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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
May 3, 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))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On May 3, 2006, Pacific Energy Partners, L.P. (the "Partnership") issued a
press release announcing its first 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 Registrant 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 (recovery) 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 months ended March
31, 2006 and 2005 is 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 its management to compare cash flows generated by
the Partnership to the cash distributions we 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 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 reimbursed costs allocated to the
Partnership's general partner, which are required to be recorded by the
Partnership as expenses under GAAP; and (v) 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 ended March 31,
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 months
ended March 31, 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.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
99.1 Pacific Energy Partners, L.P. Press Release dated May 3, 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
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Gerald A. Tywoniuk
Senior Vice President and Chief Financial
Officer
Dated: May 3, 2006
EXHIBIT INDEX
Exhibit 99.1 -- Pacific Energy Partners, L.P. Press Release dated May 3, 2006