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Press release from Business Wire

Plains All American Pipeline, L.P. Reports Second-Quarter 2013 Results

Monday, August 05, 2013

Plains All American Pipeline, L.P. Reports Second-Quarter 2013 Results

16:05 EDT Monday, August 05, 2013

HOUSTON (Business Wire) -- Plains All American Pipeline, L.P. (NYSE: PAA) reported second-quarter 2013 results as summarized below:

Summary Financial Information (1)

                         
(in millions, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
        2013     2012    

% Change

    2013     2012    

% Change

Net income attributable to Plains $ 292 $ 378 -23 % $ 821 $ 609 35 %
Diluted net income per limited partner unit $ 0.57 $ 0.93 -39 % $ 1.84 $ 1.44 28 %

EBITDA

      $ 484     $ 557     -13 %     $ 1,232     $ 940     31 %
 
Three Months Ended Six Months Ended
June 30, June 30,
        2013     2012    

% Change

    2013     2012    

% Change

Adjusted net income attributable to Plains $ 287 $ 343 -16 % $ 811 $ 663 22 %
Diluted adjusted net income per limited partner unit $ 0.56 $ 0.82 -32 % $ 1.82 $ 1.61 13 %
Adjusted EBITDA       $ 478     $ 522     -8 % $ 1,217 $ 995 22 %
Distribution declared for the period       $ 0.5875     $ 0.5325     10.3 %
 

(1) The Partnership's reported results include the impact of items that affect comparability between reporting periods. The impact of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding selected items that the Partnership believes impact comparability of financial results between reporting periods, as well as for information regarding non-GAAP financial measures (such as adjusted EBITDA) and their reconciliation to the most directly comparable GAAP measures.

 

“PAA delivered solid second-quarter results, exceeding the high-end of our guidance and in line with our updated outlook provided in late May,” said Greg L. Armstrong, Chairman and CEO of Plains All American. “These results include an approximate $25 million adverse impact associated with certain operational issues that occurred during the second quarter of 2013.

“This performance was driven by continued strong fundamentals and favorable market conditions, albeit less favorable than experienced during the first quarter of 2013 or the second quarter of 2012. We have increased the midpoint of our 2013 adjusted EBITDA guidance by $30 million to $2.19 billion, incorporating our strong performance to date and an assumed return to baseline performance levels in our Supply and Logistics segment in the second half of the year.

“We have performed well thus far this year and we are on track to achieve our 2013 goals. Our distribution payable next week represents a 10.3% increase over our distribution paid in August 2012, which is consistent with our 2013 target of 9 to 10% year-over-year distribution growth, and we expect distribution coverage for 2013 to exceed 130%. We have increased our expansion capital program by $200 million to $1.6 billion and continue to advance our multi-billion dollar project portfolio. Furthermore, PAA remains financially well-positioned, ending the quarter with a strong balance sheet, favorable credit metrics compared to our targets, and approximately $2.6 billion in committed liquidity.”

The following table summarizes selected financial information by segment for the second quarter and first half of 2013:

Summary of Selected Financial Data by Segment (1)

                         
(in millions)
Three Months Ended Three Months Ended
June 30, 2013     June 30, 2012
Supply and Supply and
Transportation     Facilities     Logistics     Transportation     Facilities     Logistics
Reported segment profit $ 160 $ 149 $ 176 $ 169 $ 114 $ 274
Selected items impacting the comparability of segment profit (2)   7     4     (22 )   11   5   (53 )
Adjusted segment profit $ 167   $ 153   $ 154   $ 180 $ 119 $ 221  
Percentage change in adjusted segment profit versus 2012 period   -7 %   29 %   -30 %
 
Six Months Ended Six Months Ended
June 30, 2013     June 30, 2012
Supply and Supply and
Transportation     Facilities     Logistics     Transportation     Facilities     Logistics
Reported segment profit $ 323 $ 300 $ 610 $ 332 $ 204 $ 402
Selected items impacting the comparability of segment profit (2)   18     10     (49 )   21   15   17  
Adjusted segment profit $ 341   $ 310   $ 561   $ 353 $ 219 $ 419  
Percentage change in adjusted segment profit versus 2012 period   -3 %   42 %   34 %
 

(1) The Partnership's reported results include the impact of items that affect comparability between reporting periods. The impact of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding selected items that the Partnership believes impact comparability of financial results between reporting periods.

(2) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

 

Second-quarter 2013 Transportation adjusted segment profit decreased 7% versus comparable 2012 results. This decrease was driven by lost revenue and incremental expenses related to operational issues that occurred during the second quarter of 2013. This impact was partially offset by the benefit of increased volumes from increased producer drilling activities and recently completed organic growth projects.

Second-quarter 2013 Facilities adjusted segment profit increased 29% over comparable 2012 results. This increase was primarily related to the benefit of a recently completed crude oil rail acquisition and rail-related organic growth projects as well as increased profitability from NGL fractionation and gas processing activities.

Second-quarter 2013 Supply and Logistics adjusted segment profit exceeded our guidance, but represented a 30% decrease relative to comparable 2012 results. This decrease was primarily related to relatively less favorable crude oil market conditions, particularly narrower crude oil differentials, partially offset by higher net margins in the NGL business.

The Partnership will hold a conference call on August 6, 2013 (see details below). Prior to this conference call, the Partnership will furnish a current report on Form 8-K, which will include material in this news release as well as financial and operational guidance for the third quarter and full year of 2013. A copy of the Form 8-K will be available on the Partnership's website at www.paalp.com, where PAA routinely posts important information about the Partnership.

Conference Call

The Partnership's conference call will be held at 11:00 a.m. EDT on Tuesday, August 6, 2013 to discuss the following items:

  1. The Partnership's second-quarter 2013 performance;
  2. The status of major expansion projects;
  3. Capitalization and liquidity;
  4. Financial and operating guidance for the third quarter and full year of 2013; and
  5. The Partnership's outlook for the future.

Conference Call Access Instructions

To access the Internet webcast of the conference call, please go to the Partnership's website at www.paalp.com, choose “Investor Relations,” and then choose “Conference Calls.” Following the live webcast, the call will be archived for a period of sixty (60) days on the Partnership's website.

Alternatively, access to the live conference call is available by dialing toll free (888) 276-0010. International callers should dial (612) 332-1210. No password is required. The slide presentation accompanying the conference call will be available a few minutes prior to the call under the “Conference Call Summaries” portion of the “Conference Calls” tab of the “Investor Relations” section of the PAA website at www.paalp.com.

Telephonic Replay Instructions

To listen to a telephonic replay of the conference call, please dial (800) 475-6701 or (320) 365-3844 for international callers and enter replay access code 295443. The replay will be available beginning Tuesday, August 6, 2013, at approximately 1:00 p.m. EDT and will continue until 12:59 a.m. EDT on September 7, 2013.

Non-GAAP Financial Measures and Selected Items Impacting Comparability

To supplement our financial information presented in accordance with GAAP, management uses additional measures that are known as “non-GAAP financial measures” (such as adjusted EBITDA and implied distributable cash flow) in its evaluation of past performance and prospects for the future. Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) the mark-to-market of derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), (iii) items that are not indicative of our core operating results and business outlook and/or (iv) other items that we believe should be excluded in understanding our core operating performance. We have defined all such items as “selected items impacting comparability.” We consider an understanding of these selected items impacting comparability to be material to the evaluation of our operating results and prospects.

Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management's discussion and analysis of operating results in our Quarterly Report on Form 10-Q.

Adjusted EBITDA and other non-GAAP financial measures are reconciled to the most comparable GAAP measures for the periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our consolidated financial statements and notes thereto. In addition, the Partnership maintains on its website (www.paalp.com) a reconciliation of adjusted EBITDA and certain commonly used non-GAAP financial information to the most comparable GAAP measures. To access the information, investors should click on the "Investor Relations" link on the Partnership's home page and then the "Non-GAAP Reconciliation" link on the Investor Relations page.

Forward-Looking Statements

Except for the historical information contained herein, the matters discussed in this release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from results anticipated in the forward-looking statements. These risks and uncertainties include, among other things, failure to implement or capitalize, or delays in implementing or capitalizing, on planned internal growth projects; unanticipated changes in crude oil market structure, grade differentials and volatility (or lack thereof); the successful integration and future performance of acquired assets or businesses and the risks associated with operating in lines of business that are distinct and separate from our historical operations; the occurrence of a natural disaster, catastrophe, terrorist attack or other event, including attacks on our electronic and computer systems; tightened capital markets or other factors that increase our cost of capital or limit our access to capital; maintenance of our credit rating and ability to receive open credit from our suppliers and trade counterparties; continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business; the effectiveness of our risk management activities; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; declines in the volumes of crude oil, refined product and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our facilities, whether due to declines in production from existing oil and gas reserves, failure to develop or slowdown in the development of additional oil and gas reserves or other factors; shortages or cost increases of supplies, materials or labor; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil, refined products and natural gas and resulting changes in pricing conditions or transportation throughput requirements; the availability of, and our ability to consummate, acquisition or combination opportunities; our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; the impact of current and future laws, rulings, governmental regulations, accounting standards and statements and related interpretations; non-utilization of our assets and facilities; the effects of competition; interruptions in service on third-party pipelines; increased costs or lack of availability of insurance; fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans; the currency exchange rate of the Canadian dollar; weather interference with business operations or project construction; risks related to the development and operation of our facilities; factors affecting demand for natural gas and natural gas storage services and rates; general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; and other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the storage of natural gas and the processing, transportation, fractionation, storage and marketing of natural gas liquids discussed in the Partnership's filings with the Securities and Exchange Commission.

Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids. Through its general partner interest and majority equity ownership position in PAA Natural Gas Storage, L.P. (NYSE: PNG), PAA also owns and operates natural gas storage facilities. PAA is headquartered in Houston, Texas.

                 
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)                          
 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per unit data)
 
Three Months Ended Six Months Ended
June 30, June 30,

 

2013 2012 2013 2012
 
REVENUES $

10,295

$ 9,786 $

20,915

$ 19,004
 
COSTS AND EXPENSES
Purchases and related costs

9,387

8,830

18,825

17,332
Field operating costs 343 319 684 568
General and administrative expenses 91 89 196 182
Depreciation and amortization   91     86     173     146  
Total costs and expenses  

9,912

    9,324    

19,878

    18,228  
 
OPERATING INCOME 383 462 1,037 776
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities 11 9 23 16
Interest expense, net (75 ) (75 ) (152 ) (140 )
Other income/(expense), net   (1 )   -     (1 )   2  
 
INCOME BEFORE TAX 318 396 907 654
Current income tax expense (8 ) (6 ) (53 ) (23 )
Deferred income tax expense   (10 )   (4 )   (17 )   (7 )
 
NET INCOME 300 386 837 624
Net income attributable to noncontrolling interests   (8 )   (8 )   (16 )   (15 )
NET INCOME ATTRIBUTABLE TO PLAINS $ 292   $ 378   $ 821   $ 609  
 
NET INCOME ATTRIBUTABLE TO PLAINS:
LIMITED PARTNERS $ 197   $ 303   $ 631   $ 465  
GENERAL PARTNER $ 95   $ 75   $ 190   $ 144  
 
BASIC NET INCOME PER LIMITED PARTNER UNIT $ 0.58   $ 0.93   $ 1.85   $ 1.45  
 
DILUTED NET INCOME PER LIMITED PARTNER UNIT $ 0.57   $ 0.93   $ 1.84   $ 1.44  
 
BASIC WEIGHTED AVERAGE UNITS OUTSTANDING   340     323     338     319  
 
DILUTED WEIGHTED AVERAGE UNITS OUTSTANDING   342     326     341     321  
                           

ADJUSTED RESULTS:

(in millions, except per unit data) Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
 
ADJUSTED NET INCOME ATTRIBUTABLE TO PLAINS $ 287   $ 343   $ 811   $ 663  
 
DILUTED ADJUSTED NET INCOME PER LIMITED PARTNER UNIT $ 0.56   $ 0.82   $ 1.82   $ 1.61  
 
ADJUSTED EBITDA $ 478   $ 522   $ 1,217   $ 995  
 
         
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)              
 

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(in millions)
June 30, December 31,
2013 2012
ASSETS
Current assets $ 4,841 $ 5,147
Property and equipment, net 10,181 9,643
Goodwill 2,503 2,535
Linefill and base gas 707 707
Long-term inventory 207 274
Investments in unconsolidated entities 442 343
Other, net   543     586  
Total assets $ 19,424   $ 19,235  
 
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities $ 4,924 $ 5,183
Senior notes, net of unamortized discount 6,011 6,010
Long-term debt under credit facilities and other 302 310
Other long-term liabilities and deferred credits   558     586  
Total liabilities 11,795 12,089
 
Partners' capital excluding noncontrolling interests 7,098 6,637
Noncontrolling interests   531     509  
Total partners' capital   7,629     7,146  
Total liabilities and partners' capital $ 19,424   $ 19,235  
 

DEBT CAPITALIZATION RATIOS

(in millions)
June 30, December 31,
2013 2012
Short-term debt $ 902 $ 1,086
Long-term debt   6,313     6,320  
Total debt $ 7,215   $ 7,406  
 
Long-term debt $ 6,313 $ 6,320
Partners' capital   7,629     7,146  
Total book capitalization $ 13,942   $ 13,466  
Total book capitalization, including short-term debt $ 14,844   $ 14,552  
 
Long-term debt-to-total book capitalization 45 % 47 %
Total debt-to-total book capitalization, including short-term debt 49 % 51 %
 
                         
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)                                      
 

SELECTED FINANCIAL DATA BY SEGMENT

(in millions)
Three Months Ended

Three Months Ended

June 30, 2013 June 30, 2012
Supply and Supply and
Transportation Facilities Logistics Transportation Facilities Logistics
Revenues (1) $ 365 $ 348 $

9,934

$ 361 $ 287 $ 9,442
Purchases and related costs (1) (39 ) (83 )

(9,614

) (35 ) (65 ) (9,030 )
Field operating costs (excluding equity-indexed compensation expense) (1) (138 ) (94 ) (109 ) (128 ) (86 ) (105 )
Equity-indexed compensation expense - operations (4 ) - (1 ) (3 ) - (1 )
Segment G&A expenses (excluding equity-indexed compensation expense) (2) (26 ) (16 ) (27 ) (28 ) (18 ) (27 )
Equity-indexed compensation expense - general and administrative (9 ) (6 ) (7 ) (7 ) (4 ) (5 )
Equity earnings in unconsolidated entities   11     -     -     9     -     -  
Reported segment profit $ 160 $ 149 $ 176 $ 169 $ 114 $ 274
Selected items impacting comparability of segment profit (3)   7     4     (22 )   11     5     (53 )
Segment profit excluding selected items impacting comparability $ 167   $ 153   $ 154   $ 180   $ 119   $ 221  
 
Maintenance capital $ 23   $ 11   $ 5   $ 27   $ 10   $ 3  
 
Six Months Ended Six Months Ended
June 30, 2013 June 30, 2012
Supply and Supply and
Transportation Facilities Logistics Transportation Facilities Logistics
Revenues (1) $ 732 $ 703 $

20,158

$ 678 $ 523 $ 18,319
Purchases and related costs (1) (74 ) (174 )

(19,249

) (63 ) (139 ) (17,638 )
Field operating costs (excluding equity-indexed compensation expense) (1) (270 ) (180 ) (224 ) (224 ) (133 ) (207 )
Equity-indexed compensation expense - operations (13 ) (1 ) (2 ) (10 ) (1 ) (1 )
Segment G&A expenses (excluding equity-indexed compensation expense) (2) (49 ) (32 ) (53 ) (49 ) (32 ) (53 )
Equity-indexed compensation expense - general and administrative (26 ) (16 ) (20 ) (16 ) (14 ) (18 )
Equity earnings in unconsolidated entities   23     -     -     16     -     -  
Reported segment profit $ 323 $ 300 $ 610 $ 332 $ 204 $ 402
Selected items impacting comparability of segment profit (3)   18     10     (49 )   21     15     17  
Segment profit excluding selected items impacting comparability $ 341   $ 310   $ 561   $ 353   $ 219   $ 419  
 
Maintenance capital $ 55   $ 18   $ 9   $ 52   $ 17   $ 7  
 

(1) Includes intersegment amounts.

(2) Segment general and administrative expenses (G&A) reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period. Includes acquisition-related expenses for the 2012 period.

(3) Certain non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

 
                 
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)                          
 
Three Months Ended Six Months Ended
June 30, June 30,

OPERATING DATA (1)

2013 2012 2013 2012
 
Transportation activities (average daily volumes in thousands of barrels):
Tariff activities
Crude Oil Pipelines
All American 38 31 39 28
Bakken Area Systems 130 135 127 136
Basin / Mesa 680 707 702 675
Capline 158 149 157 136
Eagle Ford Area Systems 74 15 61 12
Line 63 / Line 2000 108 130 113 124
Manito 46 57 46 62
Mid-Continent Area Systems 255 262 261 242
Permian Basin Area Systems 548 447 513 451
Rainbow 125 156 124 149
Rangeland 56 61 62 62
Salt Lake City Area Systems 131 157 133 148
South Saskatchewan 33 59 46 60
White Cliffs 21 17 21 17
Other 766 743 763 735
NGL Pipelines
Co-Ed 51 64 54 32
Other 165 159 186 79
Refined Products Pipelines 110 118 105 115
Tariff activities total 3,495 3,467 3,513 3,263
Trucking 108 96 109 102
Transportation activities total 3,603 3,563 3,622 3,365
 
Facilities activities (average monthly volumes):

Crude oil, refined products and NGL terminalling and storage (average monthly capacity in millions of barrels)

95 93 94 85

Rail load / unload volumes (average throughput in thousands of barrels per day)

231 - 223 -

Natural gas storage (average monthly capacity in billions of cubic feet)

97 80 95 78

NGL fractionation (average throughput in thousands of barrels per day)

90 108 95 60

Facilities activities total (average monthly capacity in millions of barrels) (2)

121 109 120 100
 
Supply and Logistics activities (average daily volumes in thousands of barrels):
Crude oil lease gathering purchases 853 814 855 806
NGL sales 160 153 221 144
Waterborne cargos 7 4 6 2
Supply and Logistics activities total 1,020 971 1,082 952
 

(1) Volumes associated with acquisitions represent total volumes (attributable to our interest) for the number of days or months we actually owned the assets divided by the number of days or months in the period.

(2) Facilities total is calculated as the sum of: (i) crude oil, refined products and NGL terminalling and storage capacity; (ii) rail load and unload volumes multiplied by the number of days in the period and divided by the number of months in the period; (iii) natural gas storage capacity divided by 6 to account for the 6:1 mcf of gas to crude Btu equivalent ratio and further divided by 1,000 to convert to monthly volumes in millions; and (iv) NGL fractionation volumes multiplied by the number of days in the period and divided by the number of months in the period.

 
                 
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)                          
 

COMPUTATION OF BASIC AND DILUTED EARNINGS PER LIMITED PARTNER UNIT

(in millions, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Basic Net Income per Limited Partner Unit:
Net income attributable to Plains $ 292 $ 378 $ 821 $ 609
Less: General partner's incentive distribution (1) (91 ) (69 ) (177 ) (134 )
Less: General partner 2% ownership (1)   (4 )   (6 )   (13 )   (10 )
Net income available to limited partners 197 303 631 465
Less: Undistributed earnings allocated and distributions to participating securities (1)   (1 )   (2 )   (5 )   (3 )
Net income available to limited partners in accordance with application of the two-class method for MLPs $ 196   $ 301   $ 626   $ 462  
 
Basic weighted average number of limited partner units outstanding 340 323 338 319
 
Basic net income per limited partner unit $ 0.58   $ 0.93   $ 1.85   $ 1.45  
 
Diluted Net Income per Limited Partner Unit:
Net income attributable to Plains $ 292 $ 378 $ 821 $ 609
Less: General partner's incentive distribution (1) (91 ) (69 ) (177 ) (134 )
Less: General partner 2% ownership (1)   (4 )   (6 )   (13 )   (10 )
Net income available to limited partners 197 303 631 465
Less: Undistributed earnings allocated and distributions to participating securities (1)   (1 )   (1 )   (3 )   (2 )
Net income available to limited partners in accordance with application of the two-class method for MLPs $ 196   $ 302   $ 628   $ 463  
 
Basic weighted average number of limited partner units outstanding 340 323 338 319
Effect of dilutive securities: Weighted average LTIP units (2)   2     3     3     2  
Diluted weighted average number of limited partner units outstanding   342     326     341     321  
 
Diluted net income per limited partner unit $ 0.57   $ 0.93   $ 1.84   $ 1.44  
 

(1) We calculate net income available to limited partners based on the distributions pertaining to the current period's net income. After adjusting for the appropriate period's distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method.

(2) Our Long-term Incentive Plan ("LTIP") awards that contemplate the issuance of common units are considered dilutive unless (i) vesting occurs only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. LTIP awards that are deemed to be dilutive are reduced by a hypothetical unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB.

 
                 
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)                          
 

SELECTED ITEMS IMPACTING COMPARABILITY

(in millions, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Selected Items Impacting Comparability - Income/(Loss) (1) :
Gains/(losses) from derivative activities net of inventory valuation adjustments (2) $ 26 $ 72 $ 50 $ 13
Equity-indexed compensation expense (3) (16 ) (12 ) (39 ) (38 )
Net gain/(loss) on foreign currency revaluation (4 ) (16 ) 4 (16 )
Tax effect on selected items impacting comparability (1 ) - (6 ) -
Significant acquisition-related expenses - (9 ) - (13 )
Other (4)   -     -     1     -  
Selected items impacting comparability of net income attributable to Plains $ 5 $ 35 $ 10 $ (54 )
 
Impact to basic net income per limited partner unit $ 0.02   $ 0.11   $ 0.02   $ (0.16 )
Impact to diluted net income per limited partner unit $ 0.01   $ 0.11   $ 0.02   $ (0.17 )
 

(1) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2) Includes mark-to-market gains and losses resulting from derivative instruments that are related to underlying activities in future periods or the reversal of mark-to-market gains and losses from the prior period, net of inventory valuation adjustments.

(3) Equity-indexed compensation expense above excludes the portion of equity-indexed compensation expense represented by grants under LTIP that, pursuant to the terms of the grant, will be settled in cash only and have no impact on diluted units.

(4) Includes other immaterial selected items impacting comparability, as well as the noncontrolling interests' portion of selected items.

 
                 
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)                          
 

COMPUTATION OF ADJUSTED BASIC AND DILUTED EARNINGS PER LIMITED PARTNER UNIT

(in millions, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Basic Adjusted Net Income per Limited Partner Unit
Net income attributable to Plains $ 292 $ 378 $ 821 $ 609
Selected items impacting comparability of net income attributable to Plains (1)   (5 )   (35 )   (10 )   54  
Adjusted net income attributable to Plains 287 343 811 663
Less: General partner's incentive distribution (2) (91 ) (69 ) (177 ) (134 )
Less: General partner 2% ownership (2)   (4 )   (5 )   (13 )   (11 )
Adjusted net income available to limited partners 192 269 621 518
Less: Undistributed earnings allocated and distributions to participating securities (2)   (1 )   (2 )   (4 )   (3 )
Adjusted limited partners' net income $ 191   $ 267   $ 617   $ 515  
 
Basic weighted average number of limited partner units outstanding 340 323 338 319
 
Basic adjusted net income per limited partner unit $ 0.56   $ 0.82   $ 1.83   $ 1.61  
 
Diluted Adjusted Net Income per Limited Partner Unit
Net income attributable to Plains $ 292 $ 378 $ 821 $ 609
Selected items impacting comparability of net income attributable to Plains (1)   (5 )   (35 )   (10 )   54  
Adjusted net income attributable to Plains 287 343 811 663
Less: General partner's incentive distribution (2) (91 ) (69 ) (177 ) (134 )
Less: General partner 2% ownership (2)   (4 )   (5 )   (13 )   (11 )
Adjusted net income available to limited partners 192 269 621 518
Less: Undistributed earnings allocated and distributions to participating securities (2)   (1 )   (1 )   (3 )   (2 )
Adjusted limited partners' net income $ 191   $ 268   $ 618   $ 516  
 
Diluted weighted average number of limited partner units outstanding 342 326 341 321
 
Diluted adjusted net income per limited partner unit $ 0.56   $ 0.82   $ 1.82   $ 1.61  
 

(1) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2) We calculate adjusted net income available to limited partners based on the distributions pertaining to the current period's net income. After adjusting for the appropriate period's distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method.

 
                 
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)                          

FINANCIAL DATA RECONCILIATIONS

(in millions) Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012

Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Excluding Selected Items Impacting Comparability ("Adjusted EBITDA") Reconciliations

Net Income $ 300 $ 386 $ 837 $ 624
Add: Interest expense 75 75 152 140
Add: Income tax expense 18 10 70 30
Add: Depreciation and amortization   91     86     173     146  
EBITDA $ 484 $ 557 $ 1,232 $ 940
Selected items impacting comparability of EBITDA (1)   (6 )   (35 )   (15 )   55  
Adjusted EBITDA $ 478   $ 522   $ 1,217   $ 995  
 

(1) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

 
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Adjusted EBITDA to Implied Distributable Cash Flow ("DCF")
Adjusted EBITDA $ 478 $ 522 $ 1,217 $ 995
Interest expense (75 ) (75 ) (152 ) (140 )
Maintenance capital (39 ) (40 ) (82 ) (76 )
Current income tax expense (8 ) (6 ) (53 ) (23 )
Equity earnings in unconsolidated entities, net of distributions (1 ) 1 (1 ) -
Distributions to noncontrolling interests (1)   (13 )   (12 )   (25 )   (24 )
Implied DCF $ 342   $ 390   $ 904   $ 732  
 

(1) Includes distributions that pertain to the current period's net income, which are paid in the subsequent period.

 
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Cash Flow from Operating Activities Reconciliation
EBITDA $ 484 $ 557 $ 1,232 $ 940
Current income tax expense (8 ) (6 ) (53 ) (23 )
Interest expense (75 ) (75 ) (152 ) (140 )
Net change in assets and liabilities, net of acquisitions

(70

) (466 )

232

(489 )
Other items to reconcile to cash flows from operating activities:
Equity-indexed compensation expense   27     20     78     60  
Net cash provided by operating activities $

358

  $ 30   $

1,337

  $ 348  

Plains All American Pipeline, L.P.
Roy I. Lamoreaux, 713-646-4222 ? 800-564-3036
Director, Investor Relations
or
Al Swanson, 800-564-3036
Executive Vice President, CFO

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