Attached files

file filename
8-K - 8-K - Sunoco LPa15-7467_18k.htm
EX-2.1 - EX-2.1 - Sunoco LPa15-7467_1ex2d1.htm
EX-99.3 - EX-99.3 - Sunoco LPa15-7467_1ex99d3.htm
EX-23.1 - EX-23.1 - Sunoco LPa15-7467_1ex23d1.htm
EX-99.1 - EX-99.1 - Sunoco LPa15-7467_1ex99d1.htm
EX-99.2 - EX-99.2 - Sunoco LPa15-7467_1ex99d2.htm

Exhibit 99.4

 

SUNOCO LP

 

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

Introduction

 

The following unaudited pro forma combined financial statements of Sunoco LP (“SUN”), formerly Susser Petroleum Partners LP, reflects the pro forma impacts of multiple transactions, each of which is described in the following sections. Our unaudited pro forma financial statements as of and for the year ended December 31, 2014, reflect the following transactions:

 

·                  The previously reported October 1, 2014 acquisition of Mid-Atlantic Convenience Stores, LLC (“MACS”) from Energy Transfer Partners, L.P. (“ETP”), the owner of our general partner and a 42.8% limited partner interest in us, for total consideration consisting of (i) $556 million in cash, subject to adjustment for working capital, and (ii) 3,983,540 of our common units (the “MACS Acquisition”);

 

·                  The previously reported December 16, 2014, acquisition of Aloha Petroleum, Ltd. (“Aloha”) for cash consideration of $240 million, subject to a post-closing earn-out and certain closing adjustments (the “Aloha Acquisition”); and

 

·                  The proposed acquisition of a 31.58% interest in Sunoco, LLC from ETP Retail Holdings, LLC (“ETP Retail”), which is wholly owned by ETP, for total consideration consisting of approximately $775.0 million in cash and $40.8 million of our common units, including the proposed issuance of notes in this offering (the “Sunoco LLC Acquisition”).

 

The historical financial information included in the column entitled “SUN” was derived from the audited consolidated financial statements included in SUN’s Annual Report on Form 10-K for the year ended December 31, 2014. The unaudited pro forma condensed combined statement of operations assumes that the above transactions were consummated as of January 1, 2014. The unaudited pro forma condensed combined balance sheet assumes that the Sunoco LLC Acquisition was completed as of December 31, 2014. The MACS Acquisition and Aloha Acquisition are already reflected in our audited balance sheet as of December 31, 2014. The pro forma results of the MACS Acquisition and Aloha Acquisition were previously provided in our Current Report on Form 8-K/A on March 2, 2015.

 

MACS Acquisition

 

On September 25, 2014, SUN entered into a contribution agreement with MACS, ETC M-A Acquisition LLC (“ETC”) and ETP, whereby SUN agreed to acquire all of the issued and outstanding membership interests of MACS from ETC for $556 million in cash, subject to adjustment for working capital, and 3,983,540 SUN common units. SUN initially financed the cash portion of the purchase price by utilizing availability under its revolving credit facility, subsequently raising net proceeds of $405 million from the sale of 9.1 million common units which were used to repay revolver borrowing. The MACS Acquisition was completed on October 1, 2014.

 

SUN is accounting for the acquisition of MACS as a transfer of net assets between entities under common control. As such, the MACS assets acquired from ETP have been recorded by SUN at ETP’s historic carrying value, and SUN has included the activities of MACS in its 2014 audited financial statements as of the September 1, 2014 date of common control for accounting purposes. Financial statements for MACS were previously provided as attachments 99.2 and 99.3 to our Current Report on Form 8-K/A on October 21, 2014.

 

Aloha Acquisition

 

On September 25, 2014, SUN and Susser Petroleum Property Company LLC (“Propco”), a wholly owned subsidiary of SUN, entered into a purchase and sale agreement in which SUN and Propco agreed to acquire all of the issued and outstanding shares of capital stock of Aloha for base consideration of $240 million in cash, subject to a post-closing earn-out and certain closing adjustments. Consummation of the Aloha Acquisition occurred on December 16, 2014. SUN financed the purchase of Aloha by utilizing availability under its revolving credit facility. SUN’s management currently plans to contribute certain assets from Propco to SUN at a future date; however, the impact of this discretionary management action is not included in the accompanying pro forma combined financial information.

 

F-1



 

The pro forma adjustments reflect a preliminary purchase price allocation. The carrying values of assets and liabilities (excluding intangibles and non-current liabilities) in this preliminary estimate were assumed to approximate their fair values. Our identifiable intangible assets consist primarily of dealer relationships. The amount of goodwill preliminarily recorded represents the excess of our estimated enterprise value over the fair value of our assets and liabilities. The value of certain assets and liabilities are preliminary in nature, and are subject to adjustment as additional information is obtained about the facts and circumstances that existed at the acquisition date. As a result, material adjustments to this preliminary allocation may occur in the future. Management is reviewing the valuation and confirming the results to determine the final purchase price allocation.

 

Sunoco LLC Acquisition

 

On March 23, 2015, we entered into a contribution agreement with ETP Retail and ETP to acquire a 31.58% membership interest in Sunoco, LLC, for total consideration of $775 million in cash and $40.8 million of our common units. We will have a 50.1% voting interest in Sunoco, LLC. The Sunoco LLC Acquisition is expected to close in early April 2015.

 

SUN will account for the Sunoco LLC Acquisition as a transfer of net assets under common control, and therefore will record the acquired assets at ETP’s historic carrying value. Additionally, SUN will recast its historical financial statements to include the operations of Sunoco, LLC as of the September 1, 2014 date of common control for accounting purposes. Because we will have a controlling interest in Sunoco LLC as a result of our 50.1% voting interest, our pro forma financial results and balance sheet reflect the results of Sunoco LLC on a consolidated basis, which means that, except as otherwise indicated, our pro forma financial results and balance sheet reflect 100% of the assets and operations of Sunoco LLC, even though our pro forma economic interest is only 31.58%.

 

Adjustments for the above-listed transactions are presented in in the following schedules, and further described in the notes to the unaudited pro forma combined financial statements. Certain information normally included in the financial statements prepared in accordance with GAAP has been condensed or omitted in accordance with the rules and regulations of the SEC. The unaudited pro forma combined financial statements and accompanying notes should be read in conjunction with the historical financial statements and related notes thereto.

 

The unaudited pro forma condensed combined financial statements do not purport to be indicative of the results of operations or financial position that we actually would have achieved if the transactions had been consummated on the dates indicated, nor do they project our results of operations or financial position for any future period or date.

 

F-2



 

SUNOCO LP

 

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

 

As of December 31, 2014

 

(Dollars in thousands)

 

 

 

Historical

 

Pro Forma
Adjustments

 

 

 

Pro Forma

 

 

 

SUN

 

Sunoco LLC

 

Sunoco LLC

 

 

 

Combined

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

67,151

 

$

 

$

 

 

 

$

67,151

 

Advances to affiliated companies

 

 

396,376

 

(389,376

)

(k)

 

7,000

 

Accounts receivable, net of allowance

 

64,082

 

129,598

 

 

 

 

193,680

 

Accounts receivable affiliates

 

36,716

 

54,316

 

(66,291

)

(k)

 

24,741

 

Inventories, net

 

48,646

 

276,408

 

 

 

 

325,054

 

Other current assets

 

8,546

 

40,735

 

 

 

 

49,281

 

Total current assets

 

225,141

 

897,433

 

(455,667

)

 

 

666,907

 

Property and equipment, net

 

905,465

 

394,814

 

 

 

 

1,300,279

 

Goodwill

 

863,458

 

 

 

 

 

863,458

 

Intangible assets, net

 

172,108

 

185,796

 

13,500

 

(l)

 

371,404

 

Deferred tax asset—long-term

 

14,893

 

 

 

 

 

14,893

 

Other noncurrent assets

 

16,416

 

1,718

 

 

 

 

18,134

 

Total Assets

 

$

2,197,481

 

$

1,479,761

 

$

(442,167

)

 

 

$

3,235,075

 

LIABILITIES AND PARTNERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

95,932

 

$

390,188

 

$

 

 

 

$

486,120

 

Accounts payable affiliates

 

3,112

 

140,900

 

(66,291

)

(k)

 

77,721

 

Current maturities of long-term debt

 

13,757

 

 

 

 

 

13,757

 

Other current liabilities

 

41,881

 

 

 

 

 

41,881

 

Total current liabilities

 

154,682

 

531,088

 

(66,291

)

 

 

619,479

 

Revolving line of credit

 

683,378

 

 

(11,500

)

(m)

 

671,878

 

Long term debt

 

173,383

 

 

800,000

 

(n)

 

973,383

 

Other noncurrent liabilities

 

49,306

 

1,756

 

 

 

 

51,062

 

Total Liabilities

 

1,060,749

 

532,844

 

722,209

 

 

 

2,315,802

 

Noncontrolling interest

 

(5,644

)

 

381,466

 

(o)

 

375,822

 

Partners’ equity

 

1,142,376

 

946,917

 

(1,545,842

)

(p)

 

543,451

 

Total Liabilities and Partners’ Equity

 

$

2,197,481

 

$

1,479,761

 

$

(442,167

)

 

 

$

3,235,075

 

 

F-3



 

SUNOCO LP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2014

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical

 

Pro Forma Adjustments

 

 

 

Pro Forma
Combined,
Before
Sunoco LLC

 

Historical

 

Pro Forma
Adjustments

 

 

 

Pro Forma
Combined,
After
Sunoco LLC

 

 

 

SUN

 

MACS (a)

 

Aloha (b)

 

Adjustments

 

 

 

Transaction

 

Sunoco, LLC

 

Sunoco, LLC

 

 

 

Acquisition

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

 

$

52,275

 

$

88,616

 

$

47,084

 

 

 

 

 

$

187,975

 

$

 

$

 

 

 

$

187,975

 

Motor fuel sales—third parties

 

2,216,665

 

1,006,520

 

620,633

 

(48,958

)

(c)

 

3,794,860

 

14,067,955

 

(1,389,265

)

(q)

 

16,473,550

 

Motor fuel sales—affiliated

 

3,074,236

 

 

 

 

 

 

 

3,074,236

 

3,232,383

 

(325,877

)

(q)

 

5,980,742

 

Other Income

 

38,840

 

16,319

 

20,042

 

 

 

 

 

75,201

 

40,721

 

 

 

 

115,922

 

Total revenues

 

5,382,016

 

1,111,455

 

687,759

 

(48,958

)

 

 

7,132,272

 

17,341,059

 

(1,715,142

)

 

 

22,758,189

 

Cost of Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise

 

38,820

 

64,234

 

34,292

 

 

 

 

 

137,346

 

 

 

 

 

137,346

 

Motor fuel

 

5,163,628

 

950,958

 

557,684

 

(48,958

)

(c)

 

6,623,312

 

17,044,158

 

(1,715,142

)

(q)

 

21,952,328

 

Other

 

3,642

 

 

1,576

 

 

 

 

 

5,218

 

 

 

 

 

5,218

 

Total Cost of Sales

 

5,206,090

 

1,015,192

 

593,552

 

(48,958

)

 

 

6,765,876

 

17,044,158

 

(1,715,142

)

 

 

22,094,892

 

Gross Profit

 

175,926

 

96,263

 

94,207

 

 

 

 

366,396

 

296,901

 

 

 

 

663,297

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

71,873

 

37,965

 

64,827

 

 

 

 

 

174,665

 

167,210

 

 

 

 

341,875

 

Loss (gain) on disposal of assets and impairment charge

 

2,631

 

295

 

241

 

 

 

 

 

3,167

 

(2,450

)

 

 

 

717

 

Depreciation, amortization and accretion

 

26,955

 

20,536

 

9,772

 

204

 

(d)

 

57,467

 

50,547

 

 

 

 

108,014

 

Acquisition transaction costs

 

 

 

523

 

(523

)

(d)

 

 

 

 

 

 

 

Total operating expenses

 

101,459

 

58,796

 

75,363

 

(319

)

 

 

235,299

 

215,307

 

 

 

 

450,606

 

Income from operations

 

74,467

 

37,467

 

18,844

 

319

 

 

 

131,097

 

81,594

 

 

 

 

212,691

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(14,329

)

(6,802

)

(2,696

)

(2,181

)

(e)

 

(28,306

)

 

(1,688

)

(l)

 

(77,452

)

 

 

 

 

 

 

 

 

2,696

 

(f)

 

 

 

 

 

542

 

(m)

 

 

 

 

 

 

 

 

 

 

 

(4,994

)

(g)

 

 

 

 

 

(48,000

)

(n)

 

 

 

Other miscellaneous

 

 

 

134

 

 

 

 

 

134

 

 

 

 

 

134

 

Total other income (expense)

 

(14,329

)

(6,802

)

(2,562

)

(4,479

)

 

 

(28,172

)

 

(49,146

)

 

 

(77,318

)

Income before income tax

 

60,138

 

30,665

 

16,282

 

(4,160

)

 

 

102,925

 

81,594

 

(49,146

)

 

 

135,373

 

Income tax (expense) benefit

 

(2,352

)

(0

)

(6,607

)

(3,199

)

(h)

 

(12,158

)

(44,862

)

44,862

 

(r)

 

(12,158

)

Net Income

 

57,786

 

30,665

 

9,675

 

(7,359

)

 

 

90,767

 

36,732

 

(4,284

)

 

 

123,215

 

Less: Net income attributable to noncontrolling interest

 

(1,043

)

(2,086

)

 

 

 

 

(3,129

)

 

(55,826

)

(o)

 

(58,955

)

Net income attributable to Sunoco LP

 

$

56,743

 

$

28,579

 

$

9,675

 

$

(7,359

)

 

 

$

87,638

 

$

36,732

 

$

(60,110

)

 

 

$

64,260

 

Net income per limited partner unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common—basic

 

$

1.96

 

 

 

 

 

 

 

 

 

$

2.29

 

 

 

 

 

 

 

$

1.59

 

Common—diluted

 

$

1.96

 

 

 

 

 

 

 

 

 

$

2.29

 

 

 

 

 

 

 

$

1.58

 

Subordinated—(basic and diluted)

 

$

1.96

 

 

 

 

 

 

 

 

 

$

2.29

 

 

 

 

 

 

 

$

1.59

 

Weighted average limited partner units outstanding (diluted):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units—basic

 

14,206,536

 

 

 

 

 

9,872,520

 

(i)

 

24,079,056

 

 

 

795,482

 

(s)

 

24,874,538

 

Common units—equivalents

 

17,112

 

 

 

 

 

 

 

 

 

17,112

 

 

 

 

 

 

 

17,112

 

Common units—diluted

 

14,223,648

 

 

 

 

 

9,872,520

 

(i)

 

24,096,168

 

 

 

795,482

 

 

 

24,891,650

 

Subordinated units

 

10,939,436

 

 

 

 

 

 

 

 

 

10,939,436

 

 

 

 

 

 

 

10,939,436

 

 

F-4



 

SUNOCO LP

 

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

As previously presented in our Current Report on Form 8-K/A filed on March 2, 2015, the unaudited pro forma condensed combined statement of operations presented above gives effect to the MACS Acquisition and the Aloha Acquisition as if all of these transactions had been consummated as of January 1, 2014.

 

(a)                                 To reflect the addition of MACS operating results for the eight months ended August 31, 2014. These amounts reflect the unaudited results for the nine months ended September 30, 2014, reduced by the results for the month of September 2014 which has already been reflected in our audited results of operations for the twelve months ended December 31, 2014. We previously filed audited financial statements for MACS in our Current Report on Form 8-K/A filed on October 21, 2014. Additional information regarding the MACS Acquisition may be found in the Notes to Consolidated Financial Statements included in our Form 10-K filed on February 27, 2015.

 

(b)                                 To reflect the operating results for Aloha for the 11.5 months ended December 15, 2014. These amounts reflect the unaudited results for the nine months ended September 30, 2014, included as Exhibit 99.2 in our Current Report on Form 8-K/A filed on March 2, 2015, plus Aloha’s results of operations for the period October 1, 2014 through December 15, 2014. Aloha’s results for the period December 16, 2014 through December 31, 2014 are included in SUN’s 2014 results. We previously filed audited financial statements for Aloha in our Current Report on Form 8-K/A filed on October 21, 2014. Additional information regarding the Aloha Acquisition may be found in the Notes to Consolidated Financial Statements included in our Form 10-K filed on February 27, 2015.

 

(c)                                  To conform the Aloha accounting policies for the presentation of motor fuel taxes as gross in motor fuel sales and motor fuel cost of sales, to SUN’s accounting policy to present wholesale motor fuel taxes net in motor fuel sales and motor fuel cost of sales.

 

(d)                                 To reflect the acquisition of Aloha by Propco to include the amortization on the estimated fair value of the trade name over 15 years, and elimination of non-recurring acquisition expenses.

 

(e)                                  To reflect interest expense on the $150.8 million draw on our revolving credit facility required in excess of equity issuance net proceeds to finance the cash payment made to ETP for the acquisition of MACS. Interest on the revolving credit facility is calculated to reflect 8 months of interest based on a variable rate. The borrowing rate as of February 27, 2014 of 2.2% is assumed for the entire period presented.

 

(f)                                   To remove historical interest expense related to Aloha’s $32.2 million of debt that was repaid concurrent with the closing of the Aloha Acquisition.

 

(g)                                  To reflect interest expense on the funding of Aloha Acquisition with a $240 million draw on our revolving credit facility. Assumed interest rate of 2.2%, reflecting our 30-day LIBOR borrowing cost as of February 27, 2014, resulting in annual pro forma interest expense of $5.0 million. A 0.125% change in the interest rate would impact annual interest expense by $0.3 million.

 

(h)                                 To reflect the estimated income tax provision for the portion of MACS operations that is included in Propco’s results of operations, at an estimated combined federal and state statutory tax rate of 39.6%.

 

(i)                                     To adjust the weighted average common units outstanding for the issuance of approximately 4.0 million units to ETP in October 2014, and the issuance of a total of approximately 9.1 million units to the public in October and November 2014, as if they had been issued on January 1, 2014 for purposes of calculating pro forma earnings per unit.

 

The unaudited pro forma condensed combined financial statements presented above further gives effect to the Sunoco LLC Acquisition as if this transaction had been consummated as of January 1, 2014 for the unaudited pro forma condensed statement of operations, and as of December 31, 2014 for the unaudited pro forma condensed combined balance sheet.

 

F-5



 

(k)                                 To eliminate $66.3 million intercompany accounts receivable and payable between Sunoco LP and Sunoco LLC, and to adjust advances to affiliated companies to reflect cash deemed distributed to parent on formation and actually distributed subsequent to formation.

 

(l)                                     To reflect an estimated $13.5 million loan issuance expenses related to the new senior notes to be recorded as an intangible asset with an eight year amortization, and $1.7 million amortization expense included in non-cash interest expense.

 

(m)                             To reflect a partial paydown of the revolving credit facility with proceeds of the senior notes offering in excess of cash required for the Sunoco LLC Acquisition, including $13.5 million estimated loan issuance expenses. The related reduction in interest expense assumes the rate as of March 13, 2015 of 2.2% for the entire period.

 

(n)                                 To reflect the issuance of $800.0 million senior notes. Cash interest expense is estimated assuming the notes are issued at par and at a 6.0% coupon. A .0125% change in the interest rate would impact annual interest expense by $1.0 million.

 

(o)                                 To reflect the 68.42% non-controlling interest in Sunoco, LLC.

 

(p)                                 To reflect the acquisition of Sunoco, LLC from ETP. The net adjustment to partners’ equity is comprised of the following adjustments (in millions):

 

Eliminate historic partners’ equity

 

$

(946.9

)

Issuance of units in exchange for 31.58% net assets acquired

 

176.1

 

Deemed distribution

 

(775.0

)

Net adjustment to partners’ equity

 

$

(1,545.8

)

 

(q)                                 To conform the Sunoco, LLC accounting policies for the presentation of motor fuel taxes as gross in motor fuel sales and motor fuel cost of sales, to SUN’s accounting policy to present wholesale motor fuel taxes net in motor fuel sales and motor fuel cost of sales.

 

(r)                                    To eliminate income tax expense prior to June 1, 2014, at which time Sunoco LLC was formed and ceased being a taxable entity.

 

(s)                                   To reflect the issuance of an estimated 0.8 million common units to ETP.

 

F-6