x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission file number 1-16335
|
Delaware
|
|
73-1599053
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(State or other jurisdiction of
incorporation or organization)
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|
(I.R.S. Employer
Identification No.)
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Magellan GP, LLC
P.O. Box 22186, Tulsa, Oklahoma
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74121-2186
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on
Which Registered
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Common Units representing limited
partnership interests
|
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New York Stock Exchange
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Page
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PART I
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II
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ITEM 5.
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ITEM 6.
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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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PART III
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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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ITEM 15.
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•
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our refined products segment, comprised of our
9,700
-mile refined products pipeline system with
53
terminals as well as
26
independent terminals not connected to our pipeline system and our
1,100
-mile ammonia pipeline system;
|
•
|
our crude oil segment, comprised of approximately
2,200
miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately
26
million barrels, of which
16
million are used for contract storage; and
|
•
|
our marine storage segment, consisting of
five
marine terminals located along coastal waterways with an aggregate storage capacity of approximately
26
million barrels.
|
•
|
refined products
are the output from refineries and are primarily used as fuels by consumers. Refined products include gasoline, diesel fuel, aviation fuel, kerosene and heating oil. Collectively, diesel fuel and heating oil are referred to as distillates;
|
•
|
liquefied petroleum gases or LPGs
are produced as by-products of the crude oil refining process and in connection with natural gas production. LPGs include butane and propane;
|
•
|
blendstocks
are blended with refined products to change or enhance their characteristics such as increasing a gasoline’s octane or oxygen content. Blendstocks include alkylates, oxygenates and natural gasoline;
|
•
|
heavy oils and feedstocks
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;
|
•
|
crude oil and condensate
are used as feedstocks by refineries and petrochemical facilities;
|
•
|
biofuels,
such as ethanol and biodiesel, are typically blended with other refined products as required by government mandates; and
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•
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ammonia
is primarily used as a nitrogen fertilizer.
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Year Ended December 31,
|
||||
|
|
2014
|
|
2015
|
|
2016
|
Percent of consolidated revenue
|
|
77%
|
|
73%
|
|
71%
|
Percent of consolidated operating margin
|
|
68%
|
|
61%
|
|
57%
|
Percent of consolidated total assets
|
|
52%
|
|
50%
|
|
49%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2014
|
|
2015
|
|
2016
|
|||
Shipments (million barrels):
|
|
|
|
|
|
|
|||
Gasoline
|
|
256.1
|
|
|
268.1
|
|
|
275.4
|
|
Distillates
|
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163.1
|
|
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152.5
|
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|
150.2
|
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Aviation fuel
|
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23.0
|
|
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21.2
|
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25.7
|
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LPGs
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9.9
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|
|
9.7
|
|
|
10.4
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Total shipments
|
|
452.1
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|
|
451.5
|
|
|
461.7
|
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Company
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Refinery Location
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Calumet Specialty Products
|
|
Superior, WI
|
CHS
|
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McPherson, KS
|
CVR Energy
|
|
Coffeyville, KS
|
CVR Energy
|
|
Wynnewood, OK
|
Flint Hills Resources
|
|
Rosemount, MN
|
HollyFrontier
|
|
El Dorado, KS
|
HollyFrontier
|
|
Tulsa, OK
|
HollyFrontier
|
|
Cheyenne, WY
|
Marathon
|
|
Galveston Bay, TX
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Marathon
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|
Texas City, TX
|
Phillips 66
|
|
Ponca City, OK
|
Sinclair
|
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Evansville, WY
|
Suncor Energy
|
|
Commerce City, CO
|
Valero
|
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Ardmore, OK
|
Valero
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Houston, TX
|
Valero
|
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Texas City, TX
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Western Refining
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St. Paul, MN
|
Western Refining
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El Paso, TX
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Wyoming Refining
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Newcastle, WY
|
|
|
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Pipeline/Terminal
|
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Connection Location
|
|
Source of Product
|
|
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|
BP
|
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Manhattan, IL
|
|
Whiting, IN refinery
|
CHS
|
|
Fargo, ND
|
|
Laurel, MT refinery
|
Explorer
|
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Glenpool, OK; Mt. Vernon, MO; Dallas, TX; East Houston, TX
|
|
Various Gulf Coast refineries
|
Holly Energy Partners
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Duncan, OK; El Paso, TX
|
|
Big Spring, TX refinery, Artesia, NM refinery
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Kinder Morgan
|
|
Galena Park and Pasadena, TX
|
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Various Gulf Coast refineries and imports
|
Magellan Terminals Holdings
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Galena Park, TX
|
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Various Gulf Coast refineries and imports
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Mid-America (Enterprise)
|
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El Dorado, KS
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Conway, KS storage
|
NuStar Energy
|
|
El Dorado, KS; Minneapolis, MN; Denver, CO
|
|
Various OK & KS refineries, Mandan, ND refinery, McKee, TX refinery
|
ONEOK Partners
|
|
Plattsburg, MO; Des Moines, IA; Wayne, IL
|
|
Bushton, KS storage and Chicago, IL area refineries
|
Phillips 66
|
|
Kansas City, KS; Denver, CO; Casper, WY; Pasadena, TX
|
|
Borger, TX refinery, various Billings, MT area refineries, Sweeney, TX refinery
|
Shell
|
|
East Houston, TX
|
|
Deer Park, TX refinery
|
|
|
Year Ended December 31,
|
||||
|
|
2014
|
|
2015
|
|
2016
|
Percent of consolidated revenue
|
|
15%
|
|
19%
|
|
20%
|
Percent of consolidated operating margin
|
|
23%
|
|
30%
|
|
32%
|
Percent of consolidated total assets
|
|
35%
|
|
38%
|
|
39%
|
|
|
Year Ended December 31,
|
||||
|
|
2014
|
|
2015
|
|
2016
|
Percent of consolidated revenue
|
|
8%
|
|
8%
|
|
9%
|
Percent of consolidated operating margin
|
|
9%
|
|
9%
|
|
10%
|
Percent of consolidated total assets
|
|
12%
|
|
11%
|
|
12%
|
•
|
an increase or decrease in the market prices of petroleum products, which may reduce supply or demand. 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. For example, legislation was passed in 2015 that removed the ban on crude oil exports from the U.S., which could impact the demand for our services in ways that we are unable to predict or control;
|
•
|
higher fuel taxes or other governmental or regulatory actions that increase the cost of the products we handle;
|
•
|
an increase in transportation 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. For example, the National Highway Traffic Safety Administration and the EPA finalized standards for passenger cars and light trucks manufactured in model years beginning in 2017 that will require significant increases in fuel efficiency. These standards are intended to reduce demand for petroleum products, and could reduce demand for our services; and
|
•
|
an increase in the use of alternative fuel sources, such as ethanol, biodiesel, natural gas, fuel cells, solar, electric and battery-powered engines. Current laws require a significant increase in the quantity of ethanol and biodiesel used in transportation fuels between now and 2022. Increases in domestic natural gas
|
•
|
We were conducting business in a state but had not complied with that particular state’s partnership statute; or
|
•
|
Our unitholders’ rights to act with other unitholders to remove or replace the general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute “control” of our business.
|
•
|
provides that whenever our general partner is permitted or required to make a decision, in its capacity as our general partner, our general partner is permitted or required to make such a decision in good faith and will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation;
|
•
|
provides that our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners resulting from any act or omission if our general partner or its officers and directors, as the case may be, acted in good faith; and
|
•
|
provides that, in the absence of bad faith, our general partner will not be in breach of its obligations under our partnership agreement or its fiduciary duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest is approved in accordance with, or otherwise meets the standards set forth in, our partnership agreement.
|
Item 1B.
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Unresolved Staff Comments
|
Item 2.
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Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
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Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
2015
|
|
2016
|
||||||||||||||||||||
Quarter
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|
High
|
|
Low
|
|
Distribution*
|
|
High
|
|
Low
|
|
Distribution*
|
||||||||||||
1
st
|
|
$
|
85.85
|
|
|
$
|
72.90
|
|
|
$
|
0.7175
|
|
|
$
|
72.00
|
|
|
$
|
55.25
|
|
|
$
|
0.8025
|
|
2
nd
|
|
$
|
85.49
|
|
|
$
|
73.36
|
|
|
$
|
0.7400
|
|
|
$
|
77.45
|
|
|
$
|
63.40
|
|
|
$
|
0.8200
|
|
3
rd
|
|
$
|
76.04
|
|
|
$
|
55.05
|
|
|
$
|
0.7625
|
|
|
$
|
77.10
|
|
|
$
|
67.34
|
|
|
$
|
0.8375
|
|
4
th
|
|
$
|
70.26
|
|
|
$
|
54.51
|
|
|
$
|
0.7850
|
|
|
$
|
75.92
|
|
|
$
|
64.25
|
|
|
$
|
0.8550
|
|
*
|
Represents declared distributions associated with each respective quarter. Distributions were declared and paid within 45 days following the close of each quarter.
|
|
|
12/31/2011
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
Magellan Midstream Partners, L.P.
|
|
$100
|
|
$131
|
|
$200
|
|
$270
|
|
$231
|
|
$270
|
Alerian MLP Index
|
|
$100
|
|
$105
|
|
$134
|
|
$140
|
|
$94
|
|
$112
|
S&P 500
|
|
$100
|
|
$116
|
|
$154
|
|
$175
|
|
$177
|
|
$198
|
Item 6.
|
Selected Financial Data
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||
|
|
(in thousands, except per unit amounts)
|
||||||||||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transportation and terminals revenue
|
|
$
|
1,016,166
|
|
|
$
|
1,188,452
|
|
|
$
|
1,459,267
|
|
|
$
|
1,544,746
|
|
|
$
|
1,591,119
|
|
Product sales revenue
|
|
799,382
|
|
|
744,669
|
|
|
878,974
|
|
|
629,836
|
|
|
599,602
|
|
|||||
Affiliate management fee revenue
|
|
1,948
|
|
|
14,609
|
|
|
22,111
|
|
|
13,871
|
|
|
14,689
|
|
|||||
Total revenue
|
|
1,817,496
|
|
|
1,947,730
|
|
|
2,360,352
|
|
|
2,188,453
|
|
|
2,205,410
|
|
|||||
Operating expenses
|
|
373,876
|
|
|
396,194
|
|
|
500,901
|
|
|
525,902
|
|
|
529,759
|
|
|||||
Cost of product sales
|
|
657,108
|
|
|
578,029
|
|
|
594,585
|
|
|
447,273
|
|
|
493,338
|
|
|||||
Earnings of non-controlled entities
|
|
(2,961
|
)
|
|
(6,275
|
)
|
|
(19,394
|
)
|
|
(66,483
|
)
|
|
(78,696
|
)
|
|||||
Operating margin
|
|
789,473
|
|
|
979,782
|
|
|
1,284,260
|
|
|
1,281,761
|
|
|
1,261,009
|
|
|||||
Depreciation and amortization expense
|
|
128,012
|
|
|
142,230
|
|
|
161,741
|
|
|
166,812
|
|
|
178,142
|
|
|||||
G&A expense
|
|
109,403
|
|
|
132,496
|
|
|
148,288
|
|
|
151,329
|
|
|
147,815
|
|
|||||
Operating profit
|
|
552,058
|
|
|
705,056
|
|
|
974,231
|
|
|
963,620
|
|
|
935,052
|
|
|||||
Interest expense, net
|
|
113,766
|
|
|
118,206
|
|
|
121,519
|
|
|
143,177
|
|
|
165,410
|
|
|||||
Gain on exchange of interest in non-controlled entity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,144
|
)
|
|||||
Other expense (income)
(a)
|
|
—
|
|
|
—
|
|
|
8,573
|
|
|
(1,015
|
)
|
|
(8,203
|
)
|
|||||
Income before provision for income taxes
|
|
438,292
|
|
|
586,850
|
|
|
844,139
|
|
|
821,458
|
|
|
805,989
|
|
|||||
Provision for income taxes
|
|
2,622
|
|
|
4,613
|
|
|
4,620
|
|
|
2,336
|
|
|
3,218
|
|
|||||
Net income
|
|
$
|
435,670
|
|
|
$
|
582,237
|
|
|
$
|
839,519
|
|
|
$
|
819,122
|
|
|
$
|
802,771
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic net income per limited partner unit
|
|
$
|
1.92
|
|
|
$
|
2.57
|
|
|
$
|
3.69
|
|
|
$
|
3.60
|
|
|
$
|
3.52
|
|
Diluted net income per limited partner unit
|
|
$
|
1.92
|
|
|
$
|
2.56
|
|
|
$
|
3.69
|
|
|
$
|
3.59
|
|
|
$
|
3.52
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital (deficit)
(b)
|
|
$
|
307,658
|
|
|
$
|
(241,543
|
)
|
|
$
|
(133,488
|
)
|
|
$
|
(374,218
|
)
|
|
$
|
(111,262
|
)
|
Total assets
|
|
$
|
4,404,987
|
|
|
$
|
4,803,307
|
|
|
$
|
5,501,409
|
|
|
$
|
6,041,567
|
|
|
$
|
6,772,073
|
|
Long-term debt, net
|
|
$
|
2,378,328
|
|
|
$
|
2,417,811
|
|
|
$
|
2,967,019
|
|
|
$
|
3,189,287
|
|
|
$
|
4,087,192
|
|
Owners’ equity
|
|
$
|
1,515,702
|
|
|
$
|
1,647,442
|
|
|
$
|
1,868,233
|
|
|
$
|
2,021,736
|
|
|
$
|
2,092,105
|
|
Cash Distribution Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash distributions declared per unit
(c)
|
|
$
|
1.88
|
|
|
$
|
2.18
|
|
|
$
|
2.62
|
|
|
$
|
3.01
|
|
|
$
|
3.32
|
|
Cash distributions paid per unit
(c)
|
|
$
|
1.78
|
|
|
$
|
2.10
|
|
|
$
|
2.51
|
|
|
$
|
2.92
|
|
|
$
|
3.25
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||
|
|
(in thousands, except operating statistics)
|
||||||||||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating margin:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Refined products
|
|
$
|
592,828
|
|
|
$
|
693,985
|
|
|
$
|
870,205
|
|
|
$
|
777,021
|
|
|
$
|
722,880
|
|
Crude oil
|
|
91,367
|
|
|
176,420
|
|
|
295,830
|
|
|
381,365
|
|
|
408,093
|
|
|||||
Marine storage
|
|
102,323
|
|
|
106,198
|
|
|
114,712
|
|
|
119,524
|
|
|
125,081
|
|
|||||
Allocated partnership depreciation costs
(d)
|
|
2,955
|
|
|
3,179
|
|
|
3,513
|
|
|
3,851
|
|
|
4,955
|
|
|||||
Operating margin
|
|
$
|
789,473
|
|
|
$
|
979,782
|
|
|
$
|
1,284,260
|
|
|
$
|
1,281,761
|
|
|
$
|
1,261,009
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA and distributable cash flow:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
$
|
435,670
|
|
|
$
|
582,237
|
|
|
$
|
839,519
|
|
|
$
|
819,122
|
|
|
$
|
802,771
|
|
Interest expense, net
(e)
|
|
113,766
|
|
|
118,206
|
|
|
121,519
|
|
|
143,177
|
|
|
165,410
|
|
|||||
Depreciation and amortization
|
|
128,012
|
|
|
142,230
|
|
|
161,741
|
|
|
166,812
|
|
|
178,142
|
|
|||||
Equity-based incentive compensation expense
(f)
|
|
8,038
|
|
|
11,823
|
|
|
12,471
|
|
|
6,461
|
|
|
4,982
|
|
|||||
Loss on sale and retirement of assets
|
|
12,622
|
|
|
7,835
|
|
|
7,223
|
|
|
7,871
|
|
|
11,190
|
|
|||||
Gain on exchange of interest in non-controlled entity
(h)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,144
|
)
|
|||||
Commodity-related adjustments
(g)
|
|
12,894
|
|
|
(339
|
)
|
|
(56,288
|
)
|
|
13,988
|
|
|
64,257
|
|
|||||
Cash distributions received from non-controlled entities in excess of (less than) earnings for the period
|
|
4,850
|
|
|
(409
|
)
|
|
(8,724
|
)
|
|
14,572
|
|
|
9,293
|
|
|||||
Other
(i)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,341
|
|
|||||
Adjusted EBITDA
|
|
715,852
|
|
|
861,583
|
|
|
1,077,461
|
|
|
1,172,003
|
|
|
1,213,242
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net, excluding debt issuance cost amortization
(e)
|
|
(111,679
|
)
|
|
(115,782
|
)
|
|
(119,186
|
)
|
|
(140,464
|
)
|
|
(162,251
|
)
|
|||||
Maintenance capital
(j)
|
|
(64,396
|
)
|
|
(76,081
|
)
|
|
(77,806
|
)
|
|
(88,685
|
)
|
|
(103,507
|
)
|
|||||
Distributable cash flow
|
|
$
|
539,777
|
|
|
$
|
669,720
|
|
|
$
|
880,469
|
|
|
$
|
942,854
|
|
|
$
|
947,484
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Refined products:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transportation revenue per barrel shipped
|
|
$
|
1.230
|
|
|
$
|
1.313
|
|
|
$
|
1.399
|
|
|
$
|
1.439
|
|
|
$
|
1.473
|
|
Volume shipped (million barrels):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gasoline
|
|
223.7
|
|
|
239.7
|
|
|
256.1
|
|
|
268.1
|
|
|
275.4
|
|
|||||
Distillates
|
|
136.7
|
|
|
146.5
|
|
|
163.1
|
|
|
152.5
|
|
|
150.2
|
|
|||||
Aviation fuel
|
|
21.5
|
|
|
21.1
|
|
|
23.0
|
|
|
21.2
|
|
|
25.7
|
|
|||||
Liquefied petroleum gases
|
|
8.5
|
|
|
7.8
|
|
|
9.9
|
|
|
9.7
|
|
|
10.4
|
|
|||||
Total volume shipped
|
|
390.4
|
|
|
415.1
|
|
|
452.1
|
|
|
451.5
|
|
|
461.7
|
|
|||||
Crude oil:
(k)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Magellan 100%-owned assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transportation revenue per barrel shipped
|
|
$
|
0.305
|
|
|
$
|
0.880
|
|
|
$
|
1.192
|
|
|
$
|
1.118
|
|
|
$
|
1.321
|
|
Volume shipped (million barrels)
|
|
72.0
|
|
|
113.2
|
|
|
185.5
|
|
|
209.9
|
|
|
187.0
|
|
|||||
Crude oil terminal average utilization (million barrels per month)
|
|
12.6
|
|
|
12.3
|
|
|
12.2
|
|
|
13.1
|
|
|
15.0
|
|
|||||
Select joint venture pipelines:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
BridgeTex - volume shipped (million barrels)
(l)
|
|
—
|
|
|
—
|
|
|
18.3
|
|
|
75.2
|
|
|
79.0
|
|
|||||
Saddlehorn - volume shipped (million barrels)
(m)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.2
|
|
|||||
Marine storage:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marine terminal average utilization (million barrels per month)
|
|
23.8
|
|
|
23.0
|
|
|
22.9
|
|
|
24.0
|
|
|
23.8
|
|
(a)
|
Other expense (income) includes the non-cash impact of the change in the differential between the current spot price and forward price on fair value hedges associated with our tank bottom assets. Additionally, other income for 2016 includes a break-up fee related to a potential acquisition.
|
(b)
|
Working capital deficit at December 31, 2013 and December 31, 2015 included the current portion of long-term debt of approximately $250 million.
|
(c)
|
Cash distributions declared were determined based on the distributable cash flow generated for 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.
|
(d)
|
Certain depreciation expense was allocated to our various business segments, which in turn recognized these allocated costs as operating expense, reducing segment operating margin by these amounts.
|
(e)
|
For the purpose of calculating DCF, we have excluded debt issuance cost amortization from interest expense.
|
(f)
|
Equity-based incentive compensation expense excludes the tax withholdings on settlement of equity-based incentive awards, which were paid in cash.
|
(g)
|
See
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Distributable Cash Flow
for a description of items included in our commodity-related adjustments.
|
(h)
|
In February 2016, we transferred our 50% membership interest in Osage to an affiliate of HollyFrontier Corporation (“HFC”). In conjunction with this transaction, we entered into several commercial agreements with affiliates of HFC, which were recorded as intangible assets and other receivables on our consolidated balance sheets. We recorded a $28.1 million non-cash gain in relation to this transaction.
|
(i)
|
Other adjustments in 2016 include certain payments received from HFC in conjunction with the transfer of our 50% membership interest in Osage in February 2016. HFC agreed to make certain payments to us until HFC completes a connection to our El Paso terminal. These payments replace distributions we would have received had the Osage transaction not occurred and are, therefore, included in our calculation of DCF. See
Note 4 – Investments in Non-Controlled Entities
in
Item 8. Financial Statements and Supplementary Data
of this report for further information about this transaction.
|
(j)
|
Maintenance capital expenditure projects maintain our existing assets and do not generate incremental DCF (i.e. incremental returns to our unitholders). For this reason, we deduct maintenance capital expenditures to determine DCF.
|
(k)
|
Before we converted our Longhorn pipeline to crude oil service in 2013, all of the volumes on our crude oil pipelines traveled short distances, and we charged a significantly lower tariff rate for such shipments than for the rest of our pipeline systems.
|
(l)
|
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by us and began operations in September 2014.
|
(m)
|
These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by us and began operations in September 2016.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
our refined products segment, comprised of our
9,700
-mile refined products pipeline system with
53
terminals as well as
26
independent terminals not connected to our pipeline system and our
1,100
-mile ammonia pipeline system;
|
•
|
our crude oil segment, comprised of approximately
2,200
miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately
26
million barrels, of which
16
million are used for contract storage; and
|
•
|
our marine storage segment, consisting of
five
marine terminals located along coastal waterways with an aggregate storage capacity of approximately
26
million barrels.
|
|
|
Year Ended December 31,
|
|
Variance
Favorable (Unfavorable)
|
|||||||||||
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Financial Highlights ($ in millions, except operating statistics)
|
|
|
|
|
|
|
|
|
|||||||
Transportation and terminals revenue:
|
|
|
|
|
|
|
|
|
|||||||
Refined products
|
|
$
|
974.5
|
|
|
$
|
1,002.4
|
|
|
$
|
27.9
|
|
|
3
|
%
|
Crude oil
|
|
394.1
|
|
|
407.8
|
|
|
13.7
|
|
|
3
|
%
|
|||
Marine storage
|
|
176.1
|
|
|
181.7
|
|
|
5.6
|
|
|
3
|
%
|
|||
Intersegment eliminations
|
|
—
|
|
|
(0.8
|
)
|
|
(0.8
|
)
|
|
n/a
|
|
|||
Total transportation and terminals revenue
|
|
1,544.7
|
|
|
1,591.1
|
|
|
46.4
|
|
|
3
|
%
|
|||
Affiliate management fee revenue
|
|
13.9
|
|
|
14.7
|
|
|
0.8
|
|
|
6
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Refined products
|
|
377.8
|
|
|
381.1
|
|
|
(3.3
|
)
|
|
(1
|
)%
|
|||
Crude oil
|
|
89.5
|
|
|
88.8
|
|
|
0.7
|
|
|
1
|
%
|
|||
Marine storage
|
|
62.5
|
|
|
65.7
|
|
|
(3.2
|
)
|
|
(5
|
)%
|
|||
Intersegment eliminations
|
|
(3.9
|
)
|
|
(5.8
|
)
|
|
1.9
|
|
|
49
|
%
|
|||
Total operating expenses
|
|
525.9
|
|
|
529.8
|
|
|
(3.9
|
)
|
|
(1
|
)%
|
|||
Product margin:
|
|
|
|
|
|
|
|
|
|||||||
Product sales
|
|
629.8
|
|
|
599.6
|
|
|
(30.2
|
)
|
|
(5
|
)%
|
|||
Cost of product sales
|
|
447.3
|
|
|
493.3
|
|
|
(46.0
|
)
|
|
(10
|
)%
|
|||
Product margin
|
|
182.5
|
|
|
106.3
|
|
|
(76.2
|
)
|
|
(42
|
)%
|
|||
Earnings of non-controlled entities
|
|
66.5
|
|
|
78.7
|
|
|
12.2
|
|
|
18
|
%
|
|||
Operating margin
|
|
1,281.7
|
|
|
1,261.0
|
|
|
(20.7
|
)
|
|
(2
|
)%
|
|||
Depreciation and amortization expense
|
|
166.8
|
|
|
178.1
|
|
|
(11.3
|
)
|
|
(7
|
)%
|
|||
G&A expense
|
|
151.3
|
|
|
147.8
|
|
|
3.5
|
|
|
2
|
%
|
|||
Operating profit
|
|
963.6
|
|
|
935.1
|
|
|
(28.5
|
)
|
|
(3
|
)%
|
|||
Interest expense (net of interest income and interest capitalized)
|
|
143.2
|
|
|
165.4
|
|
|
(22.2
|
)
|
|
(16
|
)%
|
|||
Gain on exchange of interest in non-controlled entity
|
|
—
|
|
|
(28.1
|
)
|
|
28.1
|
|
|
n/a
|
|
|||
Other expense (income)
|
|
(1.0
|
)
|
|
(8.2
|
)
|
|
7.2
|
|
|
(720
|
)%
|
|||
Income before provision for income taxes
|
|
821.4
|
|
|
806.0
|
|
|
(15.4
|
)
|
|
(2
|
)%
|
|||
Provision for income taxes
|
|
2.3
|
|
|
3.2
|
|
|
(0.9
|
)
|
|
(39
|
)%
|
|||
Net income
|
|
$
|
819.1
|
|
|
$
|
802.8
|
|
|
$
|
(16.3
|
)
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Statistics
|
|
|
|
|
|
|
|
|
|||||||
Refined products:
|
|
|
|
|
|
|
|
|
|||||||
Transportation revenue per barrel shipped
|
|
$
|
1.439
|
|
|
$
|
1.473
|
|
|
|
|
|
|||
Volume shipped (million barrels):
|
|
|
|
|
|
|
|
|
|||||||
Gasoline
|
|
268.1
|
|
|
275.4
|
|
|
|
|
|
|||||
Distillates
|
|
152.5
|
|
|
150.2
|
|
|
|
|
|
|||||
Aviation fuel
|
|
21.2
|
|
|
25.7
|
|
|
|
|
|
|||||
Liquefied petroleum gases
|
|
9.7
|
|
|
10.4
|
|
|
|
|
|
|||||
Total volume shipped
|
|
451.5
|
|
|
461.7
|
|
|
|
|
|
|||||
Crude oil:
|
|
|
|
|
|
|
|
|
|||||||
Magellan 100%-owned assets:
|
|
|
|
|
|
|
|
|
|||||||
Transportation revenue per barrel shipped
|
|
$
|
1.118
|
|
|
$
|
1.321
|
|
|
|
|
|
|||
Volumes shipped (million barrels)
|
|
209.9
|
|
|
187.0
|
|
|
|
|
|
|||||
Crude oil terminal average utilization (million barrels per month)
|
|
13.1
|
|
|
15.0
|
|
|
|
|
|
|||||
Select joint venture pipelines:
|
|
|
|
|
|
|
|
|
|||||||
BridgeTex - volume shipped (million barrels)
(a)
|
|
75.2
|
|
|
79.0
|
|
|
|
|
|
|||||
Saddlehorn - volume shipped (million barrels)
(b)
|
|
—
|
|
|
5.2
|
|
|
|
|
|
|||||
Marine storage:
|
|
|
|
|
|
|
|
|
|||||||
Marine terminal average utilization (million barrels per month)
|
|
24.0
|
|
|
23.8
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
(a)
|
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by us.
|
(b)
|
These volumes reflect the total shipments for the Saddlehorn pipeline, which began operations in September 2016 and is owned 40% by us.
|
•
|
an increase in refined products revenue of
$27.9
million. Transportation revenue was favorably impacted by the mid-year 2015 tariff rate increase of 4.6% and the mid-year 2016 increase which averaged approximately 2.0% across all of our markets. Shipments increased 2% in 2016 primarily associated with additional volumes from recent growth projects, including our Little Rock pipeline extension which commenced commercial operations in July 2016, and increased demand for gasoline and aviation fuel. Additionally, revenue from storage services along our pipeline system increased due to new customer contracts;
|
•
|
an increase in crude oil revenue of
$13.7
million primarily due to higher average rates, as well as new storage contracts. Overall crude oil shipments declined and average rate per barrel increased due to fewer barrels moving on our lower-priced Houston distribution system tariff structure to their ultimate destination. Instead, customers utilized space available on our capacity lease for shipments from the BridgeTex pipeline; and
|
•
|
an increase in marine storage revenue of
$5.6
million primarily due to higher average rates from contract renewals and escalations. Total utilization decreased slightly due in part to timing of project work to convert tanks to crude oil service at our Galena Park, Texas terminal in 2016.
|
•
|
an increase in refined products expenses of
$3.3
million primarily resulting from rental costs related to a pipeline segment we began leasing in third quarter 2016 in connection with our Little Rock pipeline extension, higher asset retirements and higher environmental accruals, partially offset by lower asset integrity spending due to timing of tank maintenance work;
|
•
|
a decrease in crude oil expenses of
$0.7
million as lower power costs and more favorable product overages (which reduce operating expenses) were primarily offset by increased personnel costs related to incremental headcount to support the crude oil segment; and
|
•
|
an increase in marine storage expenses of
$3.2
million primarily attributable to higher asset integrity spending in the current year.
|
|
|
Year Ended December 31,
|
|
Variance
Favorable (Unfavorable)
|
|||||||||||
|
|
2014
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Financial Highlights ($ in millions, except operating statistics)
|
|
|
|
|
|
|
|
|
|||||||
Transportation and terminals revenue:
|
|
|
|
|
|
|
|
|
|||||||
Refined products
|
|
$
|
946.6
|
|
|
$
|
974.5
|
|
|
$
|
27.9
|
|
|
3
|
%
|
Crude oil
|
|
341.9
|
|
|
394.1
|
|
|
52.2
|
|
|
15
|
%
|
|||
Marine storage
|
|
170.7
|
|
|
176.1
|
|
|
5.4
|
|
|
3
|
%
|
|||
Total transportation and terminals revenue
|
|
1,459.2
|
|
|
1,544.7
|
|
|
85.5
|
|
|
6
|
%
|
|||
Affiliate management fee revenue
|
|
22.1
|
|
|
13.9
|
|
|
(8.2
|
)
|
|
(37
|
)%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Refined products
|
|
356.0
|
|
|
377.8
|
|
|
(21.8
|
)
|
|
(6
|
)%
|
|||
Crude oil
|
|
83.2
|
|
|
89.5
|
|
|
(6.3
|
)
|
|
(8
|
)%
|
|||
Marine storage
|
|
65.2
|
|
|
62.5
|
|
|
2.7
|
|
|
4
|
%
|
|||
Intersegment eliminations
|
|
(3.5
|
)
|
|
(3.9
|
)
|
|
0.4
|
|
|
11
|
%
|
|||
Total operating expenses
|
|
500.9
|
|
|
525.9
|
|
|
(25.0
|
)
|
|
(5
|
)%
|
|||
Product margin:
|
|
|
|
|
|
|
|
|
|||||||
Product sales
|
|
879.0
|
|
|
629.8
|
|
|
(249.2
|
)
|
|
(28
|
)%
|
|||
Cost of product sales
|
|
594.6
|
|
|
447.3
|
|
|
147.3
|
|
|
25
|
%
|
|||
Product margin
|
|
284.4
|
|
|
182.5
|
|
|
(101.9
|
)
|
|
(36
|
)%
|
|||
Earnings of non-controlled entities
|
|
19.4
|
|
|
66.5
|
|
|
47.1
|
|
|
243
|
%
|
|||
Operating margin
|
|
1,284.2
|
|
|
1,281.7
|
|
|
(2.5
|
)
|
|
—
|
%
|
|||
Depreciation and amortization expense
|
|
161.7
|
|
|
166.8
|
|
|
(5.1
|
)
|
|
(3
|
)%
|
|||
G&A expense
|
|
148.3
|
|
|
151.3
|
|
|
(3.0
|
)
|
|
(2
|
)%
|
|||
Operating profit
|
|
974.2
|
|
|
963.6
|
|
|
(10.6
|
)
|
|
(1
|
)%
|
|||
Interest expense (net of interest income and interest capitalized)
|
|
121.5
|
|
|
143.2
|
|
|
(21.7
|
)
|
|
(18
|
)%
|
|||
Other expense (income)
|
|
8.6
|
|
|
(1.0
|
)
|
|
9.6
|
|
|
n/a
|
|
|||
Income before provision for income taxes
|
|
844.1
|
|
|
821.4
|
|
|
(22.7
|
)
|
|
(3
|
)%
|
|||
Provision for income taxes
|
|
4.6
|
|
|
2.3
|
|
|
2.3
|
|
|
50
|
%
|
|||
Net income
|
|
$
|
839.5
|
|
|
$
|
819.1
|
|
|
$
|
(20.4
|
)
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Statistics
|
|
|
|
|
|
|
|
|
|||||||
Refined products:
|
|
|
|
|
|
|
|
|
|||||||
Transportation revenue per barrel shipped
|
|
$
|
1.399
|
|
|
$
|
1.439
|
|
|
|
|
|
|||
Volume shipped (million barrels):
|
|
|
|
|
|
|
|
|
|||||||
Gasoline
|
|
256.1
|
|
|
268.1
|
|
|
|
|
|
|||||
Distillates
|
|
163.1
|
|
|
152.5
|
|
|
|
|
|
|||||
Aviation fuel
|
|
23.0
|
|
|
21.2
|
|
|
|
|
|
|||||
Liquefied petroleum gases
|
|
9.9
|
|
|
9.7
|
|
|
|
|
|
|||||
Total volume shipped
|
|
452.1
|
|
|
451.5
|
|
|
|
|
|
|||||
Crude oil:
|
|
|
|
|
|
|
|
|
|||||||
Magellan 100%-owned assets:
|
|
|
|
|
|
|
|
|
|||||||
Transportation revenue per barrel shipped
|
|
$
|
1.192
|
|
|
$
|
1.118
|
|
|
|
|
|
|||
Volumes shipped (million barrels)
|
|
185.5
|
|
|
209.9
|
|
|
|
|
|
|||||
Crude oil terminal average utilization (million barrels per month)
|
|
12.2
|
|
|
13.1
|
|
|
|
|
|
|||||
Select joint venture pipelines:
|
|
|
|
|
|
|
|
|
|||||||
BridgeTex - volume shipped (million barrels)
(a)
|
|
18.3
|
|
|
75.2
|
|
|
|
|
|
|||||
Marine storage:
|
|
|
|
|
|
|
|
|
|||||||
Marine terminal average utilization (million barrels per month)
|
|
22.9
|
|
|
24.0
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
(a)
|
These volumes reflect the total shipments for the BridgeTex pipeline, which began operations in September 2014 and is owned 50% by us.
|
•
|
an increase in refined products revenue of $27.9 million primarily attributable to higher transportation revenue and related ancillary fees. Higher transportation revenue was favorably impacted by higher rates, which increased due to the mid-year 2014 and 2015 tariff rate increases of 3.9% and 4.6%, respectively. Volumes were essentially the same between periods as lower distillate shipments were offset by higher gasoline demand. Distillate shipments were 7% lower due to reduced demand from drilling activities and wet agricultural conditions in the areas served by our assets, whereas gasoline shipments increased 5% resulting from refinery turnarounds that increased demand on our system and lower gasoline prices that increased overall demand for gasoline. Additionally, revenue from our independent terminals increased primarily from two terminal acquisitions, revenue from storage services along our pipeline system increased due to new customer contracts and our ammonia pipeline revenue increased due to higher rates and volumes;
|
•
|
an increase in crude oil revenue of $52.2 million primarily due to revenue received in 2015 from BridgeTex to lease capacity on our Houston-area crude oil distribution system and higher crude oil deliveries on our Longhorn pipeline, partially offset by lower tender deductions received from customers. Shipments on our Longhorn pipeline averaged approximately 260,000 barrels per day in 2015, an increase of approximately 30,000 barrels per day over 2014. Additionally, terminalling revenue was higher resulting from new storage contracts and from a customer buying out of its remaining storage contract in 2015. Transportation revenue per barrel shipped was lower in 2015 due to reduced average tariffs resulting from a lower volume of spot shipments on the Longhorn pipeline system, which ship at a higher rate, and more short-haul movements on our Houston-area crude oil distribution system in 2015; and
|
•
|
an increase in marine storage revenue of $5.4 million primarily due to improved storage utilization from new contracts and less storage out of service for maintenance work, as well as higher ancillary fees reflecting increased customer activities at our marine facilities. Higher average storage rates from contract renewals and escalations in 2015 were offset by a one-time favorable contract adjustment in 2014.
|
•
|
an increase in refined products expenses of $21.8 million primarily resulting from higher asset integrity spending and higher personnel costs, partially offset by more favorable product overages (which reduce operating expense) and lower power costs;
|
•
|
an increase in crude oil expenses of $6.3 million primarily due to higher pipeline rental fees and costs associated with having more assets in crude oil service in 2015, such as higher personnel costs and property taxes, partially offset by more favorable product overages (which reduce operating expense); and
|
•
|
a decrease in marine storage expenses of $2.7 million primarily attributable to lower asset integrity costs due to timing of project work and lower property taxes due to a favorable adjustment in 2015.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
Net income
|
|
$
|
839.5
|
|
|
$
|
819.1
|
|
|
$
|
802.8
|
|
Interest expense, net
(1)
|
|
121.5
|
|
|
143.2
|
|
|
165.4
|
|
|||
Depreciation and amortization
|
|
161.8
|
|
|
166.8
|
|
|
178.1
|
|
|||
Equity-based incentive compensation expense
(2)
|
|
12.5
|
|
|
6.5
|
|
|
5.0
|
|
|||
Loss on sale and retirement of assets
|
|
7.2
|
|
|
7.9
|
|
|
11.2
|
|
|||
Gain on exchange of interest in non-controlled entity
(3)
|
|
—
|
|
|
—
|
|
|
(28.1
|
)
|
|||
Commodity-related adjustments:
|
|
|
|
|
|
|
||||||
Derivative losses (gains) recognized in the period associated with future product transactions
(5)
|
|
(87.5
|
)
|
|
(47.8
|
)
|
|
21.8
|
|
|||
Derivative (losses) gains recognized in previous periods associated with product sales completed in the period
(5)
|
|
(8.1
|
)
|
|
96.1
|
|
|
45.2
|
|
|||
Lower-of-cost-or-market inventory adjustments
(6)
|
|
39.3
|
|
|
(34.3
|
)
|
|
(2.8
|
)
|
|||
Total commodity-related adjustments
|
|
(56.3
|
)
|
|
14.0
|
|
|
64.2
|
|
|||
Cash distributions received from non-controlled entities in excess of (less than) earnings for the period
|
|
(8.7
|
)
|
|
14.5
|
|
|
9.3
|
|
|||
Other
(4)
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|||
Adjusted EBITDA
|
|
1,077.5
|
|
|
1,172.0
|
|
|
1,213.2
|
|
|||
Interest expense, net, excluding debt issuance cost amortization
(1)
|
|
(119.2
|
)
|
|
(140.5
|
)
|
|
(162.2
|
)
|
|||
Maintenance capital
(7)
|
|
(77.8
|
)
|
|
(88.7
|
)
|
|
(103.5
|
)
|
|||
DCF
|
|
$
|
880.5
|
|
|
$
|
942.8
|
|
|
$
|
947.5
|
|
|
|
|
|
|
|
|
(1)
|
For the purpose of calculating DCF, we have excluded debt issuance cost amortization from interest expense of $2.3 million, $2.7 million and $3.2 million for the years ended December 31, 2014, 2015 and 2016, respectively.
|
(2)
|
Because we intend to satisfy vesting of unit awards under our equity-based incentive compensation program with the issuance of limited partner units, expenses related to this program generally are deemed non-cash and added back for DCF purposes. Total equity-based incentive compensation expense for the years ended December 31,
2014
,
2015
and
2016
was $27.3 million, $24.3 million and $19.4 million, respectively. However, the figures above include adjustments of $14.8 million, $17.8 million and $14.4 million, respectively, for minimum statutory tax withholdings we paid in connection with our equity-based incentive compensation program.
|
(3)
|
In February 2016, we transferred our 50% membership interest in Osage to an affiliate of HollyFrontier Corporation (“HFC”). In conjunction with this transaction, we entered into several commercial agreements with affiliates of HFC, which were recorded as intangible assets and other receivables on our consolidated balance sheets. We recorded a $28.1 million non-cash gain in relation to this transaction.
|
(4)
|
In conjunction with the February 2016 Osage transaction, HFC agreed to make certain payments to us until HFC completes a connection to our El Paso terminal. These payments replace distributions we would have received had the Osage transaction not occurred and are, therefore, included in our calculation of DCF.
|
(5)
|
Certain derivatives we use as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, we have designated certain derivatives we use to hedge our crude oil tank bottoms as fair value hedges and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. We exclude the net impact of both of these adjustments from our determination of DCF until the hedged products are physically sold. In the period in which these hedged products are physically sold, the net impact of the associated hedges is included in our determination of DCF.
|
(6)
|
We add the amount of LCM adjustments on inventory and firm purchase commitments we recognize in each applicable period to determine DCF as these are non-cash charges against income. In subsequent periods when we physically sell or purchase the related products, we deduct the LCM adjustments previously recognized to determine DCF.
|
(7)
|
Maintenance capital expenditures maintain our existing assets and do not generate incremental DCF (i.e. incremental returns to our unitholders). For this reason, we deduct maintenance capital expenditures to determine DCF.
|
•
|
Maintenance capital expenditures. These capital expenditures include costs required to maintain equipment reliability and safety and to address environmental or other regulatory requirements rather than to generate incremental DCF; and
|
•
|
Expansion capital expenditures. These expenditures are undertaken primarily to generate incremental DCF and include costs to acquire additional 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, for example, 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)
|
|
$
|
4,100.0
|
|
|
$
|
—
|
|
|
$
|
800.0
|
|
|
$
|
600.0
|
|
|
$
|
2,700.0
|
|
Interest obligations
(1)
|
|
2,860.4
|
|
|
204.3
|
|
|
365.2
|
|
|
280.9
|
|
|
2,010.0
|
|
|||||
Operating lease obligations
|
|
238.4
|
|
|
38.6
|
|
|
54.0
|
|
|
35.2
|
|
|
110.6
|
|
|||||
Pension and postretirement medical obligations
(2)
|
|
72.1
|
|
|
23.1
|
|
|
36.7
|
|
|
3.1
|
|
|
9.2
|
|
|||||
Purchase commitments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product purchase commitments
(3)
|
|
166.4
|
|
|
111.3
|
|
|
45.2
|
|
|
9.9
|
|
|
—
|
|
|||||
Utility purchase commitments
|
|
19.4
|
|
|
8.4
|
|
|
9.4
|
|
|
1.5
|
|
|
0.1
|
|
|||||
Derivative instruments
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Equity-based incentive awards
(5)
|
|
40.0
|
|
|
22.6
|
|
|
17.4
|
|
|
—
|
|
|
—
|
|
|||||
Capital project purchase obligations
|
|
108.4
|
|
|
102.6
|
|
|
5.8
|
|
|
—
|
|
|
—
|
|
|||||
Maintenance obligations
|
|
90.3
|
|
|
90.0
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
|
8.5
|
|
|
4.6
|
|
|
2.1
|
|
|
1.8
|
|
|
—
|
|
|||||
Total
|
|
$
|
7,703.9
|
|
|
$
|
605.5
|
|
|
$
|
1,336.1
|
|
|
$
|
932.4
|
|
|
$
|
4,829.9
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
At
December 31, 2016
, we had no borrowings outstanding under our revolving credit facility. For purposes of this table, we have reflected no assumed borrowings under our revolving credit facility for any periods presented. We assumed that the amounts outstanding under our commercial paper program at December 31, 2016 would be repaid in October 2020, the maturity date of our revolving credit facility, which supports our commercial paper program. Further, we have included interest obligations based on the stated amounts of our fixed-rate obligations. For our variable-rate debt, we calculated interest obligations assuming the weighted-average interest rate of our variable-rate debt at December 31, 2016 on amounts outstanding through the assumed repayment date.
|
(2)
|
Represents the projected benefit obligation of our pension and postretirement medical plans less the fair value of plan assets.
|
(3)
|
Includes product purchase commitments for which the price provisions are indexed based on the date of delivery. We have estimated the value of these commitments using the related index price as of December 31, 2016. Also, we have excluded certain product purchase agreements for which there is no specified or minimum quantity.
|
(4)
|
As of
December 31, 2016
, we had entered into exchange-traded futures contracts representing 4.6 million barrels of petroleum products that we expect to sell in the future and 0.7 million barrels of butane we expect to purchase in the future. At
December 31, 2016
, we had recorded a net liability of $30.7 million and received margin deposits of $49.9 million. We have excluded from this table the future net cash outflows, if any, under these futures contracts and the amounts of future margin deposit requirements because those amounts are uncertain.
|
(5)
|
The total equity-based incentive awards obligation is determined by multiplying the grant date per unit fair value by the number of unit awards granted, multiplied by the percentage of the requisite service period completed, multiplied by the estimated payout percentage of the awards at
December 31, 2016
. Settlements of these awards will differ from these reported amounts primarily due to differences between actual and current estimates of payout percentages and completion of the remaining portion of the requisite service periods.
|
•
|
Futures contracts to hedge against future price changes of certain crude oil tank bottoms, which we account for as fair value hedges. The cumulative amount of gains from these agreements was recorded as an adjustment to the asset being hedged, and there has been no ineffectiveness recognized for these hedges. We exclude the differential between the current spot price and forward price from our assessment of hedge effectiveness for these fair value hedges, and we recognize the net change in this excluded amount as other income on our consolidated statements of income.
|
•
|
Futures contracts used to hedge sales and purchases of refined products, crude oil and butane related to our butane blending, fractionation, and certain crude oil inventory activities. These contracts were accounted for as economic hedges, with the change in fair value of contracts that hedge future sales recorded to product sales, and the change in fair value of contracts that hedge future purchases recorded to cost of product sales.
|
•
|
Futures contracts used to hedge sales of refined products and crude oil inventory we carry that resulted from pipeline product overages. These contracts were accounted for as economic hedges, with the change in fair value of these contracts recorded to operating expense.
|
|
Year Ended December 31, 2014
|
||||||||||||||||||
|
Product Sales Revenue
|
|
Cost of Product Sales
|
|
Operating Expense
|
|
Other Expense
|
|
Net Impact on Results of Operations
|
||||||||||
Gains (losses) recorded on open futures contracts during the period
|
$
|
83.8
|
|
|
$
|
(10.6
|
)
|
|
$
|
8.2
|
|
|
$
|
(8.6
|
)
|
|
$
|
72.8
|
|
Gains (losses) recognized on settled futures contracts during the period
|
61.5
|
|
|
(6.5
|
)
|
|
9.6
|
|
|
—
|
|
|
64.6
|
|
|||||
Net impact of futures contracts
|
$
|
145.3
|
|
|
$
|
(17.1
|
)
|
|
$
|
17.8
|
|
|
$
|
(8.6
|
)
|
|
$
|
137.4
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||
|
Product Sales Revenue
|
|
Cost of Product Sales
|
|
Operating Expense
|
|
Other Income
|
|
Net Impact on Results of Operations
|
||||||||||
Gains (losses) recorded on open futures contracts during the period
|
$
|
41.3
|
|
|
$
|
(5.2
|
)
|
|
$
|
3.1
|
|
|
$
|
1.0
|
|
|
$
|
40.2
|
|
Gains (losses) recognized on settled futures contracts during the period
|
27.1
|
|
|
(3.8
|
)
|
|
8.7
|
|
|
—
|
|
|
32.0
|
|
|||||
Net impact of futures contracts
|
$
|
68.4
|
|
|
$
|
(9.0
|
)
|
|
$
|
11.8
|
|
|
$
|
1.0
|
|
|
$
|
72.2
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
Product Sales Revenue
|
|
Cost of Product Sales
|
|
Operating Expense
|
|
Other Income
|
|
Net Impact on Results of Operations
|
||||||||||
Gains (losses) recorded on open futures contracts during the period
|
$
|
(30.2
|
)
|
|
$
|
6.1
|
|
|
$
|
(3.6
|
)
|
|
$
|
5.2
|
|
|
$
|
(22.5
|
)
|
Gains (losses) recognized on settled futures contracts during the period
|
(8.4
|
)
|
|
4.9
|
|
|
(1.4
|
)
|
|
—
|
|
|
(4.9
|
)
|
|||||
Net impact of futures contracts
|
$
|
(38.6
|
)
|
|
$
|
11.0
|
|
|
$
|
(5.0
|
)
|
|
$
|
5.2
|
|
|
$
|
(27.4
|
)
|
Balance
|
|
2015
|
|
Balance
|
|
2016
|
|
Balance
|
||||||||||||||
12/31/14
|
|
Accruals
|
|
Expenditures
|
|
12/31/15
|
|
Accruals
|
|
Expenditures
|
|
12/31/16
|
||||||||||
$36.3
|
|
|
$6.3
|
|
|
|
$(11.2)
|
|
|
|
$31.4
|
|
|
|
$8.4
|
|
|
|
$(15.8)
|
|
|
$24.0
|
|
|
Benefit Expense
|
|
Benefit Obligation
|
||||||||||||||||
|
|
1% Increase
|
|
1% Decrease
|
|
1% Increase
|
|
1% Decrease
|
||||||||||||
Pension benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
$
|
(3,356
|
)
|
|
|
$
|
3,858
|
|
|
|
$
|
(23,407
|
)
|
|
|
$
|
28,350
|
|
|
Expected long-term rate of return on plan assets
|
|
$
|
(1,073
|
)
|
|
|
$
|
2,128
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
Rate of compensation increase
|
|
$
|
2,614
|
|
|
|
$
|
(2,773
|
)
|
|
|
$
|
11,761
|
|
|
|
$
|
(11,894
|
)
|
|
Other postretirement benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
$
|
(129
|
)
|
|
|
$
|
164
|
|
|
|
$
|
(1,437
|
)
|
|
|
$
|
1,840
|
|
|
Assumed health care cost trend rate
|
|
$
|
87
|
|
|
|
$
|
(81
|
)
|
|
|
$
|
521
|
|
|
|
$
|
(481
|
)
|
|
|
|
1% Increase
|
|
1% Decrease
|
||||
Projected return on assets
|
|
$
|
(131
|
)
|
|
$
|
131
|
|
Rate of compensation increase
|
|
$
|
3,483
|
|
|
$
|
(3,496
|
)
|
•
|
overall demand for refined products, crude oil, liquefied petroleum gases and ammonia in the U.S.;
|
•
|
price fluctuations for refined products, crude oil, liquefied petroleum gases and ammonia and expectations about future prices for these products;
|
•
|
changes in the production of crude oil in the basins served by our pipelines;
|
•
|
changes in general economic conditions, interest rates and price levels;
|
•
|
changes in the financial condition of our customers, vendors, derivatives counterparties, lenders or joint venture co-owners;
|
•
|
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, refinance our existing obligations when due and maintain adequate liquidity;
|
•
|
development of alternative energy sources, including but not limited to natural gas, solar power, wind power and geothermal energy, increased use of biofuels such as ethanol and biodiesel, increased conservation or fuel efficiency, as well as regulatory developments or other trends that could affect demand for our services;
|
•
|
changes in the throughput or interruption in service of refined products or crude oil pipelines owned and operated by third parties and connected to our assets;
|
•
|
changes in demand for storage in our refined products, crude oil or marine terminals;
|
•
|
changes in supply and demand patterns for our facilities due to geopolitical events, the activities of the Organization of the Petroleum Exporting Countries, changes in U.S. trade policies or in laws governing the importing and exporting of petroleum products, technological developments or other factors;
|
•
|
our ability to manage interest rate and commodity price exposures;
|
•
|
changes in our tariff rates implemented by the Federal Energy Regulatory Commission, the U.S. Surface Transportation Board or state regulatory agencies;
|
•
|
shut-downs or cutbacks at refineries, oil wells, petrochemical plants, ammonia production facilities or other customers or businesses that use or supply our services;
|
•
|
the effect of weather patterns and other natural phenomena, including climate change, on our operations and demand for our services;
|
•
|
an increase in the competition our operations encounter;
|
•
|
the occurrence of natural disasters, terrorism, operational hazards, equipment failures, system failures or unforeseen interruptions;
|
•
|
our ability to obtain adequate levels of insurance at a reasonable cost, and the potential for losses to exceed the insurance coverage we do obtain;
|
•
|
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 accretive acquisitions and joint ventures and successfully execute our business strategy;
|
•
|
uncertainty of estimates, including accruals and costs of environmental remediation;
|
•
|
our ability to cooperate with and rely on our joint venture co-owners;
|
•
|
actions by rating agencies concerning our credit ratings;
|
•
|
our ability to timely obtain and maintain all necessary approvals, consents and permits required to operate our existing assets and to construct, acquire and operate any new or modified assets;
|
•
|
our ability to promptly obtain all necessary services, materials, labor, supplies and rights-of-way required for construction of our growth projects, and to complete construction without significant delays, disputes or cost overruns;
|
•
|
risks inherent in the use and security of information systems in our business and implementation of new software and hardware;
|
•
|
changes in laws and regulations that govern product quality specifications or renewable fuel obligations that could impact our ability to produce gasoline volumes through our butane blending activities or that could require significant capital outlays for compliance;
|
•
|
changes in laws and regulations to which we or our customers are or could become subject, including tax withholding requirements, safety, security, employment, hydraulic fracturing, derivatives transactions, trade 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;
|
•
|
the ability and intent of our customers, vendors, lenders, joint venture co-owners or other third parties to perform on their contractual obligations to us;
|
•
|
petroleum product supply disruptions;
|
•
|
global and domestic repercussions from terrorist activities, including cyber attacks, and the government’s response thereto; and
|
•
|
other factors and uncertainties inherent in the transportation, storage and distribution of petroleum products and ammonia, and the operation, acquisition and construction of assets related to such activities.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Total
|
|
< 1 Year
|
|
1 – 3 Years
|
||||||
Forward purchase contracts – notional value
|
$
|
166.4
|
|
|
$
|
111.3
|
|
|
$
|
55.1
|
|
Forward purchase contracts – barrels
|
3.9
|
|
|
2.7
|
|
|
1.2
|
|
|||
Forward sales contracts – notional value
|
$
|
68.2
|
|
|
$
|
68.2
|
|
|
$
|
—
|
|
Forward sales contracts – barrels
|
1.0
|
|
|
1.0
|
|
|
—
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
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
/ A
ARON
L. M
ILFORD
|
|
Senior Vice President and Chief Financial Officer of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
Transportation and terminals revenue
|
|
$
|
1,459,267
|
|
|
$
|
1,544,746
|
|
|
$
|
1,591,119
|
|
Product sales revenue
|
|
878,974
|
|
|
629,836
|
|
|
599,602
|
|
|||
Affiliate management fee revenue
|
|
22,111
|
|
|
13,871
|
|
|
14,689
|
|
|||
Total revenue
|
|
2,360,352
|
|
|
2,188,453
|
|
|
2,205,410
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Operating
|
|
500,901
|
|
|
525,902
|
|
|
529,759
|
|
|||
Cost of product sales
|
|
594,585
|
|
|
447,273
|
|
|
493,338
|
|
|||
Depreciation and amortization
|
|
161,741
|
|
|
166,812
|
|
|
178,142
|
|
|||
General and administrative
|
|
148,288
|
|
|
151,329
|
|
|
147,815
|
|
|||
Total costs and expenses
|
|
1,405,515
|
|
|
1,291,316
|
|
|
1,349,054
|
|
|||
Earnings of non-controlled entities
|
|
19,394
|
|
|
66,483
|
|
|
78,696
|
|
|||
Operating profit
|
|
974,231
|
|
|
963,620
|
|
|
935,052
|
|
|||
Interest expense
|
|
145,862
|
|
|
158,895
|
|
|
194,187
|
|
|||
Interest income
|
|
(1,540
|
)
|
|
(1,276
|
)
|
|
(1,402
|
)
|
|||
Interest capitalized
|
|
(22,803
|
)
|
|
(14,442
|
)
|
|
(27,375
|
)
|
|||
Gain on exchange of interest in non-controlled entity
|
|
—
|
|
|
—
|
|
|
(28,144
|
)
|
|||
Other expense (income)
|
|
8,573
|
|
|
(1,015
|
)
|
|
(8,203
|
)
|
|||
Income before provision for income taxes
|
|
844,139
|
|
|
821,458
|
|
|
805,989
|
|
|||
Provision for income taxes
|
|
4,620
|
|
|
2,336
|
|
|
3,218
|
|
|||
Net income
|
|
$
|
839,519
|
|
|
$
|
819,122
|
|
|
$
|
802,771
|
|
|
|
|
|
|
|
|
||||||
Basic net income per limited partner unit
|
|
$
|
3.69
|
|
|
$
|
3.60
|
|
|
$
|
3.52
|
|
|
|
|
|
|
|
|
||||||
Diluted net income per limited partner unit
|
|
$
|
3.69
|
|
|
$
|
3.59
|
|
|
$
|
3.52
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation
(1)
|
|
227,260
|
|
|
227,550
|
|
|
227,926
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation
(1)
|
|
227,626
|
|
|
227,888
|
|
|
228,057
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Net income
|
$
|
839,519
|
|
|
$
|
819,122
|
|
|
$
|
802,771
|
|
Other comprehensive income:
|
|
|
|
|
|
||||||
Derivative activity:
|
|
|
|
|
|
||||||
Net loss on cash flow hedges
(1)
|
(30,090
|
)
|
|
(14,904
|
)
|
|
(6,699
|
)
|
|||
Reclassification of net loss (gain) on cash flow hedges to income
(1)
|
(124
|
)
|
|
1,365
|
|
|
2,049
|
|
|||
Changes in employee benefit plan assets and benefit obligations recognized in other comprehensive income:
|
|
|
|
|
|
||||||
Net actuarial loss
(2)
|
(33,937
|
)
|
|
(8,359
|
)
|
|
(2,452
|
)
|
|||
Plan amendment
(2)
|
—
|
|
|
3,610
|
|
|
—
|
|
|||
Amortization of prior service credit
(2)
|
(3,680
|
)
|
|
(3,713
|
)
|
|
(3,516
|
)
|
|||
Amortization of actuarial loss
(2)
|
3,986
|
|
|
7,191
|
|
|
5,525
|
|
|||
Settlement cost
(2)
|
1,809
|
|
|
—
|
|
|
202
|
|
|||
Total other comprehensive loss
|
(62,036
|
)
|
|
(14,810
|
)
|
|
(4,891
|
)
|
|||
Comprehensive income
|
$
|
777,483
|
|
|
$
|
804,312
|
|
|
$
|
797,880
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2016
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
28,731
|
|
|
$
|
14,701
|
|
Trade accounts receivable
|
|
83,893
|
|
|
105,689
|
|
||
Other accounts receivable
|
|
12,701
|
|
|
25,761
|
|
||
Inventory
|
|
130,868
|
|
|
134,378
|
|
||
Energy commodity derivatives contracts, net
|
|
39,243
|
|
|
—
|
|
||
Energy commodity derivatives deposits
|
|
—
|
|
|
49,899
|
|
||
Other current assets
|
|
43,418
|
|
|
39,966
|
|
||
Total current assets
|
|
338,854
|
|
|
370,394
|
|
||
Property, plant and equipment
|
|
6,166,766
|
|
|
6,783,737
|
|
||
Less: accumulated depreciation
|
|
1,347,537
|
|
|
1,507,996
|
|
||
Net property, plant and equipment
|
|
4,819,229
|
|
|
5,275,741
|
|
||
Investments in non-controlled entities
|
|
765,628
|
|
|
931,255
|
|
||
Long-term receivables
|
|
20,374
|
|
|
23,870
|
|
||
Goodwill
|
|
53,260
|
|
|
53,260
|
|
||
Other intangibles (less accumulated amortization of $13,709 and $2,136 at December 31, 2015 and 2016, respectively)
|
|
1,856
|
|
|
51,976
|
|
||
Other noncurrent assets
|
|
42,366
|
|
|
65,577
|
|
||
Total assets
|
|
$
|
6,041,567
|
|
|
$
|
6,772,073
|
|
|
|
|
|
|
||||
LIABILITIES AND PARTNERS’ CAPITAL
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
104,094
|
|
|
$
|
77,248
|
|
Accrued payroll and benefits
|
|
51,764
|
|
|
45,690
|
|
||
Accrued interest payable
|
|
51,296
|
|
|
65,643
|
|
||
Accrued taxes other than income
|
|
51,587
|
|
|
50,166
|
|
||
Environmental liabilities
|
|
15,679
|
|
|
10,249
|
|
||
Deferred revenue
|
|
81,627
|
|
|
101,891
|
|
||
Accrued product purchases
|
|
31,339
|
|
|
51,600
|
|
||
Energy commodity derivatives contracts, net
|
|
—
|
|
|
30,738
|
|
||
Energy commodity derivatives deposits
|
|
24,252
|
|
|
—
|
|
||
Current portion of long-term debt, net
|
|
250,335
|
|
|
—
|
|
||
Other current liabilities
|
|
51,099
|
|
|
48,431
|
|
||
Total current liabilities
|
|
713,072
|
|
|
481,656
|
|
||
Long-term debt, net
|
|
3,189,287
|
|
|
4,087,192
|
|
||
Long-term pension and benefits
|
|
77,551
|
|
|
71,461
|
|
||
Other noncurrent liabilities
|
|
24,162
|
|
|
25,868
|
|
||
Environmental liabilities
|
|
15,759
|
|
|
13,791
|
|
||
Commitments and contingencies
|
|
|
|
|
||||
Partners’ capital:
|
|
|
|
|
|
|||
Limited partner unitholders (227,427 units and 227,784 units outstanding at December 31, 2015 and 2016, respectively)
|
|
2,118,086
|
|
|
2,193,346
|
|
||
Accumulated other comprehensive loss
|
|
(96,350
|
)
|
|
(101,241
|
)
|
||
Total partners’ capital
|
|
2,021,736
|
|
|
2,092,105
|
|
||
Total liabilities and partners’ capital
|
|
$
|
6,041,567
|
|
|
$
|
6,772,073
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
Operating Activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
839,519
|
|
|
$
|
819,122
|
|
|
$
|
802,771
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
|
161,741
|
|
|
166,812
|
|
|
178,142
|
|
|||
Loss on sale and retirement of assets
|
|
7,223
|
|
|
7,871
|
|
|
11,190
|
|
|||
Earnings of non-controlled entities
|
|
(19,394
|
)
|
|
(66,483
|
)
|
|
(78,696
|
)
|
|||
Distributions from investments in non-controlled entities
|
|
3,086
|
|
|
66,285
|
|
|
78,723
|
|
|||
Equity-based incentive compensation expense
|
|
27,284
|
|
|
24,245
|
|
|
19,358
|
|
|||
Settlement cost, amortization of prior service credit and actuarial loss
|
|
2,115
|
|
|
3,478
|
|
|
2,211
|
|
|||
Gain on exchange of interest in non-controlled entity
|
|
—
|
|
|
—
|
|
|
(28,144
|
)
|
|||
Changes in components of operating assets and liabilities (Note 3)
|
|
85,727
|
|
|
48,362
|
|
|
(21,515
|
)
|
|||
Net cash provided by operating activities
|
|
1,107,301
|
|
|
1,069,692
|
|
|
964,040
|
|
|||
Investing Activities:
|
|
|
|
|
|
|
||||||
Additions to property, plant and equipment, net
(1)
|
|
(363,250
|
)
|
|
(621,151
|
)
|
|
(674,159
|
)
|
|||
Proceeds from sale and disposition of assets
|
|
10,780
|
|
|
3,371
|
|
|
7,552
|
|
|||
Acquisition of assets
|
|
(75,000
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of business
|
|
—
|
|
|
(54,678
|
)
|
|
—
|
|
|||
Investments in non-controlled entities
|
|
(408,001
|
)
|
|
(152,466
|
)
|
|
(200,023
|
)
|
|||
Distributions in excess of earnings of non-controlled entities
|
|
5,487
|
|
|
14,155
|
|
|
9,264
|
|
|||
Net cash used by investing activities
|
|
(829,984
|
)
|
|
(810,769
|
)
|
|
(857,366
|
)
|
|||
Financing Activities:
|
|
|
|
|
|
|
||||||
Distributions paid
|
|
(568,806
|
)
|
|
(662,948
|
)
|
|
(739,157
|
)
|
|||
Net commercial paper borrowings (repayments)
|
|
296,942
|
|
|
(16,981
|
)
|
|
(229,975
|
)
|
|||
Borrowings under long-term notes
|
|
257,713
|
|
|
499,589
|
|
|
1,142,997
|
|
|||
Payments on notes
|
|
(250,000
|
)
|
|
—
|
|
|
(250,000
|
)
|
|||
Debt placement costs
|
|
(2,912
|
)
|
|
(6,223
|
)
|
|
(10,906
|
)
|
|||
Net payment on financial derivatives
|
|
(3,613
|
)
|
|
(42,908
|
)
|
|
(19,287
|
)
|
|||
Settlement of tax withholdings on equity-based incentive compensation
|
|
(14,813
|
)
|
|
(17,784
|
)
|
|
(14,376
|
)
|
|||
Net cash used by financing activities
|
|
(285,489
|
)
|
|
(247,255
|
)
|
|
(120,704
|
)
|
|||
Change in cash and cash equivalents
|
|
(8,172
|
)
|
|
11,668
|
|
|
(14,030
|
)
|
|||
Cash and cash equivalents at beginning of period
|
|
25,235
|
|
|
17,063
|
|
|
28,731
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
17,063
|
|
|
$
|
28,731
|
|
|
$
|
14,701
|
|
Supplemental non-cash investing and financing activities:
|
|
|
|
|
|
|
||||||
Contribution of property, plant and equipment to a non-controlled entity
|
|
$
|
—
|
|
|
$
|
13,252
|
|
|
$
|
—
|
|
Issuance of limited partner units in settlement of equity-based incentive plan awards
|
|
$
|
7,315
|
|
|
$
|
8,045
|
|
|
$
|
7,289
|
|
(1)
Additions to property, plant and equipment
|
|
$
|
(366,445
|
)
|
|
$
|
(623,289
|
)
|
|
$
|
(653,528
|
)
|
Changes in accounts payable and other current liabilities related to capital expenditures
|
|
3,195
|
|
|
2,138
|
|
|
(20,631
|
)
|
|||
Additions to property, plant and equipment, net
|
|
$
|
(363,250
|
)
|
|
$
|
(621,151
|
)
|
|
$
|
(674,159
|
)
|
|
|
Limited Partners
|
|
Accumulated Other Comprehensive Loss
|
|
Total Partners’ Capital
|
||||||||
Balance, January 1, 2014
|
|
$
|
1,666,946
|
|
|
|
$
|
(19,504
|
)
|
|
|
$
|
1,647,442
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
839,519
|
|
|
|
—
|
|
|
|
839,519
|
|
|||
Total other comprehensive loss
|
|
—
|
|
|
|
(62,036
|
)
|
|
|
(62,036
|
)
|
|||
Total comprehensive income (loss)
|
|
839,519
|
|
|
|
(62,036
|
)
|
|
|
777,483
|
|
|||
Distributions
|
|
(568,806
|
)
|
|
|
—
|
|
|
|
(568,806
|
)
|
|||
Equity-based incentive compensation expense
|
|
19,963
|
|
|
|
—
|
|
|
|
19,963
|
|
|||
Issuance of limited partner units in settlement of equity-based incentive plan awards
|
|
7,315
|
|
|
|
—
|
|
|
|
7,315
|
|
|||
Settlement of tax withholdings on equity-based incentive compensation
|
|
(14,813
|
)
|
|
|
—
|
|
|
|
(14,813
|
)
|
|||
Other
|
|
(351
|
)
|
|
|
—
|
|
|
|
(351
|
)
|
|||
Balance, December 31, 2014
|
|
1,949,773
|
|
|
|
(81,540
|
)
|
|
|
1,868,233
|
|
|||
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
819,122
|
|
|
|
—
|
|
|
|
819,122
|
|
|||
Total other comprehensive loss
|
|
—
|
|
|
|
(14,810
|
)
|
|
|
(14,810
|
)
|
|||
Total comprehensive income (loss)
|
|
819,122
|
|
|
|
(14,810
|
)
|
|
|
804,312
|
|
|||
Distributions
|
|
(662,948
|
)
|
|
|
—
|
|
|
|
(662,948
|
)
|
|||
Equity-based incentive compensation expense
|
|
22,248
|
|
|
|
—
|
|
|
|
22,248
|
|
|||
Issuance of limited partner units in settlement of equity-based incentive plan awards
|
|
8,045
|
|
|
|
—
|
|
|
|
8,045
|
|
|||
Settlement of tax withholdings on equity-based incentive compensation
|
|
(17,784
|
)
|
|
|
—
|
|
|
|
(17,784
|
)
|
|||
Other
|
|
(370
|
)
|
|
|
—
|
|
|
|
(370
|
)
|
|||
Balance, December 31, 2015
|
|
2,118,086
|
|
|
|
(96,350
|
)
|
|
|
2,021,736
|
|
|||
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
802,771
|
|
|
|
—
|
|
|
|
802,771
|
|
|||
Total other comprehensive loss
|
|
—
|
|
|
|
(4,891
|
)
|
|
|
(4,891
|
)
|
|||
Total comprehensive income (loss)
|
|
802,771
|
|
|
|
(4,891
|
)
|
|
|
797,880
|
|
|||
Distributions
|
|
(739,157
|
)
|
|
|
—
|
|
|
|
(739,157
|
)
|
|||
Equity-based incentive compensation expense
|
|
19,358
|
|
|
|
—
|
|
|
|
19,358
|
|
|||
Issuance of limited partner units in settlement of equity-based incentive plan awards
|
|
7,289
|
|
|
|
—
|
|
|
|
7,289
|
|
|||
Settlement of tax withholdings on equity-based incentive compensation
|
|
(14,376
|
)
|
|
|
—
|
|
|
|
(14,376
|
)
|
|||
Other
|
|
(625
|
)
|
|
|
—
|
|
|
|
(625
|
)
|
|||
Balance, December 31, 2016
|
|
$
|
2,193,346
|
|
|
|
$
|
(101,241
|
)
|
|
|
$
|
2,092,105
|
|
•
|
our refined products segment, comprised of our
9,700
-mile refined products pipeline system with
53
terminals as well as
26
independent terminals not connected to our pipeline system and our
1,100
-mile ammonia pipeline system;
|
•
|
our crude oil segment, comprised of approximately
2,200
miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately
26
million barrels, of which
16
million are used for contract storage; and
|
•
|
our marine storage segment, consisting of
five
marine terminals located along coastal waterways with an aggregate storage capacity of approximately
26
million barrels.
|
•
|
refined products
are the output from refineries and are primarily used as fuels by consumers. Refined products include gasoline, diesel fuel, aviation fuel, kerosene and heating oil. Collectively, diesel fuel and heating oil are referred to as distillates;
|
•
|
liquefied petroleum gases, or LPGs,
are produced as by-products of the crude oil refining process and in connection with natural gas production. LPGs include butane and propane;
|
•
|
blendstocks
are blended with refined products to change or enhance their characteristics such as increasing a gasoline’s octane or oxygen content. Blendstocks include alkylates, oxygenates and natural gasoline;
|
•
|
heavy oils and feedstocks
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;
|
•
|
crude oil and condensate
are used as feedstocks by refineries and petrochemical facilities;
|
•
|
biofuels
, such as ethanol and biodiesel, are typically blended with other refined products as required by government mandates; and
|
•
|
ammonia
is primarily used as a nitrogen fertilizer.
|
2.
|
Summary of Significant Accounting Policies
|
3.
|
Consolidated Statements of Cash Flows
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
Trade accounts receivable and other accounts receivable
|
|
$
|
49,215
|
|
|
$
|
3,664
|
|
|
$
|
(31,107
|
)
|
Inventory
|
|
29,462
|
|
|
26,894
|
|
|
(3,510
|
)
|
|||
Energy commodity derivatives contracts, net of derivatives deposits
|
|
(7,583
|
)
|
|
(606
|
)
|
|
(692
|
)
|
|||
Accounts payable
|
|
(10,918
|
)
|
|
4,107
|
|
|
(4,423
|
)
|
|||
Accrued payroll and benefits
|
|
6,055
|
|
|
3,466
|
|
|
(6,074
|
)
|
|||
Accrued interest payable
|
|
1,038
|
|
|
5,323
|
|
|
14,347
|
|
|||
Accrued taxes other than income
|
|
9,094
|
|
|
3,699
|
|
|
(1,421
|
)
|
|||
Deferred revenue
|
|
7,978
|
|
|
10,485
|
|
|
20,264
|
|
|||
Accrued product purchases
|
|
(18,678
|
)
|
|
(13,016
|
)
|
|
20,261
|
|
|||
Current and noncurrent environmental liabilities
|
|
(2,144
|
)
|
|
(4,904
|
)
|
|
(7,398
|
)
|
|||
Other current and noncurrent assets and liabilities
|
|
22,208
|
|
|
9,250
|
|
|
(21,762
|
)
|
|||
Total
|
|
$
|
85,727
|
|
|
$
|
48,362
|
|
|
$
|
(21,515
|
)
|
4.
|
Investments in Non-Controlled Entities
|
Entity
|
|
Ownership Interest
|
BridgeTex Pipeline Company, LLC (“BridgeTex”)
|
|
50%
|
Double Eagle Pipeline LLC (“Double Eagle”)
|
|
50%
|
HoustonLink Pipeline Company, LLC (“HoustonLink”)
|
|
50%
|
Powder Springs Logistics, LLC (“Powder Springs”)
|
|
50%
|
Saddlehorn Pipeline Company, LLC (“Saddlehorn”)
|
|
40%
|
Seabrook Logistics, LLC (“Seabrook”)
|
|
50%
|
Texas Frontera, LLC (“Texas Frontera”)
|
|
50%
|
|
|
|
||
Investments at December 31, 2015
|
|
$
|
765,628
|
|
Additional investment
|
|
200,023
|
|
|
Exchange of investment in non-controlled entity
|
|
(25,105
|
)
|
|
Earnings of non-controlled entities:
|
|
|
||
Proportionate share of earnings
|
|
80,974
|
|
|
Amortization of excess investment and capitalized interest
|
|
(2,278
|
)
|
|
Earnings of non-controlled entities
|
|
78,696
|
|
|
Less:
|
|
|
||
Distributions of earnings from investments in non-controlled entities
|
|
78,723
|
|
|
Distributions in excess of earnings of non-controlled entities
|
|
9,264
|
|
|
Investments at December 31, 2016
|
|
$
|
931,255
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2016
|
||||
Current assets
|
|
$
|
158,128
|
|
|
$
|
208,901
|
|
Noncurrent assets
|
|
1,383,394
|
|
|
1,714,920
|
|
||
Total assets
|
|
$
|
1,541,522
|
|
|
$
|
1,923,821
|
|
Current liabilities
|
|
$
|
149,231
|
|
|
$
|
111,164
|
|
Noncurrent liabilities
|
|
7,719
|
|
|
27,022
|
|
||
Total liabilities
|
|
$
|
156,950
|
|
|
$
|
138,186
|
|
Equity
|
|
$
|
1,384,572
|
|
|
$
|
1,785,635
|
|
5.
|
Business Combinations
|
6.
|
Inventory
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2016
|
||||
Refined products
|
|
$
|
57,455
|
|
|
$
|
54,285
|
|
Liquefied petroleum gases
|
|
17,954
|
|
|
24,868
|
|
||
Transmix
|
|
21,297
|
|
|
28,319
|
|
||
Crude oil
|
|
28,385
|
|
|
20,839
|
|
||
Additives
|
|
5,777
|
|
|
6,067
|
|
||
Total inventory
|
|
$
|
130,868
|
|
|
$
|
134,378
|
|
7.
|
Product Sales Revenue
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
Physical sale of petroleum products
|
|
$
|
733,654
|
|
|
$
|
561,410
|
|
|
$
|
638,186
|
|
Change in value of futures contracts
|
|
145,320
|
|
|
68,426
|
|
|
(38,584
|
)
|
|||
Total product sales revenue
|
|
$
|
878,974
|
|
|
$
|
629,836
|
|
|
$
|
599,602
|
|
8.
|
Property, Plant and Equipment and Other Intangibles
|
9.
|
Major Customers and Concentration of Risks
|
10.
|
Employee Benefit Plans
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
|
$
|
190,663
|
|
|
$
|
209,591
|
|
|
$
|
12,446
|
|
|
$
|
11,314
|
|
Service cost
|
|
18,890
|
|
|
18,179
|
|
|
243
|
|
|
235
|
|
||||
Interest cost
|
|
7,754
|
|
|
7,950
|
|
|
438
|
|
|
489
|
|
||||
Plan participants’ contributions
|
|
—
|
|
|
—
|
|
|
199
|
|
|
217
|
|
||||
Plan amendment
|
|
(3,610
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Actuarial loss (gain)
|
|
574
|
|
|
1,050
|
|
|
(579
|
)
|
|
1,481
|
|
||||
Benefits paid
|
|
(4,680
|
)
|
|
(10,053
|
)
|
|
(1,433
|
)
|
|
(725
|
)
|
||||
Settlement payments
|
|
—
|
|
|
(747
|
)
|
|
—
|
|
|
—
|
|
||||
Benefit obligation at end of year
|
|
209,591
|
|
|
225,970
|
|
|
11,314
|
|
|
13,011
|
|
||||
Change in plan assets:
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
|
127,267
|
|
|
142,742
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
|
20,482
|
|
|
25,972
|
|
|
1,234
|
|
|
508
|
|
||||
Plan participants’ contributions
|
|
—
|
|
|
—
|
|
|
199
|
|
|
217
|
|
||||
Actual return on plan assets
|
|
(327
|
)
|
|
8,992
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
|
(4,680
|
)
|
|
(10,053
|
)
|
|
(1,433
|
)
|
|
(725
|
)
|
||||
Settlement payments
|
|
—
|
|
|
(747
|
)
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
|
142,742
|
|
|
166,906
|
|
|
—
|
|
|
—
|
|
||||
Funded status at end of year
|
|
$
|
(66,849
|
)
|
|
$
|
(59,064
|
)
|
|
$
|
(11,314
|
)
|
|
$
|
(13,011
|
)
|
Accumulated benefit obligation
|
|
$
|
148,906
|
|
|
$
|
160,642
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||||||
Amounts recognized in consolidated balance sheets:
|
|
|
|
|
|
|
|
|
||||||||
Current accrued benefit cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
612
|
|
|
$
|
614
|
|
Long-term pension and benefits
|
|
66,849
|
|
|
59,064
|
|
|
10,702
|
|
|
12,397
|
|
||||
|
|
66,849
|
|
|
59,064
|
|
|
11,314
|
|
|
13,011
|
|
||||
Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss
|
|
(65,889
|
)
|
|
(62,013
|
)
|
|
(7,280
|
)
|
|
(7,881
|
)
|
||||
Prior service credit
|
|
3,610
|
|
|
3,429
|
|
|
3,335
|
|
|
—
|
|
||||
|
|
(62,279
|
)
|
|
(58,584
|
)
|
|
(3,945
|
)
|
|
(7,881
|
)
|
||||
Net amount of liabilities and accumulated other comprehensive loss recognized in consolidated balance sheets
|
|
$
|
4,570
|
|
|
$
|
480
|
|
|
$
|
7,369
|
|
|
$
|
5,130
|
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||||||||
|
|
2014
|
|
2015
|
|
2016
|
|
2014
|
|
2015
|
|
2016
|
||||||||||||
Components of net periodic pension and postretirement benefit expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
13,400
|
|
|
$
|
18,890
|
|
|
$
|
18,179
|
|
|
$
|
227
|
|
|
$
|
243
|
|
|
$
|
235
|
|
Interest cost
|
|
6,675
|
|
|
7,754
|
|
|
7,950
|
|
|
506
|
|
|
438
|
|
|
489
|
|
||||||
Expected return on plan assets
|
|
(6,363
|
)
|
|
(8,037
|
)
|
|
(8,913
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost (credit)
|
|
33
|
|
|
—
|
|
|
(181
|
)
|
|
(3,713
|
)
|
|
(3,713
|
)
|
|
(3,335
|
)
|
||||||
Amortization of actuarial loss
|
|
3,071
|
|
|
6,306
|
|
|
4,645
|
|
|
915
|
|
|
885
|
|
|
880
|
|
||||||
Settlement cost
|
|
1,809
|
|
|
—
|
|
|
202
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic expense (credit)
|
|
$
|
18,625
|
|
|
$
|
24,913
|
|
|
$
|
21,882
|
|
|
$
|
(2,065
|
)
|
|
$
|
(2,147
|
)
|
|
$
|
(1,731
|
)
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||||||||
|
|
2014
|
|
2015
|
|
2016
|
|
2014
|
|
2015
|
|
2016
|
||||||||||||
Beginning balance
|
|
$
|
(36,184
|
)
|
|
$
|
(63,257
|
)
|
|
$
|
(62,279
|
)
|
|
$
|
3,053
|
|
|
$
|
(1,696
|
)
|
|
$
|
(3,945
|
)
|
Net actuarial gain (loss)
|
|
(31,986
|
)
|
|
(8,938
|
)
|
|
(971
|
)
|
|
(1,951
|
)
|
|
579
|
|
|
(1,481
|
)
|
||||||
Plan amendment
|
|
—
|
|
|
3,610
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost (credit)
|
|
33
|
|
|
—
|
|
|
(181
|
)
|
|
(3,713
|
)
|
|
(3,713
|
)
|
|
(3,335
|
)
|
||||||
Amortization of actuarial loss
|
|
3,071
|
|
|
6,306
|
|
|
4,645
|
|
|
915
|
|
|
885
|
|
|
880
|
|
||||||
Settlement cost
|
|
1,809
|
|
|
—
|
|
|
202
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amount recognized in other comprehensive loss
|
|
(27,073
|
)
|
|
978
|
|
|
3,695
|
|
|
(4,749
|
)
|
|
(2,249
|
)
|
|
(3,936
|
)
|
||||||
Ending balance
|
|
$
|
(63,257
|
)
|
|
$
|
(62,279
|
)
|
|
$
|
(58,584
|
)
|
|
$
|
(1,696
|
)
|
|
$
|
(3,945
|
)
|
|
$
|
(7,881
|
)
|
|
|
Pension Benefits
|
|
Other
Postretirement Benefits
|
||||
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Discount rate—Salaried plan
(1)
|
|
3.95%
|
|
4.21%
|
|
n/a
|
|
n/a
|
Discount rate—USW plan
|
|
3.82%
|
|
4.08%
|
|
n/a
|
|
n/a
|
Discount rate—IUOE plan
|
|
4.03%
|
|
4.41%
|
|
n/a
|
|
n/a
|
Discount rate—Other Postretirement Benefits
|
|
n/a
|
|
n/a
|
|
4.00%
|
|
3.85%
|
Rate of compensation increase—Salaried plan
(2)
|
|
4% - 11%
|
|
4% - 11%
|
|
n/a
|
|
n/a
|
Rate of compensation increase—USW plan
|
|
3.50%
|
|
3.50%
|
|
n/a
|
|
n/a
|
Rate of compensation increase—IUOE plan
|
|
5.00%
|
|
5.00%
|
|
n/a
|
|
n/a
|
|
|
Pension Benefits
|
|
Other
Postretirement Benefits
|
||||||||
|
|
2014
|
|
2015
|
|
2016
|
|
2014
|
|
2015
|
|
2016
|
Discount rate—Salaried plan
|
|
4.89%
|
|
3.91%
|
|
3.95%
|
|
n/a
|
|
n/a
|
|
n/a
|
Discount rate—USW plan
|
|
4.07%
|
|
3.56%
|
|
3.82%
|
|
n/a
|
|
n/a
|
|
n/a
|
Discount rate—IUOE plan
|
|
4.89%
|
|
3.93%
|
|
3.78%
|
|
n/a
|
|
n/a
|
|
n/a
|
Discount rate—Other Postretirement Benefits
|
|
n/a
|
|
n/a
|
|
n/a
|
|
4.52%
|
|
3.66%
|
|
4.00%
|
Rate of compensation increase—Salaried plan
(1)
|
|
5.00%
|
|
5.50%
|
|
4% - 11%
|
|
n/a
|
|
n/a
|
|
n/a
|
Rate of compensation increase—USW plan
|
|
3.50%
|
|
3.50%
|
|
3.50%
|
|
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
|
|
6.00%
|
|
6.00%
|
|
6.00%
|
|
n/a
|
|
n/a
|
|
n/a
|
Expected rate of return on plan assets—USW plan
|
|
6.00%
|
|
6.00%
|
|
6.00%
|
|
n/a
|
|
n/a
|
|
n/a
|
Expected rate of return on plan assets—IUOE plan
|
|
6.00%
|
|
6.00%
|
|
6.00%
|
|
n/a
|
|
n/a
|
|
n/a
|
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
|
|
$
|
3,492
|
|
|
$
|
3,492
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mid-cap fund
|
|
3,495
|
|
|
3,495
|
|
|
—
|
|
|
—
|
|
||||
Large-cap fund
|
|
26,304
|
|
|
26,304
|
|
|
—
|
|
|
—
|
|
||||
International equity fund
|
|
16,530
|
|
|
16,530
|
|
|
—
|
|
|
—
|
|
||||
Fixed Income Securities
(a)
:
|
|
|
|
|
|
|
|
|
||||||||
Short-term bond funds
|
|
3,834
|
|
|
3,834
|
|
|
—
|
|
|
—
|
|
||||
Intermediate-term bond funds
|
|
18,141
|
|
|
18,141
|
|
|
—
|
|
|
—
|
|
||||
Long-term investment grade bond funds
|
|
66,758
|
|
|
66,758
|
|
|
—
|
|
|
—
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
||||||||
Short-term investment funds
|
|
3,944
|
|
|
3,944
|
|
|
—
|
|
|
—
|
|
||||
Group annuity contract
|
|
244
|
|
|
—
|
|
|
—
|
|
|
244
|
|
||||
Fair value of plan assets
|
|
$
|
142,742
|
|
|
$
|
142,498
|
|
|
$
|
—
|
|
|
$
|
244
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
3,465
|
|
|
$
|
3,465
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mid-cap fund
|
|
3,472
|
|
|
3,472
|
|
|
—
|
|
|
—
|
|
||||
Large-cap funds
|
|
26,323
|
|
|
26,323
|
|
|
—
|
|
|
—
|
|
||||
International equity fund
|
|
16,797
|
|
|
16,797
|
|
|
—
|
|
|
—
|
|
||||
Fixed Income Securities
(a)
:
|
|
|
|
|
|
|
|
|
||||||||
Short-term bond funds
|
|
4,414
|
|
|
4,414
|
|
|
—
|
|
|
—
|
|
||||
Intermediate-term bond funds
|
|
23,629
|
|
|
23,629
|
|
|
—
|
|
|
—
|
|
||||
Long-term investment grade bond funds
|
|
83,240
|
|
|
83,240
|
|
|
—
|
|
|
—
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
||||||||
Short-term investment fund
|
|
5,346
|
|
|
5,346
|
|
|
—
|
|
|
—
|
|
||||
Group annuity contract
|
|
220
|
|
|
—
|
|
|
—
|
|
|
220
|
|
||||
Fair value of plan assets
|
|
$
|
166,906
|
|
|
$
|
166,686
|
|
|
$
|
—
|
|
|
$
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Category
|
|
Fund’s Investment Strategy
|
Domestic Equity Securities:
|
|
|
Small-cap fund
|
|
Seeks to track performance of the Center for Research in Security Prices (“CRSP”) US Small Cap Index
|
Mid-cap fund
|
|
Seeks to track performance of the CRSP US Mid Cap Index
|
Large-cap funds
|
|
Seek to track performance of the Standard & Poor’s 500 Index
|
International equity fund
|
|
Seeks long-term growth of capital by investing 65% or more of assets in international equities
|
Fixed Income Securities:
|
|
|
Short-term bond funds
|
|
Seek current income with limited price volatility through investment in primarily high quality bonds
|
Intermediate-term bond funds
|
|
Seek moderate and sustainable level of current income by investing primarily in high quality fixed income securities with maturities from five to ten years
|
Long-term investment grade bond funds
|
|
Seek high and sustainable current income through investment primarily in long-term high grade bonds
|
Other:
|
|
|
Short-term investment fund
|
|
Invests in high quality short-term money market instruments issued by the U.S. Treasury
|
Group annuity contract
|
|
Earns interest quarterly equal to the effective yield of the 91-day U.S. Treasury bill
|
|
|
2015
|
|
2016
|
||||
|
|
Actual
|
|
Target
|
|
Actual
|
|
Target
|
Equity securities
|
|
35%
|
|
30%
|
|
30%
|
|
30%
|
Fixed income securities
|
|
62%
|
|
67%
|
|
67%
|
|
67%
|
Other
|
|
3%
|
|
3%
|
|
3%
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
||||
2017
|
|
$
|
13,783
|
|
|
$
|
614
|
|
2018
|
|
$
|
14,016
|
|
|
$
|
685
|
|
2019
|
|
$
|
13,245
|
|
|
$
|
778
|
|
2020
|
|
$
|
16,435
|
|
|
$
|
857
|
|
2021
|
|
$
|
14,438
|
|
|
$
|
933
|
|
2022 through 2026
|
|
$
|
72,826
|
|
|
$
|
4,702
|
|
11.
|
Related Party Transactions
|
12.
|
Debt
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2016
|
||||
Commercial paper
|
|
$
|
280,000
|
|
|
$
|
50,000
|
|
5.65% Notes due 2016
|
|
250,000
|
|
|
—
|
|
||
6.40% Notes due 2018
|
|
250,000
|
|
|
250,000
|
|
||
6.55% Notes due 2019
|
|
550,000
|
|
|
550,000
|
|
||
4.25% Notes due 2021
|
|
550,000
|
|
|
550,000
|
|
||
3.20% Notes due 2025
|
|
250,000
|
|
|
250,000
|
|
||
5.00% Notes due 2026
|
|
—
|
|
|
650,000
|
|
||
6.40% Notes due 2037
|
|
250,000
|
|
|
250,000
|
|
||
4.20% Notes due 2042
|
|
250,000
|
|
|
250,000
|
|
||
5.15% Notes due 2043
|
|
550,000
|
|
|
550,000
|
|
||
4.20% Notes due 2045
|
|
250,000
|
|
|
250,000
|
|
||
4.25% Notes due 2046
|
|
—
|
|
|
500,000
|
|
||
Face value of long-term debt
|
|
3,430,000
|
|
|
4,100,000
|
|
||
Unamortized debt issuance costs
(1)
|
|
(18,672
|
)
|
|
(26,948
|
)
|
||
Net unamortized debt premium
(1)
|
|
16,459
|
|
|
6,530
|
|
||
Net unamortized amount of gains from historical fair value hedges
(1)
|
|
11,835
|
|
|
7,610
|
|
||
Long-term debt, net, including current portion
|
|
3,439,622
|
|
|
4,087,192
|
|
||
Less: current portion of long-term debt, net
|
|
250,335
|
|
|
—
|
|
||
Long-term debt, net
|
|
$
|
3,189,287
|
|
|
$
|
4,087,192
|
|
|
|
|
|
|
(1)
|
Debt issuance costs, note discounts and premiums, and realized gains and losses of historical fair value hedges are being amortized or accreted to the applicable notes over the respective lives of those notes.
|
13.
|
Derivative Financial Instruments
|
Type of Contract/Accounting Methodology
|
|
Product Represented by the Contract and Associated Barrels
|
|
Maturity Dates
|
Futures - Fair Value Hedges
|
|
0.7 million barrels of crude oil
|
|
November 2017
|
Futures - Economic Hedges
|
|
3.9 million barrels of refined products and crude oil
|
|
Between January and April 2017
|
Futures - Economic Hedges
|
|
0.7 million barrels of butane
|
|
Between January and April 2017
|
|
|
December 31, 2015
|
||||||||||||||||||
Description
|
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts of Liabilities Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Assets Presented in the Consolidated Balance Sheets
(1)
|
|
Margin Deposit Amounts Not Offset in the Consolidated Balance Sheets
|
|
Net Asset Amount
(2)
|
||||||||||
Energy commodity derivatives
|
|
$
|
48,367
|
|
|
$
|
(5,646
|
)
|
|
$
|
42,721
|
|
|
$
|
(24,252
|
)
|
|
$
|
18,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
||||||||||||||||||
Description
|
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts of Assets Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets
|
|
Margin Deposit Amounts Not Offset in the Consolidated Balance Sheets
|
|
Net Asset Amount
(2)
|
||||||||||
Energy commodity derivatives
|
|
$
|
(36,798
|
)
|
|
$
|
6,060
|
|
|
$
|
(30,738
|
)
|
|
$
|
49,899
|
|
|
$
|
19,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivative Gains (Losses) Included in AOCL
|
|
2014
|
|
2015
|
|
2016
|
||||||
Beginning balance
|
|
$
|
13,627
|
|
|
$
|
(16,587
|
)
|
|
$
|
(30,126
|
)
|
Net loss on interest rate contract cash flow hedges
|
|
(30,090
|
)
|
|
(14,904
|
)
|
|
(6,699
|
)
|
|||
Reclassification of net loss (gain) on cash flow hedges to income
|
|
(124
|
)
|
|
1,365
|
|
|
2,049
|
|
|||
Ending balance
|
|
$
|
(16,587
|
)
|
|
$
|
(30,126
|
)
|
|
$
|
(34,776
|
)
|
|
|
Year Ended December 31, 2014
|
||||||||||||||||||
Derivative Instrument
|
|
Amount of Loss Recognized in AOCL on Derivative
|
|
Location of Gain (Loss) Reclassified from AOCL into Income
|
|
Amount of Gain (Loss) Reclassified from AOCL into Income
|
||||||||||||||
|
|
|
Effective Portion
|
|
Ineffective Portion
|
|||||||||||||||
Interest rate contracts
|
|
|
$
|
(30,090
|
)
|
|
|
Interest expense
|
|
|
$
|
(242
|
)
|
|
|
|
$
|
366
|
|
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||
Derivative Instrument
|
|
Amount of Loss Recognized in AOCL on Derivative
|
|
Location of Loss Reclassified from AOCL into Income
|
|
Amount of Loss Reclassified from AOCL into Income
|
||||||||||||||
|
|
|
Effective Portion
|
|
Ineffective Portion
|
|||||||||||||||
Interest rate contracts
|
|
|
$
|
(14,904
|
)
|
|
|
Interest expense
|
|
|
$
|
(1,365
|
)
|
|
|
|
$
|
—
|
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
Derivative Instrument
|
|
Amount of Loss Recognized in AOCL on Derivative
|
|
Location of Loss Reclassified from AOCL into Income
|
|
Amount of Loss Reclassified from AOCL into Income
|
||||||||||||||
|
|
|
Effective Portion
|
|
Ineffective Portion
|
|||||||||||||||
Interest rate contracts
|
|
|
$
|
(6,699
|
)
|
|
|
Interest expense
|
|
|
$
|
(2,049
|
)
|
|
|
|
$
|
—
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
Gain (loss) recognized in other income/expense on derivative (futures contracts)
|
|
$
|
13.5
|
|
|
$
|
15.6
|
|
|
$
|
(9.0
|
)
|
Gain (loss) recognized in other income/expense on hedged item (tank bottoms)
|
|
$
|
(13.5
|
)
|
|
$
|
(15.6
|
)
|
|
$
|
9.0
|
|
|
|
|
|
Amount of Gain (Loss)
Recognized on Derivative |
||||||||||
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivative Instrument
|
|
Location of Gain (Loss)
Recognized on Derivative
|
|
2014
|
|
2015
|
|
2016
|
||||||
Futures contracts
|
|
Product sales revenue
|
|
$
|
145,320
|
|
|
$
|
68,426
|
|
|
$
|
(38,584
|
)
|
Futures contracts
|
|
Operating expenses
|
|
17,818
|
|
|
11,819
|
|
|
(5,000
|
)
|
|||
Futures contracts
|
|
Cost of product sales
|
|
(17,141
|
)
|
|
(8,997
|
)
|
|
10,998
|
|
|||
|
|
Total
|
|
$
|
145,997
|
|
|
$
|
71,248
|
|
|
$
|
(32,586
|
)
|
|
|
December 31, 2015
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Futures contracts
|
|
Energy commodity derivatives contracts, net
|
|
$
|
60
|
|
|
Energy commodity derivatives contracts, net
|
|
$
|
—
|
|
Futures contracts
|
|
Other noncurrent assets
|
|
3,478
|
|
|
Other noncurrent liabilities
|
|
—
|
|
||
Interest rate contracts
|
|
Other current assets
|
|
2,179
|
|
|
Other current liabilities
|
|
653
|
|
||
|
|
Total
|
|
$
|
5,717
|
|
|
Total
|
|
$
|
653
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2016
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Futures contracts
|
|
Energy commodity derivatives contracts, net
|
|
$
|
—
|
|
|
Energy commodity derivatives contracts, net
|
|
$
|
3,079
|
|
Interest rate contracts
|
|
Other noncurrent assets
|
|
14,114
|
|
|
Other noncurrent liabilities
|
|
—
|
|
||
|
|
Total
|
|
$
|
14,114
|
|
|
Total
|
|
$
|
3,079
|
|
|
|
December 31, 2015
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Futures contracts
|
|
Energy commodity derivatives contracts, net
|
|
$
|
44,829
|
|
|
Energy commodity derivatives contracts, net
|
|
$
|
5,646
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2016
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Futures contracts
|
|
Energy commodity derivatives contracts, net
|
|
$
|
6,060
|
|
|
Energy commodity derivatives contracts, net
|
|
$
|
33,719
|
|
14.
|
Leases
|
2017
|
$
|
38.6
|
|
2018
|
32.9
|
|
|
2019
|
21.1
|
|
|
2020
|
17.8
|
|
|
2021
|
17.4
|
|
|
Thereafter
|
110.6
|
|
|
Total
|
$
|
238.4
|
|
2017
|
$
|
227.6
|
|
2018
|
208.7
|
|
|
2019
|
158.8
|
|
|
2020
|
109.6
|
|
|
2021
|
77.0
|
|
|
Thereafter
|
188.5
|
|
|
Total
|
$
|
970.2
|
|
|
|
December 31, 2015
|
|
December 31, 2016
|
||||
Total minimum lease payments receivable
|
|
$
|
30.7
|
|
|
$
|
23.3
|
|
Less: Unearned income
|
|
5.8
|
|
|
4.8
|
|
||
Recorded net investment in direct financing lease
|
|
$
|
24.9
|
|
|
$
|
18.5
|
|
|
|
December 31, 2015
|
|
December 31, 2016
|
||||
Other accounts receivable
|
|
$
|
6.4
|
|
|
$
|
3.4
|
|
Long-term receivables
|
|
18.5
|
|
|
15.1
|
|
||
Total
|
|
$
|
24.9
|
|
|
$
|
18.5
|
|
|
|
Performance-Based Awards
|
|
Time-Based Awards
|
|
Total Awards
|
|||||||||||||||
|
|
Number of Unit
Awards
|
|
Weighted-Average Fair Value
|
|
Number of Unit
Awards
|
|
Weighted-Average Fair Value
|
|
Number of Unit
Awards
|
|
Weighted-Average Fair Value
|
|||||||||
Non-vested units - 1/1/2016
|
|
313,240
|
|
|
$
|
79.64
|
|
|
57,682
|
|
|
$
|
81.74
|
|
|
370,922
|
|
|
$
|
79.97
|
|
Units granted during 2016
|
|
193,344
|
|
|
$
|
70.29
|
|
|
39,301
|
|
|
$
|
64.76
|
|
|
232,645
|
|
|
$
|
69.35
|
|
Units vested during 2016
|
|
(163,632
|
)
|
|
$
|
72.32
|
|
|
(9,511
|
)
|
|
$
|
71.40
|
|
|
(173,143
|
)
|
|
$
|
72.27
|
|
Units forfeited during 2016
|
|
(29,256
|
)
|
|
$
|
76.08
|
|
|
(5,054
|
)
|
|
$
|
73.20
|
|
|
(34,310
|
)
|
|
$
|
75.66
|
|
Non-vested units - 12/31/16
|
|
313,696
|
|
|
$
|
78.03
|
|
|
82,418
|
|
|
$
|
75.36
|
|
|
396,114
|
|
|
$
|
77.47
|
|
Grant Date
|
|
Non-Vested Unit Awards
|
|
Adjustment to Unit Awards in Anticipation of Achieving Above- Target Financial Results
|
|
Total Unit Award Accrual
|
|
Vesting Date
|
|
Unrecognized Compensation Expense
(a)
(in millions)
|
|
|||||
Performance-Based Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2015 Awards
|
|
131,335
|
|
|
32,834
|
|
|
164,169
|
|
|
12/31/2017
|
|
$
|
4.8
|
|
|
2016 Awards
|
|
182,361
|
|
|
—
|
|
|
182,361
|
|
|
12/31/2018
|
|
8.5
|
|
|
|
Time-Based Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2017 Vesting Date
|
|
50,488
|
|
|
—
|
|
|
50,488
|
|
|
12/31/2017
|
|
1.5
|
|
|
|
2018 Vesting Date
|
|
30,456
|
|
|
—
|
|
|
30,456
|
|
|
12/31/2018
|
|
1.3
|
|
|
|
2020 Vesting Date
|
|
1,474
|
|
|
—
|
|
|
1,474
|
|
|
12/31/2020
|
|
0.1
|
|
|
|
Total
|
|
396,114
|
|
|
32,834
|
|
|
428,948
|
|
|
|
|
$
|
16.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-Based Awards
|
|
Time-Based Awards
|
||||||||||
|
|
Number of
Unit
Awards
|
|
Weighted-Average Fair Value
|
|
Number of Unit
Awards
|
|
Weighted-Average Fair Value
|
||||||
Units granted during 2014
|
|
187,371
|
|
|
$
|
72.77
|
|
|
33,903
|
|
|
$
|
82.86
|
|
Units granted during 2015
|
|
148,028
|
|
|
$
|
88.78
|
|
|
26,421
|
|
|
$
|
81.51
|
|
Units granted during 2016
|
|
193,344
|
|
|
$
|
70.29
|
|
|
39,301
|
|
|
$
|
64.76
|
|
Vesting Date
|
|
Vested
Limited
Partner Units
|
|
Fair Value of Unit Awards on Vesting Date (in millions)
|
|
Intrinsic Value of Unit Awards on Vesting Date (in millions)
|
12/31/2014
|
|
528,984
|
|
$22.4
|
|
$43.7
|
12/31/2015
|
|
506,393
|
|
$27.7
|
|
$34.4
|
12/31/2016
|
|
361,711
|
|
$22.6
|
|
$27.4
|
|
|
|
|
|
|
|
Settlement Date
|
|
Number of Limited Partner Units Issued, Net of Tax Withholdings
|
|
Minimum Tax Withholdings
(in millions)
|
|
Employer Taxes (in millions)
|
|
Total Cash Taxes Paid (in millions)
|
January 2014
|
|
387,216
|
|
$14.8
|
|
$1.2
|
|
$16.0
|
January 2015
|
|
354,529
|
|
$17.8
|
|
$1.7
|
|
$19.5
|
February 2016
|
|
350,552
|
|
$14.4
|
|
$1.4
|
|
$15.8
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
2012 awards
|
|
$
|
8,314
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2013 awards
|
|
10,852
|
|
|
10,658
|
|
|
—
|
|
|||
2014 awards
|
|
6,494
|
|
|
7,471
|
|
|
7,928
|
|
|||
2015 awards
|
|
—
|
|
|
4,917
|
|
|
4,874
|
|
|||
2016 awards
|
|
—
|
|
|
—
|
|
|
4,304
|
|
|||
Time-based awards
|
|
1,624
|
|
|
1,199
|
|
|
2,252
|
|
|||
Total
|
|
$
|
27,284
|
|
|
$
|
24,245
|
|
|
$
|
19,358
|
|
|
|
|
|
|
|
|
||||||
Allocation of LTIP expense on our consolidated statements of income:
|
|
|
|
|
|
|||||||
G&A expense
|
|
$
|
26,700
|
|
|
$
|
23,937
|
|
|
$
|
19,204
|
|
Operating expense
|
|
584
|
|
|
308
|
|
|
154
|
|
|||
Total
|
|
$
|
27,284
|
|
|
$
|
24,245
|
|
|
$
|
19,358
|
|
16.
|
Segment Disclosures
|
|
|
Year Ended December 31, 2014
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
Transportation and terminals revenue
|
|
$
|
946,612
|
|
|
$
|
341,915
|
|
|
$
|
170,740
|
|
|
$
|
—
|
|
|
$
|
1,459,267
|
|
Product sales revenue
|
|
872,537
|
|
|
—
|
|
|
6,437
|
|
|
—
|
|
|
878,974
|
|
|||||
Affiliate management fee revenue
|
|
—
|
|
|
20,790
|
|
|
1,321
|
|
|
—
|
|
|
22,111
|
|
|||||
Total revenue
|
|
1,819,149
|
|
|
362,705
|
|
|
178,498
|
|
|
—
|
|
|
2,360,352
|
|
|||||
Operating expenses
|
|
356,057
|
|
|
83,184
|
|
|
65,173
|
|
|
(3,513
|
)
|
|
500,901
|
|
|||||
Cost of product sales
|
|
592,887
|
|
|
—
|
|
|
1,698
|
|
|
—
|
|
|
594,585
|
|
|||||
(Earnings) loss of non-controlled entities
|
|
—
|
|
|
(16,309
|
)
|
|
(3,085
|
)
|
|
—
|
|
|
(19,394
|
)
|
|||||
Operating margin
|
|
870,205
|
|
|
295,830
|
|
|
114,712
|
|
|
3,513
|
|
|
1,284,260
|
|
|||||
Depreciation and amortization expense
|
|
101,642
|
|
|
27,800
|
|
|
28,786
|
|
|
3,513
|
|
|
161,741
|
|
|||||
G&A expenses
|
|
96,411
|
|
|
29,557
|
|
|
22,320
|
|
|
—
|
|
|
148,288
|
|
|||||
Operating profit
|
|
$
|
672,152
|
|
|
$
|
238,473
|
|
|
$
|
63,606
|
|
|
$
|
—
|
|
|
$
|
974,231
|
|
Additions to long-lived assets
|
|
$
|
163,753
|
|
|
$
|
439,846
|
|
|
$
|
18,413
|
|
|
|
|
$
|
622,012
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2014
|
||||||||||||||||||
Segment assets
|
|
$
|
2,875,412
|
|
|
$
|
1,937,242
|
|
|
$
|
647,900
|
|
|
|
|
$
|
5,460,554
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
40,855
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
5,501,409
|
|
||||||||
Goodwill
|
|
$
|
38,369
|
|
|
$
|
12,082
|
|
|
$
|
2,809
|
|
|
|
|
$
|
53,260
|
|
||
Investments in non-controlled entities
|
|
$
|
—
|
|
|
$
|
599,757
|
|
|
$
|
14,110
|
|
|
|
|
$
|
613,867
|
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
Transportation and terminals revenue
|
|
$
|
974,505
|
|
|
$
|
394,098
|
|
|
$
|
176,143
|
|
|
$
|
—
|
|
|
$
|
1,544,746
|
|
Product sales revenue
|
|
623,102
|
|
|
3,587
|
|
|
3,147
|
|
|
—
|
|
|
629,836
|
|
|||||
Affiliate management fee revenue
|
|
—
|
|
|
12,495
|
|
|
1,376
|
|
|
—
|
|
|
13,871
|
|
|||||
Total revenue
|
|
1,597,607
|
|
|
410,180
|
|
|
180,666
|
|
|
—
|
|
|
2,188,453
|
|
|||||
Operating expenses
|
|
377,772
|
|
|
89,455
|
|
|
62,526
|
|
|
(3,851
|
)
|
|
525,902
|
|
|||||
Cost of product sales
|
|
442,621
|
|
|
3,278
|
|
|
1,374
|
|
|
—
|
|
|
447,273
|
|
|||||
(Earnings) loss of non-controlled entities
|
|
193
|
|
|
(63,918
|
)
|
|
(2,758
|
)
|
|
—
|
|
|
(66,483
|
)
|
|||||
Operating margin
|
|
777,021
|
|
|
381,365
|
|
|
119,524
|
|
|
3,851
|
|
|
1,281,761
|
|
|||||
Depreciation and amortization expense
|
|
96,244
|
|
|
35,681
|
|
|
31,036
|
|
|
3,851
|
|
|
166,812
|
|
|||||
G&A expenses
|
|
94,482
|
|
|
36,000
|
|
|
20,847
|
|
|
—
|
|
|
151,329
|
|
|||||
Operating profit
|
|
$
|
586,295
|
|
|
$
|
309,684
|
|
|
$
|
67,641
|
|
|
$
|
—
|
|
|
$
|
963,620
|
|
Additions to long-lived assets
|
|
$
|
310,907
|
|
|
$
|
289,851
|
|
|
$
|
70,290
|
|
|
|
|
$
|
671,048
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2015
|
||||||||||||||||||
Segment assets
|
|
$
|
2,991,322
|
|
|
$
|
2,313,110
|
|
|
$
|
677,914
|
|
|
|
|
$
|
5,982,346
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
59,221
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
6,041,567
|
|
||||||||
Goodwill
|
|
$
|
38,369
|
|
|
$
|
12,082
|
|
|
$
|
2,809
|
|
|
|
|
$
|
53,260
|
|
||
Investments in non-controlled entities
|
|
$
|
12,381
|
|
|
$
|
739,470
|
|
|
$
|
13,777
|
|
|
|
|
$
|
765,628
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
Transportation and terminals revenue
|
|
$
|
1,002,368
|
|
|
$
|
407,837
|
|
|
$
|
181,721
|
|
|
$
|
(807
|
)
|
|
$
|
1,591,119
|
|
Product sales revenue
|
|
561,759
|
|
|
31,170
|
|
|
6,673
|
|
|
—
|
|
|
599,602
|
|
|||||
Affiliate management fee revenue
|
|
765
|
|
|
12,533
|
|
|
1,391
|
|
|
—
|
|
|
14,689
|
|
|||||
Total revenue
|
|
1,564,892
|
|
|
451,540
|
|
|
189,785
|
|
|
(807
|
)
|
|
2,205,410
|
|
|||||
Operating expenses
|
|
381,055
|
|
|
88,762
|
|
|
65,704
|
|
|
(5,762
|
)
|
|
529,759
|
|
|||||
Cost of product sales
|
|
459,989
|
|
|
31,657
|
|
|
1,692
|
|
|
—
|
|
|
493,338
|
|
|||||
(Earnings) loss of non-controlled entities
|
|
968
|
|
|
(76,972
|
)
|
|
(2,692
|
)
|
|
—
|
|
|
(78,696
|
)
|
|||||
Operating margin
|
|
722,880
|
|
|
408,093
|
|
|
125,081
|
|
|
4,955
|
|
|
1,261,009
|
|
|||||
Depreciation and amortization expense
|
|
103,388
|
|
|
38,081
|
|
|
31,718
|
|
|
4,955
|
|
|
178,142
|
|
|||||
G&A expenses
|
|
91,795
|
|
|
36,305
|
|
|
19,715
|
|
|
—
|
|
|
147,815
|
|
|||||
Operating profit
|
|
$
|
527,697
|
|
|
$
|
333,707
|
|
|
$
|
73,648
|
|
|
$
|
—
|
|
|
$
|
935,052
|
|
Additions to long-lived assets
|
|
$
|
291,202
|
|
|
$
|
250,433
|
|
|
$
|
104,728
|
|
|
|
|
$
|
646,363
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2016
|
||||||||||||||||||
Segment assets
|
|
$
|
3,289,600
|
|
|
$
|
2,631,407
|
|
|
$
|
791,132
|
|
|
|
|
$
|
6,712,139
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
59,934
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
6,772,073
|
|
||||||||
Goodwill
|
|
$
|
38,369
|
|
|
$
|
12,082
|
|
|
$
|
2,809
|
|
|
|
|
$
|
53,260
|
|
||
Investments in non-controlled entities
|
|
$
|
31,029
|
|
|
$
|
886,920
|
|
|
$
|
13,306
|
|
|
|
|
$
|
931,255
|
|
17.
|
Commitments and Contingencies
|
18.
|
Quarterly Financial Data (unaudited)
|
2015
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenue
|
|
$
|
530,302
|
|
|
$
|
498,427
|
|
|
$
|
586,676
|
|
|
$
|
573,048
|
|
Total costs and expenses
|
|
$
|
320,081
|
|
|
$
|
315,206
|
|
|
$
|
312,527
|
|
|
$
|
343,502
|
|
Operating margin
|
|
$
|
297,006
|
|
|
$
|
286,145
|
|
|
$
|
369,325
|
|
|
$
|
329,285
|
|
Net income
|
|
$
|
183,636
|
|
|
$
|
177,391
|
|
|
$
|
250,972
|
|
|
$
|
207,123
|
|
Basic net income per limited partner unit
|
|
$
|
0.81
|
|
|
$
|
0.78
|
|
|
$
|
1.10
|
|
|
$
|
0.91
|
|
Diluted net income per limited partner unit
|
|
$
|
0.81
|
|
|
$
|
0.78
|
|
|
$
|
1.10
|
|
|
$
|
0.91
|
|
|
|
|
|
|
|
|
|
|
||||||||
2016
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
519,816
|
|
|
$
|
518,897
|
|
|
$
|
551,782
|
|
|
$
|
614,915
|
|
Total costs and expenses
|
|
$
|
321,446
|
|
|
$
|
307,709
|
|
|
$
|
336,409
|
|
|
$
|
383,490
|
|
Operating margin
|
|
$
|
300,626
|
|
|
$
|
304,371
|
|
|
$
|
316,830
|
|
|
$
|
339,182
|
|
Net income
|
|
$
|
207,070
|
|
|
$
|
187,859
|
|
|
$
|
194,551
|
|
|
$
|
213,291
|
|
Basic net income per limited partner unit
|
|
$
|
0.91
|
|
|
$
|
0.82
|
|
|
$
|
0.85
|
|
|
$
|
0.94
|
|
Diluted net income per limited partner unit
|
|
$
|
0.91
|
|
|
$
|
0.82
|
|
|
$
|
0.85
|
|
|
$
|
0.93
|
|
19.
|
Fair Value Disclosures
|
•
|
Energy commodity derivatives contracts
. These include exchange-traded futures contracts related to petroleum products. These contracts are carried at fair value on our consolidated balance sheets and are valued based on quoted prices in active markets. See Note 13 –
Derivative Financial Instruments
for further disclosures regarding these contracts.
|
•
|
Interest rate contracts.
These include forward-starting interest rate swap agreements to hedge against the risk of variability of interest payments on future debt. These contracts are carried at fair value on our consolidated balance sheets and are valued based on an assumed exchange, at the end of each period, in an orderly transaction with a market participant in the market in which the financial instrument is traded. The exchange value was calculated using present value techniques
|
•
|
Long-term receivables.
These primarily include payments receivable under a direct-financing leasing arrangement and cost reimbursement payments receivable. These receivables were recorded at fair value on our consolidated balance sheets, using then-current market rates to estimate the present value of future cash flows.
|
•
|
Debt.
The fair value of our publicly traded notes was based on the prices of those notes at
December 31, 2015
and
2016
; however, where recent observable market trades were not available, prices were determined using adjustments to the last traded value for that debt issuance or by adjustments to the prices of similar debt instruments of peer entities that are actively traded. The carrying amount of borrowings, if any, under our revolving credit facility and our commercial paper program approximates fair value due to the frequent repricing of these obligations.
|
|
|
|
|
|
|
Fair Value Measurements as of
December 31, 2015 using:
|
||||||||||||||
Assets (Liabilities)
|
|
Carrying Amount
|
|
Fair Value
|
|
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
|
|
$
|
42,721
|
|
|
$
|
42,721
|
|
|
$
|
42,721
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate contracts
|
|
$
|
1,526
|
|
|
$
|
1,526
|
|
|
$
|
—
|
|
|
$
|
1,526
|
|
|
$
|
—
|
|
Long-term receivables
|
|
$
|
20,374
|
|
|
$
|
20,374
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,374
|
|
Debt
|
|
$
|
(3,439,622
|
)
|
|
$
|
(3,284,791
|
)
|
|
$
|
—
|
|
|
$
|
(3,284,791
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
Fair Value Measurements as of
December 31, 2016 using:
|
||||||||||||||
Assets (Liabilities)
|
|
Carrying Amount
|
|
Fair Value
|
|
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
|
|
$
|
(30,738
|
)
|
|
$
|
(30,738
|
)
|
|
$
|
(30,738
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate contracts
|
|
$
|
14,114
|
|
|
$
|
14,114
|
|
|
$
|
—
|
|
|
$
|
14,114
|
|
|
$
|
—
|
|
Long-term receivables
|
|
$
|
23,870
|
|
|
$
|
23,870
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,870
|
|
Debt
|
|
$
|
(4,087,192
|
)
|
|
$
|
(4,262,321
|
)
|
|
$
|
—
|
|
|
$
|
(4,262,321
|
)
|
|
$
|
—
|
|
20.
|
Distributions
|
Payment Date
|
|
Per Unit Cash Distribution Amount
|
|
Total Cash Distribution
|
||||
2/14/2014
|
|
$
|
0.5850
|
|
|
$
|
132,835
|
|
5/15/2014
|
|
0.6125
|
|
|
139,079
|
|
||
8/14/2014
|
|
0.6400
|
|
|
145,324
|
|
||
11/14/2014
|
|
0.6675
|
|
|
151,568
|
|
||
Total
|
|
$
|
2.5050
|
|
|
$
|
568,806
|
|
|
|
|
|
|
||||
2/13/2015
|
|
$
|
0.6950
|
|
|
$
|
158,061
|
|
5/15/2015
|
|
0.7175
|
|
|
163,178
|
|
||
8/14/2015
|
|
0.7400
|
|
|
168,296
|
|
||
11/13/2015
|
|
0.7625
|
|
|
173,413
|
|
||
Total
|
|
$
|
2.9150
|
|
|
$
|
662,948
|
|
|
|
|
|
|
||||
2/12/2016
|
|
$
|
0.7850
|
|
|
$
|
178,808
|
|
5/13/2016
|
|
0.8025
|
|
|
182,797
|
|
||
8/12/2016
|
|
0.8200
|
|
|
186,783
|
|
||
11/14/2016
|
|
0.8375
|
|
|
190,769
|
|
||
Total
|
|
$
|
3.2450
|
|
|
$
|
739,157
|
|
|
|
|
|
|
Limited partner units outstanding on January 1, 2014
|
226,679,438
|
02/2014—Settlement of 2011 awards
|
387,216
|
During 2014—Other
(a)
|
1,603
|
Limited partner units outstanding on December 31, 2014
|
227,068,257
|
01/2015—Settlement of 2012 awards
|
354,529
|
During 2015—Other
(a)
|
4,461
|
Limited partner units outstanding on December 31, 2015
|
227,427,247
|
02/2016—Settlement of 2013 awards
|
350,552
|
During 2016—Other
(a)
|
6,117
|
Limited partner units outstanding on December 31, 2016
|
227,783,916
|
(a)
|
Limited partner units issued to settle the equity-based retainer paid to independent directors of our general partner.
|
•
|
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.
|
Item 9.
|
Changes in and Disagreements 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 of Directors and Executive Officers – 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
|
|
|
|
|
|
Page
|
Covered by reports of independent auditors:
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
Not covered by reports of independent auditors:
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
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).
|
|
|
|
*(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)
|
|
Amendment No. 1 dated October 27, 2011 to 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 October 28, 2011).
|
|
|
|
*(d)
|
|
Amendment No. 2 dated January 16, 2017 to Fifth Amended and Restated Agreement of Limited Partnership of Magellan Midstream Partners, L.P. dated September 28, 2009 (filed as Exhibit 3.2 to Form 8-K filed January 17, 2017).
|
|
|
|
*(e)
|
|
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).
|
|
|
|
*(f)
|
|
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).
|
|
|
|
*(g)
|
|
Amendment No. 1 dated January 16, 2017 to Third Amended and Restated Limited Liability Company Agreement of Magellan GP, LLC dated September 28, 2009 (filed as Exhibit 3.1 to Form 8-K filed January 17, 2017).
|
|
|
|
Exhibit 4
|
|
|
|
|
|
*(a)
|
|
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).
|
|
|
|
*(b)
|
|
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).
|
|
|
|
*(c)
|
|
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).
|
|
|
|
*(d)
|
|
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).
|
|
|
|
*(e)
|
|
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).
|
Exhibit No.
|
|
Description
|
*(f)
|
|
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).
|
|
|
|
*(g)
|
|
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).
|
|
|
|
*(h)
|
|
Second Supplemental Indenture dated as of November 9, 2012 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed November 9, 2012).
|
|
|
|
*(i)
|
|
Third Supplemental Indenture dated as of October 10, 2013 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed October 10, 2013).
|
|
|
|
*(j)
|
|
Fourth Supplemental Indenture dated as of March 4, 2015 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed March 4, 2015).
|
|
|
|
*(k)
|
|
Fifth Supplemental Indenture dated as of March 4, 2015 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.3 to Form 8-K filed March 4, 2015).
|
|
|
|
*(l)
|
|
Sixth Supplemental Indenture dated as of February 29, 2016 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed February 29, 2016).
|
|
|
|
*(m)
|
|
Seventh Supplemental Indenture dated as of September 13, 2016 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed September 13, 2016).
|
|
|
|
Exhibit 10
|
|
|
|
|
|
*(a)
|
|
Amended and Restated Magellan Midstream Partners Long-Term Incentive Plan dated January 26, 2016 (filed as Exhibit 10(a) to Form 10-K filed February 19, 2016).
|
|
|
|
(b)
|
|
Description of Magellan 2017 Annual Incentive Program.
|
|
|
|
(c)
|
|
Magellan GP, LLC Non-Management Director Compensation Program effective January 1, 2017.
|
|
|
|
*(d)
|
|
Amended and Restated Director Deferred Compensation Plan effective January 28, 2014 (filed as Exhibit 10(d) to Form 10-K filed February 24, 2014).
|
|
|
|
*(e)
|
|
$1,000,000,000 Amended and Restated Credit Agreement dated as of October 27, 2015 among Magellan Midstream Partners, L.P., the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent and an Issuing Bank, JPMorgan Chase Bank, N.A., as Co-Syndication Agent and an Issuing Bank, and SunTrust Bank, as Co-Syndication Agent and an Issuing Bank (filed as Exhibit 10.1 to Form 8-K filed October 28, 2015).
|
|
|
|
*(f)
|
|
$250,000,000 364-Day Credit Agreement dated as of October 27, 2015 among Magellan Midstream Partners, L.P., the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, JPMorgan Chase Bank, N.A., as Co-Syndication Agent, and SunTrust Bank, as Co-Syndication Agent (filed as Exhibit 10.2 to Form 8-K filed October 28, 2015).
|
|
|
|
*(g)
|
|
First Amendment to 364-Day Credit Agreement dated as of October 20, 2016 among Magellan Midstream Partners, L.P., the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent (filed as Exhibit 10.1 to Form 8-K filed October 20, 2016).
|
|
|
|
*(h)
|
|
Executive Severance Pay Plan dated July 21, 2011 (filed as Exhibit 10.2 to Form 10-Q filed August 4, 2011).
|
|
|
|
(i)
|
|
Form of 2017 Performance Based Phantom Unit Agreement for awards granted pursuant to the Magellan Midstream Partners Long-Term Incentive Plan.
|
|
|
|
(j)
|
|
Form of 2017 Executive Retention Phantom Unit Agreement for awards granted pursuant to the Magellan Midstream Partners Long-Term Incentive Plan.
|
|
|
|
*(k)
|
|
Form of Commercial Paper Dealer Agreement between Magellan Midstream Partners, L.P., as Issuer, and the Dealer party thereto (filed as Exhibit 10.1 to Form 8-K filed April 22, 2014).
|
|
|
|
*(l)
|
|
Separation and Release of Claims Agreement dated as of May 18, 2015 between Magellan Midstream Holdings GP, LLC and Michael P. Osborne (filed as Exhibit 10.1 to Form 10-Q filed August 6, 2015).
|
|
|
|
*(m)
|
|
Form of Indemnification Agreement by and among Magellan Midstream Partners, L.P., Magellan GP, LLC and the directors and officers of Magellan GP, LLC (filed as Exhibit 10.1 to Form 10-Q filed November 3, 2015).
|
|
|
|
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 (filed as Exhibit 14(a) to Form 10-K filed February 25, 2011).
|
|
|
|
*(b)
|
|
Code of Ethics dated May 18, 2015 by Aaron L. Milford, principal financial and accounting officer (filed as Exhibit 14(b) to Form 10-K filed February 20, 2016).
|
|
|
|
Exhibit 21
|
|
Subsidiaries of Magellan Midstream Partners, L.P.
|
|
|
|
Exhibit 23
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
Exhibit 31
|
|
|
|
|
|
(a)
|
|
Certification of Michael N. Mears, principal executive officer.
|
|
|
|
(b)
|
|
Certification of Aaron L. Milford, principal financial officer.
|
|
|
|
Exhibit 32
|
|
|
|
|
|
(a)
|
|
Section 1350 Certification of Michael N. Mears, Chief Executive Officer.
|
|
|
|
(b)
|
|
Section 1350 Certification of Aaron L. Milford, 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 101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
Exhibit 101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
Exhibit 101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
*
|
Each such exhibit has heretofore been filed with the Securities and Exchange Commission as part of the filing indicated and is incorporated herein by reference.
|
M
AGELLAN
M
IDSTREAM
P
ARTNERS
, L.P.
(Registrant)
|
||
|
|
|
By:
|
|
M
AGELLAN
GP, LLC, its general partner
|
|
|
|
By:
|
|
/s/ AARON L. MILFORD
|
|
|
Aaron L. Milford
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 17, 2017
|
Michael N. Mears
|
|
|
|
|
|
|
|
||
/s/ A
ARON
L. M
ILFORD
|
|
Principal Financial and Accounting Officer of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 17, 2017
|
Aaron L. Milford
|
|
|
|
|
|
|
|
||
/s/ W
ALTER
R. A
RNHEIM
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 17, 2017
|
Walter R. Arnheim
|
|
|
|
|
|
|
|
||
/s/ R
OBERT
G. C
ROYLE
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 17, 2017
|
Robert G. Croyle
|
|
|
|
|
|
|
|
||
/s/ L
ORI
A G
OBILLOT
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 17, 2017
|
Lori A Gobillot
|
|
|
|
|
|
|
|
|
|
/s/ E
DWARD
J. G
UAY
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 17, 2017
|
Edward J. Guay
|
|
|
|
|
|
|
|
|
|
/s/ S
TACY
P.
M
ETHVIN
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 17, 2017
|
Stacy P. Methvin
|
|
|
|
|
|
|
|
||
/s/
J
AMES
R
.
M
ONTAGUE
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 17, 2017
|
James R. Montague
|
|
|
|
|
|
|
|
|
|
/s/
B
ARRY
R
.
P
EARL
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 17, 2017
|
Barry R. Pearl
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
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).
|
|
|
|
*(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)
|
|
Amendment No. 1 dated October 27, 2011 to 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 October 28, 2011).
|
|
|
|
*(d)
|
|
Amendment No. 2 dated January 16, 2017 to Fifth Amended and Restated Agreement of Limited Partnership of Magellan Midstream Partners, L.P. dated September 28, 2009 (filed as Exhibit 3.2 to Form 8-K filed January 17, 2017).
|
|
|
|
*(e)
|
|
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).
|
|
|
|
*(f)
|
|
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).
|
|
|
|
*(g)
|
|
Amendment No. 1 dated January 16, 2017 to Third Amended and Restated Limited Liability Company Agreement of Magellan GP, LLC dated September 28, 2009 (filed as Exhibit 3.1 to Form 8-K filed January 17, 2017).
|
|
|
|
Exhibit 4
|
|
|
|
|
|
*(a)
|
|
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).
|
|
|
|
*(b)
|
|
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).
|
|
|
|
*(c)
|
|
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).
|
*(d)
|
|
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).
|
|
|
|
*(e)
|
|
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).
|
|
|
|
*(f)
|
|
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).
|
|
|
|
*(g)
|
|
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).
|
|
|
|
*(h)
|
|
Second Supplemental Indenture dated as of November 9, 2012 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed November 9, 2012).
|
|
|
|
*(i)
|
|
Third Supplemental Indenture dated as of October 10, 2013 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed October 10, 2013).
|
|
|
|
*(j)
|
|
Fourth Supplemental Indenture dated as of March 4, 2015 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed March 4, 2015).
|
|
|
|
*(k)
|
|
Fifth Supplemental Indenture dated as of March 4, 2015 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.3 to Form 8-K filed March 4, 2015).
|
|
|
|
*(l)
|
|
Sixth Supplemental Indenture dated as of February 29, 2016 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed February 29, 2016).
|
|
|
|
*(m)
|
|
Seventh Supplemental Indenture dated as of September 13, 2016 between Magellan Midstream Partners, L.P. and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to Form 8-K filed September 13, 2016).
|
|
|
|
Exhibit 10
|
|
|
|
|
|
*(a)
|
|
Amended and Restated Magellan Midstream Partners Long-Term Incentive Plan dated January 26, 2016 (filed as Exhibit 10(a) to Form 10-K filed February 19, 2016).
|
|
|
|
(b)
|
|
Description of Magellan 2017 Annual Incentive Program.
|
|
|
|
(c)
|
|
Magellan GP, LLC Non-Management Director Compensation Program effective January 1, 2017.
|
|
|
|
*(d)
|
|
Amended and Restated Director Deferred Compensation Plan effective January 28, 2014 (filed as Exhibit 10(d) to Form 10-K filed February 24, 2014).
|
|
|
*
|
Each such exhibit has heretofore been filed with the Securities and Exchange Commission as part of the filing indicated and is incorporated herein by reference.
|
Metric
|
Trigger
|
EBITDA less Maintenance Capital (including commodities)
|
The combined financial metrics will be reset to the greater of actual metric results or a Target level payout at results of $1,312 million or more.
|
Metric
|
Weight
|
Threshold
|
Target
|
Stretch
|
EBITDA less Maintenance Capital
(1) (2)
|
65%
|
$991
|
$1,066
|
$1,119
|
Commodities
(1)
|
10%
|
$128
|
$158
|
$193
|
Operational Performance
|
10%
|
Discretionary
|
Discretionary
|
Discretionary
|
OSHA Incident Rate (IR)
(3)
|
7.5%
|
1.00
|
0.75
|
0.50
|
Human Error Releases
(3)
|
7.5%
|
10
|
6
|
2
|
(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. The combined financial metrics will be reset to the greater of actual metric results or Target Level payouts when Magellan’s EBITDA less Maintenance Capital (including commodities) is $1,312 million or more.
|
(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
|
$65,000
$110,000
(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
Nominating and Governance Committee
Presiding Director
|
$15,000
$15,000
$10,000
$10,000
$15,000
|
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 2, 2017 (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 grant of
[number of units]
phantom units, with tandem distribution equivalent rights (“DERs”), of Magellan Midstream Partners, L.P. (the “Partnership”). These Units, including the tandem DERs, are referred to in this Agreement as “Phantom Units” during the Restricted Period (as defined in Section 4) and “Units” after the Restricted Period. The number of Units received at the end of the Restricted Period will be determined based on performance criteria, employment status at that time and any other relevant provisions of the Plan and this Agreement. 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 incorporated herein by reference, and all capitalized terms used herein, but not defined herein, shall have the meanings 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 agrees to accept as binding, conclusive and final all decisions and interpretations of the Compensation Committee of the Board (the “Committee”) of the Company with respect to any questions arising under the Plan and this Agreement.
|
4.
|
Restricted Period of Phantom Units
. The Restricted Period begins on the Effective Date and ends on the first of the following events to occur:
|
a.
|
December 31, 2019; 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 and DERs
.
|
a.
|
Eligibility
. To be eligible to receive a payout 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.
|
b.
|
Determination of Payout Amount
. The final determination of the payout level of the Phantom Units will be based upon the performance metric outlined in Paragraph 7 and additional conditions outlined in Paragraph 8.
|
c.
|
DERs
. At the end of the Restricted Period, the Company will pay to the Participant, or the Participant’s legal representative, the value of the DERs on the gross number of Units awarded to the Participant 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 earned and paid during the Restricted Period on the gross number of Units awarded, and no interest shall be paid on such amount. Such payment of the DERs shall be in cash and subject to tax withholding requirements.
|
d.
|
Timing of Payout
. Subject to legal or contractual obligations, the Company will deliver to the Participant, or the Participant’s legal representative, as soon as practicable after the final determination of payout levels by the Committee, a number of Units equal in value to the number of Phantom Units calculated pursuant to Paragraphs 7 and 8, less the number of Units required to cover tax withholding requirements.
|
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
|
7.
|
Performance Metric
.
|
|
Payout Schedule
|
||
|
Threshold
50%
Payout Level
|
Target
100%
Payout Level
|
Stretch
200%
Payout Level
|
2019 Distributable Cash Flow (“DCF”) per Unit
|
$X.XX
|
$X.XX
|
$X.XX
|
(excluding commodities)
|
|
|
|
8.
|
Determination of Payout Level.
|
(i)
|
The number of Units to be paid to the Participant will be determined based on performance relative to the performance metric payout schedule in Paragraph 7. No payout will occur for results below the 50% payout level. The payout for results achieved between each payout level will be interpolated.
|
(ii)
|
The number of Units to be paid to the Participant will be subject to an increase or reduction of up to 50% based upon Total Unitholder Return (“TUR”) relative to a group of large-cap master limited partnerships deemed by the Board as the Performance Peer Group.
|
DCF Metric Performance
|
TUR Adjustment
|
Final Metric Payout Range
|
||
Above Threshold but Below Target Results
|
|
+/- 20%*
|
|
50% - 130% Payout
|
At or Above Target but Below Stretch Results
|
|
+/- 30%
|
|
70% - 230% Payout
|
Stretch Results
|
|
+/- 50%
|
|
150% - 250% Payout
|
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 employment with the Company or its Affiliates, or its or their successors, terminates prior to the vesting of the Phantom Units granted under this Agreement, such Phantom Units shall be forfeited.
|
c.
|
By signing this Agreement, the Participant represents and agrees that he or she will keep the terms, amount and fact of this Agreement completely confidential, and that, unless required to do so by law, he or she will not hereafter disclose any information concerning this Agreement to anyone including, but not limited to, any past,
|
d.
|
Neither the Phantom Units, nor the Participant’s interest in the Phantom Units, may be sold, assigned, transferred, pledged, hedged 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 GP, LLC, 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.
|
1.
|
Grant of Phantom Units
. The Company hereby grants to the Participant effective February 2, 2017
(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 grant of
X,XXX
phantom units, with tandem distribution equivalent rights (“DERs”), of Magellan Midstream Partners, L.P. (the “Partnership”). These phantom units, including the tandem DERs, are referred to in this Agreement as “Phantom Units” during the Restricted Period (as defined in Section 4) and “Units” after 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 meanings 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 agrees to accept as binding, conclusive and final all decisions and interpretations of the Compensation Committee of the Board (the “Committee”) of the Company with respect to any questions arising under the Plan and this Agreement.
|
4.
|
Restricted Period of Phantom Units.
The Restricted Period begins on the Effective Date and ends on the first of the following events to occur:
|
a.
|
December 31, 2019; 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.
|
Eligibility to Receive Units
. The Participant will be eligible to receive a payout of the Phantom Units hereunder only if the Participant has been employed by the Company or its Affiliates, or its or their successors, continuously throughout the Restricted Period and continues to be so employed on the last day of the Restricted Period, unless the Participant terminates employment during the Restricted Period due to Retirement, death or Disability, in which case, the Phantom Units will vest as provided in Section 7 below.
|
6.
|
Payment of Units and DERs
. Subject to legal or contractual obligations and Participant’s eligibility to receive a payout of the Phantom Units as set forth in Section 5, the Company will deliver to the Participant, or the Participant’s legal representative, as soon as practicable after the Restricted Period, a number of Units equal to the number of vested Phantom Units net of any Units used to satisfy all or part of tax withholding requirements. The number of Units required to cover tax withholding requirements will be based on the closing price of the Units on the last business day of the Restricted Period. In addition, as soon as practicable after the end of the Restricted Period, the Company will pay to the Participant, or the Participant’s legal representative, the value of the DERs on the gross number of Units awarded to the Participant 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 earned and paid during the Restricted Period on the gross number of Units awarded, and no interest shall be paid on such amount. Such payment of the DERs shall be in cash and subject to tax withholding requirements.
|
7.
|
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 and on the date of such termination due to Retirement, death or Disability the Participant would have met the eligibility requirements of Section 5, the initial target grant of Phantom Units will be prorated based upon the Participant’s months of employment between January 1, 2017 and December 31, 2019. Such prorated amount will continue to be restricted and subject to the terms of this Agreement until the Restricted Period ends. All Phantom Units in excess of the prorated amount shall be forfeited.
|
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 to 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, in the event that the Participant’s employment with the Company or its Affiliates, or its or their successors, terminates for any reason prior to the end of the Restricted Period, such Phantom Units shall be forfeited.
|
c.
|
By signing this Agreement, the Participant represents and agrees that he or she will keep the terms, amount and fact of this Agreement completely confidential, and that, unless required to do so by law, he or she will not hereafter disclose any information concerning this Agreement to anyone including, but not limited to, any past, present or prospective employee or applicant for employment of the Company or its Affiliates and any past, present or prospective customer of the Company, the Partnership or their Affiliates.
|
d.
|
Neither the Phantom Units, nor the Participant’s interest in the Phantom Units, may be sold, assigned, transferred, pledged, hedged 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 forfeited Phantom Units, including the tandem DERs, 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.
|
9.
|
Notices
. All notices to the Company required hereunder shall be in writing and delivered by hand or by mail, addressed to Magellan GP, LLC, 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,
|
||||||||||||||||||
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||
EARNINGS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes, extraordinary gain (loss) and cumulative effect of change in accounting principle*
|
$
|
435,331
|
|
|
$
|
580,575
|
|
|
$
|
824,745
|
|
|
$
|
754,975
|
|
|
$
|
727,293
|
|
Add: Fixed charges
|
120,321
|
|
|
133,511
|
|
|
146,835
|
|
|
160,044
|
|
|
195,581
|
|
|||||
Amortization of interest capitalized
|
755
|
|
|
816
|
|
|
900
|
|
|
993
|
|
|
1,862
|
|
|||||
Distributed income of equity investees
|
7,793
|
|
|
3,274
|
|
|
3,086
|
|
|
66,285
|
|
|
78,723
|
|
|||||
Less: Interest capitalized
|
(6,195
|
)
|
|
(14,339
|
)
|
|
(22,803
|
)
|
|
(14,442
|
)
|
|
(27,375
|
)
|
|||||
Total earnings
|
$
|
558,005
|
|
|
$
|
703,837
|
|
|
$
|
952,763
|
|
|
$
|
967,855
|
|
|
$
|
976,084
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
FIXED CHARGES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
120,068
|
|
|
$
|
132,887
|
|
|
$
|
145,862
|
|
|
$
|
158,895
|
|
|
$
|
194,187
|
|
Rent expense representative of interest factor
|
253
|
|
|
624
|
|
|
973
|
|
|
1,149
|
|
|
1,394
|
|
|||||
Total fixed charges
|
$
|
120,321
|
|
|
$
|
133,511
|
|
|
$
|
146,835
|
|
|
$
|
160,044
|
|
|
$
|
195,581
|
|
Ratio of earnings to fixed charges
|
4.6
|
|
|
5.3
|
|
|
6.5
|
|
|
6.0
|
|
|
5.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
1)
|
Registration Statement (Form S-3 No. 333-214963) of Magellan Midstream Partners, L.P.;
|
2)
|
Registration Statement (Form S-3ASR No. 333-203869) of Magellan Midstream Partners, L.P;
|
3)
|
Registration Statement (Form S-8 No. 333-212836) pertaining to the Magellan Midstream Partners Long-Term Incentive Plan of Magellan Midstream Partners, L.P.;
|
4)
|
Registration Statement (Form S-8 No. 333-176062) pertaining to the Magellan Midstream Partners Long-Term Incentive Plan of Magellan Midstream Partners, L.P.;
|
5)
|
Registration Statement (Form S-8 No. 333-71670) pertaining to the Magellan Midstream Partners Long-Term Incentive Plan of Magellan Midstream Partners, L.P., as amended by Post-Effective Amendment No. 1; and
|
6)
|
Registration Statement (Form S-8 No.333-147206) pertaining to the Magellan Midstream Partners Long-Term Incentive Plan of Magellan Midstream Partners, L.P.;
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ending December 31, 2016 (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 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) 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, 2016 (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 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) 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/ Aaron L. Milford
|
Aaron L. Milford, 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 17, 2017
|
(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/ Aaron L. Milford
|
Aaron L. Milford, Chief Financial Officer
|
Date: February 17, 2017
|