Sunoco 2013 Annual Report Download - page 49

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tariffs ($3 million). Further contributing to the decrease in results were higher selling, general and administrative expenses ($3
million). These decreases were partially offset by lower pipeline operating losses ($2 million).
Adjusted EBITDA for the Refined Products Pipelines segment 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 included a $5
million non-recurring gain recognized in connection with the sale of the Big Sandy terminal and pipeline assets and a $6
million non-recurring gain recognized by one of our joint-venture interests. 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) in the fourth quarter 2011 and increased environmental remediation expenses associated with a pipeline release in
the first quarter 2012 ($4 million).
Liquidity and Capital Resources
Liquidity
Cash generated from operations and borrowings under our $1.54 billion in credit facilities are our primary sources of
liquidity. At December 31, 2013, we had a net working capital surplus of $337 million and available borrowing capacity of
$1.30 billion under our revolving credit facilities. The primary driver of the working capital surplus was the increase in
advances to affiliated companies primarily related to borrowings under our credit facilities and increased crude oil and refined
products inventories related to operations. 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
In November 2013, we replaced our existing $550 million of credit facilities with a new $1.50 billion Credit Facility. The
prior credit facilities consisted of a five-year $350 million credit facility and a 364-day $200 million credit facility.
Outstanding borrowings under these credit facilities of $119 million at December 31, 2012 were repaid during the first quarter
2013.
The $1.50 billion Credit Facility, which matures in November 2018, includes an "accordion" feature, under which the
total aggregate commitment may be extended to $2.25 billion under certain circumstances. The facility is available to fund our
working capital requirements, finance acquisitions and capital projects, to pay distributions and for general partnership
purposes. The facility contains various covenants, including limitations on the creation of indebtedness and liens, and other
covenants related to the operation and conduct of our business. The credit facility also limits us, on a rolling four-quarter basis,
to a maximum total consolidated debt to consolidated Adjusted EBITDA ratio, as defined in the underlying credit agreement, to
5.0 to 1, which can generally be increased to 5.5 to 1 during an acquisition period. Our ratio of total consolidated debt,
excluding net unamortized fair value adjustments, to consolidated Adjusted EBITDA was 2.8 to 1 at December 31, 2013, as
calculated in accordance with the credit agreement.
In May 2012, West Texas Gulf entered into a $35 million revolving credit facility (the "$35 million Credit Facility")
which expires in April 2015. The facility is available to fund West Texas Gulf's general corporate purposes including working
capital and capital expenditures. The credit facility also limits West Texas Gulf, on a rolling four-quarter basis, to a minimum
fixed charge coverage ratio, as defined in the underlying credit agreement. The ratio for the fiscal quarter ending December 31,
2013 shall not be less than 1.00 to 1. In addition, the credit facility limits West Texas Gulf to a maximum leverage ratio of 2.00
to 1. West Texas Gulf's fixed charge coverage ratio and leverage ratio were 1.12 to 1 and 0.88 to 1, respectively, at
December 31, 2013. Outstanding borrowings under this credit facility were $35 and $20 million at December 31, 2013 and
2012, respectively.
Senior Notes
We had $250 million of 7.25 percent Senior Notes which matured and were repaid in February 2012. In addition, our
$175 million of 8.75 percent Senior Notes outstanding as of December 31, 2013 matured and were repaid in February 2014
with borrowings under the $1.50 billion Credit Facility.
In January 2013, we issued $350 million of 3.45 percent Senior Notes and $350 million of 4.95 percent Senior Notes (the
"2023 and 2043 Senior Notes"), due January 2023 and January 2043, respectively. The terms and conditions of the 2023 and
2043 Senior Notes are comparable to those under our existing senior notes. The net proceeds of $691 million from the 2023 and
2043 Senior Notes were used to pay outstanding borrowings under the $350 and $200 million credit facilities and for general
partnership purposes.