<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 12, 1999
PLAINS ALL AMERICAN PIPELINE, L.P.
(Exact name of registrant as specified in charter)
DELAWARE 1-14569 76-0582150
(State of Incorporation (Commission File No.) (I.R.S. Employer
or Organization) Identification No.)
500 Dallas Street, Suite 700
Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 654-1414
<PAGE>
The sole purpose of this amendment to the Registrant's Current Report on
Form 8-K/A Amendment No. 1 dated May 12, 1999 and filed June 28, 1999, is to
amend the pro forma financial statements, in their entirety. This amendment
reflects adjustments made to pro forma entries K, M and N.
ITEM 7. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED AND EXHIBITS
(a) Pro Forma Financial Information (unaudited)
<TABLE>
<CAPTION>
<S> <C>
PLAINS ALL AMERICAN PIPELINE, L.P.
PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS:
Introduction F-1
Pro Forma Consolidated Balance Sheet as of March 31, 1999 F-2
Pro Forma Consolidated Statement of Income for the three months ended March 31, 1999 F-3
Pro Forma Consolidated Statement of Operations for the year ended December 31, 1998 F-4
Notes to Pro Forma Consolidated Financial Statements F-5
</TABLE>
2
<PAGE>
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.
Dated: September 16, 1999
PLAINS ALL AMERICAN PIPELINE, L.P.
By: PLAINS ALL AMERICAN INC.,
Its General Partner
By: /s/ Cynthia A. Feeback
------------------------------------------
Name: Cynthia A. Feeback
Title: Treasurer
(Principal Accounting Officer
of the General Partner)
3
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
INTRODUCTION
The accompanying unaudited pro forma consolidated financial statements are
presented to reflect the acquisition of Scurlock Permian LLC and certain other
pipeline assets (the "Scurlock Acquisition") from Marathon Ashland Petroleum LLC
("MAP") by Plains Scurlock Permian, L.P. ("Plains Scurlock"), a newly formed
operating limited partnership of Plains All American Pipeline, L.P. ("PAA"). The
Scurlock Acquisition was consummated on May 12, 1999, and has been accounted for
using the purchase method of accounting. The pro forma consolidated balance
sheet as of March 31, 1999 and the pro forma consolidated statement of income
for the three months ended March 31, 1999 are based upon the historical
financial statements of PAA, and the Scurlock Permian Businesses ("Scurlock").
The Scurlock financial statements pertain to the business sold to PAA by MAP and
represent a carve-out financial statement presentation of a MAP operating unit.
PAA is a limited partnership formed in the third quarter of 1998, to acquire and
operate the midstream crude oil business and assets of Plains Resources Inc. and
its wholly owned subsidiaries (the "Plains Midstream Subsidiaries" or the
"Predecessor"). On November 23, 1998, PAA completed the initial public offering
and the transactions whereby PAA became the successor to the business of the
Predecessor. The pro forma consolidated statement of operations for the year
ended December 31, 1998, is based on the historical consolidated income
statement of PAA (for the period from November 23, 1998 to December 31, 1998),
the historical combined income statement of the Predecessor (for the period from
January 1, 1998 to November 22, 1998), and the historical statement of
operations of Scurlock for the year ended December 31, 1998. Certain
reclassifications have been made to the historical Scurlock financial statements
to conform to PAA's presentation (see pro forma note K).
The unaudited pro forma consolidated financial statements are not
necessarily indicative of the results of the future operations of PAA. The
unaudited pro forma consolidated financial statements should be read in
conjunction with the notes thereto and the historical financial statements of
Scurlock, included in Item 7(a) of Amendment No. 1 to Form 8-K/A filed with the
Securities and Exchange Commission on June 28, 1999. In addition, reference
should be made to the historical financial statements of PAA included in Form
10-K for the year ended December 31, 1998, and included in Form 10-Q for the
three months ended March 31, 1999, filed with the Securities and Exchange
Commission.
The following unaudited pro forma consolidated financial statements have
been prepared as if the Scurlock Acquisition and related transactions had taken
place on March 31, 1999, in the case of the pro forma consolidated balance sheet
or as of January 1, 1998, in the case of the pro forma consolidated statement of
income for the three months ended March 31, 1999, and the pro forma consolidated
statement of operations for the year ended December 31, 1998.
F-1
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (unaudited)
MARCH 31, 1999
(in thousands)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------
PLAINS ALL SCURLOCK
AMERICAN PERMIAN PRO FORMA
PIPELINE, L.P. BUSINESSES ADJUSTMENTS NOTE PRO FORMA
---------------- ------------ ------------ ------ -----------
ASSETS
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 683 $ 36 $ 142,365 A $ 719
(142,365) B
Accounts receivable 156,159 243,998 42,743 C 306,097
(9,168) J
(127,635) K
Due from affiliates 4,757 - - 4,757
Inventory 24,564 37,208 (16,057) B 43,256
(2,459) B
Prepaid expenses and other 852 2,988 - 3,840
-------- --------- --------- ----------
Total current assets 187,015 284,230 (112,576) 358,669
-------- --------- --------- ----------
PROPERTY AND EQUIPMENT
Crude oil pipeline, gathering and terminal assets 380,956 143,425 124,725 B 505,681
(138,287) B
(5,138) D
Other property and equipment 671 - 1,503 B 2,174
-------- --------- --------- ----------
381,627 143,425 (17,197) 507,855
Less allowance for depreciation and amortization (3,177) (15,215) 14,646 B (3,177)
569 D
-------- --------- --------- ----------
378,450 128,210 (1,982) 504,678
-------- --------- --------- ----------
OTHER ASSETS
Pipeline linefill 57,001 - 16,057 B 73,058
Other 10,846 4,218 (2,514) B 13,946
(1,704) B
3,100 B
-------- --------- --------- ----------
$633,312 $ 416,658 $ (99,619) $ 950,351
======== ========= ========= ==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Accounts payable and other current liabilities $151,385 $ 310,477 $ 1,000 B $326,059
(9,168) J
(127,635) K
Interest payable 1,356 - - 1,356
Due to affiliates 12,285 - - 12,285
Notes payable 4,100 - - 4,100
-------- --------- --------- ----------
Total current liabilities 169,126 310,477 (135,803) 343,800
LONG-TERM LIABILITIES
Bank debt 181,000 - 117,112 A 298,112
Other 155 - - 155
-------- --------- --------- ----------
Total liabilities 350,281 310,477 (18,691) 642,067
-------- --------- --------- ----------
PARENT COMPANY INVESTMENT - 106,181 (144,355) B -
42,743 C
(4,569) D
PARTNERS' CAPITAL
Common unitholders
(20,059,239 units outstanding,
21,366,429 pro forma) 260,518 - 25,000 A 285,518
Subordinated unitholders
(10,026,619 units outstanding) 21,214 - - 21,214
General partner 1,299 - 253 A 1,552
-------- --------- --------- ----------
283,031 106,181 (80,928) 308,284
======== ========= ========= ==========
$633,312 $ 416,658 $ (99,619) $ 950,351
======== ========= ========= ==========
</TABLE>
See notes to pro forma consolidated financial statements.
F-2
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands, except unit and per unit data)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------
PLAINS ALL SCURLOCK
AMERICAN PERMIAN PRO FORMA
PIPELINE, L.P. BUSINESSES ADJUSTMENTS NOTE PRO FORMA
---------------- ------------ ------------ ------ -----------
<S> <C> <C> <C> <C> <C>
REVENUES $455,760 $ 775,331 $ (493) D $730,751
(23,119) J
(476,728) K
COST OF SALES
AND OPERATIONS 435,932 763,511 (94) D 700,875
(569) H
(372) I
(23,119) J
(474,974) K
(498) L
1,058 M
TAXES OTHER THAN
INCOME TAXES - 757 (757) K -
INVENTORY MARKET
VALUATION CREDIT - (10,014) 515 N (9,499)
---------- --------- ----------- ----------
Gross Margin 19,828 21,077 (1,530) 39,375
---------- --------- ----------- ----------
EXPENSES
General and administrative 2,178 7,956 (443) D 9,200
(256) H
(235) L
Depreciation and amortization 2,831 2,952 (59) D 4,339
1,507 F
(2,892) G
---------- --------- ----------- ----------
Total expenses 5,009 10,908 (2,378) 13,539
---------- --------- ----------- ----------
Operating income 14,819 10,169 848 25,836
Interest expense 3,193 - 2,248 E 5,441
Other expense 410 - - 410
Interest and other income (97) - 547 D (547)
(997) K
---------- --------- ----------- ----------
NET INCOME $ 11,313 $ 10,169 $ (950) $20,532
========== ========= =========== ==========
BASIC AND DILUTED
NET INCOME PER
LIMITED PARTNER UNIT $ 0.37 $ 0.64
========== ==========
WEIGHTED AVERAGE NUMBER
OF UNITS OUTSTANDING 30,088,858 31,396,048
========== ==========
</TABLE>
See notes to pro forma consolidated financial statements.
F-3
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
FOR THE YEAR ENDED DECEMBER 31, 1998
(in thousands, except unit and per unit data)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------------------
PLAINS ALL AMERICAN PIPELINE, L.P.
-------------------------------------
NOVEMBER 23, JANUARY 1,
1998 TO 1998 TO SCURLOCK
DECEMBER 31, NOVEMBER 22, PERMIAN PRO FORMA
1998 1998 BUSINESSES ADJUSTMENTS NOTE PRO FORMA
-------------- -------------- ------------ ------------- ------ -----------
(Predecessor)
<S> <C> <C> <C> <C> <C> <C>
REVENUES $176,445 $953,244 $3,773,536 $ (2,502) D $2,377,887
(103,242) J
(2,419,594) K
COST OF SALES
AND OPERATIONS 168,946 922,263 3,742,276 (1,451) D 2,306,634
(2,277) H
(1,460) I
(103,242) J
(2,416,155) K
(2,781) L
515 M
TAXES OTHER THAN
INCOME TAXES - - 2,653 (2,653) K -
INVENTORY MARKET
VALUATION CHARGE - - 10,014 (515) N 9,499
---------- ---------- ---------- ----------- ----------
Gross Margin 7,499 30,981 18,593 4,681 61,754
---------- ---------- ---------- ----------- ----------
EXPENSES
General and administrative 771 4,526 31,033 (585) D 32,979
(1,023) H
(1,743) L
Depreciation and
amortization 1,192 4,179 11,136 (248) D 11,397
6,026 F
(10,888) G
---------- ---------- ---------- ----------- ----------
Total expenses 1,963 8,705 42,169 (8,461) 44,376
---------- ---------- ---------- ----------- ----------
Operating income (loss) 5,536 22,276 (23,576) 13,142 17,378
Interest expense 1,371 8,492 - 9,118 E 18,981
Related party interest
expense - 2,768 - - 2,768
Interest and other income (12) (572) - (65) D (1,435)
(786) K
---------- ---------- ---------- ----------- ----------
Net income (loss) before
provision in lieu
of income taxes 4,177 11,588 (23,576) 4,875 (2,936)
Provision in lieu of
income taxes - 4,563 - - 4,563
---------- ---------- ---------- ----------- ----------
NET INCOME (LOSS) $ 4,177 $ 7,025 $ (23,576) $ 4,875 $ (7,499)
========== ========== ========== =========== ==========
BASIC AND DILUTED
NET INCOME (LOSS)
PER LIMITED
PARTNER UNIT $ 0.14 $ 0.40 $ (0.23)
========== ========== ==========
WEIGHTED AVERAGE
NUMBER OF UNITS
OUTSTANDING 30,088,858 17,003,858 31,396,048
========== ========== ==========
</TABLE>
See notes to pro forma consolidated financial statements.
F-4
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
INTRODUCTION
The accompanying unaudited pro forma consolidated financial statements are
presented to reflect the acquisition of Scurlock Permian LLC and certain other
pipeline assets (the "Scurlock Acquisition") from Marathon Ashland Petroleum LLC
("MAP") by Plains Scurlock Permian, L.P. ("Plains Scurlock"), a newly formed
operating limited partnership of Plains All American Pipeline, L.P. ("PAA"). The
Scurlock Acquisition was consummated on May 12, 1999, and has been accounted for
using the purchase method of accounting. The pro forma consolidated balance
sheet as of March 31, 1999 and the pro forma consolidated statement of income
for the three months ended March 31, 1999 are based upon the historical
financial statements of PAA, and the Scurlock Permian Businesses ("Scurlock").
The Scurlock financial statements pertain to the business sold to PAA by MAP and
represent a carve-out financial statement presentation of a MAP operating unit.
PAA is a limited partnership formed in the third quarter of 1998, to acquire and
operate the midstream crude oil business and assets of Plains Resources Inc. and
its wholly owned subsidiaries (the "Plains Midstream Subsidiaries" or the
"Predecessor"). On November 23, 1998, PAA completed the initial public offering
and the transactions whereby PAA became the successor to the business of the
Predecessor. The pro forma consolidated statement of operations for the year
ended December 31, 1998, is based on the historical consolidated income
statement of PAA (for the period from November 23, 1998 to December 31, 1998),
the historical combined income statement of the Predecessor (for the period from
January 1, 1998 to November 22, 1998), and the historical statement of
operations of Scurlock for the year ended December 31, 1998. Certain
reclassifications have been made to the historical Scurlock financial statements
to conform to PAA's presentation (see pro forma note K.)
The unaudited pro forma consolidated financial statements are not
necessarily indicative of the results of the future operations of PAA. The
unaudited pro forma consolidated financial statements should be read in
conjunction with the notes thereto and the historical financial statements of
Scurlock, included in Item 7(a) of Amendment No. 1 to Form 8-K/A filed with the
Securities and Exchange Commission on June 28, 1999. In addition, reference
should be made to the historical financial statements of PAA included in Form
10-K for the year ended December 31, 1998, and included in Form 10-Q for the
three months ended March 31, 1999, filed with the Securities and Exchange
Commission.
The following unaudited pro forma consolidated financial statements have
been prepared as if the Scurlock Acquisition and related transactions had taken
place on March 31, 1999, in the case of the pro forma consolidated balance sheet
or as of January 1, 1998 in the case of the pro forma consolidated statement of
income for the three months ended March 31, 1999, and the pro forma consolidated
statement of operations for the year ended December 31, 1998.
In addition to the pro forma adjustments below, PAA estimates that certain
costs which are included in the historical financial statements of Scurlock will
not be incurred by PAA in its operations of Scurlock. Such amounts include (i)
approximately $1.4 million of severance costs included in the Scurlock
historical statement of operations for the year ended December 31, 1998 related
to staff reductions implemented by Scurlock in the fourth quarter of 1998 for
employees that PAA does not plan to replace, (ii) approximately $2.5 million of
compensation and benefits expense related to the staff reductions discussed in
item (i) which are included in the Scurlock historical statement of operations
for the year ended December 31 1998, and (iii) approximately $1.1 million and
$3.5 million which are reflected in the Scurlock historical statement of
operations for the three months ended March 31, 1999 and the year ended December
31, 1998, respectively, for amounts of corporate overhead allocated by MAP to
Scurlock.
PRO FORMA ADJUSTMENTS
A. Reflects the financing for the Scurlock Acquisition which was provided
through (i) borrowings of approximately $92 million under a limited recourse
bank facility with BankBoston, N.A. (the "Plains Scurlock Credit Facility"),
(ii) the sale to PAA's general partner ("General Partner") of 1.3 million Class
B Common Units of PAA ("Class B Units") at $19.125 per unit, the price equal to
the market value of PAA's common units, for a total cash consideration of $25
million and (iii) a $25 million draw under PAA's existing revolving credit
agreement. In addition, the General Partner's $0.3 million capital contribution
resulting from the sale of the Class B Units is reflected.
The Class B Units are initially pari passu with Common Units with respect
to distributions, and after six months are convertible into Common Units upon
approval of a majority of Common Unitholders. After such six month period, the
Class B Unitholder may request that PAA call a meeting of Common Unitholders to
consider approval of the conversion of Class B Units into Common Units. If the
approval of such conversion by the Common Unitholders is not obtained within 120
days of such request (the "Initial Approval Period"), the Class B Unitholders
will be entitled to receive distributions, on a per unit basis, equal
F-5
<PAGE>
to 110% of the amount of distributions paid on a Common Unit, with such
distribution right increasing to 115% if such approval is not secured within 90
days after the end of the Initial Approval Period. Except for the vote to
approve the conversion, Class B Units have the same voting rights as the Common
Units.
B. Reflects the consummation of the Scurlock Acquisition and the related
purchase accounting entries. The purchase price was allocated in accordance with
APB 16 as follows (in thousands):
Crude oil pipeline, gathering and terminal assets $124,725
Other property, and equipment 1,503
Pipeline linefill 16,057
Debt issue costs 3,100
Net working capital items (3,020)
--------
Cash paid $142,365
========
The purchase price allocation was based on preliminary estimates of fair
value and is subject to adjustment as additional information becomes available
and is evaluated. Approximately $16.0 million representing minimum amounts of
crude oil which are required to operate Scurlock's pipeline and gathering assets
have been classified as pipeline linefill, a long-term asset. Pipeline linefill
was classified as a current asset and included in inventory by Scurlock.
Approximately $1.7 million of intangible assets and $2.5 million of materials
and supplies inventory reflected in Scurlock's historical balance sheet has been
eliminated in the purchase accounting entries. In addition, approximately $2.5
million representing Scurlock's 50% investment in a crude oil tank has been
reclassified as property and equipment from other assets and included in the
purchase price allocation based on PAA's valuation of such asset.
The purchase accounting entries include a $1.0 million accrual for
estimated environmental remediation costs. Under the agreement for the sale of
Scurlock by MAP to Plains Scurlock, MAP has agreed to indemnify and hold
harmless Scurlock and Plains Scurlock for claims, liabilities and losses
(collectively "Losses") resulting from any act or omission attributable to
Scurlock's business or properties occurring prior to the date of the closing of
such sale to the extent the aggregate amount of such Losses exceed $1 million;
provided however, that claims for such Losses must be asserted by Scurlock
against MAP on or before May 15, 2003.
C. Reflects the reclassification of Scurlock's net receivables from MAP for
crude oil purchases. Such amounts, which were paid by MAP in cash subsequent to
March 31, 1999, were reflected in the Scurlock historical financial statements
as a component of Parent Company Investment.
D. Reflects the elimination of certain assets that were not purchased by
PAA, including associated revenues and expenses.
E. Reflects pro forma interest expense on (i) borrowings of approximately
$92 million under the Plains Scurlock Credit Facility and (ii) borrowings of $25
million under PAA's existing credit facility. PAA has entered into a series of
21 month interest rate collars, which provide for a floor of 5.04% and a ceiling
of 6.5% on a notional principal amount of $90 million of the LIBOR portion
outstanding under the Plains Scurlock Credit Facility. Pro forma interest
expense was calculated based on a composite annual interest rate of 7.8%. The
effect of a 1/8% change in the pro forma interest rate would be approximately
$37,000 for the three months ended March 31, 1999 and approximately $150,000 for
the year ended December 31, 1998.
F. Reflects pro forma depreciation and amortization expense based on the
purchase price of the Scurlock assets by PAA. The pro forma composite useful
depreciable life of the fixed assets acquired is 23 years. Debt issue costs
incurred in connection with the Scurlock Acquisition are amortized using the
straight-line method over five years, the term of the Plains Scurlock Credit
Facility.
G. Reflects the elimination of historical Scurlock depreciation and
amortization expense.
H. Reflects the reduction in compensation and benefits expense due to staff
terminations implemented by PAA at May 12, 1999. PAA has no plans to replace
these personnel. Such amounts reflect the historical compensation expenses
incurred by Scurlock. The termination of personnel is not expected to adversely
impact PAA's revenues or costs.
I. Reflects the cost reduction for services provided to Scurlock by MAP
related to the operation of certain pipeline assets. The Scurlock Acquisition
agreement provides for a reduced cost for such services subsequent to the
acquisition date.
J. Reflects the elimination of historical sales and purchases and
associated receivables and payables between Scurlock and PAA.
F-6
<PAGE>
K. Reflects the reclassification of certain items to conform to the
classification of such items in PAA's historical financial statements. In
addition, in order to make the Scurlock financial data consistent with that of
PAA, purchases and sales have been adjusted to exclude buy/sell activity where
like volumes are purchased and sold with the same customer with no effect on net
income; likewise, accounts receivable and accounts payable balances have been
netted to reflect these transactions.
L. Reflects the elimination of expenses associated with MAP's profit
sharing and post retirement pension, health and benefit plans in which
Scurlock's employees are no longer entitled to participate so that cost of sales
and operations and general and administrative expense reflect the ongoing cost
of employee benefits to PAA.
M. Reflects the restatement of Scurlock's inventory at average cost, which
is the inventory costing method utilized by PAA. Scurlock utilized the LIFO
method to determine inventory cost.
N. Reflects the adjustment of the historical market valuation
charge/credit reflected in Scurlock's historical financial statements to reflect
such amounts based on the average cost inventory method utilized by PAA.
F-7
