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) - May 7, 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
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.)
Item 5. Other Events and Regulation FD Disclosure
First Quarter Earnings
Plains All American Pipeline, L.P. today reported net income before unusual
or nonrecurring items and the impact of SFAS 133 of $17.2 million, or $0.38 per
limited partner unit, for the first quarter of 2002 as compared to net income
before unusual or nonrecurring items and the impact of SFAS 133 of $12.8
million, or $0.36 per limited partner unit, for the first quarter of 2001.
Earnings before interest, taxes, depreciation, amortization and other
noncash items ("EBITDA") for the first quarter of 2002 was $30.6 million, and
cash flow from operations (net income plus noncash items) totaled $24.1 million.
These amounts represent increases of 27% and 38%, respectively, over EBITDA of
$24.1 million and cash flow of $17.5 million recorded for the first quarter of
2001. These EBITDA and cash flow comparisons exclude the impact of the unusual
or nonrecurring items and the impact of SFAS 133.
The following table reconciles the Partnership's reported net income to the
Partnership's net income before unusual or nonrecurring items and the impact of
SFAS 133:
Dollars in millions, except per unit amounts For the Period Ended
March 31,
----------------------
2002 2001
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Reported net income $ 14.3 $ 13.0
Per unit $ 0.31 $ 0.37
Noncash compensation expense - 0.1
Noncash cumulative effect of accounting change (1) - (0.5)
Noncash SFAS 133 adjustment 2.9 0.2
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Net income before unusual or nonrecurring items
and the impact of SFAS 133 $ 17.2 $ 12.8
Per unit $ 0.38 $ 0.36
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Notes:
(1) Related to the adoption of SFAS 133 on January 1, 2001.
Total gross margin for the first quarter of 2002 was $38.4 million as
compared to $32.7 million for the first quarter of 2001. Gross margin from
gathering, marketing, terminalling and storage was $19.8 million during the 2002
quarter as compared to $18.8 million during the 2001 quarter. Gross margin for
both periods includes the impacts of the noncash SFAS 133 adjustments that are
listed in the above table. Gross margin from pipeline activities was $18.6
million during the first quarter of 2002 as compared to $13.9 million in the
comparable 2001 quarter.
The Partnership's long-term debt at March 31, 2002, totaled $391.0 million
as compared to $351.7 million at December 31, 2001. At March 31, 2002,
the Partnership's long-term debt-to-total capitalization ratio was approximately
50%.
The Partnership's weighted average units outstanding for the first quarter
of 2002 totaled 43.3 million as compared to 34.4 million in last year's first
quarter. At March 31, 2002, the Partnership had 43.3 million units outstanding.
The Partnership is including in this report as Exhibit 99.1 a press release
dated May 7, 2002. The financial summary tables attached to such press release
are filed herewith. All other portions of the press release are furnished under
Item 9 below.
Item 7. Financial Statements and Exhibits
(c) Exhibit 99.1 - Press Release dated May 7, 2002.
Item 9. Regulation FD Disclosure
In accordance with General Instruction B.2. of Form 8K, the information
presented under this Item 9 and the press release attached to this report as
Exhibit 99.1 (other than the financial summary tables attached thereto) 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.
Year 2002 Estimates
The Partnership provided its estimates for the year 2002 on Form 8-K on
March 6, 2002. Management believes that the assumptions and overall estimates
for EBITDA and Net Income contained within that filing remain reasonable based
on information known to us as of May 6, 2002, excluding the effect of a pending
acquisition with respect to which an 8-K was filed on May 6, 2002. Management
intends to provide estimates for the remainder of the year that incorporate this
acquisition within a reasonable time period following completion of this
acquisition.
Disclosure of Second Quarter 2002 Estimates
The following table reflects the Partnership's current estimates of certain
results for the second quarter of 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 May 6,
2002.
Operating And Financial Guidance
(in thousands except per unit data)
Quarter Ended
June 30, 2002
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Low High
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Gross Margin:
Pipeline $ 17,400 $ 17,800
Marketing, Gathering, Terminalling & Storage 22,300 23,200
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Total Gross Margin 39,700 41,000
General & Administrative/Other Exp 11,200 11,000
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EBITDA* $ 28,500 $ 30,000
Interest Exp 6,700 6,500
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Cash Flow from Operations 21,800 23,500
Depreciation & Amortization 7,000 7,000
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Net Income (Loss) $ 14,800 $ 16,500
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Net Income (Loss) to LP $ 13,793 $ 15,459
Units Outstanding 43,253 43,253
Earnings per Unit $ 0.32 $ 0.36
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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 485,000 barrels per day for the
second quarter of 2002 with Outer Continental Shelf (OCS) volumes estimated
to make up approximately 13% of these volumes or approximately 62,000
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 second quarter would have an approximate $800,000 effect on EBITDA.
3. Marketing and Transportation, Terminalling and Storage Gross Margin.
Forecast volumes for Gathering & Marketing are approximately 480,000
barrels per day for the second quarter of
2002, consistent with our current business. Revenues are forecast using
these volume assumptions, estimated per barrel margins that assume a
modest improvement over current crude oil market conditions, primarily
beginning in June, and estimates of operating expenses, which management
believes are reasonable.
4. General and Administrative Expense. G&A expense is forecast to be between
$11.0 million and $11.2 million for the second quarter of 2002. This is
based on current and projected staffing levels and office space
requirements.
5. Interest Expense. Second quarter interest expense is forecast to be $6.5 to
$6.7 million assuming an average debt balance of approximately $385 million
and an average interest rate of approximately 6.9%, 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 $2.10 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 $2.10 annual distribution level and the current
units outstanding, the general partner's incentive distribution is forecast
to be approximately $2.9 million annually.
9. Capital Expenditures. Total capital expenditures are assumed to be $9.7
million for the second quarter of 2002. Of these amounts, expansion capital
is estimated to be $8.5 million during the quarter. Expansion capital
estimates include approximately $6.3 million for Cushing Expansion Projects
(Phases II & III). Maintenance capital is estimated to be $1.25 million.
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 the interests to be acquired from Shell as disclosed in our
report on Form 8-K filed on May 6, 2002, nor any other acquisitions that
may be made after the date hereof.
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;
.. 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.
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: May 7, 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
EXHIBIT INDEX
Exhibit
Number Description
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99.1 Press Release dated May 7, 2002