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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - March 6, 2002
PLAINS ALL AMERICAN PIPELINE, L.P.
(Name of Registrant as specified in its charter)
DELAWARE 0-9808 76-0582150
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification No.)
333 CLAY STREET, SUITE 2900
HOUSTON, TEXAS 77002
(713) 646-4100
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
N/A
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
Plains All American Pipeline, L.P. today reported net income before unusual
and nonrecurring items of $16.5 million, or $0.38 per unit, for the fourth
quarter of 2001 as compared to net income before unusual and nonrecurring items
of $13.0 million, or $0.37 per unit, for the fourth quarter of 2000. For the
entire year of 2001, the Partnership reported net income before unusual and
nonrecurring items of $56.2 million, or $1.44 per unit, as compared to net
income before unusual and nonrecurring items of $54.4 million, or $1.55 per
unit, for 2000.
Earnings before interest, taxes, depreciation, amortization and other
noncash items ("EBITDA") for the fourth quarter of 2001 was $29.8 million, and
cash flow from operations (net income plus noncash items) totaled $23.2 million.
This compares with EBITDA of $24.2 million and cash flow of $17.3 million
recorded for the fourth quarter of 2000. EBITDA for 2001 was $109.6 million as
compared to $103.0 million for 2000. These EBITDA and cash flow comparisons
exclude the impact of the unusual and non-recurring items.
The Partnership noted that the year's results include certain fourth
quarter adjustments to reflect a $5.0 million noncash lower of cost or market
valuation write down of working inventory based on a year end NYMEX crude oil
benchmark price of $19.84 per barrel, to reduce previously accrued operating
expenses by $2.0 million and to increase the noncash reserve for potentially
uncollectible receivables by $3.0 million.
The following table reconciles the Partnership's reported net income to the
Partnership's net income before unusual and nonrecurring items:
Dollars in millions, except per unit data 2001 2000
-------------------------- -----------------------------
FULL YEAR 4TH QUARTER FULL YEAR 4TH QUARTER
--------- ----------- ---------- -----------
Reported net income $44.2 $ 8.9 $ 77.5 $ 6.8
Per unit $1.13 $0.20 $ 2.20 $0.19
Noncash mark-to-market inventory charge (1) $ 5.0 $ 5.0 $ - $ -
Noncash compensation expense (2) 5.7 - 3.1 0.8
Gains on sale of assets (3) (1.0) (1.0) (48.2) -
Gain on interest rate swap - - (9.7) -
Extraordinary loss on early extinguishment of debt - - 15.1 -
Litigation settlement - - 7.0 0.4
Noncash reserve for receivables (4) 3.0 3.0 5.0 5.0
Noncash amortization of debt issue costs (5) - - 4.6 -
Noncash cumulative effect of accounting change (6) (0.5) - - -
Noncash SFAS 133 adjustment (0.2) 0.6 - -
----- ----- ------ -----
Net income before unusual and nonrecurring items $56.2 $16.5 $ 54.4 $13.0
Per unit $1.44 $0.38 $ 1.55 $0.37
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Notes:
(1) The Partnership uses the average cost method for recording inventory and
the noncash write down reflects the impact of a lower of cost or market
valuation at December 31, 2001. During 2001, the price of crude oil traded
on the NYMEX averaged $25.98 per barrel; however, the NYMEX price at
December 31, 2001, was $19.84 per barrel.
(2) Attributable to the vesting of certain rights to receive phantom
Partnership units. The units were satisfied by an affiliate of Plains
Resources and therefore did not result in dilution to Unitholders.
(3) Includes gain on sale of: (i) excess communications equipment in 2001 and
(ii) a portion of the All American Pipeline and linefill in 2000.
(4) Reserve for potentially uncollectible accounts receivable.
(5) Nonrecurring amortization of debt issue costs associated with credit
facilities put in place during the fourth quarter of 1999, subsequent to
the unauthorized trading losses.
(6) Related to the adoption of SFAS 133 on January 1, 2001.
The Partnership's weighted average units outstanding for 2001 totaled 37.5
million as compared to 34.4 million for last year. The Partnership's weighted
average units outstanding for the fourth quarter of 2001 totaled 41.6 million as
compared to 34.4 million in last year's fourth quarter. At December 31, 2001,
the Partnership had 43.3 million units outstanding.
Total gross margin for the fourth quarter of 2001 was $38.5 million
(excluding the $5.0 million mark-to-market inventory charge) as compared to
$32.8 million (excluding the $0.4 million litigation settlement) for the fourth
quarter of 2000. Gross margin from gathering, marketing, terminalling and
storage was $19.8 million during the 2001 quarter as compared to $18.8 million
during the 2000 quarter. Gross margin from pipeline activities was $18.7 million
during the fourth quarter of 2001 as compared to $14.0 million in the comparable
2000 quarter.
The Partnership's long-term debt at December 31, 2001, totaled $351.7
million as compared to $434.5 million at September 30, 2001. At December 31,
2001, the Partnership's debt-to-total capitalization ratio was approximately
47%.
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY
CONSOLIDATED STATEMENTS OF OPERATIONS
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(in thousands, except per unit data)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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2001 2000 2001 2000
----------- ---------- ---------- ----------
REVENUES $1,570,164 $1,600,983 $6,868,215 $6,641,187
COST OF SALES AND OPERATIONS 1,531,680 1,568,186 6,720,970 6,506,504
UNAUTHORIZED TRADING LOSSES AND
RELATED EXPENSES - 363 - 6,963
INVENTORY VALUATION ADJUSTMENT 4,984 - 4,984 -
--------- --------- --------- ---------
Gross Margin 33,500 32,434 142,261 127,720
--------- --------- --------- ---------
EXPENSES
General and administrative 12,258 13,515 40,845 37,732
Non-cash compensation - 820 5,741 3,089
Depreciation and amortization 6,733 4,375 24,307 24,523
--------- --------- --------- ---------
Total expenses 18,991 18,710 70,893 65,344
--------- --------- --------- ---------
OPERATING INCOME 14,509 13,724 71,368 62,376
Interest expense (6,600) (6,905) (29,082) (28,691)
Gain on sale of assets 984 - 984 48,188
Interest and other income (expense) 43 (49) 401 10,776
Income before extraordinary item and
cumulative effect of accounting change 8,936 6,770 43,671 92,649
Extraordinary item - - - (15,147)
Cumulative effect of accounting change - - 508 -
--------- --------- --------- ---------
NET INCOME $ 8,936 $ 6,770 $ 44,179 $ 77,502
========= ========= ========= =========
BASIC AND DILUTED NET INCOME
PER LIMITED PARTNER UNIT:
Income before extraordinary item and
cumulative effect of accounting change $0.20 $0.19 $1.12 $2.64
========= ========= ========= =========
Net income $0.20 $0.19 $1.13 $2.20
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING 41,598 34,386 37,528 34,386
========= ========= ========= =========
OPERATING DATA (in thousands)
AVERAGE DAILY VOLUMES (BARRELS)
Pipeline activities:
All American
Tariff and fee activities 71 74 69 74
Margin activities 68 69 61 60
Canadian activities 211 - 223 -
Other 112 108 124 107
--------- --------- --------- ---------
Total 462 251 477 241
========= ========= ========= =========
Lease gathering 394 275 375 262
Bulk purchases 66 27 54 28
--------- --------- --------- ---------
Total 460 302 429 290
========= ========= ========= =========
Terminal throughput 88 76 99 67
========= ========= ========= =========
Estimated maintenance capital $ 483 $ 163 $ 3,401 $ 1,785
========= ========= ========= =========
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (continued)
FINANCIAL DATA
(in thousands) (unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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2001 2000 2001 2000
----------- --------- ------------ -----------
Earnings before interest, taxes, depreciation
and amortization ("EBITDA") $29,836 $24,233 $ 109,595 $103,048
======= ======= ========== ========
Cash flow from operations (net income before
noncash items) $23,236 $17,328 $ 80,513 $ 73,883
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Cash flow from operations after maintenance
capital expenditures $22,753 $17,165 $ 77,112 $ 72,098
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CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
DECEMBER 31, DECEMBER 31,
2001 2000
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ASSETS
Current assets $ 558,082 $397,904
Property and equipment, net 604,919 440,645
Pipeline linefill 57,367 34,312
Other long-term assets, net 40,883 12,940
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$1,261,251 $885,801
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LIABILITIES AND PARTNERS' CAPITAL
Current liabilities $ 505,160 $350,793
Long-term bank debt 351,677 320,000
Other long-term liabilities and deferred credits 1,617 1,009
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858,454 671,802
Partners' capital 402,797 213,999
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$1,261,251 $885,801
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ITEM 9. REGULATION FD DISCLOSURE
In accordance with General Instruction B.2. of Form 8K, the following
information shall not be deemed "filed" for purposes of Section 18 of the
Securities Act of 1934, as amended, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, except as
shall be expressly set forth by specific reference in such a filing.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
All statements, other than statements of historical fact, included in this
report are forward-looking statements, including, but not limited to, statements
identified by the words "anticipate," "believe," "estimate," "expect,"
"plan," "intend" and "forecast" and similar expressions and statements
regarding our business strategy, plans and objectives of our management for
future operations. These statements reflect our current views with respect to
future events, based on what we believe are reasonable assumptions. Certain
factors could cause actual results to differ materially from results anticipated
in the forward-looking statements. These factors include, but are not limited
to:
.. Abrupt or severe production declines or production interruptions in outer
continental shelf crude oil production located offshore California and
transported on the All American Pipeline;
.. the availability of adequate supplies of and demand for crude oil in the
areas in which we operate;
.. the effects of competition;
.. the success of our risk management activities;
.. the availability (or lack thereof) of acquisition or combination
opportunities;
.. successful integration and future performance of acquired assets;
.. our ability to receive credit on satisfactory terms;
.. shortages or cost increases of power supplies, materials or labor;
.. weather interference with business operations or project construction
.. the impact of current and future laws and governmental regulations;
.. environmental liabilities that are not covered by an indemnity or insurance;
.. fluctuations in the debt and equity markets; and
.. general economic, market or business conditions.
The Partnership undertakes no obligation to publicly update or revise any
forward-looking statements. Further information on risks and uncertainties is
available in the Partnership's filings with the Securities and Exchange
Commission ("SEC"), which are incorporated by reference herein.
DISCLOSURE OF YEAR 2002 ESTIMATES
The following table reflects the Partnership's current estimates of certain
results for the first quarter of 2002 and the year ending December 31, 2002.
These estimates are based on assumptions and estimates that management believes
are reasonable based on currently available information; however, management's
assumptions and the Partnership's future performance are both subject to a wide
range of business risks and uncertainties and there is no assurance that these
goals and estimates can or will be met. Any number of factors could cause
actual results to differ materially from those in the following table. The
estimates set forth below are given as of the date hereof only based on
information known to us as of March 5, 2001.
OPERATING AND FINANCIAL GUIDANCE
(in thousands except per unit data)
QUARTER ENDED YEAR ENDED
MARCH 31, 2002 DECEMBER 31, 2001
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LOW HIGH LOW HIGH
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Gross Margin:
Pipeline $17,000 $17,400 $ 74,000 $ 75,000
Marketing, Gathering, Terminalling & Storage 22,300 22,700 92,000 93,500
------- ------- -------- --------
Total Gross Margin 39,300 40,100 166,000 168,500
General & Administrative & Other 11,300 11,100 43,000 42,500
------- ------- -------- --------
EBITDA* $28,000 $29,000 $123,000 $126,000
Interest Expense 6,800 6,600 24,500 24,000
------- ------- -------- --------
Cash Flow from Operations 21,400 22,200 98,500 102,000
Depreciation & Amortization 6,825 6,825 28,100 28,100
------- ------- -------- --------
Net Income $14,375 $15,575 $ 70,400 $ 73,900
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Net Income to LP 13,548 14,724 66,832 70,262
Units Outstanding 43,253 43,253 43,253 43,253
Earnings per Unit $ 0.31 $ 0.34 $ 1.55 $ 1.62
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* EBITDA MEANS EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION AND
OTHER NON-CASH ITEMS
Notes and Assumptions:
1. The results provided do not include any assumptions or forecasts with
respect to any potential gains or losses related to SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities".
2. Pipeline Gross Margin. Pipeline volume and tariff estimates are based on
historical operating performance and our outlook for future performance.
Actual results could vary materially depending on volumes produced by the
operator of properties from which volumes are shipped. Average pipeline
volumes are estimated to be approximately 455,000 barrels per day for the
first quarter of 2002 with Outer Continental Shelf (OCS) volumes estimated to
make up approximately 14% of these volumes or 67,000 barrels per day. Average
pipeline volumes for the full year are forecast to be 460,000 barrels per day
while average OCS volumes are estimated to be 72,000 barrels per day.
Revenues are forecast using these volume assumptions, current tariffs, and
estimates of operating expenses, which management believes are reasonable. A
5,000 barrel per day variance in OCS volumes for the year would have an
approximate $3.2 million effect on EBITDA.
3. Marketing and Transportation, Terminalling and Storage Gross Margin.
Forecast volumes for Gathering & Marketing are 465,000 barrels per day for
the first quarter of 2002 and 480,000 barrels per day for the full year,
consistent with our current business and including the acquisition in March
2002 of substantially all of the domestic crude oil pipeline, gathering, and
marketing assets of Coast Energy Group and Lantern Petroleum, divisions of
Cornerstone Propane Partners, L.P. Revenues are forecast using these volume
assumptions, estimated per barrel margins, that assume a modest improvement
over current crude oil market conditions, and estimates of operating
expenses, which management believes are reasonable. Gross margin from
terminalling and storage is based on our current business model and includes
contribution from the Phase II expansion at our Cushing Terminal of 1.1
million barrels effective mid-2002.
4. General and Administrative Expense. G&A expense is forecast to be between
$11.1 million and $11.3 million for the first quarter of 2002 and $42.5
million and $43.0 million for the year. This is based on current and
projected staffing levels and office space requirements.
5. Interest Expense. First quarter interest expense is forecast to be $6.6 to
$6.8 million assuming an average debt balance of approximately $375 million
and an average interest rate of approximately 7.0%, including our current
interest rate hedges and commitment fees. Interest expense for the year 2002
is forecast to be $24.0 to $24.5 million assuming an average long-term debt
balance of approximately $360 million and an average interest rate of
approximately 6.75%, including our current interest rate hedges and
commitment fees. The forecast is based on estimated cash flow, current
distribution rates, planned capital projects, planned sales of surplus
equipment, and forecast levels of inventory and other working capital sources
and uses, all of which management believes are reasonable.
6. Depreciation & Amortization. Depreciation and Amortization is forecast
based on recent historical amounts with forecast capital spending depreciated
using a 10-year average useful life for maintenance capital and a 30-year
average useful life for other capital expenditures.
7. Units Outstanding. Our forecast is based on current units outstanding.
8. Net Income to limited partners (LP). The forecast is based on the current
annual distribution rate of $2.05 per unit. The amount of net income
allocated to our limited partnership interests is 98% of the total
partnership net income less the amount of the general partner's incentive
distribution. Based on a $2.05 annual distribution level and the current
units outstanding, the general partner's incentive distribution is forecast
to be approximately $2.2 million annually.
9. Capital Expenditures. Total capital expenditures are assumed to be $26
million for the first quarter of 2002 and $45 million for the full year. Of
these amounts, expansion capital is estimated to be $25 million during the
first quarter and $40 million for the year. These estimates include only the
purchase price for acquisitions completed as of the date hereof. Expansion
capital estimates include approximately $18 million for Cushing Expansion
Projects (Phases II & III). Maintenance capital is estimated to be $5 million
spent evenly through the year.
10. Although acquisitions comprise a key element of our growth strategy, these
results and estimates do not include any assumptions or forecasts with
respect to any acquisitions that may be made after the date hereof.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PLAINS ALL AMERICAN PIPELINE, L.P.
Date: March 6, 2002 By: Plains AAP, L.P., its general partner
By: Plains All American GP LLC, its general partner
By: /s/ Phil Kramer
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Name: Phil Kramer
Title: Executive Vice President and Chief
Financial Officer