<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-12872
EOTT ENERGY PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
Delaware 76-0424520
---------------------------------------- -------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1330 Post Oak Boulevard
Suite 2700
Houston, Texas 77056
---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(713) 993-5200
----------------------------------
(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 X No
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EOTT ENERGY PARTNERS, L.P.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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PART I. FINANCIAL INFORMATION
<S> <C>
ITEM 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited) -
Three Months Ended June 30, 2000 and 1999 and Six Months
Ended June 30, 2000 and 1999.......................................................................3
Condensed Consolidated Balance Sheets (Unaudited) -
June 30, 2000 and December 31, 1999................................................................4
Condensed Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended June 30, 2000 and 1999............................................................5
Condensed Consolidated Statement of Partners' Capital (Unaudited) -
Six Months Ended June 30, 2000.....................................................................6
Notes to Condensed Consolidated Financial Statements..................................................7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................................................12
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.....................................19
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings..............................................................................20
ITEM 6. Exhibits and Reports on Form 8-K...............................................................20
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EOTT ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ---------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue............................................ $ 2,514,934 $ 2,259,303 $ 5,196,630 $ 3,692,460
Cost of Sales...................................... 2,452,335 2,203,606 5,077,567 3,583,967
------------- ------------- ------------- -----------
Gross Margin....................................... 62,599 55,697 119,063 108,493
Expenses
Operating expenses.............................. 41,167 38,632 78,667 74,815
Depreciation and amortization................... 8,467 8,350 16,859 16,490
------------- ------------- ------------- -----------
Total......................................... 49,634 46,982 95,526 91,305
------------- ------------- ------------- -----------
Operating Income................................... 12,965 8,715 23,537 17,188
Other Income (Expense)
Interest income................................. 444 145 622 320
Interest and related charges.................... (7,693) (7,318) (15,342) (13,820)
Other, net...................................... (828) 640 (1,708) 1,028
-------------- ------------- -------------- -----------
Total......................................... (8,077) (6,533) (16,428) (12,472)
-------------- ------------- -------------- -----------
Net Income Before Cumulative
Effect of Accounting Change..................... 4,888 2,182 7,109 4,716
Cumulative Effect of Accounting Change............. - - - 1,747
------------- ------------- ------------- -----------
Net Income......................................... $ 4,888 $ 2,182 $ 7,109 $ 6,463
============= ============= ============= ===========
Basic Net Income Per Unit
Common.......................................... $ 0.17 $ 0.09 $ 0.25 $ 0.24
============= ============ ============= ===========
Subordinated.................................... $ 0.17 $ 0.09 $ 0.25 $ 0.31
============= ============ ============= ===========
Diluted Net Income Per Unit........................ $ 0.17 $ 0.09 $ 0.25 $ 0.26
============= ============ ============= ===========
Number of Units Outstanding
for Diluted Computation ........................ 27,476 23,976 27,476 23,976
============= ============= ============= ===========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE> 4
EOTT ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------- ---------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents....................................................... $ 8,786 $ 17,525
Trade and other receivables, net of allowance for doubtful
accounts of $1,732 and $1,732 respectively................................... 909,184 966,422
Inventories..................................................................... 83,615 120,306
Other .......................................................................... 16,812 29,191
------------- --------------
Total current assets......................................................... 1,018,397 1,133,444
------------- --------------
Property, Plant & Equipment, at cost................................................ 547,474 544,723
Less: Accumulated depreciation.................................................. 154,012 140,228
------------- --------------
Net property, plant & equipment.............................................. 393,462 404,495
------------- --------------
Other Assets, net of amortization................................................... 17,045 20,722
------------- --------------
Total Assets........................................................................ $ 1,428,904 $ 1,558,661
============= ==============
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Trade accounts payable ......................................................... $ 1,006,756 $ 1,103,187
Accrued taxes payable........................................................... 11,373 11,947
Repurchase agreements........................................................... 52,704 74,055
Other........................................................................... 4,236 8,333
------------- --------------
Total current liabilities.................................................... 1,075,069 1,197,522
------------- --------------
Long-Term Liabilities
11% Senior notes................................................................ 235,000 235,000
Other........................................................................... 132 3,475
------------- --------------
Total long-term liabilities.................................................. 235,132 238,475
------------- --------------
Commitments and Contingencies (Note 3)
Additional Partnership Interests.................................................... 9,318 2,547
------------- --------------
Partners' Capital
Common Unitholders.............................................................. 60,702 73,570
Subordinated Unitholders........................................................ 41,137 38,855
General Partner................................................................. 7,546 7,692
------------- --------------
Total Partners' Capital...................................................... 109,385 120,117
------------- --------------
Total Liabilities and Partners' Capital............................................. $ 1,428,904 $ 1,558,661
============= ==============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE> 5
EOTT ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
2000 1999
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Reconciliation of net income to net cash
provided by operating activities -
Net income...................................................................... $ 7,109 $ 6,463
Depreciation.................................................................... 16,331 15,456
Amortization of intangible assets............................................... 528 1,034
Gains on disposal of assets..................................................... (207) (436)
Changes in components of working capital -
Receivables.................................................................. 57,238 (246,489)
Inventories.................................................................. 36,691 34,965
Other current assets......................................................... 12,379 (32,509)
Trade accounts payable....................................................... (96,431) 243,520
Accrued taxes payable........................................................ (574) 3,569
Other current liabilities.................................................... (4,097) 527
Other assets and liabilities.................................................... 718 52
------------- --------------
Net Cash Provided By Operating Activities........................................... 29,685 26,152
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment............................. 527 548
Acquisitions.................................................................... - (33,000)
Additions to property, plant and equipment...................................... (6,559) (10,064)
Other, net...................................................................... 29 -
------------- ------------
Net Cash Used In Investing Activities............................................... (6,003) (42,516)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings - affiliate................................... - 21,903
Increase (decrease) in repurchase agreements.................................... (21,351) 6,982
Distributions to Unitholders.................................................... (17,841) (14,168)
Issuance of Additional Partnership Interests.................................... 6,771 2,547
Other, net...................................................................... - (281)
------------- --------------
Net Cash Provided By (Used In) Financing Activities................................. (32,421) 16,983
------------- --------------
Increase (Decrease) In Cash and Cash Equivalents.................................... (8,739) 619
Cash and Cash Equivalents, Beginning of Period...................................... 17,525 3,033
------------- --------------
Cash and Cash Equivalents, End of Period............................................ $ 8,786 $ 3,652
============= ==============
Supplemental Cash Flow Information:
Interest paid .................................................................. $ 14,977 $ 13,464
============= ==============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE> 6
EOTT ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(IN THOUSANDS)
(UNAUDITED)
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<CAPTION>
COMMON SUBORDINATED GENERAL
UNITHOLDERS UNITHOLDERS PARTNER
----------- -------------- -------------
<S> <C> <C> <C>
Partners' Capital at December 31, 1999................. $ 73,570 $ 38,855 $ 7,692
Net income............................................. 4,685 2,282 142
Cash distributions..................................... (17,553) - (288)
------------- ------------- -------------
Partners' Capital at June 30, 2000..................... $ 60,702 $ 41,137 $ 7,546
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
6
<PAGE> 7
EOTT ENERGY PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In connection with a reorganization of the business conducted by EOTT
Energy Corp., an indirect wholly-owned subsidiary of Enron Corp. ("Enron"), into
limited partnership form and a concurrent initial public offering of Common
Units of EOTT Energy Partners, L.P. ("EOTT" or the "Partnership") effective
March 24, 1994, the net assets of EOTT Energy Corp., its wholly-owned foreign
subsidiary, EOTT Energy Ltd., and Enron Products Marketing Company ("EPMC") were
acquired by three operating limited partnerships in which the Partnership is
directly or indirectly the 99% limited partner. EOTT Energy Corp., a Delaware
corporation, serves as the General Partner of the Partnership and its related
operating limited partnerships. The accompanying condensed consolidated
financial statements and related notes present the financial position as of June
30, 2000 and December 31, 1999 for the Partnership, the results of operations
for the three and six months ended June 30, 2000 and 1999, cash flows for the
six months ended June 30, 2000 and 1999, and changes in partners' capital for
the six months ended June 30, 2000. For the three and six months ended June 30,
2000 and 1999, traditional net income (loss) and comprehensive income (loss) are
the same.
On March 24, 1994, the General Partner completed an initial public offering
of 10 million Common Units at $20.00 per unit, representing limited partner
interests in the Partnership. In addition to its aggregate approximate 2%
general partner interest in the Partnership, the General Partner owns an
approximate 25% subordinated limited partner interest. Enron, through its
ownership of EOTT Common Units, directly holds an approximate 12% interest in
the Partnership.
The financial statements included herein have been prepared by the
Partnership without audit pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). Accordingly, they reflect all
adjustments (which consist solely of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the financial
results for interim periods. Certain information and notes normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. However, the Partnership believes that the disclosures are adequate
to make the information presented not misleading. These financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1999 filed with the SEC.
During the first quarter of 2000, the Partnership identified certain
systems integration issues relating to its new computerized marketing and
accounting system and the Partnership immediately commenced an extensive review
and analysis of the implementation of the new system. As a result of these
efforts, the Partnership identified and quantified the impacts of the systems
integration issues relating to its new computerized marketing and accounting
system and recorded appropriate financial statement adjustments in the first
quarter of 2000. The Partnership has implemented and continues to implement
additional control processes and procedures that it believes are sufficient to
permit the preparation of timely and accurate financial information, including
additional preventative and monitoring controls to ensure the integrity and
reliability of financial information generated by the system as well as
additional system training for users.
Certain reclassifications have been made to prior period amounts to conform
with the current period presentation.
7
<PAGE> 8
EOTT ENERGY PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. EARNINGS PER UNIT
Net income shown in the tables below excludes the approximate two percent
interest of the General Partner. Earnings per unit are calculated as follows (in
thousands, except per unit amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------------------------------------------------------------
2000 1999
-------------------------------------- --------------------------------------
Wtd. Wtd.
Net Average Per Net Average Per
Income Units Unit Income Units Unit
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic (1)
Common $ 3,221 18,476 $ 0.17 $ 1,336 14,976 $ 0.09
Subordinated $ 1,569 9,000 $ 0.17 $ 803 9,000 $ 0.09
Diluted (2) $ 4,790 27,476 $ 0.17 $ 2,139 23,976 $ 0.09
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------------------------------
2000 1999
-------------------------------------- --------------------------------------
Wtd. Wtd.
Net Average Per Net Average Per
Income Units Unit Income Units Unit
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic (1)
Common $ 4,685 18,476 $ 0.25 $ 3,565 14,976 $ 0.24
Subordinated $ 2,282 9,000 $ 0.25 $ 2,749 9,000 $ 0.31
Diluted (2) $ 6,967 27,476 $ 0.25 $ 6,314 23,976 $ 0.26
</TABLE>
(1) Net income, excluding the two percent General Partner interest, has
been apportioned to each class of Unitholder based on the ownership of
total Units outstanding which is also reflected on the Statement of
Partners' Capital, and Special Units are considered Common Units
during the periods in which they were outstanding. Due to a negative
capital account balance for the Common Unitholders during the second
and third quarters of 1998, the loss allocated to the Common
Unitholders attributable to these periods was reallocated to the
remaining Unitholders based on their ownership percentage. The
allocated loss was fully recouped by the Unitholders allocated the
additional losses in the first quarter of 1999.
(2) The diluted income (loss) per unit calculation assumes the conversion
of Subordinated Units into Common Units. The disproportionate income
(loss) allocation between the Unitholders has no effect on the diluted
computation.
EOTT issued 3,500,000 Common Units to the public on September 29, 1999.
Per unit information related to the net income before cumulative effect of
accounting change and cumulative effect of the change in accounting principle
for the six months ended June 30, 1999 is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999
------------------------------------------------
Basic
------------------------------
Common Subordinated Diluted
------------- ------------ -------------
<S> <C> <C> <C>
Net Income Before Cumulative Effect
of Accounting Change............................ $ 0.17 $ 0.24 $ 0.19
Cumulative Effect of Accounting Change............. 0.07 0.07 0.07
------------- ------------- -------------
Net Income......................................... $ 0.24 $ 0.31 $ 0.26
============= ============= =============
</TABLE>
8
<PAGE> 9
EOTT ENERGY PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. LITIGATION AND OTHER CONTINGENCIES
EOTT is, in the ordinary course of business, a defendant in various
lawsuits, some of which are covered in whole or in part by insurance. The
Partnership is responsible for all litigation and other claims relating to the
business acquired from EOTT Energy Corp., although the Partnership will be
entitled to the benefit of certain insurance maintained by Enron covering
occurrences prior to the closing of the offering. The Partnership believes that
the ultimate resolution of litigation, individually and in the aggregate, will
not have a materially adverse impact on the Partnership's financial position or
results of operations. Various legal actions have arisen in the ordinary course
of business, the most significant of which are discussed in "Part I, Item 3.
Legal Proceedings" of EOTT's Annual Report filed on Form 10-K for the year ended
December 31, 1999.
The Partnership believes that it has obtained or has applied for all of the
necessary permits required by federal, state, and local environmental agencies
for the operation of its business. Further, the Partnership believes that there
are no outstanding liabilities or claims relating to environmental matters
individually, and in the aggregate, which would have a material adverse impact
on the Partnership's financial position or results of operations.
4. NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement and requires
that a company must formally document, designate, and assess the effectiveness
of transactions that receive hedge accounting. SFAS No. 133, as amended, is
effective for fiscal years beginning after June 15, 2000. The standard cannot be
applied retroactively, but early adoption is permitted. EOTT has not yet
determined the impact of adopting SFAS No. 133; however, this standard could
increase volatility in earnings and partners' capital, through other
comprehensive income.
5. BUSINESS SEGMENT INFORMATION
EOTT has three reportable segments, which management believes are necessary
to make decisions about resources to be allocated and assess its performance:
North American Crude Oil - East of Rockies, Pipeline Operations and West Coast
Operations. The North American Crude Oil - East of Rockies segment primarily
purchases, gathers, transports and markets crude oil. The Pipeline Operations
segment operates approximately 7,400 active miles of common carrier pipelines in
12 states. The West Coast Operations include crude oil gathering and marketing,
refined products marketing and a natural gas liquids business.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies as discussed in Note 2 included
in the Partnership's Annual Report on Form 10-K for the year ended December 31,
1999. EOTT evaluates performance based on operating income (loss). EOTT accounts
for intersegment revenue and transfers between North American Crude Oil - East
of Rockies and West Coast Operations as if the sales or transfers were to third
parties, that is, at current market prices. Intersegment revenues for Pipeline
Operations are based on published pipeline tariffs.
9
<PAGE> 10
EOTT ENERGY PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL INFORMATION BY BUSINESS SEGMENT
(In Thousands)
<TABLE>
<CAPTION>
NORTH
AMERICAN WEST CORPORATE
CRUDE OIL PIPELINE COAST AND
- EOR OPERATIONS OPERATIONS OTHER (b) CONSOLIDATED
------------ ----------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED JUNE 30, 2000
Revenue from external customers......... $ 2,345,196 $ 5,128 $ 164,610 $ - $ 2,514,934
Intersegment revenue (a)................ 5,671 29,987 - (35,658) -
------------ ----------- ----------- ----------- ---------
Total revenue........................ 2,350,867 35,115 164,610 (35,658) 2,514,934
------------ ----------- ----------- ----------- -----------
Gross margin............................ 21,222 35,432 5,945 - 62,599
------------ ----------- ----------- ----------- -----------
Operating income (loss)................. 1,671 17,223 (117) (5,812) 12,965
Other expense........................... - - - (8,077) (8,077)
------------ ----------- ----------- ----------- -----------
Net income (loss)....................... 1,671 17,223 (117) (13,889) 4,888
------------ ----------- ----------- ----------- -----------
Depreciation and amortization........... 1,911 5,275 669 612 8,467
------------ ----------- ----------- ----------- -----------
-------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30, 1999
Revenue from external customers......... $ 2,107,679 $ 6,928 $ 144,710 $ (14) $ 2,259,303
Intersegment revenue (a)................ 18,273 22,178 8,779 (49,230) -
------------ ----------- ----------- ----------- ---------
Total revenue........................ 2,125,952 29,106 153,489 (49,244) 2,259,303
------------ ----------- ----------- ----------- -----------
Gross margin............................ 19,886 28,443 7,416 (48) 55,697
------------ ----------- ----------- ------------ -----------
Operating income (loss)................. (637) 13,564 2,017 (6,229) 8,715
Other expense........................... - - - (6,533) (6,533)
------------ ----------- ----------- ----------- -----------
Net income (loss)....................... (637) 13,564 2,017 (12,762) 2,182
------------- ----------- ----------- ----------- -----------
Depreciation and amortization........... 2,349 5,078 497 426 8,350
------------ ----------- ----------- ----------- -----------
-------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
Revenue from external customers......... $ 4,821,498 $ 14,917 $ 360,215 $ - $ 5,196,630
Intersegment revenue (a)................ 5,671 53,194 - (58,865) -
------------ ----------- ----------- ----------- ---------
Total revenue........................ 4,827,169 68,111 360,215 (58,865) 5,196,630
------------ ----------- ----------- ----------- -----------
Gross margin............................ 40,292 69,073 9,698 - 119,063
------------ ----------- ----------- ----------- -----------
Operating income (loss)................. 1,334 34,627 (1,488) (10,936) 23,537
Other expense........................... - - - (16,428) (16,428)
------------ ----------- ----------- ----------- -----------
Net income (loss)....................... 1,334 34,627 (1,488) (27,364) 7,109
------------ ----------- ----------- ----------- -----------
Depreciation and amortization........... 3,828 10,540 1,332 1,159 16,859
------------ ----------- ----------- ----------- -----------
-------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1999
Revenue from external customers......... $ 3,422,926 $ 10,070 $ 259,478 $ (14) $ 3,692,460
Intersegment revenue (a)................ 31,395 42,472 14,333 (88,200) -
------------ ----------- ----------- ----------- ---------
Total revenue........................ 3,454,321 52,542 273,811 (88,214) 3,692,460
------------ ----------- ----------- ----------- -----------
Gross margin............................ 41,978 52,007 14,556 (48) 108,493
------------ ----------- ----------- ------------ -----------
Operating income (loss)................. 932 24,325 4,402 (12,471) 17,188
Other expense........................... - - - (12,472) (12,472)
------------ ----------- ----------- ----------- -----------
Net income (loss) before cumulative
effect of accounting change.......... 932 24,325 4,402 (24,943) 4,716
------------ ----------- ----------- ----------- -----------
Depreciation and amortization........... 4,746 9,884 991 869 16,490
------------ ----------- ----------- ----------- -----------
-------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS AT JUNE 30, 2000........... $ 1,006,525 $ 302,300 $ 87,826 $ 32,253 $ 1,428,904
------------ ----------- ----------- ----------- -----------
TOTAL ASSETS AT DECEMBER 31, 1999....... 1,084,613 306,321 129,461 38,266 1,558,661
------------ ----------- ----------- ----------- -----------
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Intersegment revenue for North American Crude Oil - EOR and West Coast
Operations is made at prices comparable to those received from
external customers. Intersegment revenue for Pipeline Operations is
transportation costs charged to North American Crude Oil - EOR for the
transport of crude oil at published pipeline tariffs.
(b) Corporate and Other also includes intersegment eliminations.
10
<PAGE> 11
EOTT ENERGY PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. NONRECURRING ITEMS
In the fourth quarter of 1999, EOTT recorded a $7.8 million charge for the
theft of NGL product, concealment of commercial activities and other
unauthorized actions by a former employee. EOTT filed an insurance claim to
recover the losses related to the theft of NGL product and received $2.5 million
in the second quarter of 2000. EOTT is continuing to pursue legal action against
the former employee.
7. SUBSEQUENT EVENTS
On July 20, 2000, the Board of Directors of EOTT Energy Corp., as General
Partner, declared the Partnership's regular quarterly cash distribution of
$0.475 for all Common Units for the period April 1, 2000 through June 30, 2000.
The second quarter distribution of $9.0 million was paid on August 14, 2000 to
the General Partner and all Common Unitholders of record as of July 31, 2000.
The distribution was paid utilizing Available Cash from the Partnership.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EOTT ENERGY PARTNERS, L.P.
Information Regarding Forward-Looking Information
The statements in this Quarterly Report on Form 10-Q that are not
historical information are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements include the discussions in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Any forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and actual results
may vary materially from those in the forward-looking statements as a result of
various factors. Important factors that could cause actual results to differ
materially from those in the forward-looking statements herein include the
Partnership's success in obtaining additional lease barrels and maintaining
lease barrels, demands for various grades of crude oil and the resulting changes
in pricing relationships, developments relating to possible acquisitions or
business combination opportunities, industry conditions, the ability of the
Partnership to avoid environmental liabilities, developments relating to
pipeline tariff regulation, the successful resolution of litigation, the success
of the Partnership's risk management activities, and the conditions of the
capital and equity markets during the periods covered by the forward-looking
statements. Although the Partnership believes that its expectations regarding
future events are based on reasonable assumptions, it can give no assurance that
these are all the factors that could cause actual results to vary materially
from the forward-looking statements or that its expectations regarding future
developments will prove to be correct.
OVERVIEW
Through its affiliated limited partnerships, EOTT Energy Operating Limited
Partnership, EOTT Energy Canada Limited Partnership, and EOTT Energy Pipeline
Limited Partnership, EOTT is engaged in the purchasing, gathering, transporting,
marketing, storage and resale of crude oil and other petroleum products and
related activities. EOTT's principal business segments are North American Crude
Oil - East of Rockies, Pipeline Operations and West Coast Operations (see Note 5
to the Condensed Consolidated Financial Statements for certain financial
information by business segment).
Gathering and Marketing Operations
In general, as EOTT purchases crude oil in its gathering and marketing
operations, EOTT establishes a margin by selling crude oil for physical delivery
to third party users, such as independent refiners or major oil companies, or by
entering into a future delivery obligation with respect to futures contracts on
the NYMEX, thereby minimizing or reducing exposure to price fluctuations.
Through these transactions, EOTT seeks to maintain positions that are
substantially balanced between crude oil purchases and sales or future delivery
obligations. As a result, changes in the absolute price level for crude oil do
not necessarily impact the margin from gathering and marketing.
Although EOTT generally maintains a balanced position in terms of overall
volumes, some risks cannot be fully hedged, such as a portion of certain basis
risks. Basis risk arises when crude oil is acquired by a purchase or exchange
that does not meet the specifications of the crude oil EOTT is contractually
obligated to deliver, whether in terms of geographic location, grade or delivery
schedule. EOTT seeks to limit price risk and maintain margins through a
combination of physical sales, NYMEX hedging activities and exchanges of crude
oil with third parties. It is EOTT's policy not to acquire and hold crude oil,
futures contracts or other derivative products for the purpose of speculating on
crude oil price changes.
EOTT's operating results are sensitive to a number of factors including:
grades or types of crude oil, individual refinery demand for specific grades of
crude oil, area market price structures for the different grades of crude oil,
location of customers, availability of transportation facilities, and timing and
costs (including storage) involved in delivering crude oil to the appropriate
customer.
12
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EOTT ENERGY PARTNERS, L.P.
Gross margin from gathering, marketing and pipeline operations varies from
period-to-period, depending to a significant extent upon changes in the supply
and demand of crude oil and the resulting changes in United States crude oil
inventory levels. The gross margin from gathering and marketing operations is
generated by the difference between the price of crude oil at the point of
purchase and the price of crude oil at the point of sale, minus the associated
costs of gathering and transportation. In addition to purchasing crude oil at
the wellhead, EOTT purchases crude oil in bulk at major pipeline terminal points
and major marketing points and enters into exchange transactions with third
parties. These bulk and exchange transactions are characterized by large volumes
and narrow profit margins on purchase and sales transactions, and the absolute
price levels for crude oil do not necessarily bear a relationship to gross
margin, although such price levels significantly impact revenues and cost of
sales. Because period-to-period variations in revenues and cost of sales are not
generally meaningful in analyzing the variation in gross margin for gathering
and marketing operations such changes are not addressed in the following
discussion.
EOTT operates the business differently as market conditions change. During
periods when the demand for crude oil is weak, the market for crude oil is often
in contango, meaning that the price of crude oil in a given month is less than
the price of crude oil in a subsequent month. In a contango market, storing
crude oil is favorable, because storage owners at major trading locations can
simultaneously purchase production at low current prices for storage and sell at
higher prices for future delivery. When there is a higher demand than supply of
crude oil in the near term, the market is backwardated, meaning that the price
of crude oil in a given month exceeds the price of crude oil in a subsequent
month. A backwardated market has a positive impact on marketing margins because
crude oil gatherers can capture a premium for prompt deliveries.
Pipeline Operations
Pipeline revenues and gross margins are primarily a function of the level
of throughput and storage activity and are generated by the difference between
the regulated published tariff and the fixed and variable costs of operating the
pipeline. A majority of the pipeline revenues are generated by transporting
crude oil at published pipeline tariffs for the North American Crude Oil - East
of Rockies business segment. Approximately 76.2% of the tariff revenues of the
Pipeline Operations business segment for the six months ended June 30, 2000,
were generated from tariffs charged to the North American Crude Oil - East of
Rockies business segment. Changes in revenues and pipeline operating costs,
therefore, are relevant to the analysis of financial results of the pipeline
operations and are addressed in the following discussion of pipeline operations.
The following review of the results of operations and financial condition
should be read in conjunction with the Condensed Consolidated Financial
Statements and Notes thereto. Unless the context otherwise requires, the term
"EOTT" hereafter refers to the Partnership and its affiliated partnerships.
RESULTS OF OPERATIONS
EOTT reported net income of $4.9 million or $0.17 per diluted Unit for the
second quarter of 2000 compared to net income of $2.2 million or $0.09 per
diluted Unit for the second quarter of 1999. Excluding the impact of
mark-to-market accounting for certain energy contracts, net income for the
second quarter of 2000 was $4.8 million or $0.17 per diluted Unit, compared to
net income of $1.1 million, or $0.05 per diluted Unit in the same period last
year. Results for the second quarter of 2000 include $2.5 million of
nonrecurring income resulting from an insurance settlement related to the theft
of NGL product in 1999, offset by nonrecurring charges of $1.0 million which are
primarily related to severance charges for a former officer. The second quarter
2000 results exclusive of nonrecurring items primarily reflect an increase in
revenues from the Pipeline Operations associated with the acquisition of assets
from Texas-New Mexico Pipeline Company, combined with improved
13
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EOTT ENERGY PARTNERS, L.P.
crude oil market conditions in North American Crude Oil - East of the Rockies
segment. These increases were partially offset by reduced margins in West Coast
Operations and increased operating and interest costs.
Selected financial data for EOTT's business segments are summarized below,
in millions:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
North American Crude Oil - East of Rockies........ $ 2,350.9 $ 2,125.9 $ 4,827.2 $ 3,454.3
Pipeline Operations............................... 35.1 29.1 68.1 52.6
West Coast Operations............................. 164.6 153.5 360.2 273.8
Corporate and Other............................... - - - -
Intersegment Eliminations......................... (35.7) (49.2) (58.9) (88.2)
----------- ---------- ----------- -----------
Total............................................. $ 2,514.9 $ 2,259.3 $ 5,196.6 $ 3,692.5
=========== ========== =========== ===========
Gross margin:
North American Crude Oil - East of Rockies (1)... $ 21.2 $ 19.9 $ 40.3 $ 42.0
Pipeline Operations............................... 35.5 28.4 69.1 52.0
West Coast Operations............................. 5.9 7.4 9.7 14.5
Corporate and Other............................... - - - -
----------- ----------- ----------- -----------
Total............................................. $ 62.6 $ 55.7 $ 119.1 $ 108.5
=========== ========== =========== ===========
Operating income (loss):
North American Crude Oil - East of Rockies (1)... $ 1.7 $ (0.6) $ 1.3 $ 1.0
Pipeline Operations ............................. 17.2 13.5 34.6 24.3
West Coast Operations ........................... (0.1) 2.1 (1.5) 4.4
Corporate and Other............................... (5.8) (6.3) (10.9) (12.5)
----------- ---------- ----------- -----------
Total............................................. $ 13.0 $ 8.7 $ 23.5 $ 17.2
=========== ========== =========== ===========
</TABLE>
(1) Includes intersegment transportation costs from the Pipeline Operations
segment for the transport of crude oil at published pipeline tariffs.
Intersegment transportation costs from the Pipeline Operations segment
were $30.0 million and $53.2 million for the three and six months ended
June 30, 2000, respectively. For the three and six months ended June
30, 1999, intersegment transportation costs from the Pipeline
Operations segment were $22.2 million and $42.5 million, respectively.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1999.
North American Crude Oil - East of Rockies: The North American Crude Oil -
East of Rockies segment had operating income of $1.7 million for the second
quarter of 2000, compared to an operating loss of $0.6 million for the same
period in 1999. Excluding the impact of mark-to-market accounting for certain
energy contracts, the North American Crude Oil - East of Rockies segment had
operating income of $2.2 million in the second quarter of 2000 compared to an
operating loss of $2.1 million for the same period in 1999. Gross margin
increased $1.3 million to $21.2 million in the second quarter of 2000 due
primarily to improved market conditions. Crude oil lease volumes averaged
412,700 barrels per day for the three months ended June 30, 2000 compared to an
average of 412,200 barrels per day for the three months ended June 30, 1999.
Operating expenses of $19.5 million for the second quarter 2000 were $1.0
million lower than in the second quarter of 1999 due primarily to lower employee
related costs partially offset by higher operating costs.
14
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EOTT ENERGY PARTNERS, L.P.
Pipeline Operations: Pipeline Operations had operating income of $17.2
million for the second quarter of 2000 compared to operating income of $13.5
million for the same period in 1999. Revenues for the second quarter of 2000
increased $6.0 million to $35.1 million due primarily to increased activity
related to the acquisition of pipelines from Texas-New Mexico Pipeline Company
in May 1999 and an increase in volumes transported on the pipelines. Pipeline
volumes averaged 588,900 barrels per day for the three months ended June 30,
2000 compared to 512,800 barrels per day for the three months ended June 30,
1999. Approximately $30.0 million and $22.2 million of revenues for the three
months ended June 30, 2000 and 1999, respectively, were generated from tariffs
charged to the North American Crude Oil - East of Rockies segment. Operating
expenses of $18.3 million for the second quarter of 2000 were $3.4 million
higher than in the second quarter of 1999 primarily due to higher employee
related costs and operating costs associated with the acquisition of assets from
Texas-New Mexico Pipeline Company.
West Coast Operations: West Coast Operations had an operating loss of $0.1
million for the second quarter 2000, compared to operating income of $2.1
million for the same period in 1999 primarily due to lower margins associated
with the crude oil blending operations as a result of increasing competitive
pressures, offset by $2.5 million of nonrecurring cash received in the second
quarter of 2000 in connection with an insurance claim filed by EOTT related to
the theft of NGL product by a former employee. Operating expenses of $6.0
million for the second quarter of 2000 were $0.7 million higher than in the
second quarter of 1999 due to higher operating costs partially offset by lower
employee related costs.
Corporate and Other: Corporate and Other costs were $5.8 million for the
second quarter 2000 compared to $6.3 million in the second quarter 1999. The
decrease is due primarily to lower system operating costs and insurance costs
partially offset by nonrecurring severance charges related to a former officer.
Interest and related charges in the first quarter 2000 were $7.7 million
compared to $7.3 million for the same period in 1999. The increase is due
primarily to higher interest rates on borrowings for the financing of the
acquisitions of assets from Koch and Texas-New Mexico Pipeline Company. Other
income (expense), net, consisting primarily of discount fees on the sale of
receivables, gains (losses) on transactions denominated in foreign currency and
gains (losses) on sales of fixed assets, was an expense of $0.8 million in the
second quarter 2000 compared to income of $0.6 million for the same period in
1999 primarily due to discount fees on the sale of receivables.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999.
North American Crude Oil - East of Rockies: The North American Crude Oil -
East of Rockies segment had operating income of $1.3 million for the first half
of 2000, compared to operating income of $1.0 million for the same period in
1999. Excluding the impact of mark-to-market accounting for certain energy
contracts, the North American Crude Oil - East of Rockies segment had operating
income of $3.7 million in the first half of 2000 compared to an operating loss
of $1.7 million for the same period in 1999. Gross margin decreased $1.7 million
of $40.3 million in the first half of 2000 due primarily to unrealized
mark-to-market losses being recorded in the first half of 2000 for certain
energy contracts. Crude oil lease volumes averaged 412,800 barrels per day for
the six months ended June 30, 2000 compared to an average of 412,900 barrels per
day for the six months ended June 30, 1999. Operating expenses of $39.0 million
for the first half 2000 were $2.0 million lower than in the first half of 1999
due primarily to lower employee related costs partially offset by higher
operating costs.
Pipeline Operations: Pipeline Operations had operating income of $34.6
million for the first half of 2000 compared to operating income of $24.3 million
for the same period in 1999. Revenues for the first half of 2000 increased $15.5
million to $68.1 million due primarily to increased activity related to the
acquisition of pipelines from Texas-New Mexico Pipeline Company in May 1999.
Approximately $53.2 million and $42.5 million of revenues for the six months
ended June 30, 2000 and 1999, respectively, were generated from tariffs
15
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EOTT ENERGY PARTNERS, L.P.
charged to the North American Crude Oil - East of Rockies segment. Pipeline
volumes averaged 592,600 barrels per day for the six months ended June 30, 2000
compared to 448,000 barrels per day for the six months ended June 30, 1999.
Operating expenses of $34.5 million for the first half of 2000 were $6.8 million
higher than in the first half of 1999 due to higher employee related costs,
operating costs and depreciation associated with the acquisition of assets from
Texas-New Mexico Pipeline Company.
West Coast Operations: West Coast Operations had an operating loss of $1.5
million for the first half 2000, compared to operating income of $4.4 million
for the same period in 1999 primarily due to lower margins associated with the
crude oil blending operations primarily as a result of increasing competitive
pressures, offset by $2.5 million of nonrecurring cash received in the second
quarter of 2000 in connection with an insurance claim filed by EOTT related to
the theft of NGL product by a former employee. Operating expenses of $11.2
million for the first half of 2000 were $1.1 million higher than in the first
half of 1999 due to higher operating costs partially offset by lower employee
related costs.
Corporate and Other: Corporate and Other costs were $10.9 million for the
first half of 2000 compared to $12.5 million in the first half 1999. The
decrease is due primarily to lower system operating costs and insurance costs
partially offset by nonrecurring severance charges related to a former officer.
Interest and related charges in the first half 2000 were $15.3 million compared
to $13.8 million for the same period in 1999. The increase is due primarily to
higher interest rates on borrowings for the financing of the acquisitions of
assets from Koch and Texas-New Mexico Pipeline Company. Other income (expense),
net, consisting primarily of discount fees on the sale of receivables, gains
(losses) on transactions denominated in foreign currency and gains (losses) on
sales of fixed assets, was an expense of $1.7 million in the first half 2000
compared to income of $1.0 million for the same period in 1999 primarily due to
discount fees on the sale of receivables.
LIQUIDITY AND CAPITAL RESOURCES
General
Management anticipates that short-term liquidity as well as sustaining
capital expenditures for the foreseeable future will be funded primarily by cash
generated from operations in addition to lines of credit provided by Enron and
commodity repurchase agreements.
Cash Flows From Operating Activities
Net cash provided by operating activities totaled $29.7 million for the
first six months of 2000 compared to net cash provided by operating activities
of $26.2 million for the same period in 1999 primarily due to reduced cash
requirements related to NYMEX hedging activities.
Cash Flows From Investing Activities
Net cash used in investing activities totaled $6.0 million for the first
six months of 2000 compared to $42.5 million for the same period in 1999. Cash
additions to property, plant, and equipment of $6.6 million in 2000 primarily
include $3.1 million for information systems hardware and software and $1.9
million for pipeline, storage tank and related facility improvements. Proceeds
from asset sales were $0.5 million in the first six months of 2000 compared to
$0.5 million in the first six months of 1999. Acquisitions of $33.0 million
during 1999 primarily reflect the purchase of assets from Texas-New Mexico
Pipeline Company.
16
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EOTT ENERGY PARTNERS, L.P.
Cash Flows From Financing Activities
Net cash used in financing activities totaled $32.4 million for the first
six months of 2000 compared to net cash provided of $17.0 million for the same
period in 1999. The 2000 amount primarily represents a reduction of repurchase
agreements outstanding and distributions paid to all Common Unitholders for the
period October 1, 1999 through March 31, 2000.
OTHER MATTERS
During the first quarter of 2000, the Partnership identified certain
systems integration issues relating to its new computerized marketing and
accounting system and the Partnership immediately commenced an extensive review
and analysis of the implementation of the new system. As a result of these
efforts, the Partnership identified and quantified the impacts of the systems
integration issues relating to its new computerized marketing and accounting
system and recorded appropriate financial statement adjustments in the first
quarter of 2000. The Partnership has implemented and continues to implement
additional control processes and procedures that it believes are sufficient to
permit the preparation of timely and accurate financial information, including
additional preventative and monitoring controls to ensure the integrity and
reliability of financial information generated by the system as well as
additional system training for users.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The Statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement and requires
that a company must formally document, designate, and assess the effectiveness
of transactions that receive hedge accounting. SFAS No. 133, as amended, is
effective for fiscal years beginning after June 15, 2000. The standard cannot be
applied retroactively but early adoption is permitted. EOTT has not yet
determined the impact of adopting SFAS No. 133; however, this standard could
increase volatility in earnings and partners' capital, through other
comprehensive income.
Consistent with the Partnership's acquisition strategy, EOTT is engaged in
discussions with a third party relating to a possible acquisition of pipeline,
gathering and/or storage assets. EOTT entered into a confidentiality agreement
that provides that the owner of the assets will furnish us with confidential
information for use in the evaluation of the assets. EOTT has the exclusive
right to discuss this possible purchase of the assets with the owner until
September 1, 2000, or a later date if both parties agree in writing. EOTT would
not expect to negotiate a definitive agreement on the terms of the acquisition
until such time as the due diligence process has moved further along and certain
key inquiries have been successfully resolved. EOTT has indicated to the
potential seller that it believes that the acquisition price for the assets
would be less than $100 million, but has not reached any final agreement
regarding the price for the assets or any other terms of the transaction. If an
agreement is reached regarding this acquisition, EOTT may finance the purchase
price through the issuance of additional Common Units, the issuance of public or
private debt securities or loans or some combination of the foregoing. EOTT can
give no assurance regarding when or whether it will reach agreement with the
owner on the terms of the acquisition or that, if it does reach agreement, the
acquisition will be completed.
EOTT has begun preliminary discussions with Koch Petroleum Group, L.P.
(Koch) to modify a 15-year contract, which began December 1, 1998, to supply
crude oil to Koch at market based prices. The contract specifies that either
party may require that the other party renegotiate the contract if certain
changes in market conditions or other changes occur. Although EOTT believes that
this matter will be satisfactorily resolved with Koch, it can give no assurance
regarding the outcome of these discussions with Koch or the potential impact of
this long-term contract on future operating results.
17
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EOTT ENERGY PARTNERS, L.P.
OUTLOOK
EOTT will continue to pursue attractive acquisition or business combination
opportunities to increase the scale of its business, add cash flow, and reduce
earnings variability. Acquisitions that result in increased lease purchase
volumes should help to enhance EOTT's gathering and marketing opportunities.
EOTT's management is committed to continually improving internal business
processes in all operational, marketing, and administrative areas and thereby
achieve improvements in productivity.
Results from operations in the second quarter of 2000 for the North
American Crude Oil - East of Rockies business continued to be favorable and
EOTT's management anticipates that market conditions in the last half of 2000
will be comparable to the first six months of 2000 if crude oil prices remain
strong. In addition, gross margins in the first half of 2000 for the West Coast
Operations were lower when compared to the first six months of 1999 as a result
of increasing competitive conditions. These competitive conditions may continue
to put pressure on gross margins for the West Coast Operations for the remainder
of 2000.
Historically, the crude oil gathering and marketing business has been very
competitive with thin and variable profit margins. Market conditions and the
amount of crude oil produced cannot be projected with certainty. The Partnership
intends to continue to pay MQDs to all its Common Unitholders and paid second
quarter distributions to all its Common Unitholders on August 14, 2000 without
any distribution support from Enron; however, due to the changing market
conditions which affects operating results, it is possible that distribution
support from Enron may be needed to pay MQDs in the future. Enron has committed
to provide total cash distribution support in an amount necessary to pay MQDs up
to $29 million ($19.7 million of which remains available) through the fourth
quarter 2001, which should further assure Common Unitholders of continued
reliable distributions.
18
<PAGE> 19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
EOTT ENERGY PARTNERS, L.P.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information contained in Item 3 updates, and should be read in
conjunction with, information set forth in Part II, Item 7A in EOTT's Annual
Report on Form 10-K for the year ended December 31, 1999, in addition to the
interim condensed consolidated financial statements and accompanying notes
presented in Items 1 and 2 of this Form 10-Q.
There are no material changes in market risks faced by the Company from
those reported in EOTT's Annual Report on Form 10-K for the year ended December
31, 1999.
19
<PAGE> 20
PART II. OTHER INFORMATION
EOTT ENERGY PARTNERS, L.P.
ITEM 1. Legal Proceedings
See Part I. Item 1, Note 3 to the Condensed Consolidated Financial
Statements entitled "Litigation and Other Contingencies," which is incorporated
herein by reference.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EOTT ENERGY PARTNERS, L.P.
(A Delaware Limited Partnership)
Date: August 14, 2000 By: EOTT ENERGY CORP. as
General Partner
/s/ LORI L. MADDOX
---------------------------
Lori L. Maddox
Controller
(Principal Accounting Officer)
21
<PAGE> 22
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- ------------
27 Financial Data Schedule
