BUSINESS SEGMENTS

We operate and report in three business segments: (i) Domestic Pipelines & Terminals (formerly known as Pipelines & Terminals); (ii) Global Marine Terminals; and (iii) Merchant Services. In December 2015, we realigned our reportable segments as a result of changes in our organizational structure. We merged our previously reported Development & Logistics segment into the Domestic Pipelines & Terminals segment. We have adjusted our prior period segment information to conform to the current year presentation.

Domestic Pipelines & Terminals

The Domestic Pipelines & Terminals segment receives liquid petroleum products from refineries, connecting pipelines, vessels, and bulk and marine terminals and transports those products to other locations for a fee and provides bulk storage and terminal throughput services. The segment also has butane blending capabilities and provides crude oil services, including train loading/unloading, storage and throughput. This segment owns and operates pipeline systems and liquid petroleum products terminals in the continental United States, including five terminals owned by the Merchant Services segment but operated by the Domestic Pipelines & Terminals segment, and two underground propane storage caverns. Additionally, this segment provides turn-key operations and maintenance of third-party pipelines and performs pipeline construction management services typically for cost plus a fixed fee.

Global Marine Terminals

The Global Marine Terminals segment provides marine accessible bulk storage and blending services, rail and truck rack loading/unloading along with petroleum processing services in the East Coast and Gulf Coast regions of the United States and in the Caribbean. The segment has seven liquid petroleum product terminals located in The Bahamas, Puerto Rico and St. Lucia in the Caribbean and the New York Harbor and Corpus Christi, Texas in the United States.

Buckeye Texas owns storage and marine terminalling facilities that sit along the Corpus Christi Ship Channel in Texas. The Corpus Christi facilities have five vessel berths, including three deep-water docks, two 25,000 barrels per day condensate splitters, approximately 6.0 million barrels of liquid petroleum products storage capacity, including a refrigerated and compressed LPG storage complex, along with rail and truck loading/unloading capabilities. The facilities have three field gathering facilities with associated storage in the Eagle Ford play and pipeline connectivity that allows Buckeye Texas to move Eagle Ford play crude oil and condensate production directly to the terminalling complex in Corpus Christi. These assets form an integrated system with connectivity from the production in the field to the marine terminal infrastructure and the processing complex in Corpus Christi. See Note 3 for further discussion.

Merchant Services

The Merchant Services segment is a wholesale distributor of petroleum products in the United States and in the Caribbean. This segment recognizes revenues when products are delivered. The segment’s products include gasoline, natural gas liquids, ethanol, biodiesel and petroleum distillates such as heating oil, diesel fuel, kerosene and fuel oil. The segment owns five terminals, which are operated by the Domestic Pipelines & Terminals segment. The segment’s customers consist principally of product wholesalers as well as major commercial users of these refined petroleum products.

Natural Gas Storage Disposal Group

In December 2014, we completed the sale of our Natural Gas Storage disposal group for $102.6 million in cash, net of expenses and working capital adjustments of $2.4 million. We reported the final working capital adjustments as discontinued operations in the first quarter of 2015. We have reported the results of operations for the disposal group as discontinued operations for the years ended December 31, 2015, 2014 and 2013. See Note 4 and Note 5 for further information.

Adjusted EBITDA

Adjusted EBITDA is the primary measure used by our senior management, including our Chief Executive Officer, to: (i) evaluate our consolidated operating performance and the operating performance of our business segments; (ii) allocate resources and capital to business segments; (iii) evaluate the viability of proposed projects; and (iv) determine overall rates of return on alternative investment opportunities. Adjusted EBITDA eliminates: (i) non-cash expenses, including but not limited to depreciation and amortization expense resulting from the significant capital investments we make in our businesses and from intangible assets recognized in business combinations; (ii) charges for obligations expected to be settled with the issuance of equity instruments; and (iii) items that are not indicative of our core operating performance results and business outlook.

We believe that investors benefit from having access to the same financial measures that we use and that these measures are useful to investors because they aid in comparing our operating performance with that of other companies with similar operations. The Adjusted EBITDA data presented by us may not be comparable to similarly titled measures at other companies because these items may be defined differently by other companies.

The following tables summarize our financial information by each segment for the periods indicated (in thousands):



	Year Ended December 31,
	2015			2014			2013

Revenue:
Domestic Pipelines & Terminals	$	966,749		$	938,036		$	844,832
Global Marine Terminals	514,301			395,306			252,270
Merchant Services	2,037,664			5,358,626			3,990,575
Intersegment	(65,280		)	(71,721		)	(33,576		)
Total revenue	$	3,453,434		$	6,620,247		$	5,054,101

For the years ended December 31, 2015, 2014 and 2013, no customer contributed 10% or more of consolidated revenue.



	Year Ended December 31,
	2015		2014		2013

Capital additions, net: (1)
Domestic Pipelines & Terminals	$	218,283	$	221,850	$	154,667
Global Marine Terminals	375,267		248,905		206,472
Merchant Services	970		614		113
Total segment capital additions, net	594,520		471,369		361,252
Natural Gas Storage disposal group (2)	—		780		193
Total capital additions, net	$	594,520	$	472,149	$	361,445

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(1)	Amounts represent cash paid for capital expenditures and exclude $27.5 million, $(49.8) million and $23.3 million of non-cash changes in accounts payable and accruals for capital expenditures for the years ended December 31, 2015, 2014 and 2013, respectively. See Note 26 for supplemental cash flow information.


(2)	Assets related to the Natural Gas Storage disposal group were classified as “Assets held for sale” as of the year ended December 31, 2013. In December 2014, we sold our Natural Gas Storage segment and its related assets. See Note 4 for further information.



	December 31,
	2015		2014

Total Assets:
Domestic Pipelines & Terminals (1)	$	3,498,883	$	3,357,410
Global Marine Terminals (2)	4,500,705		4,239,792
Merchant Services	369,693		468,518
Total assets	$	8,369,281	$	8,065,720

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(1)	All equity investments are included in the assets of the Domestic Pipelines & Terminals segment.


(2)	The Global Marine Terminals segment’s long-lived assets consist of property, plant and equipment, goodwill, intangible assets and other non-current assets. Total tangible long-lived assets located in our international locations were $1,506.2 million and $1,520.8 million for the years ended December 31, 2015 and 2014, respectively.

The following tables summarize our financial information for continuing operations, by major geographic area, for the periods indicated (in thousands):



	Year Ended December 31,
	2015		2014		2013

Revenue:
United States	$	3,115,450	$	6,279,142	$	4,834,991
International	337,984		341,105		219,110
Total revenue	$	3,453,434	$	6,620,247	$	5,054,101

The following tables present Adjusted EBITDA by segment and on a consolidated basis and a reconciliation of income from continuing operations to Adjusted EBITDA for the periods indicated (in thousands):



	Year Ended December 31,
	2015		2014			2013

Adjusted EBITDA from continuing operations:
Domestic Pipeline & Terminals	$	522,196	$	532,071		$	486,458
Global Marine Terminals	323,840		239,556			149,740
Merchant Services	22,026		(8,059		)	12,616
Adjusted EBITDA from continuing operations	$	868,062	$	763,568		$	648,814



Reconciliation of Income from continuing operations to Adjusted EBITDA from continuing operations:
Income from continuing operations	$	438,391		$	334,498		$	351,599
Less: Net income attributable to noncontrolling interests	(311		)	(1,903		)	(4,152		)
Income from continuing operations attributable to Buckeye Partners, L.P.	438,080			332,595			347,447
Add: Interest and debt expense	171,330			171,235			130,920
Income tax expense	874			451			1,060
Depreciation and amortization (1)	221,278			196,443			147,591
Non-cash unit-based compensation expense	29,215			20,867			21,013
Acquisition and transition expense (2)	3,127			13,048			11,806
Litigation contingency accrual (3)	15,229			40,000			—
Less: Amortization of unfavorable storage contracts (4)	(11,071		)	(11,071		)	(11,023		)
Adjusted EBITDA from continuing operations	$	868,062		$	763,568		$	648,814

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(1)	Includes 100% of the depreciation and amortization expense of $49.3 million and $12.3 million for Buckeye Texas for the years ended December 31, 2015 and 2014, respectively.


(2)	Acquisition and transition expense consists of transaction costs, costs for transitional employees, and other employee and third-party costs related to the integration of the acquired assets that are non-recurring in nature.


(3)	Represents reductions in revenue related to settlement of a FERC proceeding. See Note 6 for further discussion.


(4)	Represents the amortization of the negative fair values allocated to certain unfavorable storage contracts acquired in connection with the BORCO acquisition.