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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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30-0740483
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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Large accelerated filer
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ý
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Accelerated filer
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☐
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Non-accelerated filer
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☐
(Do not check if a smaller reporting company)
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Smaller reporting company
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☐
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Emerging Growth company
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☐
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Page
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March 31,
2018 |
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December 31,
2017 |
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(in millions, except units)
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||||||
Assets
|
|
|
|
|
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Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
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$
|
98
|
|
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$
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28
|
|
Accounts receivable, net
|
|
451
|
|
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541
|
|
||
Receivables from affiliates
|
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160
|
|
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155
|
|
||
Inventories, net
|
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434
|
|
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426
|
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||
Other current assets
|
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71
|
|
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81
|
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Assets held for sale
|
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6
|
|
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3,313
|
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Total current assets
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1,220
|
|
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4,544
|
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Property and equipment, net
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1,522
|
|
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1,557
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Other assets:
|
|
|
|
|
||||
Goodwill
|
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1,430
|
|
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1,430
|
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Intangible assets, net
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656
|
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768
|
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Other noncurrent assets
|
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91
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|
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45
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Total assets
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$
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4,919
|
|
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$
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8,344
|
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Liabilities and equity
|
|
|
|
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Current liabilities:
|
|
|
|
|
||||
Accounts payable
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$
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416
|
|
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$
|
559
|
|
Accounts payable to affiliates
|
|
178
|
|
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206
|
|
||
Accrued expenses and other current liabilities
|
|
759
|
|
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368
|
|
||
Current maturities of long-term debt
|
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5
|
|
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6
|
|
||
Liabilities associated with assets held for sale
|
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—
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75
|
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Total current liabilities
|
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1,358
|
|
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1,214
|
|
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Revolving line of credit
|
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—
|
|
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765
|
|
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Long-term debt, net
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2,283
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|
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3,519
|
|
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Advances from affiliates
|
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85
|
|
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85
|
|
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Deferred tax liability
|
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124
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|
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389
|
|
||
Other noncurrent liabilities
|
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137
|
|
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125
|
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Total liabilities
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3,987
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|
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6,097
|
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Commitments and contingencies (Note 14)
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|
|
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Equity:
|
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|
|
|
||||
Limited partners:
|
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Series A Preferred unitholder - affiliated
(no units issued and outstanding as of March 31, 2018 and 12,000,000 units issued and outstanding as of December 31, 2017) |
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—
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300
|
|
||
Common unitholders
(82,492,008 units issued and outstanding as of March 31, 2018 and 99,667,999 units issued and outstanding as of December 31, 2017) |
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932
|
|
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1,947
|
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Class C unitholders - held by subsidiary
(16,410,780 units issued and outstanding as of March 31, 2018 and December 31, 2017) |
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—
|
|
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—
|
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Total equity
|
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932
|
|
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2,247
|
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||
Total liabilities and equity
|
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$
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4,919
|
|
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$
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8,344
|
|
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For the Three Months Ended March 31,
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||||||
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2018
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2017
|
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(in millions, except unit and per unit amounts)
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Revenues:
|
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|
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|
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Retail motor fuel
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$
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445
|
|
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$
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353
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Wholesale motor fuel sales to third parties
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3,094
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|
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2,244
|
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Wholesale motor fuel sales to affiliates
|
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12
|
|
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21
|
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Merchandise
|
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135
|
|
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131
|
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Rental income
|
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22
|
|
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22
|
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||
Other
|
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41
|
|
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37
|
|
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Total revenues
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3,749
|
|
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2,808
|
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Cost of sales:
|
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|
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|
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Retail motor fuel cost of sales
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401
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|
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317
|
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Wholesale motor fuel cost of sales
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2,945
|
|
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2,143
|
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Merchandise cost of sales
|
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93
|
|
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88
|
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Other
|
|
14
|
|
|
4
|
|
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Total cost of sales
|
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3,453
|
|
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2,552
|
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Gross profit
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296
|
|
|
256
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Operating expenses:
|
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|
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|
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General and administrative
|
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35
|
|
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32
|
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Other operating
|
|
98
|
|
|
92
|
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Rent
|
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15
|
|
|
20
|
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Loss on disposal of assets
|
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3
|
|
|
2
|
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Depreciation, amortization and accretion
|
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49
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|
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54
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Total operating expenses
|
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200
|
|
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200
|
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Operating income
|
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96
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56
|
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Other expenses:
|
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Interest expense, net
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34
|
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58
|
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Loss on extinguishment of debt and other
|
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109
|
|
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—
|
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Loss from continuing operations before income taxes
|
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(47
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)
|
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(2
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)
|
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Income tax expense (benefit)
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31
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|
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(14
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)
|
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Income (loss) from continuing operations
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(78
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)
|
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12
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Loss from discontinued operations, net of income taxes
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(237
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)
|
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(11
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)
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Net income (loss) and comprehensive income (loss)
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$
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(315
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)
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$
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1
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Net loss per limited partner unit - basic:
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|
|
|
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Continuing operations - common units
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$
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(1.11
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)
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$
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(0.11
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)
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Discontinued operations - common units
|
|
(2.63
|
)
|
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(0.11
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)
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Net loss - common units
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$
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(3.74
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)
|
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$
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(0.22
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)
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Net loss per limited partner unit - diluted:
|
|
|
|
|
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Continuing operations - common units
|
|
$
|
(1.11
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)
|
|
$
|
(0.11
|
)
|
Discontinued operations - common units
|
|
(2.63
|
)
|
|
(0.11
|
)
|
||
Net loss - common units
|
|
$
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(3.74
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)
|
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$
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(0.22
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)
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Weighted average limited partner units outstanding:
|
|
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|
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Common units - basic
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89,753,950
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98,609,608
|
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Common units - diluted
|
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90,271,751
|
|
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98,715,958
|
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|
|
|
|
|
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Cash distribution per unit
|
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$
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0.8255
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|
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$
|
0.8255
|
|
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Preferred Units-Affiliated
|
|
Common Units
|
|
Total Equity
|
||||||
Balance at December 31, 2017
|
$
|
300
|
|
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$
|
1,947
|
|
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$
|
2,247
|
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Repurchase of common units
|
—
|
|
|
(540
|
)
|
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(540
|
)
|
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Redemption of Preferred units
|
(300
|
)
|
|
—
|
|
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(300
|
)
|
|||
Cash distribution to unitholders
|
—
|
|
|
(107
|
)
|
|
(107
|
)
|
|||
Distribution to preferred units
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Unit-based compensation
|
—
|
|
|
3
|
|
|
3
|
|
|||
Cumulative effect of change in revenue recognition accounting principle
|
—
|
|
|
(54
|
)
|
|
(54
|
)
|
|||
Partnership net income (loss)
|
2
|
|
|
(317
|
)
|
|
(315
|
)
|
|||
Balance at March 31, 2018
|
$
|
—
|
|
|
$
|
932
|
|
|
$
|
932
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
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(in millions)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(315
|
)
|
|
$
|
1
|
|
Adjustments to reconcile net income (loss) to net cash provided by continuing operating activities:
|
|
|
|
||||
Loss from discontinued operations
|
237
|
|
|
11
|
|
||
Depreciation, amortization and accretion
|
49
|
|
|
54
|
|
||
Amortization of deferred financing fees
|
2
|
|
|
4
|
|
||
Loss on disposal of assets
|
3
|
|
|
2
|
|
||
Loss on extinguishment of debt and other
|
109
|
|
|
—
|
|
||
Non-cash unit based compensation expense
|
3
|
|
|
4
|
|
||
Deferred income tax
|
29
|
|
|
(14
|
)
|
||
Inventory valuation adjustment
|
(25
|
)
|
|
13
|
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
90
|
|
|
97
|
|
||
Receivable from affiliates
|
(5
|
)
|
|
(10
|
)
|
||
Inventories
|
17
|
|
|
40
|
|
||
Other assets
|
10
|
|
|
23
|
|
||
Accounts payable
|
(143
|
)
|
|
(245
|
)
|
||
Accounts payable to affiliates
|
(28
|
)
|
|
2
|
|
||
Accrued expenses and other current liabilities
|
403
|
|
|
(8
|
)
|
||
Other noncurrent liabilities
|
4
|
|
|
12
|
|
||
Net cash provided by (used in) continuing operating activities
|
440
|
|
|
(14
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(19
|
)
|
|
(24
|
)
|
||
Purchase of intangible assets
|
(1
|
)
|
|
(13
|
)
|
||
Proceeds from disposal of property and equipment
|
3
|
|
|
—
|
|
||
Net cash used in investing activities
|
(17
|
)
|
|
(37
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
2,200
|
|
|
—
|
|
||
Payments on long-term debt
|
(3,447
|
)
|
|
(1
|
)
|
||
Payments for debt extinguishment costs
|
(93
|
)
|
|
—
|
|
||
Revolver borrowings
|
414
|
|
|
618
|
|
||
Revolver repayments
|
(1,179
|
)
|
|
(857
|
)
|
||
Loan origination costs
|
(24
|
)
|
|
—
|
|
||
Advances from affiliates
|
—
|
|
|
(84
|
)
|
||
Equity issued to ETE, net of issuance costs
|
—
|
|
|
300
|
|
||
Proceeds from issuance of common units, net of offering costs
|
—
|
|
|
33
|
|
||
Common unit repurchase
|
(540
|
)
|
|
—
|
|
||
Redemption of equity issued to ETE
|
(303
|
)
|
|
—
|
|
||
Other cash from financing activities, net
|
—
|
|
|
(1
|
)
|
||
Distributions to unitholders
|
(121
|
)
|
|
(104
|
)
|
||
Net cash used in financing activities
|
(3,093
|
)
|
|
(96
|
)
|
||
Cash flows from discontinued operations:
|
|
|
|
||||
Operating activities
|
(485
|
)
|
|
142
|
|
||
Investing activities
|
3,214
|
|
|
(40
|
)
|
||
Changes in cash included in current assets held for sale
|
11
|
|
|
(1
|
)
|
||
Net increase in cash and cash equivalents of discontinued operations
|
2,740
|
|
|
101
|
|
||
Net increase (decrease) in cash
|
70
|
|
|
(46
|
)
|
||
Cash and cash equivalents at beginning of period
|
28
|
|
|
103
|
|
||
Cash and cash equivalents at end of period
|
$
|
98
|
|
|
$
|
57
|
|
1.
|
Organization and Principles of Consolidation
|
•
|
Sunoco, LLC (“Sunoco LLC”), a Delaware limited liability company, primarily distributes motor fuel in
30
states throughout the East Coast, Midwest, South Central and Southeast regions of the United States. Sunoco LLC also processes transmix and distributes refined product through its terminals in Alabama and the Greater Dallas, Texas metroplex.
|
•
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Aloha Petroleum LLC, a Delaware limited liability company, distributes motor fuel and operates terminal facilities on the Hawaiian Islands.
|
•
|
Susser Petroleum Property Company LLC (“PropCo”), a Delaware limited liability company, primarily owns and leases convenience store properties.
|
•
|
Susser Holdings Corporation (“Susser”), a Delaware corporation, sells motor fuel and merchandise in Texas, New Mexico and Oklahoma through Stripes-branded convenience stores. Susser merged with and into Stripes LLC, a Texas limited liability company, on April 1, 2018.
|
•
|
Sunoco Retail LLC (“Sunoco Retail”), a Pennsylvania limited liability company, owns and operates convenience stores that sell motor fuel and merchandise primarily in Pennsylvania, New York, and Florida.
|
•
|
MACS Retail LLC, a Virginia limited liability company, owns and operates convenience stores, in Virginia, Maryland, and Tennessee.
|
•
|
Aloha Petroleum, Ltd. (“Aloha”), a Hawaii corporation, owns and operates convenience stores on the Hawaiian Islands.
|
2.
|
Summary of Significant Accounting Policies
|
|
Balance at
December 31, 2017
|
|
Adjustments Due to
ASC 606
|
|
Balance at
January 1, 2018
|
||||||
|
(in millions)
|
||||||||||
Assets
|
|
|
|
|
|
||||||
Other current assets
|
$
|
81
|
|
|
$
|
8
|
|
|
$
|
89
|
|
Property and Equipment, net
|
1,557
|
|
|
—
|
|
|
1,557
|
|
|||
Intangible assets, net
|
768
|
|
|
(100
|
)
|
|
668
|
|
|||
Other noncurrent assets
|
45
|
|
|
39
|
|
|
84
|
|
|||
Liabilities and Equity
|
|
|
|
|
|
||||||
Other noncurrent liabilities
|
125
|
|
|
1
|
|
|
126
|
|
|||
Common unitholders
|
1,947
|
|
|
(54
|
)
|
|
1,893
|
|
|
For the Three Months Ended March 31, 2018
|
||||||||||
|
As
Reported
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower)
|
||||||
|
(in millions)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Wholesale motor fuel sales to third parties
|
$
|
3,094
|
|
|
$
|
3,104
|
|
|
$
|
(10
|
)
|
Other
|
41
|
|
|
41
|
|
|
—
|
|
|||
Costs of Sales
|
|
|
|
|
|
|
|||||
Other
|
14
|
|
|
15
|
|
|
(1
|
)
|
|||
Operating Expenses
|
|
|
|
|
|
||||||
Other Operating
|
98
|
|
|
100
|
|
|
(2
|
)
|
|||
Depreciation, amortization and accretion
|
49
|
|
|
55
|
|
|
(6
|
)
|
|||
|
|
|
|
|
|
||||||
|
March 31, 2018
|
||||||||||
|
As
Reported
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower)
|
||||||
|
(in millions)
|
||||||||||
Assets
|
|
|
|
|
|
||||||
Other current assets
|
$
|
71
|
|
|
$
|
62
|
|
|
$
|
9
|
|
Property and Equipment, net
|
1,522
|
|
|
1,522
|
|
|
—
|
|
|||
Intangible assets, net
|
656
|
|
|
761
|
|
|
(105
|
)
|
|||
Other noncurrent assets
|
91
|
|
|
49
|
|
|
42
|
|
|||
Liabilities and Equity
|
|
|
|
|
|
||||||
Other noncurrent liabilities
|
137
|
|
|
136
|
|
|
1
|
|
|||
Common unitholders
|
932
|
|
|
987
|
|
|
(55
|
)
|
3.
|
Acquisitions
|
4.
|
Discontinued Operations
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
|
(in millions)
|
||||||
Carrying amount of assets held for sale:
|
|
|
|
|
||||
Cash
|
|
$
|
—
|
|
|
$
|
21
|
|
Inventories
|
|
—
|
|
|
149
|
|
||
Other current assets
|
|
—
|
|
|
16
|
|
||
Property and equipment, net
|
|
6
|
|
|
1,851
|
|
||
Goodwill
|
|
—
|
|
|
796
|
|
||
Intangible assets, net
|
|
—
|
|
|
477
|
|
||
Other noncurrent assets
|
|
—
|
|
|
3
|
|
||
Total assets held for sale
|
|
$
|
6
|
|
|
$
|
3,313
|
|
|
|
|
|
|
||||
Carrying amount of liabilities associated with assets held for sale:
|
|
|
|
|
||||
Long term debt
|
|
$
|
—
|
|
|
$
|
21
|
|
Other current and noncurrent liabilities
|
|
—
|
|
|
54
|
|
||
Total liabilities associated with assets held for sale
|
|
$
|
—
|
|
|
$
|
75
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Revenues:
|
|
|
|
|
||||
Motor fuel sales
|
|
$
|
256
|
|
|
$
|
1,162
|
|
Merchandise
|
|
89
|
|
|
409
|
|
||
Rental income
|
|
—
|
|
|
1
|
|
||
Other
|
|
4
|
|
|
14
|
|
||
Total revenues
|
|
349
|
|
|
1,586
|
|
||
Cost of sales:
|
|
|
|
|
||||
Motor fuel cost of sales
|
|
240
|
|
|
1,057
|
|
||
Merchandise cost of sales
|
|
65
|
|
|
282
|
|
||
Other
|
|
—
|
|
|
—
|
|
||
Total cost of sales
|
|
305
|
|
|
1,339
|
|
||
Gross profit
|
|
44
|
|
|
247
|
|
||
Operating expenses:
|
|
|
|
|
||||
General and administrative
|
|
2
|
|
|
32
|
|
||
Other operating
|
|
57
|
|
|
171
|
|
||
Rent
|
|
4
|
|
|
14
|
|
||
Loss on disposal of assets
|
|
23
|
|
|
5
|
|
||
Depreciation, amortization and accretion expense
|
|
—
|
|
|
33
|
|
||
Total operating expenses
|
|
86
|
|
|
255
|
|
||
Operating loss
|
|
(42
|
)
|
|
(8
|
)
|
||
Interest expense, net
|
|
2
|
|
|
6
|
|
||
Loss on extinguishment of debt and other
|
|
20
|
|
|
—
|
|
||
Loss from discontinued operations before income taxes
|
|
(64
|
)
|
|
(14
|
)
|
||
Income tax expense (benefit)
|
|
173
|
|
|
(3
|
)
|
||
Loss from discontinued operations, net of income taxes
|
|
$
|
(237
|
)
|
|
$
|
(11
|
)
|
5.
|
Accounts Receivable, net
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Accounts receivable, trade
|
$
|
289
|
|
|
$
|
285
|
|
Credit card receivables
|
104
|
|
|
160
|
|
||
Vendor receivables for rebates, branding, and other
|
18
|
|
|
29
|
|
||
Other receivables
|
42
|
|
|
69
|
|
||
Allowance for doubtful accounts
|
(2
|
)
|
|
(2
|
)
|
||
Accounts receivable, net
|
$
|
451
|
|
|
$
|
541
|
|
6.
|
Inventories, net
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Fuel
|
$
|
393
|
|
|
$
|
387
|
|
Merchandise
|
30
|
|
|
30
|
|
||
Other
|
11
|
|
|
9
|
|
||
Inventories, net
|
$
|
434
|
|
|
$
|
426
|
|
7.
|
Property and Equipment, net
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Land
|
$
|
523
|
|
|
$
|
516
|
|
Buildings and leasehold improvements
|
716
|
|
|
714
|
|
||
Equipment
|
660
|
|
|
623
|
|
||
Construction in progress
|
120
|
|
|
159
|
|
||
Total property and equipment
|
2,019
|
|
|
2,012
|
|
||
Less: accumulated depreciation
|
497
|
|
|
455
|
|
||
Property and equipment, net
|
$
|
1,522
|
|
|
$
|
1,557
|
|
8.
|
Goodwill and Intangible Assets, net
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated Amortization
|
|
Net Book Value
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Indefinite-lived
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tradenames
|
$
|
295
|
|
|
$
|
—
|
|
|
$
|
295
|
|
|
$
|
295
|
|
|
$
|
—
|
|
|
$
|
295
|
|
Contractual rights
|
30
|
|
|
—
|
|
|
30
|
|
|
30
|
|
|
—
|
|
|
30
|
|
||||||
Liquor licenses
|
12
|
|
|
—
|
|
|
12
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||
Finite-lived
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relations including supply agreements (1)
|
549
|
|
|
242
|
|
|
307
|
|
|
674
|
|
|
256
|
|
|
418
|
|
||||||
Favorable leasehold arrangements, net
|
12
|
|
|
5
|
|
|
7
|
|
|
12
|
|
|
5
|
|
|
7
|
|
||||||
Loan origination costs (2)
|
10
|
|
|
7
|
|
|
3
|
|
|
10
|
|
|
6
|
|
|
4
|
|
||||||
Other intangibles
|
5
|
|
|
3
|
|
|
2
|
|
|
5
|
|
|
3
|
|
|
2
|
|
||||||
Intangible assets, net
|
$
|
913
|
|
|
$
|
257
|
|
|
$
|
656
|
|
|
$
|
1,038
|
|
|
$
|
270
|
|
|
$
|
768
|
|
(1)
|
Decrease in gross carrying amount is mainly due to the adoption of ASU No. 2014-09,
Revenue from Contracts with Customers,
see Note 2.
|
(2)
|
Loan origination costs are associated with the 2014 Revolver, see Note 10 for further information on the 2014 Revolver.
|
9.
|
Accrued Expenses and Other Current Liabilities
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Wage and other employee-related accrued expenses
|
$
|
25
|
|
|
$
|
72
|
|
Accrued tax expense
|
601
|
|
|
180
|
|
||
Accrued insurance
|
14
|
|
|
26
|
|
||
Accrued interest expense
|
25
|
|
|
43
|
|
||
Dealer deposits
|
16
|
|
|
16
|
|
||
Other
|
78
|
|
|
31
|
|
||
Total
|
$
|
759
|
|
|
$
|
368
|
|
10.
|
Long-Term Debt
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Term Loan (1)
|
$
|
—
|
|
|
$
|
1,243
|
|
Sale leaseback financing obligation
|
111
|
|
|
113
|
|
||
2014 Revolver
|
—
|
|
|
765
|
|
||
4.875% Senior Notes Due 2023
|
1,000
|
|
|
—
|
|
||
5.500% Senior Notes Due 2026
|
800
|
|
|
—
|
|
||
5.875% Senior Notes Due 2028
|
400
|
|
|
—
|
|
||
6.375% Senior Notes Due 2023 (2)
|
—
|
|
|
800
|
|
||
5.500% Senior Notes Due 2020 (2)
|
—
|
|
|
600
|
|
||
6.250% Senior Notes Due 2021 (2)
|
—
|
|
|
800
|
|
||
Other
|
2
|
|
|
3
|
|
||
Total debt
|
2,313
|
|
|
4,324
|
|
||
Less: current maturities
|
5
|
|
|
6
|
|
||
Less: debt issuance costs
|
25
|
|
|
34
|
|
||
Long-term debt, net of current maturities
|
$
|
2,283
|
|
|
$
|
4,284
|
|
(1)
|
The Term Loan was repaid in full and terminated on January 23, 2018.
|
(2)
|
The Senior Notes were redeemed on January 23, 2018.
|
Level 1
|
Quoted prices (unadjusted) in active markets for identical assets or liabilities;
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
|
Level 3
|
Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.
|
11.
|
Other Noncurrent Liabilities
|
|
March 31,
2018 |
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
Accrued straight-line rent
|
$
|
12
|
|
|
$
|
13
|
|
Reserve for underground storage tank removal
|
50
|
|
|
41
|
|
||
Reserve for environmental remediation
|
24
|
|
|
23
|
|
||
Unfavorable lease liability
|
17
|
|
|
10
|
|
||
Aloha acquisition contingent consideration
|
15
|
|
|
15
|
|
||
Others
|
19
|
|
|
23
|
|
||
Total
|
$
|
137
|
|
|
$
|
125
|
|
12.
|
Related-Party Transactions
|
•
|
Philadelphia Energy Solutions Products Purchase Agreements –
two
related products purchase agreements,
one
with Philadelphia Energy Solutions Refining & Marketing (“PES”) and
one
with PES’s product financier Merrill Lynch Commodities; both purchase agreements contain
12
-month terms that automatically renew for consecutive
12
-month terms until either party cancels with notice. ETP Retail Holdings, LLC, a subsidiary of ETP, owns a noncontrolling interest in the parent of PES.
|
•
|
ETP Transportation and Terminalling Contracts – various agreements with subsidiaries of ETP for pipeline, terminalling and storage services. We also have agreements with subsidiaries of ETP for the purchase and sale of fuel.
|
•
|
Net advances from affiliates were
$85 million
as of
March 31, 2018
and
December 31, 2017
. Advances from affiliates are primarily related to the treasury services agreements between Sunoco LLC and Sunoco (R&M), LLC and Sunoco Retail and Sunoco (R&M), LLC, which are in place for purposes of cash management.
|
•
|
Net accounts receivable from affiliates were
$160 million
and
$155 million
as of
March 31, 2018
and
December 31, 2017
, respectively, which are primarily related to motor fuel purchases from us.
|
•
|
Net accounts payable to affiliates was
$178 million
and
$206 million
as of
March 31, 2018
and
December 31, 2017
, respectively, which are related to operational expenses and fuel pipeline purchases.
|
•
|
Wholesale motor fuel sales to affiliates of
$12 million
and
$21 million
for the
three months ended March 31, 2018
and
2017
, respectively.
|
•
|
Bulk fuel purchases from affiliates of
$777 million
and
$545 million
for the
three months ended March 31, 2018
and
2017
, respectively, which is included in wholesale motor fuel cost of sales in our Consolidated Statements of Operations and Comprehensive Income (Loss).
|
13.
|
Revenue
|
|
For the Three Months Ended March 31, 2018
|
||
|
(in millions)
|
||
Retail Segment
|
|
||
Retail Motor Fuel
|
$
|
445
|
|
Merchandise
|
135
|
|
|
Other
|
30
|
|
|
Total Retail Revenue
|
610
|
|
|
Wholesale Segment
|
|
||
Dealer
|
800
|
|
|
Distributor
|
1,623
|
|
|
Unbranded Wholesale
|
562
|
|
|
Commission Agent
|
121
|
|
|
Rental Income (1)
|
19
|
|
|
Other
|
14
|
|
|
Total Wholesale Revenue
|
3,139
|
|
|
Total Revenue
|
$
|
3,749
|
|
(1)
|
Rental Income is the result of our lease arrangements which are outside the scope of ASC Topic 606.
|
|
Balance at
January 1, 2018
|
|
Balance at March 31, 2018
|
|
Increase/ (Decrease)
|
||||||
|
(in millions)
|
||||||||||
Contract Balances
|
|
|
|
|
|
||||||
Contract Asset
|
$
|
51
|
|
|
$
|
55
|
|
|
$
|
4
|
|
Accounts receivable from contracts with customers
|
$
|
445
|
|
|
$
|
393
|
|
|
$
|
(52
|
)
|
Contract Liability
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
•
|
Significant financing component
- The Partnership elected not to adjust the promised amount of consideration for the effects of significant financing component if the Partnership expects at contract inception that the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less.
|
•
|
Incremental costs of obtaining a contract
- The Partnership generally expenses sales commissions when incurred because the amortization period would have been less than one year. We record these costs within general and administrative expenses. The Partnership elected to expense the incremental costs of obtaining a contract when the amortization period for such contracts would have been one year or less.
|
•
|
Shipping and handling costs
- The Partnership elected to account for shipping and handling activities that occur after the customer has obtained control of a good as fulfillment activities (i.e., an expense) rather than as a promised service.
|
•
|
Measurement of transaction price
- The Partnership has elected to exclude from the measurement of transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Partnership from a customer, for e.g. sales tax, value added tax etc.
|
•
|
Variable consideration of wholly unsatisfied performance obligations
-
The Partnership has elected to exclude the estimate of variable consideration to the allocation of wholly unsatisfied performance obligations.
|
14.
|
Commitments and Contingencies
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Cash rent:
|
|
|
|
|
||||
Store base rent (1) (2)
|
|
$
|
15
|
|
|
$
|
16
|
|
Equipment and other rent (3)
|
|
—
|
|
|
4
|
|
||
Total cash rent
|
|
15
|
|
|
20
|
|
||
Non-cash rent:
|
|
|
|
|
||||
Straight-line rent
|
|
—
|
|
|
—
|
|
||
Net rent expense
|
|
$
|
15
|
|
|
$
|
20
|
|
(1)
|
Store base rent includes the Partnership's rent expense for leased convenience store properties which are subleased to third-party operators. The sublease income from these sites is recorded in rental income on the statement of operations and totaled
$6 million
and
$6 million
for the
three months ended March 31, 2018
and
2017
, respectively.
|
(2)
|
Store base rent includes contingent rent expense totaling
$1 million
and
$4 million
for the
three months ended March 31, 2018
and
2017
, respectively.
|
(3)
|
Equipment and other rent consists primarily of vehicles and marine transportation vessels.
|
15.
|
Interest Expense, net
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Interest expense
|
|
$
|
34
|
|
|
$
|
55
|
|
Amortization of deferred financing fees
|
|
2
|
|
|
4
|
|
||
Interest income
|
|
(2
|
)
|
|
(1
|
)
|
||
Interest expense, net
|
|
$
|
34
|
|
|
$
|
58
|
|
16.
|
Income Tax Expense
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in million)
|
||||||
Tax at statutory federal rate (1)
|
|
$
|
(10
|
)
|
|
$
|
(1
|
)
|
Partnership earnings not subject to tax
|
|
9
|
|
|
(13
|
)
|
||
Statutory tax rate changes
|
|
29
|
|
|
—
|
|
||
Other
|
|
3
|
|
|
—
|
|
||
Net income tax expense (benefit)
|
|
$
|
31
|
|
|
$
|
(14
|
)
|
(1)
|
In December 2017, the “Tax Cuts and Jobs Act” was signed into law. Among other provisions, the highest corporate federal income tax rate was reduced from 35% to 21% for tax years beginning after December 31, 2017.
|
17.
|
Partners' Capital
|
|
Number of Units
|
|
Number of common units at December 31, 2017
|
99,667,999
|
|
Common units repurchase
|
(17,286,859
|
)
|
Phantom unit vesting
|
110,868
|
|
Number of common units at March 31, 2018
|
82,492,008
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Attributable to Common Units
|
|
|
|
|
||||
Distributions (a)
|
|
$
|
68
|
|
|
$
|
82
|
|
Distributions in excess of net income
|
|
(404
|
)
|
|
(104
|
)
|
||
Limited partners' interest in net income (loss)
|
|
$
|
(336
|
)
|
|
$
|
(22
|
)
|
|
|
|
|
|
||||
(a) Distributions declared per unit to unitholders as of record date
|
|
$
|
0.8255
|
|
|
$
|
0.8255
|
|
|
|
|
Marginal percentage interest
in distributions
|
||||
|
Total quarterly distribution per Common Unit target amount
|
|
Common Unitholders
|
|
Holder of IDRs
|
||
Minimum Quarterly Distribution
|
$0.4375
|
|
100
|
%
|
|
—
|
|
First Target Distribution
|
Above $0.4375 up to $0.503125
|
|
100
|
%
|
|
—
|
|
Second Target Distribution
|
Above $0.503125 up to $0.546875
|
|
85
|
%
|
|
15
|
%
|
Third Target Distribution
|
Above $0.546875 up to $0.656250
|
|
75
|
%
|
|
25
|
%
|
Thereafter
|
Above $0.656250
|
|
50
|
%
|
|
50
|
%
|
|
|
Limited Partners
|
|
|
||||||||
Payment Date
|
|
Per Unit Distribution
|
|
Total Cash Distribution
|
|
Distribution to IDR Holders
|
||||||
|
|
(in millions, except per unit amounts)
|
||||||||||
May 15, 2018
|
|
$
|
0.8255
|
|
|
$
|
68
|
|
|
$
|
18
|
|
February 14, 2018
|
|
$
|
0.8255
|
|
|
$
|
82
|
|
|
$
|
21
|
|
(1)
|
$10 million cash distribution paid on January 25, 2018 includes $8 million cash distribution for the three months ended December 31, 2017 and $2 million cash distribution for the period from January 1, 2018 through January 25, 2018.
|
18.
|
Unit-Based Compensation
|
|
Number of Phantom Common Units
|
|
Weighted-Average Grant Date Fair Value
|
|||
Outstanding at December 31, 2016
|
2,013,634
|
|
|
$
|
34.43
|
|
Granted
|
203,867
|
|
|
28.31
|
|
|
Vested
|
(289,377
|
)
|
|
45.48
|
|
|
Forfeited
|
(150,823
|
)
|
|
34.71
|
|
|
Outstanding at December 31, 2017
|
1,777,301
|
|
|
31.89
|
|
|
Granted
|
420,300
|
|
|
28.86
|
|
|
Vested
|
(169,996
|
)
|
|
28.18
|
|
|
Forfeited
|
(214,344
|
)
|
|
31.93
|
|
|
Outstanding at March 31, 2018
|
1,813,261
|
|
|
$
|
30.96
|
|
19.
|
Segment Reporting
|
|
For the Three Months Ended March 31,
|
||||||||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||||||||
|
Wholesale Segment
|
|
Retail Segment
|
|
Intercompany Eliminations
|
|
Totals
|
|
Wholesale Segment
|
|
Retail Segment
|
|
Intercompany Eliminations
|
|
Totals
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Retail motor fuel
|
$
|
—
|
|
|
$
|
445
|
|
|
|
|
$
|
445
|
|
|
$
|
—
|
|
|
$
|
353
|
|
|
|
|
$
|
353
|
|
||
Wholesale motor fuel sales to third parties
|
3,094
|
|
|
—
|
|
|
|
|
3,094
|
|
|
2,244
|
|
|
—
|
|
|
|
|
2,244
|
|
||||||||
Wholesale motor fuel sales to affiliates
|
12
|
|
|
—
|
|
|
|
|
12
|
|
|
21
|
|
|
—
|
|
|
|
|
21
|
|
||||||||
Merchandise
|
—
|
|
|
135
|
|
|
|
|
135
|
|
|
—
|
|
|
131
|
|
|
|
|
131
|
|
||||||||
Rental income
|
19
|
|
|
3
|
|
|
|
|
22
|
|
|
19
|
|
|
3
|
|
|
|
|
22
|
|
||||||||
Other
|
14
|
|
|
27
|
|
|
|
|
41
|
|
|
13
|
|
|
24
|
|
|
|
|
37
|
|
||||||||
Intersegment sales
|
404
|
|
|
34
|
|
|
(438
|
)
|
|
—
|
|
|
327
|
|
|
35
|
|
|
(362
|
)
|
|
—
|
|
||||||
Total revenue
|
3,543
|
|
|
644
|
|
|
(438
|
)
|
|
3,749
|
|
|
2,624
|
|
|
546
|
|
|
(362
|
)
|
|
2,808
|
|
||||||
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Retail motor fuel
|
—
|
|
|
44
|
|
|
|
|
44
|
|
|
—
|
|
|
36
|
|
|
|
|
36
|
|
||||||||
Wholesale motor fuel
|
161
|
|
|
—
|
|
|
|
|
161
|
|
|
122
|
|
|
—
|
|
|
|
|
122
|
|
||||||||
Merchandise
|
—
|
|
|
42
|
|
|
|
|
42
|
|
|
—
|
|
|
43
|
|
|
|
|
43
|
|
||||||||
Rental and other
|
29
|
|
|
20
|
|
|
|
|
49
|
|
|
28
|
|
|
27
|
|
|
|
|
55
|
|
||||||||
Total gross profit
|
190
|
|
|
106
|
|
|
|
|
296
|
|
|
150
|
|
|
106
|
|
|
|
|
256
|
|
||||||||
Total operating expenses
|
119
|
|
|
81
|
|
|
|
|
200
|
|
|
91
|
|
|
109
|
|
|
|
|
200
|
|
||||||||
Operating income (loss)
|
71
|
|
|
25
|
|
|
|
|
96
|
|
|
59
|
|
|
(3
|
)
|
|
|
|
56
|
|
||||||||
Interest expense, net
|
19
|
|
|
15
|
|
|
|
|
34
|
|
|
20
|
|
|
38
|
|
|
|
|
58
|
|
||||||||
Loss on extinguishment of debt and other
|
109
|
|
|
—
|
|
|
|
|
109
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||||||
Income (loss) from continuing operations before income taxes
|
(57
|
)
|
|
10
|
|
|
|
|
(47
|
)
|
|
39
|
|
|
(41
|
)
|
|
|
|
(2
|
)
|
||||||||
Income tax expense (benefit)
|
1
|
|
|
30
|
|
|
|
|
31
|
|
|
1
|
|
|
(15
|
)
|
|
|
|
(14
|
)
|
||||||||
Income (loss) from continuing operations
|
(58
|
)
|
|
(20
|
)
|
|
|
|
(78
|
)
|
|
38
|
|
|
(26
|
)
|
|
|
|
12
|
|
||||||||
Loss from discontinued operations, net of income taxes (See Note 4)
|
—
|
|
|
(237
|
)
|
|
|
|
(237
|
)
|
|
—
|
|
|
(11
|
)
|
|
|
|
(11
|
)
|
||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(58
|
)
|
|
$
|
(257
|
)
|
|
|
|
$
|
(315
|
)
|
|
$
|
38
|
|
|
$
|
(37
|
)
|
|
|
|
$
|
1
|
|
||
Depreciation, amortization and accretion (1)
|
28
|
|
|
21
|
|
|
|
|
49
|
|
|
22
|
|
|
65
|
|
|
|
|
87
|
|
||||||||
Interest expense, net (1)
|
19
|
|
|
17
|
|
|
|
|
36
|
|
|
20
|
|
|
44
|
|
|
|
|
64
|
|
||||||||
Income tax expense (benefit) (1)
|
1
|
|
|
203
|
|
|
|
|
204
|
|
|
1
|
|
|
(18
|
)
|
|
|
|
(17
|
)
|
||||||||
EBITDA
|
(10
|
)
|
|
(16
|
)
|
|
|
|
(26
|
)
|
|
81
|
|
|
54
|
|
|
|
|
135
|
|
||||||||
Non-cash compensation expense (1)
|
—
|
|
|
3
|
|
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|
|
|
4
|
|
||||||||
Loss on disposal of assets (1)
|
3
|
|
|
23
|
|
|
|
|
26
|
|
|
2
|
|
|
5
|
|
|
|
|
7
|
|
||||||||
Loss on extinguishment of debt and other (1)
|
109
|
|
|
20
|
|
|
|
|
129
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||||||
Unrealized gain on commodity derivatives (1)
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
|
|
(5
|
)
|
||||||||
Inventory fair value adjustments (1)
|
(25
|
)
|
|
(1
|
)
|
|
|
|
(26
|
)
|
|
13
|
|
|
1
|
|
|
|
|
14
|
|
||||||||
Other non-cash adjustments
|
3
|
|
|
—
|
|
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||||||
Adjusted EBITDA
|
$
|
80
|
|
|
$
|
29
|
|
|
|
|
$
|
109
|
|
|
$
|
91
|
|
|
$
|
64
|
|
|
|
|
$
|
155
|
|
||
Capital expenditures (1)
|
$
|
12
|
|
|
$
|
7
|
|
|
|
|
$
|
19
|
|
|
$
|
12
|
|
|
$
|
54
|
|
|
|
|
$
|
66
|
|
||
Total assets as of March 31, 2018 and December 31, 2017, respectively
|
$
|
3,073
|
|
|
$
|
1,846
|
|
|
|
|
$
|
4,919
|
|
|
$
|
3,130
|
|
|
$
|
5,214
|
|
|
|
|
$
|
8,344
|
|
(1)
|
Includes amounts from discontinued operations.
|
20.
|
Net Income per Unit
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions, except units and per unit amounts)
|
||||||
Income (loss) from continuing operations
|
|
$
|
(78
|
)
|
|
$
|
12
|
|
Less:
|
|
|
|
|
||||
Distributions on Series A Preferred units
|
|
2
|
|
|
—
|
|
||
Incentive distribution rights
|
|
18
|
|
|
21
|
|
||
Distributions on nonvested phantom unit awards
|
|
1
|
|
|
2
|
|
||
Limited partners' interest in net loss from continuing operations
|
|
$
|
(99
|
)
|
|
$
|
(11
|
)
|
Loss from discontinued operations
|
|
$
|
(237
|
)
|
|
$
|
(11
|
)
|
Weighted average limited partner units outstanding:
|
|
|
|
|
||||
Common - basic
|
|
89,753,950
|
|
|
98,609,608
|
|
||
Common - equivalents
|
|
517,801
|
|
|
106,350
|
|
||
Common - diluted
|
|
90,271,751
|
|
|
98,715,958
|
|
||
Loss from continuing operations per limited partner unit:
|
|
|
|
|
||||
Common - basic
|
|
$
|
(1.11
|
)
|
|
$
|
(0.11
|
)
|
Common - diluted
|
|
$
|
(1.11
|
)
|
|
$
|
(0.11
|
)
|
Loss from discontinued operations per limited partner unit:
|
|
|
|
|
||||
Common - basic
|
|
$
|
(2.63
|
)
|
|
$
|
(0.11
|
)
|
Common - diluted
|
|
$
|
(2.63
|
)
|
|
$
|
(0.11
|
)
|
•
|
the outcome of any legal proceedings that may be instituted against us following the completion of the 7-Eleven Transaction;
|
•
|
our ability to make, complete and integrate acquisitions from affiliates or third-parties;
|
•
|
business strategy and operations of Energy Transfer Partners, L.P. (“ETP”) and Energy Transfer Equity, L.P. (“ETE”) and ETP’s and ETE’s conflicts of interest with us;
|
•
|
changes in the price of and demand for the motor fuel that we distribute and our ability to appropriately hedge any motor fuel we hold in inventory;
|
•
|
our dependence on limited principal suppliers;
|
•
|
competition in the wholesale motor fuel distribution and convenience store industry;
|
•
|
changing customer preferences for alternate fuel sources or improvement in fuel efficiency;
|
•
|
environmental, tax and other federal, state and local laws and regulations;
|
•
|
the fact that we are not fully insured against all risk incidents to our business;
|
•
|
dangers inherent in the storage and transportation of motor fuel;
|
•
|
our reliance on senior management, supplier trade credit and information technology; and
|
•
|
our partnership structure, which may create conflicts of interest between us and Sunoco GP LLC, our general partner (“General Partner”), and its affiliates, and limits the fiduciary duties of our General Partner and its affiliates.
|
•
|
284
convenience stores and fuel outlets;
|
•
|
185
independently operated consignment locations where we sell motor fuel to retail customers under commission arrangements with such operators;
|
•
|
6,503
convenience stores and retail fuel outlets operated by independent operators, which we refer to as “dealers” or “distributors,” pursuant to long-term distribution agreements; and
|
•
|
2,203
other commercial customers, including unbranded convenience stores, other fuel distributors, school districts, municipalities and other industrial customers.
|
•
|
Wholesale and retail motor fuel gallons sold
. One of the primary drivers of our business is the total volume of motor fuel sold through our wholesale and retail channels. Fuel distribution contracts with our wholesale customers generally provide that we distribute motor fuel at a fixed, volume-based profit margin or at an agreed upon level of price support. As a result, wholesale gross profit is directly tied to the volume of motor fuel that we distribute.
|
•
|
Gross profit per gallon
. Gross profit per gallon is calculated as the gross profit on motor fuel (excluding non-cash fair value adjustments) divided by the number of gallons sold, and is typically expressed as cents per gallon. Our gross profit per gallon varies amongst our third-party relationships and is impacted by the availability of certain discounts and rebates from suppliers. Retail gross profit per gallon is heavily impacted by volatile pricing and intense competition from convenience stores, supermarkets, club stores and other retail formats, which varies based on the market.
|
•
|
Merchandise gross profit and margin
. Merchandise gross profit is calculated as the gross sales price of merchandise less direct cost of goods and shortages, including bad merchandise and theft. Merchandise margin is calculated as merchandise gross profit as a percentage of merchandise sales. We do not include gross profit from ancillary products and services in the calculation of merchandise gross profit. We do not anticipate that merchandise gross profit and margin will be used by management as a key measure to analyze our future business performance as we have transitioned primarily into a wholesale fuel distribution business.
|
•
|
EBITDA, Adjusted EBITDA and distributable cash flow
. EBITDA as used throughout this document, is defined as earnings before net interest expense, income taxes, depreciation, amortization and accretion expense. Adjusted EBITDA is further adjusted to exclude allocated non-cash compensation expense, unrealized gains and losses on commodity derivatives and inventory fair value adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations, such as gain or loss on disposal of assets and non-cash impairment charges. We define distributable cash flow as Adjusted EBITDA less cash interest expense, including the accrual of interest expense related to our long-term debt which is paid on a semi-annual basis, Series A Preferred distribution, current income tax expense, maintenance capital expenditures and other non-cash adjustments.
|
•
|
Adjusted EBITDA is used as a performance measure under our revolving credit facility;
|
•
|
securities analysts and other interested parties use such metrics as measures of financial performance, ability to make distributions to our unitholders and debt service capabilities;
|
•
|
our management uses them for internal planning purposes, including aspects of our consolidated operating budget, and capital expenditures; and
|
•
|
distributable cash flow provides useful information to investors as it is a widely accepted financial indicator used by investors to compare partnership performance, and as it provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.
|
•
|
they do not reflect our total cash expenditures, or future requirements for capital expenditures or contractual commitments;
|
•
|
they do not reflect changes in, or cash requirements for, working capital;
|
•
|
they do not reflect interest expense or the cash requirements necessary to service interest or principal payments on our revolving credit facility or term loan;
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and
|
•
|
as not all companies use identical calculations, our presentation of EBITDA, Adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies.
|
|
For the Three Months Ended March 31,
|
|||||||||||||||||||||||
|
2018
|
|
|
2017
|
||||||||||||||||||||
|
Wholesale
|
|
Retail
|
|
Total
|
|
|
Wholesale
|
|
Retail
|
|
Total
|
||||||||||||
|
(dollars and gallons in millions, except gross profit per gallon)
|
|||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail motor fuel
|
$
|
—
|
|
|
$
|
445
|
|
|
$
|
445
|
|
|
|
$
|
—
|
|
|
$
|
353
|
|
|
$
|
353
|
|
Wholesale motor fuel sales to third parties
|
3,094
|
|
|
—
|
|
|
3,094
|
|
|
|
2,244
|
|
|
—
|
|
|
2,244
|
|
||||||
Wholesale motor fuel sale to affiliates
|
12
|
|
|
—
|
|
|
12
|
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||||
Merchandise
|
—
|
|
|
135
|
|
|
135
|
|
|
|
—
|
|
|
131
|
|
|
131
|
|
||||||
Rental income
|
19
|
|
|
3
|
|
|
22
|
|
|
|
19
|
|
|
3
|
|
|
22
|
|
||||||
Other
|
14
|
|
|
27
|
|
|
41
|
|
|
|
13
|
|
|
24
|
|
|
37
|
|
||||||
Total revenues
|
$
|
3,139
|
|
|
$
|
610
|
|
|
$
|
3,749
|
|
|
|
$
|
2,297
|
|
|
$
|
511
|
|
|
$
|
2,808
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail motor fuel
|
$
|
—
|
|
|
$
|
44
|
|
|
$
|
44
|
|
|
|
$
|
—
|
|
|
$
|
36
|
|
|
$
|
36
|
|
Wholesale motor fuel
|
161
|
|
|
—
|
|
|
161
|
|
|
|
122
|
|
|
—
|
|
|
122
|
|
||||||
Merchandise
|
—
|
|
|
42
|
|
|
42
|
|
|
|
—
|
|
|
43
|
|
|
43
|
|
||||||
Rental and other
|
29
|
|
|
20
|
|
|
49
|
|
|
|
28
|
|
|
27
|
|
|
55
|
|
||||||
Total gross profit
|
$
|
190
|
|
|
$
|
106
|
|
|
$
|
296
|
|
|
|
$
|
150
|
|
|
$
|
106
|
|
|
$
|
256
|
|
Income (loss) from continuing operations
|
(58
|
)
|
|
(20
|
)
|
|
(78
|
)
|
|
|
38
|
|
|
(26
|
)
|
|
12
|
|
||||||
Loss from discontinued operations, net of taxes
|
—
|
|
|
(237
|
)
|
|
(237
|
)
|
|
|
—
|
|
|
(11
|
)
|
|
(11
|
)
|
||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(58
|
)
|
|
$
|
(257
|
)
|
|
$
|
(315
|
)
|
|
|
$
|
38
|
|
|
$
|
(37
|
)
|
|
$
|
1
|
|
Adjusted EBITDA (2)
|
$
|
80
|
|
|
$
|
29
|
|
|
$
|
109
|
|
|
|
$
|
91
|
|
|
$
|
64
|
|
|
$
|
155
|
|
Distributable cash flow, as adjusted (2)
|
|
|
|
|
$
|
85
|
|
|
|
|
|
|
|
$
|
77
|
|
||||||||
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total motor fuel gallons sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail (3)
|
|
|
245
|
|
|
245
|
|
|
|
|
|
595
|
|
|
595
|
|
||||||||
Wholesale
|
1,612
|
|
|
|
|
1,612
|
|
|
|
1,313
|
|
|
|
|
1,313
|
|
||||||||
Motor fuel gross profit cents per gallon (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail (3)
|
|
|
24.4¢
|
|
|
24.4¢
|
|
|
|
|
|
23.1¢
|
|
|
23.1¢
|
|
||||||||
Wholesale
|
8.4¢
|
|
|
|
|
8.4¢
|
|
|
|
10.6¢
|
|
|
|
|
10.6¢
|
|
||||||||
Volume-weighted average for all gallons (3)
|
|
|
|
|
10.5¢
|
|
|
|
|
|
|
|
14.5¢
|
|
||||||||||
Retail merchandise margin (3)
|
|
|
29.7
|
%
|
|
|
|
|
|
|
31.6
|
%
|
|
|
(1)
|
Includes other non-cash adjustments and excludes the impact of inventory adjustments consistent with the definition of Adjusted EBITDA.
|
(2)
|
We define EBITDA, Adjusted EBITDA, and distributable cash flow as described above under “Key Measures Used to Evaluate and Assess Our Business.”
|
(3)
|
Includes amounts from discontinued operations.
|
|
For the Three Months Ended March 31,
|
|||||||||||||||||||||||
|
2018
|
|
|
2017
|
||||||||||||||||||||
|
Wholesale
|
|
Retail
|
|
Total
|
|
|
Wholesale
|
|
Retail
|
|
Total
|
||||||||||||
|
(in millions)
|
|||||||||||||||||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(58
|
)
|
|
$
|
(257
|
)
|
|
$
|
(315
|
)
|
|
|
$
|
38
|
|
|
$
|
(37
|
)
|
|
$
|
1
|
|
Depreciation, amortization and accretion (1)
|
28
|
|
|
21
|
|
|
49
|
|
|
|
22
|
|
|
65
|
|
|
87
|
|
||||||
Interest expense, net (1)
|
19
|
|
|
17
|
|
|
36
|
|
|
|
20
|
|
|
44
|
|
|
64
|
|
||||||
Income tax expense (benefit) (1)
|
1
|
|
|
203
|
|
|
204
|
|
|
|
1
|
|
|
(18
|
)
|
|
(17
|
)
|
||||||
EBITDA
|
$
|
(10
|
)
|
|
$
|
(16
|
)
|
|
$
|
(26
|
)
|
|
|
$
|
81
|
|
|
$
|
54
|
|
|
$
|
135
|
|
Non-cash compensation expense (1)
|
—
|
|
|
3
|
|
|
3
|
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||||
Loss on disposal of assets (1)
|
3
|
|
|
23
|
|
|
26
|
|
|
|
2
|
|
|
5
|
|
|
7
|
|
||||||
Loss on extinguishment of debt and other (1)
|
109
|
|
|
20
|
|
|
129
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Unrealized gain on commodity derivatives (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Inventory adjustments (1)
|
(25
|
)
|
|
(1
|
)
|
|
(26
|
)
|
|
|
13
|
|
|
1
|
|
|
14
|
|
||||||
Other non-cash adjustments
|
3
|
|
|
—
|
|
|
3
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Adjusted EBITDA
|
$
|
80
|
|
|
$
|
29
|
|
|
$
|
109
|
|
|
|
$
|
91
|
|
|
$
|
64
|
|
|
$
|
155
|
|
Cash interest expense (1)
|
|
|
|
|
34
|
|
|
|
|
|
|
|
60
|
|
||||||||||
Current income tax expense (1)
|
|
|
|
|
468
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Transaction-related income taxes (2)
|
|
|
|
|
(480
|
)
|
|
|
|
|
|
|
—
|
|
||||||||||
Maintenance capital expenditures (1)
|
|
|
|
|
3
|
|
|
|
|
|
|
|
18
|
|
||||||||||
Distributable cash flow
|
|
|
|
|
$
|
84
|
|
|
|
|
|
|
|
$
|
77
|
|
||||||||
Transaction-related expenses (1)
|
|
|
|
|
3
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Series A Preferred distribution
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
—
|
|
||||||||||
Distributable cash flow, as adjusted
|
|
|
|
|
$
|
85
|
|
|
|
|
|
|
|
$
|
77
|
|
(1)
|
Includes amounts from discontinued operations.
|
(2)
|
Transaction-related income taxes primarily related to the 7-Eleven Transaction.
|
•
|
an increase in wholesale motor fuel revenue of
$841 million
due to a
11.8%
, or a
$0.20
, increase in the sales price per wholesale motor fuel gallon, and an increase in wholesale motor fuel gallons sold of approximately
299 million
;
|
•
|
an increase in retail motor fuel revenue of
$92 million
due to
32.2%
, or a
$0.77
, increase in the sales price per retail motor fuel gallon, offset by a decrease in retail motor fuel gallons sold of approximately
7 million
; and
|
•
|
a net increase in merchandise revenue, rental income and other revenue of
$8 million
.
|
•
|
an increase in the gross profit on wholesale motor fuel of
$39 million
primarily due to a
$38 million
favorable change in the inventory adjustment compared to the prior year. Excluding the inventory adjustment change, we had a
20.8%
, or a
$0.022
, decrease in the gross profit per wholesale motor fuel gallon and an increase in wholesale motor fuel gallons sold of approximately
299 million
; and
|
•
|
an increase in the gross profit on retail motor fuel of
$8 million
primarily due to a
23.6%
, or a
$0.060
, increase in the gross profit per retail motor fuel gallon, offset by a decrease in retail motor fuel gallons sold of approximately
7 million
; offset by
|
•
|
a net decrease in other gross profit consisting of merchandise, rental and other of
$7 million
.
|
•
|
an increase in general and administrative expenses and other operating expenses of
$9 million
primarily attributable to higher salary, insurance and maintenance expenses; and
|
•
|
an increase in loss on disposal of assets of
$1 million
; offset by
|
•
|
a net decrease in rent expense and depreciation, amortization and accretion expense of
$10 million
.
|
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Net cash provided by (used in)
|
|
|
|
||||
Operating activities - continuing operations
|
$
|
440
|
|
|
$
|
(14
|
)
|
Investing activities - continuing operations
|
(17
|
)
|
|
(37
|
)
|
||
Financing activities - continuing operations
|
(3,093
|
)
|
|
(96
|
)
|
||
Discontinued operations
|
2,740
|
|
|
101
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
70
|
|
|
$
|
(46
|
)
|
•
|
borrowed $2.2 billion under our 2018 Senior Notes offering, comprised of $1.0 billion in aggregate principal amount of 4.875% senior notes due 2023, $800 million in aggregate principal amount of 5.500% senior notes due 2026 and $400 million in aggregate principal amount of 5.875% senior notes due 2028;
|
•
|
borrowed
$414 million
and repaid
$1.2 billion
under our 2014 Revolver to fund daily operations;
|
•
|
redeemed $2.2 billion of our existing senior notes as of December 31, 2017, comprised of $800 million in aggregate principal amount of 6.250% senior notes due 2021, $600 million in aggregate principal amount of 5.500% senior notes due 2020, and $800 million in aggregate principal amount of 6.375% senior notes due 2023;
|
•
|
repaid
$1.2 billion
Term Loan in full and terminated it;
|
•
|
redeemed the outstanding Series A Preferred Units held by ETE for $300 million and a call premium of $3 million;
|
•
|
repurchased 17,286,859 SUN common units owned by ETP for aggregate cash consideration of approximately $540 million ; and
|
•
|
paid $121 million in distributions to our unitholders, of which $69 million was paid to ETP and ETE collectively.
|
|
Owned
|
|
Leased
|
||
Wholesale dealer and consignment sites
|
473
|
|
|
242
|
|
Company-operated convenience stores and fuel outlets
|
147
|
|
|
137
|
|
Warehouses, offices and other
|
82
|
|
|
84
|
|
Total
|
702
|
|
|
463
|
|
•
|
interest rate risk on short-term borrowings; and
|
•
|
the impact of interest rate movements on our ability to obtain adequate financing to fund future acquisitions.
|
Period
|
|
Total number of shares purchased
|
|
Average Price paid per share
|
|
Total number of shares purchased as part of publicly announced plans or programs (1)
|
|
Approximate dollar value of shares that may yet be purchased under the plan or program
|
||||||
January 1, 2018 to January 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
February 1, 2018 to February 28, 2018
|
|
17,286,859
|
|
|
31.2376
|
|
|
17,286,859
|
|
|
—
|
|
||
March 1, 2018 to March 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
17,286,859
|
|
|
$
|
31.2376
|
|
|
17,286,859
|
|
|
$
|
—
|
|
(1)
|
On February 7, 2018, subsequent to the record date for SUN’s fourth quarter 2017 distribution, the Partnership repurchased 17,286,859 SUN common units owned by ETP for aggregate cash consideration of approximately $540 million. The repurchase price per common unit was $31.2376, which is equal to the volume weighted average trading price of SUN common units on the New York Stock Exchange for the ten trading days ending on January 23, 2018. The Partnership funded the repurchase with cash on hand.
|
|
SUNOCO LP
|
|
|
|
|
|
By
|
Sunoco GP LLC, its general partner
|
|
|
|
Date: May 10, 2018
|
By
|
/s/ Thomas R. Miller
|
|
|
Thomas R. Miller
|
|
|
Chief Financial Officer
(On behalf of the registrant and in his capacity as chief financial officer) |
|
|
|
|
By
|
/s/
Leta McKinley
|
|
|
Leta McKinley
|
|
|
Vice President, Controller and
Principal Accounting Officer (In her capacity as principal accounting officer) |
1.
|
The name of the limited partnership is Sunoco LP.
|
2.
|
The address of the registered office of the Partnership in the State of Delaware is 251 Little Falls Drive, Wilmington, Delaware, County of New Castle 19808, and the name of the registered agent at such address is Corporation Service Company.
|
3.
|
The name and business address of the General Partner of the Partnership are as follows:
|
a.
|
Section 2.3 of the LLC Agreement is hereby amended and restated to read as follows:
|
|
Three Months Ended March 31, 2018
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014 (1)
|
|
2013
|
|||||||||||||
|
(in millions, except ratios)
|
||||||||||||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest cost and debt expense
|
$
|
37
|
|
|
$
|
249
|
|
|
$
|
191
|
|
|
$
|
89
|
|
|
$
|
17
|
|
|
$
|
3
|
|
Interest allocable to rental expense (2)
|
6
|
|
|
46
|
|
|
47
|
|
|
47
|
|
|
14
|
|
|
1
|
|
||||||
Total
|
$
|
43
|
|
|
$
|
295
|
|
|
$
|
238
|
|
|
$
|
136
|
|
|
$
|
31
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated pretax income (loss) from continuing operations
|
$
|
(47
|
)
|
|
$
|
20
|
|
|
$
|
(16
|
)
|
|
$
|
185
|
|
|
$
|
22
|
|
|
$
|
37
|
|
Fixed charges
|
43
|
|
|
295
|
|
|
238
|
|
|
136
|
|
|
31
|
|
|
4
|
|
||||||
Interest capitalized
|
(1
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
||||||
Total
|
$
|
(5
|
)
|
|
$
|
311
|
|
|
$
|
220
|
|
|
$
|
320
|
|
|
$
|
52
|
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of Earnings to Fixed Charges (3)
|
|
|
1.05
|
|
|
|
|
2.35
|
|
|
1.68
|
|
|
10.25
|
|
(1)
|
For the year ended December 31, 2014, we have combined the Predecessor Period and the Successor Period and presented the unaudited financial data on a combined basis for comparative purposes.
|
(2)
|
Represents one-third of the total operating lease rental expense, which is that portion deemed to be interest.
|
(3)
|
The ratios of coverage in 2016 and the
three months ended March 31, 2018
were less than 1:1. The Partnership would have needed to generate additional earnings from continuing operations of $18 million and
$48 million
to achieve a coverage of 1:1 in 2016 and the
three months ended March 31, 2018
.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Sunoco LP;
|
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 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 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.
|
Date: May 10, 2018
|
/s/ Joseph Kim
|
|
Joseph Kim
|
|
President and Chief Executive Officer of Sunoco GP LLC, the general partner of Sunoco LP
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Sunoco LP;
|
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 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 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.
|
Date: May 10, 2018
|
/s/ Thomas R. Miller
|
|
Thomas R. Miller
|
|
Chief Financial Officer of Sunoco GP LLC, the general partner of Sunoco LP
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
Date: May 10, 2018
|
/s/
Joseph Kim
|
|
Joseph Kim
|
|
President and Chief Executive Officer of Sunoco GP LLC, the general partner of Sunoco LP
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
Date: May 10, 2018
|
/s/
Thomas R. Miller
|
|
Thomas R. Miller
|
|
Chief Financial Officer of Sunoco GP LLC, the general partner of Sunoco LP
|
|
Page
|
Balance Sheets
|
1
|
Statements of Operations
|
2
|
Statement of Equity
|
3
|
Statements of Cash Flows
|
4
|
Notes to Financial Statements
|
5
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Advances to affiliated companies
|
$
|
61
|
|
|
$
|
52
|
|
Total current assets
|
61
|
|
|
52
|
|
||
|
|
|
|
||||
Investment in unconsolidated affiliate
|
228
|
|
|
282
|
|
||
Total assets
|
$
|
289
|
|
|
$
|
334
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accrued and other current liabilities
|
$
|
3
|
|
|
$
|
3
|
|
Total current liabilities
|
3
|
|
|
3
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
||||
|
|
|
|
|
|||
Equity:
|
|
|
|
||||
Member’s equity
|
286
|
|
|
331
|
|
||
Total equity
|
286
|
|
|
331
|
|
||
Total liabilities and equity
|
$
|
289
|
|
|
$
|
334
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Loss from unconsolidated affiliate
|
|
$
|
(45
|
)
|
|
$
|
(2
|
)
|
Net loss
|
|
$
|
(45
|
)
|
|
$
|
(2
|
)
|
|
Total
|
||
Balance, December 31, 2017
|
$
|
331
|
|
Net loss
|
(45
|
)
|
|
Balance, March 31, 2018
|
$
|
286
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(45
|
)
|
|
$
|
(2
|
)
|
Reconciliation of net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Loss from unconsolidated affiliate
|
45
|
|
|
2
|
|
||
Distributions from unconsolidated affiliate
|
9
|
|
|
9
|
|
||
Net cash provided by operating activities
|
9
|
|
|
9
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Advances to Sunoco, Inc.
|
(9
|
)
|
|
(9
|
)
|
||
Net cash used in financing activities
|
(9
|
)
|
|
(9
|
)
|
||
Change in cash and cash equivalents
|
—
|
|
|
—
|
|
||
Cash and cash equivalents, beginning of period
|
—
|
|
|
—
|
|
||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
—
|
|
1.
|
Operations and Organization:
|
2.
|
Summary of Significant Accounting Policies:
|
4.
|
Commitments and Contingencies:
|
•
|
With the exception of PropCo and any companies owned directly or indirectly by PropCo, neither we nor our operating subsidiaries have elected or will elect to be treated as a corporation; and
|
•
|
For each taxable year, more than 90% of our gross income has been and will be income that Hunton Andrews Kurth has opined or will opine is “qualifying income” within the meaning of Section 7704(d) of the Internal Revenue Code.
|
•
|
interest on indebtedness properly allocable to property held for investment;
|
•
|
our interest expense attributed to portfolio income; and
|
•
|
the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable to portfolio income.
|
•
|
any of our income, gain, loss or deduction with respect to those common units would not be reportable by the unitholder;
|
•
|
any cash distributions received by the unitholder as to those common units would be fully taxable; and
|
•
|
all of these distributions may be subject to tax as ordinary income.
|
•
|
the net amount of our U.S. items of income, gain, deduction, and loss to the extent such items are included or allowed in the determination of taxable income for the year,
excluding
, however, certain specified types of passive investment income (such as capital gains and dividends, which are taxed at a rate of 20%) and certain payments made to the unitholder for services rendered to us; and
|
•
|
any gain recognized upon a disposition of our units to the extent such gain is attributable to Section 751 Assets, such as depreciation recapture and our “inventory items,” and is thus treated as ordinary income under Section 751 of the Internal Revenue Code.
|
•
|
a short sale;
|
•
|
an offsetting notional principal contract; or
|
•
|
a futures or forward contract;
|