-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DQZYH5GCNdnI0EtvstwU++qaFUl13ewjKocyOp/+g/lCtbTgDSFZ6ntx74+5oxG6 fWrPheG/clcAP2NF+hMnkw== 0000853890-04-000015.txt : 20040806 0000853890-04-000015.hdr.sgml : 20040806 20040805181347 ACCESSION NUMBER: 0000853890-04-000015 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040630 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KANEB PIPE LINE PARTNERS L P CENTRAL INDEX KEY: 0000853890 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM BULK STATIONS & TERMINALS [5171] IRS NUMBER: 752287571 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-30330 FILM NUMBER: 04955809 BUSINESS ADDRESS: STREET 1: 2435 NORTH CENTRAL EXPRESSWAY CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 9726994031 8-K 1 kpp8k2q04.txt KPP FORM 8-K FOR PRESS RELEASE - -------------------------------------------------------------------------------- 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): August 5, 2004 KANEB PIPE LINE PARTNERS, L.P. (Exact name of registrant as specified in charter) Delaware 001-10311 75-2287571 (State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.) 2435 North Central Expressway Richardson, Texas 75080 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (972) 699-4062 - -------------------------------------------------------------------------------- Item 7. Financial Statements and Exhibits. Exhibit. 99.1 Press Release dated August 5, 2004, reporting financial results for the three and six months ended June 30, 2004. Item 12. Results of Operations and Financial Condition and Exhibit A press release issued by Kaneb Pipe Line Partners, L.P. (the "Registrant") and Kaneb Services LLC on August 5, 2004 regarding financial results for the three and six months ended June 30, 2004 is attached hereto as Exhibit 99.1, and excluding the final paragraph thereof, is incorporated herein by reference. This information is not deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act registration statements. The earnings release of the Registrant includes disclosure of EBITDA and reconciles EBITDA to income before cumulative effect of change in accounting principle. EBITDA is used as a supplemental financial measure to assess: (a) the ability of assets to generate cash sufficient to pay interest costs and make cash distributions to unitholders, (b) the financial performance of assets and (c) the appropriateness of the purchase price of assets being considered for acquisition. As such, this supplemental financial measure provides a basis for investors and management to assess and measure performance over time and in relation to entities who own similar assets. Moreover, the Registrant's revolving credit agreement requires it to use EBITDA in calculating financial ratios. Although EBITDA is used as a supplemental financial measure to assess the Registrant's ability to generate cash sufficient to pay interest costs and make cash distributions to unitholders as noted above, the amount of cash available for such payments is also subject to the Registrant's ability to reserve cash for other uses, such as debt repayments, capital expenditures and operating activities. SIGNATURES 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 hereunto duly authorized. KANEB PIPE LINE PARTNERS, L.P. By: Kaneb Pipe Line Company LLC, as General Partner Dated August _____, 2004 //s// HOWARD C. WADSWORTH ------------------------------------------ Howard C. Wadsworth Vice President, Treasurer and Secretary EX-99 2 kexh9912q04.txt EXHIBIT 99.1 PRESS RELEASE OF EARNINGS Exhibit 99.1 For immediate release For more information, contact: Investor Relations (972) 699-4041 Email: investor@kaneb.com KANEB Reports Second Quarter Results Highlights |X| KPP earnings per unit $0.77 for 2Q04, compared with $0.73 for 2Q03 |X| KSL earnings per share $0.62 for 2Q04, compared with $0.47 for 2Q03 DALLAS, TX (August 5, 2004) - KANEB today reported results for the quarter ended June 30, 2004. The KANEB Companies are Kaneb Services LLC (NYSE: KSL) and Kaneb Pipe Line Partners, L.P. (NYSE: KPP, "the Partnership"). Kaneb Services LLC's wholly owned subsidiary, Kaneb Pipe Line Company LLC, is the Partnership's General Partner. "We are pleased to report our second quarter results for KANEB. The Partnership delivered a 7 percent increase in net income over last year's second quarter. In KSL, due to its unique characteristics, we saw a 13 percent increase in its income from KPP," said John R. Barnes, chairman and CEO of KANEB. Mr. Barnes continued, "The second quarter was very active for KANEB. We announced several significant additions to our KANEB management team -- seasoned leaders whose expertise and experience add strength and capacity to our organization going forward. We again increased our cash distributions -- from $3.36 to $3.42 per year, or 1.8 percent, for each KPP limited partnership unit, and from $1.90 to $1.98 per year, or 4.2 percent, for each KSL common share. And, finally, we closed a terminaling acquisition on the East Coast. We are pleased with the quarter and will continue to build on our momentum going forward." 2Q 2004 RESULTS FOR KANEB SERVICES LLC For the quarter ended June 30, 2004, Kaneb Services LLC's distributions received from KPP, net of general administrative expenses and parent company interest expense (see Supplemental Information in the attached table) increased to $6.2 million, compared with $5.6 million for the second quarter 2003. KSL reported net income was $7.4 million for the second quarter 2004, compared with $5.5 million for the second quarter 2003. Diluted earnings per share were $0.62 for the second quarter, compared with $0.47 for the same period last year. For the six months ended June 30, 2004, Kaneb Services LLC's distributions received from KPP, net of general administrative expenses and parent company interest expense (see Supplemental Information in the attached table) increased to $12.3 million, compared with $10.7 million for the same period in 2003. Revenues for the six months were $487.4 million, compared with $437.1 million last year. For the six month period in 2004, income before gain on issuance of units by KPP and cumulative effect of change in accounting principle (see Supplemental Information in the attached table) was $13.4 million, compared with $11.5 million for the six month period in 2003. Reported net income for the six months was $13.4 million, compared with $22.0 million in the prior year period. KSL is a unique limited liability company, the only publicly traded, cash distributing entity taxed as a partnership that owns the general partner interest of another publicly traded master limited partnership. Its assets include the KPP general partner interest and incentive as well as 5.1 million Partnership units, a wholesale petroleum product marketing company, and a wholly owned subsidiary that manages and operates the pipeline and terminaling assets of KPP. 2Q 2004 RESULTS FOR KANEB PIPE LINE PARTNERS, L.P. Kaneb Pipe Line Partners, L.P. reported revenues of $154.0 million for the second quarter 2004, compared with $146.9 million for the second quarter last year. Net income for the second quarter was $24.3 million, compared with $22.6 million for the second quarter last year. Net income per unit for the quarter was $0.77, compared with $0.73 for the second quarter last year. EBITDA increased (see Supplemental Information in the attached table) to $49.4 million for the second quarter 2004, compared with $46.6 million in the second quarter 2003. For the six months ended June 30, 2004, KPP revenues were $300.4 million, compared with $287.7 million last year. Reported net income for the six months was $45.1 million, compared with $44.4 million in the prior year period. For the six month period in 2004, net income per unit was $1.42 after a cumulative increase of 5 percent in the weighted average number of Partnership units outstanding, compared with $1.50 for the six month period in 2003. EBITDA increased (see Supplemental Information in the attached table) to $95.8 million for the six month period in 2004, compared with $93.3 million for the prior year period. "During the second quarter, we closed an acquisition of a 600,000 barrel terminal in Philadelphia, located next to our existing facility. This gives us additional capacity to serve a strong market area for the Partnership," said Edward D. Doherty, chairman and CEO of Kaneb Pipe Line Company LLC, the Partnership's General Partner. Michael L. Rose, chief operating officer of Kaneb Pipe Line Company LLC, commented on KPP's second quarter results: "The Partnership achieved a $7.0 million revenue increase over the second quarter last year, which includes $3.3 million from terminaling operations, $1.3 million from pipeline operations and $2.4 million from product sales. Pipeline operating income was flat at $12.0 million, while terminaling operating income increased by $3.1 million for the quarter to $20.9 million. We are also having a good year in our bunkering business, growing it through increased sales to overcome most of the anomaly of unusually high margins and volumes experienced in the first half of last year." Pipeline revenues for the second quarter 2004 (see Supplemental Information in the attached table) were $30.6 million, compared with $29.4 million for the second quarter last year. Pipeline operating income was $12.0 million, compared with $12.2 million last year. Petroleum pipeline barrel miles shipped in the second quarter were 5.7 billion, compared with 5.2 billion in the second quarter last year. Terminaling revenues for the second quarter 2004 (see Supplemental Information in the attached table) were $63.4 million, compared with $60.1 million for the second quarter last year. Terminaling operating income increased to $20.9 million, compared with $17.8 million last year. Terminaling average annual barrels of tankage utilized were 48.1 million in the second quarter, compared with 47.9 million last year, and the average annualized revenues per barrel of tankage utilized for the second quarter were $5.31 compared with $5.04 for the second quarter last year. Product sales revenues for the second quarter 2004 (see Supplemental Information in the attached table) were $59.9 million, compared with $57.5 million for the second quarter last year. Product sales operating income was $2.8 million, compared with $3.0 million last year. ABOUT KANEB KANEB is a single business represented by two separate publicly traded entities on the New York Stock Exchange. KANEB's business is focused on mid-stream energy assets -- refined petroleum product pipelines, and petroleum and specialty liquids storage and terminaling facilities. KANEB is a major transporter of refined petroleum products in the Midwest and is the third largest independent liquids terminaling company in the world. Worldwide operations include facilities in 29 states, Canada, the Netherlands Antilles, Australia, New Zealand and the United Kingdom. Its publicly traded entities are Kaneb Services LLC (NYSE: KSL) and Kaneb Pipe Line Partners, L.P., (NYSE: KPP, "the Partnership"). For more information, visit www.kaneb.com. Kaneb Services LLC was formed as a limited liability company in 2001 from assets previously held by Kaneb Services, Inc. (now Xanser Corporation). Those assets include the KPP general partner interest and incentive as well as 5.1 million Partnership units, a wholesale petroleum product marketing company, and a wholly owned subsidiary, Kaneb Pipe Line Company LLC, that manages and operates the pipeline and terminaling assets of KPP. KSL is a unique limited liability company, the only publicly traded, cash distributing entity taxed as a partnership that owns the general partner interest of another publicly traded master limited partnership. Kaneb Pipe Line Partners, L.P., a master limited partnership, was formed in 1989 to own a 2,075 mile common carrier pipeline system from Kansas to North Dakota that has been managed by Kaneb Pipe Line Company LLC since 1953. Pipeline acquisitions in 1995 and 1998 added 725 miles of pipeline in Colorado, Iowa, South Dakota and Wyoming. In 2002, the Partnership acquired the largest fertilizer pipeline in the country, a 2,000-mile pipeline system that runs from the Louisiana Gulf Coast to the upper Midwest states. In December 2002, the Partnership acquired a 400 mile products pipeline and four terminals in North Dakota and Minnesota. The Partnership entered the liquids terminaling business with a large acquisition in 1993, and has more than tripled the size of this operation through subsequent acquisitions. In 2001, the Partnership completed a $165 million acquisition of seven West Coast, U.S. terminals. In 2002, the Partnership completed a $300 million acquisition of two world-class terminaling facilities located in Point Tupper, Nova Scotia, Canada and on the island of St. Eustatius in the Netherlands Antilles and the acquisition of eight bulk liquid storage terminals in Australia and New Zealand. Certain of the Company's statements in this press release are not purely historical, and as such are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding management's intentions, plans, beliefs, expectations or projections of the future. Forward-looking statements involve risks and uncertainties, including without limitation, the various risks inherent in the Company's business, and other risks and uncertainties detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. One or more of these factors have affected, and could in the future affect, the Company's business and financial results in future periods, and could cause actual results to differ materially from plans and projections. There can be no assurance that the forward-looking statements made in this document will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by the Company, or any other person, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to management, and the Company assumes no obligation to update any forward-looking statements. KANEB SERVICES LLC CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, ---------------------- ---------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Consolidated revenues: Services $ 94,058 $ 89,461 $ 184,756 $ 176,155 Products 160,144 129,193 302,625 260,968 --------- --------- --------- --------- Total consolidated revenues 254,202 218,654 487,381 437,123 --------- --------- --------- --------- Consolidated costs and expenses: Cost of products sold 153,364 122,437 289,795 246,764 Operating costs 43,371 42,939 86,795 83,613 Depreciation and amortization 13,738 13,615 27,645 26,647 General and administrative 7,195 6,958 13,697 13,670 --------- --------- --------- --------- Total consolidated costs and expenses 217,668 185,949 417,932 370,694 --------- --------- --------- --------- Consolidated operating income 36,534 32,705 69,449 66,429 Consolidated interest and other income 61 30 93 139 Consolidated interest expense (10,720) (9,117) (21,349) (17,961) --------- --------- --------- --------- Consolidated income before gain on issuance of units by KPP, income taxes, interest of outside non-controlling partners in KPP's net income and cumulative effect of change in accounting principle 25,875 23,618 48,193 48,607 Gain on issuance of units by KPP -- -- -- 10,898 Income tax expense (606) (1,199) (1,769) (2,628) Interest of outside non-controlling partners in KPP's net income (17,874) (16,931) (33,034) (34,517) --------- --------- --------- --------- Income before cumulative effect of change in accounting principle 7,395 5,488 13,390 22,360 Cumulative effect of change in accounting principle - adoption of new accounting standard for asset retirement obligations -- -- -- (313) --------- --------- --------- --------- Net income $ 7,395 $ 5,488 $ 13,390 $ 22,047 ========= ========= ========= ========= Earnings per share: Basic: Before cumulative effect of change in accounting principle $ 0.63 $ 0.48 $ 1.15 $ 1.95 Cumulative effect of change in accounting principle -- -- -- (0.03) --------- --------- --------- --------- $ 0.63 $ 0.48 $ 1.15 $ 1.92 ========= ========= ========= ========= Diluted: Before cumulative effect of change in accounting principle $ 0.62 $ 0.47 $ 1.12 $ 1.91 Cumulative effect of change in accounting principle -- -- -- (0.03) --------- --------- --------- --------- $ 0.62 $ 0.47 $ 1.12 $ 1.88 ========= ========= ========= =========
KANEB SERVICES LLC SUPPLEMENTAL INFORMATION (In thousands, except per share amounts) (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, ---------------------- ---------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Income before cumulative effect of change in accounting principle $ 7,395 $ 5,488 $ 13,390 $ 22,360 Gain on issuance of units by KPP -- -- -- (10,898) --------- --------- --------- --------- Income before gain on issuance of units by KPP and cumulative effect of change in accounting principle $ 7,395 $ 5,488 $ 13,390 $ 11,462 ========= ========= ========= ========= Diluted earnings per share before gain on issuance of units by KPP and cumulative effect of change in accounting principle $ 0.62 $ 0.47 $ 1.12 $ 0.98 ========= ========= ========= ========= Weighted average diluted shares outstanding 11,911 11,747 11,907 11,716 ========= ========= ========= ========= Consolidated revenues (including KPP): Pipeline $ 30,610 $ 29,350 $ 58,513 $ 57,358 Terminaling 63,448 60,111 126,243 118,797 Product Marketing 160,144 129,193 302,625 260,968 --------- --------- --------- --------- $ 254,202 $ 218,654 $ 487,381 $ 437,123 ========= ========= ========= ========= Consolidated operating income (including KPP): Pipeline $ 12,024 $ 12,220 $ 23,234 $ 24,197 Terminaling 20,876 17,795 39,360 35,835 Product Marketing 4,156 3,210 7,910 7,415 General and administrative expenses (522) (520) (1,055) (1,018) --------- --------- --------- --------- $ 36,534 $ 32,705 $ 69,449 $ 66,429 ========= ========= ========= ========= Supplemental cash flow information: Distributions received from KPP $ 6,837 $ 6,320 $ 13,675 $ 12,081 General and administrative expenses (522) (520) (1,055) (1,018) Parent Company interest expense (137) (159) (274) (327) --------- --------- --------- --------- $ 6,178 $ 5,641 $ 12,346 $ 10,736 ========= ========= ========= =========
KANEB PIPE LINE PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, ---------------------- ---------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Revenues: Services $ 94,058 $ 89,461 $ 184,756 $ 176,155 Products 59,900 57,487 115,615 111,550 --------- --------- --------- --------- Total revenues 153,958 146,948 300,371 287,705 --------- --------- --------- --------- Costs and expenses: Cost of products sold 55,167 51,314 106,206 99,200 Operating costs 43,105 42,740 86,315 83,198 Depreciation and amortization 13,729 13,604 27,627 26,626 General and administrative 6,307 6,249 12,011 12,042 --------- --------- --------- --------- Total costs and expenses 118,308 113,907 232,159 221,066 --------- --------- --------- --------- Operating income 35,650 33,041 68,212 66,639 Interest and other income 35 1 40 89 Interest expense (10,512) (8,903) (20,948) (17,518) --------- --------- --------- --------- Income before minority interest, income taxes and cumulative effect of change in accounting principle 25,173 24,139 47,304 49,210 Minority interest in net income (245) (229) (455) (465) Income tax expense (642) (1,310) (1,794) (2,739) --------- --------- --------- --------- Income before cumulative effect of change in accounting principle 24,286 22,600 45,055 46,006 Cumulative effect of change in accounting principle - adoption of new accounting standard for asset retirement obligations -- -- -- (1,577) --------- --------- --------- --------- Net income 24,286 22,600 45,055 44,429 General partner's interest in net income (2,490) (1,954) (4,772) (3,899) --------- --------- --------- --------- Limited partners' interest in net income $ 21,796 $ 20,646 $ 40,283 $ 40,530 ========= ========= ========= ========= Allocation of net income per unit: Before cumulative effect of change in accounting principle $ 0.77 $ 0.73 $ 1.42 $ 1.56 Cumulative effect of change in accounting principle -- -- -- (0.06) --------- --------- --------- --------- $ 0.77 $ 0.73 $ 1.42 $ 1.50 ========= ========= ========= ========= Weighted average number of Partnership units outstanding 28,318 28,318 28,318 26,937 ========= ========= ========= =========
KANEB PIPE LINE PARTNERS, L.P. SUPPLEMENTAL INFORMATION (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, ---------------------- ---------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Revenues (in 000s): Pipeline $ 30,610 $ 29,350 $ 58,513 $ 57,358 Terminaling 63,448 60,111 126,243 118,797 Product sales 59,900 57,487 115,615 111,550 --------- --------- --------- --------- $ 153,958 $ 146,948 $ 300,371 $ 287,705 ========= ========= ========= ========= Operating income (in 000s): Pipeline $ 12,024 $ 12,220 $ 23,234 $ 24,197 Terminaling 20,876 17,795 39,360 35,835 Product sales 2,750 3,026 5,618 6,607 --------- --------- --------- --------- $ 35,650 $ 33,041 $ 68,212 $ 66,639 ========= ========= ========= ========= Depreciation and amortization (in 000s): Pipeline $ 3,624 $ 3,511 $ 7,223 $ 7,008 Terminaling 9,896 9,856 19,980 19,100 Product sales 209 237 424 518 --------- --------- --------- --------- $ 13,729 $ 13,604 $ 27,627 $ 26,626 ========= ========= ========= ========= Capital expenditures (in 000s): Maintenance and environmental $ 5,906 $ 5,723 $ 11,627 $ 12,089 Expansion 4,087 5,055 5,713 10,423 --------- --------- --------- --------- $ 9,993 $ 10,778 $ 17,340 $ 22,512 ========= ========= ========= ========= EBITDA (in 000s): Income before cumulative effect of change in accounting principle $ 24,286 $ 22,600 $ 45,055 $ 46,006 Interest expense 10,512 8,903 20,948 17,518 Income tax expense 642 1,310 1,794 2,739 Depreciation and amortization 13,729 13,604 27,627 26,626 Interest and other income (35) (1) (40) (89) Minority interest in net income 245 229 455 465 --------- --------- --------- --------- $ 49,379 $ 46,645 $ 95,839 $ 93,265 ========= ========= ========= ========= Pipeline operating statistics: Barrel miles shipped on petroleum pipelines (in billions) 5.7 5.2 10.8 10.4 ========= ========= ========= ========= Volumes shipped on anhydrous ammonia pipeline (in thousands of tons) 279 284 576 588 ========= ========= ========= ========= Terminaling operating statistics: Average barrels of tankage utilized (in millions) 48.1 47.9 48.1 47.7 ========= ========= ========= ========= Average annualized revenues per barrel of tankage utilized $ 5.31 $ 5.04 $ 5.28 $ 5.02 ========= ========= ========= =========
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