Sunoco 2012 Annual Report Download - page 55

($3 million). Further contributing to the decrease in results were higher selling, general and administrative
expenses ($3 million). The decreases were partially offset by lower pipeline operating losses ($2 million).
Adjusted EBITDA for the Refined Products Pipelines increased $5 million to $57 million for the period
from January 1, 2012 to October 4, 2012, as compared to the nine months ended September 30, 2011. Results for
2012 include non-recurring gains for a contract settlement associated with the Big Sandy refined products
terminal and pipeline asset sale ($5 million) and an asset sale recognized by Explorer Pipeline Company
($6 million). Excluding these items, Adjusted EBITDA decreased $6 million compared to the prior period.
Increased contributions from the acquisition of the Inland refined products pipeline ($5 million) were offset by
lower pipeline volumes and fees driven primarily by the idling of the Marcus Hook refinery ($9 million) and
increased environmental remediation expenses associated with a pipeline release in the first quarter 2012 ($4
million).
Adjusted EBITDA for the Refined Products Pipelines segment decreased $8 million to $69 million for the
year ended December 31, 2011. Adjusted EBITDA decreased compared to 2010 due primarily to lower volumes
on our refined products pipelines in the northeast and southwest United States ($9 million). Volumes were
negatively impacted during 2011 by unplanned maintenance activity at Sunoco’s refineries during the first half of
2011.
Liquidity and Capital Resources
Liquidity
Cash generated from operations and borrowings under the $585 million of credit facilities are our primary
sources of liquidity. At December 31, 2012, we had a net working capital surplus of $259 million and available
borrowing capacity of $446 million under our revolving credit facilities which includes $15 million of available
borrowing capacity from West Texas Gulf’s revolving credit facility. In January 2013, the balances outstanding
under the Operating Partnership’s credit facilities were repaid in connection with the senior notes offering (see
below). The primary driver of the working capital surplus was the decrease in current liabilities related to the
repayment of the $250 million Senior Notes in February 2012 and the increase in current assets attributable to the
value of crude oil inventory, which was adjusted to fair value in connection with the acquisition of the general
partner by ETP. Our working capital position reflects crude oil and refined products inventories based on
historical costs under the last-in, first-out (“LIFO”) method of accounting. We periodically supplement our cash
flows from operations with proceeds from debt and equity financing activities.
Capital Resources
Credit Facilities
The Operating Partnership maintains two credit facilities totaling $550 million to fund the Operating
Partnership’s working capital requirements, finance acquisitions and capital projects and for general partnership
purposes. The credit facilities consist of a $350 million unsecured credit facility which expires in August 2016
(the “$350 million Credit Facility”) and a $200 million unsecured credit facility which expires in August 2013
(the “$200 million Credit Facility”). Outstanding borrowings under these credit facilities were $119 million at
December 31, 2012.
The $350 million and $200 million credit facilities contain various covenants limiting our ability to a) incur
further indebtedness, b) grant certain liens, c) make certain loans, acquisitions and investments, d) make any
material change to the nature of our business, e) acquire another company, or f) enter into a merger or sale of
assets, including the sale or transfer of interests in the Partnership’s subsidiaries. The $350 million and
$200 million credit facilities also limit us, on a rolling four-quarter basis, to a maximum total debt to Adjusted
EBITDA, as defined in the underlying credit agreement, ratio of 5.0 to 1, which could generally be increased to
5.50 to 1 during an acquisition period. Our ratio of total debt, excluding net unamortized fair value adjustments,
to Adjusted EBITDA was 2.0 to 1 at December 31, 2012, as calculated in accordance with the credit agreements.
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