sun-10q_20150930.htm

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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

The registrant had 52,373,639 common units and 10,939,436 subordinated units and 11,018,744 Class A units outstanding at November 2, 2015.

	December 31, 2014			September 30, 2015
Assets
Current assets:
Cash and cash equivalents	$	125,426		$	47,773
Advances from affiliates		396,376			242,639
Accounts receivable, net		257,065			317,840
Receivables from affiliates (MACS: $3,484 at December 31, 2014 and $5,549 at September 30, 2015)		4,941			25,222
Inventories, net		440,294			350,613
Other current assets		72,557			65,782
Total current assets		1,296,659			1,049,869
Property and equipment, net (MACS: $45,340 at December 31, 2014 and $44,161 at September 30, 2015)		2,081,126			2,298,004
Other assets:
Goodwill		1,854,436			1,799,044
Intangible assets, net		893,455			980,591
Other noncurrent assets (MACS: $3,665 at December 31, 2014 and September 30, 2015)		35,568			52,085
Total assets	$	6,161,244		$	6,179,593
Liabilities and equity
Current liabilities:
Accounts payable (MACS: $6 at December 31, 2014 and September 30, 2015)	$	383,496		$	439,158
Accounts payable to affiliates		56,969			35,449
Accrued expenses and other current liabilities (MACS: $484 at December 31, 2014 and September 30, 2015)		291,047			253,777
Current maturities of long-term debt (MACS: $8,422 at December 31, 2014 and $8,393 at September 30, 2015)		13,772			13,762
Total current liabilities		745,284			742,146
Revolving line of credit		683,378			875,000
Long-term debt (MACS: $48,029 at December 31, 2014 and $46,400 at September 30, 2015)		408,826			1,568,447
Deferred income tax liability		391,332			419,303
Other noncurrent liabilities (MACS: $1,190 at December 31, 2014 and September 30, 2015)		89,268			95,552
Total liabilities		2,318,088			3,700,448
Commitments and contingencies (Note 13)
Partners' capital:
Limited partner interest:
Common unitholders - public (20,036,329 units issued and outstanding at December 31, 2014 and 25,536,329 at September 30, 2015)		874,688			1,092,954
Common unitholders - affiliated (4,062,848 units issued and outstanding at December 31, 2014 and 26,837,310 at September 30, 2015)		27,459			1,267,056
Subordinated unitholders - affiliated (10,939,436 units issued and outstanding at December 31, 2014 and September 30, 2015)		—			74,991
Class A unitholders - held by subsidiary (no units issued or outstanding at December 31, 2014 and 11,018,744 at September 30, 2015)		—			—
Total partners' capital		902,147			2,435,001
Predecessor equity		2,946,653			—
Noncontrolling interest		(5,644	)		44,144
Total equity		3,843,156			2,479,145
Total liabilities and equity	$	6,161,244		$	6,179,593

Parenthetical amounts represent assets and liabilities attributable to consolidated variable interest entities
of Mid-Atlantic Convenience Stores, LLC (MACS) as of December 31, 2014 and September 30, 2015.

The accompanying notes are an integral part of these consolidated financial statements.

	July 1, 2014 through August 31, 2014			September 1, 2014 through September 30, 2014			Three Months Ended September 30, 2015
	Predecessor			Successor
Revenues
Retail motor fuel sales	$	—		$	350,689		$	854,140
Wholesale motor fuel sales to third parties		323,281			1,021,267			2,664,186
Wholesale motor fuel sales to affiliates		571,755			271,726			500,362
Merchandise sales		—			115,070			429,891
Rental income		3,424			2,531			18,411
Other		1,117			9,300			20,327
Total revenues		899,577			1,770,583			4,487,317
Cost of sales
Retail motor fuel cost of sales		—			326,538			740,632
Wholesale motor fuel cost of sales		882,666			1,300,425			3,076,942
Merchandise cost of sales		—			78,091			287,364
Other		553			426			1,232
Total cost of sales		883,219			1,705,480			4,106,170
Gross profit		16,358			65,103			381,147
Operating expenses
General and administrative		6,833			10,844			42,752
Other operating		1,169			55,025			183,623
Rent		196			5,048			23,586
Loss (gain) on disposal of assets		(3	)		(34	)		696
Depreciation, amortization and accretion		3,798			13,309			45,601
Total operating expenses		11,993			84,192			296,258
Income from operations		4,365			(19,089	)		84,889
Interest expense, net		(1,491	)		(3,371	)		(28,517	)
Income before income taxes		2,874			(22,460	)		56,372
Income tax expense		(91	)		(980	)		(28,972	)
Net income (loss) and comprehensive income (loss)		2,783			(23,440	)		27,400
Less: Net loss and comprehensive loss attributable to noncontrolling interest		—			—			(12,142	)
Less: Preacquisition income (loss) allocated to general partner		—			(21,684	)		11,998
Net income (loss) and comprehensive income (loss) attributable to partners	$	2,783		$	(1,756	)	$	27,544
Net income (loss) per limited partner unit:
Common (basic and diluted)	$	0.13		$	(0.09	)	$	0.30
Subordinated (basic and diluted)	$	0.13		$	(0.09	)	$	0.52
Weighted average limited partner units outstanding:
Common units - public		10,957,974			10,974,491			24,340,677
Common units - affiliated		79,308			79,308			19,431,349
Subordinated units - affiliated		10,939,436			10,939,436			10,939,436
Cash distribution per unit	$	—		$	0.5457		$	0.7454

The accompanying notes are an integral part of these consolidated financial statements.

	January 1, 2014 through August 31, 2014			September 1, 2014 through September 30, 2014			Nine Months Ended September 30, 2015
	Predecessor			Successor
Revenues
Retail motor fuel sales	$	—		$	350,689		$	2,538,495
Wholesale motor fuel sales to third parties		1,275,422			1,021,267			8,021,741
Wholesale motor fuel sales to affiliates		2,200,394			271,726			1,391,145
Merchandise sales		—			115,070			1,195,306
Rental income		11,690			2,531			54,202
Other		4,683			9,300			59,834
Total revenues		3,492,189			1,770,583			13,260,723
Cost of sales
Retail motor fuel cost of sales		—			326,538			2,281,887
Wholesale motor fuel cost of sales		3,429,169			1,300,425			9,048,913
Merchandise cost of sales		—			78,091			801,231
Other		2,339			426			3,744
Total cost of sales		3,431,508			1,705,480			12,135,775
Gross profit		60,681			65,103			1,124,948
Operating expenses
General and administrative		17,075			10,844			131,175
Other operating		4,964			55,025			504,813
Rent		729			5,048			70,097
Loss (gain) on disposal of assets		(39	)		(34	)		1,531
Depreciation, amortization and accretion		10,457			13,309			144,128
Total operating expenses		33,186			84,192			851,744
Income from operations		27,495			(19,089	)		273,204
Interest expense, net		(4,767	)		(3,371	)		(57,692	)
Income before income taxes		22,728			(22,460	)		215,512
Income tax expense		(218	)		(980	)		(43,657	)
Net income (loss) and comprehensive income (loss)		22,510			(23,440	)		171,855
Less: Net income and comprehensive income attributable to noncontrolling interest		—			—			49,788
Less: Preacquisition income (loss) allocated to general partner		—			(21,684	)		64,789
Net income (loss) and comprehensive income (loss) attributable to partners	$	22,510		$	(1,756	)	$	57,278
Net income (loss) per limited partner unit:
Common (basic and diluted)	$	1.02		$	(0.09	)	$	0.96
Subordinated (basic and diluted)	$	1.02		$	(0.09	)	$	1.21
Weighted average limited partner units outstanding:
Common units - public		10,944,309			10,974,491			21,486,879
Common units - affiliated		79,308			79,308			9,507,137
Subordinated units - affiliated		10,939,436			10,939,436			10,939,436
Cash distribution per unit	$	1.0218		$	0.5457		$	2.0838

The accompanying notes are an integral part of these consolidated financial statements.

	Partnership
	Common Units-Public			Common Units- Affiliated			Subordinated Units- Affiliated			Predecessor Equity			Noncontrolling Interest			Total Equity
Balance at December 31, 2014	$	874,688		$	27,459		$	—		$	2,946,653		$	(5,644	)	$	3,843,156
Contribution of Sunoco LLC from ETP		—			—			—			(775,000	)		—			(775,000	)
Contribution of Susser from ETP Holdco and HHI		—			—			—			(966,855	)		—			(966,855	)
Contribution of assets between entities under common control above historic cost		—			1,348			81,357			(1,090,405	)		—			(1,007,700	)
Cancellation of promissory note with ETP		—			255,000			—			—			—			255,000
Cash distribution to ETP		—			(25,000	)		—			(179,182	)		—			(204,182	)
Cash distribution to unitholders		(42,669	)		(14,543	)		(7,585	)		—			—			(64,797	)
Equity issued to ETP		—			1,007,699			—			—			—			1,007,699
Public equity offering, net		213,213			—			—			—			—			213,213
Unit-based compensation		3,181			1,279			297			—			—			4,757
Other		(5	)		2,004			—			—			—			1,999
Partnership net income		44,546			11,810			922			64,789			49,788			171,855
Balance at September 30, 2015	$	1,092,954		$	1,267,056		$	74,991		$	—		$	44,144		$	2,479,145

The accompanying notes are an integral part of these consolidated financial statements.

	January 1, 2014 through August 31, 2014			September 1, 2014 through September 30, 2014			Nine Months Ended September 30, 2015
	Predecessor			Successor
Cash flows from operating activities:
Net income	$	22,510		$	(23,440	)	$	171,855
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion		10,457			13,309			144,128
Amortization of deferred financing fees		313			1,606			2,291
Loss (gain) on disposal of assets		(39	)		(34	)		1,531
Non-cash unit based compensation		4,692			2,503			3,529
Deferred income tax		(15	)		—			2,042
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(3,939	)		80,911			(60,775	)
Accounts receivable from affiliates		(22,812	)		(5,496	)		(18,273	)
Inventories		(10,557	)		34,241			88,903
Other assets		(938	)		83,862			6,775
Accounts payable		30,838			(186,588	)		66,430
Accounts payable to affiliates		—			(21,249	)		(21,634	)
Accrued liabilities		1,713			38,386			(37,546	)
Other noncurrent liabilities		1,139			(7,507	)		(13,317	)
Net cash provided by operating activities		33,362			10,504			335,939
Cash flows from investing activities:
Capital expenditures		(89,330	)		(20,123	)		(257,729	)
Purchase of intangible assets		(3,660	)		(19,925	)		(63,277	)
Acquisition of Sunoco LLC, net of cash acquired		—			—			(775,000	)
Acquisition of Susser, net of cash acquired		—			—			(966,855	)
Other acquisitions		—			—			(59,193	)
Redemption of marketable securities		25,952			—			—
Proceeds from disposal of property and equipment		—			53			4,419
Net cash used in investing activities		(67,038	)		(39,995	)		(2,117,635	)
Cash flows from financing activities:
Proceeds from issuance of Senior Notes		—			—			1,400,000
Payments on long-term debt		(25,880	)		(30,837	)		(240,388	)
Revolver, borrowings		554,771			110,800			959,668
Revolver, repayments		(466,391	)		(85,390	)		(513,046	)
Advances from affiliates		—			53,125			153,737
Proceeds from equity issued, net		—			—			213,213
Distributions to Parent		(16,669	)		—			(204,182	)
Distributions to Unitholders		(16,485	)		—			(64,852	)
Other		(125	)		—			(107	)
Net cash provided by financing activities		29,221			47,698			1,704,043
Net increase (decrease) in cash		(4,455	)		18,207			(77,653	)
Cash and cash equivalents at beginning of period		8,150			127,400			125,426
Cash and cash equivalents at end of period	$	3,695		$	145,607		$	47,773

The accompanying notes are an integral part of these consolidated financial statements.

The Partnership was formed in June 2012 by Susser Holdings Corporation ("Susser") and its wholly owned subsidiary, Sunoco GP LLC (formerly known as Susser Petroleum Partners GP LLC), our general partner (“General Partner”). On September 25, 2012, we completed our initial public offering (“IPO”) of 10,925,000 common units representing limited partner interests.

On April 27, 2014, Susser entered into an Agreement and Plan of Merger with Energy Transfer Partners, L.P. (“ETP”) and certain other related entities, under which ETP would acquire the outstanding common shares of Susser ("ETP Merger"). The ETP Merger was completed on August 29, 2014. By acquiring Susser, ETP acquired 100% of the non-economic general partner interest and incentive distribution rights in us, which have subsequently been distributed to Energy Transfer Equity, L.P. (“ETE”), and directly and indirectly acquired approximately 11.0 million of our common and subordinated units (representing approximately 50.1% of our then outstanding units). Unvested phantom units that were outstanding on April 27, 2014 vested upon completion of the ETP Merger. See Note 3 for further information.

Effective October 27, 2014, Susser Petroleum Partners LP (NYSE: SUSP) changed its name to Sunoco LP (“SUN”, NYSE: SUN). These changes align the Partnership's legal and marketing name with that of ETP's iconic brand, Sunoco. As used in this document, the terms "Partnership", "SUN", "we", "us" or "our", should be understood to refer to Sunoco LP and our consolidated subsidiaries, unless the context clearly indicates otherwise.

The consolidated financial statements are composed of Sunoco LP, a publicly traded Delaware limited partnership, our majority-owned subsidiaries, and variable interest entities (“VIE”s) in which we are the primary beneficiary. We distribute motor fuels across more than 30 states throughout the East Coast and Southeast regions of the United States from Maine to Florida and from Florida to New Mexico, as well as Hawaii. Starting in fiscal 2014, we are also an operator of convenience retail stores in Virginia, Maryland, Tennessee, Georgia, and Hawaii. As a result of our July 31, 2015 acquisition of Susser from ETP, we are also an operator of convenience retail stores in Texas, Oklahoma, and New Mexico. Our recent acquisitions are intended to complement and expand our wholesale distribution business and diversify both geographically and through retail operations.

On April 1, 2015, we acquired a 31.58% membership interest and 50.1% voting interest in Sunoco, LLC (“Sunoco LLC”). Because we have a controlling financial interest in Sunoco LLC, our consolidated financial statements include 100% of Sunoco LLC. The 68.42% membership interest in Sunoco LLC that we do not own is presented as noncontrolling interest in our consolidated financial statements.

Results of operations for the Mid-Atlantic Convenience Stores, LLC ("MACS"), Sunoco LLC, and Susser acquisitions, deemed transactions between entities under common control, have been included in our consolidated results of operations since September 1, 2014, the date of common control. See Note 3 for further information.

Prior to September 2014, we operated our business as one segment, which was primarily engaged in wholesale fuel distribution. With the addition of convenience store operations we have added a retail operating segment. Our primary operations are conducted by the following consolidated subsidiaries:

All significant intercompany accounts and transactions have been eliminated in consolidation.

Certain line items have been reclassified for presentation purposes to conform to the accounting policies of the consolidated entity. These reclassifications had no impact on gross margin, income from operations, net income and comprehensive income, or the balance sheets or statements of cash flows.

The accompanying interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Pursuant to Regulation S-X, certain information and disclosures normally included in the annual financial statements have been condensed or omitted. The consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on February 27, 2015.

Cash and Cash Equivalents. Sunoco LLC has a treasury services agreement with an indirect wholly-owned subsidiary of ETP, Sunoco, Inc. Pursuant to this agreement, Sunoco LLC participates in Sunoco, Inc.’s centralized cash management program. Under this program, all cash receipts and cash disbursements are processed, together with those of Sunoco, Inc., through Sunoco, Inc.’s cash accounts with a corresponding credit or charge to the advances to/from affiliates account. This cash management policy differs from our remaining cash policies, which are unchanged from December 31, 2014. The net balance of Sunoco LLC is reflected in Advances from affiliates on the consolidated balance sheets.

Segment Reporting. Beginning with the acquisition of MACS in 2014, we operate our business in two primary segments, both of which are included as reportable segments. Our retail segment operates convenience stores selling a variety of merchandise, food items, services and motor fuel. Our wholesale segment sells motor fuel to our retail segment and external customers. Beginning in the first quarter of 2015, we allocated the revenue and costs previously reported in "All Other" to each segment based on the way our Chief Operating Decision Maker ("CODM") measures segment performance (see Note 18).

As of September 30, 2015, there were no other changes in significant accounting policies from those described in the December 31, 2014 audited consolidated financial statements.

FASB ASU No. 2015-03. In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, "Interest - Imputation of Interest - (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." Debt issuance costs related to a recognized debt liability shall be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for financial statements issued with fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The ASU requires retrospective application. We do not anticipate that the adoption of this ASU will have a material impact on the presentation of our financial statements.

FASB ASU No. 2015-05. In April 2015, the FASB issued ASU No. 2015-05 "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement." The amendments in this ASU provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts. The amendments in this ASU are effective for financial statements issued with fiscal years beginning after

December 15, 2015, and interim periods within those fiscal years. We do not anticipate that the adoption of this ASU will have a material impact on the presentation of our financial statements.

FASB ASU No. 2015-06. In April 2015, the FASB issued ASU No. 2015-06 "Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (a consensus of the FASB Emerging Issues Task Force ("EITF")." The amendments in this ASU specify that for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before the date of a dropdown transaction should be allocated entirely to the general partner. In that circumstance, the previously reported earnings per unit of the limited partners (which is typically the earnings per unit measure presented in the financial statements) would not change as a result of the dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class method also are required. The amendments in this ASU are effective for financial statements issued with fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. We currently are in compliance with the amendments in this ASU.

FASB ASU No. 2015-14. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date," which amends the effective date of ASU No. 2014-09. The updates clarify the principles for recognizing revenue based on the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2015-14 amends the effective date to financial statements issued with fiscal years beginning after December 15, 2017, including interim periods within that reporting period, with earlier adoption not permitted. ASU 2015-14 can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. We are continuing to evaluate the impact, if any, that adopting this new accounting standard will have on our revenue recognition policies.

FASB ASU No. 2015-15. In August 2015, the FASB issued ASU No. 2015-15 "Interest – Imputation of Interest (Subtopic 835-30) – Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting)." As the guidance in Update 2015-03 (discussed above) does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements, Update 2015-15 clarifies that such debt issuance costs may be deferred and presented as an asset and subsequently amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The amendments in this Update are effective for financial statements issued with fiscal years beginning after December 15, 2015, including interim periods within that reporting period. The ASU requires retrospective application. We do not anticipate that the adoption of this ASU will have a material impact on the presentation of our financial statements.

FASB ASU No. 2015-16. In August 2015, the FASB issued ASU No. 2015-16 "Business Combinations (Topic 805) – Simplifying the Accounting for Measurement-Period Adjustments." This update requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Additionally, this update requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. Finally, this update requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this Update are effective for financial statements issued with fiscal years beginning after December 15, 2015, including interim periods within that reporting period. We do not anticipate that the adoption of this ASU will have a material impact on the presentation of our financial statements.

As a result of the ETP Merger, we became a consolidated entity of ETP and applied “push down” accounting that required our assets and liabilities to be adjusted to fair value as of August 29, 2014, the date of the merger. Due to the application of "push down" accounting, our consolidated financial statements and certain footnote disclosures are presented in two distinct periods to indicate the application of two different bases of accounting between the periods presented. The periods prior to the ETP Merger are identified as “Predecessor” and the period after the ETP Merger is identified as “Successor”. For accounting purposes, management has designated the ETP Merger date as August 31, 2014, as the operating results and change in financial position for the intervening period is not material.

Management, with the assistance of a third party valuation firm, has determined the fair value of our assets and liabilities as of August 31, 2014. We determined the value of goodwill by giving consideration to the following qualitative factors:

Our identifiable intangible assets consist primarily of dealer relationships, the fair value of which were determined by applying a discounted cash flow approach which was adjusted for customer attrition assumptions and projected market conditions. The amount of goodwill recorded represents the excess of our enterprise value over the fair value of our assets and liabilities. In connection with the finalization of the ETP Merger valuation, an adjustment of $15.1 million was made to reduce the amounts of goodwill and deferred tax liability, and increase property and equipment.

The following table summarizes the final "push down" accounting allocation to our assets and liabilities as of the date presented (in thousands):

On October 1, 2014, we acquired 100% of the membership interests of MACS from ETP for a total consideration of approximately $768.0 million, subject to certain working capital adjustments. The consideration paid consisted of 3,983,540 newly issued Partnership common units and $566.0 million in cash. We initially financed the cash portion of the MACS acquisition by utilizing availability under the 2014 Revolver (as defined below). A portion of the 2014 Revolver borrowing was repaid during the fourth quarter of 2014, using cash from proceeds of an equity offering. MACS has been determined to be the primary beneficiary of certain variable interest entities, and therefore the Partnership consolidates these variable interest entities.

The assets owned by MACS include approximately 100 company-operated retail convenience stores and 200 dealer-operated and consignment sites that were previously acquired by ETP. The combined portfolio includes locations in Virginia, Maryland, Tennessee and Georgia. This was the first transaction completed in a series of previously announced drop-down plans by which ETP intends to transfer its retail and fuel distribution businesses to the Partnership. The acquisition was accounted for as a transaction between entities under common control. Specifically, the Partnership recognized the acquired assets and assumed liabilities at their respective carrying values and no additional goodwill was created. The Partnership's results of operations include MACS' results of operations beginning September 1, 2014, the date of common control. As a result, the Partnership retrospectively adjusted its financial statements to include the balances and operations of MACS from August 31, 2014.

The following table summarizes the preliminary recording of the assets and liabilities at their respective carrying values as of the date presented, including initial tax accounting related to the transaction (in thousands):

Goodwill acquired in connection with the MACS acquisition is deductible for tax purposes.

On December 16, 2014, we completed the acquisition of 100% of the stock of Aloha, the largest independent gasoline marketer and one of the largest convenience store operators in Hawaii, with an extensive wholesale fuel distribution network and six fuel storage terminals on the islands. Aloha currently markets through approximately 100 Aloha, Shell, and Mahalo branded fuel stations throughout the state, about half of which are company operated. The adjusted purchase price for Aloha was approximately $267.0 million in cash, subject to a post-closing earn-out we have estimated at $18.3 million, and certain post-closing adjustments, and before transaction costs and other expenses totaling $2.8 million. As of December 31, 2014, we have recorded on our consolidated balance sheet under other non-current liabilities the $18.3 million contingent consideration, which we based on the internal evaluation of the earnings level that Aloha is expected to achieve during the earnout period of December 16, 2014 through December 31, 2022. Approximately $14.1 million of the cash consideration was placed in an escrow account to satisfy indemnification obligations of the seller and certain environmental claims, pursuant to the terms of the purchase agreement.

Management, with the assistance of a third party valuation firm, preliminarily determined the fair value of the assets and liabilities at the date of acquisition. We determined the value of goodwill by giving consideration to the following qualitative factors:

The value of certain assets and liabilities are preliminary in nature, and are subject to adjustment as additional information is obtained about the facts and circumstances that existed at the acquisition date. As a result, material adjustments to this preliminary allocation may occur in the future. An adjustment of $49.1 million was made to reduce the amount of goodwill related to the Aloha acquisition and increase tangible and intangible assets offset by an increase in deferred tax liability. Management is reviewing the valuation and confirming the results to determine the final purchase price allocation.

The following table summarizes the preliminary allocation of the assets and liabilities as of the date presented (in thousands):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	¨

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	44
Item 4. Controls and Procedures	45

PART II – OTHER INFORMATION
Item 1. Legal Proceedings	46
Item 1A. Risk Factors	46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3. Defaults Upon Senior Securities	46
Item 4. Mine Safety Disclosures	46
Item 5. Other Information	46
Item 6. Exhibits	46

	August 31, 2014
Current assets	$	171,434
Property and equipment		274,510
Goodwill		574,876
Intangible assets		70,473
Other noncurrent assets		811
Current liabilities		(150,657	)
Other noncurrent liabilities		(245,663	)
Net assets	$	695,784

	August 31, 2014
Current assets	$	96,749
Property and equipment		463,772
Goodwill		118,610
Intangible assets		90,676
Other noncurrent assets		48,913
Current liabilities		(45,151	)
Other noncurrent liabilities		(186,661	)
Net assets		586,908
Net deemed contribution		(21,095	)
Cash acquired		(60,798	)
Total cash consideration, net of cash acquired	$	505,015

	December 16, 2014
Current assets	$	67,012
Property and equipment		127,833
Goodwill		105,698
Intangible assets		74,706
Other noncurrent assets