Sunoco Logistics Partners LP--Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report: January 27, 2012

(Date of earliest event reported): January 26, 2012

 

 

SUNOCO LOGISTICS PARTNERS L.P.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-31219   23-3096839

(State or other jurisdiction

of incorporation)

 

(Commission

file number)

 

(IRS employer

identification number)

1818 Market Street, Suite 1500, Philadelphia, PA   19103-7583
(Address of principal executive offices)   (Zip Code)

(215) 977-3000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On January 26, 2012, Sunoco Logistics Partners L.P. (the “Partnership”) issued a press release announcing its financial results for the fourth quarter 2011. A Form 8-K was filed on January 26, 2012. A copy of the press release was attached and was incorporated by reference therein.

 

Item 7.01. Regulation FD Disclosure.

On January 26, 2012, the Partnership issued a press release announcing its financial results for the fourth quarter 2011. Additional information concerning the Partnership’s fourth quarter earnings was presented in a slide presentation to investors during a teleconference on January 26, 2012. A copy of the slide presentation is attached as Exhibit 99.1 and is incorporated herein by reference.

The information in this report, being furnished pursuant to Items 2.02, 7.01, 8.01 and 9.01 related thereto, of Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits

 

Exhibit
No.

  

Exhibit

99.1    Slide presentation given January 26, 2012 during investor teleconference.

Forward-Looking Statements

Statements contained in the exhibits to this report that state the Partnership’s or its management’s expectations or predictions of the future are forward-looking statements. The Partnership’s actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the documents that the Partnership has filed with the Securities and Exchange Commission.


SIGNATURE

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.

 

SUNOCO LOGISTICS PARTNERS LP.
By:  

Sunoco Partners LLC,
its General Partner

  By:  

/s/ MICHAEL D. GALTMAN

   

Michael D. Galtman

Controller

January 27, 2012

Philadelphia, PA


EXHIBIT INDEX

 

Exhibit
No.

  

Exhibit

99.1    Slide presentation given January 26, 2012 during investor teleconference.
Slide Presentation
Fourth Quarter 2011
Earnings Conference Call
January 26, 2012
Sunoco Logistics Partners L.P.
Exhibit 99.1


Forward-Looking Statements
2
You should review this slide presentation in conjunction with the fourth quarter 2011 earnings
conference call for Sunoco Logistics Partners L.P., held on January 26 at 4:30 p.m. ET.  You may listen to 
free) 888-790-3592.  International callers should dial 517-308-9379.  Please enter Conference ID “Sunoco
Logistics.”  Audio replays of the conference call will be available for two weeks after the conference call
beginning approximately two hours following the completion of the call.  To access the replay, dial 888-282-
0036.  International callers should dial 203-369-3022.
During the call, those statements we make that are not historical facts are forward-looking statements.
These forward-looking statements are not guarantees of future performance. Although we believe the
assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking
statements involve risks and uncertainties that may affect our business and cause actual results to differ
materially from those discussed during the conference call. Such risks and uncertainties include economic,
business, competitive and/or regulatory factors affecting our business, as well as uncertainties related to the
outcomes of pending or future litigation.   Sunoco Logistics Partners L.P. has included in its Annual Report
on Form 10-K for the year ended December 31, 2010, and in its subsequent SEC filings, cautionary language
identifying important factors (though not necessarily all such factors) that could cause future outcomes to
differ materially from those set forth in the forward-looking statements.  For more information about these 
any obligation to update or alter these forward-looking statements, whether as a result of new information,
future events or otherwise.
This presentation includes certain non-GAAP financial measures intended to supplement, not
substitute for, comparable GAAP measures. Reconciliations of non-GAAP financial measures to GAAP
financial measures are provided in the slides at the end of the presentation.  You should consider carefully
the comparable GAAP measures and the reconciliations to those measures provided in this presentation.
the
audio
portion
of
the
conference
call
on
our
website
at
www.sunocologistics.com
or
by
dialing
(USA
toll-
factors,
see
our
SEC
filings,
available
on
our
website
at
www.sunocologistics.com.
We
expressly
disclaim


Highlights
Record quarterly performance:
$165 million Adjusted EBITDA
$110 million Distributable Cash Flow (DCF)
Record full year performance:
$544 million Adjusted EBITDA
$388 million Distributable Cash Flow
$665 million of Expansion Capital Spending
3
Note: Fourth quarter and full year Adjusted EBITDA  and DCF include an $11million charge for regulatory obligations 
          recognized in connection with the Partnership’s impairment assessment of certain assets affected by Sunoco, Inc.’s 
         announcement to exit its refining operations


Highlights
Grew ratable business 14% year over year
Completed
a
three-for-one
unit
split
(1)
on
December
2
nd
Increased
distribution
for
27
th
consecutive
quarter
2012 Guidance:
Increase the cash distribution by 7 %
Approximately $300 million of organic expansion capital
Approximately $50 million of maintenance capital
(1)
All unit and per unit information presented herein is on a post-split basis.
4


Segment EBITDA: Segment Change 2007-2011YTD
Adjusted EBITDA: Ratable and Market Related
Maximize asset base by
taking advantage of
market opportunities
Distributions based on
ratable cash
Market related cash
flow increases
coverage ratio
193
291
343
366
544
0
100
200
300
400
500
600
2007
2008
2009
2010
2011
Year
Market Related
Ratable
5


Record Expansion Capital Growth
2011 expansion capital of $665 million included record organic
and acquisition growth.
(1)
Includes inventory.
(amounts in millions)
Full Year Ended
December 31,
2011
Calculation of Expansion Capital:
Organic Expansion Capital
171
$                  
Major Acquisitions
(1)
494
Total Expansion Capital
665
$                  
6


Organic Expansion Capital
7
Optimize current asset base
Invest in organic extensions
Butane blending
Nederland
Eagle Point
Mariner West
West Texas Crude Expansion
2012 Organic investment
projected to be approximately 
$300 million including:
0
50
100
150
200
250
300
350
2007
2008
2009
2010
2011
2012P
Organic Expansion Capital


2011 Acquisitions
Texon Crude Business w/exposure to shales in:
Bakken, Granite Wash, Permian & Eagleford
Eagle Point Tank Farm
Inland Pipeline (84% interest)
East Boston Products Terminal
8


Q4 2011 Financial Highlights
(amounts in millions)
9
Three Months Ended
Full Year Ended
December 31,
December 31,
2011
2010
2011
2010
Sales and other operating revenue
3,376
$     
2,223
$     
10,905
$  
7,808
$     
Other income
4
5
13
30
Total revenues
3,380
2,228
10,918
7,838
Cost of products sold and operating expenses
3,178
2,103
10,264
7,398
Depreciation and amortization
25
19
86
64
Impairment charge and related matters
42
3
42
3
Selling, general and administrative expenses
23
20
90
72
Total costs and expenses
3,268
2,145
10,482
7,537
Operating income
112
83
436
301
Interest cost and debt expense
28
21
96
78
Capitalized interest
(2)
(2)
(7)
(5)
Gain on investments in affiliates
-
-
-
128
Income before provision for income taxes
86
64
347
356
Provision for income taxes
7
4
25
8
Net Income
79
60
$          
322
348
$        
Net income attributable to noncontrolling
interests
3
1
9
2
Net Income attributable to Sunoco Logistics
Partners L.P.
76
$          
59
$          
313
$        
346
$        


Q4 2011 Financial Highlights
(amounts in millions, except per unit amounts)
10
Three Months Ended
Full Year Ended
December 31,
December 31,
2011
2010
2011
2010
Calculation of Limited Partners' interest:
Net Income attributable to Sunoco Logistics Partners L.P.
76
$      
59
$      
313
$   
346
$   
Less: General Partner's interest
(14)
(12)
(54)
(48)
Limited Partners' interest in Net Income
62
$      
47
$      
259
$   
298
$   
Net Income per Limited Partner unit:
Basic
0.60
$  
0.47
$  
2.56
$  
3.13
$  
Diluted
0.60
$  
0.47
$  
2.54
$  
3.11
$  
Weighted Average Limited Partners' units outstanding:
Basic
103.3
99.2
101.3
95.2
Diluted
103.8
99.7
101.8
95.7
(1)
Amounts reflect the three-for-one unit split in the fourth quarter 2011.
(1)
(1)


Refined Products Pipelines
(financial amounts in millions)
11
Three Months Ended
Full Year Ended
December 31,
December 31,
2011
2010
2011
2010
Financial Highlights
Sales and other operating revenue
37
$        
29
$        
130
$      
120
$      
Operating income
9
$          
10
$        
33
$        
44
$        
Depreciation and amortization expense
4
$          
3
$          
17
$        
15
$        
Adjusted EBITDA
(1)
12
$        
13
$        
49
$        
59
$        
Operating Highlights
(2)(3)
Pipeline throughput (thousands of bpd)
599
442
522
468
Pipeline revenue per barrel (cents)
67.5
71.7
68.3
70.0
(1)
(2)
(3)
Amounts exclude earnings attributable to noncontrolling interests.
Excludes amounts attributable to equity interests which are not consolidated.
In May 2011, the Partnership acquired a controlling financial interest in the Inland refined products pipeline. As a result of this acquisition, the Partnership
accounted for this entity as a consolidated subsidiary from the acquisition date. Volumes for the twelve months ended December 31, 2011 of 88 thousand bpd and
the related revenue per barrel, have been included in the consolidated totals. From the date of acquisition, this pipeline had actual throughput of approximately
140
thousand
bpd
for
the
twelve
months
ended
December
31,
2011.


Terminal Facilities
(financial amounts in millions)
12
Three Months Ended
Full Year Ended
December 31,
December 31,
2011
2010
2011
2010
Financial Highlights
Sales and other operating revenue
156
$      
99
$        
435
$      
287
$      
Operating income
(11)
$      
21
$        
85
$        
95
$        
Depreciation and amortization expense
10
$        
8
$          
34
$        
26
$        
Adjusted EBITDA
(1)
30
$        
32
$        
150
$      
124
$      
Operating Highlights
Terminal throughput (thousands of bpd):
(2)
Refined products terminals
514
502
492
488
Nederland terminal
692
724
757
729
Refinery terminals
505
434
443
465
(1)
(2)
Amounts
include
an
$11
million
charge
for
regulatory
obligations
recognized
in
the
fourth
quarter
2011
in
connection
with
the
Partnership's
impairment
assessment
of
certain
assets
affected
by
Sunoco's
announcement
to
exit
its
refining
operations.
In
July
2011
and
August
2011,
the
Partnership
acquired
the
Eagle
Point
tank
farm
and
a
refined
products
terminal
located
in
East
Boston
Massachusetts,
respectively.
Volumes
for
these
acquisitions
are
included
from
their
acquisition
dates.


Crude Oil Pipelines
(financial amounts in millions)
13
Three Months Ended
Full Year Ended
December 31,
December 31,
2011
2010
2011
2010
Financial Highlights
Sales and other operating revenue
86
$        
76
$        
319
$      
221
$      
Operating income
52
$        
36
$        
181
$      
126
$      
Depreciation and amortization expense
6
$          
7
$          
25
$        
21
$        
Adjusted EBITDA
(1)
56
$        
42
$        
198
$      
145
$      
Operating Highlights
(2)(3)
Pipeline throughput (thousands of bpd)
1,577
1,592
1,587
1,183
Pipeline revenue per barrel (cents)
58.9
50.9
55.0
50.7
(1)
(2)
(3)
Amounts exclude earnings attributable to noncontrolling interests.
In July 2010, the Partnership acquired additional interests in the Mid-Valley and West Texas Gulf crude oil pipelines, which previously
had been recorded as
equity investments.  The Partnership obtained a controlling financial interest as a result of these acquisitions and began accounting for these entities as
consolidated subsidiaries from their respective acquisition dates.  Volumes and the related revenues for the twelve months ended
December 31, 2010 of 278 
thousand bpd have been included in the crude oil pipeline throughput and revenue per barrel.  From the date of acquisition, these pipelines had actual throughput
of approximately 696 thousand bpd for the three and twelve months ended December 31, 2010.  The amounts presented for the three and twelve month periods
ended December 31, 2011 include amounts attributable to these systems for the entire period.
Excludes amounts attributable to equity interests which are not consolidated.


Crude Oil Acquisition and Marketing
(financial amounts in millions)
14
Three Months Ended
Full Year Ended
December 31,
December 31,
2011
2010
2011
2010
Financial Highlights
Sales and other operating revenue
3,135
$  
2,048
$  
10,163
$
7,282
$  
Operating income
62
$        
16
$        
137
$      
36
$        
Depreciation and amortization expense
5
$          
1
$          
10
$        
2
$          
Adjusted EBITDA
67
$        
17
$        
147
$      
38
$        
Operating Highlights
(1)
Crude oil purchases (thousands of bpd)
(2)
690
606
663
638
Gross margin per barrel purchased (cents)
(2)(3)
103.4
35.6
61.9
20.0
Average crude oil price (per barrel)
$94.02
$85.18
$95.14
$79.55
(1)
(2)
(3)
Represents total segment sales and other operating revenue minus
cost of products sold and operating expenses and depreciation and amortization divided by
total crude purchases.
The Crude Oil Acquisition and Marketing segment gathers, purchases, markets and sells crude oil principally in Oklahoma and Texas.  The segment consists of
approximately 140 crude oil transport trucks; and approximately 110 crude oil truck unloading facilities.
Includes results from the crude oil acquisition and marketing business acquired from Texon L.P. in August 2011 from the acquisition date.


Q4 2011 Financial Highlights
(amounts in millions)
15
Three Months Ended
Full Year Ended
December 31,
December 31,
2011
2010
2011
2010
Capital Expenditure Data:
Maintenance capital expenditures
22
$          
12
$          
42
$          
37
$          
Expansion capital expenditures
69
58
171
137
Major Acquisitions
-
-
494
252
Total
91
$          
70
$          
707
$        
426
$        
December 31,
December 31,
2011
2010
Balance Sheet Data (at period end):
Cash and cash equivalents
5
$             
2
$             
Total debt
(2)(3)
1,698
$     
1,229
$     
Equity:
Sunoco Logistics Partners L.P. Equity
1,096
$     
965
$        
Noncontrolling interests
98
77
Total Equity
1,194
$     
1,042
$     
(1)
(2)
(3)
Total debt at December 31, 2010 includes the $100 million promissory note to Sunoco, Inc.
Includes July 2011 acquisition of Eagle Point tank farm from Sunoco for $100 million, consisting of: Class A (deferred distribution)
units with a fair value of $98 million and $2 million in cash. This related party transaction was recorded at Sunoco’s carrying value on
$22 million under generally accepted accounting principles.
As of December 31, 2011, the Partnership had available borrowing capacity of $550 million under its revolving credit facilities.
(1)


Non-GAAP Financial Measures
(amounts in millions)
(1)
Management of the Partnership believes Adjusted EBITDA and distributable cash flow information enhances an investor's understanding of a business’
ability to generate
cash for payment of distributions and other purposes.  Adjusted EBITDA and distributable cash flow do not represent and should not be considered an alternative to net
income or cash flows from operating activities as determined under United States generally accepted accounting principles (GAAP)
and may not be comparable to other
similarly titled measures of other businesses.
(2)
Amounts
exclude
earnings
attributable
to
noncontrolling
interests
and
include
an
$11
million
charge
for
regulatory
obligations
recognized
in
the
fourth
quarter
2011
in
connection with the Partnership's impairment assessment of certain assets affected by Sunoco's announcement to exit its refining
operations.
16
Three Months Ended
Full Year Ended
December 31,
December 31,
2011
2010
2011
2010
Add: Interest expense, net
26
19
89
73
Add: Depreciation and amortization expense
25
19
86
64
Add: Impairment charge
31
3
31
3
Add: Provision for income taxes
7
4
25
8
Less: Gain on investments in affiliates
-
-
-
(128)
Adjusted EBITDA
(1)(2)
165
104
544
366
Less: Interest expense, net
(26)
(19)
(89)
(73)
Less: Maintenance capital expenditures
(22)
(12)
(42)
(37)
Less: Provision for income taxes
(7)
(4)
(25)
(8)
Distributable cash flow
(1)
110
$        
69
$          
388
$        
248
$        
313
$        
346
$        
59
$          
76
$          
Net Income attributable to Sunoco Logistics
Partners L.P.