Plains All American Pipeline, L.P. Reports Third-Quarter 2013 Results

Plains All American Pipeline, L.P. (NYSE: PAA) reported third-quarter 2013 results as summarized below:

Summary Financial Information (1)
     

(in millions, except per unit data)
    Three Months Ended

September 30,
  Nine Months Ended

September 30,
  2013   2012   %

Change
2013   2012   %

Change
Net income attributable to Plains $ 231   $ 165 40 % $ 1,052 $ 774 36 %
Diluted net income per limited partner unit $ 0.38 $ 0.27 41 % $ 2.22 $ 1.70 31 %
EBITDA $ 411   $ 470   -13 % $ 1,642   $ 1,410   16 %
 
 
Three Months Ended

September 30,
Nine Months Ended

September 30,
  2013   2012   %

Change
2013   2012   %

Change
Adjusted net income attributable to Plains $ 284 $ 322 -12 % $ 1,096 $ 985 11 %
Diluted adjusted net income per limited partner unit $ 0.53 $ 0.73 -27 % $ 2.35 $ 2.33 1 %
Adjusted EBITDA     $ 480   $ 502   -4 % $ 1,697   $ 1,497   13 %
Distribution declared for the period     $ 0.6000   $ 0.5425   10.6 %
 

(1) The Partnership’s reported results include the impact of items that affect comparability between reporting periods. The impact of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding selected items that the Partnership believes impact comparability of financial results between reporting periods, as well as for information regarding non-GAAP financial measures (such as adjusted EBITDA) and their reconciliation to the most directly comparable GAAP measures.
 

“PAA continues to deliver solid performance in a variety of market conditions. For the third quarter of 2013, adjusted EBITDA for each of our three reporting segments met or exceeded the mid-point of our guidance and we remain on track to meet or exceed each of our goals for 2013,” said Greg L. Armstrong, Chairman and CEO of Plains All American. “PAA’s quarterly distribution payable next week represents a 10.6% increase over the quarterly distribution paid in November 2012, exceeding the high end of our 9% to 10% targeted growth range for 2013.”

“Additionally, we increased the mid-point of our 2013 guidance range for adjusted EBITDA by $50 million to $2.24 billion and ended the quarter well positioned to finance PAA’s continued growth with a strong balance sheet, approximately $2.9 billion in committed liquidity and credit metrics that compare favorably to our targets. Looking beyond 2013, we furnished preliminary baseline guidance for 2014, underpinned by a 20% increase in our fee-based activities, and established a 10% distribution growth target for next year. We also expect recently completed growth projects and our multi-billion dollar portfolio of organic growth capital investments to provide visibility for continued growth beyond 2014.”

The following table summarizes selected financial information by segment for the third quarter and first nine months of 2013:

Summary of Selected Financial Data by Segment (1)
       
(in millions)
    Three Months Ended Three Months Ended
September 30, 2013 September 30, 2012
Transportation   Facilities  

Supply and Logistics
    Transportation   Facilities  

Supply and

Logistics
Reported segment profit $ 198   $ 146   $ 64 $ 184 $ 140 $ 142
Selected items impacting the comparability of segment profit (2)   7     4     60     6   2   27
Adjusted segment profit $ 205   $ 150   $ 124   $ 190 $ 142 $ 169
Percentage change in adjusted segment profit versus 2012 period   8 %   6 %   -27 %
 
Nine Months Ended Nine Months Ended
September 30, 2013 September 30, 2012
Transportation   Facilities  

Supply and

Logistics
    Transportation   Facilities  

Supply and Logistics
Reported segment profit $ 522 $ 445 $ 673 $ 516 $ 344 $ 544
Selected items impacting the comparability of segment profit (2)   25     14     12     27   18   43
Adjusted segment profit $ 547   $ 459   $ 685   $ 543 $ 362 $ 587
Percentage change in adjusted segment profit versus 2012 period   1 %   27 %   17 %
 

(1) The Partnership’s reported results include the impact of items that affect comparability between reporting periods. The impact of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding selected items that the Partnership believes impact comparability of financial results between reporting periods.

(2) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.
 

Third-quarter 2013 Transportation adjusted segment profit increased 8% versus comparable 2012 results. This increase was primarily driven by the benefit of higher pipeline volumes related to crude oil production increases in basins our assets service, recently completed organic growth projects and higher average pipeline tariffs. These benefits were partially offset by lost revenue from weather-related downtime during the third quarter of 2013.

Third-quarter 2013 Facilities adjusted segment profit increased 6% over comparable 2012 results. This increase was primarily related to increased crude oil rail activities.

Third-quarter 2013 Supply and Logistics adjusted segment profit exceeded our guidance, but represented a 27% decrease relative to comparable 2012 results. This decrease was primarily related to less favorable crude oil market conditions during the current year quarter, particularly narrower crude oil differentials, partially offset by stronger net margins in the NGL business.

The Partnership will hold a conference call on November 5, 2013 (see details below). Prior to this conference call, the Partnership will furnish a current report on Form 8-K, which will include material in this news release as well as financial and operational guidance for the fourth quarter and full year of 2013. A copy of the Form 8-K will be available on the Partnership’s website at www.paalp.com, where PAA routinely posts important information about the Partnership.

Conference Call

The Partnership’s conference call will be held at 11:00 a.m. EST on Tuesday, November 5, 2013 to discuss the following items:

1. The Partnership’s third-quarter 2013 performance;

2. The status of major expansion projects;

3. Capitalization and liquidity;

4. Financial and operating guidance for the fourth quarter and full year of 2013;

5. Preliminary 2014 adjusted EBITDA, implied DCF and growth capital investment guidance;

6. Status of pending purchase of outstanding publicly traded units of PNG; and

7. The Partnership’s outlook for the future.

Conference Call Access Instructions

To access the Internet webcast of the conference call, please go to the Partnership’s website at www.paalp.com, choose “Investor Relations,” and then choose “Events and Presentations.” Following the live webcast, the call will be archived for a period of sixty (60) days on the Partnership’s website.

Alternatively, access to the live conference call is available by dialing toll free (877) 531-2998. International callers should dial (612) 332-0228. No password is required. The slide presentation accompanying the conference call will be available a few minutes prior to the call under the “Conference Call Summaries” portion of the “Conference Calls” tab of the “Investor Relations” section of the PAA website at www.paalp.com.

Telephonic Replay Instructions

To listen to a telephonic replay of the conference call, please dial (800) 475-6701 or (320) 365-3844 for international callers and enter replay access code 303548. The replay will be available beginning Tuesday, November 5, 2013, at approximately 1:00 p.m. EST and will continue until 12:59 a.m. EST on December 6, 2013.

Non-GAAP Financial Measures and Selected Items Impacting Comparability

To supplement our financial information presented in accordance with GAAP, management uses additional measures that are known as “non-GAAP financial measures” (such as adjusted EBITDA and implied distributable cash flow) in its evaluation of past performance and prospects for the future. Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) the mark-to-market of derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), (iii) items that are not indicative of our core operating results and business outlook and/or (iv) other items that we believe should be excluded in understanding our core operating performance. We have defined all such items as “selected items impacting comparability.” We consider an understanding of these selected items impacting comparability to be material to the evaluation of our operating results and prospects.

Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management’s discussion and analysis of operating results in our Quarterly Report on Form 10-Q.

Adjusted EBITDA and other non-GAAP financial measures are reconciled to the most comparable GAAP measures for the periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our consolidated financial statements and notes thereto. In addition, the Partnership maintains on its website ( www.paalp.com) a reconciliation of adjusted EBITDA and certain commonly used non-GAAP financial information to the most comparable GAAP measures. To access the information, investors should click on the "Investor Relations" link on the Partnership's home page, select the "Guidance & Non-GAAP Reconciliations" link and navigate to the “Non-GAAP Reconciliations” tab on the Investor Relations page.

Forward Looking Statements

Except for the historical information contained herein, the matters discussed in this release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from results anticipated in the forward-looking statements. These risks and uncertainties include, among other things, failure to implement or capitalize, or delays in implementing or capitalizing, on planned internal growth projects; unanticipated changes in crude oil market structure, grade differentials and volatility (or lack thereof); the successful integration and future performance of acquired assets or businesses and the risks associated with operating in lines of business that are distinct and separate from our historical operations; the occurrence of a natural disaster, catastrophe, terrorist attack or other event, including attacks on our electronic and computer systems; tightened capital markets or other factors that increase our cost of capital or limit our access to capital; maintenance of our credit rating and ability to receive open credit from our suppliers and trade counterparties; continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business; the effectiveness of our risk management activities; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; declines in the volumes of crude oil, refined product and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our facilities, whether due to declines in production from existing oil and gas reserves, failure to develop or slowdown in the development of additional oil and gas reserves or other factors; shortages or cost increases of supplies, materials or labor; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil, refined products and natural gas and resulting changes in pricing conditions or transportation throughput requirements; the availability of, and our ability to consummate, acquisition or combination opportunities; our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; the impact of current and future laws, rulings, governmental regulations, accounting standards and statements and related interpretations; non-utilization of our assets and facilities; the effects of competition; interruptions in service on third-party pipelines; increased costs or lack of availability of insurance; fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans; the currency exchange rate of the Canadian dollar; weather interference with business operations or project construction; risks related to the development and operation of our facilities; factors affecting demand for natural gas and natural gas storage services and rates; general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; and other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the storage of natural gas and the processing, transportation, fractionation, storage and marketing of natural gas liquids discussed in the Partnership’s filings with the Securities and Exchange Commission.

Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids. Through its general partner interest and majority equity ownership position in PAA Natural Gas Storage, L.P. (NYSE: PNG), PAA also owns and operates natural gas storage facilities. PAA is headquartered in Houston, Texas.

             
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
 
REVENUES $ 10,703 $ 9,354 $ 31,617 $ 28,358
 
COSTS AND EXPENSES
Purchases and related costs 9,909 8,524 28,733 25,855
Field operating costs 326 292 1,010 860
General and administrative expenses 79 81 276 264
Depreciation and amortization   93     210     265     356  
Total costs and expenses   10,407     9,107     30,284     27,335  
 
OPERATING INCOME 296 247 1,333 1,023
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities 19 9 42 25
Interest expense, net (72 ) (74 ) (224 ) (214 )
Other income, net   3     4     2     6  
 
INCOME BEFORE TAX 246 186 1,153 840
Current income tax expense (17 ) (10 ) (69 ) (32 )
Deferred income tax benefit/(expense)   8     (3 )   (10 )   (11 )
 
NET INCOME 237 173 1,074 797
Net income attributable to noncontrolling interests   (6 )   (8 )   (22 )   (23 )
NET INCOME ATTRIBUTABLE TO PLAINS $ 231   $ 165   $ 1,052   $ 774  
 
NET INCOME ATTRIBUTABLE TO PLAINS:
LIMITED PARTNERS $ 133   $ 89   $ 764   $ 554  
GENERAL PARTNER $ 98   $ 76   $ 288   $ 220  
 
BASIC NET INCOME PER LIMITED PARTNER UNIT $ 0.38   $ 0.27   $ 2.23   $ 1.71  
 
DILUTED NET INCOME PER LIMITED PARTNER UNIT $ 0.38   $ 0.27   $ 2.22   $ 1.70  
 
BASIC WEIGHTED AVERAGE UNITS OUTSTANDING   343     329     340     322  
 
DILUTED WEIGHTED AVERAGE UNITS OUTSTANDING   345     331     342     325  
 
                       

ADJUSTED RESULTS:
(in millions, except per unit data) Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
 
ADJUSTED NET INCOME ATTRIBUTABLE TO PLAINS $ 284   $ 322   $ 1,096   $ 985  
 
DILUTED ADJUSTED NET INCOME PER LIMITED PARTNER UNIT $ 0.53   $ 0.73   $ 2.35   $ 2.33  
 
ADJUSTED EBITDA $ 480   $ 502   $ 1,697   $ 1,497  
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
 

CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in millions)
September 30, December 31,
2013 2012
ASSETS
Current assets $ 5,245 $ 5,147
Property and equipment, net 10,607 9,643
Goodwill 2,519 2,535
Linefill and base gas 770 707
Long-term inventory 218 274
Investments in unconsolidated entities 474 343
Other, net   534     586  
Total assets $ 20,367   $ 19,235  
 
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities $ 5,111 $ 5,183
Senior notes, net of unamortized discount 6,710 6,010
Long-term debt under credit facilities and other 308 310
Other long-term liabilities and deferred credits   554     586  
Total liabilities 12,683 12,089
 
Partners' capital excluding noncontrolling interests 7,150 6,637
Noncontrolling interests   534     509  
Total partners' capital   7,684     7,146  

Total liabilities and partners' capital
$ 20,367   $ 19,235  
 

DEBT CAPITALIZATION RATIOS
(in millions)
September 30, December 31,
2013 2012
Short-term debt $ 619 $ 1,086
Long-term debt   7,018     6,320  
Total debt $ 7,637   $ 7,406  
 
Long-term debt $ 7,018 $ 6,320
Partners' capital   7,684     7,146  
Total book capitalization $ 14,702   $ 13,466  
Total book capitalization, including short-term debt $ 15,321   $ 14,552  
 
Long-term debt-to-total book capitalization 48 % 47 %
Total debt-to-total book capitalization, including short-term debt 50 % 51 %
               
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
 

SELECTED FINANCIAL DATA BY SEGMENT
(in millions)
Three Months Ended Three Months Ended
September 30, 2013 September 30, 2012
Supply and Supply and
Transportation Facilities Logistics Transportation Facilities Logistics
Revenues (1) $ 378 $ 280 $ 10,386 $ 364 $ 262 $ 9,049
Purchases and related costs (1) (35 ) (23 ) (10,189 ) (36 ) (29 ) (8,776 )
Field operating costs (excluding equity-indexed compensation expense) (1) (131 ) (92 ) (103 ) (119 ) (72 ) (101 )
Equity-indexed compensation expense - operations (3 ) - - (3 ) - (1 )
Segment G&A expenses (excluding equity-indexed compensation expense) (2) (25 ) (15 ) (25 ) (23 ) (16 ) (24 )
Equity-indexed compensation expense - general and administrative (5 ) (4 ) (5 ) (8 ) (5 ) (5 )
Equity earnings in unconsolidated entities   19     -     -     9     -     -  
Reported segment profit $ 198   $ 146   $ 64   $ 184   $ 140   $ 142  
Selected items impacting comparability of segment profit (3)   7     4     60     6     2     27  
Segment profit excluding selected items impacting comparability $ 205   $ 150   $ 124   $ 190   $ 142   $ 169  
 
Maintenance capital $ 29   $ 6   $ 7   $ 26   $ 17   $ 4  
 
Nine Months Ended Nine Months Ended
September 30, 2013 September 30, 2012
Supply and Supply and
Transportation Facilities Logistics Transportation Facilities Logistics
Revenues (1) $ 1,111 $ 983 $ 30,544 $ 1,043 $ 785 $ 27,368
Purchases and related costs (1) (109 ) (196 ) (29,439 ) (100 ) (168 ) (26,414 )
Field operating costs (excluding equity-indexed compensation expense) (1) (402 ) (272 ) (327 ) (343 ) (204 ) (308 )
Equity-indexed compensation expense - operations (15 ) (2 ) (2 ) (12 ) (2 ) (2 )
Segment G&A expenses (excluding equity-indexed compensation expense) (2) (74 ) (48 ) (77 ) (73 ) (48 ) (77 )
Equity-indexed compensation expense - general and administrative (31 ) (20 ) (26 ) (24 ) (19 ) (23 )
Equity earnings in unconsolidated entities   42     -     -     25     -     -  
Reported segment profit $ 522 $ 445 $ 673 $ 516 $ 344 $ 544
Selected items impacting comparability of segment profit (3)   25     14     12     27     18     43  
Segment profit excluding selected items impacting comparability $ 547   $ 459   $ 685   $ 543   $ 362   $ 587  
 
Maintenance capital $ 84   $ 23   $ 17   $ 78   $ 34   $ 11  
 
(1) Includes intersegment amounts.
(2) Segment general and administrative expenses (G&A) reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment

require judgment by management and are based on the business activities that exist during each period. Includes acquisition-related expenses for the 2012 period.
(3) Certain non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.
                     
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,

OPERATING DATA (1)
2013 2012 2013 2012
 
Transportation activities (average daily volumes in thousands of barrels):
Tariff activities
Crude Oil Pipelines
All American 40 38 39 31
Bakken Area Systems 136 127 130 133
Basin / Mesa 731 678 712 676
Capline 147 159 153 144
Eagle Ford Area Systems 119 26 81 17
Line 63 / Line 2000 113 131 113 126
Manito 47 51 46 59
Mid-Continent Area Systems 256 281 277 268
Permian Basin Area Systems 593 452 540 451
Rainbow 128 142 125 147
Rangeland 54 57 59 60
Salt Lake City Area Systems 131 156 132 151
South Saskatchewan 56 61 50 60
White Cliffs 22 18 22 18
Other 738 670 737 700
NGL Pipelines
Co-Ed 56 60 55 41
Other 200 204 190 121
Refined Products Pipelines 54 112 88 114
Tariff activities total 3,621 3,423 3,549 3,317
Trucking 120 107 113 103
Transportation activities total 3,741 3,530 3,662 3,420
 
Facilities activities (average monthly volumes):
Crude oil, refined products and NGL terminalling and storage

(average monthly capacity in millions of barrels)
94 94 94 88
Rail load / unload volumes

(average throughput in thousands of barrels per day)
218 - 221 -
Natural gas storage

(average monthly capacity in billions of cubic feet)
97 89 96 82
NGL fractionation

(average throughput in thousands of barrels per day)
106 100 99 73
Facilities activities total

(average monthly capacity in millions of barrels) (2)
120 111 120 104
 

Supply and Logistics activities (average daily volumes in thousands of barrels):
Crude oil lease gathering purchases 856 811 855 808
NGL sales 145 179 196 155
Waterborne cargos 4 5 5 3
Supply and Logistics activities total 1,005 995 1,056 966
 

(1) Volumes associated with acquisitions represent total volumes (attributable to our interest) for the number of days or months we actually owned the assets divided by the number of days or months in the period.

(2) Facilities total is calculated as the sum of: (i) crude oil, refined products and NGL terminalling and storage capacity; (ii) rail load and unload volumes multiplied by the number of days in the period and divided by the number of months in the period; (iii) natural gas storage capacity divided by 6 to account for the 6:1 mcf of gas to crude Btu equivalent ratio and further divided by 1,000 to convert to monthly volumes in millions; and (iv) NGL fractionation volumes multiplied by the number of days in the period and divided by the number of months in the period.
     
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
 

COMPUTATION OF BASIC AND DILUTED EARNINGS PER LIMITED PARTNER UNIT
(in millions, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Basic Net Income per Limited Partner Unit:
Net income attributable to Plains $ 231 $ 165 $ 1,052 $ 774
Less: General partner's incentive distribution (1) (95 ) (74 ) (272 ) (208 )
Less: General partner 2% ownership (1)   (3 )   (2 )   (16 )   (12 )
Net income available to limited partners 133 89 764 554
Less: Undistributed earnings allocated and distributions to participating securities (1)   (1 )   (1 )   (5 )   (3 )
Net income available to limited partners in accordance with application of the two-class method for MLPs $ 132   $ 88   $ 759   $ 551  
 
Basic weighted average number of limited partner units outstanding 343 329 340 322
 
Basic net income per limited partner unit $ 0.38   $ 0.27   $ 2.23   $ 1.71  
 
Diluted Net Income per Limited Partner Unit:
Net income attributable to Plains $ 231 $ 165 $ 1,052 $ 774
Less: General partner's incentive distribution (1) (95 ) (74 ) (272 ) (208 )
Less: General partner 2% ownership (1)   (3 )   (2 )   (16 )   (12 )
Net income available to limited partners 133 89 764 554
Less: Undistributed earnings allocated and distributions to participating securities (1)   (1 )   (1 )   (4 )   (3 )
Net income available to limited partners in accordance with application of the two-class method for MLPs $ 132   $ 88   $ 760   $ 551  
 
Basic weighted average number of limited partner units outstanding 343 329 340 322
Effect of dilutive securities: Weighted average LTIP units (2)   2     2     2     3  
Diluted weighted average number of limited partner units outstanding   345     331     342     325  
 
Diluted net income per limited partner unit $ 0.38   $ 0.27   $ 2.22   $ 1.70  
 

(1) We calculate net income available to limited partners based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period's distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method.

(2) Our Long-term Incentive Plan ("LTIP") awards that contemplate the issuance of common units are considered dilutive unless (i) vesting occurs only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. LTIP awards that are deemed to be dilutive are reduced by a hypothetical unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB.
       
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
 

SELECTED ITEMS IMPACTING COMPARABILITY
(in millions, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Selected Items Impacting Comparability - Income/(Loss) (1):
Gains/(losses) from derivative activities net of inventory valuation adjustments (2) $ (59 ) $ (31 ) $ (9 ) $ (18 )
Asset impairments (3) - (125 ) - (125 )
Equity-indexed compensation expense (4) (12 ) (12 ) (51 ) (50 )
Net gain/(loss) on foreign currency revaluation 2 11 5 (6 )
Tax effect on selected items impacting comparability 15 - 8 -
Significant acquisition-related expenses - - - (13 )
Other (5)   1     -     3     1  
Selected items impacting comparability of net income attributable to Plains $ (53 ) $ (157 ) $ (44 ) $ (211 )
 
Impact to basic net income per limited partner unit $ (0.16 ) $ (0.46 ) $ (0.13 ) $ (0.64 )
Impact to diluted net income per limited partner unit $ (0.15 ) $ (0.46 ) $ (0.13 ) $ (0.63 )
 

(1) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2) Includes mark-to-market gains and losses resulting from derivative instruments that are related to underlying activities in future periods or the reversal of mark-to-market gains and losses from the prior period, net of inventory valuation adjustments.

(3) Asset impairments are reflected in "Depreciation and amortization" on our Condensed Consolidated Statements of Operations and do not impact the comparability of EBITDA.

(4) Equity-indexed compensation expense above excludes the portion of equity-indexed compensation expense represented by grants under LTIP that, pursuant to the terms of the grant, will be settled in cash only and have no impact on diluted units.

(5) Includes other immaterial selected items impacting comparability, as well as the noncontrolling interests' portion of selected items.
       
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
 

COMPUTATION OF ADJUSTED BASIC AND DILUTED EARNINGS PER LIMITED PARTNER UNIT
(in millions, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Basic Adjusted Net Income per Limited Partner Unit
Net income attributable to Plains $ 231 $ 165 $ 1,052 $ 774

Selected items impacting comparability of net income attributable to Plains (1)
  53     157     44     211  
Adjusted net income attributable to Plains 284 322 1,096 985
Less: General partner's incentive distribution (2) (95 ) (74 ) (272 ) (208 )
Less: General partner 2% ownership (2)   (4 )   (5 )   (16 )   (16 )
Adjusted net income available to limited partners 185 243 808 761
Less: Undistributed earnings allocated and distributions to participating securities (2)   (1 )   (2 )   (6 )   (5 )
Adjusted limited partners' net income $ 184   $ 241   $ 802   $ 756  
 
Basic weighted average number of limited partner units outstanding 343 329 340 322
 
Basic adjusted net income per limited partner unit $ 0.54   $ 0.73   $ 2.36   $ 2.35  
 
Diluted Adjusted Net Income per Limited Partner Unit
Net income attributable to Plains $ 231 $ 165 $ 1,052 $ 774

Selected items impacting comparability of net income attributable to Plains (1)
  53     157     44     211  
Adjusted net income attributable to Plains 284 322 1,096 985
Less: General partner's incentive distribution (2) (95 ) (74 ) (272 ) (208 )
Less: General partner 2% ownership (2)   (4 )   (5 )   (16 )   (16 )
Adjusted net income available to limited partners 185 243 808 761
Less: Undistributed earnings allocated and distributions to participating securities (2)   (1 )   (1 )   (5 )   (3 )
Adjusted limited partners' net income $ 184   $ 242   $ 803   $ 758  
 
Diluted weighted average number of limited partner units outstanding 345 331 342 325
 
Diluted adjusted net income per limited partner unit $ 0.53   $ 0.73   $ 2.35   $ 2.33  
 
(1) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2) We calculate adjusted net income available to limited partners based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period's distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method.
       
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)                
 

FINANCIAL DATA RECONCILIATIONS
(in millions) Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012

Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Excluding Selected Items Impacting Comparability ("Adjusted EBITDA") Reconciliations
Net Income $ 237 $ 173 $ 1,074 $ 797
Add: Interest expense 72 74 224 214
Add: Income tax expense 9 13 79 43
Add: Depreciation and amortization   93     210     265     356  
EBITDA $ 411 $ 470 $ 1,642 $ 1,410
Selected items impacting comparability of EBITDA (1)   69     32     55     87  
Adjusted EBITDA $ 480   $ 502   $ 1,697   $ 1,497  
 
(1) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.
 
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Adjusted EBITDA to Implied Distributable Cash Flow ("DCF")
Adjusted EBITDA $ 480 $ 502 $ 1,697 $ 1,497
Interest expense (72 ) (74 ) (224 ) (214 )
Maintenance capital (42 ) (47 ) (124 ) (123 )
Current income tax expense (17 ) (10 ) (69 ) (32 )
Equity earnings in unconsolidated entities, net of distributions (6 ) 1 (7 ) 2
Distributions to noncontrolling interests (1)   (13 )   (12 )   (38 )   (36 )
Implied DCF $ 330   $ 360   $ 1,235   $ 1,094  
 

(1) Includes distributions that pertain to the current period's net income, which are paid in the subsequent period.
 
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Cash Flow from Operating Activities Reconciliation
EBITDA $ 411 $ 470 $ 1,642 $ 1,410
Current income tax expense (17 ) (10 ) (69 ) (32 )
Interest expense (72 ) (74 ) (224 ) (214 )
Net change in assets and liabilities, net of acquisitions

(82
) 125

149
(366 )
Other items to reconcile to cash flows from operating activities:
Equity-indexed compensation expense   17     22     96     82  
Net cash provided by operating activities $

257
  $ 533   $

1,594
  $ 880  

Copyright Business Wire 2010

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