Sunoco 2015 Annual Report Download - page 51
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49
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").
Adjusted EBITDA and DCF 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.
Our management believes Adjusted EBITDA and DCF information enhances an investor's understanding of a business's
ability to generate cash for payment of distributions and other purposes. Adjusted EBITDA calculations are also defined and
used as a measure in determining our compliance with certain revolving credit facility covenants. However, despite compliance
with our credit facility covenants, there may be contractual, legal, economic or other factors which may prevent us from
satisfying principal and interest obligations with respect to indebtedness and may require us to allocate funds for other purposes.
The following table reconciles the differences between net income, as determined under GAAP, and Adjusted EBITDA
and DCF:
Year Ended December 31,
2015 2014 2013
(in millions)
Net Income $ 397 $ 300 $ 474
Interest expense, net 134 67 77
Depreciation and amortization expense 382 296 265
Impairment charge and other matters 162 258 —
Provision for income taxes 21 25 30
Non-cash compensation expense 17 16 14
Unrealized losses (gains) on commodity risk management
activities 4 (17) (1)
Amortization of excess equity method investment 222
Proportionate share of unconsolidated affiliates’ interest,
depreciation and provision for income taxes 34 24 20
Non-cash accrued liability adjustment — — (10)
Adjusted EBITDA 1,153 971 871
Interest expense, net (134) (67) (77)
Provision for current income taxes (15) (29) (24)
Amortization of fair value adjustments on long-term debt (13) (14) (23)
Distributions versus Adjusted EBITDA of unconsolidated
affiliates (35) (35) (27)
Maintenance capital expenditures (84) (76) (53)
Distributable Cash Flow attributable to noncontrolling
interests (4) (12) (16)
Contributions attributable to acquisition from affiliate 11 12 9
Distributable Cash Flow $ 879 $ 750 $ 660