x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Commission file number 1-16335
|
Delaware
|
|
73-1599053
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Magellan GP, LLC
P.O. Box 22186, Tulsa, Oklahoma
|
|
74121-2186
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of Each Class
|
|
Name of Each Exchange on
Which Registered
|
Common Units representing limited
partnership interests
|
|
New York Stock Exchange
|
|
|
|
Page
|
|
PART I
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|
|
ITEM 1.
|
|
||
ITEM 1A.
|
|
||
ITEM 1B.
|
|
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ITEM 2.
|
|
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ITEM 3.
|
|
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ITEM 4.
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||
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PART II
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|
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ITEM 5.
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|
||
ITEM 6.
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|
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ITEM 7.
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||
ITEM 7A.
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ITEM 8.
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ITEM 9.
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||
ITEM 9A.
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ITEM 9B.
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||
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PART III
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|
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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PART IV
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|
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ITEM 15.
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||
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|
Item 1.
|
Business
|
•
|
petroleum pipeline system, comprised of approximately 9,600 miles of pipeline and 51 terminals;
|
•
|
petroleum terminals, which includes storage terminal facilities (consisting of six marine terminals located along coastal waterways and crude oil storage in Cushing, Oklahoma) and 27 inland terminals; and
|
•
|
ammonia pipeline system, representing our 1,100-mile ammonia pipeline and six associated terminals.
|
•
|
refined petroleum products,
which are the output from refineries and are primarily used as fuels by consumers. Refined petroleum products include gasoline, diesel fuel, aviation fuel, kerosene and heating oil;
|
•
|
liquefied petroleum gases, or LPGs,
which are produced as by-products of the crude oil refining process and in connection with natural gas production. LPGs include butane and propane;
|
•
|
blendstocks,
which are blended with petroleum products to change or enhance their characteristics such as increasing a gasoline’s octane or oxygen content. Blendstocks include alkylates and oxygenates;
|
•
|
heavy oils and feedstocks,
which are used as burner fuels or feedstocks for further processing by refineries and petrochemical facilities. Heavy oils and feedstocks include No. 6 fuel oil and vacuum gas oil; and
|
•
|
crude oil and condensate,
which are used as feedstocks by refineries. In addition, we store, blend and distribute biofuels such as ethanol and biodiesel, which are increasingly required by government mandates.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2008
|
|
2009
|
|
2010
|
|||
Percent of consolidated revenues
|
|
84
|
%
|
|
80
|
%
|
|
85
|
%
|
Percent of consolidated operating margin
|
|
79
|
%
|
|
75
|
%
|
|
79
|
%
|
Percent of consolidated total assets
|
|
68
|
%
|
|
73
|
%
|
|
70
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2008
|
|
2009
|
|
2010
|
|||
Shipments (thousand barrels):
|
|
|
|
|
|
|
|||
Refined products
|
|
|
|
|
|
|
|||
Gasoline
|
|
152,703
|
|
|
169,873
|
|
|
194,338
|
|
Distillates
|
|
114,751
|
|
|
100,214
|
|
|
122,929
|
|
Aviation fuel
|
|
22,190
|
|
|
19,843
|
|
|
22,612
|
|
LPGs
|
|
6,252
|
|
|
5,770
|
|
|
4,949
|
|
Crude oil
|
|
—
|
|
|
—
|
|
|
14,658
|
|
Total product shipments
|
|
295,896
|
|
|
295,700
|
|
|
359,486
|
|
Capacity leases
|
|
24,665
|
|
|
29,821
|
|
|
27,084
|
|
Total shipments, including capacity leases
|
|
320,561
|
|
|
325,521
|
|
|
386,570
|
|
Daily average (thousand barrels)
|
|
876
|
|
|
892
|
|
|
1,059
|
|
|
|
|
Company
|
|
Refinery Location
|
BP
|
|
Texas City, TX
|
Coffeyville Resources
|
|
Coffeyville, KS
|
Conoco Phillips
|
|
Ponca City, OK
|
Flint Hills Resources (Koch)
|
|
Pine Bend, MN
|
Frontier Oil
|
|
El Dorado, KS
|
Gary-Williams Energy
|
|
Wynnewood, OK
|
Holly Corporation
|
|
Tulsa, OK
|
St. Paul Park Refining
|
|
St. Paul, MN
|
Murphy Oil USA
|
|
Superior, WI
|
National Cooperative Refining Association
|
|
McPherson, KS
|
Valero Energy
|
|
Ardmore, OK
|
Valero Energy
|
|
Houston, TX
|
Valero Energy
|
|
Texas City, TX
|
|
|
|
|
|
Pipeline/Terminal
|
|
Connection Location
|
|
Source of Product
|
Refined Products:
|
|
|
|
|
BP
|
|
Manhattan, IL
|
|
Whiting, IN refinery
|
Cenex
|
|
Fargo, ND
|
|
Laurel, MT refinery
|
Conoco Phillips
|
|
Kansas City, KS
|
|
Various Gulf Coast refineries (via Seaway/Standish Pipeline); Borger, TX refinery
|
Explorer
|
|
Glenpool, OK; Mt. Vernon, MO; Dallas, TX; East Houston, TX; Mt. Pleasant, TX
|
|
Various Gulf Coast refineries
|
Kinder Morgan
|
|
Galena Park and Pasadena, TX
|
|
Various Gulf Coast refineries and imports
|
Magellan Terminals Holdings
|
|
Galena Park, TX
|
|
Various Gulf Coast refineries and imports
|
Mid-America (Enterprise)
|
|
El Dorado, KS
|
|
Conway, KS storage
|
NuStar Energy
|
|
El Dorado, KS; Minneapolis, MN
|
|
Various OK & KS refineries and Mandan, ND refinery
|
ONEOK Partners
|
|
Plattsburg, MO; Des Moines, IA; Wayne, IL
|
|
Bushton, KS storage and Chicago, IL area refineries
|
Sinco
|
|
East Houston, TX
|
|
Deer Park, TX refinery
|
West Shore
|
|
Chicago, IL
|
|
Various Chicago, IL area refineries
|
Crude:
|
|
|
|
|
Speed Junction
|
|
Houston, TX
|
|
Various Houston, TX terminals and two pipelines along the Houston ship channel
|
Genoa Junction
|
|
Houston, TX
|
|
Two pipelines near the Houston ship channel
|
|
|
Year Ended December 31,
|
|||||||
|
|
2008
|
|
2009
|
|
2010
|
|||
Percent of consolidated revenues
|
|
14
|
%
|
|
18
|
%
|
|
14
|
%
|
Percent of consolidated operating margin
|
|
19
|
%
|
|
23
|
%
|
|
22
|
%
|
Percent of consolidated total assets
|
|
28
|
%
|
|
25
|
%
|
|
28
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2008
|
|
2009
|
|
2010
|
|||
Percent of consolidated revenues
|
|
2
|
%
|
|
2
|
%
|
|
1
|
%
|
Percent of consolidated operating margin
|
|
2
|
%
|
|
1
|
%
|
|
(1
|
)%
|
Percent of consolidated total assets
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2008
|
|
2009
|
|
2010
|
|||
Customer A
|
|
12
|
%
|
|
5
|
%
|
|
13
|
%
|
Customer B
|
|
12
|
%
|
|
11
|
%
|
|
11
|
%
|
Total
|
|
24
|
%
|
|
16
|
%
|
|
24
|
%
|
|
|
|
|
|
|
|
Item 1A.
|
Risk Factors
|
|
•
|
|
an increase in the market prices of crude oil and petroleum products, which may reduce demand for crude oil, gasoline and other petroleum products. Market prices for petroleum products are subject to wide fluctuations in response to changes in global and regional supply and demand over which we have no control;
|
|
•
|
|
higher fuel taxes or other governmental or regulatory actions that increase the cost of the products we handle;
|
|
•
|
|
an increase in fuel economy, whether as a result of a shift by consumers to more fuel-efficient vehicles, technological advances by manufacturers or federal or state regulations; and
|
|
•
|
|
an increase in the use of alternative fuel sources, such as ethanol, biodiesel, fuel cells and solar, electric and battery-powered engines. Current laws will require a significant increase in the quantity of ethanol and biodiesel used in transportation fuels between now and 2022. Such an increase could have a material impact on the volume of petroleum-based fuels transported on our pipeline or distributed through our terminals.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Reserved
|
Item 5.
|
Market for Registrant’s Limited Partner Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
2009
|
|
2010
|
||||||||||||||||||||
Quarter
|
|
High
|
|
Low
|
|
Distribution*
|
|
High
|
|
Low
|
|
Distribution*
|
||||||||||||
1
st
|
|
$
|
36.00
|
|
|
$
|
25.36
|
|
|
$
|
0.7100
|
|
|
$
|
47.65
|
|
|
$
|
39.81
|
|
|
$
|
0.7200
|
|
2
nd
|
|
$
|
36.75
|
|
|
$
|
28.93
|
|
|
$
|
0.7100
|
|
|
$
|
48.60
|
|
|
$
|
39.85
|
|
|
$
|
0.7325
|
|
3
rd
|
|
$
|
39.92
|
|
|
$
|
33.75
|
|
|
$
|
0.7100
|
|
|
$
|
51.47
|
|
|
$
|
45.55
|
|
|
$
|
0.7450
|
|
4
th
|
|
$
|
43.70
|
|
|
$
|
36.55
|
|
|
$
|
0.7100
|
|
|
$
|
57.43
|
|
|
$
|
51.45
|
|
|
$
|
0.7575
|
|
|
|
12/30/2005
|
|
12/29/2006
|
|
12/31/2007
|
|
12/31/2008
|
|
12/31/2009
|
|
12/31/2010
|
||||||||||||
Magellan Midstream Partners, L.P.
|
|
$
|
100.0
|
|
|
$
|
128.0
|
|
|
$
|
152.1
|
|
|
$
|
114.1
|
|
|
$
|
176.9
|
|
|
$
|
245.0
|
|
Alerian MLP Index
|
|
$
|
100.0
|
|
|
$
|
126.1
|
|
|
$
|
142.1
|
|
|
$
|
89.6
|
|
|
$
|
158.1
|
|
|
$
|
214.8
|
|
S&P 500
|
|
$
|
100.0
|
|
|
$
|
115.8
|
|
|
$
|
122.1
|
|
|
$
|
77.0
|
|
|
$
|
97.3
|
|
|
$
|
111.9
|
|
Item 6.
|
Selected Financial Data
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
||||||||||
|
|
(in thousands, except per unit amounts)
|
||||||||||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transportation and terminals revenues
|
|
$
|
559,321
|
|
|
$
|
608,781
|
|
|
$
|
638,810
|
|
|
$
|
678,945
|
|
|
$
|
793,599
|
|
Product sales revenues
|
|
664,569
|
|
|
709,564
|
|
|
574,095
|
|
|
334,465
|
|
|
763,090
|
|
|||||
Affiliate management fee revenues
|
|
690
|
|
|
712
|
|
|
733
|
|
|
761
|
|
|
758
|
|
|||||
Total revenues
|
|
1,224,580
|
|
|
1,319,057
|
|
|
1,213,638
|
|
|
1,014,171
|
|
|
1,557,447
|
|
|||||
Operating expenses
|
|
243,860
|
|
|
250,935
|
|
|
264,871
|
|
|
257,635
|
|
|
282,212
|
|
|||||
Product purchases
|
|
605,341
|
|
|
633,909
|
|
|
436,567
|
|
|
280,291
|
|
|
668,585
|
|
|||||
Gain on assignment of supply agreement
|
|
—
|
|
|
—
|
|
|
(26,492
|
)
|
|
—
|
|
|
—
|
|
|||||
Equity earnings
|
|
(3,324
|
)
|
|
(4,027
|
)
|
|
(4,067
|
)
|
|
(3,431
|
)
|
|
(5,732
|
)
|
|||||
Operating margin
|
|
378,703
|
|
|
438,240
|
|
|
542,759
|
|
|
479,676
|
|
|
612,382
|
|
|||||
Depreciation and amortization expense
|
|
76,200
|
|
|
79,140
|
|
|
86,501
|
|
|
97,216
|
|
|
108,668
|
|
|||||
G&A expense
|
|
69,503
|
|
|
74,859
|
|
|
73,302
|
|
|
84,049
|
|
|
95,316
|
|
|||||
Operating profit
|
|
233,000
|
|
|
284,241
|
|
|
382,956
|
|
|
298,411
|
|
|
408,398
|
|
|||||
Interest expense, net
|
|
47,624
|
|
|
47,653
|
|
|
50,479
|
|
|
69,187
|
|
|
93,296
|
|
|||||
Debt prepayment premium
|
|
—
|
|
|
1,984
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Debt placement fee amortization
|
|
1,925
|
|
|
1,554
|
|
|
767
|
|
|
1,112
|
|
|
1,401
|
|
|||||
Other (income) expense, net
|
|
653
|
|
|
728
|
|
|
(380
|
)
|
|
(24
|
)
|
|
750
|
|
|||||
Income before provision for income taxes
|
|
182,798
|
|
|
232,322
|
|
|
332,090
|
|
|
228,136
|
|
|
312,951
|
|
|||||
Provision for income taxes
(a)
|
|
—
|
|
|
1,568
|
|
|
1,987
|
|
|
1,661
|
|
|
1,371
|
|
|||||
Net income
|
|
$
|
182,798
|
|
|
$
|
230,754
|
|
|
$
|
330,103
|
|
|
$
|
226,475
|
|
|
$
|
311,580
|
|
Net income allocation:
(b)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Portion applicable to ownership interests before completion of initial public offering
(c)
|
|
$
|
5,886
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-controlling owners’ interest
|
|
148,292
|
|
|
175,356
|
|
|
244,430
|
|
|
99,729
|
|
|
(397
|
)
|
|||||
Limited partner interests
|
|
33,069
|
|
|
61,580
|
|
|
87,733
|
|
|
126,746
|
|
|
311,977
|
|
|||||
General partner interest
|
|
(4,449
|
)
|
|
(6,182
|
)
|
|
(2,060
|
)
|
|
—
|
|
|
—
|
|
|||||
Net income
|
|
$
|
182,798
|
|
|
$
|
230,754
|
|
|
$
|
330,103
|
|
|
$
|
226,475
|
|
|
$
|
311,580
|
|
Basic and diluted net income per limited partner unit
|
|
$
|
0.83
|
|
|
$
|
1.55
|
|
|
$
|
2.21
|
|
|
$
|
2.22
|
|
|
$
|
2.85
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital (deficit)
(d)
|
|
$
|
(310,087
|
)
|
|
$
|
(15,609
|
)
|
|
$
|
(29,644
|
)
|
|
$
|
94,571
|
|
|
$
|
109,536
|
|
Total assets
|
|
2,316,508
|
|
|
2,416,931
|
|
|
2,600,708
|
|
|
3,163,148
|
|
|
3,717,900
|
|
|||||
Long-term debt
(d)
|
|
518,609
|
|
|
914,536
|
|
|
1,083,485
|
|
|
1,680,004
|
|
|
1,906,148
|
|
|||||
Owners’ equity
|
|
1,165,775
|
|
|
1,184,566
|
|
|
1,254,132
|
|
|
1,196,354
|
|
|
1,469,571
|
|
|||||
Cash Distribution Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash distributions declared per MMP unit
(e)
|
|
$
|
2.34
|
|
|
$
|
2.55
|
|
|
$
|
2.77
|
|
|
$
|
2.84
|
|
|
$
|
2.96
|
|
Cash distributions paid per MMP unit
(e)
|
|
$
|
2.29
|
|
|
$
|
2.49
|
|
|
$
|
2.72
|
|
|
$
|
2.84
|
|
|
$
|
2.91
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
||||||||||
|
|
(in thousands, except per unit amounts and operating statistics)
|
||||||||||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating margin (loss):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Petroleum pipeline system
|
|
$
|
287,574
|
|
|
$
|
354,914
|
|
|
$
|
428,903
|
|
|
$
|
361,598
|
|
|
$
|
480,781
|
|
Petroleum terminals
|
|
84,992
|
|
|
83,289
|
|
|
101,713
|
|
|
110,573
|
|
|
132,748
|
|
|||||
Ammonia pipeline system
|
|
2,554
|
|
|
(2,995
|
)
|
|
8,660
|
|
|
3,666
|
|
|
(4,156
|
)
|
|||||
Allocated partnership depreciation costs
(f)
|
|
3,583
|
|
|
3,032
|
|
|
3,483
|
|
|
3,839
|
|
|
3,009
|
|
|||||
Operating margin
|
|
$
|
378,703
|
|
|
$
|
438,240
|
|
|
$
|
542,759
|
|
|
$
|
479,676
|
|
|
$
|
612,382
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Distributable cash flow:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
$
|
182,798
|
|
|
$
|
230,754
|
|
|
$
|
330,103
|
|
|
$
|
226,475
|
|
|
$
|
311,580
|
|
Depreciation and amortization expense
(g)
|
|
78,125
|
|
|
80,694
|
|
|
87,268
|
|
|
98,328
|
|
|
110,069
|
|
|||||
Equity-based incentive compensation expense
(h)
|
|
10,820
|
|
|
6,213
|
|
|
931
|
|
|
6,123
|
|
|
15,499
|
|
|||||
Asset retirements and impairments
|
|
8,031
|
|
|
8,548
|
|
|
7,180
|
|
|
5,529
|
|
|
1,062
|
|
|||||
Commodity-related adjustments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NYMEX losses (gains) recognized in the current period associated with products that will be sold in the future
(i)
|
|
—
|
|
|
—
|
|
|
(20,200
|
)
|
|
10,475
|
|
|
14,945
|
|
|||||
NYMEX losses (gains) recognized in previous periods associated with products that were sold in the current period
(j)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,200
|
|
|
(7,675
|
)
|
|||||
Lower-of-cost-or-market adjustments
|
|
—
|
|
|
—
|
|
|
6,413
|
|
|
(6,413
|
)
|
|
—
|
|
|||||
Houston-to-El Paso cost of sales adjustment
(k)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
478
|
|
|||||
Maintenance capital
|
|
(26,160
|
)
|
|
(31,243
|
)
|
|
(43,232
|
)
|
|
(37,999
|
)
|
|
(44,620
|
)
|
|||||
Expenses paid by (credited to) a former affiliate
(l)
|
|
13,652
|
|
|
10,617
|
|
|
(4,344
|
)
|
|
5,144
|
|
|
—
|
|
|||||
Product supply agreement gains
(m)
|
|
(2,563
|
)
|
|
(2,563
|
)
|
|
(26,919
|
)
|
|
—
|
|
|
—
|
|
|||||
Other
|
|
(6,960
|
)
|
|
(4,876
|
)
|
|
1,013
|
|
|
541
|
|
|
(1,579
|
)
|
|||||
Distributable cash flow
|
|
$
|
257,743
|
|
|
$
|
298,144
|
|
|
$
|
338,213
|
|
|
$
|
328,403
|
|
|
$
|
399,759
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Petroleum pipeline system:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transportation revenue per barrel shipped
|
|
$
|
1.060
|
|
|
$
|
1.147
|
|
|
$
|
1.193
|
|
|
$
|
1.205
|
|
|
$
|
1.160
|
|
Volume shipped (million barrels)
(n)
|
|
309.6
|
|
|
307.2
|
|
|
295.9
|
|
|
295.7
|
|
|
359.5
|
|
|||||
Petroleum terminals:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Storage terminal (formerly marine terminal) average utilization (million barrels per month)
|
|
18.9
|
|
|
19.9
|
|
|
21.4
|
|
|
23.5
|
|
|
25.8
|
|
|||||
Inland terminal throughput (million barrels)
|
|
110.1
|
|
|
117.3
|
|
|
108.1
|
|
|
109.8
|
|
|
114.7
|
|
|||||
Ammonia pipeline system:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Volume shipped (thousand tons)
|
|
726
|
|
|
716
|
|
|
822
|
|
|
643
|
|
|
462
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Beginning in 2007, the state of Texas implemented a partnership-level tax based on a percentage of net revenues apportioned to the state of Texas. The estimate of this tax was reported as provision for income taxes on the consolidated statements of income included in this report.
|
(b)
|
Prior to September 28, 2009, the date the simplification of our capital structure closed (see Note 2–
Summary of Significant Accounting Policies
in the accompanying notes to consolidated financial statements for a discussion of the simplification), net income allocations were as follows:
|
•
|
Non-controlling owners’ interest was our net income allocated to owners other than Magellan Midstream Holdings, L.P. ("Holdings"), the owner of our general partner at that time;
|
•
|
Limited partner interests was net income allocated to Holdings' limited partner unitholders; and
|
•
|
General partner interest was the net loss allocated to Holdings' general partner.
|
(c)
|
Prior to the simplification of our capital structure in September 2009, these financial statements were those of Holdings, which at that time was the owner of our general partner. As our general partner, Holdings fully consolidated our financial results. Holdings was taken public in February 2006. This represents income allocable to the owners of Holdings prior to its initial public offering in February 2006.
|
(d)
|
The maturity date of our pipeline notes was October 7, 2007. As a result, the $270.8 million carrying value of these notes was classified as a current liability on the December 31, 2006 consolidated balance sheet. This debt was refinanced before its maturity.
|
(e)
|
Cash distributions declared represent distributions declared associated with each calendar year. Distributions were declared and paid within 45 days following the close of each quarter. Cash distributions paid represent cash payments for distributions during each of the periods presented.
|
(f)
|
Certain assets were contributed to us and were recorded as property, plant and equipment at the partnership level. The associated depreciation expense was allocated to our various business segments, which in turn recognized these allocated costs as operating expense, reducing segment operating margins by these amounts.
|
(g)
|
Includes debt placement fee amortization.
|
(h)
|
Excludes the tax withholdings on settlement of these equity-based incentive awards, which were paid in cash.
|
(i)
|
Certain derivatives we use as economic hedges do not qualify for hedge accounting treatment. We recognize the change in fair value of these agreements each accounting period in our earnings, even if the hedged product has not yet been physically sold. These amounts represent the gains or losses of hedged products recognized in our earnings for products that we have not yet physically sold.
|
(j)
|
When we physically sell products that we have economically hedged (but did not qualify for hedge accounting treatment), we include in our DCF calculations the full amount of the change in fair value of the associated derivative agreement.
|
(k)
|
Cost of goods sold adjustment related to transitional commodity activities for our Houston-to-El Paso pipeline to more closely resemble current market prices for distributable cash flow purposes rather than average inventory costing as used to determine our results of operations.
|
(l)
|
In periods prior to the completion of our simplification in September 2009, we had agreements with our general partner and its affiliates that provided reimbursement for (i) certain general and administrative costs above specified amounts and (ii) certain environmental costs that were subject to an environmental indemnification settlement in 2004. In addition, our general and administrative costs included non cash expenses to us for a payment made by our general partner’s affiliate to one of our executive officers. In 2008, we negotiated a settlement with the EPA for environmental matters that were part of the 2004 indemnification settlement. The settlement was for an amount less than had been previously accrued for these matters, which consequently reduced expenses and increased net income.
|
(m)
|
In October 2004, as part of our acquisition of a pipeline system, we assumed a third-party supply agreement. Because the expected profits from this supply agreement were below the fair value of the associated tariff-based shipments on the acquired pipeline, we recognized a liability for the difference. From 2004 until the first quarter of 2008 we amortized a portion of this liability to revenues. We adjusted these non-cash revenue credits out of our distributable cash flow calculations. In 2008, we assigned this supply agreement to a separate third party and recognized a non-cash gain on that transaction of $26.5 million, which we eliminated from our distributable cash flow calculations.
|
(n)
|
Excludes capacity leases.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
petroleum pipeline system, comprised of approximately 9,600 miles of pipeline and 51 terminals;
|
•
|
petroleum terminals, which includes storage terminal facilities (consisting of six marine terminals located along coastal waterways and crude oil storage in Cushing, Oklahoma) and 27 inland terminals; and
|
•
|
ammonia pipeline system, representing our 1,100-mile ammonia pipeline and six associated terminals.
|
•
|
In April 2010, the acquisition of various petroleum products storage tanks already connected to our petroleum pipeline system at Des Moines, Iowa, El Dorado, Kansas and Glenpool and Tulsa, Oklahoma for $29.3 million.
|
•
|
In September 2010, the acquisition from BP of 7.8 million barrels of crude oil storage in the Cushing, Oklahoma area and more than 100 miles of petroleum pipelines in the Houston, Texas area for $291.3 million.
|
•
|
strong demand for petroleum products and crude oil storage, which has provided significant opportunity for us to build tankage along our petroleum pipeline system and at our storage terminals, backed by long-term customer commitments; and
|
•
|
demand for enhanced connectivity to key growth markets. We are expanding our crude oil logistics infrastructure in the Cushing, Oklahoma and Houston, Texas markets. The assets acquired from BP will facilitate our strategy of developing our existing East Houston terminal into a key distribution point for crude oil to Gulf Coast refineries by improving our connectivity within the Houston market and extending our reach to the Texas City refining region.
|
|
|
Year Ended December 31,
|
|
Variance
Favorable (Unfavorable)
|
|||||||||||
|
|
2009
|
|
2010
|
|
$ Change
|
|
% Change
|
|||||||
Financial Highlights ($ in millions, except operating statistics)
|
|
|
|
|
|
|
|
|
|||||||
Transportation and terminals revenues:
|
|
|
|
|
|
|
|
|
|||||||
Petroleum pipeline system
|
|
$
|
494.2
|
|
|
$
|
584.0
|
|
|
$
|
89.8
|
|
|
18
|
%
|
Petroleum terminals
|
|
167.0
|
|
|
196.7
|
|
|
29.7
|
|
|
18
|
%
|
|||
Ammonia pipeline system
|
|
19.9
|
|
|
14.9
|
|
|
(5.0
|
)
|
|
(25
|
)%
|
|||
Intersegment eliminations
|
|
(2.2
|
)
|
|
(2.0
|
)
|
|
0.2
|
|
|
9
|
%
|
|||
Total transportation and terminals revenues
|
|
678.9
|
|
|
793.6
|
|
|
114.7
|
|
|
17
|
%
|
|||
Affiliate management fee revenues
|
|
0.8
|
|
|
0.8
|
|
|
—
|
|
|
—
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Petroleum pipeline system
|
|
181.0
|
|
|
191.0
|
|
|
(10.0
|
)
|
|
(6
|
)%
|
|||
Petroleum terminals
|
|
64.3
|
|
|
75.2
|
|
|
(10.9
|
)
|
|
(17
|
)%
|
|||
Ammonia pipeline system
|
|
16.2
|
|
|
19.1
|
|
|
(2.9
|
)
|
|
(18
|
)%
|
|||
Intersegment eliminations
|
|
(3.9
|
)
|
|
(3.1
|
)
|
|
(0.8
|
)
|
|
21
|
%
|
|||
Total operating expenses
|
|
257.6
|
|
|
282.2
|
|
|
(24.6
|
)
|
|
(10
|
)%
|
|||
Product margin:
|
|
|
|
|
|
|
|
|
|||||||
Product sales
|
|
334.5
|
|
|
763.1
|
|
|
428.6
|
|
|
128
|
%
|
|||
Product purchases
|
|
280.3
|
|
|
668.6
|
|
|
(388.3
|
)
|
|
(139
|
)%
|
|||
Product margin
|
|
54.2
|
|
|
94.5
|
|
|
40.3
|
|
|
74
|
%
|
|||
Equity earnings
|
|
3.4
|
|
|
5.7
|
|
|
2.3
|
|
|
68
|
%
|
|||
Operating margin
|
|
479.7
|
|
|
612.4
|
|
|
132.7
|
|
|
28
|
%
|
|||
Depreciation and amortization expense
|
|
97.2
|
|
|
108.7
|
|
|
(11.5
|
)
|
|
(12
|
)%
|
|||
G&A expense
|
|
84.1
|
|
|
95.3
|
|
|
(11.2
|
)
|
|
(13
|
)%
|
|||
Operating profit
|
|
298.4
|
|
|
408.4
|
|
|
110.0
|
|
|
37
|
%
|
|||
Interest expense (net of interest income and interest capitalized)
|
|
69.2
|
|
|
93.3
|
|
|
(24.1
|
)
|
|
(35
|
)%
|
|||
Debt placement fee amortization
|
|
1.1
|
|
|
1.4
|
|
|
(0.3
|
)
|
|
(27
|
)%
|
|||
Other (income) expense
|
|
(0.1
|
)
|
|
0.7
|
|
|
(0.8
|
)
|
|
n/a
|
|
|||
Income before provision for income taxes
|
|
228.2
|
|
|
313.0
|
|
|
84.8
|
|
|
37
|
%
|
|||
Provision for income taxes
|
|
1.7
|
|
|
1.4
|
|
|
0.3
|
|
|
18
|
%
|
|||
Net income
|
|
$
|
226.5
|
|
|
$
|
311.6
|
|
|
$
|
85.1
|
|
|
38
|
%
|
Operating Statistics
|
|
|
|
|
|
|
|
|
|||||||
Petroleum pipeline system:
|
|
|
|
|
|
|
|
|
|||||||
Transportation revenue per barrel shipped
|
|
$
|
1.205
|
|
|
$
|
1.160
|
|
|
|
|
|
|||
Volume shipped (million barrels)
(a)
|
|
295.7
|
|
|
359.5
|
|
|
|
|
|
|||||
Petroleum terminals:
|
|
|
|
|
|
|
|
|
|||||||
Storage terminal (formerly marine terminal) average utilization (million barrels per month)
|
|
23.5
|
|
|
25.8
|
|
|
|
|
|
|||||
Inland terminal throughput (million barrels)
|
|
109.8
|
|
|
114.7
|
|
|
|
|
|
|||||
Ammonia pipeline system:
|
|
|
|
|
|
|
|
|
|||||||
Volume shipped (thousand tons)
|
|
643
|
|
|
462
|
|
|
|
|
|
(a)
|
Excludes capacity leases.
|
•
|
an increase in petroleum pipeline system revenues of
$89.8
million primarily attributable to higher transportation revenues, higher pipeline capacity and storage lease revenues and incremental fees for terminal throughput, ethanol blending and additives. Transportation revenues increased primarily as a result of higher diesel fuel volumes driven by improved economic conditions and additional volumes from recent acquisitions and growth projects, as well as higher tariff rates due to the mid-2009 tariff escalation. Overall transportation revenue per barrel shipped declined between periods because the tariffs related to the Texas pipelines acquired from BP in September 2010 are significantly lower than our remaining pipeline system due to the short distance of the pipeline movements between Houston and Texas City, Texas. Excluding the recently-acquired pipelines, transportation rates increased for the remainder of our pipeline system by $0.07 per barrel, or 6%, primarily due to longer haul shipments;
|
•
|
an increase in petroleum terminals revenues of
$29.7
million due to higher revenues at both our storage and inland terminals. Storage terminal revenues increased principally due to higher rates on existing storage, leasing new storage tanks placed in service over the past year and the acquisition of storage in Cushing, Oklahoma. Inland revenues benefited from higher fees due to ethanol blending and increased throughput volumes; and
|
•
|
a decrease in ammonia pipeline system revenues of
$5.0
million due to lower shipments resulting from the hydrostatic testing performed on our pipeline this year, which rendered the pipeline unavailable for shipments for much of 2010.
|
•
|
an increase in petroleum pipeline system expenses of
$10.0
million due primarily to higher operating expenses related to our Houston-to-El Paso pipeline section (which we acquired in third quarter 2009) and higher power costs resulting from increased shipments;
|
•
|
an increase in petroleum terminals expenses of
$10.9
million primarily related to higher asset maintenance, environmental and personnel costs; and
|
•
|
an increase in ammonia pipeline system expenses of
$2.9
million due primarily to an increase in asset integrity costs from the hydrostatic testing performed on our pipeline during 2010.
|
|
|
Year Ended December 31,
|
|
Variance
Favorable (Unfavorable)
|
|||||||||||
|
|
2008
|
|
2009
|
|
$ Change
|
|
% Change
|
|||||||
Financial Highlights ($ in millions, except operating statistics)
|
|
|
|
|
|
|
|
|
|||||||
Transportation and terminals revenues:
|
|
|
|
|
|
|
|
|
|||||||
Petroleum pipeline system
|
|
$
|
478.5
|
|
|
$
|
494.2
|
|
|
$
|
15.7
|
|
|
3
|
%
|
Petroleum terminals
|
|
138.7
|
|
|
167.0
|
|
|
28.3
|
|
|
20
|
%
|
|||
Ammonia pipeline system
|
|
22.7
|
|
|
19.9
|
|
|
(2.8
|
)
|
|
(12
|
)%
|
|||
Intersegment eliminations
|
|
(1.1
|
)
|
|
(2.2
|
)
|
|
(1.1
|
)
|
|
(100
|
)%
|
|||
Total transportation and terminals revenues
|
|
638.8
|
|
|
678.9
|
|
|
40.1
|
|
|
6
|
%
|
|||
Affiliate management fee revenues
|
|
0.7
|
|
|
0.8
|
|
|
0.1
|
|
|
14
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Petroleum pipeline system
|
|
195.3
|
|
|
181.0
|
|
|
14.3
|
|
|
7
|
%
|
|||
Petroleum terminals
|
|
59.1
|
|
|
64.3
|
|
|
(5.2
|
)
|
|
(9
|
)%
|
|||
Ammonia pipeline system
|
|
14.1
|
|
|
16.2
|
|
|
(2.1
|
)
|
|
(15
|
)%
|
|||
Intersegment eliminations
|
|
(3.7
|
)
|
|
(3.9
|
)
|
|
0.2
|
|
|
(5
|
)%
|
|||
Total operating expenses
|
|
264.8
|
|
|
257.6
|
|
|
7.2
|
|
|
3
|
%
|
|||
Product margin:
|
|
|
|
|
|
|
|
|
|||||||
Product sales
|
|
574.1
|
|
|
334.5
|
|
|
(239.6
|
)
|
|
(42
|
)%
|
|||
Product purchases
|
|
436.6
|
|
|
280.3
|
|
|
(156.3
|
)
|
|
36
|
%
|
|||
Product margin
|
|
137.5
|
|
|
54.2
|
|
|
(83.3
|
)
|
|
(61
|
)%
|
|||
Gain on assignment of supply agreement
|
|
26.5
|
|
|
—
|
|
|
(26.5
|
)
|
|
(100
|
)%
|
|||
Equity earnings
|
|
4.1
|
|
|
3.4
|
|
|
(0.7
|
)
|
|
(17
|
)%
|
|||
Operating margin
|
|
542.8
|
|
|
479.7
|
|
|
(63.1
|
)
|
|
(12
|
)%
|
|||
Depreciation and amortization expense
|
|
86.5
|
|
|
97.2
|
|
|
(10.7
|
)
|
|
(12
|
)%
|
|||
G&A expense
|
|
73.3
|
|
|
84.1
|
|
|
(10.8
|
)
|
|
(15
|
)%
|
|||
Operating profit
|
|
383.0
|
|
|
298.4
|
|
|
(84.6
|
)
|
|
(22
|
)%
|
|||
Interest expense (net of interest income and interest capitalized)
|
|
50.5
|
|
|
69.2
|
|
|
(18.7
|
)
|
|
(37
|
)%
|
|||
Debt placement fee amortization
|
|
0.8
|
|
|
1.1
|
|
|
(0.3
|
)
|
|
(38
|
)%
|
|||
Other (income) expense
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|
(75
|
)%
|
|||
Income before provision for income taxes
|
|
332.1
|
|
|
228.2
|
|
|
(103.9
|
)
|
|
(31
|
)%
|
|||
Provision for income taxes
|
|
2.0
|
|
|
1.7
|
|
|
0.3
|
|
|
15
|
%
|
|||
Net income
|
|
$
|
330.1
|
|
|
$
|
226.5
|
|
|
$
|
(103.6
|
)
|
|
(31
|
)%
|
Operating Statistics
|
|
|
|
|
|
|
|
|
|||||||
Petroleum pipeline system:
|
|
|
|
|
|
|
|
|
|||||||
Transportation revenue per barrel shipped
|
|
$
|
1.193
|
|
|
$
|
1.205
|
|
|
|
|
|
|||
Volume shipped (million barrels)
(a)
|
|
295.9
|
|
|
295.7
|
|
|
|
|
|
|||||
Petroleum terminals:
|
|
|
|
|
|
|
|
|
|||||||
Storage terminal (formerly marine terminal) average utilization (million barrels per month)
|
|
21.4
|
|
|
23.5
|
|
|
|
|
|
|||||
Inland terminal throughput (million barrels)
|
|
108.1
|
|
|
109.8
|
|
|
|
|
|
|||||
Ammonia pipeline system:
|
|
|
|
|
|
|
|
|
|||||||
Volume shipped (thousand tons)
|
|
822
|
|
|
643
|
|
|
|
|
|
(a)
|
Excludes capacity leases.
|
•
|
an increase in petroleum pipeline system revenues of $15.7 million primarily attributable to higher leased storage and transportation revenues and incremental fees for ethanol blending and additives. The higher leased storage revenues resulted from new storage capacity. Transportation revenues increased primarily as a result of higher average tariffs due largely to the mid-year tariff escalations. Otherwise, an increase in gasoline shipments reflecting the impact of lower gasoline prices during 2009 primarily offset lower diesel and aviation fuel shipments resulting from the weak economic conditions in 2009;
|
•
|
an increase in petroleum terminals revenues of $28.3 million due to higher revenues at both storage and inland terminals. Storage revenues increased primarily at our Galena Park, Texas and Wilmington, Delaware facilities due to leasing new storage tanks placed in service over the 2009 year and higher rates on existing storage. Inland revenues benefitted from higher fees due to ethanol blending and increased throughput volumes; and
|
•
|
a decrease in ammonia pipeline system revenues of $2.8 million due to lower shipments primarily resulting from operational issues at two of our customers' plants during early 2009 and increased system maintenance and testing during 2009, resulting in the pipeline being unavailable for shipments during that time. The impact of lower volumes on revenues was partially offset by higher average tariffs.
|
•
|
a decrease in petroleum pipeline system expenses of $14.3 million due primarily to more favorable product overages (which reduce operating expenses) and lower power costs resulting from lower prices for natural gas and electricity, partially offset by higher operating expenses related to the Houston-to-El Paso pipeline section acquisition, which was completed in July 2009, additional compensation costs and higher environmental expenses. The 2008 period included a $12.1 million reduction to environmental expenses resulting from the favorable settlement of a civil penalty related to historical product releases;
|
•
|
an increase in petroleum terminals expenses of $5.2 million primarily related to higher personnel costs, operating taxes (hurricane damage resulted in lower tax assessments in 2008) and gains recognized from insurance proceeds received in 2008 associated with hurricane damages sustained during 2005; and
|
•
|
an increase in ammonia pipeline system expenses of $2.1 million due primarily to an increase in system maintenance and testing in 2009.
|
•
|
The
$155.3 million
increase from
2009
to
2010
was primarily attributable to:
|
◦
|
a $105.8 million increase in net income, excluding the increase in non-cash depreciation and amortization expense and equity-based incentive compensation expense;
|
◦
|
a $35.7 million increase resulting from lower levels of inventory purchases in 2010 as compared to 2009; specifically, a $23.4 million increase in inventory in 2010 versus a $59.1 million increase in inventory in 2009 primarily due to the purchase of Houston-to-El Paso linefill inventory during 2009;
|
◦
|
a $14.7 million increase resulting from a $17.2 million increase in trade accounts receivable and other accounts receivable in 2010 versus a $31.9 million increase in trade accounts receivable and other accounts receivable in 2009. The increase during 2010 is primarily due to the acquisition of certain storage and pipeline assets from BP and timing of payments from our customers. The increase during 2009 is primarily due to an increase in product prices during late 2009 and timing of payments from our customers; and
|
◦
|
an $11.9 million increase resulting from a $3.7 million increase in energy commodity derivatives contracts liability, net of derivatives deposits in 2010 primarily due to additional NYMEX commodity contracts associated with the crude oil working inventory we acquired as part of our acquisition from BP versus an $8.2 million decrease in energy commodity derivatives contracts liability, net of derivatives deposits in 2009 primarily due to the increase in outstanding NYMEX commodity contracts during 2009, most of which was due to our purchase of the Houston-to-El Paso linefill inventory, and
|
◦
|
an $11.7 million increase resulting from a $7.8 million increase in accounts payable in 2010 versus a $3.9 million decrease in accounts payable in 2009 primarily due to the timing of invoices paid to vendors and suppliers.
|
◦
|
a $14.9 million decrease resulting from a $2.9 million increase in accrued interest payable in 2010 versus a $17.8 million increase in accrued interest payable in 2009 due primarily to the timing of semi-annual interest payments; and
|
◦
|
a $14.4 million decrease resulting from cash restricted in 2010 due to the formation of MCO, a consolidated entity. MCO's cash on hand was unavailable to us for our partnership matters and was recorded as restricted cash on our consolidated balance sheet at December 31, 2010.
|
•
|
The $165.5 million decrease from
2008
to
2009
was primarily attributable to:
|
◦
|
a $54.3 million decrease in net income, excluding the increase in non-cash depreciation and amortization expense, the $26.5 million non-cash gain on assignment of a third-party supply agreement in 2008 and the $12.1 million non-cash reduction to operating expenses resulting from the 2008 favorable settlement of a civil penalty related to historical product releases on our petroleum pipeline system;
|
◦
|
a $131.8 million decrease resulting from a $59.1 million increase in inventory in 2009 versus a $72.7 million decrease in inventory in 2008. The increase in inventory during 2009 is primarily attributable to the linefill inventory related to our Houston-to-El Paso pipeline section acquisition in 2009. The decrease in inventory during 2008 is principally due to the sale of petroleum products inventory when we assigned our product supply agreement to a third party in March 2008 as well as a significant decrease in product prices during the latter part of 2008; and
|
◦
|
a $56.2 million decrease resulting from a $31.9 million increase in trade accounts receivable and other accounts receivable in 2009 versus a $24.3 million decrease in trade accounts receivable and other accounts receivable in 2008. The increase during 2009 is primarily due to an increase in product prices during late 2009 and timing of payments from our customers. The decrease during 2008 is primarily due to a significant decrease in product prices during the latter part of 2008.
|
◦
|
a $32.3 million increase resulting from a $12.9 million increase in accrued product purchases in 2009 versus a $19.4 million decrease in accrued product purchases in 2008 due primarily to the timing of invoices received from suppliers;
|
◦
|
as a result of the assignment of our product supply agreement to a third party in March 2008, we refunded a deposit to our customer, reducing cash in 2008 by $18.5 million;
|
◦
|
a $10.1 million increase resulting from an $8.4 million increase in accrued payroll and benefits in 2009 versus a $1.7 million decrease in accrued payroll and benefits in 2008 due primarily to higher accrued employee incentive compensation in 2009; and
|
◦
|
a $9.9 million increase resulting from a $17.8 million increase in accrued interest payable in 2009 versus a $7.9 million increase in accrued interest payable in 2008 due primarily to the issuance of $550.0 million of long-term notes during 2009.
|
•
|
maintenance capital expenditures, such as those required to maintain equipment reliability and safety and to address environmental regulations; and
|
•
|
expansion capital expenditures to acquire additional complementary assets to grow our business and to expand or upgrade our existing facilities, which we refer to as organic growth projects. Organic growth projects include capital expenditures that increase storage or throughput volumes or develop pipeline connections to new supply sources.
|
|
|
Total
|
|
< 1 year
|
|
1-3 years
|
|
3-5 years
|
|
> 5 years
|
||||||||||
Long-term debt obligations
(1)
|
|
$
|
1,865.0
|
|
|
$
|
—
|
|
|
$
|
15.0
|
|
|
$
|
250.0
|
|
|
$
|
1,600.0
|
|
Interest obligations
(2)
|
|
1,181.5
|
|
|
118.5
|
|
|
236.3
|
|
|
210.0
|
|
|
616.7
|
|
|||||
Operating lease obligations
|
|
20.8
|
|
|
2.4
|
|
|
3.7
|
|
|
1.8
|
|
|
12.9
|
|
|||||
Pension and postretirement medical obligations
|
|
29.4
|
|
|
8.4
|
|
|
3.8
|
|
|
1.3
|
|
|
15.9
|
|
|||||
Purchase commitments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product purchase commitments
(3)
|
|
30.5
|
|
|
30.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Utility purchase commitments
|
|
2.2
|
|
|
1.3
|
|
|
0.4
|
|
|
0.2
|
|
|
0.3
|
|
|||||
Derivative instruments
(4)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity-based incentive awards
(5)
|
|
33.4
|
|
|
13.0
|
|
|
20.4
|
|
|
—
|
|
|
—
|
|
|||||
Environmental remediation
(6)
|
|
10.8
|
|
|
3.4
|
|
|
3.3
|
|
|
3.1
|
|
|
1.0
|
|
|||||
Capital project purchase obligations
|
|
49.8
|
|
|
49.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Maintenance obligations
|
|
17.4
|
|
|
15.8
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|||||
Other purchase obligations
|
|
3.2
|
|
|
1.6
|
|
|
1.4
|
|
|
0.2
|
|
|
—
|
|
|||||
Total
|
|
$
|
3,244.0
|
|
|
$
|
244.7
|
|
|
$
|
285.9
|
|
|
$
|
466.6
|
|
|
$
|
2,246.8
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For purposes of this table, we have assumed that the $15.0 million of borrowings under our revolving credit facility as of
December 31, 2010
will not be repaid until the maturity date of the facility in September 2012.
|
(2)
|
The interest obligation for borrowings under our variable-rate revolving credit facility assumes the borrowings outstanding at
December 31, 2010
will remain outstanding until the maturity date of that facility. The interest obligation for borrowings under our variable-rate revolving credit facility further assumes the weighted-average borrowing rate of the facility at
December 31, 2010
of 0.7%.
|
(3)
|
We have an agreement with a supplier whereby we can purchase up to approximately 400,000 barrels of petroleum products per month until 2013. We have an offsetting agreement with a third party to sell these barrels at the same price as our purchases. Because we account for this buy-sell arrangement on a net basis, neither the product purchases nor the related product sales impact our consolidated statements of income. Related to these agreements, we have entered into a separate buy-or-make-whole agreement with the supplier for 13,000 barrels of petroleum products per day through January 31, 2013. Under the terms of this buy-or-make-whole agreement, if we do not purchase all of the barrels specified in the agreement, our supplier will sell the deficiency barrels in the open market. We are required to reimburse our supplier for any amounts in which they sell these deficiency barrels at prices lower than specified in our buy-or-make-whole agreement. We have not included any amounts in the table above for this commitment because are unable to determine what the amounts, if any, of that commitment might be.
|
(4)
|
As of
December 31, 2010
, we had entered into commodity-related derivative contracts representing
2.9 million
barrels of petroleum products that we expect to sell in the future. At December 31, 2010, we had recorded a net liability of
$16.7 million
and made margin deposits of
$22.3 million
associated with these derivative agreements. We have excluded from this table the future net cash outflows, if any, under these derivative agreements and the amounts of future margin deposit requirements because those amounts are uncertain.
|
(5)
|
Represents the grant date fair value of unit awards accounted for as equity plus the
December 31, 2010
fair value of award grants accounted for as liabilities multiplied by the estimated payout percentage of the awards at
December 31, 2010
, reduced for estimated forfeitures. Settlements of these awards will differ from these reported amounts primarily due to differences between actual and current estimates of payout percentages and forfeitures and for changes in our unit price between
December 31, 2010
and the vesting dates of the awards.
|
(6)
|
During 2005, we entered into a 10-year agreement to reach contractual endpoint (as defined in the agreement) for 23 remediation sites. This contract obligates us to pay the remediation costs incurred by the contract counterparty associated with these 23 sites up to a maximum of $14.3 million. The amounts in the table above include the estimated remaining amounts to be paid under this agreement ($3.1 million as of
December 31, 2010
) and the estimated timing of these payments. Additionally, this agreement requires us to pay the contract counterparty a performance bonus if the remediation sites are brought to contractual endpoint for less than $14.3 million. The table above includes our estimate of the performance bonus ($1.5 million) as of
December 31, 2010
. During 2006, we entered into a separate 10-year agreement with an independent contractor to remediate certain of our environmental sites. This contract obligated us to pay $16.2 million over a 10-year period. The amounts in the table above include the remaining amounts to be paid under this agreement ($6.2 million as of
December 31, 2010
) and the estimated timing of those payments based on project progress to date.
|
◦
|
The gains and losses resulting from the mark-to-market changes in value of NYMEX contracts that qualify for hedge accounting treatment are not included in product sales revenues in our consolidated statement of income until the hedged petroleum products are physically sold. During 2010, we recognized
$5.4 million
of losses associated with derivative agreements that qualified as hedges when the hedged products were sold and the contracts were settled.
|
◦
|
As of December 31, 2010, we had open NYMEX contracts for 1.0 million barrels of petroleum products that did not qualify for hedge accounting treatment. We recognize the period change in fair value of these agreements in our consolidated income statement. These contracts mature between January and July 2011. The cumulative amount of unrealized losses through December 31, 2010 associated with NYMEX agreements that did not qualify for hedge accounting treatment was $6.5 million, which we recorded as a decrease in product sales revenues on our consolidated statements of income and energy commodity derivatives contracts on our consolidated balance sheet. All of the $6.5 million of unrealized losses were recognized in 2010. Additionally, we realized gains of $1.2 million on NYMEX contracts that did not qualify for hedge accounting treatment that settled during 2010.
|
•
|
Future commodity sales of linefill and working inventory associated with our Houston-to-El Paso pipeline section:
|
◦
|
At December 31, 2010, we had open NYMEX contracts covering 1.2 million barrels to hedge against changes in the future price of petroleum products associated with the linefill barrels. Contracts covering 0.3 million barrels mature in January 2011 and contracts covering 0.9 million barrels mature in July 2011. Because these NYMEX contracts do not qualify for hedge accounting treatment
,
we recognize the period change in fair value of these agreements in our consolidated income statement. The cumulative amount of unrealized losses through December 31, 2010 associated with these agreements was $8.7 million, of which $7.8 million of losses were recognized during 2010 and $0.9 million of losses were recognized in the last two quarters of 2009. Additionally, we recognized $3.4 million of losses associated with the linefill NYMEX contracts that were settled during 2010 and were recorded as a decrease in product sales revenues on our consolidated income statement. The linefill and working inventory associated with our Houston-to-El Paso pipeline section are classified as inventory in current assets on our consolidated balance sheets.
|
•
|
Future commodity sales of linefill and tank bottom inventory associated with our crude pipeline and crude storage activities:
|
◦
|
During third quarter 2010, we entered into NYMEX contracts hedging less than 0.1 million barrels of linefill in a crude pipeline connected to our Cushing, Oklahoma terminal. As of December 31, 2010, these contracts did not qualify for hedge accounting treatment and mature in March 2011. The unrealized losses of $0.6 million from these agreements during 2010 were recorded as a decrease in product sales revenues on our consolidated income statement. The linefill for our crude pipeline connected to our Cushing terminal is classified as an other current asset on our consolidated balance sheets.
|
◦
|
During third quarter 2010, we entered into NYMEX contracts to hedge future price changes on 0.7 million barrels of tank bottom inventory. These contracts qualified for and were designated as fair value hedges and mature in November 2013. The unrealized losses of $4.9 million from these agreements during the year were fully offset by an adjustment to the tank bottom inventory and, therefore, there was no impact on product sales revenues. The tank bottom inventory at our Cushing terminal is separately classified as a long-term asset on our consolidated balance sheets.
|
◦
|
During third quarter 2010, prior to the execution of the cash flow and fair value hedges discussed above, we entered into certain short-term NYMEX contracts as economic hedges of both the linefill and tank bottom inventory discussed above. These short-term contracts were not designated as hedges for accounting purposes. These contracts were terminated and we realized a gain of $0.8 million, which we recorded as an increase in our product sales revenues.
|
2009
|
|
||
NYMEX losses recorded in 2009 that were associated with physical product sales during 2009
|
$
|
(30.3
|
)
|
NYMEX losses recorded in 2009 that were associated with future physical product sales
|
(8.3
|
)
|
|
Total NYMEX losses which impacted product sales revenues during 2009
|
$
|
(38.6
|
)
|
|
|
||
2010
|
|
||
NYMEX losses recorded in 2010 that were associated with physical product sales during 2010
|
$
|
(6.8
|
)
|
NYMEX losses recorded in 2010 that were associated with future physical product sales
|
(14.9
|
)
|
|
Total NYMEX losses which impacted product sales revenues during 2010
|
$
|
(21.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance
|
2009
|
|
Balance
|
|
2010
|
|
Balance
|
|||||||||||||||||||||||||||||||||||
12/31/08
|
|
Accruals
|
|
Expenditures
|
|
12/31/09
|
|
Accruals
|
|
Expenditures
|
|
Acquisitions
|
|
12/31/10
|
||||||||||||||||||||||||||||
$
|
41.8
|
|
|
|
$
|
8.5
|
|
|
|
|
$
|
(15.9
|
)
|
|
|
|
$
|
34.4
|
|
|
|
|
$
|
12.9
|
|
|
|
|
$
|
(14.9
|
)
|
|
|
|
$
|
0.4
|
|
|
|
$
|
32.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit Expense
|
|
Benefit Obligation
|
||||||||||||||||
|
|
One-Percentage-
|
|
One-Percentage-
|
|
One-Percentage-
|
|
One-Percentage-
|
||||||||||||
|
|
Point Increase
|
|
Point Decrease
|
|
Point Increase
|
|
Point Decrease
|
||||||||||||
Pension benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
$
|
(1,568
|
)
|
|
|
$
|
2,467
|
|
|
|
$
|
(9,067
|
)
|
|
|
$
|
11,314
|
|
|
Expected long-term rate of return on plan assets
|
|
|
(604
|
)
|
|
|
|
604
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Rate of compensation increase
|
|
|
1,269
|
|
|
|
|
(1,009
|
)
|
|
|
|
4,821
|
|
|
|
|
(4,075
|
)
|
|
Other postretirement benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
(305
|
)
|
|
|
|
449
|
|
|
|
|
(2,870
|
)
|
|
|
|
3,668
|
|
|
Assumed health care cost trend rate
|
|
|
613
|
|
|
|
|
(449
|
)
|
|
|
|
3,340
|
|
|
|
|
(2,670
|
)
|
|
|
Year Ended December 31,
|
||||||
|
2008
|
|
2009
|
||||
MGG Midstream Holdings GP, LLC -allocated operating expenses
|
$
|
84,460
|
|
|
$
|
69,523
|
|
MGG Midstream Holdings GP, LLC -allocated G&A expenses
|
44,482
|
|
|
41,890
|
|
||
MGG Midstream Holdings, L.P.-allocated G&A expenses
|
440
|
|
|
—
|
|
•
|
overall demand for refined petroleum products, natural gas liquids, crude oil and ammonia in the United States;
|
•
|
price fluctuations for petroleum products, crude oil and natural gas liquids and expectations about future prices for these products;
|
•
|
changes in general economic conditions, interest rates and price levels;
|
•
|
changes in the financial condition of our customers, vendors, derivatives counterparties or lenders;
|
•
|
our ability to secure financing in the credit and capital markets in amounts and on terms that will allow us to execute our growth strategy and maintain adequate liquidity;
|
•
|
development of alternative energy sources, increased use of biofuels such as ethanol and biodiesel, increased conservation or fuel efficiency, regulatory developments or other trends that could affect demand for our services;
|
•
|
changes in the throughput or interruption in service on petroleum pipelines owned and operated by third parties and connected to our assets;
|
•
|
changes in demand for storage in our petroleum terminals;
|
•
|
changes in supply patterns for our storage terminals due to geopolitical events;
|
•
|
our ability to manage interest rate and commodity price exposures;
|
•
|
changes in our tariff rates implemented by the Federal Energy Regulatory Commission, the United States Surface Transportation Board and state regulatory agencies;
|
•
|
shut-downs or cutbacks at major refineries, petrochemical plants, ammonia production facilities or other businesses that use or supply our services;
|
•
|
weather patterns materially different than historical trends;
|
•
|
an increase in the competition our operations encounter;
|
•
|
the occurrence of natural disasters, terrorism, operational hazards or unforeseen interruptions for which we are not adequately insured;
|
•
|
the treatment of us as a corporation for federal or state income tax purposes or if we become subject to significant forms of other taxation or more aggressive enforcement or increased assessments under existing forms of taxation;
|
•
|
our ability to identify expansion projects or to complete identified expansion projects on time and at projected costs;
|
•
|
our ability to make and integrate acquisitions and successfully complete our business strategy;
|
•
|
changes in laws and regulations that govern the product quality specifications that could impact our ability to produce gasoline volumes through our blending activities or that could require significant capital outlays for compliance;
|
•
|
changes in laws and regulations to which we are or could become subject, including tax withholding issues, safety, employment and environmental laws and regulations, including laws and regulations designed to address climate change;
|
•
|
the cost and effects of legal and administrative claims and proceedings against us or our subsidiaries;
|
•
|
the amount of our indebtedness, which could make us vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds, place us at competitive disadvantages compared to our competitors that have less debt or have other adverse consequences;
|
•
|
the effect of changes in accounting policies;
|
•
|
the potential that our internal controls may not be adequate, weaknesses may be discovered or remediation of any identified weaknesses may not be successful and the impact these could have on our unit price;
|
•
|
the ability of third parties to perform on their contractual obligations to us;
|
•
|
supply disruption; and
|
•
|
global and domestic economic repercussions from terrorist activities and the government’s response thereto.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
|
By:
|
/
S
/ M
ICHAEL
N. M
EARS
|
|
Chairman of the Board, President, Chief Executive Officer and Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
|
By:
|
/
S
/ J
OHN
D. C
HANDLER
|
|
Senior Vice President and Chief Financial Officer of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2008
|
|
2009
|
|
2010
|
||||||
Transportation and terminals revenues
|
|
$
|
638,810
|
|
|
$
|
678,945
|
|
|
$
|
793,599
|
|
Product sales revenues
|
|
574,095
|
|
|
334,465
|
|
|
763,090
|
|
|||
Affiliate management fee revenue
|
|
733
|
|
|
761
|
|
|
758
|
|
|||
Total revenues
|
|
1,213,638
|
|
|
1,014,171
|
|
|
1,557,447
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Operating
|
|
264,871
|
|
|
257,635
|
|
|
282,212
|
|
|||
Product purchases
|
|
436,567
|
|
|
280,291
|
|
|
668,585
|
|
|||
Depreciation and amortization
|
|
86,501
|
|
|
97,216
|
|
|
108,668
|
|
|||
General and administrative
|
|
73,302
|
|
|
84,049
|
|
|
95,316
|
|
|||
Total costs and expenses
|
|
861,241
|
|
|
719,191
|
|
|
1,154,781
|
|
|||
Gain on assignment of supply agreement
|
|
26,492
|
|
|
—
|
|
|
—
|
|
|||
Equity earnings
|
|
4,067
|
|
|
3,431
|
|
|
5,732
|
|
|||
Operating profit
|
|
382,956
|
|
|
298,411
|
|
|
408,398
|
|
|||
Interest expense
|
|
56,764
|
|
|
73,357
|
|
|
96,379
|
|
|||
Interest income
|
|
(1,482
|
)
|
|
(660
|
)
|
|
(140
|
)
|
|||
Interest capitalized
|
|
(4,803
|
)
|
|
(3,510
|
)
|
|
(2,943
|
)
|
|||
Debt placement fee amortization
|
|
767
|
|
|
1,112
|
|
|
1,401
|
|
|||
Other (income) expense
|
|
(380
|
)
|
|
(24
|
)
|
|
750
|
|
|||
Income before provision for income taxes
|
|
332,090
|
|
|
228,136
|
|
|
312,951
|
|
|||
Provision for income taxes
|
|
1,987
|
|
|
1,661
|
|
|
1,371
|
|
|||
Net income
|
|
$
|
330,103
|
|
|
$
|
226,475
|
|
|
$
|
311,580
|
|
|
|
|
|
|
|
|
||||||
Allocation of net income (loss):
|
|
|
|
|
|
|
||||||
Noncontrolling owners’ interests
|
|
$
|
244,430
|
|
|
$
|
99,729
|
|
|
$
|
(397
|
)
|
Limited partners’ interest
|
|
87,733
|
|
|
126,746
|
|
|
311,977
|
|
|||
General partner’s interest
|
|
(2,060
|
)
|
|
—
|
|
|
—
|
|
|||
Net income
|
|
$
|
330,103
|
|
|
$
|
226,475
|
|
|
$
|
311,580
|
|
|
|
|
|
|
|
|
||||||
Basic and diluted net income per limited partner unit
|
|
$
|
2.21
|
|
|
$
|
2.22
|
|
|
$
|
2.85
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation
|
|
39,630
|
|
|
57,115
|
|
|
109,485
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation
|
|
39,630
|
|
|
57,145
|
|
|
109,561
|
|
|
|
December 31,
|
||||||
|
|
2009
|
|
2010
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
4,168
|
|
|
$
|
7,483
|
|
Restricted cash
|
|
—
|
|
|
14,379
|
|
||
Trade accounts receivable (less allowance for doubtful accounts of $139 and $106 at December 31, 2009 and 2010, respectively)
|
|
72,978
|
|
|
92,192
|
|
||
Other accounts receivable
|
|
8,216
|
|
|
6,175
|
|
||
Inventory
|
|
193,001
|
|
|
216,408
|
|
||
Energy commodity derivatives deposits
|
|
17,943
|
|
|
22,302
|
|
||
Reimbursable costs
|
|
13,280
|
|
|
13,870
|
|
||
Other current assets
|
|
14,382
|
|
|
11,774
|
|
||
Total current assets
|
|
323,968
|
|
|
384,583
|
|
||
Property, plant and equipment
|
|
3,398,606
|
|
|
3,894,610
|
|
||
Less: accumulated depreciation
|
|
617,989
|
|
|
716,054
|
|
||
Net property, plant and equipment
|
|
2,780,617
|
|
|
3,178,556
|
|
||
Equity investments
|
|
22,054
|
|
|
23,728
|
|
||
Long-term receivables
|
|
618
|
|
|
1,167
|
|
||
Goodwill
|
|
14,766
|
|
|
39,925
|
|
||
Other intangibles (less accumulated amortization of $9,974 and $11,964 at December 31, 2009 and 2010, respectively)
|
|
5,896
|
|
|
16,924
|
|
||
Debt placement costs (less accumulated amortization of $4,038 and $5,439 at December 31, 2009 and 2010, respectively)
|
|
10,894
|
|
|
11,871
|
|
||
Tank bottom inventory
|
|
—
|
|
|
57,937
|
|
||
Other noncurrent assets
|
|
4,335
|
|
|
3,209
|
|
||
Total assets
|
|
$
|
3,163,148
|
|
|
$
|
3,717,900
|
|
|
|
|
|
|
||||
LIABILITIES AND OWNERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
37,063
|
|
|
$
|
41,425
|
|
Accrued payroll and benefits
|
|
30,300
|
|
|
32,393
|
|
||
Accrued interest payable
|
|
32,877
|
|
|
35,799
|
|
||
Accrued taxes other than income
|
|
21,261
|
|
|
26,953
|
|
||
Environmental liabilities
|
|
11,943
|
|
|
12,202
|
|
||
Deferred revenue
|
|
27,776
|
|
|
34,733
|
|
||
Accrued product purchases
|
|
36,797
|
|
|
47,324
|
|
||
Energy commodity derivatives contracts
|
|
9,257
|
|
|
11,790
|
|
||
Other current liabilities
|
|
22,123
|
|
|
32,428
|
|
||
Total current liabilities
|
|
229,397
|
|
|
275,047
|
|
||
Long-term debt
|
|
1,680,004
|
|
|
1,906,148
|
|
||
Long-term pension and benefits
|
|
22,582
|
|
|
28,965
|
|
||
Other noncurrent liabilities
|
|
12,317
|
|
|
17,597
|
|
||
Environmental liabilities
|
|
22,494
|
|
|
20,572
|
|
||
Commitments and contingencies
|
|
|
|
|
||||
Owners’ equity:
|
|
|
|
|
||||
Partners’ capital:
|
|
|
|
|
||||
Limited partner unitholders (106,588 units and 112,481 units outstanding at December 31, 2009 and 2010, respectively)
|
|
1,204,355
|
|
|
1,466,404
|
|
||
Accumulated other comprehensive loss
|
|
(8,001
|
)
|
|
(11,096
|
)
|
||
Total partners’ capital
|
|
1,196,354
|
|
|
1,455,308
|
|
||
Non-controlling owners’ interests in consolidated subsidiaries
|
|
—
|
|
|
14,263
|
|
||
Total owners’ equity
|
|
1,196,354
|
|
|
1,469,571
|
|
||
Total liabilities and owners’ equity
|
|
$
|
3,163,148
|
|
|
$
|
3,717,900
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2008
|
|
2009
|
|
2010
|
||||||
Operating Activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
330,103
|
|
|
$
|
226,475
|
|
|
$
|
311,580
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
|
86,501
|
|
|
97,216
|
|
|
108,668
|
|
|||
Debt placement fee amortization
|
|
767
|
|
|
1,112
|
|
|
1,401
|
|
|||
Loss on sale and retirement of assets
|
|
7,180
|
|
|
5,529
|
|
|
1,062
|
|
|||
Equity earnings
|
|
(4,067
|
)
|
|
(3,431
|
)
|
|
(5,732
|
)
|
|||
Distributions from equity investments
|
|
4,067
|
|
|
3,431
|
|
|
4,853
|
|
|||
Equity-based incentive compensation expense
|
|
4,751
|
|
|
9,622
|
|
|
18,899
|
|
|||
Amortization of net prior service credit and net actuarial loss
|
|
(88
|
)
|
|
1,256
|
|
|
106
|
|
|||
Gain on assignment of supply agreement
|
|
(26,492
|
)
|
|
—
|
|
|
—
|
|
|||
Changes in components of operating assets and liabilities (Note 3)
|
|
32,167
|
|
|
(71,773
|
)
|
|
(16,181
|
)
|
|||
Net cash provided by operating activities
|
|
434,889
|
|
|
269,437
|
|
|
424,656
|
|
|||
Investing Activities:
|
|
|
|
|
|
|
||||||
Property, plant and equipment:
|
|
|
|
|
|
|
||||||
Additions to property, plant and equipment
|
|
(272,083
|
)
|
|
(216,698
|
)
|
|
(221,419
|
)
|
|||
Proceeds from sale of assets
|
|
3,862
|
|
|
338
|
|
|
8,300
|
|
|||
Changes in accounts payable related to capital expenditures
|
|
661
|
|
|
921
|
|
|
(3,432
|
)
|
|||
Acquisitions of businesses
|
|
(38,302
|
)
|
|
(390,606
|
)
|
|
(291,292
|
)
|
|||
Acquisition of tank bottom inventory
|
|
—
|
|
|
—
|
|
|
(53,017
|
)
|
|||
Other acquisition
|
|
—
|
|
|
—
|
|
|
(29,300
|
)
|
|||
Distributions in excess of equity investment earnings
|
|
1,133
|
|
|
1,127
|
|
|
—
|
|
|||
Net cash used by investing activities
|
|
(304,729
|
)
|
|
(604,918
|
)
|
|
(590,160
|
)
|
|||
Financing Activities:
|
|
|
|
|
|
|
||||||
Distributions paid
|
|
(264,310
|
)
|
|
(285,758
|
)
|
|
(318,817
|
)
|
|||
Net borrowings (repayments) under revolver
|
|
(93,500
|
)
|
|
31,600
|
|
|
(86,600
|
)
|
|||
Borrowings under long-term notes
|
|
249,980
|
|
|
568,699
|
|
|
298,899
|
|
|||
Debt placement costs
|
|
(2,048
|
)
|
|
(4,357
|
)
|
|
(2,378
|
)
|
|||
Net receipt from financial derivatives
|
|
10,312
|
|
|
5,335
|
|
|
16,238
|
|
|||
Capital contributions by affiliate
|
|
3,709
|
|
|
—
|
|
|
—
|
|
|||
Increase in outstanding checks
|
|
2,671
|
|
|
2,955
|
|
|
2,393
|
|
|||
Settlement of tax withholdings on long-term incentive compensation
|
|
—
|
|
|
(3,450
|
)
|
|
(3,371
|
)
|
|||
Issuance of common units
|
|
—
|
|
|
—
|
|
|
258,407
|
|
|||
Capital contributed by non-controlling owners
|
|
—
|
|
|
—
|
|
|
4,361
|
|
|||
Costs associated with the simplification of capital structure
|
|
—
|
|
|
(13,287
|
)
|
|
(313
|
)
|
|||
Net cash (used) provided by financing activities
|
|
(93,186
|
)
|
|
301,737
|
|
|
168,819
|
|
|||
Change in cash and cash equivalents
|
|
36,974
|
|
|
(33,744
|
)
|
|
3,315
|
|
|||
Cash and cash equivalents at beginning of period
|
|
938
|
|
|
37,912
|
|
|
4,168
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
37,912
|
|
|
$
|
4,168
|
|
|
$
|
7,483
|
|
Supplemental non-cash financing activities:
|
|
|
|
|
|
|
||||||
Issuance of MMP limited partner units in settlement of long-term incentive plan awards
|
|
$
|
8,536
|
|
|
$
|
1,943
|
|
|
$
|
2,034
|
|
Non-cash capital contributed by non-controlling owners
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,299
|
|
|
|
Partners’ Capital
|
|
|
|
|
||||||||||||||
|
|
Limited
Partners
|
|
General
Partner
|
|
Partners’
Accumulated
Other
Comprehensive
Loss
|
|
Non-controlling
Owners’ Interest
|
|
Total
Owners’
Equity
|
||||||||||
Beginning balance, January 1, 2008
|
|
$
|
44,916
|
|
|
$
|
12,505
|
|
|
$
|
(91
|
)
|
|
$
|
1,127,236
|
|
|
$
|
1,184,566
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
|
87,733
|
|
|
(2,060
|
)
|
|
—
|
|
|
244,430
|
|
|
330,103
|
|
|||||
Reclassification of net gain on interest rate cash flow hedges to interest expense
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(161
|
)
|
|
(164
|
)
|
|||||
Amortization of net prior service credit and net actuarial loss
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(86
|
)
|
|
(88
|
)
|
|||||
Adjustment to recognize the funded status of postretirement plans
|
|
—
|
|
|
—
|
|
|
(244
|
)
|
|
(12,028
|
)
|
|
(12,272
|
)
|
|||||
Total comprehensive income (loss)
|
|
87,733
|
|
|
(2,060
|
)
|
|
(249
|
)
|
|
232,155
|
|
|
317,579
|
|
|||||
Affiliate capital contributions
|
|
—
|
|
|
3,709
|
|
|
—
|
|
|
—
|
|
|
3,709
|
|
|||||
Distributions
|
|
(82,756
|
)
|
|
(12
|
)
|
|
—
|
|
|
(181,542
|
)
|
|
(264,310
|
)
|
|||||
Equity method incentive compensation expense
|
|
4,138
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,138
|
|
|||||
Issuance of MMP limited partner units in settlement of long-term incentive plan awards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,536
|
|
|
8,536
|
|
|||||
Acquisition of general partner
|
|
14,142
|
|
|
(14,142
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
|
(110
|
)
|
|
—
|
|
|
—
|
|
|
24
|
|
|
(86
|
)
|
|||||
Balance, December 31, 2008
|
|
68,063
|
|
|
—
|
|
|
(340
|
)
|
|
1,186,409
|
|
|
1,254,132
|
|
|||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
126,746
|
|
|
—
|
|
|
—
|
|
|
99,729
|
|
|
226,475
|
|
|||||
Net gain (loss) on commodity hedges
|
|
—
|
|
|
—
|
|
|
(7,430
|
)
|
|
626
|
|
|
(6,804
|
)
|
|||||
Reclassification of net gain on interest rate cash flow hedges to interest expense
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
(120
|
)
|
|
(164
|
)
|
|||||
Reclassification of net loss (gain) on commodity hedges to product sales revenues
|
|
—
|
|
|
—
|
|
|
5,308
|
|
|
(250
|
)
|
|
5,058
|
|
|||||
Amortization of net prior service credit and net actuarial loss
|
|
—
|
|
|
—
|
|
|
333
|
|
|
923
|
|
|
1,256
|
|
|||||
Adjustment to recognize the funded status of postretirement plans
|
|
—
|
|
|
—
|
|
|
9,259
|
|
|
512
|
|
|
9,771
|
|
|||||
Total comprehensive income
|
|
126,746
|
|
|
—
|
|
|
7,426
|
|
|
101,420
|
|
|
235,592
|
|
|||||
Distributions
|
|
(143,147
|
)
|
|
—
|
|
|
—
|
|
|
(142,611
|
)
|
|
(285,758
|
)
|
|||||
Equity method incentive compensation expense
|
|
6,894
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,894
|
|
|||||
Costs associated with the simplification of our capital structure
|
|
(13,287
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,287
|
)
|
|||||
Issuance of MMP limited partner units in settlement of long-term incentive plan awards
|
|
(4,406
|
)
|
|
—
|
|
|
—
|
|
|
6,349
|
|
|
1,943
|
|
|||||
Issuance of MMP limited partner units in settlement of special unit awards
|
|
377
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
377
|
|
|||||
Settlement of tax withholdings on long-term incentive compensation
|
|
(3,450
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,450
|
)
|
|||||
Issuance of MMP limited partner units pursuant to the simplification (Note 2)
|
|
1,166,654
|
|
|
—
|
|
|
(15,087
|
)
|
|
(1,151,567
|
)
|
|
—
|
|
|||||
Other
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|||||
Balance, December 31, 2009
|
|
$
|
1,204,355
|
|
|
$
|
—
|
|
|
$
|
(8,001
|
)
|
|
$
|
—
|
|
|
$
|
1,196,354
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENT OF OWNERS’ EQUITY (Continued)
(In thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Partners' Capital
|
|
|
|
|
||||||||||||||
|
|
Limited
Partners
|
|
General
Partner
|
|
Partners’
Accumulated
Other
Comprehensive
Loss
|
|
Non-controlling
Owners’ Interest
|
|
Total
Owners’
Equity
|
||||||||||
Beginning balance, January 1, 2010
|
|
$
|
1,204,355
|
|
|
$
|
—
|
|
|
$
|
(8,001
|
)
|
|
$
|
—
|
|
|
$
|
1,196,354
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
|
311,977
|
|
|
—
|
|
|
—
|
|
|
(397
|
)
|
|
311,580
|
|
|||||
Net loss on commodity hedges
|
|
—
|
|
|
—
|
|
|
(4,283
|
)
|
|
—
|
|
|
(4,283
|
)
|
|||||
Reclassification of net gain on interest rate cash flow hedges to interest expense
|
|
—
|
|
|
—
|
|
|
(164
|
)
|
|
—
|
|
|
(164
|
)
|
|||||
Reclassification of net loss on commodity hedges to product sales revenues
|
|
—
|
|
|
—
|
|
|
5,438
|
|
|
—
|
|
|
5,438
|
|
|||||
Reclassification of loss on discontinuance of cash flow hedge to product sales revenues
|
|
—
|
|
|
—
|
|
|
591
|
|
|
—
|
|
|
591
|
|
|||||
Amortization of net prior service credit and net actuarial loss
|
|
—
|
|
|
—
|
|
|
106
|
|
|
—
|
|
|
106
|
|
|||||
Adjustment to recognize the funded status of postretirement plans
|
|
—
|
|
|
—
|
|
|
(4,783
|
)
|
|
—
|
|
|
(4,783
|
)
|
|||||
Total comprehensive income
|
|
311,977
|
|
|
—
|
|
|
(3,095
|
)
|
|
(397
|
)
|
|
308,485
|
|
|||||
Distributions
|
|
(318,817
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(318,817
|
)
|
|||||
Issuance of MMP limited partner units
|
|
258,407
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
258,407
|
|
|||||
Equity method incentive compensation expense
|
|
12,233
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,233
|
|
|||||
Issuance of MMP limited partner units in settlement of long-term incentive plan awards
|
|
2,034
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,034
|
|
|||||
Settlement of tax withholdings on long-term incentive compensation
|
|
(3,371
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,371
|
)
|
|||||
Capital contributed by non-controlling owners
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,660
|
|
|
14,660
|
|
|||||
Other
|
|
(414
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(414
|
)
|
|||||
Balance, December 31, 2010
|
|
$
|
1,466,404
|
|
|
$
|
—
|
|
|
$
|
(11,096
|
)
|
|
$
|
14,263
|
|
|
$
|
1,469,571
|
|
1.
|
Organization and Description of Business
|
2.
|
Summary of Significant Accounting Policies
|
|
|
December 31,
|
||||||
|
|
2009
|
|
2010
|
||||
Aggregated undiscounted environmental liabilities
|
|
$
|
40,102
|
|
|
$
|
38,229
|
|
Amount of discount on environmental liabilities
|
|
(5,665
|
)
|
|
(5,455
|
)
|
||
Environmental liabilities, as reported
|
|
$
|
34,437
|
|
|
$
|
32,774
|
|
|
|
Derivative
Gains
(Losses)
|
|
Pension and
Postretirement
Liabilities
|
|
Accumulated
Other
Comprehensive
Loss*
|
||||||
Balance, January 1, 2008
|
|
$
|
3,817
|
|
|
$
|
(8,411
|
)
|
|
$
|
(4,594
|
)
|
Reclassification of net gain on interest rate cash flow hedges to interest expense
|
|
(164
|
)
|
|
—
|
|
|
(164
|
)
|
|||
Amortization of net prior service credit and net actuarial loss
|
|
—
|
|
|
(88
|
)
|
|
(88
|
)
|
|||
Adjustment to recognize the funded status of postretirement benefit plans
|
|
—
|
|
|
(12,272
|
)
|
|
(12,272
|
)
|
|||
Balance, December 31, 2008
|
|
3,653
|
|
|
(20,771
|
)
|
|
(17,118
|
)
|
|||
Net loss on commodity hedges
|
|
(6,804
|
)
|
|
—
|
|
|
(6,804
|
)
|
|||
Reclassification of net gain on interest rate cash flow hedges to interest expense
|
|
(164
|
)
|
|
—
|
|
|
(164
|
)
|
|||
Reclassification of net loss on commodity hedges to product sales revenues
|
|
5,058
|
|
|
—
|
|
|
5,058
|
|
|||
Amortization of net prior service credit and net actuarial loss
|
|
—
|
|
|
1,256
|
|
|
1,256
|
|
|||
Adjustment to recognize the funded status of postretirement benefit plans
|
|
—
|
|
|
9,771
|
|
|
9,771
|
|
|||
Balance, December 31, 2009
|
|
1,743
|
|
|
(9,744
|
)
|
|
(8,001
|
)
|
|||
Net loss on commodity hedges
|
|
(4,283
|
)
|
|
—
|
|
|
(4,283
|
)
|
|||
Reclassification of net gain on interest rate cash flow hedges to interest expense
|
|
(164
|
)
|
|
—
|
|
|
(164
|
)
|
|||
Reclassification of net loss on commodity hedges to product sales revenues
|
|
5,438
|
|
|
—
|
|
|
5,438
|
|
|||
Reclassification of loss on discontinuance of cash flow hedge to product sales revenues
|
|
591
|
|
|
—
|
|
|
591
|
|
|||
Amortization of net prior service credit and net actuarial loss
|
|
—
|
|
|
106
|
|
|
106
|
|
|||
Adjustment to recognize the funded status of postretirement benefit plans
|
|
—
|
|
|
(4,783
|
)
|
|
(4,783
|
)
|
|||
Balance, December 31, 2010
|
|
$
|
3,325
|
|
|
$
|
(14,421
|
)
|
|
$
|
(11,096
|
)
|
3.
|
Consolidated Statements of Cash Flows
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2008
|
|
2009
|
|
2010
|
||||||
Restricted cash
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(14,379
|
)
|
Trade accounts receivable and other accounts receivable
|
|
24,270
|
|
|
(31,872
|
)
|
|
(17,173
|
)
|
|||
Inventory
|
|
72,728
|
|
|
(59,135
|
)
|
|
(23,407
|
)
|
|||
Energy commodity derivatives contracts, net of derivatives deposits
|
|
(1,206
|
)
|
|
(8,181
|
)
|
|
3,694
|
|
|||
Supply agreement deposit
|
|
(18,500
|
)
|
|
—
|
|
|
—
|
|
|||
Reimbursable costs
|
|
(4,964
|
)
|
|
(5,104
|
)
|
|
(590
|
)
|
|||
Accounts payable
|
|
(253
|
)
|
|
(3,909
|
)
|
|
7,794
|
|
|||
Accrued payroll and benefits
|
|
(1,739
|
)
|
|
8,416
|
|
|
2,093
|
|
|||
Accrued interest payable
|
|
7,880
|
|
|
17,800
|
|
|
2,922
|
|
|||
Accrued taxes other than income
|
|
(894
|
)
|
|
1,110
|
|
|
5,378
|
|
|||
Accrued product purchases
|
|
(19,356
|
)
|
|
12,923
|
|
|
10,527
|
|
|||
Current and noncurrent environmental liabilities
|
|
(18,368
|
)
|
|
(7,383
|
)
|
|
(2,038
|
)
|
|||
Other current and noncurrent assets and liabilities
|
|
(7,431
|
)
|
|
3,562
|
|
|
8,998
|
|
|||
Total
|
|
$
|
32,167
|
|
|
$
|
(71,773
|
)
|
|
$
|
(16,181
|
)
|
4.
|
Allocation of Net Income
|
|
|
Year Ended December 31,
|
||||||
|
|
2008
|
|
2009
|
||||
Net income
|
|
$
|
330,103
|
|
|
$
|
226,475
|
|
Net income applicable to non-controlling owners’ interest
(a)
|
|
244,430
|
|
|
99,729
|
|
||
Net income applicable to limited partners and Holdings GP
|
|
85,673
|
|
|
126,746
|
|
||
Allocation of net income applicable to limited partners and Holdings GP:
|
|
|
|
|
||||
Direct charges to Holdings GP:
|
|
|
|
|
||||
Reimbursable G&A costs
|
|
2,072
|
|
|
—
|
|
||
Income applicable to limited partners and Holdings GP before direct charges to Holdings GP
|
|
87,745
|
|
|
126,746
|
|
||
Holdings GP’s share of income
(b)
|
|
0.0130
|
%
|
|
—
|
|
||
Holdings GP’s allocated share of net income before direct charges
|
|
12
|
|
|
—
|
|
||
Direct charges to Holdings GP
|
|
2,072
|
|
|
—
|
|
||
Net loss allocated to Holdings GP
|
|
$
|
(2,060
|
)
|
|
$
|
—
|
|
|
|
|
|
|
||||
Net income applicable to limited partners and Holdings GP
|
|
$
|
85,673
|
|
|
$
|
126,746
|
|
Less: net loss allocated to Holdings GP
(b)
|
|
(2,060
|
)
|
|
—
|
|
||
Net income allocated to limited partners
|
|
$
|
87,733
|
|
|
$
|
126,746
|
|
(a)
|
These amounts represent Partners' allocation of pre-simplification net income to the non-controlling owners' interest. We completed the simplification (see Note 2–
Summary of Significant Accounting Policies
) during the third quarter of 2009. In that transaction, we dissolved Holdings and eliminated Partners' incentive distribution rights; therefore, there were no longer non-controlling owners' interests and all of Partners' net income was allocated to the limited partners.
|
(b)
|
In December 2008, Holdings acquired Holdings GP, and subsequently, Holdings GP was no longer allocated a portion of consolidated net income.
|
5.
|
Acquisitions
|
Purchase price
|
$
|
338,439
|
|
Fair value of assets acquired (liabilities assumed):
|
|
||
Property, plant and equipment
|
$
|
252,327
|
|
Inventory
|
86,132
|
|
|
Environmental liabilities
|
(20
|
)
|
|
Total
|
$
|
338,439
|
|
|
|
Purchase price
|
$
|
20,003
|
|
Fair value of assets acquired:
|
|
||
Property, plant and equipment
|
$
|
20,003
|
|
|
|
Purchase price
|
$
|
32,164
|
|
Fair value of assets acquired (liabilities assumed):
|
|
||
Property, plant and equipment
|
$
|
32,279
|
|
Other intangibles
|
2,041
|
|
|
Other current liabilities
|
(586
|
)
|
|
Other noncurrent liabilities
|
(1,570
|
)
|
|
Total
|
$
|
32,164
|
|
|
|
Purchase price
|
$
|
291,292
|
|
Fair value of assets acquired (liabilities assumed):
|
|
||
Property, plant and equipment
|
$
|
262,718
|
|
Other current assets
|
2,877
|
|
|
Goodwill
|
25,159
|
|
|
Other intangibles
|
3,898
|
|
|
Environmental liabilities
|
(375
|
)
|
|
Other current liabilities
|
(2,985
|
)
|
|
Total
|
$
|
291,292
|
|
|
|
|
Year Ended December 31, 2010
|
||||||||||
|
Petroleum Pipeline System Segment
|
|
Petroleum Terminals Segment
|
|
Total
|
||||||
Revenues
|
$
|
13,399
|
|
|
$
|
5,155
|
|
|
$
|
18,554
|
|
Net operating margin*
|
$
|
15,137
|
|
|
$
|
3,985
|
|
|
$
|
19,122
|
|
|
|
Year Ended December 31, 2009
|
||||||||||
|
|
As
Reported
|
|
Pro Forma
Adjustments
|
|
Pro Forma
|
||||||
Revenues
|
|
$
|
1,014,171
|
|
|
$
|
64,933
|
|
|
$
|
1,079,104
|
|
Net income
|
|
$
|
226,475
|
|
|
$
|
(7,711
|
)
|
|
$
|
218,764
|
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2010
|
||||||||||
|
|
As
Reported
|
|
Pro Forma
Adjustments
|
|
Pro Forma
|
||||||
Revenues
|
|
$
|
1,557,447
|
|
|
$
|
36,483
|
|
|
$
|
1,593,930
|
|
Net income
|
|
$
|
311,580
|
|
|
$
|
15,740
|
|
|
$
|
327,320
|
|
6.
|
Inventory
|
|
|
2009
|
|
2010
|
||||
Refined petroleum products
|
|
$
|
152,776
|
|
|
$
|
146,211
|
|
Natural gas liquids
|
|
17,263
|
|
|
27,982
|
|
||
Transmix
|
|
17,230
|
|
|
32,277
|
|
||
Other
|
|
5,732
|
|
|
9,938
|
|
||
Total inventory
|
|
$
|
193,001
|
|
|
$
|
216,408
|
|
7.
|
Product Sales Revenues
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2008
|
|
2009
|
|
2010
|
||||||
Physical sale of petroleum products
|
|
$
|
523,158
|
|
|
$
|
373,055
|
|
|
$
|
784,839
|
|
NYMEX contract adjustments:
|
|
|
|
|
|
|
||||||
Change in value of NYMEX contracts that did not qualify for hedge accounting treatment and the effective portion of losses of matured NYMEX contracts that qualified for hedge accounting treatment associated with our petroleum products blending and fractionation activities
(1)
|
|
50,937
|
|
|
(28,732
|
)
|
|
(10,751
|
)
|
|||
Change in value of NYMEX contracts that did not qualify for hedge accounting treatment associated with the Houston-to-El Paso pipeline section linefill working inventory
(1)
|
|
—
|
|
|
(9,858
|
)
|
|
(11,212
|
)
|
|||
Change in value of NYMEX contracts that did not qualify for hedge accounting treatment and the discontinuance of a cash flow hedge associated with our crude oil activities
|
|
—
|
|
|
—
|
|
|
214
|
|
|||
Total NYMEX contract adjustments
|
|
50,937
|
|
|
(38,590
|
)
|
|
(21,749
|
)
|
|||
Total product sales revenues
|
|
$
|
574,095
|
|
|
$
|
334,465
|
|
|
$
|
763,090
|
|
|
|
|
|
|
|
|
||||||
(1) The associated petroleum products for these activities are classified as inventories in current assets on our consolidated balance sheets.
|
8.
|
Property, Plant and Equipment
|
|
|
December 31,
|
|
Estimated Depreciable
Lives
|
||||||
|
|
2009
|
|
2010
|
|
|||||
Construction work-in-progress
|
|
$
|
101,265
|
|
|
$
|
106,699
|
|
|
|
Land and rights-of-way
|
|
68,603
|
|
|
75,568
|
|
|
|
||
Carrier property
|
|
1,743,606
|
|
|
1,922,131
|
|
|
6 – 59 years
|
||
Buildings
|
|
26,877
|
|
|
34,323
|
|
|
20 – 53 years
|
||
Storage tanks
|
|
620,719
|
|
|
829,306
|
|
|
20 – 40 years
|
||
Pipeline and station equipment
|
|
260,344
|
|
|
290,343
|
|
|
3 – 59 years
|
||
Processing equipment
|
|
496,087
|
|
|
546,426
|
|
|
3 – 56 years
|
||
Other
|
|
81,105
|
|
|
89,814
|
|
|
3 – 48 years
|
||
Total
|
|
$
|
3,398,606
|
|
|
$
|
3,894,610
|
|
|
|
|
|
|
|
|
|
|
9.
|
Major Customers and Concentration of Risks
|
|
|
Year Ended December 31,
|
|||||||
|
|
2008
|
|
2009
|
|
2010
|
|||
Customer A
|
|
12
|
%
|
|
5
|
%
|
|
13
|
%
|
Customer B
|
|
12
|
%
|
|
11
|
%
|
|
11
|
%
|
Total
|
|
24
|
%
|
|
16
|
%
|
|
24
|
%
|
|
|
|
|
|
|
|
10.
|
Employee Benefit Plans
|
|
|
Pension Benefits
|
|
Other Postretirement
Benefits
|
||||||||||||
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
|
$
|
51,198
|
|
|
$
|
60,657
|
|
|
$
|
19,157
|
|
|
$
|
13,352
|
|
Service cost
|
|
6,583
|
|
|
6,720
|
|
|
407
|
|
|
319
|
|
||||
Interest cost
|
|
3,210
|
|
|
3,341
|
|
|
899
|
|
|
992
|
|
||||
Plan participants’ contributions
|
|
—
|
|
|
—
|
|
|
115
|
|
|
165
|
|
||||
Actuarial (gain) loss
|
|
1,550
|
|
|
2,394
|
|
|
(6,738
|
)
|
|
4,738
|
|
||||
Benefits paid
|
|
(1,884
|
)
|
|
(1,166
|
)
|
|
(488
|
)
|
|
(656
|
)
|
||||
Benefit obligation at end of year
|
|
60,657
|
|
|
71,946
|
|
|
13,352
|
|
|
18,910
|
|
||||
Change in plan assets:
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
|
38,213
|
|
|
51,006
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
|
7,371
|
|
|
5,677
|
|
|
373
|
|
|
491
|
|
||||
Plan participants’ contributions
|
|
—
|
|
|
—
|
|
|
115
|
|
|
165
|
|
||||
Actual return on plan assets
|
|
7,306
|
|
|
5,901
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
|
(1,884
|
)
|
|
(1,166
|
)
|
|
(488
|
)
|
|
(656
|
)
|
||||
Fair value of plan assets at end of year
|
|
51,006
|
|
|
61,418
|
|
|
—
|
|
|
—
|
|
||||
Funded status at end of year
|
|
$
|
(9,651
|
)
|
|
$
|
(10,528
|
)
|
|
$
|
(13,352
|
)
|
|
$
|
(18,910
|
)
|
Accumulated benefit obligation
|
|
$
|
46,380
|
|
|
$
|
54,514
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Postretirement
Benefits
|
||||||||||||
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
||||||||
Amounts recognized in consolidated balance sheet:
|
|
|
|
|
|
|
|
|
||||||||
Current accrued benefit cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(421
|
)
|
|
$
|
(473
|
)
|
Long-term pension and benefit cost
|
|
(9,651
|
)
|
|
(10,528
|
)
|
|
(12,931
|
)
|
|
(18,437
|
)
|
||||
|
|
(9,651
|
)
|
|
(10,528
|
)
|
|
(13,352
|
)
|
|
(18,910
|
)
|
||||
Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss (gain)
|
|
11,308
|
|
|
10,837
|
|
|
(699
|
)
|
|
3,905
|
|
||||
Prior service cost (credit)
|
|
1,261
|
|
|
954
|
|
|
(2,126
|
)
|
|
(1,275
|
)
|
||||
|
|
12,569
|
|
|
11,791
|
|
|
(2,825
|
)
|
|
2,630
|
|
||||
Net amount recognized in consolidated balance sheet
|
|
$
|
2,918
|
|
|
$
|
1,263
|
|
|
$
|
(16,177
|
)
|
|
$
|
(16,280
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||||||||
|
|
2008
|
|
2009
|
|
2010
|
|
2008
|
|
2009
|
|
2010
|
||||||||||||
Components of net periodic pension and postretirement benefit expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
5,473
|
|
|
$
|
6,583
|
|
|
$
|
6,720
|
|
|
$
|
435
|
|
|
$
|
407
|
|
|
$
|
319
|
|
Interest cost
|
|
2,698
|
|
|
3,210
|
|
|
3,341
|
|
|
1,029
|
|
|
899
|
|
|
992
|
|
||||||
Expected return on plan assets
|
|
(2,702
|
)
|
|
(2,723
|
)
|
|
(3,552
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost (credit)
|
|
307
|
|
|
307
|
|
|
307
|
|
|
(852
|
)
|
|
(851
|
)
|
|
(851
|
)
|
||||||
Amortization of net actuarial loss
|
|
150
|
|
|
1,630
|
|
|
517
|
|
|
307
|
|
|
170
|
|
|
133
|
|
||||||
Net periodic expense
|
|
$
|
5,926
|
|
|
$
|
9,007
|
|
|
$
|
7,333
|
|
|
$
|
919
|
|
|
$
|
625
|
|
|
$
|
593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Postretirement
Benefits
|
||||||||||||
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss (gain)
|
|
$
|
(3,033
|
)
|
|
$
|
45
|
|
|
$
|
(6,738
|
)
|
|
$
|
4,738
|
|
Amortization of net actuarial loss
|
|
(1,630
|
)
|
|
(517
|
)
|
|
(170
|
)
|
|
(133
|
)
|
||||
Amortization of prior service credit (cost)
|
|
(307
|
)
|
|
(307
|
)
|
|
851
|
|
|
851
|
|
||||
Total recognized in other comprehensive loss
|
|
(4,970
|
)
|
|
(779
|
)
|
|
(6,057
|
)
|
|
5,456
|
|
||||
Net periodic expense
|
|
9,007
|
|
|
7,333
|
|
|
625
|
|
|
593
|
|
||||
Total recognized in net periodic benefit cost and other comprehensive loss
|
|
$
|
4,037
|
|
|
$
|
6,554
|
|
|
$
|
(5,432
|
)
|
|
$
|
6,049
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
||||||||
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
||||
Discount rate—Salaried plan
|
|
5.79
|
%
|
|
5.54
|
%
|
|
N/A
|
|
|
N/A
|
|
Discount rate—USW plan
|
|
5.72
|
%
|
|
5.07
|
%
|
|
N/A
|
|
|
N/A
|
|
Discount rate—IUOE plan
|
|
5.67
|
%
|
|
5.52
|
%
|
|
N/A
|
|
|
N/A
|
|
Discount rate—Other Postretirement Benefits
|
|
N/A
|
|
|
N/A
|
|
|
5.97
|
%
|
|
5.56
|
%
|
Rate of compensation increase—Salaried plan
|
|
5.00
|
%
|
|
5.00
|
%
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase—USW plan
|
|
4.50
|
%
|
|
4.50
|
%
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase—IUOE plan
|
|
5.00
|
%
|
|
5.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
Pension Benefits
|
|
Other
Postretirement Benefits
|
||||||||||||||
|
|
2008
|
|
2009
|
|
2010
|
|
2008
|
|
2009
|
|
2010
|
||||||
Discount rate—Salaried plan
|
|
6.50
|
%
|
|
6.00
|
%
|
|
5.79
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Discount rate—USW plan
|
|
6.50
|
%
|
|
6.25
|
%
|
|
5.72
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Discount rate—IUOE plan
|
|
6.50
|
%
|
|
5.75
|
%
|
|
5.67
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Discount rate—Other Postretirement Benefits
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
6.50
|
%
|
|
5.75
|
%
|
|
5.97
|
%
|
Rate of compensation increase—Salaried plan
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase—USW plan
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase—IUOE plan
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Expected rate of return on plan assets—Salaried plan
|
|
7.00
|
%
|
|
6.80
|
%
|
|
6.80
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Expected rate of return on plan assets—USW plan
|
|
7.00
|
%
|
|
6.80
|
%
|
|
6.80
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Expected rate of return on plan assets—IUOE plan
|
|
7.00
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
1%
Increase
|
|
1%
Decrease
|
||||
Change in total of service and interest cost components
|
|
$
|
241
|
|
|
$
|
193
|
|
Change in postretirement benefit obligation
|
|
$
|
3,329
|
|
|
$
|
2,660
|
|
Asset Category
|
|
Total
|
|
Quoted Prices in Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash
|
|
$
|
23
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Domestic Equity Securities
(a)
:
|
|
|
|
|
|
|
|
|
||||||||
Small-cap fund
|
|
2,070
|
|
|
2,070
|
|
|
—
|
|
|
—
|
|
||||
Mid-cap fund
|
|
4,702
|
|
|
4,702
|
|
|
—
|
|
|
—
|
|
||||
Large-cap fund
|
|
6,193
|
|
|
6,193
|
|
|
—
|
|
|
—
|
|
||||
International equity fund
|
|
7,630
|
|
|
7,630
|
|
|
—
|
|
|
—
|
|
||||
Fixed Income Securities
(a)
:
|
|
|
|
|
|
|
|
|
||||||||
Intermediate-term bond funds
|
|
22,029
|
|
|
22,029
|
|
|
—
|
|
|
—
|
|
||||
Long-term investment grade bond fund
|
|
6,426
|
|
|
6,426
|
|
|
—
|
|
|
—
|
|
||||
Other:
|
|
|
|
|
|
—
|
|
|
—
|
|
||||||
Short-term investment fund
|
|
1,462
|
|
|
1,462
|
|
|
—
|
|
|
—
|
|
||||
Group annuity contract
|
|
471
|
|
|
—
|
|
|
—
|
|
|
471
|
|
||||
Fair value of plan assets
|
|
$
|
51,006
|
|
|
$
|
50,535
|
|
|
$
|
—
|
|
|
$
|
471
|
|
|
|
|
|
|
|
|
|
|
Asset Category
|
|
Total
|
|
Quoted Prices in Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Domestic Equity Securities
(a)
:
|
|
|
|
|
|
|
|
|
||||||||
Small-cap fund
|
|
$
|
2,403
|
|
|
$
|
2,403
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mid-cap fund
|
|
5,405
|
|
|
5,405
|
|
|
—
|
|
|
—
|
|
||||
Large-cap fund
|
|
7,182
|
|
|
7,182
|
|
|
—
|
|
|
—
|
|
||||
International equity fund
|
|
8,998
|
|
|
8,998
|
|
|
—
|
|
|
—
|
|
||||
Fixed Income Securities
(a)
:
|
|
|
|
|
|
|
|
|
||||||||
Intermediate-term bond funds
|
|
26,237
|
|
|
26,237
|
|
|
—
|
|
|
—
|
|
||||
Long-term investment grade bond fund
|
|
7,898
|
|
|
7,898
|
|
|
—
|
|
|
—
|
|
||||
Other:
|
|
|
|
|
|
—
|
|
|
—
|
|
||||||
Short-term investment fund
|
|
2,863
|
|
|
2,863
|
|
|
—
|
|
|
—
|
|
||||
Group annuity contract
|
|
432
|
|
|
—
|
|
|
—
|
|
|
432
|
|
||||
Fair value of plan assets
|
|
$
|
61,418
|
|
|
$
|
60,986
|
|
|
$
|
—
|
|
|
$
|
432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
2009
|
|
2010
|
||||
Beginning balance
|
$
|
442
|
|
|
$
|
471
|
|
Actual return on plan assets:
|
|
|
|
||||
Relating to assets still held at the reporting date
|
25
|
|
|
30
|
|
||
Purchases, sales and settlements
|
4
|
|
|
(69
|
)
|
||
Ending balance
|
$
|
471
|
|
|
$
|
432
|
|
|
|
|
|
|
|
|
Asset Category
|
|
Fund’s Investment Strategy
|
Domestic Equity Securities:
|
|
|
Small-cap fund
|
|
Seeks to track performance of the Morgan Stanley Country Index (“MSCI”) US Small Cap 1750 Index
|
Mid-cap fund
|
|
Seeks to track performance of the MSCI US Mid Cap 450 Index
|
Large-cap fund
|
|
Seeks to track performance of the Standard & Poor’s 500 Index
|
International equity fund
|
|
Seeks long-term growth of capital by investing 80% of assets in international equities
|
|
|
|
Fixed Income Securities:
|
|
|
Intermediate-term bond funds
|
|
Seeks to track performance of bond indexes representing fixed income securities having maturities greater than one year
|
Long-term investment grade bond fund
|
|
Seeks high and sustainable current income through investment in long-term high grade bonds
|
|
|
|
Other:
|
|
|
Short-term investment fund
|
|
Invests primarily in high quality commercial paper and government securities
|
Group annuity contract
|
|
Guarantees a specified return based on a specified index
|
|
|
2009
|
|
2010
|
||||||||
|
|
Actual
(a)
|
|
Target
|
|
Actual
(a)
|
|
Target
|
||||
Equity securities
|
|
40
|
%
|
|
40
|
%
|
|
39
|
%
|
|
40
|
%
|
Debt securities
|
|
57
|
%
|
|
59
|
%
|
|
56
|
%
|
|
59
|
%
|
Other
|
|
3
|
%
|
|
1
|
%
|
|
5
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
||||
2011
|
|
$
|
2,488
|
|
|
$
|
473
|
|
2012
|
|
2,895
|
|
|
554
|
|
||
2013
|
|
2,979
|
|
|
621
|
|
||
2014
|
|
3,369
|
|
|
630
|
|
||
2015
|
|
3,121
|
|
|
707
|
|
||
2016 through 2020
|
|
20,817
|
|
|
4,516
|
|
11.
|
Related Party Transactions
|
|
|
Year Ended December 31,
|
||||||
|
|
2008
|
|
2009
|
||||
MGG Midstream Holdings GP, LLC—allocated operating expenses
|
|
$
|
84,460
|
|
|
$
|
69,523
|
|
MGG Midstream Holdings GP, LLC—allocated G&A expenses
|
|
44,482
|
|
|
41,890
|
|
||
MGG Midstream Holdings, L.P.—allocated G&A expenses
|
|
440
|
|
|
—
|
|
12.
|
Debt
|
|
|
|
|
Weighted-Average Interest Rate at December 31, 2010 (a)
|
||||||
|
|
|
|
|||||||
|
|
December 31,
|
|
|||||||
|
|
2009
|
|
2010
|
|
|||||
Revolving credit facility
|
|
$
|
101,600
|
|
|
$
|
15,000
|
|
|
0.7%
|
6.45% Notes due 2014
|
|
249,732
|
|
|
249,786
|
|
|
6.3%
|
||
5.65% Notes due 2016
|
|
252,897
|
|
|
252,466
|
|
|
5.7%
|
||
6.40% Notes due 2018
|
|
260,340
|
|
|
259,125
|
|
|
5.9%
|
||
6.55% Notes due 2019
|
|
566,500
|
|
|
581,890
|
|
|
5.4%
|
||
4.25% Notes due 2021
|
|
—
|
|
|
298,932
|
|
|
4.3%
|
||
6.40% Notes due 2037
|
|
248,935
|
|
|
248,949
|
|
|
6.3%
|
||
Total debt
|
|
$
|
1,680,004
|
|
|
$
|
1,906,148
|
|
|
|
|
|
|
|
|
|
|
13.
|
Derivative Financial Instruments
|
•
|
Petroleum products blending and fractionation - we had open NYMEX contracts maturing between January 2011 and July 2011 associated with these activities representing 1.0 million barrels of petroleum products that did not qualify as hedges for accounting purposes;
|
•
|
Linefill on our Houston-to-El Paso pipeline section - we had open NYMEX contracts maturing between January 2011 and July 2011 associated with these activities representing 1.2 million barrels of petroleum products that did not qualify as hedges for accounting purposes; and
|
•
|
Crude oil storage and pipeline:
|
◦
|
At December 31, 2010, we had open NYMEX contracts associated with our crude oil tank bottom inventory for our Cushing storage facility. These contracts, representing 0.7 million barrels of crude oil, were designated as fair value hedges for accounting purposes and mature in November 2013.
|
◦
|
At December 31, 2010, we had open NYMEX contracts associated with our crude oil pipeline linefill we acquired from BP in September 2010. These contracts, which mature in March 2011 and represent less than 0.1 million barrels of crude oil, did not qualify as hedges for accounting purposes.
|
|
|
Year Ended December 31,
|
||||||||||
Derivative Gains (Losses) Included in AOCL
|
|
2008
|
|
2009
|
|
2010
|
||||||
Beginning balance
|
|
$
|
3,817
|
|
|
$
|
3,653
|
|
|
$
|
1,743
|
|
Net loss on NYMEX commodity contracts
|
|
—
|
|
|
(6,804
|
)
|
|
(4,283
|
)
|
|||
Reclassification of net gain on cash flow hedges to interest expense
|
|
(164
|
)
|
|
(164
|
)
|
|
(164
|
)
|
|||
Reclassification of net loss on commodity hedges to product sales revenues
|
|
—
|
|
|
5,058
|
|
|
5,438
|
|
|||
Reclassification of loss on discontinuance of cash flow hedge to product sales revenues
|
|
—
|
|
|
—
|
|
|
591
|
|
|||
Ending balance
|
|
$
|
3,653
|
|
|
$
|
1,743
|
|
|
$
|
3,325
|
|
|
|
|
|
Unamortized Amount Recorded in Long-Term Debt
|
|
Amount Reclassified to Interest Expense from Long-Term Debt
|
||||||||||||||
|
|
|
|
As of December 31,
|
|
Year Ended December 31,
|
||||||||||||||
Hedge
|
|
Total Gain
Realized
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
||||||||||
Fair value hedges (date executed):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rate swaps 6.40% Notes (July 2008)
|
|
$
|
11,652
|
|
|
$
|
10,358
|
|
|
$
|
9,142
|
|
|
$
|
(1,216
|
)
|
|
$
|
(1,216
|
)
|
Interest rate swaps 5.65% Notes (October 2004)
|
|
3,830
|
|
|
3,093
|
|
|
2,638
|
|
|
(455
|
)
|
|
(455
|
)
|
|||||
Interest rate swaps 6.55% Notes (June and August 2009)
|
|
16,238
|
|
|
—
|
|
|
15,222
|
|
|
—
|
|
|
(1,016
|
)
|
|||||
Total fair value hedges
|
|
|
|
$
|
13,451
|
|
|
$
|
27,002
|
|
|
$
|
(1,671
|
)
|
|
$
|
(2,687
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of Gain Recognized on Derivative
|
|
Amount of Gain Recognized on Derivative
|
|
Amount of Interest Expense Recognized on Fixed-Rated Debt (Related Hedged Item)
|
||||||||||||
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|||||||||||||
Derivative Instrument
|
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|||||||||
Interest rate swap agreements
|
|
Interest expense
|
|
$
|
4,446
|
|
|
$
|
4,604
|
|
|
$
|
(15,917
|
)
|
|
$
|
(17,277
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
||||||||||||
Derivative Instrument
|
|
Amount of Gain (Loss) Recognized in AOCL on Derivative
|
|
Location of Gain (Loss) Reclassified from AOCL into Income
|
|
Amount of Gain (Loss) Reclassified from AOCL into Income
|
||||||||
Interest rate swap agreements
|
|
|
$
|
—
|
|
|
|
Interest expense
|
|
|
$
|
164
|
|
|
NYMEX commodity contracts
|
|
|
(6,804
|
)
|
|
|
Product sales revenues
|
|
|
(5,058
|
)
|
|
||
Total cash flow hedges
|
|
|
$
|
(6,804
|
)
|
|
|
Total
|
|
|
$
|
(4,894
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2010
|
||||||||||||
Derivative Instrument
|
|
Amount of Gain (Loss) Recognized in AOCL on Derivative
|
|
Location of Gain (Loss) Reclassified from AOCL into Income
|
|
Amount of Gain (Loss) Reclassified from AOCL into Income
|
||||||||
Interest rate swap agreements
|
|
|
$
|
—
|
|
|
|
Interest expense
|
|
|
$
|
164
|
|
|
NYMEX commodity contracts
|
|
|
(4,283
|
)
|
|
|
Product sales revenues
|
|
|
5,438
|
|
|
||
Total cash flow hedges
|
|
|
$
|
(4,283
|
)
|
|
|
Total
|
|
|
$
|
5,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss) Recognized on Derivative
|
||||||
|
|
|
|
Year Ended December 31,
|
||||||
Derivative Instrument
|
|
Location of Gain (Loss) Recognized on Derivative
|
|
2009
|
|
2010
|
||||
Interest rate swap agreements
|
|
Other income
|
|
$
|
279
|
|
|
$
|
—
|
|
NYMEX commodity contracts
|
|
Product sales revenues
|
|
(33,532
|
)
|
|
(15,720
|
)
|
||
|
|
Total
|
|
$
|
(33,253
|
)
|
|
$
|
(15,720
|
)
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Interest rate swap agreements, current portion
|
|
Other current assets
|
|
$
|
4,446
|
|
|
Other current liabilities
|
|
$
|
—
|
|
Interest rate swap agreements, noncurrent portion
|
|
Other noncurrent assets
|
|
—
|
|
|
Other noncurrent liabilities
|
|
1,649
|
|
||
NYMEX commodity contracts
|
|
Energy commodity derivatives contracts
|
|
—
|
|
|
Energy commodity derivatives contracts
|
|
1,211
|
|
||
|
|
Total
|
|
$
|
4,446
|
|
|
Total
|
|
$
|
2,860
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2010
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
NYMEX commodity contracts
|
|
Other noncurrent assets
|
|
$
|
—
|
|
|
Other noncurrent liabilities
|
|
$
|
4,920
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
NYMEX commodity contracts
|
|
Energy commodity derivatives contracts
|
|
$
|
—
|
|
|
Energy commodity derivatives contracts
|
|
$
|
8,046
|
|
NYMEX commodity contracts
|
|
Other noncurrent assets
|
|
—
|
|
|
Other noncurrent liabilities
|
|
1,146
|
|
||
|
|
Total
|
|
$
|
—
|
|
|
Total
|
|
$
|
9,192
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2010
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
NYMEX commodity contracts
|
|
Energy commodity derivatives contracts
|
|
$
|
—
|
|
|
Energy commodity derivatives contracts
|
|
$
|
11,790
|
|
|
|
|
|
|
|
|
|
|
14.
|
Leases
|
2011
|
$
|
2,415
|
|
2012
|
2,373
|
|
|
2013
|
1,290
|
|
|
2014
|
929
|
|
|
2015
|
854
|
|
|
Thereafter
|
12,947
|
|
|
Total
|
$
|
20,808
|
|
|
|
2011
|
$
|
157,848
|
|
2012
|
148,504
|
|
|
2013
|
129,243
|
|
|
2014
|
114,754
|
|
|
2015
|
93,500
|
|
|
Thereafter
|
305,752
|
|
|
Total
|
$
|
949,601
|
|
|
|
Grant Date
|
|
Unit
Awards
Granted
|
|
Forfeitures / Settlements
|
|
Adjustments to Unit
Awards for
Attaining Above-
Target Financial
Results
|
|
Vested
Limited
Partner Units
|
|
Vesting Date
|
|
Value of
Unit
Awards on
Vesting Date
(Millions)
|
||||
February 2005
|
|
160,640
|
|
|
11,348
|
|
|
149,292
|
|
|
298,584
|
|
|
12/31/2007
|
|
$12.9
|
June 2006
|
|
1,170
|
|
|
—
|
|
|
1,170
|
|
|
2,340
|
|
|
12/31/2007
|
|
$0.1
|
February 2006
|
|
168,105
|
|
|
13,730
|
|
|
154,143
|
|
|
308,518
|
|
|
12/31/2008
|
|
$9.3
|
Various 2006
|
|
9,201
|
|
|
2,640
|
|
|
6,561
|
|
|
13,122
|
|
|
12/31/2008
|
|
$0.4
|
March 2007
|
|
2,640
|
|
|
—
|
|
|
—
|
|
|
2,640
|
|
|
12/31/2008
|
|
$0.1
|
January 2007
|
|
159,691
|
|
|
3,776
|
|
|
62,190
|
|
|
218,105
|
|
|
12/31/2009
|
|
$9.5
|
January 2008
|
|
189,832
|
|
|
4,987
|
|
|
184,803
|
|
|
369,648
|
|
|
12/31/2010
|
|
$20.9
|
Various 2008 & March 2009
|
|
14,248
|
|
|
—
|
|
|
—
|
|
|
14,248
|
|
|
12/31/2010
|
|
$0.8
|
Grant Date
|
|
Vested Limited Partner Units
|
|
Minimum Tax Withholdings
|
|
Limited Partner Units Issued to Participants
|
|
Tax Withholdings and Employer Taxes Paid (Millions)
|
|
Settlement Date
|
|||
February 2005
|
|
298,584
|
|
|
|
|
|
|
|
|
|
||
June 2006
|
|
2,340
|
|
|
|
|
|
|
|
|
|
||
|
|
300,924
|
|
|
104,068
|
|
|
196,856
|
|
|
$5.1
|
|
January 2008
|
February 2006
|
|
308,518
|
|
|
|
|
|
|
|
|
|
||
Various 2006
|
|
13,122
|
|
|
|
|
|
|
|
|
|
||
March 2007
|
|
2,640
|
|
|
|
|
|
|
|
|
|
||
|
|
324,280
|
|
|
114,960
|
|
|
209,320
|
|
|
$4.0
|
|
January 2009
|
January 2007
|
|
218,105
|
|
|
77,788
|
|
|
140,317
|
|
|
$3.9
|
|
January 2010
|
January 2008
|
|
369,648
|
|
|
|
|
|
|
|
|
|
||
Various 2008 & March 2009
|
|
14,248
|
|
|
|
|
|
|
|
|
|
||
|
|
383,896
|
|
|
131,150
|
|
|
252,746
|
|
|
*$8.3
|
|
January 2011
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
Unit
Awards
Granted
|
|
Estimated
Forfeitures
|
|
Adjustment to
Unit Awards in
Anticipation of
Achieving
Above Target
Financial Results
|
|
Total Unit
Award
Accrual
|
|
Vesting
Date
|
|
Unrecognized
Compensation
Expense
(Millions)
(1)
|
|
Intrinsic Value of
Unvested Awards
at December 31,
2010 (Millions)
|
||||||||||
2009 Awards
|
|
275,994
|
|
|
8,280
|
|
|
|
133,857
|
|
|
|
401,571
|
|
|
12/31/2011
|
|
$
|
3.5
|
|
|
$
|
22.7
|
|
2010 Awards
|
|
203,212
|
|
|
6,097
|
|
|
|
—
|
|
|
|
197,115
|
|
|
12/31/2012
|
|
5.0
|
|
|
11.1
|
|
||
Total
|
|
479,206
|
|
|
14,377
|
|
|
|
133,857
|
|
|
|
598,686
|
|
|
|
|
$
|
8.5
|
|
|
$
|
33.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unrecognized compensation expense will be recognized over the remaining vesting periods of the awards.
|
Grant Date
|
|
Unit
Awards
Granted
|
|
Estimated
Forfeitures
|
|
Total Unit
Award
Accrual
|
|
Vesting Date
|
|
Unrecognized
Compensation
Expense
(Millions)
(1)
|
|
Intrinsic Value of
Unvested Awards
at December 31,
2010
(Millions)
|
|||||||
Various 2008
|
|
40,315
|
|
|
5,242
|
|
|
35,073
|
|
|
12/31/2011
|
|
$
|
0.2
|
|
|
$
|
2.0
|
|
March 2009
|
|
2,240
|
|
|
291
|
|
|
1,949
|
|
|
12/31/2011
|
|
*
|
|
|
0.1
|
|
||
Various 2010
|
|
42,979
|
|
|
1,935
|
|
|
41,044
|
|
|
12/31/2012
|
|
1.0
|
|
|
2.3
|
|
||
|
|
85,534
|
|
|
7,468
|
|
|
78,066
|
|
|
|
|
$
|
1.2
|
|
|
$
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unrecognized compensation expense will be recognized over the remaining vesting periods of the awards.
|
|
|
December 31, 2010
|
||||||||||||||
|
|
2008 Awards
|
|
2009 Awards
|
|
2010 Awards
|
|
Retention Awards
|
||||||||
Weighted-average per unit grant date fair value of equity awards
(a)
|
|
$
|
28.58
|
|
|
$
|
19.61
|
|
|
$
|
35.04
|
|
|
$
|
29.05
|
|
December 31, 2010 per unit fair value of liability awards
(b)
|
|
$
|
56.50
|
|
|
$
|
53.37
|
|
|
$
|
50.85
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
We account for approximately 80% of the unit awards as equity (see
Performance Based Unit Awards
above). For the 2008 and 2009 awards, we calculated fair value as our unit price on the grant date less the present value of estimated cash distributions during the vesting period. For the 2010 awards, we calculated fair value as our unit price on the grant date less the present value of annual cash distributions of $2.84 per unit during the vesting period (the LTIP recipients will receive the value of distributions paid in excess of $2.84 when these awards vest).
|
(b)
|
We account for approximately 20% of the unit awards as liabilities (see
Performance Based Unit Awards
above). For the 2008 and 2009 awards, we calculated fair value as our unit price at the end of each accounting period less the present value of estimated cash distributions during the remaining portion of the vesting period. For the 2010 awards, we calculated fair value as our unit price at the end of each accounting period less the present value of annual cash distributions of $2.84 per unit during the remaining portion of the vesting period.
|
|
|
Year Ended December 31, 2008
|
||||||||||
|
|
Equity
Method
|
|
Liability
Method
|
|
Total
|
||||||
2005 awards
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
26
|
|
2006 awards
|
|
2,509
|
|
|
378
|
|
|
2,887
|
|
|||
2007 awards
|
|
990
|
|
|
127
|
|
|
1,117
|
|
|||
2008 awards
|
|
457
|
|
|
82
|
|
|
539
|
|
|||
Retention awards
|
|
182
|
|
|
—
|
|
|
182
|
|
|||
Total
|
|
$
|
4,138
|
|
|
$
|
613
|
|
|
$
|
4,751
|
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2009
|
||||||||||
|
|
Equity
Method
|
|
Liability
Method
|
|
Total
|
||||||
2007 awards
|
|
$
|
3,842
|
|
|
$
|
1,526
|
|
|
$
|
5,368
|
|
2008 awards
|
|
1,243
|
|
|
534
|
|
|
1,777
|
|
|||
2009 awards
|
|
1,400
|
|
|
668
|
|
|
2,068
|
|
|||
Retention awards
|
|
409
|
|
|
—
|
|
|
409
|
|
|||
Total
|
|
$
|
6,894
|
|
|
$
|
2,728
|
|
|
$
|
9,622
|
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2010
|
||||||||||
|
|
Equity
Method
|
|
Liability
Method
|
|
Total
|
||||||
2007 awards
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
6
|
|
2008 awards
|
|
6,763
|
|
|
3,802
|
|
|
10,565
|
|
|||
2009 awards
|
|
2,800
|
|
|
2,189
|
|
|
4,989
|
|
|||
2010 awards
|
|
1,842
|
|
|
669
|
|
|
2,511
|
|
|||
Retention awards
|
|
828
|
|
|
—
|
|
|
828
|
|
|||
Total
|
|
$
|
12,233
|
|
|
$
|
6,666
|
|
|
$
|
18,899
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2008
|
|
2009
|
|
2010
|
||||||
Phantom units earned by independent directors
|
|
13,950
|
|
|
14,123
|
|
|
15,001
|
|
|||
|
|
|
|
|
|
|
||||||
Deferred director compensation expense
|
|
$
|
507
|
|
|
$
|
435
|
|
|
$
|
676
|
|
Distribution equivalent units
|
|
32
|
|
|
52
|
|
|
100
|
|
|||
Changes in market value of phantom units awarded to directors
|
|
(238
|
)
|
|
430
|
|
|
461
|
|
|||
Total deferred equity-based director compensation expense
|
|
$
|
301
|
|
|
$
|
917
|
|
|
$
|
1,237
|
|
|
|
|
|
|
|
|
16.
|
Segment Disclosures
|
|
|
Year Ended December 31, 2008
|
||||||||||||||||||
|
|
Petroleum
Pipeline
System
|
|
Petroleum
Terminals
|
|
Ammonia
Pipeline
System
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Transportation and terminals revenues
|
|
$
|
478,473
|
|
|
$
|
138,717
|
|
|
$
|
22,704
|
|
|
$
|
(1,084
|
)
|
|
$
|
638,810
|
|
Product sales revenues
|
|
543,694
|
|
|
30,401
|
|
|
—
|
|
|
—
|
|
|
574,095
|
|
|||||
Affiliate management fee revenue
|
|
733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
733
|
|
|||||
Total revenues
|
|
1,022,900
|
|
|
169,118
|
|
|
22,704
|
|
|
(1,084
|
)
|
|
1,213,638
|
|
|||||
Operating expenses
|
|
195,262
|
|
|
59,126
|
|
|
14,044
|
|
|
(3,561
|
)
|
|
264,871
|
|
|||||
Product purchases
|
|
429,294
|
|
|
8,279
|
|
|
—
|
|
|
(1,006
|
)
|
|
436,567
|
|
|||||
Gain on assignment of supply agreement
|
|
(26,492
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,492
|
)
|
|||||
Equity earnings
|
|
(4,067
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,067
|
)
|
|||||
Operating margin
|
|
428,903
|
|
|
101,713
|
|
|
8,660
|
|
|
3,483
|
|
|
542,759
|
|
|||||
Depreciation and amortization expense
|
|
56,225
|
|
|
25,623
|
|
|
1,170
|
|
|
3,483
|
|
|
86,501
|
|
|||||
G&A expenses
|
|
52,874
|
|
|
17,313
|
|
|
3,115
|
|
|
—
|
|
|
73,302
|
|
|||||
Operating profit
|
|
$
|
319,804
|
|
|
$
|
58,777
|
|
|
$
|
4,375
|
|
|
$
|
—
|
|
|
$
|
382,956
|
|
Additions to long-lived assets
|
|
$
|
177,302
|
|
|
$
|
123,584
|
|
|
$
|
5,536
|
|
|
|
|
$
|
306,422
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2008
|
||||||||||||||||||
Segment assets
|
|
$
|
1,772,779
|
|
|
$
|
720,256
|
|
|
$
|
38,561
|
|
|
|
|
$
|
2,531,596
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
69,112
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
2,600,708
|
|
||||||||
Goodwill
|
|
$
|
2,864
|
|
|
$
|
11,902
|
|
|
$
|
—
|
|
|
|
|
$
|
14,766
|
|
||
Equity investments
|
|
$
|
23,190
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
23,190
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
||||||||||||||||||
|
|
Petroleum
Pipeline
System
|
|
Petroleum
Terminals
|
|
Ammonia
Pipeline
System
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Transportation and terminals revenues
|
|
$
|
494,165
|
|
|
$
|
166,950
|
|
|
$
|
19,862
|
|
|
$
|
(2,032
|
)
|
|
$
|
678,945
|
|
Product sales revenues
|
|
320,100
|
|
|
14,365
|
|
|
—
|
|
|
—
|
|
|
334,465
|
|
|||||
Affiliate management fee revenue
|
|
761
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
761
|
|
|||||
Total revenues
|
|
815,026
|
|
|
181,315
|
|
|
19,862
|
|
|
(2,032
|
)
|
|
1,014,171
|
|
|||||
Operating expenses
|
|
180,979
|
|
|
64,349
|
|
|
16,196
|
|
|
(3,889
|
)
|
|
257,635
|
|
|||||
Product purchases
|
|
275,880
|
|
|
6,393
|
|
|
—
|
|
|
(1,982
|
)
|
|
280,291
|
|
|||||
Equity earnings
|
|
(3,431
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,431
|
)
|
|||||
Operating margin
|
|
361,598
|
|
|
110,573
|
|
|
3,666
|
|
|
3,839
|
|
|
479,676
|
|
|||||
Depreciation and amortization expense
|
|
61,704
|
|
|
30,208
|
|
|
1,465
|
|
|
3,839
|
|
|
97,216
|
|
|||||
G&A expenses
|
|
60,846
|
|
|
20,859
|
|
|
2,344
|
|
|
—
|
|
|
84,049
|
|
|||||
Operating profit (loss)
|
|
$
|
239,048
|
|
|
$
|
59,506
|
|
|
$
|
(143
|
)
|
|
$
|
—
|
|
|
$
|
298,411
|
|
Additions to long-lived assets
|
|
$
|
429,453
|
|
|
$
|
88,878
|
|
|
$
|
276
|
|
|
|
|
$
|
518,607
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2009
|
||||||||||||||||||
Segment assets
|
|
$
|
2,303,432
|
|
|
$
|
787,068
|
|
|
$
|
36,191
|
|
|
|
|
$
|
3,126,691
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
36,457
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
3,163,148
|
|
||||||||
Goodwill
|
|
$
|
2,864
|
|
|
$
|
11,902
|
|
|
$
|
—
|
|
|
|
|
$
|
14,766
|
|
||
Equity investments
|
|
$
|
22,054
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
22,054
|
|
||
|
|
Year Ended December 31, 2010
|
||||||||||||||||||
|
|
Petroleum
Pipeline
System
|
|
Petroleum
Terminals
|
|
Ammonia
Pipeline
System
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Transportation and terminals revenues
|
|
$
|
583,977
|
|
|
$
|
196,719
|
|
|
$
|
14,922
|
|
|
$
|
(2,019
|
)
|
|
$
|
793,599
|
|
Product sales revenues
|
|
744,612
|
|
|
18,750
|
|
|
—
|
|
|
(272
|
)
|
|
763,090
|
|
|||||
Affiliate management fee revenue
|
|
758
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
758
|
|
|||||
Total revenues
|
|
1,329,347
|
|
|
215,469
|
|
|
14,922
|
|
|
(2,291
|
)
|
|
1,557,447
|
|
|||||
Operating expenses
|
|
190,971
|
|
|
75,172
|
|
|
19,078
|
|
|
(3,009
|
)
|
|
282,212
|
|
|||||
Product purchases
|
|
663,327
|
|
|
7,549
|
|
|
—
|
|
|
(2,291
|
)
|
|
668,585
|
|
|||||
Equity earnings
|
|
(5,732
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,732
|
)
|
|||||
Operating margin (loss)
|
|
480,781
|
|
|
132,748
|
|
|
(4,156
|
)
|
|
3,009
|
|
|
612,382
|
|
|||||
Depreciation and amortization expense
|
|
69,758
|
|
|
34,446
|
|
|
1,455
|
|
|
3,009
|
|
|
108,668
|
|
|||||
G&A expenses
|
|
68,908
|
|
|
23,904
|
|
|
2,504
|
|
|
—
|
|
|
95,316
|
|
|||||
Operating profit (loss)
|
|
$
|
342,115
|
|
|
$
|
74,398
|
|
|
$
|
(8,115
|
)
|
|
$
|
—
|
|
|
$
|
408,398
|
|
Additions to long-lived assets
|
|
$
|
315,583
|
|
|
$
|
191,518
|
|
|
$
|
2,384
|
|
|
|
|
$
|
509,485
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2010
|
||||||||||||||||||
Segment assets
|
|
$
|
2,630,586
|
|
|
$
|
1,018,356
|
|
|
$
|
35,731
|
|
|
|
|
$
|
3,684,673
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
33,227
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
3,717,900
|
|
||||||||
Goodwill
|
|
$
|
15,136
|
|
|
$
|
24,789
|
|
|
$
|
—
|
|
|
|
|
$
|
39,925
|
|
||
Equity investments
|
|
$
|
22,934
|
|
|
$
|
794
|
|
|
$
|
—
|
|
|
|
|
$
|
23,728
|
|
17.
|
Commitments and Contingencies
|
18.
|
Quarterly Financial Data (unaudited)
|
2009
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenues
|
|
$
|
212,926
|
|
|
$
|
208,220
|
|
|
$
|
239,770
|
|
|
$
|
353,255
|
|
Total costs and expenses
|
|
$
|
157,385
|
|
|
$
|
145,249
|
|
|
$
|
166,380
|
|
|
$
|
250,177
|
|
Operating margin
|
|
$
|
100,348
|
|
|
$
|
107,321
|
|
|
$
|
119,373
|
|
|
$
|
152,634
|
|
Net income
|
|
$
|
41,170
|
|
|
$
|
49,138
|
|
|
$
|
54,215
|
|
|
$
|
81,952
|
|
Net income allocated to limited partners’ interest
|
|
$
|
12,022
|
|
|
$
|
14,611
|
|
|
$
|
18,161
|
|
|
$
|
81,952
|
|
Basic and diluted net income per limited partner unit
|
|
$
|
0.30
|
|
|
$
|
0.37
|
|
|
$
|
0.43
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
|
||||||||
2010
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
329,695
|
|
|
$
|
423,060
|
|
|
$
|
406,201
|
|
|
$
|
398,491
|
|
Total costs and expenses
|
|
$
|
244,577
|
|
|
$
|
299,819
|
|
|
$
|
325,604
|
|
|
$
|
284,781
|
|
Operating margin
|
|
$
|
135,891
|
|
|
$
|
170,614
|
|
|
$
|
133,278
|
|
|
$
|
172,599
|
|
Net income
|
|
$
|
64,534
|
|
|
$
|
102,452
|
|
|
$
|
56,637
|
|
|
$
|
87,957
|
|
Net income allocated to limited partners’ interest
|
|
$
|
64,534
|
|
|
$
|
102,520
|
|
|
$
|
56,791
|
|
|
$
|
88,132
|
|
Basic and diluted net income per limited partner unit
|
|
$
|
0.60
|
|
|
$
|
0.96
|
|
|
$
|
0.51
|
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
19.
|
Fair Value Disclosures
|
•
|
Cash and cash equivalents and restricted cash.
The carrying amounts reported in our consolidated balance sheets approximate fair value due to the short-term maturity or variable rates of these instruments.
|
•
|
Energy commodity derivatives deposits
. This asset represents a short-term deposit we paid associated with our energy commodity derivatives contracts. The carrying amount reported in our consolidated balance sheets approximates fair value as the deposits paid change daily in relation to the associated contracts
|
•
|
Long-term receivables.
Fair value was determined by estimating the present value of future cash flows using a risk-free rate of interest.
|
•
|
Energy commodity derivatives contracts
. These include NYMEX contracts related to petroleum products. These contracts are carried at fair value in our consolidated balance sheets and are valued based on quoted prices in active markets.
|
•
|
Debt.
We based the fair value of our publicly traded notes, excluding the value of interest rate swaps qualifying as fair value hedges, on the prices of those notes at December 31, 2009 and 2010. The carrying amount of borrowings under our revolving credit facility approximates fair value due to the variable rates of that instrument.
|
•
|
Interest rate swaps.
Fair value was determined based on an assumed exchange, at the end of each period; in an orderly transaction with the financial institution counterparties of the interest rate derivative agreements adjusted for the effect of credit risk (see Note 13–
Derivative Financial Instruments
). We calculated the exchange value using present value techniques on estimated future cash flows based on forward interest rate curves.
|
|
|
December 31, 2009
|
|
December 31, 2010
|
||||||||||||
Assets (Liabilities)
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Cash and cash equivalents
|
|
$
|
4,168
|
|
|
$
|
4,168
|
|
|
$
|
7,483
|
|
|
$
|
7,483
|
|
Restricted cash
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,379
|
|
|
$
|
14,379
|
|
Energy commodity derivatives deposits
|
|
$
|
17,943
|
|
|
$
|
17,943
|
|
|
$
|
22,302
|
|
|
$
|
22,302
|
|
Long-term receivables
|
|
$
|
618
|
|
|
$
|
589
|
|
|
$
|
1,167
|
|
|
$
|
1,161
|
|
Energy commodity derivatives contracts (current)
|
|
$
|
(9,257
|
)
|
|
$
|
(9,257
|
)
|
|
$
|
(11,790
|
)
|
|
$
|
(11,790
|
)
|
Energy commodity derivatives contracts (noncurrent)
|
|
$
|
(1,146
|
)
|
|
$
|
(1,146
|
)
|
|
$
|
(4,920
|
)
|
|
$
|
(4,920
|
)
|
Debt
|
|
$
|
(1,680,004
|
)
|
|
$
|
(1,777,064
|
)
|
|
$
|
(1,906,148
|
)
|
|
$
|
(2,048,895
|
)
|
Interest rate swaps (current)
|
|
$
|
4,446
|
|
|
$
|
4,446
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (noncurrent)
|
|
$
|
(1,649
|
)
|
|
$
|
(1,649
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Asset Fair Value Measurements as of
December 31, 2009 using:
|
||||||||||||
Assets (Liabilities)
|
|
Total
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Energy commodity derivatives contracts (current)
|
|
$
|
(9,257
|
)
|
|
$
|
(9,257
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Energy commodity derivatives contracts (noncurrent)
|
|
$
|
(1,146
|
)
|
|
$
|
(1,146
|
)
|
|
|
|
|
||||
Interest rate swaps (current)
|
|
$
|
4,446
|
|
|
$
|
—
|
|
|
$
|
4,446
|
|
|
$
|
—
|
|
Interest rate swaps (noncurrent)
|
|
$
|
(1,649
|
)
|
|
$
|
—
|
|
|
$
|
(1,649
|
)
|
|
|
|
|
|
|
Asset Fair Value Measurements as of
December 31, 2010 using:
|
||||||||||||
Assets (Liabilities)
|
|
Total
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Energy commodity derivatives contracts (current)
|
|
$
|
(11,790
|
)
|
|
$
|
(11,790
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Energy commodity derivatives contracts (noncurrent)
|
|
$
|
(4,920
|
)
|
|
$
|
(4,920
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
20.
|
Distributions
|
Payment Date
|
|
Per Unit Cash Distribution Amount
|
|
Limited Partner Units
|
|
General Partner
(a)
|
|
Total Cash Distribution
|
||||||||
2/14/2008
|
|
$
|
0.65750
|
|
|
$
|
43,884
|
|
|
$
|
19,909
|
|
|
$
|
63,793
|
|
5/15/2008
|
|
0.67250
|
|
|
44,885
|
|
|
20,910
|
|
|
65,795
|
|
||||
8/14/2008
|
|
0.68750
|
|
|
45,886
|
|
|
21,911
|
|
|
67,797
|
|
||||
11/14/2008
|
|
0.70250
|
|
|
46,887
|
|
|
22,912
|
|
|
69,799
|
|
||||
Total
|
|
$
|
2.72000
|
|
|
$
|
181,542
|
|
|
$
|
85,642
|
|
|
$
|
267,184
|
|
|
|
|
|
|
|
|
|
|
||||||||
2/13/2009
|
|
$
|
0.71000
|
|
|
$
|
47,537
|
|
|
$
|
23,478
|
|
|
$
|
71,015
|
|
5/15/2009
|
|
0.71000
|
|
|
47,537
|
|
|
23,478
|
|
|
71,015
|
|
||||
8/14/2009
|
|
0.71000
|
|
|
47,537
|
|
|
23,478
|
|
|
71,015
|
|
||||
11/13/2009
|
|
0.71000
|
|
|
75,677
|
|
|
—
|
|
|
75,677
|
|
||||
Total
|
|
$
|
2.84000
|
|
|
$
|
218,288
|
|
|
$
|
70,434
|
|
|
$
|
288,722
|
|
|
|
|
|
|
|
|
|
|
||||||||
2/12/2010
|
|
$
|
0.71000
|
|
|
$
|
75,779
|
|
|
$
|
—
|
|
|
$
|
75,779
|
|
5/14/2010
|
|
0.72000
|
|
|
76,847
|
|
|
—
|
|
|
76,847
|
|
||||
8/13/2010
|
|
0.73250
|
|
|
82,393
|
|
|
—
|
|
|
82,393
|
|
||||
11/12/2010
|
|
0.74500
|
|
|
83,798
|
|
|
—
|
|
|
83,798
|
|
||||
Total
|
|
$
|
2.90750
|
|
|
$
|
318,817
|
|
|
$
|
—
|
|
|
$
|
318,817
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes amounts paid to MMP GP for its incentive distribution rights.
|
Payment Date
|
|
Per Unit Cash Distribution Amount
|
|
Limited Partner
Units
|
|
General
Partner
|
|
Total Cash
Distribution
|
||||||||
2/14/2008
|
|
$
|
0.48538
|
|
|
$
|
19,232
|
|
|
$
|
3
|
|
|
$
|
19,235
|
|
5/15/2008
|
|
0.50988
|
|
|
20,204
|
|
|
3
|
|
|
20,207
|
|
||||
8/14/2008
|
|
0.53360
|
|
|
21,143
|
|
|
3
|
|
|
21,146
|
|
||||
11/14/2008
|
|
0.55968
|
|
|
22,177
|
|
|
3
|
|
|
22,180
|
|
||||
Total
|
|
$
|
2.08854
|
|
|
$
|
82,756
|
|
|
$
|
12
|
|
|
$
|
82,768
|
|
|
|
|
|
|
|
|
|
|
||||||||
2/13/2009
|
|
$
|
0.56759
|
|
|
$
|
22,490
|
|
|
$
|
—
|
|
|
$
|
22,490
|
|
5/15/2009
|
|
0.56759
|
|
|
22,490
|
|
|
—
|
|
|
22,490
|
|
||||
8/14/2009
|
|
0.56759
|
|
|
22,490
|
|
|
—
|
|
|
22,490
|
|
||||
Total
|
|
$
|
1.70277
|
|
|
$
|
67,470
|
|
|
$
|
—
|
|
|
$
|
67,470
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2008
|
|
2009
|
|
2010
|
||||||
Cash distributions we paid
|
$
|
267,184
|
|
|
$
|
288,722
|
|
|
$
|
318,817
|
|
Less distributions we paid to our general partner
|
85,642
|
|
|
70,434
|
|
|
—
|
|
|||
Distributions we paid to outside owners
|
181,542
|
|
|
218,288
|
|
|
318,817
|
|
|||
Cash distributions paid by Holdings to its outside owners
|
82,768
|
|
|
67,470
|
|
|
—
|
|
|||
Total distributions
|
$
|
264,310
|
|
|
$
|
285,758
|
|
|
$
|
318,817
|
|
|
|
|
|
|
|
Limited partner units outstanding on January 1, 2008
|
66,546,297
|
|
01/08—Settlement of 2005 award grants
|
196,856
|
|
01/08—Other
(a)
|
577
|
|
Limited partner units outstanding on December 31, 2008
|
66,743,730
|
|
01/09—Settlement of 2006 and 2007 award grants
|
209,320
|
|
01/09—Other
(a)
|
828
|
|
09/09—Additional awards issued in September 2009
|
10,000
|
|
09/09—Holdings units converted to MMP units
(b)
|
39,623,944
|
|
Limited partner units outstanding on December 31, 2009
(c)
|
106,587,822
|
|
01/10—Settlement of 2007 award grants
|
140,317
|
|
01/10—Other
(a)
|
3,210
|
|
07/10—Issuance of common units
|
5,750,000
|
|
Limited partner units outstanding on December 31, 2010
|
112,481,349
|
|
|
|
(a)
|
Limited partner units issued to settle the equity-based retainer paid to one of the independent directors of MMP GP.
|
(b)
|
Pursuant to the simplification (see Note 2–
Summary of Significant Accounting Policies
), all of the outstanding limited partner units of Holdings converted into our limited partner units on September 28, 2009 at the exchange rate of 0.6325 to 1.0.
|
(c)
|
The weighted average units outstanding reported on the consolidated statements of income were the pre-simplification outstanding limited partner units of Holdings and our post-simplification limited partner units outstanding, adjusted for director-earned phantom units and certain unvested LTIP awards whose performance metrics had been met.
|
•
|
right to receive distributions of our available cash within 45 days after the end of each quarter;
|
•
|
right to elect the board members of our general partner;
|
•
|
right to remove Magellan GP, LLC as our general partner upon a 100% vote of outstanding unitholders;
|
•
|
right to transfer limited partner unit ownership to substitute limited partners;
|
•
|
right to receive an annual report, containing audited financial statements and a report on those financial statements by our independent public accountants, within 120 days after the close of the fiscal year end;
|
•
|
right to receive information reasonably required for tax reporting purposes within 90 days after the close of the calendar year;
|
•
|
right to vote according to the limited partners’ percentage interest in us at any meeting that may be called by our general partner; and
|
•
|
right to inspect our books and records at the unitholders’ own expense.
|
22.
|
Assignment of Supply Agreement
|
Item 9.
|
Changes in and Disagreement With Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
•
|
Director Election Proposal;
|
•
|
Executive Officers of our General Partner;
|
•
|
Section 16(a) Beneficial Ownership Reporting Compliance;
|
•
|
Code of Ethics;
|
•
|
Corporate Governance – Director Nominations; and
|
•
|
Corporate Governance – Board Committees.
|
Item 11.
|
Executive Compensation
|
•
|
Compensation of Directors and Executive Officers;
|
•
|
Compensation Committee Interlocks and Insider Participation; and
|
•
|
Compensation Committee Report.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
•
|
Securities Authorized for Issuance Under Equity Compensation Plans; and
|
•
|
Security Ownership of Certain Beneficial Owners and Management.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
•
|
Transactions with Related Persons, Promoters and Certain Control Persons; and
|
•
|
Corporate Governance – Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
|
|
|
|
Page
|
Covered by reports of independent auditors:
|
|
|
|
||
|
||
|
||
|
||
|
||
Not covered by reports of independent auditors:
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
Exhibit 2
|
|
|
|
|
|
*(a)
|
|
Agreement Relating to Simplification of Capital Structure dated as of March 3, 2009 by and among Magellan Midstream Partners, L.P., Magellan GP, LLC, Magellan Midstream Holdings, L.P. and Magellan Midstream Holdings GP, LLC (filed as Exhibit 2.1 to Form 8-K filed March 4, 2009).
|
|
|
|
*(b)
|
|
Amendment No. 1 dated as of August 6, 2009 to the Agreement Relating to Simplification of Capital Structure dated as of March 3, 2009 by and among Magellan Midstream Partners, L.P., Magellan GP, LLC, Magellan Midstream Holdings, L.P. and Magellan Midstream Holdings GP, LLC (filed as Exhibit 2.1 to Form 8-K filed August 10, 2009).
|
|
|
|
Exhibit 3
|
|
|
|
|
|
*(a)
|
|
Certificate of Limited Partnership of Magellan Midstream Partners, L.P. dated August 30, 2000, as amended on November 15, 2002 and August 12, 2003 (filed as Exhibit 3.1 to Form 10-Q filed November 10, 2003 (File No. 001-16335/03989347)).
|
|
|
|
*(b)
|
|
Fifth Amended and Restated Agreement of Limited Partnership of Magellan Midstream Partners, L.P. dated September 28, 2009 (filed as Exhibit 3.1 to Form 8-K filed September 30, 2009).
|
|
|
|
*(c)
|
|
Amended and Restated Certificate of Formation of Magellan GP, LLC dated November 15, 2002, as amended on August 12, 2003 (filed as Exhibit 3(f) to Form 10-K filed March 10, 2004 (File No. 001-16335/04660853)).
|
|
|
|
*(d)
|
|
Third Amended and Restated Limited Liability Company Agreement of Magellan GP, LLC dated September 28, 2009 (filed as Exhibit 3.2 to Form 8-K filed September 30, 2009).
|
|
|
|
Exhibit 4
|
|
|
|
|
|
*(a)
|
|
Fifth Amended and Restated Agreement of Limited Partnership of Magellan Midstream Partners, L.P. dated September 28, 2009 (filed as Exhibit 3.1 to Form 8-K filed September 30, 2009).
|
|
|
|
*(b)
|
|
Unit Purchase Rights Agreement dated as of December 4, 2008 between Magellan Midstream Partners, L.P. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to Form 8-A filed December 5, 2008).
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
*(c)
|
|
Amendment No. 1 dated as of March 3, 2009 to Unit Purchase Rights Agreement dated as of December 4, 2008 between Magellan Midstream Partners, L.P. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to Form 8-K filed March 4, 2009).
|
|
|
|
*(d)
|
|
Indenture dated as of May 25, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.1 to Form 8-K filed May 25, 2004 (File No. 001-16335/04829044)).
|
|
|
|
*(e)
|
|
First Supplemental Indenture dated as of May 25, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.2 to Form 8-K filed May 25, 2004 (File No. 001-16335/04829044)).
|
|
|
|
*(f)
|
|
Second Supplemental Indenture dated as of October 15, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.1 to Form 8-K filed October 15, 2004 (File No. 001-16335/041080163)).
|
|
|
|
*(g)
|
|
Indenture dated as of April 19, 2007 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Form 8-K filed April 20, 2007).
|
|
|
|
*(h)
|
|
First Supplemental Indenture dated as of April 19, 2007 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed April 20, 2007).
|
|
|
|
*(i)
|
|
Second Supplemental Indenture dated as of July 14, 2008 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed July 14, 2008).
|
|
|
|
*(j)
|
|
Third Supplemental Indenture dated as of June 26, 2009 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed June 26, 2009).
|
|
|
|
*(k)
|
|
Indenture dated as of August 11, 2010 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Form 8-K filed August 16, 2010).
|
|
|
|
*(l)
|
|
First Supplemental Indenture dated as of August 11, 2010 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed August 16, 2010).
|
|
|
|
Exhibit 10
|
|
|
|
|
|
(a)
|
|
Amended and Restated Magellan Midstream Partners Long-Term Incentive Plan dated October 20, 2010.
|
|
|
|
(b)
|
|
Description of Magellan 2011 Annual Incentive Program.
|
|
|
|
(c)
|
|
Magellan GP, LLC Non-Management Director Compensation Program effective January 1, 2011.
|
|
|
|
*(d)
|
|
Director Deferred Compensation Plan effective October 1, 2006 (filed as Exhibit 10.1 to Form 8-K filed October 4, 2006 (File No. 001-16335/061128415)).
|
|
|
|
*(e)
|
|
$550,000,000 Second Amended and Restated Credit Agreement dated as of September 20, 2007 among Magellan Midstream Partners, L.P., as Borrower, the Lenders party thereto and Wachovia Bank, N.A., as Administrative Agent (filed as Exhibit 10.1 to Form 8-K filed September 21, 2007).
|
|
|
|
*(f)
|
|
Amendment No. 1 dated as of December 4, 2009 to $550,000,000 Second Amended and Restated Credit Agreement dated as of September 20, 2007 among Magellan Midstream Partners, L.P., as Borrower, the Lenders party thereto and Wachovia Bank, N.A., as Administrative Agent (filed as Exhibit 10(f) to Form 10-K filed February 24, 2010).
|
|
|
|
*(g)
|
|
Amendment No. 2 dated as of September 17, 2010 to $550,000,000 Second Amended and Restated Credit Agreement dated as of September 20, 2007 among Magellan Midstream Partners, L.P., as Borrower, the Lenders party thereto and Wachovia Bank, N.A., as Administrative Agent (filed as Exhibit 10.5 to Form 10-Q filed November 2, 2010).
|
|
|
|
*(h)
|
|
Indenture dated as of May 25, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.1 to Form 8-K filed May 25, 2004 (File No. 001-16335/04829044)).
|
|
|
|
*(i)
|
|
First Supplemental Indenture dated as of May 25, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.2 to Form 8-K filed May 25, 2004 (File No. 001-16335/04829044)).
|
|
|
|
*(j)
|
|
Second Supplemental Indenture dated as of October 15, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.1 to Form 8-K filed October 15, 2004 (File No. 001-16335/041080163)).
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
*(k)
|
|
Indenture dated as of April 19, 2007 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Form 8-K filed April 20, 2007).
|
|
|
|
*(l)
|
|
First Supplemental Indenture dated as of April 19, 2007 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed April 20, 2007).
|
|
|
|
*(m)
|
|
Second Supplemental Indenture dated as of July 14, 2008 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed July 14, 2008).
|
|
|
|
*(n)
|
|
Third Supplemental Indenture dated as of June 26, 2009 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed June 26, 2009).
|
|
|
|
*(o)
|
|
Indenture dated as of August 11, 2010 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Form 8-K filed August 16, 2010).
|
|
|
|
*(p)
|
|
First Supplemental Indenture dated as of August 22, 2010 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed August 16, 2010).
|
|
|
|
*(q)
|
|
Unit Purchase Rights Agreement dated as of December 4, 2008 between Magellan Midstream Partners, L.P. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to Form 8-A filed December 5, 2008).
|
|
|
|
*(r)
|
|
Amendment No. 1 dated as of March 3, 2009 to Unit Purchase Rights Agreement dated as of December 4, 2008 between Magellan Midstream Partners, L.P. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to Form 8-K filed March 4, 2009).
|
|
|
|
*(s)
|
|
Asset Purchase Agreement dated as of June 18, 2009 between Longhorn Partners Pipeline, L.P. and Magellan Midstream Partners, L.P. (filed as Exhibit 10.1 to Form 8-K filed July 29, 2009).
|
|
|
|
*(t)
|
|
IDR Entity Assumption Agreement dated September 28, 2009 by and among Magellan Midstream Partners, L.P., Magellan IDR LP, LLC and Magellan IDR, L.P. (filed as Exhibit 10.1 to Form 8-K filed September 30, 2009).
|
|
|
|
*(u)
|
|
Contribution and Assumption Agreement dated September 28, 2009 by and among Magellan Midstream Partners, L.P., Magellan GP, LLC, Magellan Midstream Holdings, L.P., Magellan Midstream Holdings GP, LLC and MGG GP Holdings, LLC (filed as Exhibit 10.2 to Form 8-K filed September 30, 2009).
|
|
|
|
(v)
|
|
Form of 2011 Phantom Unit Agreement for awards granted pursuant to the Magellan Midstream Partners Long-Term Incentive Plan.
|
|
|
|
*(w)
|
|
Cushing and South Houston Asset Purchase Agreement by and between BP Pipelines (North America), Inc. and Magellan Pipeline Company, L.P. dated July 12, 2010 (filed as Exhibit 10.1 to Form 10-Q filed August 3, 2010).
|
|
|
|
Exhibit 12
|
|
Ratio of earnings to fixed charges.
|
|
|
|
Exhibit 14
|
|
|
|
|
|
(a)
|
|
Code of Ethics dated February 1, 2011 by Michael N. Mears, principal executive officer.
|
|
|
|
(b)
|
|
Code of Ethics dated February 1, 2011 by John D. Chandler, principal financial and accounting officer.
|
|
|
|
Exhibit 21
|
|
Subsidiaries of Magellan Midstream Partners, L.P.
|
|
|
|
Exhibit 23
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
Exhibit 31
|
|
|
|
|
|
(a)
|
|
Certification of Michael N. Mears, principal executive officer.
|
|
|
|
(b)
|
|
Certification of John D. Chandler, principal financial officer.
|
|
|
|
Exhibit 32
|
|
|
|
|
|
(a)
|
|
Section 1350 Certification of Michael N. Mears, Chief Executive Officer.
|
|
|
|
(b)
|
|
Section 1350 Certification of John D. Chandler, Chief Financial Officer.
|
|
|
|
Exhibit 101-INS
|
|
XBRL Instance Document.
|
|
|
|
Exhibit 101.SCH
|
|
XBRL Taxonomy Extension Schema.
|
|
|
|
Exhibit 101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
Exhibit 101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
Exhibit 101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
Exhibit 101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
|
|
|
M
AGELLAN
M
IDSTREAM
P
ARTNERS
, L.P.
(Registrant)
|
||
|
|
|
By:
|
|
M
AGELLAN
GP, LLC, its general partner
|
|
|
|
By:
|
|
/s/ J
OHN
D. C
HANDLER
|
|
|
John D. Chandler
Senior Vice President
and Chief Financial Officer
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ M
ICHAEL
N. M
EARS
|
|
Chairman of the Board and Principal Executive Officer of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 25, 2011
|
Michael N. Mears
|
|
|
|
|
|
|
|
||
/s/ J
OHN
D. C
HANDLER
|
|
Principal Financial and Accounting Officer of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 25, 2011
|
John D. Chandler
|
|
|
|
|
|
|
|
||
/s/ W
ALTER
R. A
RNHEIM
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 25, 2011
|
Walter R. Arnheim
|
|
|
|
|
|
|
|
||
/s/ R
OBERT
G. C
ROYLE
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 25, 2011
|
Robert G. Croyle
|
|
|
|
|
|
|
|
||
/s/ P
ATRICK
C. E
ILERS
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 25, 2011
|
Patrick C. Eilers
|
|
|
|
|
|
|
|
||
/s/ J
AMES
C. K
EMPNER
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 25, 2011
|
James C. Kempner
|
|
|
|
|
|
|
|
||
/s/ J
AMES
R. M
ONTAGUE
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 25, 2011
|
James R. Montague
|
|
|
|
|
|
|
|
||
/s/ B
ARRY
R. P
EARL
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 25, 2011
|
Barry R. Pearl
|
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
Exhibit 2
|
|
|
|
|
|
*(a)
|
|
Agreement Relating to Simplification of Capital Structure dated as of March 3, 2009 by and among Magellan Midstream Partners, L.P., Magellan GP, LLC, Magellan Midstream Holdings, L.P. and Magellan Midstream Holdings GP, LLC (filed as Exhibit 2.1 to Form 8-K filed March 4, 2009).
|
|
|
|
*(b)
|
|
Amendment No. 1 dated as of August 6, 2009 to the Agreement Relating to Simplification of Capital Structure dated as of March 3, 2009 by and among Magellan Midstream Partners, L.P., Magellan GP, LLC, Magellan Midstream Holdings, L.P. and Magellan Midstream Holdings GP, LLC (filed as Exhibit 2.1 to Form 8-K filed August 10, 2009).
|
|
|
|
Exhibit 3
|
|
|
|
|
|
*(a)
|
|
Certificate of Limited Partnership of Magellan Midstream Partners, L.P. dated August 30, 2000, as amended on November 15, 2002 and August 12, 2003 (filed as Exhibit 3.1 to Form 10-Q filed November 10, 2003 (File No. 001-16335/03989347)).
|
|
|
|
*(b)
|
|
Fifth Amended and Restated Agreement of Limited Partnership of Magellan Midstream Partners, L.P. dated September 28, 2009 (filed as Exhibit 3.1 to Form 8-K filed September 30, 2009).
|
|
|
|
*(c)
|
|
Amended and Restated Certificate of Formation of Magellan GP, LLC dated November 15, 2002, as amended on August 12, 2003 (filed as Exhibit 3(f) to Form 10-K filed March 10, 2004 (File No. 001-16335/04660853)).
|
|
|
|
*(d)
|
|
Third Amended and Restated Limited Liability Company Agreement of Magellan GP, LLC dated September 28, 2009 (filed as Exhibit 3.2 to Form 8-K filed September 30, 2009).
|
|
|
|
Exhibit 4
|
|
|
|
|
|
*(a)
|
|
Fifth Amended and Restated Agreement of Limited Partnership of Magellan Midstream Partners, L.P. dated September 28, 2009 (filed as Exhibit 3.1 to Form 8-K filed September 30, 2009).
|
|
|
|
*(b)
|
|
Unit Purchase Rights Agreement dated as of December 4, 2008 between Magellan Midstream Partners, L.P. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to Form 8-A filed December 5, 2008).
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
*(c)
|
|
Amendment No. 1 dated as of March 3, 2009 to Unit Purchase Rights Agreement dated as of December 4, 2008 between Magellan Midstream Partners, L.P. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to Form 8-K filed March 4, 2009).
|
|
|
|
*(d)
|
|
Indenture dated as of May 25, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.1 to Form 8-K filed May 25, 2004 (File No. 001-16335/04829044)).
|
|
|
|
*(e)
|
|
First Supplemental Indenture dated as of May 25, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.2 to Form 8-K filed May 25, 2004 (File No. 001-16335/04829044)).
|
|
|
|
*(f)
|
|
Second Supplemental Indenture dated as of October 15, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.1 to Form 8-K filed October 15, 2004 (File No. 001-16335/041080163)).
|
|
|
|
*(g)
|
|
Indenture dated as of April 19, 2007 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Form 8-K filed April 20, 2007).
|
|
|
|
*(h)
|
|
First Supplemental Indenture dated as of April 19, 2007 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed April 20, 2007).
|
|
|
|
*(i)
|
|
Second Supplemental Indenture dated as of July 14, 2008 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed July 14, 2008).
|
|
|
|
*(j)
|
|
Third Supplemental Indenture dated as of June 26, 2009 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed June 26, 2009).
|
|
|
|
*(k)
|
|
Indenture dated as of August 11, 2010 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Form 8-K filed August 16, 2010).
|
|
|
|
*(l)
|
|
First Supplemental Indenture dated as of August 11, 2010 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed August 16, 2010).
|
|
|
|
Exhibit 10
|
|
|
|
|
|
(a)
|
|
Amended and Restated Magellan Midstream Partners Long-Term Incentive Plan dated October 20, 2010.
|
|
|
|
(b)
|
|
Description of Magellan 2011 Annual Incentive Program.
|
|
|
|
(c)
|
|
Magellan GP, LLC Non-Management Director Compensation Program effective January 1, 2011.
|
|
|
|
*(d)
|
|
Director Deferred Compensation Plan effective October 1, 2006 (filed as Exhibit 10.1 to Form 8-K filed October 4, 2006 (File No. 001-16335/061128415)).
|
|
|
|
*(e)
|
|
$550,000,000 Second Amended and Restated Credit Agreement dated as of September 20, 2007 among Magellan Midstream Partners, L.P., as Borrower, the Lenders party thereto and Wachovia Bank, N.A., as Administrative Agent (filed as Exhibit 10.1 to Form 8-K filed September 21, 2007).
|
|
|
|
*(f)
|
|
Amendment No. 1 dated as of December 4, 2009 to $550,000,000 Second Amended and Restated Credit Agreement dated as of September 20, 2007 among Magellan Midstream Partners, L.P., as Borrower, the Lenders party thereto and Wachovia Bank, N.A., as Administrative Agent (filed as Exhibit 10(f) to Form 10-K filed February 24, 2010).
|
|
|
|
*(g)
|
|
Amendment No. 2 dated as of September 17, 2010 to $550,000,000 Second Amended and Restated Credit Agreement dated as of September 20, 2007 among Magellan Midstream Partners, L.P., as Borrower, the Lenders party thereto and Wachovia Bank, N.A., as Administrative Agent (filed as Exhibit 10.5 to Form 10-Q filed November 2, 2010).
|
|
|
|
*(h)
|
|
Indenture dated as of May 25, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.1 to Form 8-K filed May 25, 2004 (File No. 001-16335/04829044)).
|
|
|
|
*(i)
|
|
First Supplemental Indenture dated as of May 25, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.2 to Form 8-K filed May 25, 2004 (File No. 001-16335/04829044)).
|
|
|
|
*(j)
|
|
Second Supplemental Indenture dated as of October 15, 2004 between Magellan Midstream Partners, L.P. and SunTrust Bank, as trustee (filed as Exhibit 4.1 to Form 8-K filed October 15, 2004 (File No. 001-16335/041080163)).
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
*(k)
|
|
Indenture dated as of April 19, 2007 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Form 8-K filed April 20, 2007).
|
|
|
|
*(l)
|
|
First Supplemental Indenture dated as of April 19, 2007 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed April 20, 2007).
|
|
|
|
*(m)
|
|
Second Supplemental Indenture dated as of July 14, 2008 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed July 14, 2008).
|
|
|
|
*(n)
|
|
Third Supplemental Indenture dated as of June 26, 2009 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed June 26, 2009).
|
|
|
|
*(o)
|
|
Indenture dated as of August 11, 2010 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Form 8-K filed August 16, 2010).
|
|
|
|
*(p)
|
|
First Supplemental Indenture dated as of August 11, 2010 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed August 16, 2010).
|
|
|
|
*(q)
|
|
Unit Purchase Rights Agreement dated as of December 4, 2008 between Magellan Midstream Partners, L.P. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to Form 8-A filed December 5, 2008).
|
|
|
|
*(r)
|
|
Amendment No. 1 dated as of March 3, 2009 to Unit Purchase Rights Agreement dated as of December 4, 2008 between Magellan Midstream Partners, L.P. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to Form 8-K filed March 4, 2009).
|
|
|
|
*(s)
|
|
Asset Purchase Agreement dated as of June 18, 2009 between Longhorn Partners Pipeline, L.P. and Magellan Midstream Partners, L.P. (filed as Exhibit 10.1 to Form 8-K filed July 29, 2009).
|
|
|
|
*(t)
|
|
IDR Entity Assumption Agreement dated September 28, 2009 by and among Magellan Midstream Partners, L.P., Magellan IDR LP, LLC and Magellan IDR, L.P. (filed as Exhibit 10.1 to Form 8-K filed September 30, 2009).
|
|
|
|
*(u)
|
|
Contribution and Assumption Agreement dated September 28, 2009 by and among Magellan Midstream Partners, L.P., Magellan GP, LLC, Magellan Midstream Holdings, L.P., Magellan Midstream Holdings GP, LLC and MGG GP Holdings, LLC (filed as Exhibit 10.2 to Form 8-K filed September 30, 2009).
|
|
|
|
(v)
|
|
Form of 2011 Phantom Unit Agreement for awards granted pursuant to the Magellan Midstream Partners Long-Term Incentive Plan.
|
|
|
|
*(w)
|
|
Cushing and South Houston Asset Purchase Agreement by and between BP Pipelines (North America), Inc. and Magellan Pipeline Company, L.P. dated July 12, 2010 (filed as Exhibit 10.1 to Form 10-Q filed August 3, 2010).
|
|
|
|
Exhibit 12
|
|
Ratio of earnings to fixed charges.
|
|
|
|
Exhibit 14
|
|
|
|
|
|
(a)
|
|
Code of Ethics dated February 1, 2011 by Michael N. Mears, principal executive officer.
|
|
|
|
(b)
|
|
Code of Ethics dated February 1, 2011 by John D. Chandler, principal financial and accounting officer.
|
|
|
|
Exhibit 21
|
|
Subsidiaries of Magellan Midstream Partners, L.P.
|
|
|
|
Exhibit 23
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
Exhibit 31
|
|
|
|
|
|
(a)
|
|
Certification of Michael N. Mears, principal executive officer.
|
|
|
|
(b)
|
|
Certification of John D. Chandler, principal financial officer.
|
|
|
|
Exhibit 32
|
|
|
|
|
|
(a)
|
|
Section 1350 Certification of Michael N. Mears, Chief Executive Officer.
|
|
|
|
(b)
|
|
Section 1350 Certification of John D. Chandler, Chief Financial Officer.
|
|
|
|
Exhibit 101-INS
|
|
XBRL Instance Document.
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
Exhibit 101.SCH
|
|
XBRL Taxonomy Extension Schema.
|
|
|
|
Exhibit 101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
Exhibit 101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
Exhibit 101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
Exhibit 101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
|
|
|
Metric
|
Weight
|
Threshold
|
Target
|
Stretch
|
|||||||||||
EBITDA less Maintenance Capital
(1) (2)
|
65
|
%
|
|
$
|
410
|
|
|
$
|
436
|
|
|
$
|
463
|
|
|
Commodities
(1)
|
10
|
%
|
|
$
|
67
|
|
|
$
|
87
|
|
|
$
|
105
|
|
|
Operational Performance
(3)
|
15
|
%
|
|
Discretionary
|
Discretionary
|
Discretionary
|
|||||||||
OSHA Incident Rate (IR)
(3)
|
5
|
%
|
|
2.00
|
|
|
1.00
|
|
|
0.70
|
|
|
|||
Human Error Releases
(3)
|
5
|
%
|
|
8
|
|
|
5
|
|
|
3
|
|
|
(1)
|
The overriding financial trigger will change the payout to at least a target level payout for the financial metrics when overall financial results have exceeded the trigger.
|
(2)
|
EBITDA less Maintenance Capital excludes commodities.
|
(3)
|
Payout will be zero if a fatality occurs related to activities under the control of Magellan.
|
|
Compensation
|
Timing of Payment
(1)
|
Annual Board Retainer
:
(2)
Cash
Common Units
|
$50,000
$70,000
(3)
|
Paid quarterly as of January 1
st
, April 1
st
, July 1
st
and October 1
st
As of January 1
st
|
Annual Chairman Retainer
:
(2)
Audit Committee
Compensation Committee
Conflicts Committee
Presiding Director
|
$15,000
$10,000
$10,000
$5,000
|
Paid quarterly as of January 1
st
, April 1
st
, July 1
st
and October 1
st
|
Meeting Fees
:
Board Meeting Fees
Committee Meeting Fees
|
$1,500 per meeting
$1,500 per meeting
|
Paid quarterly as of January 1
st
, April 1
st
, July 1
st
and October 1
st
|
(1)
|
For newly elected directors or a newly appointed committee chairman, the annual board retainer and annual chairman retainer, if applicable, are payable pro-rata for the year of election.
|
(2)
|
Directors who resign from the board or relinquish their role of committee chairman after a payment date has occurred, but prior to the payment having been received, will receive a pro-rata annual board retainer and annual chairman retainer for the period of time between the payment date and the resignation/relinquishment.
|
(3)
|
The number of common units to be issued for the annual board retainer will be determined based on the closing price on the first business day immediately following the January 1
st
payment date.
|
1.
|
Grant of Phantom Units
. The Company hereby grants to the Participant effective February 14, 2011 (the “Effective Date”), subject to the terms and conditions of the Magellan Midstream Partners Long-Term Incentive Plan, as amended and restated (the “Plan”) and this Agreement, the right to be eligible to receive a target grant of
[number of units]
Phantom Units with tandem distribution equivalent rights (“DERs”), of Magellan Midstream Partners, L.P. (the “Partnership”). The number of Units received at the end of the Restricted Period (as defined herein) will be determined based on Performance Criteria (as defined herein), employment status at that time and any other relevant provisions of the Plan and this Agreement. These Units, including the tandem DERs, are referred to in this Agreement as “Phantom Units” during the Restricted Period. Until the Phantom Units vest and are paid, the Participant shall have no rights as a unitholder of the Partnership with respect to the Phantom Units.
|
2.
|
Incorporation of Plan
. The Plan is hereby incorporated herein by reference and all capitalized terms used herein but not defined herein shall have the meaning set forth in the Plan. The Participant acknowledges receipt of a copy of the Plan and hereby accepts the Phantom Units subject to all the terms and provisions of the Plan and this Agreement.
|
3.
|
Compensation Committee of the Board Decisions and Interpretations
. The Participant hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Compensation Committee of the Board (the “Committee”) of the Company upon any questions arising under the Plan and this Agreement.
|
4.
|
Restricted Period of Phantom Units
. The Restricted Period begins with the Effective Date and ends with the first of the following events:
|
a.
|
December 31, 2013; or
|
b.
|
Your Termination of Affiliation (excluding any transfer to an Affiliate of the Company) with the Company, voluntarily for Good Reason, or involuntarily (other than due to Cause) within two years following a Change of Control as set forth in the Plan.
|
5.
|
Payment of Phantom Units
. To be eligible to receive payment of the Phantom Units at the end of the Restricted Period, the Participant must be employed by the Company or its Affiliates at the end of the Restricted Period, or must have terminated employment during the Restricted Period due to Retirement, death, or Disability. The final determination of the payout levels will be based upon the performance metrics outlined in Paragraph 7 below. In addition, at the end of the Restricted Period the Company will pay to the Participant the value of the DERs on the gross number of Units received pursuant to the terms of this Agreement. The value of the DERs shall be the amount of all distributions per Unit that would have been paid during the Restricted Period on the gross number of Units received, and no interest shall be paid on such amount. Such payment of DERs shall be in a number of additional Units equal to the value of the DERs divided by the closing price of the Units at the end of the
|
6.
|
Termination of Employment Due to Retirement, Death or Disability
. In the event a Participant's employment with the Company or its Affiliates terminates prior to the end of the Restricted Period due to Retirement, death or Disability, the initial target grant of Phantom Units will be prorated based upon the Participant's months of employment between January 1, 2011 and December 31, 2013. Such prorated amount will continue to be restricted and subject to the terms of this Agreement until the Restricted Period ends as provided in Section 4.a above. All Phantom Units in excess of the prorated amount shall be forfeited.
|
7.
|
Performance Metric
.
|
|
Threshold
|
Target
|
Stretch
|
2013 Distributable Cash Flow per Unit
|
XXXX
|
XXXX
|
XXXX
|
(excluding commodities)
|
|
|
|
|
|
|
|
8.
|
Determination of Payout Level
|
(i)
|
The number of Units awarded will be determined based on performance relative to the performance metric as follows:
|
Below Threshold
|
No payout
|
Target Achieved
|
100% of Units are paid out
|
Stretch Achieved
|
200% of Units are paid out
|
The payout for results between threshold, target and stretch will be interpolated.
|
|
|
(ii)
|
The number of Units awarded will be subject to an increase or reduction of up to 20% based upon personal performance of Participant.
|
9.
|
Other Provisions
.
|
a.
|
The Participant understands and agrees that payments under this Agreement shall not be used for, or in the determination of, any other payment or benefit under any continuing agreement, plan, policy, practice or arrangement providing for the making of any payment or the provision of any benefits to or for the Participant or the Participant's beneficiaries or representatives, including, without limitation, any employment agreement, any change of control severance protection plan or any employee benefit plan as defined in Section 3(3) of ERISA, including, but not limited to qualified and non-qualified retirement plans.
|
b.
|
Except as otherwise provided herein, and in the Plan, in the event that the Participant's
|
c.
|
The Participant acknowledges that this award and similar awards are made on a selective basis and are, therefore, to be kept confidential.
|
d.
|
Neither the Phantom Units, nor the Participant's interest in the Phantom Units, may be sold, assigned, transferred, pledged or otherwise disposed of or encumbered at any time prior to the vesting and payment of such Phantom Units under this Agreement.
|
e.
|
If the Participant at any time forfeits any or all of the Phantom Units pursuant to this Agreement, the Participant agrees that all of the Participant's rights to and interest in the Phantom Units shall terminate upon forfeiture without payment of consideration.
|
f.
|
The Committee shall make the determination as to whether an event has occurred resulting in the forfeiture of the Phantom Units, in accordance with this Agreement and the Plan, and all determinations of the Committee shall be final and conclusive.
|
g.
|
With respect to the right to receive payment of the Phantom Units under this Agreement, nothing contained herein shall give the Participant any rights that are greater than those of a general creditor of the Company.
|
10.
|
Notices
. All notices to the Company required hereunder shall be in writing and delivered by hand or by mail, addressed to Magellan Midstream Partners, L.P., One Williams Center, Mail Drop 28-4, Tulsa, Oklahoma 74172, Attention: Compensation Department. Notices shall become effective upon their receipt by the Company if delivered in the forgoing manner.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
||||||||||
EARNINGS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income
taxes, extraordinary gain (loss) and cumulative
effect of change in accounting principle*
|
$
|
179,474
|
|
|
$
|
228,295
|
|
|
$
|
328,023
|
|
|
$
|
224,705
|
|
|
$
|
307,219
|
|
Add: Fixed charges
|
57,151
|
|
|
56,816
|
|
|
57,792
|
|
|
74,750
|
|
|
97,991
|
|
|||||
Amortization of interest capitalized
|
475
|
|
|
533
|
|
|
641
|
|
|
715
|
|
|
729
|
|
|||||
Distributed income of equity investees
|
4,125
|
|
|
3,800
|
|
|
5,200
|
|
|
4,558
|
|
|
4,853
|
|
|||||
Less: Interest capitalized
|
(2,371
|
)
|
|
(4,452
|
)
|
|
(4,803
|
)
|
|
(3,510
|
)
|
|
(2,943
|
)
|
|||||
Total earnings
|
$
|
238,854
|
|
|
$
|
284,992
|
|
|
$
|
386,853
|
|
|
$
|
301,218
|
|
|
$
|
407,849
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
FIXED CHARGES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
52,415
|
|
|
$
|
50,504
|
|
|
$
|
51,961
|
|
|
$
|
69,847
|
|
|
$
|
93,436
|
|
Interest capitalized
|
2,371
|
|
|
4,452
|
|
|
4,803
|
|
|
3,510
|
|
|
2,943
|
|
|||||
Debt amortization expense
|
1,925
|
|
|
1,554
|
|
|
767
|
|
|
1,112
|
|
|
1,401
|
|
|||||
Rent expense representative of interest factor
|
440
|
|
|
306
|
|
|
261
|
|
|
281
|
|
|
211
|
|
|||||
Total fixed charges
|
$
|
57,151
|
|
|
$
|
56,816
|
|
|
$
|
57,792
|
|
|
$
|
74,750
|
|
|
$
|
97,991
|
|
Ratio of earnings to fixed charges
|
4.2
|
|
|
5.0
|
|
|
6.7
|
|
|
4.0
|
|
|
4.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
1)
|
Registration Statement (Form S-3 No. 333-162929) of Magellan Midstream Partners, L.P.,
|
|
2)
|
Registration Statement (Form S-8 No. 333-71670) pertaining to the Magellan Midstream Partners Long-Term Incentive Plan, and
|
|
3)
|
Registration Statement (Form S-8 No. 333-147206) pertaining to the Magellan Midstream Partners Long-Term Incentive Plan;
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ending December 31, 2010 (this “report”) of Magellan Midstream Partners, L.P. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Michael N. Mears
|
Michael N. Mears, principal executive officer
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ending December 31, 2010 (this “report”) of Magellan Midstream Partners, L.P. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ John D. Chandler
|
John D. Chandler, principal financial and accounting officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
/s/ Michael N. Mears
|
Michael N. Mears, Chief Executive Officer
|
Date: February 25, 2011
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
/s/ John D. Chandler
|
John D. Chandler, Chief Financial Officer
|
Date: February 25, 2011
|