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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004 |
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OR |
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o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 1-14569
PLAINS ALL AMERICAN PIPELINE, L.P.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
76-0582150 (I.R.S. Employer Identification No.) |
|
333 Clay Street, Suite 1600 Houston, Texas 77002 (Address of principal executive offices) (Zip Code) |
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(713) 646-4100 (Registrant's telephone number, including area code) |
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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 ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o
At November 1, 2004, there were outstanding 62,740,218 Common Units, 1,307,190 Class B Common Units and 3,245,700 Class C Common Units.
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
2
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
| |
September 30, 2004 |
December 31, 2003 |
||||||
|---|---|---|---|---|---|---|---|---|
| |
(unaudited) |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 4,547 | $ | 4,137 | ||||
| Trade accounts receivable, net | 846,347 | 590,645 | ||||||
| Inventory | 242,312 | 105,967 | ||||||
| Other current assets | 55,501 | 32,225 | ||||||
| Total current assets | 1,148,707 | 732,974 | ||||||
| PROPERTY AND EQUIPMENT | 1,824,314 | 1,272,634 | ||||||
| Accumulated depreciation | (165,589 | ) | (121,595 | ) | ||||
| 1,658,725 | 1,151,039 | |||||||
| OTHER ASSETS | ||||||||
| Pipeline linefill in owned assets | 159,985 | 95,928 | ||||||
| Inventory in third party assets | 46,359 | 26,725 | ||||||
| Other, net | 92,245 | 88,965 | ||||||
| Total assets | $ | 3,106,021 | $ | 2,095,631 | ||||
| LIABILITIES AND PARTNERS' CAPITAL | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 965,265 | $ | 603,460 | ||||
| Due to related parties | 33,447 | 26,981 | ||||||
| Short-term debt | 122,882 | 127,259 | ||||||
| Other current liabilities | 77,641 | 44,219 | ||||||
| Total current liabilities | 1,199,235 | 801,919 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Long-term debt under credit facilities | 40,408 | 70,000 | ||||||
| Senior notes, net of unamortized discount of $2,820 and $1,009, respectively | 797,180 | 448,991 | ||||||
| Other long-term liabilities and deferred credits | 24,780 | 27,994 | ||||||
| Total liabilities | 2,061,603 | 1,348,904 | ||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 10) | ||||||||
PARTNERS' CAPITAL |
||||||||
| Common unitholders (62,740,218 and 49,502,556 units outstanding at September 30, 2004, and December 31, 2003, respectively) | 895,479 | 744,073 | ||||||
| Class B common unitholder (1,307,190 units outstanding at each date) | 18,302 | 18,046 | ||||||
| Class C common unitholders (3,245,700 units and no units outstanding at September 30, 2004, and December 31, 2003, respectively) | 98,856 | — | ||||||
| Subordinated unitholders (no units and 7,522,214 units outstanding at September 30, 2004, and December 31, 2003, respectively) | — | (39,913 | ) | |||||
| General partner | 31,781 | 24,521 | ||||||
| Total partners' capital | 1,044,418 | 746,727 | ||||||
| $ | 3,106,021 | $ | 2,095,631 | |||||
The accompanying notes are an integral part of these consolidated financial statements.
3
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
| |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2004 |
2003 |
2004 |
2003 |
||||||||||
| |
(unaudited) |
(unaudited) |
||||||||||||
| REVENUES | ||||||||||||||
| Crude oil and LPG sales | $ | 5,663,504 | $ | 2,897,112 | $ | 14,218,956 | $ | 8,572,569 | ||||||
| Other gathering, marketing, terminalling and storage revenues | 11,193 | 8,221 | 27,920 | 22,777 | ||||||||||
| Pipeline margin activities revenues | 142,999 | 123,974 | 424,165 | 376,660 | ||||||||||
| Pipeline tariff activities revenues | 49,309 | 24,370 | 132,343 | 72,768 | ||||||||||
| Total revenues | 5,867,005 | 3,053,677 | 14,803,384 | 9,044,774 | ||||||||||
| COSTS AND EXPENSES | ||||||||||||||
| Crude oil and LPG purchases and related costs | 5,576,523 | 2,849,286 | 13,992,768 | 8,417,316 | ||||||||||
| Pipeline margin activities purchases | 138,530 | 119,119 | 407,658 | 362,250 | ||||||||||
| Field operating costs (excluding LTIP charge) | 61,203 | 33,222 | 158,053 | 100,301 | ||||||||||
| LTIP charge—operations | — | 1,390 | 567 | 1,390 | ||||||||||
| General and administrative expenses (excluding LTIP charge) | 19,484 | 12,198 | 54,565 | 37,431 | ||||||||||
| LTIP charge—general and administrative | — | 6,006 | 3,661 | 6,006 | ||||||||||
| Depreciation and amortization | 16,768 | 11,988 | 45,887 | 34,164 | ||||||||||
| Total costs and expenses | 5,812,508 | 3,033,209 | 14,663,159 | 8,958,858 | ||||||||||
| Gains on sales of assets | 559 | 474 | 643 | 608 | ||||||||||
| OPERATING INCOME | 55,056 | 20,942 | 140,868 | 86,524 | ||||||||||
| OTHER INCOME/(EXPENSE) | ||||||||||||||
| Interest expense (net of $32 and $165 capitalized for the three month periods, respectively, and $207 and $461 capitalized for the nine month periods, respectively) | (12,702 | ) | (8,794 | ) | (32,201 | ) | (26,480 | ) | ||||||
| Interest income and other, net | (620 | ) | (277 | ) | (250 | ) | (424 | ) | ||||||
| Income before cumulative effect of change in accounting principle | 41,734 | 11,871 | 108,417 | 59,620 | ||||||||||
| Cumulative effect of change in accounting principle | — | — | (3,130 | ) | — | |||||||||
| NET INCOME | $ | 41,734 | $ | 11,871 | $ | 105,287 | $ | 59,620 | ||||||
| NET INCOME-LIMITED PARTNERS | $ | 38,738 | $ | 10,392 | $ | 97,692 | $ | 54,958 | ||||||
| NET INCOME-GENERAL PARTNER | $ | 2,996 | $ | 1,479 | $ | 7,595 | $ | 4,662 | ||||||
| BASIC NET INCOME PER LIMITED PARTNER UNIT | ||||||||||||||
| Income before cumulative effect of change in accounting principle | $ | 0.59 | $ | 0.20 | $ | 1.63 | $ | 1.06 | ||||||
| Cumulative effect of change in accounting principle | — | — | (0.05 | ) | — | |||||||||
| Basic net income per limited partner unit | $ | 0.59 | $ | 0.20 | $ | 1.58 | $ | 1.06 | ||||||
| DILUTED NET INCOME PER LIMITED PARTNER UNIT | ||||||||||||||
| Income before cumulative effect of change in accounting principle | $ | 0.59 | $ | 0.19 | $ | 1.63 | $ | 1.05 | ||||||
| Cumulative effect of change in accounting principle | — | — | (0.05 | ) | — | |||||||||
| Diluted net income per limited partner unit | $ | 0.59 | $ | 0.19 | $ | 1.58 | $ | 1.05 | ||||||
BASIC WEIGHTED AVERAGE UNITS OUTSTANDING |
65,776 |
52,788 |
61,929 |
51,735 |
||||||||||
| DILUTED WEIGHTED AVERAGE UNITS OUTSTANDING |
65,776 | 53,435 | 61,929 | 52,407 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| |
Nine Months Ended September 30, |
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|---|---|---|---|---|---|---|---|---|---|
| |
2004 |
2003 |
|||||||
| |
(unaudited) |
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| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
| Net income | $ | 105,287 | $ | 59,620 | |||||
| Adjustments to reconcile to cash flows from operating activities: | |||||||||
| Depreciation and amortization | 45,887 | 34,164 | |||||||
| Cumulative effect of accounting change | 3,130 | — | |||||||
| Change in derivative fair value | (1,431 | ) | 1,731 | ||||||
| Noncash portion of LTIP charge | 4,228 | 3,700 | |||||||
| Gain on foreign currency revaluation | (3,423 | ) | — | ||||||
| Noncash amortization of terminated interest rate swap | 1,092 | — | |||||||
| Loss on refinancing of debt | 658 | — | |||||||
| Gain on sale of assets | (643 | ) | (608 | ) | |||||
| Net cash paid for terminated swaps | (1,465 | ) | — | ||||||
| Changes in assets and liabilities, net of acquisitions: | |||||||||
| Trade accounts receivable and other | (285,123 | ) | 132,366 | ||||||
| Inventory | (127,391 | ) | (84,690 | ) | |||||
| Accounts payable and other current liabilities | 365,784 | 84,717 | |||||||
| Settlement of environmental indemnities | — | 4,600 | |||||||
| Due to related parties | 6,461 | 500 | |||||||
| Net cash provided by operating activities | 113,051 | 236,100 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
| Cash paid in connection with acquisitions | (495,715 | ) | (99,897 | ) | |||||
| Additions to property and equipment | (63,596 | ) | (52,180 | ) | |||||
| Cash paid for linefill in assets owned | (10,242 | ) | (40,449 | ) | |||||
| Proceeds from sales of assets | 2,234 | 7,076 | |||||||
| Other investing activities | — | 232 | |||||||
| Net cash used in investing activities | (567,319 | ) | (185,218 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
| Net repayments on long-term revolving credit facility | (29,977 | ) | (13,122 | ) | |||||
| Net borrowings on working capital revolving credit facility | 34,700 | — | |||||||
| Net repayments on short-term letter of credit and hedged inventory facility | (42,234 | ) | (67,315 | ) | |||||
| Principal payments on senior secured term loan | — | (43,000 | ) | ||||||
| Cash paid in connection with financing arrangements | (3,172 | ) | (87 | ) | |||||
| Proceeds from the issuance of senior notes | 346,427 | — | |||||||
| Net proceeds from the issuance of common units | 262,132 | 161,905 | |||||||
| Distributions paid to unitholders and general partner | (114,468 | ) | (89,346 | ) | |||||
| Net cash provided by (used in) financing activities | 453,408 | (50,965 | ) | ||||||
Effect of translation adjustment on cash |
1,270 |
— |
|||||||
Net increase (decrease) in cash and cash equivalents |
410 |
(83 |
) |
||||||
Cash and cash equivalents, beginning of period |
4,137 |
3,501 |
|||||||
Cash and cash equivalents, end of period |
$ |
4,547 |
$ |
3,418 |
|||||
Cash paid for interest, net of amounts capitalized |
$ |
23,366 |
$ |
24,286 |
|||||
The accompanying notes are an integral part of these consolidated financial statements.
5
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(in thousands)
| |
|
|
Class B Common Units |
Class C Common Units |
|
|
|
|
|
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Common Units |
Subordinated Units |
|
|
Total Partners' Capital Amount |
||||||||||||||||||||||||
| |
General Partners' Amount |
Total Units |
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| |
Units |
Amount |
Units |
Amount |
Units |
Amount |
Units |
Amount |
|||||||||||||||||||||
| |
(unaudited) |
|
|||||||||||||||||||||||||||
| Balance at December 31, 2003 | 49,502 | $ | 744,073 | 1,307 | $ | 18,046 | — | $ | — | 7,523 | $ | (39,913 | ) | $ | 24,521 | 58,332 | $ | 746,727 | |||||||||||
| Issuance of common units | 4,968 | 157,568 | — | — | — | — | — | — | 3,371 | 4,968 | 160,939 | ||||||||||||||||||
| Issuance of common units under LTIP | 362 | 11,772 | — | — | — | — | — | — | 238 | 362 | 12,010 | ||||||||||||||||||
| Private placement of Class C common units | — | — | — | — | 3,246 | 98,782 | — | — | 2,041 | 3,246 | 100,823 | ||||||||||||||||||
| Issuance of units for acquisition contingent consideration | 385 | 13,082 | — | — | — | — | — | — | 267 | 385 | 13,349 | ||||||||||||||||||
| Distributions | — | (96,531 | ) | — | (2,225 | ) | — | (3,700 | ) | — | (4,231 | ) | (7,781 | ) | — | (114,468 | ) | ||||||||||||
| Other comprehensive income | — | 18,029 | — | 410 | — | 624 | — | (841 | ) | 1,529 | — | 19,751 | |||||||||||||||||
| Net income | — | 91,027 | — | 2,071 | — | 3,150 | — | 1,444 | 7,595 | — | 105,287 | ||||||||||||||||||
| Conversion of subordinated units | 7,523 | (43,541 | ) | — | — | — | — | (7,523 | ) | 43,541 | — | — | — | ||||||||||||||||
| Balance at September 30, 2004 | 62,740 | $ | 895,479 | 1,307 | $ | 18,302 | 3,246 | $ | 98,856 | — | $ | — | $ | 31,781 | 67,293 | $ | 1,044,418 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME
(in thousands)
Statements of Comprehensive Income
| |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2004 |
2003 |
2004 |
2003 |
||||||||
| |
(unaudited) |
(unaudited) |
||||||||||
| Net income | $ | 41,734 | $ | 11,871 | $ | 105,287 | $ | 59,620 | ||||
| Other comprehensive income | 16,518 | 25,286 | 19,751 | 61,599 | ||||||||
| Comprehensive income | $ | 58,252 | $ | 37,157 | $ | 125,038 | $ | 121,219 | ||||
Statement of Changes in Accumulated Other Comprehensive Income