<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
x Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997 or
Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 1-9356
BUCKEYE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 23-2432497
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5 Radnor Corporate Center, Suite 500
100 Matsonford Road
Radnor, PA 19087
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: 610-254-4600
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report).
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at October 17, 1997
Limited Partnership Units 13,360,303 Units
<PAGE>
<TABLE>
<CAPTION>
BUCKEYE PARTNERS, L.P.
INDEX
Page No.
<S> <C>
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Statements of Income 1
for the three months and nine months
ended September 30, 1997 and 1996
Consolidated Balance Sheets 2
September 30, 1997 and December 31, 1996
Consolidated Statements of Cash Flows 3
for the nine months ended September 30, 1997
and 1996
Notes to Consolidated Financial Statements 4-7
Item 2. Management's Discussion and Analysis 8-11
of Financial Condition and Results
of Operations
Part II. Other Information
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
<PAGE>
Part I - Financial Information
Item 1. Consolidated Financial Statements
Buckeye Partners, L.P.
Consolidated Statements of Income
(In thousands, except per Unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
- ------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
$47,333 $45,083 Revenue $137,546 $135,985
- ------- ------- -------- --------
Costs and expenses
22,514 21,228 Operating expenses 66,567 69,517
2,836 2,817 Depreciation and amortization 8,529 8,512
3,390 3,417 General and administrative expenses 10,367 10,026
- ------- ------- -------- --------
28,740 27,462 Total costs and expenses 85,463 88,055
- ------- ------- -------- --------
18,593 17,621 Operating income 52,083 47,930
- ------- ------- -------- --------
Other income (expenses)
407 409 Interest income 1,484 1,097
(5,366) (5,447) Interest and debt expense (16,124) (16,402)
(904) (566) Minority interests and other (1,806) 1,309
- ------- ------- -------- --------
(5,863) (5,604) Total other income (expenses) (16,446) (13,996)
- ------- ------- -------- --------
$12,730 $12,017 Net income $ 35,637 $ 33,934
======= ======= ======== ========
Net income allocated to General
$ 121 $ 120 Partner $ 350 $ 339
Net income allocated to Limited
$12,609 $11,897 Partners $ 35,287 $ 33,595
$ 0.99 $ 0.99 Net income per unit $ 2.87 $ 2.79
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Buckeye Partners, L.P.
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 13,143 $ 17,416
Temporary investments 12,329 14,528
Trade receivables 9,624 12,536
Inventories 1,853 1,732
Prepaid and other current assets 11,245 7,715
-------- --------
Total current assets 48,194 53,927
Property, plant and equipment, net 517,699 511,646
Other non-current assets 60,895 2,264
-------- --------
Total assets $626,788 $567,837
======== ========
Liabilities and partners' capital
Current liabilities
Current portion of long-term debt $ 15,650 $ 11,900
Accounts payable 1,705 4,279
Accrued and other current liabilities 26,672 24,088
-------- --------
Total current liabilities 44,027 40,267
Long-term debt 189,425 202,100
Minority interests 2,970 2,913
Other non-current liabilities 44,197 46,578
Commitments and contingent liabilities - -
-------- --------
Total liabilities 280,619 291,858
-------- --------
Partners' capital
General Partner 2,825 2,760
Limited Partners 343,344 273,219
-------- --------
Total partners' capital 346,169 275,979
-------- --------
Total liabilities and partners' capital $626,788 $567,837
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Buckeye Partners, L.P.
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $35,637 $33,934
------- -------
Adjustments to reconcile income to net cash
provided by operating activities:
Gain on sale of property, plant and equipment (11) (2,651)
Depreciation and amortization 8,529 8,512
Minority interests 375 348
Distributions to minority interests (318) (287)
Changes in assets and liabilities:
Temporary investments 2,199 (10,025)
Trade receivables 2,912 6,157
Inventories (121) (147)
Prepaid and other current assets 1,168 (2,024)
Accounts payable (2,574) (591)
Accrued and other current liabilities 2,584 (3,473)
Other non-current assets 871 1
Other non-current liabilities (2,381) (1,041)
------- -------
Total adjustments 13,233 (5,221)
------- -------
Net cash provided by operating activities 48,870 28,713
------- -------
Cash flows from investing activities:
Capital expenditures (14,150) (7,312)
Proceeds from sale of property, plant and equipment 25 5,144
Expenditures for disposal of property,
plant and equipment, net (446) (293)
------- -------
Net cash used in investing activities (14,571) (2,461)
------- -------
Cash flows from financing activities:
Capital contribution 5 10
Proceeds from exercise of unit options 497 974
Payment of long-term debt (8,925) -
Distributions to unitholders (30,149) (27,390)
------- -------
Net cash used in financing activities (38,572) (26,406)
------- -------
Net decrease in cash and cash equivalents (4,273) (154)
Cash and cash equivalents at beginning of period 17,416 16,213
------- -------
Cash and cash equivalents at end of period $13,143 $16,059
======= =======
Supplemental cash flow information:
Cash paid during the period for interest
(net of amount capitalized) $16,396 $16,664
Non-cash change from issuance of LP Units $64,200 -
(including $59,502 in other non-current assets)
</TABLE>
See notes to consolidated financial statements.
<PAGE>
BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.BASIS OF PRESENTATION
In the opinion of management, the accompanying financial statements of Buckeye
Partners, L.P. (the "Partnership"), which are unaudited except that the
Balance Sheet as of December 31, 1996 is derived from audited financial
statements, include all adjustments necessary to present fairly the
Partnership's financial position as of September 30, 1997 and the results of
operations for the three month and nine month periods ended September 30, 1997
and 1996, and cash flows for the nine month periods ended September 30, 1997
and 1996.
The Partnership adopted Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," on January 1, 1997 with no impact on the
Partnership's operating results or financial condition. Statement No. 125
provides consistent standards for determining if transfers of financial assets
are sales or secured borrowings and revises the accounting rules for
liabilities extinguished by an in-substance defeasance.
On January 1, 1997, the Partnership adopted the American Institute of
Certified Public Accountants Statement of Position 96-1, "Environmental
Remediation Liabilities," which clarifies the accounting for environmental
remediation liabilities. The adoption had no significant impact on the
Partnership's operating results or financial condition.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share." This new
standard requires dual presentation of basic and diluted earnings per share
(EPS) on the face of the statement of earnings and requires reconciliation of
the numerators and denominators of the basic and diluted EPS calculations.
This statement will be effective for the Partnership's 1997 Annual Report
including interim periods to be presented therein; however, earlier
application is not permitted. The Partnership expects that its current EPS
calculation will be the same as basic EPS and that basic EPS will not be
materially different than diluted EPS.
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" that will be effective in 1998. The
Partnership does not anticipate reporting comprehensive income due to
immateriality. The Financial Accounting Standards Board also issued Statement
No. 131, "Disclosures about Segments of an Enterprise and Related
Information." The Partnership currently conforms to the provisions of this
statement, and any incremental disclosure is not expected to be material.
Pursuant to the rules and regulations of the Securities and Exchange
Commission, the financial statements do not include all of the information and
notes normally included with financial statements prepared in accordance with
generally accepted accounting principles. These financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1996.
2. CONTINGENCIES
The Partnership and its subsidiaries (the "Operating Partnerships"), in the
ordinary course of business, are involved in various claims and legal
proceedings, some of which are covered in whole or in part by insurance.
Buckeye Management Company (the "General Partner") is unable to predict the
timing or outcome of these claims and proceedings. Although it is possible
that one or more of these claims or proceedings, if adversely determined,
could, depending on the relative amounts involved, have a material effect on
the Partnership's results of operations for a future period, the General
Partner does not believe that their outcome will have a material effect on the
Partnership's consolidated financial condition or results of operations.
Environmental
Certain Operating Partnerships (or their predecessors) have been named as a
defendant in lawsuits or have been notified by federal or state authorities
that they are a potentially responsible party ("PRP") under federal laws or a
respondent under state laws relating to the generation, disposal, or release
of hazardous substances into the environment. These proceedings generally
relate to potential liability for clean-up costs. The total potential
remediation costs relating to these clean-up sites cannot be reasonably
estimated.
With respect to each site, however, the Operating Partnership involved is one
of several or as many as several hundred PRPs that would share in the total
costs of clean-up under the principle of joint and several liability. The
General Partner believes that the generation, handling and disposal of
hazardous substances by the Operating Partnerships and their predecessors have
been in material compliance with applicable environmental and regulatory
requirements. Additional claims for the cost of cleaning up releases of
hazardous substances and for damage to the environment resulting from the
activities of the Operating Partnerships or their predecessors may be asserted
in the future under various federal and state laws.
Guaranteed Investment Contract
The Buckeye Pipe Line Company Retirement and Savings Plan (the "Plan") held a
guaranteed investment contract ("GIC") issued by Executive Life Insurance
Company ("Executive Life"), which entered conservatorship proceedings in the
state of California in April 1991. The GIC was purchased in July 1989, with
an initial principal investment of $7.4 million earning interest at an effec
tive rate per annum of 8.98 percent through June 30, 1992. Pursuant to the
Executive Life Plan of Rehabilitation, the Plan has received an interest only
contract from Aurora National Life Assurance Company in substitution for its
Executive Life GIC. The contract provides for semi-annual interest payments
at a rate of 5.61 percent per annum through September 1998, the maturity date
of the contract. In addition, the Plan is to receive certain additional cash
payments through the maturity date of the contract pursuant to the Plan of
Rehabilitation. The Plan has also submitted a claim to the Pennsylvania Life
and Health Insurance Guaranty Association for partial reimbursement of its
loss due to the insolvency. The timing and amount of any additional cash
payments cannot be estimated accurately at this time. In May 1991, the
General Partner, in order to safeguard the basic retirement and savings
benefits of its employees, announced its intention to enter an arrangement
with the Plan that would guarantee that the Plan would receive at least its
initial principal investment of $7.4 million plus interest at an effective
rate per annum of 5 percent from July 1, 1989. The General Partner's present
intention is to effectuate its commitment no later than September 1998. The
General Partner believes that an adequate provision has been made for costs
which may be incurred by the Partnership in connection with the guarantee.
3. Employee Stock Ownership Plan Restructuring
During March 1996, BMC Acquisition Company ("BAC"), a corporation organized in
1996 under the laws of the state of Delaware, acquired all of the common stock
of the General Partner for $63 million in cash (the "Acquisition"). In
connection with the Acquisition, BAC formed the BMC Acquisition Company
Employee Stock Ownership Plan (the "ESOP") which held an investment in BAC
Series A Convertible Preferred Stock (the "Preferred Stock"). The costs of
the ESOP were chargeable to the Partnership.
After the Acquisition, the General Partner reconsidered various issues
relating to the structure of the ESOP. As a result of this analysis, the
General Partner developed a proposal to restructure the ESOP (the "ESOP
Restructuring"). The goals of the ESOP Restructuring are to provide financial
and other benefits to the Partnership, increase cash available for
distribution to the holders of limited partnership units ("LP Units"),
increase incentives for management and improve the ESOP as a benefit plan for
employee participants.
The ESOP Restructuring was approved by a majority of the holders of the LP
Units at a special meeting held on August 11, 1997. On August 12, 1997 after
a series of transactions related to the ESOP Restructuring, the Partnership
issued an additional 1,286,573 LP Units which are beneficially owned by the
ESOP. The market value of the LP Units issued was approximately $64.2
million. In exchange for the LP Units, the Partnership's obligation to
reimburse the General Partner for certain executive compensation costs was
permanently released, the incentive compensation paid by the Partnership to
the General Partner under the existing incentive compensation agreement was
reduced, and other changes were implemented to make the ESOP a less expensive
fringe benefit for the Partnership. In connection with the ESOP Restructuring
the Partnership increased the regular quarterly cash distribution paid to the
holders of the LP Units with respect to the second quarter 1997 from $0.75 to
$0.88 per LP Unit. In addition, as part of the ESOP Restructuring, the
Partnership recorded an asset of $64.2 million of which $4.7 million was
current and $59.5 was non-current. The asset is being amortized over 13.7
years which is the remaining life of the ESOP loan. Amortization expense
related to this asset was $0.6 million during the third quarter 1997.
4. PARTNERS' CAPITAL
Partners' capital consists of the following:
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Partners' Capital - 1/1/97 $2,760 $273,219 $275,979
Net Income 350 35,287 35,637
Distributions (290) (29,859) (30,149)
Value of additional units issued in
connection with ESOP Restructuring - 64,200 64,200
Exercise of unit options and
capital contributions 5 497 502
------ -------- --------
Partners' Capital - 9/30/97 $2,825 $343,344 $346,169
====== ======== ========
</TABLE>
Earnings per unit is calculated on the basis of the weighted average number of
units outstanding. The potential dilution represented by units issuable from
the exercise of outstanding unit options is less than three percent and is
therefore not reflected in the earnings per unit presentation. The weighted
average number of units outstanding used to calculate earnings per unit was as
follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Units outstanding from
beginning of period 12,191,242 12,176,242 12,182,000 12,151,242
Weighted average number
of units issued in
connection with ESOP
Restructuring 699,224 - 235,636 -
Weighted average number
of units issued upon
exercise of unit options 4,220 1,557 8,720 19,228
---------- ---------- --------- ----------
Weighted average number
of units outstanding 12,894,686 12,177,799 12,426,356 12,170,470
========== ========== ========== ==========
</TABLE>
5. CASH DISTRIBUTIONS
The Partnership will generally make quarterly cash distributions of
substantially all of its available cash, generally defined as consolidated
cash receipts less consolidated cash expenditures and such retentions for
working capital, anticipated cash expenditures and contingencies as the
General Partner deems appropriate or as are required by the terms of the
Mortgage Note Indenture.
The Partnership has declared a cash distribution of $1.05 per unit payable on
November 28, 1997 to unitholders of record on November 5, 1997. The total
distribution will amount to approximately $14,156,000.
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations
Amounts in the following discussion and analysis of financial condition and
results of operations relate to continuing operations unless otherwise
indicated.
RESULTS OF OPERATIONS
Third Quarter
Revenue for the third quarter 1997 was $47.3 million or 4.9 percent greater
than revenue of $45.1 million for the third quarter of 1996. Volume for the
third quarter 1997 was 1,042,300 barrels per day, 55,300 barrels per day or
5.6 percent greater than volume of 987,000 barrels per day for the third
quarter 1996. Gasoline volumes during the third quarter 1997 were 4.6 percent
greater than gasoline volumes during the third quarter 1996. In the East,
strong demand for gasoline continued to occur in the Harrisburg, Coraopolis
and Pittsburgh, Pennsylvania market area. In addition, deliveries to upstate
New York recovered from business lost to other pipelines and Canadian imports.
Gasoline deliveries also increased on the Long Island system due to the
shutdown of a terminal and the shift of barged volumes to the Partnership's
pipeline. Distillate volumes during the third quarter 1997 were 12.7 percent
greater than distillate volumes during the third quarter 1996. The distillate
increase is primarily the result of shippers building seasonal inventory
levels sooner than in 1996 when inventory build-up was delayed. Turbine fuel
volumes during the third quarter 1997 were 5.3 percent greater than turbine
fuel volumes during the third quarter 1996. Increased demand at Pittsburgh,
J.F. Kennedy and Newark airports resulted in the favorable increase. Tariff
increases instituted during the third quarter 1996 contributed approximately
$0.2 million of additional revenue over the third quarter of 1996.
Costs and expenses for the third quarter 1997 were $28.7 million or 4.3
percent greater than costs and expenses of $27.5 million for the third quarter
1996. Increases in outside services, rents and operating power were offset to
some extent by declines in payroll overhead expense and professional fees. In
addition, property tax credits that occurred in 1996 did not recur to the same
extent in 1997.
Other income (expense), which is the net of non-operating income and expenses,
was a net expense of $5.9 million for the third quarter 1997 compared to a net
expense of $5.6 million during the third quarter 1996. Higher incentive
compensation related to the increase in the third quarter cash distribution to
holders of LP Units was the primary cause of the net expense increase.
First Nine Months
Revenue for the first nine months of 1997 was $137.5 million or 1.1 percent
greater than revenue of $136.0 million for the first nine months of 1996.
Volume transported for the first nine months of 1997 was 1,017,200 barrels per
day or 2.5 percent greater than volume of 992,400 barrels per day during the
first nine months of 1996. Gasoline volumes were 1.9 percent higher than 1996
levels due to strong demand in the Pittsburgh and Coraopolis, Pennsylvania
market areas. Distillate volumes were 3.7 percent higher than 1996 levels as
inventory build-up has occurred earlier than last year due to attractive
product prices. Turbine fuel volumes were 4.5 percent higher than 1996 levels
as demand at Pittsburgh, J.F. Kennedy and Newark airports was strong
throughout the year. These increases offset declines in deliveries to the
upstate New York area for the first nine months of 1997. Tariff increases
instituted during the third quarter 1996 contributed approximately $1.2
million of additional revenue over the first nine months of 1996.
Costs and expenses for the first nine months of 1997 were $85.5 million or 3.0
percent less than costs and expenses of $88.1 for the first nine months of
1996. Declines in payroll expense, resulting from the second quarter 1996
early retirement and staff reduction program, and casualty loss expense were
partially offset by increases in operating power, rentals and outside service
expenses.
Other income (expenses), which is the net of non-operating income and
expenses, was a net expense of $16.4 million for the first nine months of 1997
compared to a net expense of $14.0 million for the first nine months of 1996.
A $2.9 million gain recorded on the sale of land in 1996 did not recur in
1997. In addition, incentive compensation payments on increased distributions
were greater in 1997 than 1996. These increases were partially offset by
increased interest income earned on cash balances.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's financial condition at September 30, 1997 is highlighted in
the following comparative summary:
Liquidity and Capital Indicators
<TABLE>
<CAPTION>
As of
------------------------
9/30/97 12/31/96
------- --------
<S> <C> <C>
Current ratio 1.1 to 1 1.3 to 1
Ratio of cash and cash equivalents,
temporary investments and trade
receivables to current liabilities 0.8 to 1 1.1 to 1
Working capital (in thousands) $ 4,167 $13,660
Ratio of total debt to total capital .37 to 1 .43 to 1
Book value (per Unit) $25.68 $22.65
</TABLE>
The Partnership's cash flow from operations is generally sufficient to meet
current working capital requirements. In addition, the Partnership maintains
$10.0 million in short-term credit facilities under which there are no current
outstanding borrowings.
Cash Provided by Operations
For the nine months ended September 30, 1997, cash provided by operations of
$48.9 million was derived principally from net income before depreciation of
$44.2 million and a $3.6 million source of cash from operating working capital
changes. Cash was derived primarily from reductions in temporary investments
and the collection of trade receivables.
For the nine months ended September 30, 1996, cash provided by operations of
$28.7 million was derived principally from net income before depreciation of
$42.4 million offset by a $10.1 million use of cash for operating working
capital purposes. Uses of cash for operating working capital purposes
included an increase in temporary investments of $10.0 million. Cash was used
to increase prepaid and other current assets while reducing accounts payable.
During the third quarter, the Partnership began invoicing customers on a
weekly rather than monthly basis, thereby decreasing trade receivables,
providing $6.2 million of cash. In addition, a $2.7 million gain on the sale
of property, plant and equipment was deducted from net income before arriving
at cash provided by operating activities. Remaining cash uses of $0.9 million
were primarily related to favorable tax adjustments.
Debt Obligation and Credit Facilities
At September 30, 1997, the Partnership had $189.4 million in outstanding long-
term debt and $15.7 million in current debt representing the First Mortgage
Notes of Buckeye Pipe Line Co., L.P. ("Buckeye"). The First Mortgage Notes
are collateralized by substantially all of Buckeye's property, plant and
equipment.
The indenture, as amended and pursuant to which the First Mortgage Notes were
issued, permits Buckeye, under certain circumstances, to issue additional
First Mortgage Notes provided that the aggregate principal amount of First
Mortgage Notes outstanding after such issuance does not exceed $275 million.
Buckeye has a $10 million short-term line of credit secured by accounts
receivable. At September 30, 1997, there were no outstanding borrowings under
these facilities.
At September 30, 1997, the ratio of total debt to total capital was 37
percent. For purposes of the calculation of this ratio, total capital
consists of current and long-term debt, minority interests in subsidiaries and
partners' capital.
As part of its ongoing review of the Partnership's capital structure, the
General Partner has decided to increase cash available for distribution by
maintaining the Partnership's long-term debt at no less than current levels.
In addition, the General Partner is considering refinancing alternatives for
the Partnership's long-term debt in order to reduce interest expense and
increase further the amount of cash available for distribution to unitholders.
Capital Expenditures
At September 30, 1997, approximately 83 percent of total consolidated assets
consisted of property, plant and equipment.
Capital expenditures during the nine months ended September 30, 1997 totaled
$14.2 million compared to $7.3 million during the nine months ended September
30, 1996. During both periods, capital expenditures were paid from internally
generated funds.
During the second quarter of 1997, the General Partner elected to implement a
five year plan to install automated field equipment at 52 receipt and delivery
locations throughout its systems. Total capital expenditures related to this
automation program are estimated to be $10.0 million. This new program, which
will increase the Partnership's annual capital expenditures by approximately
$2.0 million over previously planned levels, will result in cost reductions as
each facility is completed over the five year period.
OTHER MATTERS
Accounting Pronouncements
The Partnership adopted Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," on January 1, 1997 with no impact on the
Partnership's operating results or financial condition. Statement No. 125
provides consistent standards for determining if transfers of financial assets
are sales or secured borrowings and revises the accounting rules for
liabilities extinguished by an in-substance defeasance.
On January 1, 1997, the Partnership adopted the American Institute of
Certified Public Accountants Statement of Position 96-1, "Environmental
Remediation Liabilities," which clarifies the accounting for environmental
remediation liabilities. The adoption had no significant impact on the
Partnership's operating results or financial condition.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share." This new
standard requires dual presentation of basic and diluted earnings per share
(EPS) on the face of the statement of earnings and requires reconciliation of
the numerators and denominators of the basic and diluted EPS calculations.
This statement will be effective for the Partnership's 1997 Annual Report
including interim periods to be presented therein; however, earlier
application is not permitted. The Partnership expects that its current EPS
calculation will be the same as basic EPS and that basic EPS will not be
materially different than diluted EPS.
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" that will be effective in 1998. The
Partnership does not anticipate reporting comprehensive income due to
immateriality. The Financial Accounting Standards Board also issued Statement
No. 131, "Disclosures about Segments of an Enterprise and Related
Information." The Partnership currently conforms with the provisions of this
statement, and any incremental disclosure is not expected to be material.
Forward Looking Statements
This SEC Form 10-Q includes forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the General Partner believes that its
expectations are based on reasonable assumptions, it can give no assurance
that such assumptions will materialize.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
For information concerning the Partnership's legal proceedings, see Item 3 of
the Partnership's Form 10-K for the fiscal year ended December 31, 1996 and
Part II, Item 1 of the Partnership's 10-Q for the quarter ended June 30, 1997.
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of unitholders was held on August 11, 1997. The meeting did
not involve the election of directors.
The matters voted upon and the results of the voting were as follows:
(1) With respect to the proposal to issue additional LP Units to a corporation
wholly owned by the BMC Acquisition Company Employee Stock Ownership Plan
(the "ESOP") in connection with the restructuring of the ESOP, the holders
of the LP Units voted 7,656,844 Units in the affirmative and 254,024 Units
in the negative with 3,977,095 votes withheld and 181,367 abstentions.
Following the approval of the proposal at the special meeting, the
Partnership issued 1,286,573 LP Units to Buckeye Pipe Line Services
Company, a Pennsylvania corporation wholly owned by the ESOP ("Services").
On the same date, Services became the sponsor of the ESOP and the employer
of all of the employees previously employed by Buckeye Pipe Line Company,
the sole general partner and manager of each of the Partnership's operating
partnerships.
(2) With respect to the proposal to amend the Amended and Restated Agreement
of Limited Partnership, as amended (the "Partnership Agreement"), the
holders of the LP Units voted 7,622,734 Units in the affirmative and
250,040 Units in the negative with 3,977,095 votes withheld and 219,441
abstentions. The amendment to the Partnership Agreement (i) relieved the
General Partner of any obligation to make an additional capital
contribution to the Partnership upon the issuance of additional LP Units if
the General Partner receives a legal opinion that such additional capital
contribution is not required for the Partnership or any of its operating
partnerships to avoid being treated as an association taxable as a
corporation for federal income tax purposes and (ii) obligated any
successor general partner, upon removal and replacement of the General
Partner by the holders of the LP Units, to the obligations of the General
Partner and its affiliates under the Exchange Agreement and to consider
this obligation in determining the value of the general partnership
interest which must be acquired by a successor general partner.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 - Computation of Earnings Per Unit
27 - Financial Data Schedule
(b) Buckeye Partners, L.P. filed a Current Report on Form 8-K on August 18,
1997 announcing the significant terms of the ESOP Restructuring that was
completed on August 12, 1997.
<PAGE>
SIGNATURE
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 thereunto duly authorized.
BUCKEYE PARTNERS, L.P.
(Registrant)
By: Buckeye Management Company,
as General Partner
Dated: October 23, 1997 By: /s/ Steven C. Ramsey
Steven C. Ramsey
Senior Vice President, Finance
and Chief Financial Officer
(Principal Accounting and
Financial Officer)
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
11 Computation of Earnings per Unit
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 11
BUCKEYE PARTNERS, L.P.
COMPUTATION OF EARNINGS PER UNIT
(In thousands, except for Units and per Unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net Income $ 12,730 $ 12,017 $ 35,637 $ 33,934
Primary earnings per Unit
Net income $ 0.98 $ 0.99 $ 2.86 $ 2.78
Fully-diluted earnings per Unit
Net income $ 0.98 $ 0.99 $ 2.86 $ 2.78
Weighted average number of
Units outstanding:
Units outstanding at Sept. 30 12,894,686 12,177,799 12,426,356 12,170,470
Exercise of Options reduced by
the number of Units purchased
with proceeds (Primary) 40,883 16,726 32,901 18,737
---------- ---------- ---------- ----------
Total Units outstanding -Primary 12,935,569 12,194,525 12,459,257 12,189,207
========== ========== ========== ==========
Units outstanding at Sept. 30 12,894,686 12,177,799 12,426,356 12,170,470
Exercise of Options reduced by
the number of Units purchased
with proceeds (fully-diluted) 40,887 18,808 42,890 21,826
---------- ---------- ---------- ---------
Total Units outstanding-
Fully-diluted 12,935,573 12,196,607 12,469,246 12,192,296
========== ========== ========== ==========
</TABLE>
Although not required to be presented in the income statement under
provisions APB Opinion No. 15, this calculation is submitted in accordance
with Regulations S-K item 601(b)(11).
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 13,143
<SECURITIES> 12,329
<RECEIVABLES> 9,624
<ALLOWANCES> 0
<INVENTORY> 1,853
<CURRENT-ASSETS> 48,194
<PP&E> 575,038
<DEPRECIATION> 57,339
<TOTAL-ASSETS> 626,788
<CURRENT-LIABILITIES> 44,027
<BONDS> 189,425
0
0
<COMMON> 0
<OTHER-SE> 346,169
<TOTAL-LIABILITY-AND-EQUITY> 626,788
<SALES> 0
<TOTAL-REVENUES> 137,546
<CGS> 0
<TOTAL-COSTS> 85,463
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,124
<INCOME-PRETAX> 35,637
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,637
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,637
<EPS-PRIMARY> 2.86
<EPS-DILUTED> 2.86
</TABLE>
