10       1.12       1.15  
 
Net income divided by Total cash to be distributed *   0.69       0.71       0.74     0.73       0.79       0.85     0.85       0.89       0.93  
 
 
* Distributions paid in 2012 reflect quarterly increases of $0.01 in the low case, $0.015 in the midpoint case and $0.02 in the high case. In 2013 and 2014, distributions paid reflect quarterly increases of $0.015 in the low case, $0.02 in the midpoint case, and $0.025 in the high case. Distributions are paid in the quarter following the period in which they are earned. Cash distributions earned in 4Q 2012 reflect the $0.02 (midpoint) increase paid in 1Q 2013.
 
Reconciliation of Non-GAAP "Adjusted Segment Profit" to GAAP "Segment Profit"
 
Segment Profit:
Midstream $ 952 $ 1,002 $ 1,052 $ 1,225 $ 1,400 $ 1,575 $ 1,800 $ 2,000 $ 2,200
Gas Pipeline   678       698       718     725       750       775     775       800       825  
Total Segment Profit 1,630 1,700 1,770 1,950 2,150 2,350 2,575 2,800 3,025
Adjustments:
Midstream - Acquisition and transition-related costs 23 23 23 - - - - - -
Midstream - Gain on sale of certain assets (6 ) (6 ) (6 ) - - - - - -
Midstream - Impairment of certain assets 6 6 6 - - - - - -
Gas Pipeline - Loss related to Eminence storage facility leak   2       2       2     -       -       -     -       -       -  
Adjusted segment profit $ 1,655     $ 1,725     $ 1,795   $ 1,950     $ 2,150     $ 2,350   $ 2,575     $ 2,800     $ 3,025  
 
  Note: Amounts reflect acquisition of Geismar in November 2012.                                

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