Q1 2015 Form 10-Q


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
ý
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 
¨
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 1-31219
 SUNOCO LOGISTICS PARTNERS L.P.
(Exact name of registrant as specified in its charter)
 
Delaware
 
23-3096839
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
1818 Market Street, Suite 1500,
Philadelphia, PA
 
19103
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (866) 248-4344
Former name, former address and former fiscal year, if changed since last report: Not Applicable
 
 
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  ý    No  ¨
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
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 definition of "large accelerated filer," "accelerated filer," "non-accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 
ý
  
Accelerated filer
 
¨
Non-accelerated filer
 
¨
  
Smaller reporting company
 
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
At May 1, 2015, the number of the registrant’s Common Units outstanding were 245,341,835.
 
 
 
 
 





SUNOCO LOGISTICS PARTNERS L.P.
INDEX
 
 
 
 
 
 
Page
Number
 
PART I. FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements
 
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2015 and 2014 (unaudited)
 
 
 
 
Condensed Consolidated Balance Sheets at March 31, 2015 and December 31, 2014 (unaudited)
 
 
 
 
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014 (unaudited)
 
 
 
 
Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2015 and 2014 (unaudited)
 
 
 
 
Notes to Condensed Consolidated Financial Statements (unaudited)
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults Upon Senior Securities
 
 
 
Item 4.
Mine Safety Disclosures
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
SIGNATURE

1



PART I.
FINANCIAL INFORMATION
Item 1.
Financial Statements
SUNOCO LOGISTICS PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in millions, except per unit amounts)
 
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Revenues
 
 
 
 
Sales and other operating revenue:
 
 
 
 
Unaffiliated customers
 
$
2,453

 
$
4,171

Affiliates (Note 4)
 
119

 
306

Total Revenues
 
2,572

 
4,477

Costs and Expenses
 
 
 
 
Cost of products sold
 
2,309

 
4,210

Operating expenses
 
49

 
41

Selling, general and administrative expenses
 
25

 
30

Depreciation and amortization expense
 
82

 
69

Impairment charge and other matters (Notes 6 and 16)
 
41

 

Total Costs and Expenses
 
2,506

 
4,350

Operating Income
 
66

 
127

Interest cost and debt expense, net
 
(50
)
 
(26
)
Capitalized interest
 
21

 
10

Other income
 
6

 
4

Income Before Provision for Income Taxes
 
43

 
115

Provision for income taxes (Note 8)
 
(6
)
 
(5
)
Net Income
 
37

 
110

Net income attributable to noncontrolling interests
 
(1
)
 
(3
)
Net Income Attributable to Sunoco Logistics Partners L.P.
 
36

 
107

Less: General Partner's interest
 
(60
)
 
(38
)
Limited Partners' interest
 
$
(24
)
 
$
69

 
 
 
 
 
Net Income (Loss) Attributable to Sunoco Logistics Partners L.P. per Limited Partner unit (Note 5): (1)
 
 
 

Basic
 
$
(0.10
)
 
$
0.33

Diluted
 
$
(0.10
)
 
$
0.33

 
 
 
 
 
Weighted average Limited Partners' units outstanding (Note 5): (1)
 
 
 

Basic
 
231.0

 
208.0

Diluted
 
231.0

 
209.1

 
 
 
 
 
Net Income
 
$
37

 
$
110

Adjustment to affiliate's pension funded status
 
(1
)
 

Other Comprehensive Loss
 
(1
)
 

Comprehensive Income
 
36

 
110

Less: Comprehensive income attributable to noncontrolling interests
 
(1
)
 
(3
)
Comprehensive Income Attributable to Sunoco Logistics Partners L.P.
 
$
35

 
$
107

(1) 
Amounts reflect the second quarter 2014 two-for-one unit split (Note 11).

(See Accompanying Notes)

2



SUNOCO LOGISTICS PARTNERS L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions)
 
 
 
March 31, 2015
 
December 31, 2014
Assets
 
 
 
 
Cash and cash equivalents
 
$
54

 
$
101

Accounts receivable, affiliated companies (Note 4)
 
44

 
9

Accounts receivable, net
 
1,458

 
1,766

Inventories (Note 6)
 
609

 
470

Other current assets
 
5

 
3

Total Current Assets
 
2,170

 
2,349

Properties, plants and equipment
 
9,789

 
9,358

Less accumulated depreciation and amortization
 
(579
)
 
(509
)
Properties, plants and equipment, net
 
9,210

 
8,849

Investment in affiliates
 
234

 
226

Long-term note receivable, affiliated companies (Note 4)
 
23

 
17

Goodwill
 
1,358

 
1,358

Intangible assets, net (Note 7)
 
757

 
770

Other assets
 
72

 
75

Total Assets
 
$
13,824

 
$
13,644

Liabilities and Equity
 
 
 
 
Accounts payable
 
$
1,632

 
$
1,934

Accounts payable, affiliated companies (Note 4)
 
17

 
21

Accrued liabilities
 
156

 
304

Accrued taxes payable (Note 8)
 
35

 
52

Total Current Liabilities
 
1,840

 
2,311

Long-term debt (Note 9)
 
4,457

 
4,260

Other deferred credits and liabilities
 
80

 
71

Deferred income taxes (Note 8)
 
247

 
249

Total Liabilities
 
6,624

 
6,891

Commitments and contingent liabilities (Note 10)
 


 


Redeemable noncontrolling interests
 
15

 
15

Total Equity
 
7,185

 
6,738

Total Liabilities and Equity
 
$
13,824

 
$
13,644

(See Accompanying Notes)


3



SUNOCO LOGISTICS PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
 
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Cash Flows from Operating Activities:
 
 
 
 
Net Income
 
$
37

 
$
110

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
 
Depreciation and amortization expense
 
82

 
69

Impairment charge and other matters
 
41

 

Deferred income tax benefit
 
(2
)
 
(1
)
Amortization of bond premium
 
(3
)
 
(4
)
Non-cash compensation expense
 
4

 
5

Equity in earnings of unconsolidated affiliates
 
(7
)
 
(4
)
Distributions from unconsolidated affiliates
 
5

 
2

Changes in working capital pertaining to operating activities:
 
 
 
 
Accounts receivable, affiliated companies
 
(34
)
 
10

Accounts receivable, net
 
286

 
(640
)
Inventories
 
(180
)
 
(70
)
Accounts payable, affiliated companies
 
(4
)
 
5

Accounts payable and accrued liabilities
 
(313
)
 
407

Accrued taxes payable
 
(17
)
 
(8
)
Unrealized (gains) losses on commodity risk
      management activities
 
15

 
(1
)
Other
 
14

 
(5
)
Net cash used in operating activities
 
(76
)
 
(125
)
Cash Flows from Investing Activities:
 
 
 
 
Capital expenditures
 
(567
)
 
(423
)
Investment in joint venture interests
 

 
(42
)
Acquisitions, net of cash received
 
(131
)
 

Change in long-term note receivable, affiliated companies
 
(6
)
 

Net cash used in investing activities
 
(704
)
 
(465
)
Cash Flows from Financing Activities:
 
 
 
 
Distributions paid to limited and general partners
 
(146
)
 
(104
)
Distributions paid to noncontrolling interests
 

 
(2
)
Net proceeds from issuance of limited partner units
 
689

 

Payments of statutory withholding on net issuance of limited partner units under LTIP
 
(8
)
 
(6
)
Repayments under credit facilities
 
(750
)
 

Borrowings under credit facilities
 
950

 
750

Repayments of senior notes
 

 
(175
)
Advances to affiliated companies, net
 

 
225

Contributions attributable to acquisition from affiliate
 
3

 
3

Other
 
(5
)
 

Net cash provided by financing activities
 
733

 
691

Net change in cash and cash equivalents
 
(47
)
 
101

Cash and cash equivalents at beginning of period
 
101

 
39

Cash and cash equivalents at end of period
 
$
54

 
$
140

(See Accompanying Notes)

4



SUNOCO LOGISTICS PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
(in millions)
 
 
 
Limited
Partners
 
General
Partner
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interests
 
Total
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2014
 
$
5,292

 
$
912

 
$

 
$
121

 
$
6,325

Net Income
 
69

 
38

 

 
3

 
110

Total comprehensive income
 
69

 
38

 

 
3

 
110

Non-cash compensation expense
 
5

 

 

 

 
5

Distribution equivalent rights
 
(2
)
 

 

 

 
(2
)
Payments of statutory withholding on issuance under LTIP
 
(6
)
 

 

 

 
(6
)
Distributions
 
(69
)
 
(35
)
 

 
(2
)
 
(106
)
Contributions attributable to acquisition from affiliate
 
3

 

 

 

 
3

Balance at March 31, 2014
 
$
5,292

 
$
915

 
$

 
$
122

 
$
6,329

 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2015
 
$
5,752

 
$
925

 
$
1

 
$
60

 
$
6,738

Net Income (Loss)
 
(24
)
 
60

 

 
1

 
37

Adjustment to affiliate's pension funded status
 

 

 
(1
)
 

 
(1
)
Total comprehensive income (loss)
 
(24
)
 
60

 
(1
)
 
1

 
36

Issuance of limited partner units to the public
 
689

 

 

 

 
689

Non-cash compensation expense
 
4

 

 

 

 
4

Payments of statutory withholding on issuance under LTIP
 
(8
)
 

 

 

 
(8
)
Distributions
 
(92
)
 
(54
)
 

 

 
(146
)
Contributions attributable to acquisition from affiliate
 
3

 

 

 

 
3

Acquisition of a noncontrolling interest
        in a consolidated subsidiary
 
(103
)
 
(2
)
 

 
(26
)
 
(131
)
Balance at March 31, 2015
 
$
6,221

 
$
929

 
$

 
$
35

 
$
7,185

(See Accompanying Notes)

5



SUNOCO LOGISTICS PARTNERS L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Basis of Presentation
Sunoco Logistics Partners L.P. (the "Partnership") is a publicly traded Delaware limited partnership that owns and operates a logistics business, consisting of crude oil, refined products and natural gas liquids ("NGL") pipelines, terminalling and storage assets, and crude oil, refined products and NGL acquisition and marketing assets. The Partnership conducts its business activities in 35 states located throughout the United States.
The consolidated financial statements reflect the results of the Partnership and its wholly-owned subsidiaries, including Sunoco Logistics Partners Operations L.P. (the "Operating Partnership"), the proportionate shares of the Partnership's undivided interests in assets, and the accounts of entities in which the Partnership has a controlling financial interest. A controlling financial interest is evidenced by either a voting interest greater than 50 percent or a risk and rewards model that identifies the Partnership or one of its subsidiaries as the primary beneficiary of a variable interest entity. At March 31, 2015, the Partnership held a controlling financial interest in Inland Corporation ("Inland"), Mid-Valley Pipeline Company ("Mid-Valley"), and Price River Terminal, LLC ("PRT"), and as such, these entities are reflected as consolidated subsidiaries of the Partnership. In January 2015, the Partnership acquired the outstanding noncontrolling interest in the West Texas Gulf Pipe Line Company ("West Texas Gulf"), which resulted in West Texas Gulf becoming a wholly-owned subsidiary of the Partnership. The Partnership is not the primary beneficiary of any variable interest entities ("VIEs"). All significant intercompany accounts and transactions are eliminated in consolidation, and noncontrolling interests in net income and equity are shown separately in the condensed consolidated statements of comprehensive income and equity. Equity ownership interests in corporate joint ventures in which the Partnership does not have a controlling financial interest, but over which the Partnership can exercise significant influence, are accounted for under the equity method of accounting.
The accompanying condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States for interim financial reporting. They do not include all disclosures normally made in annual financial statements contained in Form 10-K. The accompanying condensed consolidated balance sheet at December 31, 2014 has been derived from the Partnership's audited financial statements for the year ended December 31, 2014. In management's opinion, all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for the periods shown have been made. All such adjustments are of a normal recurring nature. Results for the three months ended March 31, 2015 are not necessarily indicative of results for the full year 2015.
Certain amounts in the prior year condensed consolidated financial statements have been reclassified to conform to the current-year presentation.
2. Changes in Business and Other Matters
In the second quarter 2014, the Partnership entered into a joint agreement for 49 percent economic and voting interest in Bayview Refining Company, LLC ("Bayview"). Bayview will construct and operate a facility to process crude oil into intermediate petroleum products and will be accounted for as a variable interest entity for which the Partnership is not the primary beneficiary. Through March 31, 2015, the joint owners have made contributions to fund construction totaling $45 million. Operations are expected to commence at the facility in the second half of 2015. The Partnership's investment in Bayview is reflected as an equity method investment within the Crude Oil Acquisition and Marketing segment.
In connection with the formation of Bayview, the joint owners agreed to guarantee the obligations of the entity with respect to certain third-party operating agreements over a ten-year term. The fair value of the liability recognized in connection with the guarantee was not material in relation to the Partnership’s financial position at March 31, 2015.
In the first quarter 2014, the Partnership exercised its rights to acquire an additional ownership interest in Explorer Pipeline Company ("Explorer") from Chevron Pipe Line Company for $42 million, increasing the Partnership's ownership interest from 9.4 to 13.3 percent. Explorer owns approximately 1,850 miles of refined products pipelines running from the Gulf Coast of the United States to the Chicago, Illinois area. The fair value of the investment was estimated based on the fair value of the consideration transferred. The investment continues to be accounted for as an equity method investment within the Partnership's Products Pipelines segment, with the equity income recorded based on the Partnership's ownership percentage for each period presented.
No pro forma information has been presented, as the impact of these investments was not material to the Partnership's consolidated financial position or results of operations.

6



3. Acquisitions
In December 2014, the Partnership acquired an additional 28.3 percent ownership interest in West Texas Gulf from Chevron Pipe Line Company, increasing its controlling financial interest to 88.6 percent. As this transaction represented the acquisition of ownership interest in a consolidated subsidiary, the $325 million purchase price resulted in the reduction of noncontrolling interest and partners’ equity of $66 and $259 million, respectively, in accordance with applicable accounting guidance. In January 2015, the Partnership acquired the remaining noncontrolling interest in West Texas Gulf from the Southwest Pipeline Holding Company for $131 million. The acquisition of the remaining ownership interest reduced noncontrolling interest and partners’ equity by $26 and $105 million, respectively, in the first quarter 2015.
No pro forma information has been presented, as the impact of these acquisitions was not material in relation to the Partnership's consolidated financial position or results of operations.
4. Related Party Transactions
The Partnership is a consolidated subsidiary of Energy Transfer Partners, L.P. ("ETP"). ETP and one of its affiliates own Sunoco Partners LLC, the Partnership's general partner, and a 27.3 percent limited partner interest in the Partnership. The Partnership has various operating and administrative agreements with ETP and its affiliates, which include the agreements described below.
Administrative Services
The Partnership has no employees. The operations of the Partnership are carried out by employees of the general partner. The Partnership reimburses the general partner and its affiliates for certain costs and direct expenses incurred on the Partnership's behalf. These costs may be increased if the acquisition or construction of new businesses or assets requires an increase in the level of services received by the Partnership.
The Partnership pays ETP and its affiliates an annual administrative fee for expenses incurred by ETP and its affiliates to perform certain centralized corporate functions, such as legal, accounting, information technology, insurance, and other corporate services, including the administration of employee benefit plans. This fee does not include the salaries or wages of employees of the general partner, or the cost of employee benefits.
The Partnership's share of allocated ETP employee benefit plan expenses, including non-contributory defined benefit retirement plans, defined contribution 401(k) plans, employee and retiree medical, dental and life insurance plans, incentive compensation plans and other such benefits are reflected in operating expenses and selling, general and administrative expenses in the condensed consolidated statements of comprehensive income.
Affiliated Revenues and Accounts Receivable, Affiliated Companies
The Partnership is party to various agreements with ETP and its affiliates to supply crude oil, refined products and NGLs, as well as to provide pipeline and terminalling services. The revenues associated with these activities are reflected as affiliated revenues in the condensed consolidated statements of comprehensive income.
The Partnership's note receivable in connection with its interest in Bayview is reflected in long-term note receivable, affiliated companies, in the condensed consolidated balance sheet.
Capital Contributions
During the three months ended March 31, 2015 and March 31, 2014, the Partnership issued 0.3 million limited partnership units to participants in the Sunoco Partners LLC Long-Term Incentive Plan ("LTIP") upon completion of award vesting requirements. In addition, during the three months ended March 31, 2015, the Partnership issued 3.4 million limited partnership units under its at-the-market equity offering program ("ATM program"), which was established in the first quarter 2014 (Note 11). Contributions were previously required for the general partner to maintain its two percent general partner interest. In July 2014, the Partnership agreement was amended to remove the obligation of the general partner to make capital contributions upon the issuance of limited partner units to retain a two percent interest. No capital contributions have been made by the general partner subsequent to the Partnership agreement modification.
In connection with the acquisition of the Marcus Hook Facility in the second quarter 2013, the Partnership will be reimbursed $40 million by an affiliate of ETP for certain operating expenses of the facility through March 31, 2017. The reimbursement proceeds are reflected as contributions to equity within the condensed consolidated statements of equity.


7



5. Net Income Attributable to Sunoco Logistics Partners L.P. per Limited Partner Unit
The general partner's interest in net income attributable to SXL consists of its approximate two percent general partner interest and "incentive distributions," which are increasing percentages of up to 50 percent of quarterly distributions in excess of $0.0833 per common unit (Note 12). The general partner was allocated net income attributable to SXL of $60 and $38 million (representing 167 and 36 percent of total net income attributable to SXL) for the three months ended March 31, 2015 and 2014, respectively. Diluted net income attributable to SXL per limited partner unit is calculated by dividing the limited partners' interest in net income attributable to SXL by the sum of the weighted average number of common units outstanding and the dilutive effect of unvested incentive unit awards (Note 13).
The following table sets forth the reconciliation of the weighted average number of limited partner units used to compute basic net income attributable to SXL per limited partner unit to those used to compute diluted net income attributable to SXL per limited partner unit for the three months ended March 31, 2015 and 2014:
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
(in millions)
Weighted average number of units outstanding, basic (1)
 
231.0

 
208.0

Add effect of dilutive incentive awards (1) (2)
 

 
1.1

Weighted average number of units, diluted (1)
 
231.0

 
209.1

(1) 
Amounts reflect the second quarter 2014 two-for-one unit split (Note 11).
(2) 
Certain unvested incentive unit awards and a written option are not included within the calculation of the dilutive weighted average number of units for the period ended March 31, 2015 since the effect on net loss attributable to SXL per limited partner unit would have been antidilutive.
6. Inventories
The components of inventories are as follows:
 
 
March 31, 2015
 
December 31, 2014
 
 
(in millions)
Crude oil
 
$
470

 
$
364

Refined products and NGLs
 
124

 
90

Refined products additives
 
2

 
4

Materials, supplies and other
 
13

 
12

Total Inventories
 
$
609

 
$
470

The Partnership recorded write downs on its crude oil inventory of $68 and $231 million in the first quarter 2015 and the fourth quarter 2014, respectively. As a result of changes to product mix in the refined products and NGLs inventory pool, the Partnership reversed $27 million of inventory reserves in the first quarter 2015. This reserve related to write downs of refined products and NGLs that were recorded in the fourth quarter 2014.








8



7. Intangible Assets
The components of intangible assets are as follows:
 
 
Weighted Average
Amortization Period
 
March 31, 2015
 
December 31, 2014
 
 
(in years)
 
(in millions)
Gross
 
 
 
 
 
 
Customer relationships
 
18
 
$
836

 
$
836

Technology
 
10
 
47

 
47

Total gross
 
 
 
883

 
883

Accumulated amortization
 
 
 
 
 
 
Customer relationships
 
 
 
(114
)
 
(102
)
Technology
 
 
 
(12
)
 
(11
)
Total accumulated amortization
 
 
 
(126
)
 
(113
)
Total Net
 
 
 
$
757

 
$
770

Amortization expense was $13 million for the three months ended March 31, 2015 and 2014. The Partnership forecasts annual amortization expense of $52 million in 2015 and approximately $51 million of annual amortization expense for each year thereafter, through 2019, for these intangible assets.
Intangible assets associated with rights of way are included in properties, plants and equipment in the Partnership's condensed consolidated balance sheets.
8. Income Taxes
The Partnership is not a taxable entity for U.S. federal income tax purposes, or for the majority of states that impose income taxes. Rather, income taxes are generally assessed at the partner level. There are some states in which the Partnership operates where it is subject to state and local income taxes. Substantially all of the income tax amounts reflected in the Partnership's condensed consolidated financial statements are related to the operations of Inland, Mid-Valley and West Texas Gulf, all of which are entities subject to income taxes for federal and state purposes at the corporate level. The effective tax rates for these entities approximate the federal statutory rate of 35 percent.
In taxable jurisdictions, the Partnership records deferred income taxes on all significant temporary differences between the book basis and the tax basis of assets and liabilities. The net deferred tax liabilities reflected in the condensed consolidated balance sheets are derived principally from the differences in the book and tax bases of properties, plants and equipment of Inland, Mid-Valley and West Texas Gulf.











9



9. Debt
The components of the Partnership's debt balance are as follows:
 
 
March 31, 2015
 
December 31, 2014
 
 
 
Credit Facilities
 
(in millions)
$2.50 billion Credit Facility, due March 2020
 
$
350

 
$
150

$35 million Credit Facility, matured and repaid April 2015 (1)
 
35

 
35

Senior Notes
 
 
 
 
Senior Notes - 6.125%, due May 2016
 
175

 
175

Senior Notes - 5.50%, due February 2020
 
250

 
250

Senior Notes - 4.65%, due February 2022
 
300

 
300

Senior Notes - 3.45%, due January 2023
 
350

 
350

Senior Notes - 4.25% due April 2024
 
500

 
500

Senior Notes - 6.85%, due February 2040
 
250

 
250

Senior Notes - 6.10%, due February 2042
 
300

 
300

Senior Notes - 4.95%, due January 2043
 
350

 
350

Senior Notes - 5.30% due April 2044
 
700

 
700

Senior Notes - 5.35% due May 2045
 
800

 
800

Unamortized fair value adjustments
 
103

 
106

Total debt
 
4,463

 
4,266

Less:
 
 
 
 
Unamortized bond discount
 
(6
)
 
(6
)
Long-term debt
 
$
4,457

 
$
4,260

(1)
Amounts outstanding under West Texas Gulf's $35 million Credit Facility have been classified as long-term debt as repayment of the credit facility's balance was made with borrowings from the Partnership's $2.50 billion Credit Facility.
Credit Facilities
In March 2015, the Operating Partnership amended and restated its $1.50 billion Credit Facility, which was scheduled to mature in November 2018. The amended and restated credit facility is a $2.50 billion unsecured revolving credit agreement (the "$2.50 billion Credit Facility"), which matures in March 2020, that will continue to fund the Partnership's working capital requirements, finance acquisitions and capital projects, and be used for general partnership purposes. The $2.50 billion Credit Facility contains an "accordion" feature, under which the total aggregate commitment may be extended to $3.25 billion under certain conditions. The facility bears interest at LIBOR or the Base Rate (as defined in the facility), each plus an applicable margin. The credit facility may be repaid at any time. Outstanding borrowings under this credit facility were $350 and $150 million at March 31, 2015 and December 31, 2014, respectively.
The $2.50 billion Credit Facility contains various covenants including limitations on the creation of indebtedness and liens, and related to the operation and conduct of the business of the Partnership and its subsidiaries. The credit facility also limits the Partnership, on a rolling four quarter basis, to a maximum total consolidated debt to consolidated Adjusted EBITDA ratio, as defined in the underlying credit agreement, of 5.0 to 1, which can generally be increased to 5.5 to 1 during an acquisition period. The Partnership's ratio of total consolidated debt, excluding net unamortized fair value adjustments, to consolidated Adjusted EBITDA was 3.4 to 1 at March 31, 2015, as calculated in accordance with the credit agreement.
The West Texas Gulf $35 million revolving credit facility matured in April 2015 and was repaid with borrowings from the $2.50 billion Credit Facility.
Senior Notes
The Operating Partnership had $175 million of 8.75 percent senior notes which matured and were repaid in February 2014, using borrowings under the revolving credit facility.



10



10. Commitments and Contingent Liabilities
The Partnership is subject to numerous federal, state and local laws which regulate the discharge of materials into the environment or otherwise relate to the protection of the environment. These laws and regulations can result in liabilities and loss contingencies for remediation at the Partnership's facilities and at third-party or formerly owned sites. At March 31, 2015 and December 31, 2014, there were accrued liabilities for environmental remediation in the condensed consolidated balance sheets of $6 and $14 million, respectively. The accrued liabilities for environmental remediation do not include any amounts attributable to unasserted claims, since there are no unasserted claims that are probable of settlement or are reasonably estimable, nor have any recoveries from insurance been assumed. Charges against income for environmental remediation totaled $3 and $5 million for the three months ended March 31, 2015 and 2014, respectively. The Partnership maintains insurance programs that cover certain of its existing or potential environmental liabilities. Claims for recovery of environmental liabilities and previous expenditures that are probable of realization were not material in relation to the Partnership's consolidated financial position at March 31, 2015.
Total future costs for environmental remediation activities will depend upon, among other things, the identification of any additional sites; the determination of the extent of the contamination at each site; the timing and nature of required remedial actions; the technology available and needed to meet the various existing legal requirements; the nature and extent of future environmental laws, inflation rates and the determination of the Partnership's liability at multi-party sites, if any, in light of uncertainties with respect to joint and several liability; and the number, participation levels and financial viability of other parties. Management believes it is reasonably possible that additional environmental remediation losses will be incurred. At March 31, 2015, the aggregate of the estimated maximum additional reasonably possible losses, which relate to numerous individual sites, totaled $9 million.
The Partnership is a party to certain pending and threatened claims. Although the ultimate outcome of these claims cannot be ascertained at this time, nor can a range of reasonably possible losses be determined, it is reasonably possible that some portion of them could be resolved unfavorably for the Partnership. Management does not believe that any liabilities which may arise from such claims or the environmental matters discussed above would be material in relation to the Partnership's financial position, results of operations or cash flows at March 31, 2015. Furthermore, management does not believe that the overall costs for such matters will have a material impact, over an extended period of time, on the Partnership's financial position, results of operations or cash flows.
Sunoco, Inc. ("Sunoco") has indemnified the Partnership for 30 years for environmental and toxic tort liabilities related to the assets contributed to the Partnership, that arose from the operation of such assets prior to the closing of the February 2002 initial public offering ("IPO"). Sunoco has also indemnified the Partnership for 100 percent of all losses asserted within the first 21 years after the closing of the IPO. Sunoco's share of the liability for claims asserted thereafter will decrease by 10 percent per year. For example, for a claim asserted during the twenty-third year after the closing of the IPO, Sunoco would be required to indemnify the Partnership for 80 percent of its loss. There is no monetary cap on the amount of indemnity coverage provided by Sunoco. The Partnership has agreed to indemnify Sunoco for events and conditions associated with the operation of the Partnership's assets that occur on or after the closing of the IPO and for environmental and toxic tort liabilities to the extent that Sunoco is not required to indemnify the Partnership.
Management of the Partnership does not believe that any liabilities which may arise from claims indemnified by Sunoco would be material in relation to the Partnership's financial position, results of operations or cash flows at March 31, 2015. There are certain other pending legal proceedings related to matters arising after the IPO that are not indemnified by Sunoco. Management believes that any liabilities that may arise from these legal proceedings will not be material in relation to the Partnership's financial position, results of operations or cash flows at March 31, 2015.








11



11. Equity
The changes in the number of units outstanding from January 1, 2014 through March 31, 2015 are as follows:
 
 
Common Units
 
 
(in millions)
Balance at January 1, 2014
 
207.7

Units issued in public offering
 
7.7

Units issued under ATM program
 
10.3

Units issued under incentive plans
 
0.4

Balance at December 31, 2014
 
226.1

Units issued in public offering
 
13.5

Units issued under ATM program
 
3.4

Units issued under incentive plans
 
0.3

Balance at March 31, 2015
 
243.3

On June 12, 2014, the Partnership completed a two-for-one split of its common units. The unit split resulted in the issuance of one additional common unit for every one common unit owned. All unit and per unit information included in this report are presented on a post-split basis.
In the first quarter 2014, the Partnership filed a registration statement and established a $250 million ATM program. The program allows the Partnership to issue common units directly to the public and raise capital in a timely and efficient manner to finance its growth capital program, while supporting the Partnership's investment grade credit ratings. In the third quarter 2014, the Partnership filed a registration statement which allows for issuance of an additional $1.0 billion of common units under the ATM program. In 2014, the Partnership issued 10.3 million common units under the ATM program for net proceeds of $477 million. For the three months ended March 31, 2015, the Partnership issued 3.4 million common units under this program, for net proceeds of $142 million.
In March 2015, the Partnership completed an overnight public offering of 13.5 million common units for net proceeds of $547 million. The net proceeds from this offering were used to repay outstanding borrowings under the Partnership's revolving credit facility and for general partnership purposes. In April 2015, an additional 2.0 million common units were issued for net proceeds of $82 million related to the exercise of an option in connection with the March 2015 offering.

12. Cash Distributions
Within 45 days after the end of each quarter, the Partnership distributes all cash on hand at the end of the quarter, less reserves established by the general partner at its discretion. This is defined as "available cash" in the partnership agreement. The general partner has broad discretion to establish cash reserves that it determines are necessary or appropriate to properly conduct the Partnership's business. The Partnership will make quarterly distributions to the extent there is sufficient cash from operations after the establishment of cash reserves and the payment of fees and expenses, including payments to the general partner.
If cash distributions exceed $0.0833 per unit in a quarter, the general partner will receive increasing percentages, up to 50 percent, of the cash distributed in excess of that amount. These distributions are referred to as "incentive distributions." The percentage interests for the unitholders and the general partner for the minimum quarterly distribution are also applicable to the quarterly distribution amounts that are less than the minimum quarterly distribution.









12



The following table shows the target distribution levels and distribution "splits" between the general partner and the holders of the Partnership's common units through March 31, 2015:
 
 
 
 
Marginal Percentage Interest in Distributions
 
Total Quarterly
Distribution Target Amount
 
General Partner
 
Unitholders
Minimum Quarterly Distribution
 
$0.0750
 
2
%
 
 
98
%
First Target Distribution
up to
$0.0833
 
2
%
 
 
98
%
Second Target Distribution
above
$0.0833
 
 
 
 
 
up to
$0.0958
 
15
%
(1) 
85
%
Third Target Distribution
above
$0.0958
 
 
 
 
up to
$0.2638
 
37
%
(1) 
63
%
Thereafter
above
$0.2638
 
50
%
(1) 
50
%
(1) 
Includes general partner interest.
The distributions paid by the Partnership for the periods presented were as follows:
Cash Distribution Payment Date
 
Cash Distribution
per Limited Partner Unit
 
Total Cash Distribution
to the Limited Partners
 
Total Cash Distribution
to the General Partner
 
 
 
 
(in millions)
 
(in millions)
February 13, 2015
 
$
0.4000

 
$
92

 
$
54

November 14, 2014
 
$
0.3825

 
$
84

 
$
49

August 14, 2014
 
$
0.3650

 
$
77

 
$
43

May 15, 2014
 
$
0.3475

 
$
72

 
$
39

February 14, 2014
 
$
0.3312

 
$
69

 
$
35

On April 28, 2015, the Partnership's general partner announced a cash distribution of $0.419 per common unit ($1.68 annualized), representing the distribution for the first quarter 2015. The $165 million distribution, including $62 million to the general partner for its interests and incentive distribution rights, will be paid on May 15, 2015 to unitholders of record on May 11, 2015.
13. Management Incentive Plan
The general partner has adopted the LTIP for employees and directors of the general partner who perform services for the Partnership. The LTIP is administered by the independent directors of the Compensation Committee of the general partner's board of directors with respect to employee awards, and by the general partner's board of directors with respect to awards granted to the independent directors. The LTIP currently permits the grant of restricted units and unit options covering an additional 0.6 million common units.
During the three months ended March 31, 2015 and March 31, 2014, the Partnership issued 0.3 million common units under the LTIP. The Partnership recognized share-based compensation expense of $4 and $5 million for the three months ended March 31, 2015 and 2014, respectively. Each of the outstanding restricted unit grants have tandem distribution equivalent rights which are recognized as a reduction to equity when earned.
Additionally, the general partner granted 0.1 million phantom unit incentive awards during the three months ended March 31, 2015. The Partnership recognized share-based compensation expense in relation to the phantom units of less than $0.2 million for the period. The phantom units will be settled in cash upon vesting, and have been accounted for as a liability within the condensed consolidated balance sheet.



13



14. Derivatives and Risk Management
The Partnership is exposed to various risks, including volatility in the prices of the products that the Partnership markets, counterparty credit risk and changes in interest rates.
Price Risk Management
The Partnership is exposed to risks associated with changes in the market price of crude oil, refined products and NGLs. These risks are primarily associated with price volatility related to pre-existing or anticipated purchases, sales and storage. Price changes are often caused by shifts in the supply and demand for these commodities, as well as their locations. In order to manage such exposure, the Partnership's policy is (i) to only purchase crude oil, refined products and NGLs for which sales contracts have been executed or for which ready markets exist, (ii) to structure sales contracts so that price fluctuations do not materially impact the margins earned, and (iii) not to acquire and hold physical inventory, futures contracts or other derivative instruments for the purpose of speculating on commodity price changes. Although the Partnership seeks to maintain a balanced inventory position within its commodity inventories, net unbalances may occur for short periods of time due to production, transportation and delivery variances. When physical inventory builds or draws do occur, the Partnership continuously manages the variances to a balanced position over a period of time.
The physical contracts related to the Partnership's crude oil, refined products and NGL businesses that qualify as derivatives are designated as normal purchases and sales and accounted for using accrual accounting under United States generally accepted accounting principles. The Partnership accounts for derivatives that do not qualify as normal purchases and sales at fair value. The Partnership currently does not utilize derivative instruments to manage its exposure to prices related to crude oil purchase and sale activities.
Pursuant to the Partnership's approved risk management policy, derivative contracts such as swaps, futures and other instruments may be used to hedge or reduce exposure to price risk associated with acquired inventory or forecasted physical transactions. The Partnership uses such derivative instruments to mitigate the risk associated with market movements in the price of crude oil, refined products and NGLs. These derivative contracts act as a hedging mechanism against the volatility of prices by allowing the Partnership to transfer this price risk to counterparties who are able and willing to bear it. The Partnership does not designate any of its derivative contracts as hedges for accounting purposes. Therefore, all realized and unrealized gains and losses from these derivative contracts are recognized in the condensed consolidated statement of comprehensive income as they are incurred. All realized gains and losses associated with derivative contracts are recorded in earnings in the same line item associated with the forecasted transaction (either in sales and other operating revenue or cost of products sold).
The Partnership had open derivative positions on approximately 6.9 and 3.6 million barrels of crude oil, refined products and NGLs at March 31, 2015 and December 31, 2014, respectively. The derivatives outstanding as of March 31, 2015 vary in duration but do not extend beyond one year. The Partnership records its derivatives at fair value based on observable market prices (levels 1 and 2). As of March 31, 2015, the fair value of the Partnership's derivative assets and liabilities were approximately $6 and $6 million, respectively, compared to $29 and $14 million at December 31, 2014. Derivative asset and liability balances are recorded in accounts receivable and accrued liabilities, respectively, in the condensed consolidated balance sheets.
The following table sets forth the impact of derivatives on the Partnership's results of operations for the three months ended March 31, 2015 and 2014:
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Location of Gains (Losses) Recognized in Earnings
 
(in millions)
Commodity contracts not designated as cash flow hedging instruments:
 
 
 
 
Sales and other operating revenue
 
$
(1
)
 
$

Cost of products sold
 

 
1

 
 
$
(1
)
 
$
1





14



Credit Risk Management
The Partnership maintains credit policies with regard to its counterparties that management believes minimize the overall credit risk through credit analysis, credit approvals, credit limits and monitoring procedures. The credit positions of the Partnership's customers are analyzed prior to the extension of credit and periodically after credit has been extended. The Partnership's counterparties consist primarily of financial institutions and major integrated oil companies. This concentration of counterparties may impact the Partnership's overall exposure to credit risk, either positively or negatively, as the counterparties may be similarly affected by changes in economic, regulatory or other conditions.
Interest Rate Risk Management
The Partnership has interest rate risk exposure for changes in interest rates related to its outstanding borrowings. The Partnership manages its exposure to changes in interest rates through the use of a combination of fixed-rate and variable-rate debt. At March 31, 2015, the Partnership had $385 million of consolidated variable-rate borrowings under its revolving credit facilities.
15. Fair Value Measurements
The Partnership applies fair value accounting for all assets and liabilities that are required to be measured at fair value under current accounting rules. The assets and liabilities measured at fair value on a recurring basis are comprised primarily of derivative instruments.
The Partnership determines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Partnership utilizes valuation techniques that maximize the use of observable inputs (levels 1 and 2) and minimize the use of unobservable inputs (level 3) within the fair value hierarchy established by the FASB. The Partnership generally applies a "market approach" to determine fair value. This method uses pricing and other information generated by market transactions for identical or comparable assets and liabilities. Assets and liabilities are classified within the fair value hierarchy based on the lowest level (least observable) input that is significant to the measurement in its entirety.
The estimated fair value of the Partnership's financial instruments has been determined based on management's assessment of available market information and appropriate valuation methodologies. The Partnership's current assets (other than derivatives and inventories) and current liabilities (other than derivatives) are financial instruments and most of these items are recorded at cost in the condensed consolidated balance sheets. The estimated fair value of these financial instruments approximates their carrying value due to their short-term nature. The Partnership's derivatives are measured and recorded at fair value based on observable market prices (Note 14). The estimated fair values of the Partnership's senior notes are determined using observable market prices, as these notes are actively traded (level 1). The estimated aggregate fair value of the senior notes at March 31, 2015 was $4.16 billion, compared to the carrying amount of $4.08 billion. The estimated aggregate fair value of the senior notes at December 31, 2014 was $4.09 billion, compared to the carrying amount of $4.08 billion.
For further information regarding the Partnership's fair value measurements, see Note 14.










15



16. Business Segment Information
The following tables summarize condensed consolidated statements of comprehensive income information for the Partnership's business segments and reconcile total segment Adjusted EBITDA to net income attributable to the Partnership for the three months ended March 31, 2015 and 2014, respectively: 
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
(in millions)
Sales and other operating revenue (1)
 
 
 
 
Crude Oil Pipelines
 
$
135

 
$
131

Crude Oil Acquisition and Marketing
 
2,208

 
4,094

Terminal Facilities
 
244

 
287

Products Pipelines
 
63

 
41

Intersegment eliminations
 
(78
)
 
(76
)
Total sales and other operating revenue
 
$
2,572

 
$
4,477

 
 
 
 
 
Depreciation and amortization
 
 
 
 
Crude Oil Pipelines
 
$
27

 
$
24

Crude Oil Acquisition and Marketing
 
12

 
12

Terminal Facilities
 
31

 
26

Products Pipelines
 
12

 
7

Total depreciation and amortization
 
$
82

 
$
69

 
 
 
 
 
Impairment charge and other matters
 
 
 
 
Crude Oil Acquisition and Marketing
 
$
68

 
$

Terminal Facilities
 
(27
)
 

Total impairment charge and other matters
 
$
41

 
$

 
 
 
 
 
Adjusted EBITDA
 
 
 
 
Crude Oil Pipelines
 
$
95

 
$
93

Crude Oil Acquisition and Marketing
 
31

 
12

Terminal Facilities
 
52

 
86

Products Pipelines
 
43

 
17

Total Adjusted EBITDA
 
221

 
208

Interest expense, net
 
(29
)
 
(16
)
Depreciation and amortization expense
 
(82
)
 
(69
)
Impairment charge and other matters

 
(41
)
 

Provision for income taxes
 
(6
)
 
(5
)
Non-cash compensation expense
 
(4
)
 
(5
)
Unrealized (gains) losses on commodity risk management activities
 
(15
)
 
1

Amortization of excess equity method investment
 
(1
)
 

Proportionate share of unconsolidated affiliates' interest, depreciation and provision for income taxes
 
(6
)
 
(4
)
Net Income
 
37

 
110

Less: Net income attributable to noncontrolling interests
 
(1
)
 
(3
)
Net Income attributable to Sunoco Logistics Partners L.P.
 
$
36

 
$
107

(1) 
Sales and other operating revenue includes the following amounts from ETP and its affiliates for the three months ended March 31, 2015 and 2014:
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
(in millions)
Crude Oil Acquisition and Marketing
 
$
57

 
$
269

Terminal Facilities
 
52

 
32

Products Pipelines
 
10

 
5

Total sales and other operating revenue
 
$
119

 
$
306


16



The following table summarizes the identifiable assets for each segment as of March 31, 2015 and December 31, 2014:
 
 
March 31, 2015
 
December 31, 2014
 
 
(in millions)
Crude Oil Pipelines
 
$
3,891

 
$
3,765

Crude Oil Acquisition and Marketing
 
3,166

 
3,329

Terminal Facilities
 
3,672

 
3,534

Products Pipelines
 
2,874

 
2,763

Corporate and other assets (1)
 
221

 
253

Total identifiable assets
 
$
13,824

 
$
13,644

(1) 
Corporate and other assets consist of cash and cash equivalents, properties, plants and equipment and other assets.
17. Supplemental Condensed Consolidating Financial Information
The Partnership serves as guarantor of the senior notes. These guarantees are full and unconditional. For the purposes of this footnote, Sunoco Logistics Partners L.P. is referred to as "Parent Guarantor" and Sunoco Logistics Partners Operations L.P. is referred to as "Subsidiary Issuer." All other consolidated subsidiaries of the Partnership are collectively referred to as "Non-Guarantor Subsidiaries."
The following supplemental condensed consolidating financial information reflects the Parent Guarantor's separate accounts, the Subsidiary Issuer's separate accounts, the combined accounts of the Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations, and the Parent Guarantor's consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent Guarantor's investments in its subsidiaries and the Subsidiary Issuer's investments in its subsidiaries are accounted for under the equity method of accounting.

17



Condensed Consolidating Statement of Comprehensive Income (Loss)
Three Months Ended March 31, 2015
(in millions, unaudited)
 
 
 
Parent
Guarantor
 
Subsidiary
Issuer
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Revenues
 
 
 
 
 
 
 
 
 
 
Sales and other operating revenue:
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
 
$

 
$

 
$
2,453

 
$

 
$
2,453

Affiliates
 

 

 
119

 

 
119

Total Revenues
 

 

 
2,572

 

 
2,572

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
Cost of products sold
 

 

 
2,309

 

 
2,309

Operating expenses
 

 

 
49

 

 
49

Selling, general and administrative expenses
 

 

 
25

 

 
25

Depreciation and amortization expense
 

 

 
82

 

 
82

Impairment charge and other matters
 

 

 
41

 

 
41

Total Costs and Expenses
 

 

 
2,506

 

 
2,506

Operating Income
 

 

 
66

 

 
66

Interest cost and debt expense, net
 

 
(49
)
 
(1
)
 

 
(50
)
Capitalized interest
 

 
21

 

 

 
21

Other income
 

 

 
6

 

 
6

Equity in earnings of subsidiaries
 
36

 
64

 

 
(100
)
 

Income (Loss) Before Provision for Income Taxes
 
36

 
36

 
71

 
(100
)
 
43

Provision for income taxes
 

 

 
(6
)
 

 
(6
)
Net Income (Loss)
 
36

 
36

 
65

 
(100
)
 
37

Less: Net income attributable to noncontrolling interests
 

 

 
(1
)
 

 
(1
)
Net Income (Loss) Attributable to Sunoco Logistics Partners L.P.
 
$
36

 
$
36

 
$
64

 
$
(100
)
 
$
36

 
 
 
 
 
 
 
 
 
 
 
Comprehensive Income (Loss)
 
$
36

 
$
36

 
$
64

 
$
(100
)
 
$
36

Less: Comprehensive income attributable to noncontrolling interests
 

 

 
(1
)
 

 
(1
)
Comprehensive Income (Loss) Attributable to Sunoco Logistics Partners L.P.
 
$
36

 
$
36

 
$
63

 
$
(100
)
 
$
35


18



Condensed Consolidating Statement of Comprehensive Income (Loss)
Three Months Ended March 31, 2014
(in millions, unaudited)
 
 
 
Parent
Guarantor
 
Subsidiary
Issuer
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Revenues
 
 
 
 
 
 
 
 
 
 
Sales and other operating revenue:
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
 
$

 
$

 
$
4,171

 
$

 
$
4,171

Affiliates
 

 

 
306

 

 
306

Total Revenues
 

 

 
4,477

 

 
4,477

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
Cost of products sold
 

 

 
4,210

 

 
4,210

Operating expenses
 

 

 
41

 

 
41

Selling, general and administrative expenses
 

 

 
30

 

 
30

Depreciation and amortization expense
 

 

 
69

 

 
69

Total Costs and Expenses
 

 

 
4,350

 

 
4,350

Operating Income
 

 

 
127

 

 
127

Interest cost and debt expense, net
 

 
(25
)
 
(1
)
 

 
(26
)
Capitalized interest
 

 
10

 

 

 
10

Other income
 

 

 
4

 

 
4

Equity in earnings of subsidiaries
 
107

 
122

 

 
(229
)
 

Income (Loss) Before Provision for Income Taxes
 
107

 
107

 
130

 
(229
)
 
115

Provision for income taxes
 

 

 
(5
)
 

 
(5
)
Net Income (Loss)
 
107

 
107

 
125

 
(229
)
 
110

Less: Net income attributable to noncontrolling interests
 

 

 
(3
)
 

 
(3
)
Net Income (Loss) Attributable to Sunoco Logistics Partners L.P.
 
$
107

 
$
107

 
$
122

 
$
(229
)
 
$
107

 
 
 
 
 
 
 
 
 
 
 
Comprehensive Income (Loss)
 
$
107

 
$
107

 
$
125

 
$
(229
)
 
$
110

Less: Comprehensive income attributable to noncontrolling interests
 

 

 
(3
)
 

 
(3
)
Comprehensive Income (Loss) Attributable to Sunoco Logistics Partners L.P.
 
$
107

 
$
107

 
$
122

 
$
(229
)
 
$
107








 

19



Condensed Consolidating Balance Sheet
March 31, 2015
(in millions, unaudited)
 
 
 
Parent
Guarantor
 
Subsidiary
Issuer
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
54

 
$

 
$

 
$
54

Accounts receivable, affiliated companies
 




44




44

Accounts receivable, net
 

 

 
1,458

 

 
1,458

Inventories
 

 

 
609

 

 
609

Other current assets
 

 

 
5

 

 
5

Total Current Assets
 

 
54

 
2,116

 

 
2,170

Properties, plants and equipment, net
 

 

 
9,210

 

 
9,210

Investment in affiliates
 
6,124

 
9,154

 
234

 
(15,278
)
 
234

Long-term note receivable, affiliated companies
 

 

 
23

 

 
23

Goodwill
 

 

 
1,358

 

 
1,358

Intangible assets, net
 

 

 
757

 

 
757

Other assets
 

 
32

 
40

 

 
72

Total Assets
 
$
6,124

 
$
9,240

 
$
13,738

 
$
(15,278
)
 
$
13,824

Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$

 
$

 
$
1,632

 
$

 
$
1,632

Accounts payable, affiliated companies
 

 

 
17

 

 
17

Accrued liabilities
 
1

 
63

 
92

 

 
156

Accrued taxes payable
 

 

 
35

 

 
35

Intercompany
 
(1,028
)
 
(1,369
)
 
2,397

 

 

Total Current Liabilities
 
(1,027
)
 
(1,306
)
 
4,173

 

 
1,840

Long-term debt
 

 
4,422

 
35

 

 
4,457

Other deferred credits and liabilities
 

 

 
80

 

 
80

Deferred income taxes
 

 

 
247

 

 
247

Total Liabilities
 
(1,027
)
 
3,116

 
4,535

 

 
6,624

Redeemable noncontrolling interests
 

 

 
15

 

 
15

Total Equity
 
7,151

 
6,124

 
9,188

 
(15,278
)
 
7,185

Total Liabilities and Equity
 
$
6,124

 
$
9,240

 
$
13,738

 
$
(15,278
)
 
$
13,824


20



Condensed Consolidating Balance Sheet
December 31, 2014
(in millions, unaudited)  
 
 
Parent
Guarantor
 
Subsidiary
Issuer
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
101

 
$

 
$

 
$
101

Accounts receivable, affiliated companies
 

 
3

 
6

 

 
9

Accounts receivable, net
 

 

 
1,766

 

 
1,766

Inventories
 

 

 
470

 

 
470

Other current assets
 

 

 
3

 

 
3

Total Current Assets
 

 
104

 
2,245

 

 
2,349

Properties, plants and equipment, net
 

 

 
8,849

 

 
8,849

Investment in affiliates
 
6,189

 
9,168

 
226

 
(15,357
)
 
226

Long-term note receivable, affiliated companies
 

 

 
17

 

 
17

Goodwill
 

 

 
1,358

 

 
1,358

Intangible assets, net
 

 

 
770

 

 
770

Other assets
 

 
28

 
47

 

 
75

Total Assets
 
$
6,189

 
$
9,300

 
$
13,512

 
$
(15,357
)
 
$
13,644

Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$

 
$

 
$
1,934

 
$

 
$
1,934

Accounts payable, affiliated companies
 

 

 
21

 

 
21

Accrued liabilities
 

 
58

 
246

 

 
304

Accrued taxes payable
 

 

 
52

 

 
52

Intercompany
 
(489
)
 
(1,172
)
 
1,661

 

 

Total Current Liabilities
 
(489
)
 
(1,114
)
 
3,914

 

 
2,311

Long-term debt
 

 
4,225

 
35

 

 
4,260

Other deferred credits and liabilities
 

 

 
71

 

 
71

Deferred income taxes