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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 8, 1998
SANTA FE PACIFIC PIPELINE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 1-10066 95-4191066
(State of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
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1100 Town & Country Road
Orange, California 92868
(Address of principal executive offices, including zip code)
(714) 560-4400
(Registrant's telephone number, including area code)
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SANTA FE PACIFIC PIPELINE PARTNERS, L.P.
Item 5. Other Events
Santa Fe Pacific Pipeline Partners, L.P. (the "Partnership") announced its
fourth quarter and full year 1997 earnings in a January 8, 1998 press release
(the "Press Release"), which press release is attached as Exhibit 99 and is
hereby incorporated by reference.
As previously reported, the Partnership, along with its general partner, Santa
Fe Pacific Pipelines, Inc. (the "General Partner"), and SFP Pipeline Holdings,
Inc. have entered into a definitive Purchase Agreement with Kinder Morgan Energy
Partners, L.P. and Kinder Morgan G.P., Inc. (collectively, "Kinder Morgan")
pursuant to which Kinder Morgan and its affiliates would acquire the
Partnership's limited partner interest in the Partnership's operating
partnership subsidiary, SFPP, L.P., as well as the General Partner's general
partner interest in the Partnership, and approximately one-half of the General
Partner's general partner interest in SFPP, L.P. would be redeemed (the
"Transaction").
The Partnership has previously distributed to the holders of its Common Units a
Joint Proxy Statement/Prospectus dated February 4, 1998 (the "Proxy Statement")
relating to the Transaction. The Proxy Statement (on pages 66-70) describes the
opinion of Smith Barney Inc. ("Smith Barney"), financial advisor to the Special
Committee of the Board of Directors of the General Partner. A copy of the
opinion of Smith Barney is attached as Annex C to the Proxy Statement. Smith
Barney has advised the Partnership that it was aware of the financial
information contained in the Press Release and the Kinder Morgan press release
dated January 15, 1998 (relating to the fourth quarter and full year 1997
earnings of Kinder Morgan Energy Partners, L.P.) at the time it rendered its
opinion, and it considered that financial information in rendering its opinion.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
99 Press release dated January 8, 1998.
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.
SANTA FE PACIFIC PIPELINE PARTNERS, L.P.
(Registrant)
By: Santa Fe Pacific Pipelines, Inc.,
as General Partner
Date: February 24, 1998 By: /s/ BARRY R. PEARL
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Barry R. Pearl
Senior Vice President, Treasurer
and Chief Financial Officer
(On behalf of the Registrant)
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EXHIBIT 99
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January 8, 1998
SANTA FE PACIFIC PIPELINE PARTNERS, L.P.
ANNOUNCES FOURTH QUARTER EARNINGS
FOR IMMEDIATE RELEASE . . . . . . Santa Fe Pacific Pipeline Partners, L. P.
(NYSE:SFL) announced fourth quarter net income of $21.9 million, or $1.10 per
unit, 10 percent above net income of $19.9 million, or $1.01 per unit, for the
same period last year, excluding charges in the current quarter totaling $4.3
million for potential FERC reparations and costs associated with the proposed
sale of the Partnership to Kinder Morgan Energy Partners, L.P. and a $15 million
litigation provision recorded in 1996. Including the charges, fourth quarter
net income was $17.7 million, or $0.89 per unit.
For the year ended December 31, 1997, net income, excluding litigation
provisions and transaction costs totaling $10.3 million, was $79.4 million, or
$4.01 per unit, 7 percent above net income of $74.5 million, or $3.76 per unit
in 1996, excluding litigation provisions totaling $23 million. Including the
provisions and costs, net income for 1997 was $69.4 million, or $3.51 per unit.
The fourth quarter charges included $2.0 million to reflect potential
reparations for the quarter, consistent with the Administrative Law Judge's
Initial Decision issued in September 1997, in the rate proceeding at the Federal
Energy Regulatory Commission challenging the Partnership's rates for
transportation of refined petroleum products to Arizona from El Paso, Texas and
Los Angeles, California. In addition, $2.3 million was recorded to reflect
fourth quarter costs associated with the proposed sale of the Partnership to
Kinder Morgan.
The Partnership also announced a cash distribution of 75 cents per unit
for the fourth quarter of 1997. The distribution is payable February 13, 1998 to
unitholders of record as of January 30, 1998.
Fourth quarter revenues of $61.8 million and total year revenues of $244.4
million both exceeded the respective prior year periods by 2 percent. Total
volumes delivered during the fourth quarter were essentially even with
deliveries in the prior year quarter. For the year, volumes delivered exceeded
one million barrels per day for the first time, 1 percent above 1996 deliveries.
Volume growth was achieved in virtually all commercial markets served by the
Partnership, with the 2 percent commercial growth rate tempered by reduced short
haul deliveries to certain Northern and Southern
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California locations. Military volumes were lower at most facilities, with a
significant reduction in San Francisco Bay Area deliveries attributed to a
change in military supply sources.
Excluding provisions and charges, fourth quarter operating expenses of
$31.7 million were essentially even with the prior year quarter and total year
operating expenses of $130.1 million increased less than 1 percent above 1996,
with higher field operating expenses offset by lower legal expenses and
facilities costs.
Capital expenditures were $10.1 million for the fourth quarter and $24.9
million for the year. Capital expenditures in 1996 totaled $27.7 million.
Santa Fe Pacific Pipeline Partners, L.P. is one of the largest independent
refined petroleum products pipelines in the United States. The Partnership
serves six Western states with approximately 3,300 miles of common carrier
pipeline and 13 truck loading terminals.
* * *
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SANTA FE PACIFIC PIPELINE PARTNERS, L.P.
CONSOLIDATED STATEMENT OF INCOME
AND OPERATING HIGHLIGHTS
(Unaudited)
(In thousands, except per unit and per barrel amounts)
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<CAPTION>
Three months Twelve months
ended December 31, ended December 31,
------------------------ -------------------------
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues
Trunk revenues .................................. $48,336 $47,518 $192,031 $189,207
Storage and terminaling revenues ................ 10,002 9,650 39,121 38,302
Other revenues .................................. 3,456 3,260 13,263 12,633
------- ------- -------- --------
Total operating revenues ...................... 61,794 60,428 244,415 240,142
------- ------- -------- --------
Operating expenses
Field operating expenses ........................ 10,789 10,653 44,924 37,375
General and administrative expenses ............. 7,260 7,168 26,495 30,260
Depreciation and amortization ................... 5,259 5,242 21,351 21,080
Power costs ..................................... 5,285 5,506 20,674 21,062
Facilities costs ................................ 3,082 3,307 16,661 19,244
Provisions for litigation costs ................. 2,000 15,000 8,000 23,000
------- ------- -------- --------
Total operating expenses ...................... 33,675 46,876 138,105 152,021
------- ------- -------- --------
Operating income .................................. 28,119 13,552 106,310 88,121
Interest expense .................................. 8,999 9,144 35,922 36,518
Kinder Morgan transaction costs ................... 2,300 -- 2,300 --
Other income, net ................................. 1,472 1,188 3,674 2,415
------- ------- -------- --------
Net income before minority interest ............... 18,292 5,596 71,762 54,018
Less minority interest in net income .............. (590) (181) (2,315) (1,743)
------- ------- -------- --------
Net income ........................................ $17,702 $ 5,415 $ 69,447 $ 52,275
======= ======= ======== ========
Net income excluding special items*................ $21,863 $19,932 $ 79,415 $ 74,533
======= ======= ======== ========
Per Unit Amounts (19,148,148 units)
Net income per unit ............................... $ 0.89 $ 0.27 $ 3.51 $ 2.64
======= ======= ======== ========
Net income per unit excluding special items*....... $ 1.10 $ 1.01 $ 4.01 $ 3.76
======= ======= ======== ========
Cash distributions declared per unit .............. $ 0.75 $ 0.75 $ 3.00 $ 3.00
======= ======= ======== ========
Operating Data
Barrels delivered ................................. 91,710 91,776 369,845 365,377
Barrel miles (millions) .......................... 13,417 13,008 53,046 51,828
Total revenue per barrel ......................... $ 0.67 $ 0.66 $ 0.66 $ 0.66
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* These alternative computations exclude the provisions for litigation costs
and Kinder Morgan transaction costs reflected above.
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SANTA FE PACIFIC PIPELINE PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In thousands)
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<CAPTION>
December 31, December 31,
1997 1996
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<S> <C> <C>
Assets
Current assets .................................................. $ 78,054 $ 77,909
Property, plant and equipment, net .............................. 629,365 628,694
Other assets .................................................... 19,303 19,215
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Total assets .................................................. $726,722 $725,818
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Liabilities and Partners' Capital
Current liabilities ............................................. $ 38,675 $ 35,545
Long-term debt .................................................. 355,000 355,000
Other long-term liabilities ..................................... 58,767 71,351
Minority interest ............................................... 1,342 1,007
Partners' capital ............................................... 272,938 262,915
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Total liabilities and partners' capital ....................... $726,722 $725,818
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
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<CAPTION>
Three months ended Twelve months ended
December 31, December 31,
------------------- --------------------
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income ......................... $ 17,702 $ 5,415 $ 69,447 $ 52,275
Depreciation, working capital
and other adjustments ............. (4,501) 13,011 15,644 34,972
-------- -------- -------- --------
Net cash provided by
operating activities ............ 13,201 18,426 85,091 87,247
-------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures ............... (10,099) (7,476) (24,934) (27,686)
Proceeds from property sales ....... -- 2,749 -- 2,749
-------- -------- -------- --------
Net cash used by
investing activities ............ (10,099) (4,727) (24,934) (24,937)
-------- -------- -------- --------
Cash flows from financing activities:
Cash distributions ................. (15,351) (15,351) (61,407) (61,407)
-------- -------- -------- --------
Increase (decrease) in cash
and cash equivalents ................ (12,249) (1,652) (1,250) 903
-------- -------- -------- --------
Cash and cash equivalents:
Beginning of period ................ 53,121 43,774 42,122 41,219
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End of period ...................... $ 40,872 $ 42,122 $ 40,872 $ 42,122
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