8-KOther Events

ENTERPRISE PRODUCTS PARTNERS L.P. 8-K Report, Corporate Update (Jun 3, 2013)

Filed June 3, 2013For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) filed an 8-K on June 3, 2013, to report on the adoption of new accounting standards related to disclosures of offsetting assets and liabilities. Specifically, the company adopted ASU No. 2011-11 and ASU No. 2013-01, which enhance transparency regarding financial instruments and derivative contracts. While these changes are effective for periods beginning January 1, 2013, and applied retroactively, EPD stated that the impact of this retrospective adjustment was immaterial to its historical financial statements. The filing provides tables detailing the retrospective application of these standards for December 31, 2012, and December 31, 2011. These tables illustrate the gross amounts of derivative assets and liabilities compared to the amounts that could be offset under netting agreements and collateral arrangements in a default scenario. This disclosure aims to improve comparability with International Financial Reporting Standards and provide users with a clearer understanding of the company's financial position concerning its derivative exposures.

Key Highlights

  • 1EPD adopted new accounting standards (ASU 2011-11 and ASU 2013-01) effective January 1, 2013, for disclosures on offsetting assets and liabilities.
  • 2The adoption of these standards required retrospective application for comparative periods, but the impact on EPD's historical financial statements was deemed immaterial.
  • 3The filing includes tables showing the retrospective application of these standards for year-end 2012 and 2011.
  • 4These tables present gross derivative assets and liabilities alongside potential net amounts under netting and collateral agreements.
  • 5The disclosures are intended to enhance transparency and comparability with International Financial Reporting Standards.
  • 6Derivative assets and liabilities are recorded on a gross basis, even when netting agreements exist, though such agreements facilitate net settlement in default scenarios.
  • 7Cash collateral received or paid, specifically variation margin, is reflected in the disclosures.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce and provide details on Enterprise Products Partners L.P.'s adoption of new accounting standards (ASU 2011-11 and ASU 2013-01) related to disclosures of offsetting assets and liabilities, particularly concerning derivative contracts.

EPD stated that the retrospective adjustment for adopting these new accounting standards had an immaterial impact on its historical consolidated financial statements. The filing provides tables to illustrate the potential effects of netting arrangements, but it does not indicate a significant change in the company's reported financial position due to the adoption itself.

These disclosures are important for investors as they provide greater transparency into the company's financial position by illustrating how derivative assets and liabilities might be reduced under netting agreements and collateral arrangements, especially in a counterparty default scenario. This helps investors better understand the potential net exposure EPD has related to its derivative activities.

The tables show a comparison between the gross amounts of derivative assets and liabilities as reported on EPD's balance sheet and the net amounts that could be realized or settled under netting and collateral agreements in a default scenario. They also detail how cash collateral, specifically variation margin, fits into these calculations.