Attached files
file | filename |
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8-K - FORM 8-K - ANDEAVOR LOGISTICS LP | d462140d8k.htm |
EX-99.2 - UNAUDITED COMBINED STATEMENTS - ANDEAVOR LOGISTICS LP | d462140dex992.htm |
EX-23.1 - CONSENT OF PRICEWATERHOUSECOOPERS LLP - ANDEAVOR LOGISTICS LP | d462140dex231.htm |
EX-99.1 - AUDITED COMBINED STATEMENTS - ANDEAVOR LOGISTICS LP | d462140dex991.htm |
Exhibit 99.3
TESORO LOGISTICS LP
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
Background
The following unaudited pro forma condensed combined consolidated financial information of Tesoro Logistics LP (the Partnership) reflects adjustments to the historical combined consolidated financial statements of the Partnership to give effect to (i) the acquisition of the Anacortes rail train facility assets (the ART Facility), hereafter referred to as the ART Acquisition, including the expected impact of the Anacortes Track Use and Throughput Agreement (the TTA) and the amendments to our operational services and omnibus agreements that we entered into in connection with the ART Acquisition from the date the ART Facility was placed in service; (ii) the offering of 4,255,000 common units representing limited partner interests (the October Offering) that closed on October 5, 2012 and the application of proceeds therefrom; (iii) the payment of certain fees and expenses in connection with the October Offering and the ART Acquisition; (iv) the probable acquisition of the Chevron assets (the Chevron Acquisition); (v) the planned offering of common units to fund the Chevron Acquisition (the Planned Offering, and, together with the October Offering, the Offerings), the corresponding issuance and sale of general partner units and the application of proceeds therefrom; and (vi) the payment of estimated fees and expenses in connection with Planned Offering and the Chevron Acquisition. The pro forma adjustments have been prepared as if the transactions described above had taken place as of September 30, 2012, in the case of the unaudited pro forma balance sheet, and as of January 1, 2011, in the case of the unaudited pro forma statements of operations, with the exception of the TTA, the operational services and omnibus agreement entered into in connection with the ART acquisition, which have been adjusted from the facilitys in-service date.
References to we, us and our mean Tesoro Logistics LP and its consolidated subsidiaries, unless the context otherwise requires. References to Tesoro refer collectively to Tesoro Corporation and any of its subsidiaries other than Tesoro Logistics LP, its subsidiaries and Tesoro Logistics GP, LLC (TLGP), its general partner.
The unaudited pro forma condensed combined consolidated financial information has been prepared for illustrative purposes only and is not necessarily indicative of our financial position or results of operations had the ART Acquisition, Chevron Acquisition and the Offerings actually occurred on the dates assumed, nor is such unaudited pro forma condensed combined consolidated financial information necessarily indicative of the results to be expected for any future period.
The pro forma adjustments are based on preliminary estimates and currently available information and assumptions that management believes are reasonable. The notes to the unaudited pro forma condensed combined consolidated financial statements provide a detailed discussion of how such adjustments were derived and presented in the unaudited pro forma financial information. The unaudited pro forma condensed combined consolidated financial information and related notes thereto should be read in conjunction with the historical combined consolidated financial statements and related notes thereto for the year ended December 31, 2011, included in our current report on Form 8-K filed with the Securities and Exchange Commission (SEC) on December 14, 2012 and our condensed combined consolidated financial statements and notes thereto included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 as supplemented by our Current Report on Form 8-K filed with the SEC on December 17, 2012.
Effective November 15, 2012, we acquired the ART Facility from Tesoro Refining and Marketing Company LLC (TRMC) in exchange for total consideration of $180.0 million, comprised of $162.0 million in cash and the remaining $18.0 million in partner units. The ART Facility includes a four-track unloading platform, two receiving and departing tracks capable of handling a 100-car unit train and two additional short track spurs, as well as other related assets and properties associated with the facility. The facility was placed in service on September 5, 2012.
TRMC retained any current assets, current liabilities and environmental liabilities related to the ART Facility as of November 15, 2012, the date of the ART Acquisition. The only historical balance sheet item that transferred to the Partnership in the ART Acquisition was property, plant and equipment, which was recorded by us at historical cost as the ART Acquisition is considered to be a transfer of a business between entities under common control.
The Partnership commenced managing the additional operation of all of the assets associated with the ART acquisition and receiving fees for services as of November 15, 2012. At the time of the ART Acquisition, TLGP hired one employee to manage the operations. The Partnership reimburses Tesoro for operational expenses related to the ART Facility under the terms of the Amendment and Restatement of Schedules to Amended and Restated Operational Services Schedules (the Amended Operational Services Schedules), which became effective on November 15, 2012.
Additionally, on December 6, 2012, the Partnership entered into a definitive agreement with the Chevron Pipeline Company and the Northwest Terminalling Company to purchase the Northwest Products System which consists of a 760-mile common carrier refined products pipeline extending from Salt Lake City, Utah to Spokane, Washington, a separate 5-mile jet fuel pipeline to the Salt Lake City International Airport and three refined products terminals (collectively, Chevron Assets) for $400 million. In addition, we will acquire certain working capital assets, including a prepaid right of way easement, certain pipeline and terminal inventories and assume any environmental liabilities associated with the Chevron Assets.
All third party terminal agreements and any contracts between Chevron and other Chevron affiliates will be assigned to the Partnership. The common carrier refined products pipeline is subject to a tariff under the Federal Energy Regulatory Commission and therefore does not have a contract related to the throughput. We plan to fund the Chevron Acquisition in part with proceeds from the Planned Offering.
2
TESORO LOGISTICS LP
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
September 30, 2012
Pro Forma Adjustments | ||||||||||||||||||||||||||||
Tesoro Logistics LP |
October Offering |
Historical ART Facility |
ART Facility |
Chevron Acquisition |
Planned Offering |
Tesoro Logistics LP Pro Forma |
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(Dollars in thousands) | ||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
CURRENT ASSETS |
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Cash and cash equivalents |
$ | 55,274 | $ | 177,859 | (a) | $ | | $ | (162,000 | )(d) | $ | (400,000 | )(h) | $ | 369,302 | (a) | $ | 24,757 | ||||||||||
(6,893 | )(b) | (659 | )(e) | (970 | )(e) | 7,808 | (i) | |||||||||||||||||||||
(475 | )(c) | (13,849 | )(b) | |||||||||||||||||||||||||
Receivables |
(640 | )(c) | ||||||||||||||||||||||||||
Trade |
297 | | | | | | 297 | |||||||||||||||||||||
Affiliate |
13,676 | | | | | | 13,676 | |||||||||||||||||||||
Prepayments and other current assets |
1,187 | | | | 5,049 | (h) | | 6,236 | ||||||||||||||||||||
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Total Current Assets |
70,434 | 170,491 | | (162,659 | ) | (395,921 | ) | 362,621 | 44,966 | |||||||||||||||||||
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NET PROPERTY, PLANT AND EQUIPMENT |
211,389 | | 48,504 | | (d) | 394,951 | (h) | | 654,844 | |||||||||||||||||||
DEFERRED FINANCE COSTS |
9,027 | | | | | | 9,027 | |||||||||||||||||||||
OTHER NONCURRENT ASSETS |
440 | | | | | | 440 | |||||||||||||||||||||
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Total Assets |
$ | 291,290 | $ | 170,491 | $ | 48,504 | $ | (162,659 | ) | $ | (970 | ) | $ | 362,621 | $ | 709,277 | ||||||||||||
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LIABILITIES AND EQUITY (DEFICIT) | ||||||||||||||||||||||||||||
CURRENT LIABILITIES |
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Accounts payable |
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Trade |
$ | 9,278 | $ | | $ | 5,148 | $ | (5,148 | )(f) | $ | | $ | | $ | 9,278 | |||||||||||||
Affiliate |
5,532 | | | | | | 5,532 | |||||||||||||||||||||
Deferred revenueaffiliate |
2,034 | | | | | | 2,034 | |||||||||||||||||||||
Accrued liabilities |
2,881 | | 55 | (55 | )(f) | | | 2,881 | ||||||||||||||||||||
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Total Current Liabilities |
19,725 | | 5,203 | (5,203 | ) | | | 19,725 | ||||||||||||||||||||
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OTHER NONCURRENT LIABILITIES |
46 | | | | | | 46 | |||||||||||||||||||||
DEBT |
350,000 | | | | | | 350,000 | |||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES |
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EQUITY (DEFICIT) |
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Equity of Predecessor |
| | 43,301 | (43,301 | )(g) | | | | ||||||||||||||||||||
Common unitholders |
63,888 | 177,859 | (a) | | (124,740 | )(d) | (623 | )(e) | 369,302 | (a) | 508,576 | |||||||||||||||||
(4,426 | )(b) | (423 | )(e) | (8,893 | )(b) | |||||||||||||||||||||||
(305 | )(c) | 4,006 | (f) | (411 | )(c) | |||||||||||||||||||||||
33,342 | (g) | |||||||||||||||||||||||||||
Subordinated unitholders |
(140,707 | ) | (2,329 | )(b) | | (223 | )(e) | (328 | )(e) | (4,679 | )(b) | (148,642 | ) | |||||||||||||||
(160 | )(c) | (216 | )(c) | |||||||||||||||||||||||||
General partnerTLGP |
(1,662 | ) | (138 | )(b) | | (37,260 | )(d) | (19 | )(e) | (7,808 | )(i) | (20,428 | ) | |||||||||||||||
(10 | )(c) | (13 | )(e) | (277 | )(b) | |||||||||||||||||||||||
1,197 | (f) | (13 | )(c) | |||||||||||||||||||||||||
9,959 | (g) | |||||||||||||||||||||||||||
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Total Equity (Deficit) |
(78,481 | ) | 170,491 | 43,301 | (157,456 | ) | (970 | ) | 362,621 | 339,506 | ||||||||||||||||||
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Total Liabilities and Equity (Deficit) |
$ | 291,290 | $ | 170,491 | $ | 48,504 | $ | (162,659 | ) | $ | (970 | ) | $ | 362,621 | $ | 709,277 | ||||||||||||
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See accompanying notes to unaudited pro forma condensed combined consolidated financial statements.
3
TESORO LOGISTICS LP
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF COMBINED CONSOLIDATED OPERATIONS
Year Ended December 31, 2011
Tesoro Logistics LP |
Historical Chevron Assets |
Pro Forma Adjustments - Chevron Assets |
Tesoro Logistics LP Pro Forma |
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(Dollars in thousands, except unit and per unit amounts) | ||||||||||||||||
REVENUES |
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Affiliate |
$ | 77,443 | $ | 14,120 | $ | (3,480 | )(j) | $ | 88,083 | |||||||
Third-party |
9,894 | 29,883 | 3,480 | (j) | 43,257 | |||||||||||
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Total Revenues |
87,337 | 44,003 | | 131,340 | ||||||||||||
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COSTS AND EXPENSES |
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Operating and maintenance expenses |
47,149 | 20,715 | | 67,864 | ||||||||||||
Depreciation and amortization expenses |
11,277 | | 19,396 | (k) | 30,673 | |||||||||||
General and administrative expenses |
8,776 | | | 8,776 | ||||||||||||
Loss on asset disposals |
26 | | | 26 | ||||||||||||
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Total Costs and Expenses |
67,228 | 20,715 | 19,396 | 107,339 | ||||||||||||
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OPERATING INCOME (LOSS) |
20,109 | 23,288 | (19,396 | ) | 24,001 | |||||||||||
Interest and financing costs, net |
(1,610 | ) | | | (1,610 | ) | ||||||||||
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NET INCOME (LOSS) |
18,499 | 23,288 | (19,396 | ) | 22,391 | |||||||||||
Less: Loss attributable to Predecessors |
(16,069 | ) | | | (16,069 | ) | ||||||||||
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Net income (loss) attributable to partners |
34,568 | 23,288 | (19,396 | ) | 38,460 | |||||||||||
Less: General partners interest in net income (loss), including incentive distribution rights |
692 | | 77 | 769 | ||||||||||||
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Limited partners interest in net income (loss) |
$ | 33,876 | $ | 23,288 | $ | (19,473 | ) | $ | 37,691 | |||||||
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Net income per limited partner unit: |
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Commonbasic and diluted |
$ | 1.11 | $ | 0.90 | ||||||||||||
Subordinatedbasic and diluted |
$ | 1.11 | $ | 0.79 | ||||||||||||
Weighted average limited partner units outstanding: |
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Common unitsbasic (1) |
15,254,890 | 13,064,838 | 28,319,728 | |||||||||||||
Common unitsdiluted (1) |
15,282,366 | 13,064,838 | 28,347,204 | |||||||||||||
Subordinated unitsbasic and diluted |
15,254,890 | | 15,254,890 |
(1) | Common unit adjustment includes units issued for the October Offering, ART Acquisition and the planned offering |
See accompanying notes to unaudited pro forma condensed combined consolidated financial statements.
4
TESORO LOGISTICS LP
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF COMBINED CONSOLIDATED OPERATIONS
Nine Months Ended September 30, 2012
Tesoro Logistics LP |
Historical ART Facility |
Pro Forma Adjustments - ART Facility |
Historical Chevron Assets |
Pro Forma Adjustments - Chevron Assets |
Tesoro Logistics LP Pro Forma |
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(Dollars in thousands, except unit and per unit amounts) | ||||||||||||||||||||||||
REVENUES |
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Affiliate |
$ | 98,052 | $ | | $ | 1,530 | (l) | $ | 11,748 | $ | (2,091 | )(j) | $ | 109,239 | ||||||||||
Third-party |
11,049 | | | 26,052 | 2,091 | (j) | 39,192 | |||||||||||||||||
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Total Revenues |
109,101 | | 1,530 | 37,800 | | 148,431 | ||||||||||||||||||
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COSTS AND EXPENSES |
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Operating and maintenance expenses |
44,500 | 492 | 24 | (m) | 14,908 | | 59,924 | |||||||||||||||||
Depreciation and amortization expenses |
8,892 | 231 | | | 14,547 | (k) | 23,670 | |||||||||||||||||
General and administrative expenses |
11,542 | 16 | | | | 11,558 | ||||||||||||||||||
Loss on asset disposals |
257 | | | | | 257 | ||||||||||||||||||
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Total Costs and Expenses |
65,191 | 739 | 24 | 14,908 | 14,547 | 95,409 | ||||||||||||||||||
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OPERATING INCOME (LOSS) |
43,910 | (739 | ) | 1,506 | 22,892 | (14,547 | ) | 53,022 | ||||||||||||||||
Interest and financing costs, net |
(3,360 | ) | | | | | (3,360 | ) | ||||||||||||||||
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NET INCOME (LOSS) |
40,550 | (739 | ) | 1,506 | 22,892 | (14,547 | ) | 49,662 | ||||||||||||||||
Less: Income (loss) attributable to Predecessors |
331 | (739 | ) | | | | (408 | ) | ||||||||||||||||
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Net income (loss) attributable to partners |
40,219 | | 1,506 | 22,892 | (14,547 | ) | 50,070 | |||||||||||||||||
Less: General partners interest in net income (loss), including incentive distribution rights |
1,436 | | 57 | | 316 | 1,809 | ||||||||||||||||||
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Limited partners interest in net income (loss) |
$ | 38,783 | $ | | $ | 1,449 | $ | 22,892 | $ | (14,863 | ) | $ | 48,261 | |||||||||||
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Net income per limited partner unit: |
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Commonbasic |
$ | 1.34 | $ | 1.11 | ||||||||||||||||||||
Commondiluted |
$ | 1.33 | $ | 1.10 | ||||||||||||||||||||
Subordinatedbasic and diluted |
$ | 1.19 | $ | 1.10 | ||||||||||||||||||||
Weighted average limited partner units outstanding: |
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Common unitsbasic |
15,424,700 | 4,564,838 | 8,500,000 | 28,489,538 | ||||||||||||||||||||
Common unitsdiluted |
15,513,252 | 4,564,838 | 8,500,000 | 28,578,090 | ||||||||||||||||||||
Subordinated unitsbasic and diluted |
15,254,890 | | | 15,254,890 |
See accompanying notes to unaudited pro forma condensed combined consolidated financial statements.
5
TESORO LOGISTICS LP
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The unaudited pro forma condensed combined consolidated financial information presents the application of pro forma adjustments to our historical financial statements to reflect the transactions described above in Background on page 1 of this Exhibit 99.3. The pro forma adjustments have been prepared as if the transactions described above had taken place as of September 30, 2012, in the case of the unaudited pro forma balance sheet, and as of January 1, 2011, in the case of the unaudited pro forma statements of operations. The unaudited pro forma condensed combined consolidated financial statements give pro forma effect to the following adjustments:
October Offering:
| the offering of 4,255,000 common units that took place on October 5, 2012; and |
| the payment of underwriting discounts totaling $6.9 million and $0.5 million of certain fees related to the October Offering. |
ART Acquisition:
| the ART Acquisition of the ART Facility assets and operations, recorded at historical cost of $48.5 million, which excludes working capital, other noncurrent liabilities and certain equipment, which were retained by Tesoro under the Second Amended and Restated Omnibus Agreement (the Amended Omnibus Agreement) and the payment of $0.7 million in costs associated with the ART Acquisition; |
| historical results of operations from the in-service date through September 30, 2012; |
| the issuance of 309,838 common limited partner units and 93,289 general partner units to TLGP for the ART Acquisition; |
| the execution of the TTA and the recognition of incremental revenues under the agreement; and |
| the amendment to the existing Amended Operational Services Schedules, which provides for the Partnership to reimburse Tesoro for operational support services. |
Chevron Acquisition:
| historical revenues and direct operating expenses for the Chevron Assets; |
| the allocation of the purchase price based on a preliminary estimate of the fair value; |
| the payment of $1.0 million in estimated costs associated with the Chevron Acquisition; |
| depreciation expense based on the fair value of the Chevron Assets; and |
| the reclassification of revenues from third party to affiliate to appropriately reflect the counterparty based on the assignment of the contracts in the Chevron Acquisition. |
Planned Offering:
| $369.3 million in gross proceeds from the Planned Offering of an estimated 8,500,000 common units representing limited partner interests; |
| the payment of underwriting discounts totaling $13.8 million and $0.6 million of certain estimated fees related to the Planned Offering; and |
| the issuance of 173,000 general partner units to TLGP. |
Note 2. Pro Forma Adjustments and Assumptions
(a) | Reflects the gross proceeds of $177.9 million from the October Offering and assumes gross proceeds of $369.3 million from the Planned Offering. The Planned Offering adjustment includes an estimated 8,500,000 common units representing limited partner interests based on an estimated public offering price of $43.45 per unit. The October Offering consists of 4,255,000 common units representing limited partner interests at a public offering price of $41.80 per unit. |
6
TESORO LOGISTICS LP
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(b) | Reflects the payment of underwriting discounts related to the October Offering of $6.9 million and to the Planned Offering of an assumed $13.8 million, each of which will be allocated to all unitholders. |
(c) | Reflects $0.5 million and an assumed $0.6 million for expenses associated with the October Offering and Planned Offering, respectively, including FINRA fees, legal and accounting services, SEC filing fees and other costs, which will be allocated to all unitholders. |
(d) | Reflects the ART Acquisition, along with the related distributions to TLGP as described in the contribution, conveyance and assumption agreement. The property, plant and equipment was recorded at historical cost as it is considered to be a transaction among entities under common control. |
(e) | Reflects $0.7 million and an assumed $1.0 million in costs associated with the ART Acquisition and Chevron Acquisition, respectively, including advisory fees and environmental, health and safety and mechanical integrity assessments, which are reflected as being expensed when incurred. |
(f) | Reflects the retention by Tesoro of the working capital of the ART Facility, which balances represented assets and liabilities related to the operations prior to the closing of the ART Acquisition. |
(g) | Represents the conversion of the adjusted equity related to of the predecessor of $43.3 million from equity of predecessors to the common unitholders and general partner unitholders of the Partnership, related to the ART Acquisition. The conversion is as follows: |
| $33.3 million for 309,838 common units; and |
| $10.0 million for 93,289 general partner units. |
(h) | For purposes of this pro forma analysis, the estimated purchase price for the Chevron Acquisition has been allocated based on a preliminary assessment of the fair value of the assets acquired and liabilities assumed, pending the completion of an independent appraisal and other evaluations. The Partnership cannot currently estimate the value of the purchase price to be allocated to goodwill or identifiable intangible assets at this time. The results of the pending appraisal may reflect a value for certain customer contracts or other identifiable intangible assets, the quantification of which cannot be determined at this time. Further, as the acquisition has not closed, certain amounts of working capital and other closing adjustments, including any environmental liabilities, have not been reflected in the pro forma adjustments. The preliminary purchase price allocation results in the following pro forma adjustments (in thousands): |
Prepayments and other current assets |
$ | 5,049 | ||
Property, plant and equipment |
394,951 | |||
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Preliminary purchase price allocation |
$ | 400,000 | ||
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(i) | Reflects the issuance of general partner units to TLGP to maintain a 2% interest in the partnership in connection with the Planned Offering. |
(j) | Reflects the adjustment to the Chevron Assets historical financial statements to properly classify revenue from transactions with Chevron affiliates as third-party and revenue from transactions with Tesoro as affiliate. The revenue from transactions with Chevron affiliates and Tesoro are presented below (in thousands): |
December 31, 2011 | September 30, 2012 | |||||||
Chevron affiliate revenue |
14,120 | 11,748 | ||||||
Tesoro revenue |
10,640 | 9,657 |
7
TESORO LOGISTICS LP
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(k) | Reflects the adjustment to depreciation expense for the Chevron Assets based upon the estimated fair value allocated to the acquired property, plant and equipment. The depreciation expense is calculated using the estimated depreciable lives ranging from 16 to 22 years and the straight-line depreciation method. |
(l) | Reflects recognition of affiliate revenues for services provided by us to manage and operate the ART Facility. Revenues were calculated using the contractual terms under the TTA that were entered into with Tesoro at the closing of the ART Acquisition. |
(m) | Reflects the pro-rata annual service fee, from the ART Facility in-service date, that the Partnership pays Tesoro under the terms of the Amended Operational Services Schedules for certain services provided at the ART Facility. |
Note 3. Pro Forma Net Income Per Unit
We use the two-class method when calculating the net income per unit applicable to limited partners, because we have more than one participating security. Our participating securities consist of common units, subordinated units, general partner units and incentive distribution rights. We base our calculation of net income per unit on the weighted-average number of common and subordinated limited partner units outstanding during the period.
Net income attributable to the Partnership is allocated between the limited (both common and subordinated) and general partners in accordance with our partnership agreement. Net income per unit is only calculated for the Partnership after its initial public offering as no units were outstanding prior to April 26, 2011. Distributions less than (greater than) earnings are allocated to the general partner and limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income per unit. The pro forma basic weighted-average number of units outstanding equals the historical weighted average number of units outstanding for each of the periods presented, plus the number of incremental common units as a result of the October Offering, Planned Offering and the ART Acquisition.
Diluted net income per unit includes the effects of potentially dilutive units on our common units, which consist of unvested service and performance phantom units. Basic and diluted net income per unit applicable to subordinated limited partners are the same as there are no potentially dilutive subordinated units outstanding.
Note 4. Commercial Agreements with Tesoro
In connection with the closing of the ART Acquisition, we entered into the TTA. The TTA is a long-term, fee-based commercial agreement with Tesoro, under which we agree to provide services to manage and operate the assets and Tesoro agrees to pay us fees based on minimum monthly throughput volumes. The agreement provides for initial terms of 10 years and the Partnership will have the option to renew the agreement for up to two five-year terms. The fees under this agreement will be indexed for inflation. We believe the terms and conditions under the TTA are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services.
In connection with the closing of the Chevron Acquisition, Chevron will assign its terminalling agreement with Tesoro to the Partnership. The services provided under the agreement include receiving products, temporarily storing products in tanks and providing delivery back to Tesoro via truck rack delivery to pipeline or product transfer. The agreement also provides for ethanol blending services and additive injection services. The fees under this agreement will be indexed for inflation.
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