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 2, 2006
PACIFIC ENERGY PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-31345 68-0490580
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
5900 Cherry Avenue
Long Beach, CA 90805
(Address of principal executive office)
(562) 728-2800
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 2, 2006, Pacific Energy Partners, L.P. (the "Partnership")
issued a press release announcing its second quarter 2006 financial results. The
press release is being furnished with this Current Report on Form 8-K as Exhibit
99.1 and is hereby incorporated herein by reference.
The information provided in this Item 2.02 (including Exhibit 99.1)
shall not be deemed to be "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, nor shall it be incorporated by
reference in any filing made by the Partnership pursuant to the Securities Act
of 1933, as amended, other than to the extent that such filing incorporates by
reference any or all of such information by express reference thereto.
ITEM 7.01 REGULATION FD DISCLOSURE
EBITDA is used as a supplemental performance measure by management, and
the Partnership believes, by external users of its financial statements, such as
investors, commercial banks, research analysts and rating agencies, to assess:
(i) the financial performance of its assets without regard to financing methods,
capital structures or historical cost basis; (ii) the ability of its assets to
generate cash sufficient to pay interest cost and support the Partnership's
indebtedness; (iii) the Partnership's operating performance and return on
capital as compared to those of other companies in the midstream energy sector,
without regard to financing and capital structure; and (iv) the viability of
projects and the overall rates of return on alternative investment
opportunities.
The Partnership defines EBITDA as net income plus interest expense,
income tax expense (benefit) and depreciation and amortization expense. Although
the Partnership is not a taxable entity, its Canadian subsidiaries are taxable
entities.
EBITDA should not be considered an alternative to net income, income
before taxes, cash flows from operations, or any other measure of financial
performance presented in accordance with GAAP. EBITDA is not intended to
represent cash flow. The Partnership's EBITDA may not be comparable to EBITDA or
similarly titled measures of other companies.
Calculations of distributable cash flow for the three and six months
ended June 30, 2006 and 2005 are presented in the press release included as an
exhibit to this Form 8-K. Distributable Cash Flow ("DCF") is a significant
liquidity and performance measure used by management to compare cash flows
generated by the Partnership to the cash distributions the Partnership makes to
its partners and we believe that investors benefit from having access to the
same financial measures being utilized by management. Using this financial
measure, management can quickly compute the coverage ratio of these cash flows
to cash distributions. This is an important financial measure for limited
partners of the Partnership since it is an indicator of its success in providing
a cash return on their investment. Specifically, this financial measure tells
investors whether or not the Partnership is generating cash flows at a level
that can sustain or support an increase in its quarterly cash distributions paid
to partners. Lastly, DCF is the quantitative standard used throughout the
investment community with respect to publicly traded partnerships, because the
value of a partnership unit is in part measured by its yield (which in turn is
based on the amount of cash distributions a partnership pays to its
unitholders). However, DCF is a non-GAAP financial measure and should not be
considered as an alternative to net income, cash flow from operations, or any
other measure of financial performance presented in accordance with accounting
principles generally accepted in the United States. In addition, the
Partnership's DCF may not be comparable to DCF or similarly titled measures of
other companies. The GAAP measure most directly comparable to DCF is net cash
provided by operating activities.
Several adjustments to DCF are required to reconcile it to net cash
provided by operating activities. These adjustments include: (i) adding back or
subtracting net changes in operating assets and liabilities which are not
included in DCF but are considered in net cash provided by operating activities;
(ii) subtracting the Partnership's share of Frontier Pipeline Company's
("Frontier") net income and adding the Partnership's share of Frontier's
distributions to it; (iii) adjusting for employee compensation under the
long-term incentive plan; (iv) deducting cash contributions by the Partnership's
general partner for certain costs, which were required to be recorded by the
Partnership as expenses under GAAP; (v) adding or deducting other non-cash
adjustments; and (vi) adding back sustaining capital expenditures which are not
deducted in arriving at net cash provided by operating activities.
Sustaining capital expenditures are expenditures to replace partially
or fully depreciated assets in order to maintain the existing operating capacity
or efficiency of our assets and extend their useful lives.
Calculations of recurring net income for the three months and six
months ended June 30, 2005, are presented in the press release included as an
exhibit to this Form 8-K. Recurring net income is a non-GAAP financial measure.
This measure is used to more precisely compare year over year net income by
eliminating one-time, non-recurring charges. To calculate recurring net income
for the three and six months ended June 30, 2006, the transaction costs
associated with the Plains All American Pipeline, L.P. merger agreement were
added back to net income and a deferred tax credit, resulting from a change in
Canadian tax rates, was subtracted from net income. To calculate recurring net
income for the six months ended June 30, 2005, the amounts relating to the
expense associated with the Line 63 oil release, the compensation expense due to
the accelerated vesting of the long-term incentive plan, and the transaction
costs associated with the sale of our general partner, which were reimbursed by
LB Pacific, LP and The Anschutz Corporation, were added back to net income.
There were no such adjustments for the three months ended June 30, 2005.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Pacific Energy Partners, L.P. Press Release dated
August 2, 2006.
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 thereunto duly authorized.
PACIFIC ENERGY PARTNERS, L.P.
By: PACIFIC ENERGY GP, LP,
its general partner
By: PACIFIC ENERGY MANAGEMENT LLC,
by its general partner
By: /S/ GERALD A. TYWONIUK
----------------------
Gerald A. Tywoniuk
Senior Vice President and Chief Financial Officer
Dated: August 2, 2006
EXHIBIT INDEX
Exhibit 99.1 -- Pacific Energy Partners, L.P. Press Release dated August 2, 2006