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EX-31.02 - EXHIBIT 31.02 - NuStar Energy L.P.ns1q1510-qex3102.htm
EX-32.01 - EXHIBIT 32.01 - NuStar Energy L.P.ns1q1510-qex3201.htm
EX-31.01 - EXHIBIT 31.01 - NuStar Energy L.P.ns1q1510-qex3101.htm
EX-32.02 - EXHIBIT 32.02 - NuStar Energy L.P.ns1q1510-qex3202.htm
EX-12.01 - EXHIBIT 12.01 - NuStar Energy L.P.ns1q1510-qex1201.htm
EXCEL - IDEA: XBRL DOCUMENT - NuStar Energy L.P.Financial_Report.xls

 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________________
 FORM 10-Q
 _________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______            
Commission File Number 1-16417
  _________________________________________
NUSTAR ENERGY L.P.
(Exact name of registrant as specified in its charter)
  _________________________________________
 
Delaware
 
74-2956831
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
19003 IH-10 West
San Antonio, Texas
 
78257
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code (210) 918-2000
 _________________________________________
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  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act:
Large accelerated filer
 
x
Accelerated filer
 
o
 
 
 
 
 
 
Non-accelerated filer
 
o  (Do not check if a smaller reporting company)
Smaller reporting company
 
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o   No  x
The number of common units outstanding as of April 30, 2015 was 77,886,078.
 
 
 
 
 



NUSTAR ENERGY L.P.
FORM 10-Q
TABLE OF CONTENTS
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
 
Item 2.
 
 
 
Item 6.
 
 

2


PART I – FINANCIAL INFORMATION

Item 1.
Financial Statements
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars, Except Unit Data)
 
March 31,
2015
 
December 31,
2014
 
(Unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
78,183

 
$
87,912

Accounts receivable, net of allowance for doubtful accounts of $7,785
and $7,808 as of March 31, 2015 and December 31, 2014, respectively
189,655

 
208,314

Receivable from related parties

 
164

Inventories
43,693

 
55,713

Other current assets
24,677

 
35,944

Assets held for sale

 
1,100

Total current assets
336,208

 
389,147

Property, plant and equipment, at cost
4,984,442

 
4,815,396

Accumulated depreciation and amortization
(1,392,156
)
 
(1,354,664
)
Property, plant and equipment, net
3,592,286

 
3,460,732

Intangible assets, net
128,700

 
58,670

Goodwill
704,488

 
617,429

Investment in joint venture

 
74,223

Deferred income tax asset
4,330

 
4,429

Other long-term assets, net
318,135

 
314,166

Total assets
$
5,084,147

 
$
4,918,796

Liabilities and Partners’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
114,032

 
$
162,056

Payable to related party
16,808

 
15,128

Short-term debt
46,000

 
77,000

Accrued interest payable
27,397

 
33,345

Accrued liabilities
39,943

 
61,025

Taxes other than income tax
12,543

 
14,121

Income tax payable
3,562

 
2,517

Total current liabilities
260,285

 
365,192

Long-term debt
2,987,413

 
2,749,452

Long-term payable to related party
35,220

 
33,537

Deferred income tax liability
24,804

 
27,308

Other long-term liabilities
50,468

 
27,097

Commitments and contingencies (Note 5)

 

Partners’ equity:
 
 
 
Limited partners (77,886,078 common units outstanding
as of March 31, 2015 and December 31, 2014)
1,774,277

 
1,744,810

General partner
39,693

 
39,312

Accumulated other comprehensive loss
(88,013
)
 
(67,912
)
Total partners’ equity
1,725,957

 
1,716,210

Total liabilities and partners’ equity
$
5,084,147

 
$
4,918,796

See Condensed Notes to Consolidated Financial Statements.

3


NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
 
Three Months Ended March 31,
 
2015
 
2014
Revenues:
 
 
 
Service revenues
$
269,973

 
$
229,338

Product sales
284,971

 
619,875

Total revenues
554,944

 
849,213

Costs and expenses:
 
 
 
Cost of product sales
262,506

 
594,959

Operating expenses:
 
 
 
Third parties
84,360

 
77,406

Related party
31,287

 
28,659

Total operating expenses
115,647

 
106,065

General and administrative expenses:
 
 
 
Third parties
7,667

 
6,762

Related party
17,386

 
14,094

Total general and administrative expenses
25,053

 
20,856

Depreciation and amortization expense
52,457

 
46,230

Total costs and expenses
455,663

 
768,110

Operating income
99,281

 
81,103

Equity in loss of joint ventures

 
(4,306
)
Interest expense, net
(32,037
)
 
(34,417
)
Interest income from related party

 
1,055

Other income, net
62,268

 
3,678

Income from continuing operations before income tax expense
129,512

 
47,113

Income tax expense
2,387

 
4,117

Income from continuing operations
127,125

 
42,996

Income (loss) from discontinued operations, net of tax
774

 
(3,359
)
Net income
127,899

 
39,637

Less net loss attributable to noncontrolling interest

 
(107
)
Net income attributable to NuStar Energy L.P.
$
127,899

 
$
39,744

Net income (loss) per unit applicable to limited partners:
 
 
 
Continuing operations
$
1.46

 
$
0.40

Discontinued operations
0.01

 
(0.04
)
Total (Note 10)
$
1.47

 
$
0.36

Weighted-average limited partner units outstanding
77,886,078

 
77,886,078

 
 
 
 
Comprehensive income
$
107,798

 
$
37,718

Less comprehensive loss attributable to noncontrolling interest

 
(552
)
Comprehensive income attributable to NuStar Energy L.P.
$
107,798

 
$
38,270

See Condensed Notes to Consolidated Financial Statements.

4


NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Thousands of Dollars)
 
Three Months Ended March 31,
 
2015
 
2014
Cash Flows from Operating Activities:
 
 
 
Net income
$
127,899

 
$
39,637

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization expense
52,457

 
46,230

Amortization of debt related items
2,237

 
2,424

Gain from sale or disposition of assets
(75
)
 
(24
)
Gain associated with the Linden Acquisition
(56,277
)
 

Asset impairment loss

 
2,067

Deferred income tax (benefit) expense
(535
)
 
3,054

Equity in loss of joint ventures

 
4,306

Distributions of equity in earnings of joint ventures
2,500

 
2,366

Changes in current assets and current liabilities (Note 11)
(7,774
)
 
(38,795
)
Other, net
2,150

 
2,060

Net cash provided by operating activities
122,582

 
63,325

Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(72,880
)
 
(54,486
)
Change in accounts payable related to capital expenditures
(13,464
)
 
(8,560
)
Acquisitions
(142,500
)
 

Investment in other long-term assets
(2,177
)
 

Proceeds from sale or disposition of assets
1,185

 
66

Increase in note receivable from Axeon

 
(13,328
)
Other, net

 
(23
)
Net cash used in investing activities
(229,836
)
 
(76,331
)
Cash Flows from Financing Activities:
 
 
 
Proceeds from long-term debt borrowings
330,532

 
245,213

Proceeds from short-term debt borrowings
163,000

 

Long-term debt repayments
(83,166
)
 
(189,280
)
Short-term debt repayments
(194,000
)
 

Distributions to unitholders and general partner
(98,051
)
 
(98,051
)
Decrease in cash book overdrafts
(14,294
)
 
(215
)
Other, net
(10
)
 
(369
)
Net cash provided by (used in) financing activities
104,011

 
(42,702
)
Effect of foreign exchange rate changes on cash
(6,486
)
 
(2,437
)
Net decrease in cash and cash equivalents
(9,729
)
 
(58,145
)
Cash and cash equivalents as of the beginning of the period
87,912

 
100,743

Cash and cash equivalents as of the end of the period
$
78,183

 
$
42,598

See Condensed Notes to Consolidated Financial Statements.

5


NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization and Operations
NuStar Energy L.P. (NuStar Energy) (NYSE: NS) is a publicly held Delaware limited partnership engaged in the transportation of petroleum products and anhydrous ammonia, the terminalling and storage of petroleum products and the marketing of petroleum products. Unless otherwise indicated, the terms “NuStar Energy,” “the Partnership,” “we,” “our” and “us” are used in this report to refer to NuStar Energy L.P., to one or more of our consolidated subsidiaries or to all of them taken as a whole. NuStar GP Holdings, LLC (NuStar GP Holdings) (NYSE: NSH) owns our general partner, Riverwalk Logistics, L.P., and owns a 14.9% total interest in us as of March 31, 2015.

We conduct our operations through our subsidiaries, primarily NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline Operating Partnership L.P. (NuPOP). We have three business segments: pipeline, storage and fuels marketing.

Basis of Presentation
These unaudited condensed consolidated financial statements include the accounts of the Partnership and subsidiaries in which the Partnership has a controlling interest. Noncontrolling interests are separately disclosed on the financial statements. Inter-partnership balances and transactions have been eliminated in consolidation. We account for investments in joint ventures using the equity method of accounting.

These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included, and all disclosures are adequate. All such adjustments are of a normal recurring nature unless disclosed otherwise. Financial information for the three months ended March 31, 2015 and 2014 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited condensed consolidated financial statements. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The consolidated balance sheet as of December 31, 2014 has been derived from the audited consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.

New Accounting Pronouncements
In April 2015, the Financial Accounting Standards Board (FASB) issued amended guidance for the presentation of debt issuance costs. Under the amended guidance, debt issuance costs will be presented on the balance sheet as a deduction from the carrying value of the associated debt liability. The changes are effective for annual and interim periods beginning after December 15, 2015, and retrospective application is required. Early adoption is permitted. We will adopt these provisions January 1, 2016, and we do not expect the amended guidance to have a material impact on our financial position, results of operations or disclosures.

In February 2015, the FASB issued new consolidation guidance that modifies the criterion involved in a reporting organization’s evaluation of whether certain legal entities are subject to consolidation under the standard. The standard is effective for public companies for annual and interim reporting periods beginning after December 15, 2015, using one of two retrospective transition methods. Early adoption is permitted. We are currently assessing the impact of this new guidance on our financial statements and disclosures, and we have not yet selected a transition method.

In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard. The standard is effective for public entities for annual and interim periods beginning after December 15, 2016, using one of two retrospective transition methods. Early adoption is not permitted for public entities. We are currently assessing the impact of this new guidance on our financial statements and disclosures, and we have not yet selected a transition method.


6

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. ACQUISITIONS AND DISPOSITIONS

Acquisitions
Linden Acquisition. On January 2, 2015, we acquired full ownership of ST Linden Terminal, LLC (Linden), which owns a refined products terminal in Linden, NJ with 4.3 million barrels of storage capacity (the Linden Acquisition). Linden is located on a 44-acre facility that provides deep-water terminalling capabilities in the New York Harbor and primarily stores petroleum products, including gasoline, jet fuel and fuel oils. Prior to the Linden Acquisition, Linden operated as a joint venture between us and Linden Holding Corp, with each party owning 50 percent.

In connection with the Linden Acquisition, we ceased applying the equity method of accounting and consolidated Linden, which is included in our storage segment. The condensed consolidated statements of comprehensive income include the results of operations for Linden commencing on January 2, 2015. On the acquisition date, we remeasured our existing 50% equity investment in Linden to its fair value of $128.0 million and we recognized a gain of $56.3 million in “Other income, net” in the condensed consolidated statements of comprehensive income for the three months ended March 31, 2015. We estimated the fair value using a market approach, which estimates the enterprise value based on an earnings multiple. We funded the acquisition with borrowings under our revolving credit agreement. The acquisition complements our existing storage operations, and having sole ownership of Linden strengthens our presence in the New York Harbor and the East Coast market.

We accounted for the Linden Acquisition using the acquisition method. The purchase price has been preliminarily allocated based on the estimated fair values of the individual assets acquired and liabilities assumed at the date of the acquisition pending completion of an independent evaluation. The preliminary purchase price allocation was as follows (in thousands of dollars):
Cash paid for the Linden Acquisition
$
142,500

Fair value of liabilities assumed
22,865

Consideration
165,365

Acquisition date fair value of previously held equity interest
128,000

Total
$
293,365

 
 
Current assets
$
1,746

Property, plant and equipment
129,400

Goodwill
87,059

Intangible assets
75,050

Other long-term assets
110

Purchase price allocation
$
293,365

The intangible assets primarily consist of customer contracts and relationships and are being amortized over 10 years.

Dispositions
Discontinued Operations. In January 2015, we sold our terminal in Alamogordo, NM with storage capacity of 0.1 million barrels for proceeds of $1.1 million. We classified the associated property, plant and equipment as “Assets held for sale” on the consolidated balance sheet as of December 31, 2014. In 2014, we divested our terminals in Mobile, AL, Wilmington, NC and Dumfries, VA and our 75% interest in our facility in Mersin, Turkey. We presented the results of operations for those facilities as discontinued operations. We allocated interest expense of $0.4 million for the three months ended March 31, 2014 to discontinued operations based on the ratio of net assets discontinued to consolidated net assets. The following table summarizes the results from discontinued operations:
 
Three Months Ended March 31,
 
2015
 
2014
 
(Thousands of Dollars)
Revenues
$
208

 
$
1,821

Income (loss) before income tax expense
$
774

 
$
(3,359
)


7

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2014 Asphalt Sale. On February 26, 2014, we sold our remaining 50% ownership interest in NuStar Asphalt LLC to Lindsay Goldberg LLC (Lindsay Goldberg), a private investment firm (the 2014 Asphalt Sale). Effective February 27, 2014, NuStar Asphalt LLC changed its name to Axeon Specialty Products LLC (Axeon). Lindsay Goldberg now owns 100% of Axeon. As a result of the 2014 Asphalt Sale, we ceased applying the equity method of accounting.

3. INVENTORIES

Inventories consisted of the following:
 
March 31,
2015

December 31,
2014
 
(Thousands of Dollars)
Crude oil
$
539

 
$
3,527

Finished products
34,246

 
43,206

Materials and supplies
8,908

 
8,980

Total
$
43,693

 
$
55,713


4. DEBT

Revolving Credit Agreement
During the three months ended March 31, 2015, the balance under our $1.5 billion five-year revolving credit agreement (the Revolving Credit Agreement) increased by $239.1 million, which we used for general partnership purposes and to fund the Linden Acquisition. The Revolving Credit Agreement bears interest, at our option, based on an alternative base rate, a LIBOR-based rate or a EURIBOR-based rate. The interest rate on the Revolving Credit Agreement is subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. As of March 31, 2015, our weighted-average interest rate was 1.9% and we had $840.6 million outstanding.

The Revolving Credit Agreement contains customary restrictive covenants, such as limitations on indebtedness, liens, mergers, asset transfers and certain investing activities. In addition, the Revolving Credit Agreement requires us to maintain, as of the end of each rolling period of four consecutive fiscal quarters, a consolidated debt coverage ratio (consolidated debt to consolidated EBITDA, each as defined in the Revolving Credit Agreement) not to exceed 5.00-to-1.00. However, if we consummate one or more acquisitions for an aggregate net consideration of at least $50.0 million, the maximum consolidated debt coverage ratio will increase to 5.50-to-1.00 for two rolling periods. As of March 31, 2015, our consolidated debt coverage ratio could not exceed 5.50-to-1.00, as a result of the Linden Acquisition in January 2015. The requirement not to exceed a maximum consolidated debt coverage ratio may limit the amount we can borrow under the Revolving Credit Agreement to an amount less than the total amount available for borrowing. As of March 31, 2015, our consolidated debt coverage ratio was 4.1x, and we had $602.5 million available for borrowing.

Gulf Opportunity Zone Revenue Bonds
In 2008, 2010 and 2011, the Parish of St. James, Louisiana issued, pursuant to the Gulf Opportunity Zone Act of 2005, tax-exempt revenue bonds (the GoZone Bonds) associated with our St. James, Louisiana terminal expansions. The GoZone Bonds bear interest based on a weekly tax-exempt bond market interest rate, and interest is paid monthly. The interest rate was 0.1% as of March 31, 2015. Following the issuance, the proceeds were deposited with a trustee and are disbursed to us upon our request for reimbursement of expenditures related to our St. James terminal expansion. We include the amount remaining in trust in “Other long-term assets, net,” and we include the amount of bonds issued in “Long-term debt” on the consolidated balance sheets. For the three months ended March 31, 2015, we received $0.5 million from the trustee. As of March 31, 2015, the amount remaining in trust totaled $71.0 million.

Short-term Lines of Credit
As of March 31, 2015, we had two short-term line of credit agreements with an aggregate uncommitted borrowing capacity of up to $80.0 million. These agreements allow us to better manage the fluctuations in our daily cash requirements and minimize our excess cash balances. The interest rate and maturity vary and are determined at the time of the borrowing. We had $46.0 million outstanding under these short-term lines of credit as of March 31, 2015.


8

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5. COMMITMENTS AND CONTINGENCIES

Contingencies
We have contingent liabilities resulting from various litigation, claims and commitments. We record accruals for loss contingencies when losses are considered probable and can be reasonably estimated. Legal fees associated with defending the Partnership in legal matters are expensed as incurred. As of March 31, 2015, we have accrued $4.4 million for contingent losses. The amount that will ultimately be paid may differ from the recorded accruals, and the timing of such payments is uncertain. In addition, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on our results of operations, financial position or liquidity.

6. FAIR VALUE MEASUREMENTS

We segregate the inputs used in measuring fair value into three levels: Level 1, defined as observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists. We consider counterparty credit risk and our own credit risk in the determination of all estimated fair values.

Recurring Fair Value Measurements
The following assets and liabilities are measured at fair value on a recurring basis:
 
March 31, 2015
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Thousands of Dollars)
Assets:
 
 
 
 
 
 
 
Other current assets:
 
 
 
 
 
 
 
Product imbalances
$
1,375

 
$

 
$

 
$
1,375

Commodity derivatives
2,872

 
3,258

 

 
6,130

Other long-term assets, net:
 
 
 
 
 
 
 
Interest rate swaps

 
397

 

 
397

Total
$
4,247

 
$
3,655

 
$

 
$
7,902

Liabilities:
 
 
 
 
 
 
 
Accrued liabilities:
 
 
 
 
 
 
 
Product imbalances
$
(2,499
)
 
$

 
$

 
$
(2,499
)
Commodity derivatives

 
(2,217
)
 

 
(2,217
)
Other long-term liabilities:
 
 
 
 
 
 
 
Guarantee liability

 

 
(595
)
 
(595
)
Interest rate swaps

 
(2,432
)
 

 
(2,432
)
Total
$
(2,499
)
 
$
(4,649
)
 
$
(595
)
 
$
(7,743
)


9

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 
December 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Thousands of Dollars)
Assets:
 
 
 
 
 
 
 
Other current assets:
 
 
 
 
 
 
 
Product imbalances
$
117

 
$

 
$

 
$
117

Commodity derivatives
11,009

 
5,353

 

 
16,362

Total
$
11,126

 
$
5,353

 
$

 
$
16,479

Liabilities:
 
 
 
 
 
 
 
Accrued liabilities:
 
 
 
 
 
 
 
Product imbalances
$
(1,388
)
 
$

 
$

 
$
(1,388
)
Commodity derivatives

 
(4,623
)
 

 
(4,623
)
Other long-term liabilities:
 
 
 
 
 
 
 
Guarantee liability

 

 
(580
)
 
(580
)
Total
$
(1,388
)
 
$
(4,623
)
 
$
(580
)
 
$
(6,591
)

Product Imbalances. We value our assets and liabilities related to product imbalances using quoted market prices in active markets as of the reporting date. Therefore, we include these product imbalances in Level 1 of the fair value hierarchy.

Interest Rate Swaps. We estimate the fair value of our forward-starting interest rate swaps using discounted cash flows, which
use observable inputs such as time to maturity and market interest rates. Therefore, we include these interest rate swaps in Level 2 of the fair value hierarchy.

Commodity Derivatives. We base the fair value of certain of our commodity derivative instruments on quoted prices on an exchange; accordingly, we include these items in Level 1 of the fair value hierarchy. We also have derivative instruments for which we determine fair value using industry pricing services and other observable inputs, such as quoted prices on an exchange for similar derivative instruments. Therefore, we include these derivative instruments in Level 2 of the fair value hierarchy. See Note 7 for a discussion of our derivative instruments.

Guarantees. We provide credit support, such as guarantees, letters of credit and cash collateral, as applicable, of up to $150.0 million to Axeon. As of March 31, 2015 and December 31, 2014, we provided guarantees mainly for commodity purchases, lease obligations and certain utilities for Axeon with an aggregate maximum potential exposure of $25.9 million and $25.3 million, respectively, and two guarantees that do not specify a maximum amount. A majority of these guarantees have no expiration date. We estimated the fair value of guarantees we have issued on behalf of Axeon considering the probability of default by Axeon and an estimate of the amount we would be obligated to pay under the guarantees at the time of default based on the guarantees outstanding as of March 31, 2015 and December 31, 2014. Our estimate of the fair value is based on significant inputs not observable in the market and thus falls within Level 3 of the fair value hierarchy.

The following table summarizes the activity in our Level 3 liabilities:
 
Three Months Ended March 31, 2015
 
(Thousands of Dollars)
Beginning balance
$
580

Adjustments to guarantee liability
15

Ending balance
$
595



10

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Fair Value of Financial Instruments
We recognize cash equivalents, receivables, note receivables, payables and debt in our consolidated balance sheets at their carrying amounts. The fair values of these financial instruments, except for the $190.0 million term loan to Axeon (the Axeon Term Loan) and long-term debt, approximate their carrying amounts. The estimated fair value and carrying amounts of the long-term debt and the Axeon Term Loan were as follows:
 
March 31, 2015
 
December 31, 2014
 
Fair Value
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
(Thousands of Dollars)
Long-term debt
$
3,026,670

 
$
2,987,413

 
$
2,764,242

 
$
2,749,452

Axeon Term Loan
$
165,562

 
$
169,250

 
$
164,386

 
$
169,235


We estimated the fair value of our publicly-traded senior notes based upon quoted prices in active markets; therefore, we determined that the fair value of our publicly-traded senior notes falls in Level 1 of the fair value hierarchy. For our other debt, for which a quoted market price is not available, we estimated the fair value using a discounted cash flow analysis using current incremental borrowing rates for similar types of borrowing arrangements and determined that the fair value falls in Level 2 of the fair value hierarchy.
We estimated the fair value of the Axeon Term Loan using discounted cash flows, which use observable inputs such as time to maturity and market interest rates, and determined the fair value falls in Level 2 of the fair value hierarchy.
As of March 31, 2015, the carrying amount of the receivable for the Axeon Term Loan is $169.3 million, consisting of the following: (i) the outstanding principal amount from the Axeon Term Loan of $190.0 million; (ii) plus the fair value of guarantees of $0.6 million as of March 31, 2015; and (iii) less equity losses from our investment in Axeon of $21.3 million incurred prior to the 2014 Asphalt Sale and after the carrying value of our equity investment in Axeon was reduced to zero. The carrying value of the Axeon Term Loan is included in “Other long-term assets, net” on the consolidated balance sheets. We review the financial information of Axeon monthly for possible non-payment indicators.

7. DERIVATIVES AND RISK MANAGEMENT ACTIVITIES

We utilize various derivative instruments to manage our exposure to interest rate risk and commodity price risk. Our risk management policies and procedures are designed to monitor interest rates, futures and swap positions and over-the-counter positions, as well as physical volumes, grades, locations and delivery schedules, to help ensure that our hedging activities address our market risks. Our risk management committee oversees our trading controls and procedures and certain aspects of commodity and trading risk management. Our risk management committee also reviews all new commodity and trading risk management strategies in accordance with our risk management policy, as approved by our board of directors.
Interest Rate Risk
We are a party to certain interest rate swap agreements to manage our exposure to change in interest rates. During the three months ended March 31, 2015, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $450.0 million. Under the terms of the swaps, we pay a fixed rate and receive a rate based on three month USD LIBOR. We entered into these swaps in order to hedge the risk of changes in the interest payments attributable to changes in the benchmark interest rate during the period from the effective date of the swap to the issuance of the forecasted debt. These swaps qualified, and we designated them, as cash flow hedges of future interest payments associated with forecasted debt issuances in 2018 and 2020. We record the effective portion of mark-to-market adjustments as a component of “Accumulated other comprehensive income” (AOCI), and the amount in AOCI will be recognized in “Interest expense, net” as the forecasted interest payments occur or if the interest payments are probable not to occur. We had no forward-starting interest rate swap agreements as of December 31, 2014.

Commodity Price Risk
We are exposed to market risks related to the volatility of crude oil and refined product prices. In order to reduce the risk of commodity price fluctuations with respect to our crude oil and finished product inventories and related firm commitments to purchase and/or sell such inventories, we utilize commodity futures and swap contracts, which qualify and we designate as fair value hedges. Derivatives that are intended to hedge our commodity price risk, but fail to qualify as fair value or cash flow hedges, are considered economic hedges, and we record associated gains and losses in net income.


11

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The volume of commodity contracts is based on open derivative positions and represents the combined volume of our long and short open positions on an absolute basis, which totaled 4.5 million barrels and 4.7 million barrels as of March 31, 2015 and December 31, 2014, respectively.

As of March 31, 2015, we had $0.2 million of margin deposits related to our derivative instruments and none as of December 31, 2014.

The fair values of our derivative instruments included in our consolidated balance sheets were as follows:
 
 
 
Asset Derivatives
 
Liability Derivatives
 
Balance Sheet Location
 
March 31,
2015
 
December 31, 2014
 
March 31,
2015
 
December 31, 2014
 
 
 
(Thousands of Dollars)
Derivatives Designated as
Hedging Instruments:
 
 
 
 
 
 
 
 
 
Commodity contracts
Other current assets
 
$
2,799

 
$
5,609

 
$
(18
)
 
$

Interest rate swaps - cash flow hedges
Other long-term assets, net
 
397

 

 

 

Interest rate swaps - cash flow hedges
Other long-term liabilities
 

 

 
(2,432
)
 

Total
 
 
3,196

 
5,609

 
(2,450
)
 

 
 
 
 
 
 
 
 
 
 
Derivatives Not Designated
as Hedging Instruments:
 
 
 
 
 
 
 
 
 
Commodity contracts
Other current assets
 
19,013

 
38,704

 
(15,664
)
 
(27,951
)
Commodity contracts
Accrued liabilities
 
11,261

 
13,081

 
(13,478
)
 
(17,704
)
Total
 
 
30,274

 
51,785

 
(29,142
)
 
(45,655
)
 
 
 
 
 
 
 
 
 
 
Total Derivatives
 
 
$
33,470

 
$
57,394

 
$
(31,592
)
 
$
(45,655
)
 
Certain of our derivative instruments are eligible for offset in the consolidated balance sheets and subject to master netting arrangements. Under our master netting arrangements, there is a legally enforceable right to offset amounts, and we intend to settle such amounts on a net basis. The following are the net amounts presented on the consolidated balance sheets:
Commodity Contracts
 
March 31,
2015
 
December 31, 2014
 
 
(Thousands of Dollars)
Net amounts of assets presented in the consolidated balance sheets
 
$
6,130

 
$
16,362

Net amounts of liabilities presented in the consolidated balance sheets
 
$
(2,217
)
 
$
(4,623
)

The earnings impact of our derivative activity was as follows:
Derivatives Designated as Fair Value Hedging Instruments
 
Income Statement
Location
 
Amount of Gain
(Loss) Recognized
in Income on
Derivative
(Effective Portion)
 
Amount of Gain
(Loss)
Recognized in
Income on
Hedged Item
 
Amount of Gain
(Loss) Recognized
in Income  on
Derivative
(Ineffective Portion)
 
 
 
 
(Thousands of Dollars)
Three months ended March 31, 2015:
 
 
 
 
 
 
 
 
Commodity contracts
 
Cost of product sales
 
$
2,164

 
$
(1,676
)
 
$
488

 
 
 
 
 
 
 
 
 
Three months ended March 31, 2014:
 
 
 
 
 
 
 
 
Commodity contracts
 
Cost of product sales
 
$
1,213

 
$
(2,097
)
 
$
(884
)


12

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Derivatives Designated as Cash Flow Hedging Instruments
 
Amount of Gain
(Loss) Recognized 
in Other Comprehensive Income on Derivative(Effective Portion)
 
Amount of Gain
(Loss) Reclassified
from AOCI
into Interest expense, net
(Effective Portion) (a)
 
 
(Thousands of Dollars)
Three months ended March 31, 2015:
 
 
 
 
Interest rate swaps
 
$
(2,035
)
 
$

Unwound interest rate swaps
 
$

 
$
(2,538
)
 
 
 
 
 
Three months ended March 31, 2014:
 
 
 
 
Unwound interest rate swaps
 
$

 
$
(2,766
)

(a)
As of March 31, 2015, we expect to reclassify a loss of $9.5 million to “Interest expense, net” within the next twelve months associated with unwound forward-starting interest rate swaps.

Derivatives Not Designated as Hedging Instruments
 
Income Statement Location
 
Amount of Gain (Loss)
Recognized in Income
 
 
 
 
(Thousands of Dollars)
Three months ended March 31, 2015:
 
 
 
 
Commodity contracts
 
Cost of product sales
 
$
330

 
 
 
 
 
Three months ended March 31, 2014:
 
 
 
 
Commodity contracts
 
Cost of product sales
 
$
32


8. RELATED PARTY TRANSACTIONS

The following table summarizes information pertaining to related party transactions:
 
Three Months Ended March 31,
 
2015
 
2014
 
(Thousands of Dollars)
Revenues
$

 
$
929

Operating expenses
$
31,287

 
$
28,659

General and administrative expenses
$
17,386

 
$
14,094

Interest income
$

 
$
1,055

Revenues included in discontinued operations, net of tax
$

 
$
405

Expenses included in discontinued operations, net of tax
$
2

 
$
805


NuStar GP, LLC
Our operations are managed by NuStar GP, LLC, the general partner of our general partner. Under a services agreement between NuStar Energy and NuStar GP, LLC, employees of NuStar GP, LLC perform services for our U.S. operations. Certain of our wholly owned subsidiaries employ persons who perform services for our international operations. Employees of NuStar GP, LLC provide services to both NuStar Energy and NuStar GP Holdings; therefore, we reimburse NuStar GP, LLC for all employee costs, other than the expenses allocated to NuStar GP Holdings.

We had a payable to NuStar GP, LLC of $16.8 million and $15.1 million as of March 31, 2015 and December 31, 2014, respectively, with both amounts representing payroll, employee benefit plan expenses and unit-based compensation. We also had a long-term payable to NuStar GP, LLC as of March 31, 2015 and December 31, 2014 of $35.2 million and $33.5 million, respectively, for amounts payable for retiree medical benefits and other post-employment benefits.

Axeon
As a result of the 2014 Asphalt Sale, we ceased reporting transactions between us and Axeon as related party transactions in our consolidated financial statements on February 26, 2014.

13

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

9. PARTNERS’ EQUITY

Partners Equity Activity
The following table summarizes changes in the carrying amount of equity attributable to NuStar Energy L.P. partners and noncontrolling interest:
 
Three Months Ended March 31, 2015
 
Three Months Ended March 31, 2014
 
NuStar Energy L.P. Partners’ Equity
 
Noncontrolling Interest (a)
 
Total Partners’
Equity
 
NuStar Energy L.P. Partners’ Equity
 
Noncontrolling Interest (a)
 
Total Partners’
Equity
 
(Thousands of Dollars)
Beginning balance
$
1,716,210

 
$

 
$
1,716,210

 
$
1,902,136

 
$
1,658

 
$
1,903,794

Net income (loss)
127,899

 

 
127,899

 
39,744

 
(107
)
 
39,637

Other comprehensive
income (loss):
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation
adjustment
(20,604
)
 

 
(20,604
)
 
(4,240
)
 
(445
)
 
(4,685
)
Net unrealized loss
on cash flow hedges
(2,035
)
 

 
(2,035
)
 

 

 

Net loss on cash flow
hedges reclassified
into interest expense, net
2,538

 

 
2,538

 
2,766

 

 
2,766

Total other comprehensive
loss
(20,101
)
 

 
(20,101
)
 
(1,474
)
 
(445
)
 
(1,919
)
Cash distributions to
partners
(98,051
)
 

 
(98,051
)
 
(98,051
)
 

 
(98,051
)
Other

 

 

 
23

 

 
23

Ending balance
$
1,725,957

 
$

 
$
1,725,957

 
$
1,842,378

 
$
1,106

 
$
1,843,484

(a)
In September 2014, we sold our 75% interest in our facility in Mersin, Turkey.
 
Accumulated Other Comprehensive Loss
The balance of and changes in the components included in AOCI were as follows:
 
Foreign
Currency
Translation
 
Cash Flow Hedges
 
Total
 
(Thousands of Dollars)
Balance as of January 1, 2015
$
(28,839
)
 
$
(39,073
)
 
$
(67,912
)
Activity
(20,604
)
 
503

 
(20,101
)
Balance as of March 31, 2015
$
(49,443
)
 
$
(38,570
)
 
$
(88,013
)

Allocations of Net Income
Our partnership agreement, as amended, sets forth the calculation to be used to determine the amount and priority of cash distributions that the common unitholders and the general partner will receive. The partnership agreement also contains provisions for the allocation of net income and loss to the unitholders and the general partner. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interests. Normal allocations according to percentage interests are made after giving effect to priority income allocations, if any, in an amount equal to incentive cash distributions allocated 100% to the general partner.


14

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table details the calculation of net income applicable to the general partner:
 
Three Months Ended March 31,
 
2015
 
2014
 
(Thousands of Dollars)
Net income attributable to NuStar Energy L.P.
$
127,899

 
$
39,744

Less general partner incentive distribution
10,805

 
10,805

Net income after general partner incentive distribution
117,094

 
28,939

General partner interest
2
%
 
2
%
General partner allocation of net income after general partner
    incentive distribution
2,342

 
579

General partner incentive distribution
10,805

 
10,805

Net income applicable to general partner
$
13,147

 
$
11,384


Cash Distributions
The following table reflects the allocation of total cash distributions to the general and limited partners applicable to the period in which the distributions were earned:
 
Three Months Ended March 31,
 
2015
 
2014
 
(Thousands of Dollars, Except Per Unit Data)
General partner interest
$
1,961

 
$
1,961

General partner incentive distribution
10,805

 
10,805

Total general partner distribution
12,766

 
12,766

Limited partners’ distribution
85,285

 
85,285

Total cash distributions
$
98,051

 
$
98,051

 
 
 
 
Cash distributions per unit applicable to limited partners
$
1.095

 
$
1.095


The following table summarizes information related to our quarterly cash distributions:
Quarter Ended
 
Cash Distributions Per Unit
 
Total Cash Distributions
 
Record Date
 
Payment Date
 
 
 
 
(Thousands of Dollars)
 
 
 
 
March 31, 2015 (a)
 
$
1.095

 
$
98,051

 
May 8, 2015
 
May 14, 2015
December 31, 2014
 
$
1.095

 
$
98,051

 
February 9, 2015
 
February 13, 2015
(a)
The distribution was announced on April 22, 2015.


15

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

10. NET INCOME PER UNIT

We have identified the general partner interest and incentive distribution rights as participating securities and use the two-class method when calculating the net income per unit applicable to limited partners, which is based on the weighted-average number of common units outstanding during the period. Basic and diluted net income per unit applicable to limited partners are the same because we have no potentially dilutive securities outstanding.

The following table details the calculation of earnings per unit:
 
Three Months Ended March 31,
 
2015
 
2014
 
(Thousands of Dollars, Except Unit and Per Unit Data)
Net income attributable to NuStar Energy L.P.
$
127,899

 
$
39,744

Less general partner distribution (including incentive distribution rights)
12,766

 
12,766

Less limited partner distribution
85,285

 
85,285

Distributions less than (in excess of) earnings
$
29,848

 
$
(58,307
)
 
 
 
 
General partner earnings:
 
 
 
Distributions
$
12,766

 
$
12,766

Allocation of distributions less than (in excess of) earnings (2%)
597

 
(1,166
)
Total
$
13,363

 
$
11,600

 
 
 
 
Limited partner earnings:
 
 
 
Distributions
$
85,285

 
$
85,285

Allocation of distributions less than (in excess of) earnings (98%)
29,251

 
(57,141
)
Total
$
114,536

 
$
28,144

 
 
 
 
Weighted-average limited partner units outstanding
77,886,078

 
77,886,078

 
 
 
 
Net income per unit applicable to limited partners
$
1.47

 
$
0.36



16

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

11. STATEMENTS OF CASH FLOWS
Changes in current assets and current liabilities were as follows:
 
Three Months Ended March 31,
 
2015
 
2014
 
(Thousands of Dollars)
Decrease (increase) in current assets:
 
 
 
Accounts receivable
$
19,654

 
$
(22,751
)
Receivable from related parties

 
50,872

Inventories
11,997

 
35,476

Other current assets
10,963

 
(42
)
Increase (decrease) in current liabilities:
 
 
 
Accounts payable
(21,776
)
 
(93,400
)
Payable to related party
1,145

 
5,286

Accrued interest payable
(5,948
)
 
(5,714
)
Accrued liabilities
(23,191
)
 
(9,127
)
Taxes other than income tax
(1,738
)
 
(747
)
Income tax payable
1,120

 
1,352

Changes in current assets and current liabilities
$
(7,774
)
 
$
(38,795
)

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable consolidated balance sheets due to the change in the amount accrued for capital expenditures and the effect of foreign currency translation.

Cash flows related to interest and income taxes were as follows:
 
Three Months Ended March 31,
 
2015
 
2014
 
(Thousands of Dollars)
Cash paid for interest, net of amount capitalized
$
38,044

 
$
38,352

Cash paid for income taxes, net of tax refunds received
$
1,738

 
$
1,998



17

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

12. SEGMENT INFORMATION

Our reportable business segments consist of pipeline, storage and fuels marketing. Our segments represent strategic business units that offer different services and products. We evaluate the performance of each segment based on its respective operating income, before general and administrative expenses and certain non-segmental depreciation and amortization expense. General and administrative expenses are not allocated to the operating segments since those expenses relate primarily to the overall management at the entity level. Our principal operations include the transportation of petroleum products and anhydrous ammonia, the terminalling and storage of petroleum products and the marketing of petroleum products. Intersegment revenues result from storage agreements with wholly owned subsidiaries of NuStar Energy at lease rates consistent with rates charged to third parties for storage.
Results of operations for the reportable segments were as follows:
 
Three Months Ended March 31,
 
2015
 
2014
 
(Thousands of Dollars)
Revenues:
 
 
 
Pipeline
$
124,425

 
$
102,959

Storage:
 
 
 
Third parties
144,085

 
124,354

Intersegment
6,249

 
7,283

Related party

 
929

Total storage
150,334

 
132,566

Fuels Marketing
286,434

 
620,971

Consolidation and intersegment eliminations
(6,249
)
 
(7,283
)
Total revenues
$
554,944

 
$
849,213

 
 
 
 
Operating income:
 
 
 
Pipeline
$
68,640

 
$
52,990

Storage
47,978

 
42,007

Fuels marketing
9,925

 
9,558

Consolidation and intersegment eliminations
43

 
(17
)
Total segment operating income
126,586

 
104,538

General and administrative expenses
25,053

 
20,856

Other depreciation and amortization expense
2,252

 
2,579

Total operating income
$
99,281

 
$
81,103


Total assets by reportable segment were as follows:
 
March 31,
2015
 
December 31,
2014
 
(Thousands of Dollars)
Pipeline
$
1,975,828

 
$
1,962,821

Storage
2,441,519

 
2,241,573

Fuels marketing
192,379

 
227,642

Total segment assets
4,609,726

 
4,432,036

Other partnership assets
474,421

 
486,760

Total consolidated assets
$
5,084,147

 
$
4,918,796

 

18

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

NuStar Energy has no operations and its assets consist mainly of its investments in NuStar Logistics and NuPOP, both wholly owned subsidiaries. The senior and subordinated notes issued by NuStar Logistics are fully and unconditionally guaranteed by NuStar Energy and NuPOP. As a result, the following condensed consolidating financial statements are presented as an alternative to providing separate financial statements for NuStar Logistics and NuPOP.

Condensed Consolidating Balance Sheets
March 31, 2015
(Thousands of Dollars)
 
NuStar
Energy
 
NuStar
Logistics
 
NuPOP
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
923

 
$
6

 
$

 
$
77,254

 
$

 
$
78,183

Receivables, net

 
41,938

 
9,748

 
137,969

 

 
189,655

Inventories

 
2,059

 
3,362

 
38,272

 

 
43,693

Other current assets
121

 
8,116

 
1,451

 
14,989

 

 
24,677

Intercompany receivable

 
1,565,895

 

 

 
(1,565,895
)
 

Total current assets
1,044

 
1,618,014

 
14,561

 
268,484

 
(1,565,895
)
 
336,208

Property, plant and equipment, net

 
1,855,422

 
557,303

 
1,179,561

 

 
3,592,286

Intangible assets, net

 
54,091

 

 
74,609

 

 
128,700

Goodwill

 
149,453

 
170,652

 
384,383

 

 
704,488

Investment in wholly owned
subsidiaries
2,320,011

 
33,015

 
992,093

 
965,584

 
(4,310,703
)
 

Deferred income tax asset

 

 

 
4,880

 
(550
)
 
4,330

Other long-term assets, net
673

 
277,774

 
26,329

 
13,359

 

 
318,135

Total assets
$
2,321,728

 
$
3,987,769

 
$
1,760,938

 
$
2,890,860

 
$
(5,877,148
)
 
$
5,084,147

Liabilities and Partners’ Equity
 
 
 
 
 
 
 
 
 
 
 
Payables
$
51

 
$
49,072

 
$
5,239

 
$
76,478

 
$

 
$
130,840

Short-term debt

 
46,000

 

 

 

 
46,000

Accrued interest payable

 
27,393

 

 
4

 

 
27,397

Accrued liabilities
727

 
11,114

 
8,391

 
19,711

 

 
39,943

Taxes other than income tax

 
4,254

 
4,268

 
4,021

 

 
12,543

Income tax payable

 
16

 
5

 
3,541

 

 
3,562

Intercompany payable
506,980

 

 
769,413

 
289,502

 
(1,565,895
)
 

Total current liabilities
507,758

 
137,849

 
787,316

 
393,257

 
(1,565,895
)
 
260,285

Long-term debt

 
2,987,413

 

 

 

 
2,987,413

Long-term payable to related party

 
29,778

 

 
5,442

 

 
35,220

Deferred income tax liability

 
528

 
22

 
24,804

 
(550
)
 
24,804

Other long-term liabilities

 
16,686

 
7,927

 
25,855

 

 
50,468

Total partners’ equity
1,813,970

 
815,515

 
965,673

 
2,441,502

 
(4,310,703
)
 
1,725,957

Total liabilities and
partners’ equity
$
2,321,728

 
$
3,987,769

 
$
1,760,938

 
$
2,890,860

 
$
(5,877,148
)
 
$
5,084,147




19

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Condensed Consolidating Balance Sheets
December 31, 2014
(Thousands of Dollars)
 
NuStar
Energy
 
NuStar
Logistics
 
NuPOP
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
923

 
$
6

 
$

 
$
86,983

 
$

 
$
87,912

Receivables, net

 
47,038

 
18,347

 
143,093

 

 
208,478

Inventories

 
1,998

 
3,768

 
49,989

 
(42
)
 
55,713

Other current assets

 
10,403

 
418

 
25,239

 
(116
)
 
35,944

Assets held for sale

 

 

 
1,100

 

 
1,100

Intercompany receivable

 
1,438,675

 

 

 
(1,438,675
)
 

Total current assets
923

 
1,498,120

 
22,533

 
306,404

 
(1,438,833
)
 
389,147

Property, plant and equipment, net

 
1,820,126

 
559,808

 
1,080,798

 

 
3,460,732

Intangible assets, net

 
55,801

 

 
2,869

 

 
58,670

Goodwill

 
149,453

 
170,652

 
297,324

 

 
617,429

Investment in wholly owned
subsidiaries
2,289,673

 
37,179

 
910,394

 
913,343

 
(4,150,589
)
 

Investment in joint venture

 

 

 
74,223

 

 
74,223

Deferred income tax asset

 

 

 
4,429

 

 
4,429

Other long-term assets, net
673

 
279,058

 
26,329

 
8,106

 

 
314,166

Total assets
$
2,291,269

 
$
3,839,737

 
$
1,689,716

 
$
2,687,496

 
$
(5,589,422
)
 
$
4,918,796

Liabilities and Partners’ Equity
 
 
 
 
 
 
 
 
 
 
 
Payables
$

 
$
60,687

 
$
8,211

 
$
108,286

 
$

 
$
177,184

Short-term debt

 
77,000

 

 

 

 
77,000

Accrued interest payable

 
33,340

 

 
5

 

 
33,345

Accrued liabilities
862

 
32,178

 
6,965

 
21,020

 

 
61,025

Taxes other than income tax
125

 
7,896

 
3,099

 
3,001

 

 
14,121

Income tax payable

 

 
4

 
2,629

 
(116
)
 
2,517

Intercompany payable
506,160

 

 
751,023

 
181,492

 
(1,438,675
)
 

Total current liabilities
507,147

 
211,101

 
769,302

 
316,433

 
(1,438,791
)
 
365,192

Long-term debt

 
2,749,452

 

 

 

 
2,749,452

Long-term payable to related party

 
28,094

 

 
5,443

 

 
33,537

Deferred income tax liability

 
528

 
22

 
26,758

 

 
27,308

Other long-term liabilities

 
13,681

 
6,963

 
6,453

 

 
27,097

Total partners’ equity
1,784,122

 
836,881

 
913,429

 
2,332,409

 
(4,150,631
)
 
1,716,210

Total liabilities and
partners’ equity
$
2,291,269

 
$
3,839,737

 
$
1,689,716

 
$
2,687,496

 
$
(5,589,422
)
 
$
4,918,796




20

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Condensed Consolidating Statements of Comprehensive Income
For the Three Months Ended March 31, 2015
(Thousands of Dollars)
 
NuStar
Energy
 
NuStar
Logistics
 
NuPOP
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$

 
$
134,036

 
$
52,574

 
$
368,661

 
$
(327
)
 
$
554,944

Costs and expenses
490

 
72,906

 
33,124

 
349,512

 
(369
)
 
455,663

Operating (loss) income
(490
)
 
61,130

 
19,450

 
19,149

 
42

 
99,281

Equity in earnings (loss) of
subsidiaries
128,389

 
(4,164
)
 
81,699

 
101,273

 
(307,197
)
 

Interest (expense) income, net

 
(32,174
)
 
119

 
18

 

 
(32,037
)
Other expense, net

 
1,340

 
2

 
60,926

 

 
62,268

Income from continuing
operations before income tax
(benefit) expense
127,899

 
26,132

 
101,270

 
181,366

 
(307,155
)
 
129,512

Income tax (benefit) expense

 
(1,026
)
 

 
3,413

 

 
2,387

Income from continuing
operations
127,899

 
27,158

 
101,270

 
177,953

 
(307,155
)
 
127,125

Income from discontinued
operations, net of tax

 

 

 
774

 

 
774

Net income attributable to
NuStar Energy L.P.
$
127,899

 
$
27,158

 
$
101,270

 
$
178,727

 
$
(307,155
)
 
$
127,899

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
attributable to NuStar Energy L.P.
$
127,899

 
$
27,661

 
$
101,270

 
$
158,123

 
$
(307,155
)
 
$
107,798

 


21

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Condensed Consolidating Statements of Comprehensive Income
For the Three Months Ended