UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 2010
NuStar Energy L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 001-16417 | 74-2956831 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
2330 North Loop 1604 West
San Antonio, Texas 78248
(Address of principal executive offices)
(210) 918-2000
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 8.01 | Other Events. |
NuStar Energy L.P. is filing this Current Report on Form 8-K to provide a reconciliation of the non-GAAP financial measures EBITDA and distributable cash flow to their nearest comparable GAAP measures, both overall and on a reportable segment basis (or portions of a reportable segment).
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit |
EXHIBIT | |
| Exhibit 99.1 | Reconciliation of Non-GAAP Financial Information. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NUSTAR ENERGY L.P. | ||||||||
| By: | Riverwalk Logistics, L.P. | |||||||
| its general partner | ||||||||
| By: | NuStar GP, LLC | |||||||
| its general partner | ||||||||
| Date: August 9, 2010 | By: | /s/ Amy L. Perry | ||||||
| Name: Amy L. Perry | ||||||||
| Title: Vice President and Corporate Secretary | ||||||||
EXHIBIT INDEX
| Exhibit |
EXHIBIT | |
| Exhibit 99.1 | Reconciliation of Non-GAAP Financial Information. |
Exhibit 99.1
Reconciliation of Non-GAAP Financial Information
EBITDA and Distributable Cash Flow
(Unaudited, Dollars in Thousands)
NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not defined in United States generally accepted accounting principles (GAAP). Management uses these financial measures because they are widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership's assets and the cash that the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income. They should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP.
EBITDA is defined as net income, plus:
- interest expense, net;
- income tax expense; and
- depreciation and amortization expense.
Distributable cash flow is defined as EBITDA less:
- equity earnings from joint ventures;
- interest expense, net;
- reliability capital expenditures; and
- income tax expense;
plus:
- mark-to-market impact on hedge transactions;
- charges reimbursed by general partner;
- distributions from joint ventures; and
- other non-cash items.
The following is a reconciliation of net income to EBITDA and distributable cash flow:
| Year Ended December 31, | ||||||||||||||||||||||||||||
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||||||
| Net income |
$ | 45,873 | $ | 55,143 | $ | 69,593 | $ | 78,418 | $ | 107,675 | $ | 149,906 | $ | 150,298 | $ | 254,018 | $ | 224,875 | ||||||||||
| Plus interest expense, net |
3,811 | 4,880 | 15,860 | 20,950 | 41,388 | 66,266 | 76,516 | 90,818 | 79,384 | |||||||||||||||||||
| Plus income tax expense |
— | 395 | — | — | 4,713 | 5,861 | 11,448 | 11,006 | 10,531 | |||||||||||||||||||
| Plus depreciation and amortization expense |
13,390 | 16,440 | 26,267 | 33,149 | 64,895 | 100,266 | 114,293 | 135,709 | 145,743 | |||||||||||||||||||
| EBITDA |
63,074 | 76,858 | 111,720 | 132,517 | 218,671 | 322,299 | 352,555 | 491,551 | 460,533 | |||||||||||||||||||
| Less equity earnings from joint ventures |
3,179 | 3,188 | 2,416 | 1,344 | 2,319 | 5,882 | 6,833 | 8,030 | 9,615 | |||||||||||||||||||
| Less interest expense, net |
3,811 | 4,880 | 15,860 | 20,950 | 41,388 | 66,266 | 76,516 | 90,818 | 79,384 | |||||||||||||||||||
| Less reliability capital expenditures |
2,786 | 3,943 | 10,353 | 9,701 | 23,707 | 35,803 | 40,337 | 55,669 | 45,163 | |||||||||||||||||||
| Less income tax expense |
— | — | — | — | 4,713 | 5,861 | 11,448 | 11,006 | 10,531 | |||||||||||||||||||
| Plus mark-to-market impact on hedge transactions |
— | — | — | — | — | — | 3,131 | (9,784 | ) | 19,970 | ||||||||||||||||||
| Plus charges reimbursed by general partner |
— | — | — | — | — | 575 | — | — | — | |||||||||||||||||||
| Plus distributions from joint ventures |
2,874 | 3,590 | 2,803 | 1,373 | 4,657 | 5,141 | 544 | 2,835 | 9,700 | |||||||||||||||||||
| Plus other non-cash items |
— | — | — | — | 2,672 | — | — | — | — | |||||||||||||||||||
| Distributable cash flow |
$ | 56,172 | $ | 68,437 | $ | 85,894 | $ | 101,895 | $ | 153,873 | $ | 214,203 | $ | 221,096 | $ | 319,079 | $ | 345,510 | ||||||||||
Note: 2005 and 2006 distributable cash flow and EBITDA are from continuing operations.
Reconciliation of Non-GAAP Financial Information:
Transportation and Storage
(Unaudited, Dollars in Thousands)
EBITDA in the following reconciliations relate to our reportable segments or a portion of a reportable segment. We do not allocate general and administrative expenses to our reportable segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. EBITDA is not intended to represent cash flows for the period, nor is it presented as an alternative to operating income. EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP.
The following is a reconciliation of operating income to EBITDA for the Transportation Segment:
| Year Ended December 31, | ||||||||||||
| 2006 | 2007 | 2008 | 2009 | |||||||||
| Operating income |
$ | 122,714 | $ | 126,508 | $ | 135,086 | $ | 139,869 | ||||
| Plus depreciation and amortization expense |
47,145 | 49,946 | 50,749 | 50,528 | ||||||||
| EBITDA |
$ | 169,859 | $ | 176,454 | $ | 185,835 | $ | 190,397 | ||||
The following is a reconciliation of operating income to EBITDA for the Storage Segment:
| Year Ended December 31, | ||||||||||||
| 2006 | 2007 | 2008 | 2009 | |||||||||
| Operating income |
$ | 108,486 | $ | 114,635 | $ | 141,079 | $ | 171,245 | ||||
| Plus depreciation and amortization expense |
53,121 | 62,317 | 66,706 | 70,888 | ||||||||
| EBITDA |
$ | 161,607 | $ | 176,952 | $ | 207,785 | $ | 242,133 | ||||
Reconciliation of Non-GAAP Financial Information:
Asphalt and Fuels Marketing
(Unaudited, Dollars in Thousands)
EBITDA in the following reconciliations relate to our reportable segments or a portion of a reportable segment. We do not allocate general and administrative expenses to our reportable segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. EBITDA is not intended to represent cash flows for the period, nor is it presented as an alternative to operating income. EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP.
The following is a reconciliation of operating income to EBITDA for the Asphalt and Fuels Marketing Segment:
| Year Ended December 31, 2008 | |||||||||
| Asphalt and Fuels Marketing Segment |
Less Fuels Marketing Operations |
Asphalt Operations | |||||||
| Operating income |
$ | 112,506 | $ | 36,239 | $ | 76,267 | |||
| Plus depreciation and amortization expense |
14,734 | 552 | 14,182 | ||||||
| EBITDA |
$ | 127,240 | $ | 36,791 | $ | 90,449 | |||
| Year Ended December 31, 2009 | |||||||||
| Asphalt and Fuels Marketing Segment |
Less Fuels Marketing Operations |
Asphalt Operations | |||||||
| Operating income |
$ | 60,629 | $ | 9,919 | $ | 50,710 | |||
| Plus depreciation and amortization expense |
19,463 | — | 19,463 | ||||||
| EBITDA |
$ | 80,092 | $ | 9,919 | $ | 70,173 | |||
| Six Month Ended June 30, 2010 | |||||||||
| Asphalt and Fuels Marketing Segment |
Less Fuels Marketing Operations |
Asphalt Operations | |||||||
| Operating income |
$ | 39,656 | $ | 15,857 | $ | 23,799 | |||
| Plus depreciation and amortization expense |
10,116 | 42 | 10,074 | ||||||
| EBITDA |
$ | 49,772 | $ | 15,899 | $ | 33,873 | |||
Reconciliation of Non-GAAP Financial Information:
Asphalt and Fuels Marketing – Continued
(Unaudited, Dollars in Thousands)
EBITDA in the following reconciliations relate to our reportable segments or a portion of a reportable segment. We do not allocate general and administrative expenses to our reportable segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. EBITDA is not intended to represent cash flows for the period, nor is it presented as an alternative to operating income. EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP.
The following is a reconciliation of operating income to EBITDA and distributable cash flow for our asphalt operations:
| Year Ended December 31, 2008 |
Year Ended December 31, 2009 |
Six Month Ended June 30, 2010 |
Jan 1, 2008 - June 30, 2010 | |||||||||
| Asphalt operations operating income |
$ | 76,267 | $ | 50,710 | $ | 23,799 | $ | 150,776 | ||||
| Plus depreciation and amortization associated with asphalt operations |
14,182 | 19,463 | 10,074 | 43,719 | ||||||||
| Asphalt operations EBITDA |
90,449 | 70,173 | 33,873 | 194,495 | ||||||||
| Allocated to asphalt operations for distributable cash flow purposes: |
||||||||||||
| Less general & administrative expense |
18,640 | 16,105 | 10,489 | 45,234 | ||||||||
| Less interest expense |
20,150 | 26,056 | 13,925 | 60,131 | ||||||||
| Less income tax expense |
— | 489 | 140 | 629 | ||||||||
| Less reliability capital expenditures |
4,126 | 6,962 | 3,397 | 14,485 | ||||||||
| Asphalt operations distributable cash flow |
$ | 47,533 | $ | 20,561 | $ | 5,922 | $ | 74,016 | ||||
| Distributable cash flow |
$ | 319,079 | $ | 345,510 | $ | 149,170 | $ | 813,759 | ||||
| Less asphalt operations distributable cash flow |
47,533 | 20,561 | 5,922 | 74,016 | ||||||||
| Non-asphalt operations distributable cash flow |
$ | 271,546 | $ | 324,949 | $ | 143,248 | $ | 739,743 | ||||