UNITED STATES
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 September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No.: 1-16335
Magellan Midstream Partners, L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 73-1599053 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
One Williams Center, P.O. Box 22186, Tulsa, Oklahoma 74121-2186
(Address of principal executive offices and zip code)
(918) 574-7000
(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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of November 5, 2004, there were outstanding 28,920,541 common units and 4,259,771 subordinated units.
FINANCIAL INFORMATION
MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per unit amounts)
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2003 |
2004 |
2003 |
2004 |
|||||||||||||
| Transportation and terminals revenues: |
||||||||||||||||
| Third party |
$ | 97,785 | $ | 104,001 | $ | 268,093 | $ | 296,630 | ||||||||
| Affiliate |
— | — | 13,122 | — | ||||||||||||
| Product sales revenues: |
||||||||||||||||
| Third party |
24,391 | 54,499 | 67,811 | 137,234 | ||||||||||||
| Affiliate |
— | — | 790 | — | ||||||||||||
| Total revenues |
122,176 | 158,500 | 349,816 | 433,864 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Operating |
46,535 | 46,792 | 122,244 | 126,703 | ||||||||||||
| Environmental |
7,186 | 176 | 9,137 | 42,504 | ||||||||||||
| Environmental reimbursements |
(7,358 | ) | — | (8,616 | ) | (41,324 | ) | |||||||||
| Product purchases |
21,170 | 49,617 | 61,021 | 120,498 | ||||||||||||
| Depreciation and amortization |
8,994 | 9,564 | 27,256 | 28,908 | ||||||||||||
| Affiliate general and administrative |
13,802 | 13,837 | 40,725 | 40,231 | ||||||||||||
| Total costs and expenses |
90,329 | 119,986 | 251,767 | 317,520 | ||||||||||||
| Equity earnings |
— | 713 | — | 981 | ||||||||||||
| Operating profit |
31,847 | 39,227 | 98,049 | 117,325 | ||||||||||||
| Interest expense |
9,734 | 8,029 | 27,264 | 25,248 | ||||||||||||
| Interest income |
(996 | ) | (291 | ) | (1,550 | ) | (1,737 | ) | ||||||||
| Debt prepayment premium |
— | — | — | 12,666 | ||||||||||||
| Write-off of unamortized debt placement fees |
— | — | — | 5,002 | ||||||||||||
| Debt placement fee amortization |
838 | 886 | 2,147 | 2,224 | ||||||||||||
| Gain on derivative |
— | — | — | (953 | ) | |||||||||||
| Net income |
$ | 22,271 | $ | 30,603 | $ | 70,188 | $ | 74,875 | ||||||||
| Allocation of net income: |
||||||||||||||||
| Limited partners’ interest |
$ | 22,705 | $ | 28,286 | $ | 70,211 | $ | 69,625 | ||||||||
| General partner’s interest |
(434 | ) | 2,317 | (23 | ) | 5,250 | ||||||||||
| Net income |
$ | 22,271 | $ | 30,603 | $ | 70,188 | $ | 74,875 | ||||||||
| Basic net income per limited partner unit |
$ | 0.84 | $ | 0.97 | $ | 2.58 | $ | 2.47 | ||||||||
| Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
27,190 | 29,271 | 27,190 | 28,157 | ||||||||||||
| Diluted net income per limited partner unit |
$ | 0.84 | $ | 0.96 | $ | 2.58 | $ | 2.47 | ||||||||
| Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
27,190 | 29,341 | 27,233 | 28,216 | ||||||||||||
See notes to consolidated financial statements.
2
MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
| December 31, 2003 |
September 30, 2004 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 111,357 | $ | 182,772 | ||||
| Restricted cash |
8,223 | 11,683 | ||||||
| Accounts receivable (less allowance for doubtful accounts of $319 and $137 at December 31, 2003 and September 30, 2004, respectively) |
19,615 | 26,973 | ||||||
| Other accounts receivable |
14,579 | 27,685 | ||||||
| Affiliate accounts receivable |
9,324 | 9,092 | ||||||
| Inventory |
17,588 | 24,359 | ||||||
| Other current assets |
3,941 | 6,279 | ||||||
| Total current assets |
184,627 | 288,843 | ||||||
| Property, plant and equipment, at cost |
1,371,847 | 1,418,948 | ||||||
| Less: accumulated depreciation |
431,298 | 453,072 | ||||||
| Net property, plant and equipment |
940,549 | 965,876 | ||||||
| Acquisition prepayment |
— | 24,731 | ||||||
| Equity investment |
— | 26,013 | ||||||
| Goodwill |
22,057 | 22,007 | ||||||
| Other intangibles (less accumulated amortization of $911 and $1,886 at December 31, 2003 and September 30, 2004, respectively) |
11,417 | 10,442 | ||||||
| Long-term affiliate receivables |
13,472 | 6,662 | ||||||
| Long-term receivables |
9,077 | 8,281 | ||||||
| Debt placement costs (less accumulated amortization of $2,761 and $3,305 at December 31, 2003 and September 30, 2004, respectively) |
10,618 | 9,642 | ||||||
| Other noncurrent assets |
3,113 | 2,402 | ||||||
| Total assets |
$ | 1,194,930 | $ | 1,364,899 | ||||
| LIABILITIES AND PARTNERS’ CAPITAL | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 21,200 | $ | 15,776 | ||||
| Affiliate accounts payable |
257 | 364 | ||||||
| Outstanding checks |
6,961 | — | ||||||
| Accrued affiliate payroll and benefits |
15,077 | 12,930 | ||||||
| Accrued taxes other than income |
14,286 | 16,806 | ||||||
| Accrued interest payable |
8,196 | 16,726 | ||||||
| Environmental liabilities |
12,243 | 34,015 | ||||||
| Deferred revenue |
10,868 | 12,456 | ||||||
| Accrued product purchases |
11,585 | 8,159 | ||||||
| Product shortage liability |
874 | 11,765 | ||||||
| Payable on interest rate derivative |
— | 8,328 | ||||||
| Current portion of long-term debt |
900 | — | ||||||
| Other current liabilities |
4,742 | 5,582 | ||||||
| Total current liabilities |
107,189 | 142,907 | ||||||
| Long-term debt |
569,100 | 555,594 | ||||||
| Long-term affiliate payable |
1,509 | 4,442 | ||||||
| Long-term affiliate pension and benefits |
— | 3,422 | ||||||
| Other deferred liabilities |
4,455 | 4,114 | ||||||
| Environmental liabilities |
14,528 | 26,954 | ||||||
| Commitments and contingencies |
||||||||
| Partners’ capital: |
||||||||
| Partners’ capital |
498,920 | 631,467 | ||||||
| Accumulated other comprehensive (loss) |
(771 | ) | (4,001 | ) | ||||
| Total partners’ capital |
498,149 | 627,466 | ||||||
| Total liabilities and partners’ capital |
$ | 1,194,930 | $ | 1,364,899 | ||||
See notes to consolidated financial statements.
3
MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2003 |
2004 |
|||||||
| Operating Activities: |
||||||||
| Net income |
$ | 70,188 | $ | 74,875 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
27,256 | &n | ||||||