Sunoco 2012 Annual Report Download - page 48

Non-GAAP Financial Measures
To supplement our financial information presented in accordance with United States generally accepted
accounting principles (“GAAP”), management uses additional measures that are known as “non-GAAP financial
measures” in its evaluation of past performance and prospects for the future. The primary measures used by
management are earnings before interest, taxes, depreciation and amortization expenses and other non-cash items
(“Adjusted EBITDA”) and distributable cash flow (“DCF”).
Our management believes Adjusted EBITDA and distributable cash flow information enhances an
investor’s understanding of a business’s ability to generate cash for payment of distributions and other purposes.
In addition, Adjusted EBITDA calculations are also defined and used as a measure in determining our
compliance with certain revolving credit facility covenants. However, there may be contractual, legal, economic
or other reasons which may prevent us from satisfying principal and interest obligations with respect to
indebtedness and may require us to allocate funds for other purposes. During the fourth quarter of 2012, the
Partnership changed its definition of Adjusted EBITDA and Distributable Cash Flow to conform to the
presentation utilized by its general partner. The Partnership also changed its measure of segment profit from
operating income to the revised presentation of Adjusted EBITDA. This change did not impact the Partnership’s
reportable segments. Prior period amounts have been recast to conform to current presentation. Adjusted
EBITDA and distributable cash flow do not represent and should not be considered alternatives to net income or
cash flows from operating activities as determined under GAAP and may not be comparable to other similarly
titled measures of other businesses.
The following table reconciles the differences between net income, as determined under GAAP, and Adjusted
EBITDA and distributable cash flow. The Partnership’s definition of Adjusted EBITDA has been revised beginning
in the fourth quarter 2012. Prior period results have been recast to conform to current presentation.
Successor Predecessor
Period from Acquisition
(October 5, 2012) to
December 31, 2012(1)
Period from
January 1, 2012 to
October 4, 2012(1)
Three Months
Ended
December 31,
2011
Nine Months
Ended
September 30,
2011
Total
2011
Year Ended
December 31,
2010
(in millions) (in millions)
Net Income ....................... $142 $389 $ 79 $243 $322 $ 348
Interest expense, net ............... 14 65 26 63 89 73
Depreciation and amortization
expense ....................... 63 76 25 61 86 64
Impairment charge ................ — 9 31 — 31 3
Provision for income taxes .......... 8 24 7 18 25 8
Non-cash compensation expense ..... 2 6 1 5 6 5
Unrealized losses/(gains) on
commodity risk management
activities ...................... (3) 6 6 (8) (2) 2
Proportionate share of unconsolidated
affiliates’ interest, depreciation and
provision for income taxes ........ 5 16 4 12 16 24
Adjustments to commodity hedges
resulting from push-down
accounting .................... (12) — — — — —
Gain on investments in affiliates ..... — — — — — (128)
Adjusted EBITDA ................. 219 591 179 394 573 399
Interest expense, net ............... (14) (65) (26) (63) (89) (73)
Provision for income taxes .......... (8) (24) (7) (18) (25) (8)
Amortization of fair value adjustments
on long-term debt ............... (6) — — — — —
Distributions versus Adjusted
EBITDA of unconsolidated
affiliates ...................... (3) (25) (4) (13) (17) (36)
Maintenance capital expenditures .... (21) (29) (22) (20) (42) (37)
Distributable Cash Flow attributable to
noncontrolling interests .......... (2) (9) (2) (8) (10) (3)
Distributable Cash Flow ............ $165 $439 $118 $272 $390 $ 242
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