Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2002 or
_____ Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 1-9356
BUCKEYE PARTNERS, L.P.
----------------------
(Exact name of registrant as specified in its charter)
Delaware 23-2432497
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5 Radnor Corporate Center, Suite 500
100 Matsonford Road
Radnor, PA 19087
- --------------------------------- ----------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: 484-232-4000
Not Applicable
- -----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report).
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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at October 25, 2002
- ------------------------- -------------------------------
Limited Partnership Units 26,935,246 Units
BUCKEYE PARTNERS, L.P.
INDEX
Page No.
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Income 1
(unaudited) for the three months and nine months
ended September 30, 2002 and 2001
Condensed Consolidated Balance Sheets (unaudited) 2
September 30, 2002 and December 31, 2001
Condensed Consolidated Statements of Cash Flows 3
(unaudited) for the nine months ended
September 30, 2002 and 2001
Notes to Condensed Consolidated Financial Statements 4-10
Item 2. Management's Discussion and Analysis 11-17
of Financial Condition and Results
of Operations
Item 3. Quantitative and Qualitative Disclosures 17
about Market Risk
Item 4. Controls and Procedures 17-18
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 18
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Buckeye Partners, L.P.
Condensed Consolidated Statements of Income
(In thousands, except per Unit amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
- ------------------ -----------------
2002 2001 2002 2001
---- ---- ---- ----
$63,582 $58,650 Revenue $181,534 $169,934
- ------- ------- -------- --------
Costs and expenses
28,083 26,161 Operating expenses 82,040 76,798
5,136 5,085 Depreciation and amortization 15,419 14,811
3,065 2,834 General and administrative expenses 10,066 8,890
- ------- ------- -------- --------
36,284 34,080 Total costs and expenses 107,525 100,499
- ------- ------- -------- --------
27,298 24,570 Operating income 74,009 69,435
- ------- ------- -------- --------
Other income (expenses)
876 65 Investment income 1,565 463
(5,132) (4,965) Interest and debt expense (15,709) (13,668)
(3,008) (2,964) Minority interests and other (8,897) (8,551)
- ------- ------- -------- --------
(7,264) (7,864) Total other income (expenses) (23,041) (21,756)
- ------- ------- -------- --------
$20,034 $16,706 Net income $ 50,968 $ 47,679
======= ======= ======== ========
Net income allocated to General
$ 180 $ 126 Partner $ 458 $ 405
Net income allocated to Limited
$19,854 $16,580 Partners $ 50,510 $ 47,274
Earnings per Partnership Unit - basic:
Net income allocated to General
and Limited Partners per
$ 0.74 $ 0.62 Partnership Unit $ 1.88 $ 1.76
======= ======= ======= =======
Earnings per Partnership Unit -
assuming dilution:
Net income allocated to General
and Limited Partners per
$ 0.74 $ 0.61 Partnership Unit $ 1.87 $ 1.75
======= ======= ======== ========
See notes to condensed consolidated financial statements.
Buckeye Partners, L.P.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, December 31,
2002 2001
---- ----
Assets
Current assets
Cash and cash equivalents $ 23,466 $ 12,946
Trade receivables 14,589 13,753
Inventories 8,231 7,591
Prepaid and other current assets 22,281 13,441
-------- --------
Total current assets 68,567 47,731
Property, plant and equipment, net 682,798 670,439
Goodwill 11,355 11,355
Other non-current assets 75,275 78,035
-------- --------
Total assets $837,995 $807,560
======== ========
Liabilities and partners' capital
Current liabilities
Accounts payable $ 5,550 $ 7,416
Accrued and other current liabilities 22,498 24,885
-------- --------
Total current liabilities 28,048 32,301
Long-term debt 407,000 373,000
Minority interests 3,426 3,307
Other non-current liabilities 46,215 46,056
-------- --------
Total liabilities 484,689 454,664
-------- --------
Commitments and contingent liabilities - -
Partners' capital
General Partner 2,835 2,834
Limited Partners 351,421 351,057
Receivable from exercise of options (950) (995)
-------- --------
Total partners' capital 353,306 352,896
-------- --------
Total liabilities and partners' capital $837,995 $807,560
======== ========
See notes to condensed consolidated financial statements.
Buckeye Partners, L.P.
Condensed Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
----------------------
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 50,968 $ 47,679
-------- --------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 15,419 14,811
Minority interests 715 696
Change in assets and liabilities:
Trade receivables (836) (916)
Inventories (640) (839)
Prepaid and other current assets (8,840) (1,211)
Accounts payable (1,866) (2,109)
Accrued and other current liabilities (2,387) (1,489)
Other non-current assets (948) 486
Other non-current liabilities 159 (69)
-------- --------
Total adjustments from operating
activities 776 9,360
-------- --------
Net cash provided by operating activities 51,744 57,039
-------- --------
Cash flows from investing activities:
Capital expenditures (23,419) (24,910)
Acquisitions - (61,577)
Net expenditures for disposal of
property, plant and equipment (651) (478)
-------- --------
Net cash used in investing activities (24,070) (86,965)
-------- --------
Cash flows from financing activities:
Proceeds from exercise of unit options 387 1,419
Distributions to minority interests (596) (556)
Proceeds from issuance of long-term debt 34,000 177,000
Payment of long-term debt - (120,000)
Payment of debt issuance fees - (1,165)
Distributions to Unitholders (50,945) (49,486)
-------- --------
Net cash (used in) provided by financing
activities (17,154) 7,212
-------- --------
Net increase (decrease) in cash and cash
equivalents 10,520 (22,714)
Cash and cash equivalents at beginning of
period 12,946 32,216
-------- --------
Cash and cash equivalents at end of period $ 23,466 $ 9,502
======== ========
Supplemental cash flow information:
Cash paid during the period for interest
(net of amount capitalized) $ 15,624 $ 14,271
See notes to condensed consolidated financial statements.
BUCKEYE PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying condensed consolidated
financial statements of Buckeye Partners, L.P. (the "Partnership"), which are
unaudited except that the Balance Sheet as of December 31, 2001 is derived
from audited financial state ments, include all adjustments necessary to
present fairly the Partnership's financial position as of September 30, 2002,
the results of operations for the three and nine month periods ended September
30, 2002 and 2001 and cash flows for the nine month periods ended September
30, 2002 and 2001. The results of operations for the three and nine months
ended September 30, 2002 are not necessarily indicative of the results to be
expected for the full year ending December 31, 2002.
Buckeye Pipe Line Company, L.P., Laurel Pipe Line Company, L.P, Everglades
Pipe Line Company, L.P. and Buckeye Pipe Line Holdings, L.P. (formerly Buckeye
Tank Terminals, L.P.) are referred to collectively as the "Operating
Partnerships."
Pursuant to the rules and regulations of the Securities and Exchange
Commission, the condensed consolidated financial statements do not include all
of the information and notes normally included with financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 2001.
2. ACQUISITIONS
On July 31, 2001, the Partnership acquired a pipeline system and related
terminals from affiliates of TransMontaigne Inc. for a total purchase price of
$61,750,000. Additional costs incurred in connection with the acquisition
amounted to $533,000. The assets included a 482-mile refined petroleum
products pipeline that runs from Hartsdale, Indiana west to Fort Madison, Iowa
and east to Toledo, Ohio, with an 11-mile pipeline connection between major
storage terminals in Hartsdale and East Chicago, Indiana. The assets also
included 3.2 million barrels of pipeline storage and trans-shipment facilities
in Hartsdale and East Chicago, Indiana and Toledo, Ohio; and four truck rack
product terminals located in Bryan, Ohio; South Bend and Indianapolis,
Indiana; and Peoria, Illinois. The pipeline system is operated under the name
of Norco Pipe Line Co., LLC ("Norco"). The terminal assets became part of the
operations of the Partnership's wholly-owned subsidiary, Buckeye Terminals,
LLC. The pipeline system and related terminals are collectively referred to as
the "Norco Assets" or "Norco Operations". The allocated fair value of assets
acquired is summarized as follows:
(In thousands)
Pipe inventory $ 688
Property, plant and equipment 61,595
-------
Total $62,283
=======
Pro forma results of operations for the Partnership, assuming the acquisition
of the Norco Assets had occurred at the beginning of the period indicated
below, are as follows:
(Unaudited) (Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2001 2001
------------- -------------
(In thousands, except
per Unit amounts)
Revenue $60,266 $179,675
Net income $17,427 $ 49,601
Earnings per Partnership Unit - basic $ 0.64 $ 1.83
Earnings per Partnership Unit - basic
excluding amortization of goodwill $ 0.65 $ 1.85
The unaudited pro forma results have been prepared for comparative purposes
only and do not purport to be indicative of the results of operations which
actually would have resulted had the combination been in effect at the
beginning of the periods presented, or of future results of operations of the
entities. The Norco acquisition was accounted for under the purchase method
of accounting.
3. SEGMENT INFORMATION
During the three and nine month periods ended September 30, 2002 and 2001, the
Partnership had one business segment, the transportation segment. The
transportation segment derives its revenues primarily from the transportation
of refined petroleum products that it receives from refineries, connecting
pipelines and marine terminals. Other transportation segment revenues are
received from storage and terminal throughput services of refined petroleum
products and contract operation of petrochemical pipelines. Revenues from the
transportation segment are, for the most part, subject to regulation by the
Federal Energy Regulatory Commission or are under contract.
4. CONTINGENCIES
The Partnership and the Operating Partnerships in the ordinary course of
business are involved in various claims and legal proceedings, some of which
are covered in whole or in part by insurance. Buckeye Pipe Line Company, the
general partner of the Partnership, (the "General Partner") is unable to
predict the timing or outcome of these claims and proceedings. Although it is
possible that one or more of these claims or proceedings, if adversely
determined, could, depending on the relative amounts involved, have a material
effect on the Partnership for a future period, the General Partner does not
believe that their outcome will have a material effect on the Partnership's
consolidated financial condition or annual results of operations.
Environmental
Various claims for the cost of cleaning up releases of hazardous substances
and for damage to the environment resulting from the activities of the
Operating Partnerships or their predecessors have been asserted and may be
asserted in the future under various federal and state laws. The General
Partner believes that the generation, handling and disposal of hazardous
substances by the Operating Partnerships and their predecessors have been in
material compliance with applicable environmental and regulatory requirements.
The total potential remediation costs to be borne by the Operating
Partnerships relating to these clean-up sites cannot be reasonably estimated
and could be material. With respect to certain sites, however, the Operating
Partnership involved is one of several or as many as several hundred
potentially responsible parties that would share in the total costs of clean-
up under the principle of joint and several liability. The General Partner is
unable to determine the timing or outcome of pending proceedings.
5. LONG-TERM DEBT
As of September 30, 2002, the Partnership had $240.0 million of Senior Notes
outstanding. The Senior Notes are scheduled to mature in the period 2020 to
2024 and bear interest from 6.89 percent to 6.98 percent.
During September and October 2001, the Partnership entered into a $277.5
million 5-year Revolving Credit Agreement and a $92.5 million 364-day
Revolving Credit Agreement (the "Credit Facilities") with a syndicate of banks
led by SunTrust Bank. In September 2002 the Partnership entered into a new
364-day Agreement with another syndicate of banks also led by SunTrust Bank
and reduced the maximum amount borrowable to $85.0 million. The Partnership's
ability to draw funds on the 364-day facility is subject to certain regulatory
approvals. Certain covenants in both agreements were amended to eliminate the
requirement of at least one investment grade rating from either Standard and
Poor's or Moody's Investor Services. Together, these Credit Facilities permit
borrowings of up to $362.5 million subject to certain limitations contained in
the Credit Facilities. Borrowings bear interest at the bank's base rate or at
a rate based on the London Interbank Offered Rate ("LIBOR") at the option of
the Partnership. At September 30, 2002, the Partnership had borrowed $167
million under the 5-year Revolving Credit Agreement at an average weighted
LIBOR pricing option rate of 2.92 percent.
The Credit Facilities contain certain covenants that affect the Partnership.
Generally, the Credit Facilities (a) limit outstanding indebtedness of the
Partnership based upon certain financial ratios contained in the Credit
Facilities (b) prohibit the Partnership from creating or incurring certain
liens on its property, (c) prohibit the Partnership from disposing of property
which is material to its operations and (d) limit consolidations, mergers and
asset transfers by the Partnership. At September 30, 2002, the Partnership
was in compliance with the covenants contained in the Credit Facilities.
Concurrent with the 2001 execution of the Credit Facilities, Buckeye repaid
all borrowings outstanding under its $100 million Credit Agreement with First
Union National Bank ("First Union") and its $30 million Loan Agreement with
First Union. Those agreements were terminated with the repayment of the
borrowings.
The fair value of the Partnership's debt is estimated to be $437 million and
$372 million as of September 30, 2002 and December 31, 2001, respectively.
The values at September 30, 2002 and December 31, 2001 were calculated using
interest rates currently available to the Partnership for issuance of debt
with similar terms and remaining maturities.
6. GOODWILL AND INTANGIBLE ASSETS
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets,"
which establishes financial accounting and reporting for acquired goodwill and
other intangible assets. Under SFAS No. 142, goodwill and indefinite-lived
intangible assets are no longer amortized but are reviewed at least annually
for impairment. Intangible assets that have finite useful lives will continue
to be amortized over their useful lives.
SFAS No. 142 requires that goodwill be tested for impairment at least annually
utilizing a two-step methodology. The initial step requires the Partnership
to determine the fair value of each of its reporting units and compare it to
the carrying value, including goodwill, of such reporting unit. If the fair
value exceeds the carrying value, no impairment loss is recognized. However,
a carrying value that exceeds its fair value may be an indication of impaired
goodwill. The amount, if any, of the impairment would then be measured and an
impairment loss would be recognized.
The Partnership has completed the transitional impairment test required upon
adoption of SFAS No. 142. The transitional test, which involved the use of
estimates related to the fair market value of the business operations
associated with the goodwill, did not result in an impairment loss. The
Partnership will continue to evaluate its goodwill, at least annually, and
will reflect the impairment of goodwill, if any, in operating income in the
income statement.
The following represents a pro-forma restatement of 2001 as if SFAS No. 142
had been adopted at the beginning of the year and that goodwill amortization
had been eliminated. The impact on net income, and basic and diluted earnings
per share for the periods indicated below are as follows:
(Unaudited) (Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2001 2001
------------- -------------
(In thousands, except
per Unit amounts)
Reported net income $16,706 $47,679
Adjustment for amortization of
goodwill 210 622
------- -------
Adjusted net income $16,916 $48,301
======= =======
Reported basic earnings per Unit $ 0.62 $ 1.76
Adjustment for amortization of
goodwill - 0.02
------- -------
Adjusted basic earnings per Unit $ 0.62 $ 1.78
======= =======
Reported diluted earnings per Unit $ 0.61 $ 1.75
Adjustment for amortization of
goodwill 0.01 0.03
------- -------
Adjusted diluted earnings per Unit $ 0.62 $ 1.78
======= =======
The Partnership's amortizable intangible assets consist of pipeline rights-of-
way and contracts. The contracts were acquired in connection with the
acquisition of Buckeye Gulf Coast Pipe Lines, LLC in March 1999. At September
30, 2002, the gross carrying amount of the pipeline rights-of-way was
$25,447,000 and accumulated amortization was $2,990,000. Pipeline rights-of-
way are included in property, plant and equipment in the accompanying balance
sheet. At September 30, 2002, the gross carrying amount of the contracts was
$3,600,000 and accumulated amortization was $840,000. For the nine month
periods ended September 30, 2002 and 2001, amortization expense related to
amortizable intangible assets was $561,000 and $528,000, respectively. For the
three month periods ended September 30, 2002 and 2001, amortization expense
related to amortizable intangible assets was $187,000 and $176,000,
respectively. Aggregate amortization expense related to amortizable intangible
assets is estimated to be $748,000 per year for each of the next five years.
The Partnership's only intangible asset not subject to amortization is
goodwill that was recorded in connection with the acquisition of Buckeye
Terminals, LLC in June 2000. The carrying amount of the goodwill was
$11,355,000 at September 30, 2002.
7. PARTNERS' CAPITAL
Partners' capital consists of the following:
Receivable
General Limited from Exercise
Partner Partners of Options Total
------- -------- ------------- -----
(In thousands)
Partners' Capital - 1/1/02 $2,834 $351,057 $(995) $352,896
Net Income 458 50,510 - 50,968
Distributions (457) (50,488) - (50,945)
Payments on unit option loans - - 204 204
Exercise of unit options - 342 (159) 183
------ -------- ----- --------
Partners' Capital - 9/30/02 $2,835 $351,421 $(950) $353,306
====== ======== ===== ========
The following is a reconciliation of basic and diluted net income per
Partnership Unit for the three month and nine month periods ended
September 30:
Three Months Ended September 30,
-------------------------------------------------
2002 2001
--------------------- ---------------------
Income Units Per Income Units Per
(Numer- (Denomi- Unit (Numer- (Denomi- Unit
ator) nator) Amount ator) nator) Amount
------- -------- ------ ------- -------- ------
(In thousands, except per Unit amounts)
Net income $20,034 $16,706
------- -------
Basic earnings per
Partnership Unit 20,034 27,176 $0.74 16,706 27,150 $0.62
Effect of dilutive
securities - options - 48 - - 53 (0.01)
------- ------ ----- ------ ------ -----
Diluted earnings per
Partnership Unit $20,034 27,224 $0.74 $16,706 27,203 $0.61
======= ====== ===== ======= ====== =====
Nine Months Ended September 30,
-------------------------------------------------
2002 2001
--------------------- ---------------------
Income Units Per Income Units Per
(Numer- (Denomi- Unit (Numer- (Denomi- Unit
ator) nator) Amount ator) nator) Amount
------- -------- ------ ------- -------- ------
(In thousands, except per Unit amounts)
Net income $50,968 $47,679
------- -------
Basic earnings per
Partnership Unit 50,968 27,171 $1.88 47,679 27,121 $1.76
Effect of dilutive
securities - options - 54 (0.01) - 70 (0.01)
------- ------ ----- ------ ------ -----
Diluted earnings per
Partnership Unit $50,968 27,225 $1.87 $47,679 27,191 $1.75
======= ====== ===== ======= ====== =====
Options reported as dilutive securities are related to unexercised options
outstanding under the Partnership's Unit Option Plan.
8. CASH DISTRIBUTIONS
The Partnership will generally make quarterly cash distributions of
substantially all of its available cash, generally defined as consolidated
cash receipts less consolidated cash expenditures and such retentions for
working capital, anticipated cash expenditures and contingencies as the
General Partner deems appropriate.
On October 23, 2002, the Partnership declared a cash distribution of $0.625
per unit payable on November 29, 2002 to Unitholders of record on November 6,
2002. The total distribution will amount to approximately $16,970,000.
9. RELATED PARTY ACCRUED CHARGES
Accrued and other current liabilities include $3,168,000 and $6,552,000 due to
the General Partner for payroll and other reimbursable costs at September 30,
2002 and December 31, 2001, respectively.
10. ACCOUNTING PRONOUNCEMENTS
In June 2001, the FASB issued two new pronouncements: SFAS No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS
141 prohibits the use of the pooling-of-interest method for business
combinations initiated after June 30, 2001 and also applies to all business
combinations accounted for by the purchase method that are completed after
June 30, 2001. The Norco acquisition was accounted for in accordance with the
provisions of No. SFAS 141. SFAS 142 is effective for fiscal years beginning
after December 15, 2001 with respect to all goodwill and other intangible
assets recognized in an entity's statement of financial position at that date,
regardless of when those assets were initially recognized. As a result of
SFAS 142, the Partnership's goodwill of $11,355,000 is no longer subject to
amortization (See Note 6).
In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations". SFAS No. 143, addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. The Partnership is currently evaluating
the provisions of SFAS No. 143.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". SFAS No. 144 addresses the financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
The adoption of SFAS No. 144, beginning January 1, 2002, did not have a
material impact on the Partnership's financial statements.
In May 2002, the FASB issued SFAS No. 145, "Recission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
SFAS No. 145 rescinds the automatic treatment of gains or losses from
extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in APB No. 30, "Reporting the Results of
Operations, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions".
SFAS No. 145 also requires sale-leaseback accounting for certain lease
modifications that have economic effects similar to a sale-leaseback
transaction and makes various technical corrections to existing
pronouncements. SFAS No. 145 is effective for all financial statements issued
by the Partnership beginning in 2003. The Partnership does not expect the
adoption of SFAS No. 145 to have a material effect on its consolidated
financial position or results of operations.
In June 2002 the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 nullifies the guidance
provided in Emerging Issues Task Force ("EITF") Issue 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring)." Generally,
SFAS No. 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred, rather than
when management commits to a plan of exit or disposal as is called for by EITF
Issue No. 94-3. SFAS No. 146 is effective for exit or disposal activities
that are initiated after December 31, 2002, with earlier application
encouraged. The Partnership is evaluating the provisions of SFAS No. 146, but
does not expect the adoption of SFAS No. 146 to have a material effect on its
consolidated financial position or results of operations.
11. SUBSEQUENT EVENTS
On October 2, 2002, the Partnership entered into a definitive agreement (the
"Agreement") with Amoco Pipeline Holding Company ("Amoco"), a subsidiary of BP
PLC, to purchase Amoco's approximate 18% ownership interest in Colonial
Pipeline Company ("Colonial") and Colonial Ventures, L.L.C. ("Ventures") for
approximately $295 million. The Agreement is subject to regulatory approval
and certain purchase rights held by the existing equity holders of Colonial
and Ventures.
In connection with the Agreement, the Partnership received commitments from
SunTrust Bank for a $200 million bridge loan as well as lines of credit
sufficient to replace the Partnership's existing $362.5 million Credit
Facilities in the event that required amendments to the existing Credit
Facilities cannot be obtained. On September 30, 2002 the Partnership borrowed
$14 million under its existing 5-year Revolving Credit Agreement to fund a
deposit on the transaction with Amoco and commitment fees to SunTrust Bank
(See Note 5).
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Third Quarter
Revenue for the third quarter 2002 was $63.6 million, which was $4.9 million
or 8.3 percent greater than revenue of $58.7 million for the third quarter
2001. Included in third quarter 2002 revenue is $3.8 million from Norco
Operations compared to $2.2 million of revenue from Norco Operations for the
third quarter 2001. The Norco Operations were acquired on July 31, 2001.
Pipeline volumes transported during the third quarter of 2002 were 1,106,200
barrels per day, 10,600 barrels per day or 1.0 percent greater than volumes of
1,095,600 barrels per day transported in the third quarter 2001. Included in
third quarter 2002 volumes are three months of Norco pipeline volumes of
38,900 barrels per day. Norco volumes averaged 26,900 barrels per day during
its two months of operations in the third quarter 2001. This equates to
17,900 barrels per day on a quarterly basis. Average transportation revenue
was 54.3 cents per barrel during the third quarter 2002 as compared to 53.7
cents per barrel during the third quarter 2001. Revenue was negatively
impacted by approximately $0.7 million due to billing adjustments to certain
customers for tariffs that were incorrectly applied during the first six
months of 2002 ($0.3 million with respect to the first quarter and $0.4
million with respect to the second quarter). Refunds or, in some cases,
additional billings, were issued in the third quarter of 2002 to adjust for
the incorrect tariffs. None of the tariff adjustments related to periods
prior to January 1, 2002.
Gasoline volumes of 578,800 barrels per day for the third quarter of 2002 were
17,600 barrels per day or 3.1 percent greater than the third quarter of 2001.
Norco gasoline volumes were 18,300 barrels per day for the third quarter of
2002. Norco gasoline volumes averaged 13,600 barrels per day during its two
months of operations in the third quarter 2001. This equates to 9,000 barrels
per day on a quarterly basis. In the East, gasoline volumes increased by
approximately 10,700 barrels per day, or 4.2 percent, as demand increased
throughout most of the eastern region and in particular to the upstate New
York and Pittsburgh, Pennsylvania areas. In the Midwest, gasoline volumes of
166,900 barrels per day were 2.4 percent less than the third quarter 2001.
Demand for gasoline was generally lower throughout all areas of the Midwest
region. On the Long Island system, gasoline volumes of 112,500 barrels per day
during the third quarter 2002 were 6.3 percent greater than third quarter 2001
gasoline volumes due to additional available capacity on this system following
reductions in turbine fuel demand after the terrorist attacks on September 11,
2001. On the Jet Lines system, gasoline volumes of 16,300 barrels per day
during the third quarter 2002 were 23.0 percent less than third quarter 2001
gasoline volumes due primarily to the closure of a customer's terminal,
resulting in a shift in supply to an alternate transportation mode.
Distillate volumes of 231,000 barrels per day for the third quarter of 2002
were 8,600 barrels per day or 3.6 percent less than the third quarter of 2001.
Norco distillate volumes were 9,900 barrels per day for the third quarter of
2002. Norco distillate volumes averaged 8,300 barrels per day during its two
months of operations in the third quarter 2001. This equates to 5,500 barrels
per day on a quarterly basis. In the East, distillate volumes declined by
3,800 barrels per day, or 2.7 percent, as demand was weak throughout all areas
and in particular to the Pittsburgh, Pennsylvania area. In the Midwest,
distillate volumes declined by 4,300 barrels per day, or 6.3 percent, on weak
demand throughout the region. Jet Lines and Long Island system distillate
volumes declined by a combined 5,300 barrels per day, or 19.2 percent.
Turbine fuel volumes of 261,700 barrels per day were 2,500 barrels per day or
0.9 percent lower during the third quarter 2002 than the third quarter 2001.
Norco does not transport turbine fuel. Deliveries to New York City airports
during the third quarter 2002 declined by 7,800 barrels per day, or 5.4
percent, as a result of reduced airline travel following the terrorist attacks
on September 11, 2001. Deliveries to Pittsburgh declined by 1,800 barrels per
day, or 15.4 percent, reflecting a cutback in activity by US Airways following
its bankruptcy filing. Largely offsetting these results was a 5,100 barrel
per day, or 31.5 percent, increase in turbine fuel deliveries to Detroit Metro
Airport following quality control issues on an alternate pipeline carrier. In
addition, deliveries to Miami Airport increased 800 barrels per day, or 1.6
percent. Although deliveries to major airports have improved, the outlook for
further recovery of turbine fuel volumes to pre September 11, 2001 levels is
uncertain due to airline schedule reductions and reduced consumer air travel.
Turbine fuel revenue constitutes approximately 15 percent of the Partnership's
revenues.
Buckeye Gulf Coast Pipe Lines, L.P. ("BGC") operating revenues for the third
quarter 2002 increased by $1.9 million over the third quarter 2001 due to
additional contract services being provided.
Costs and expenses for the third quarter 2002 were $36.3 million compared to
$34.1 million for the third quarter 2001. Costs and expenses related to Norco
Operations were $2.2 million for the third quarter 2002 compared to $1.2
million for the third quarter 2001. During the third quarter of 2002,
increases in payroll and payroll benefits expense and in outside service
expense were partially offset by declines in property tax expense from a $1.1
million adjustment related primarily to a favorable settlement of a state
property tax refund claim. The tax settlement resulted in the Partnership
receiving $0.4 million in cash in October 2002 and the reversal of $0.7
million of accrued liabilities.
First Nine Months
Revenue for the first nine months of 2002 was $181.5 million, which was $11.6
million or 6.8 percent greater than revenue of $169.9 million for the first
nine months of 2001. Included in first nine months 2002 revenue is $11.7
million from Norco Operations. Norco was acquired on July 31, 2001 and had
revenue of $2.2 million through September 30, 2001. Volumes for the first
nine months of 2002 were 1,089,600 barrels per day, approximately equal to
volumes of 1,089,400 barrels per day for the first nine months 2001. Included
in the first nine months 2002 volumes are Norco volumes of 38,900 barrels per
day. Norco volumes averaged 26,900 barrels per day during its two months of
operations in the third quarter 2001. This equates to 6,000 barrels per day on
a nine-month basis for 2001. Average transportation revenue was 53.3 cents
per barrel for the first nine months of 2002 compared to 51.9 cents per barrel
during the first nine months of 2001.
Gasoline volumes of 557,900 barrels per day for the first nine months of 2002
were 20,700 barrels per day or 3.9 percent greater than the first nine months
of 2001. Norco gasoline volumes were 17,900 barrels per day for the first
nine months of 2002. Norco gasoline volumes averaged 13,600 barrels per day
during its two months of operations in the third quarter 2001. This equates
to 3,000 barrels per day on a nine-month basis for 2001. In the East,
gasoline volumes increased by approximately 9,500 barrels per day, or 4.0
percent, primarily due to increases in deliveries to the upstate New York and
Pittsburgh, Pennsylvania areas. In the Midwest, gasoline volumes of 162,700
barrels per day were 4.3 percent less than the first nine months of 2001.
Demand for gasoline was generally lower throughout the region with the largest
declines occurring in the Detroit and Bay City, Michigan areas. Long Island
System gasoline was up 6,200 barrels per day or 5.9% due to additional
available capacity on this system following reductions in turbine fuel demand
after September 11, 2001.
Distillate volumes of 252,700 barrels per day for the first nine months of
2002 were 7,300 barrels per day or 2.8 percent less than the first nine months
of 2001. Norco distillate volumes were 13,400 barrels per day for the first
nine months of 2002. Norco distillate volumes averaged 8,300 barrels per day
during its two months of operations in the third quarter 2001. This equates
to 1,900 barrels per day on a nine-month basis for 2001. In the East,
distillate volumes declined by 10,300 barrels per day, or 7.0 percent, while
in the Midwest, distillate volumes declined by 3,800 barrels per day, or 5.4
percent. Jet Lines and Long Island system distillate volumes declined by a
combined 5,000 barrels per day. Demand was weak throughout all systems due to
the unseasonably warm weather experienced during the winter heating season.
Turbine fuel volumes of 248,700 barrels per day were 21,000 barrels per day or
7.8 percent lower during the first nine months of 2002 than the first nine
months of 2001. Norco does not transport turbine fuel. WesPac Pipelines, Ltd.
volumes increased by 4,100 barrels per day on deliveries to San Diego Airport
where transportation service commenced in May 2001. Deliveries to New York
City airports declined by 18,900 barrels per day, or 12.9 percent. Deliveries
to Pittsburgh Airport declined by 1,600 barrels per day, or 13.8 percent,
while deliveries to Miami Airport declined 4,900 barrels per day, or 8.7
percent. Generally, volumes to major airports served by the Partnership
declined as a result of reduced airline travel following the terrorist attacks
on September 11, 2001. Although deliveries to major airports have improved
recently, the outlook for recovery of turbine fuel volumes to pre-September
11, 2001 levels is uncertain due to airline schedule reductions and reduced
consumer air travel.
BGC's operating revenues for the first nine months of 2002 increased by $3.0
million over the first nine months of 2001 operations due to additional
contract services being provided.
Costs and expenses for the first nine months of 2002 were $107.5 million
compared to $100.5 million for the first nine months 2001. Costs and expenses
related to Norco Operations were $6.6 million for the first nine months 2002
compared to $1.2 million in 2001 commencing with its acquisition on July 31,
2001. During the first nine months 2002, increases in payroll and payroll
benefits, outside services and depreciation expense were partially offset by
declines in casualty loss expense and declines in property tax expense. The
decline in property tax expense is the result of a $1.1 million adjustment
related primarily to a favorable settlement of a state property tax refund
claim. The tax settlement resulted in the Partnership receiving $0.4 million
in cash in October 2002 and the reversal of $0.7 million of accrued
liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's financial condition at September 30, 2002 and December 31,
2001 is highlighted in the following comparative summary:
Liquidity and Capital Indicators
As of
-----------------------
9/30/02 12/31/01
------- --------
Current ratio 2.4 to 1 1.5 to 1
Ratio of cash and cash equivalents,
and trade receivables to
current liabilities 1.4 to 1 0.8 to 1
Working capital - in thousands $40,519 $15,430
Ratio of total debt to total capital .54 to 1 .51 to 1
Book value (per Unit) $13.00 $12.98
The Partnership's cash flows from operations are generally sufficient to meet
current working capital requirements. In addition, as described under "Debt
Obligation and Credit Facilities" below, the Partnership has the ability to
borrow up to $362.5 million under a $277.5 million 5-year Revolving Credit
Agreement and an $85.0 million 364-day Revolving Credit Agreement (the "Credit
Facilities").
Cash Provided by Operations
For the nine months ended September 30, 2002, net cash provided by operations
of $51.7 million was principally derived from $66.4 million of net income
before depreciation and amortization. Changes in current assets and current
liabilities resulted in a net cash use of $14.6 million. Increases in prepaid
and other current assets are related to work performed by BGC under a letter
agreement to construct a 90-mile petrochemical pipeline in the Gulf Coast
region (see "Capital Expenditures" below). Accounts payable declined due to
the payment of outstanding invoices while accrued and other current
liabilities decreased primarily as a result of payments made to the General
Partner for its services. Changes in non-current assets and liabilities
resulted in a net cash use of $0.8 million.
Debt Obligation and Credit Facilities
During September and October 2001, the Partnership entered into a $277.5
million 5-year Revolving Credit Agreement and a $92.5 million 364-day
Revolving Credit Agreement with a syndicate of banks led by SunTrust Bank. In
September 2002 the Partnership entered into a new 364-day Agreement with
another syndicate of banks also led by SunTrust Bank and reduced the maximum
amount borrowable to $85.0 million. The Partnership's ability to draw funds
on the 364-day facility is subject to certain regulatory approvals. Certain
covenants in both agreements were amended to eliminate the requirement of an
investment grade rating from either Standard or Poor's or Moody's Investor
Services.
Together, these Credit Facilities permit borrowings of up to $362.5 million
subject to certain limitations contained in the Credit Facilities. Borrowings
bear interest at the bank's base rate or at a rate based on the London
Interbank Offered Rate ("LIBOR") at the option of the Partnership. The $362.5
million is available under the Credit Facilities until September 2003 with
$277.5 available thereafter until September 2006. The Partnership anticipates
renewing the 364-day facility prior to its expiration in September 2003.
At September 30, 2002, the Partnership had borrowed $167 million under the 5-
year Revolving Credit Agreement at an average weighted LIBOR pricing option
rate of 2.92 percent. Borrowings under the 5-year Revolving Credit Agreement
increased by $34 million during the nine months ended September 30, 2002. The
Partnership borrowed $20 million principally to fund BGC's 90-mile pipeline
project in the Gulf Coast region (see "Capital Expenditures" below) as well as
ongoing capital expenditures. Additionally, $14 million was borrowed on
September 30, 2002 and held in cash in anticipation of entering into an
agreement to purchase an approximate 18% interest in each of Colonial Pipeline
Company and Colonial Ventures L.L.C. This agreement was entered into on
October 2, 2002 and the Partnership used the amounts borrowed to fund a
deposit with the seller and transaction costs associated with proposed bank
financing (See Note 11 to the Partnership's financial statements).
At September 30, 2002, the Partnership had $407.0 million in outstanding long-
term debt representing $240.0 million of Senior Notes and $167.0 million of
borrowings under the 5-year revolving credit agreement. The weighted average
interest on all debt outstanding at September 30, 2002 was 5.29 percent.
Capital Expenditures
At September 30, 2002 approximately 81 percent of total consolidated assets
consisted of property, plant and equipment.
Capital expenditures during the nine months ended September 30, 2002 totaled
$23.4 million and were $1.5 million less than capital expenditures for the
nine months ended September 30, 2001. Projected capital expenditures for 2002
are approximately $35 million, including approximately $29 million of
maintenance capital and $6 million of expansion capital, and are expected to
be funded from cash generated by operations and the Credit Facilities.
Planned capital expenditures will enhance pipeline integrity and facilitate
increased pipeline volumes and include, among other things, the renewal and
replacement of tank floors and roofs, upgrades to field instrumentation and
cathodic protection systems and installation and replacement of mainline pipe
and valves. The Partnership had previously estimated capital expenditures to
total approximately $30 million in 2002. The increase in planned capital
expenditures results from the acceleration of certain pipeline integrity
projects that had previously been planned for future periods. The Partnership
continues to evaluate the results of its pipeline integrity inspections and
the level of capital expenditures that will be required to maintain pipeline
integrity and comply with regulatory requirements.
In addition to the above planned 2002 capital expenditures, BGC has entered
into a letter agreement with three major petrochemical companies to construct
a 90-mile pipeline. At September 30, 2002, right-of-way acquisition and the
design stage of the project had been completed and construction was in
progress. Construction is expected to be completed in the fourth quarter of
2002. Under terms of the letter agreement, as of September 30, 2002, the
Partnership has invested $12.5 million (after reimbursements of $9.5 million
from two of the three petrochemical companies) in the pipeline project. This
investment is reflected in prepaid and other assets. The Partnership
investment in the project has been funded by borrowings under the Credit
Facilities. Depending upon the final terms and conditions of the definitive
agreements among the parties to the project, the Partnership expects to be a
co-owner of the pipeline with a potential capital investment of up to $30
million. It is anticipated that upon execution of definitive agreements the
prepaid and other current assets with respect to this project will be
reclassified as property, plant and equipment. It is expected that the
definitive agreements will provide for throughput payments to the project on a
long-term basis. In the event that definite agreements are not reached, BGC
will be reimbursed all costs associated with the pipeline including an imputed
return on its investment. Additional expenditures on this project will
continue to be funded by the Partnership's credit facilities.
OTHER MATTERS
Accounting Pronouncements
In June 2001, the FASB issued two new pronouncements: SFAS No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS
141 prohibits the use of the pooling-of-interest method for business
combinations initiated after June 30, 2001 and also applies to all business
combinations accounted for by the purchase method that are completed after
June 30, 2001. The Norco acquisition was accounted for in accordance with the
provisions of SFAS 141. SFAS 142 is effective for fiscal years beginning
after December 15, 2001 with respect to all goodwill and other intangible
assets recognized in an entity's statement of financial position at that date,
regardless of when those assets were initially recognized. As a result of SFAS
142, the Partnership's goodwill of $11,355,000 is no longer subject to
amortization.
In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations". SFAS No. 143, addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. The Partnership is currently evaluating
the provisions of SFAS 143.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". SFAS 144 addresses the financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS 144 is effective for fiscal years beginning after December 15, 2001. The
adoption of SFAS 144 did not have a material impact on the Partnership's
financial statements.
In May 2002, the FASB issued SFAS No. 145, "Recission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections". SFAS 145 rescinds the automatic treatment of gains or losses
from extinguishments of debt as extraordinary unless they meet the criteria
for extraordinary items as outlined in APB No. 30, "Reporting the Results of
Operations, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions".
SFAS No. 145 also requires sale-leaseback accounting for certain lease
modifications that have economic effects similar to a sale-leaseback
transaction and makes various technical corrections to existing
pronouncements. SFAS No. 145 is effective for all financial statements issued
by the Partnership beginning in 2003. The Partnership does not expect the
adoption of SFAS No. 145 to have a material effect on its consolidated
financial position or results of operations.
In June 2002 the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 nullifies the guidance
provided in Emerging Issues Task Force ("EITF") Issue 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring)." Generally,
SFAS No. 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred, rather than
when management commits to a plan of exit or disposal as is called for by EITF
Issue No. 94-3. SFAS No. 146 is effective for exit or disposal activities
that are initiated after December 31, 2002, with earlier application
encouraged. The Partnership is evaluating the provisions of SFAS No. 146, but
does not expect the adoption of SFAS No. 146 to have a material effect on its
consolidated financial position or results of operations.
Forward Looking Statements
Information contained above in this Management's Discussion and Analysis and
elsewhere in this Report on Form 10-Q with respect to expected financial
results and future events is forward-looking, based on our estimates and
assumptions and subject to risk and uncertainties. For those statements, the
Partnership and the General Partner claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995.
The following important factors could affect our future results and could
cause those results to differ materially from those expressed in our forward-
looking statements: (1) price trends and overall demand for refined petroleum
products in the United States in general and in our service areas in
particular. Economic activity, weather, alternative energy sources,
conservation and technological advances may affect price trends and demands;
(2) changes, if any, in laws and regulations, including, among others, safety,
tax and accounting matters of FERC regulation of our tariff rates; (3)
liability for environmental claims; (4) security issues affecting our assets,
including, among others, potential damage to our assets caused by acts of war
or terrorism; (5) unanticipated capital expenditures and operating expenses to
repair or replace our assets; (6) availability and cost of insurance on our
assets and operations; (7) our ability to successfully identify and complete
strategic acquisitions and make cost saving changes in operations; (8)
expansion in the operations of our competitors; (9) our ability to integrate
any acquired operations into our existing operations; (10) shut-downs or
cutbacks at major refineries that use our services; (11) deterioration in our
labor relations; (12) changes in real property tax assessments; (13)
disruptions to the air travel system; and (14) interest rate fluctuations and
other capital market conditions.
These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in any of our
forward-looking statements. Other unknown or unpredictable factors could also
have a material adverse effect on future results. We undertake no obligation
to update publicly any forward-looking statement whether as a result of new
information or future events.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Operating Partnerships generate revenue primarily from the transportation
of refined petroleum products for third-party customers. The Operating
Partnerships do not own the product they transport, and, therefore, the
Partnership is not exposed to fluctuation in commodity prices and is not
engaged in hedge transactions to manage commodity price risk. The Partnership
is also not engaged in any other type of energy trading or derivative
activity.
The Partnership is exposed to market risks resulting from changes in interest
rates. Market risk represents the risk of loss that may impact the
Partnership's results of operations, consolidated financial position or
operating cash flows. The Partnership is not exposed to any market risk due
to rate changes on its fixed-rate Senior Notes but is exposed to market risk
related to the interest rate on its Credit Facilities.
Market Risk - Trading Instruments
The Partnership is not exposed to market risk from trading instruments.
Market Risk - Other than Trading Instruments
The Partnership has market risk exposure on its Credit Facilities due to its
variable rate pricing that is based on the bank's base rate or at a rate based
on LIBOR. At September 30, 2002, the Partnership had $167.0 million in
outstanding debt under its Credit Facilities that was subject to market risk.
A 1.0 percent increase or decrease in the applicable rate under the Credit
Facilities will result in an interest expense fluctuation of approximately
$1.7 million per year. As of December 31, 2001, the Partnership had $133.0
million in outstanding debt under the Credit Facilities that was subject to
market risk.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
The General Partner's principal executive officer and its principal
financial officer, after evaluating the effectiveness of the Partnership's
disclosure controls and procedures (as defined in Exchange Act Rules 13a -
14 and 15d - 14) as of a date within 90 days prior to the filing of this
report (the "Evaluation Date"), have concluded that, as of the Evaluation
Date, the Partnership's disclosure controls and procedures were adequate
and effective to ensure that material information relating to the
Partnership and its consolidated subsidiaries would be made known to them
by others within those entities.
(b) Changes in internal controls.
There were no significant changes in the Partnership's internal controls
or in other factors that could significantly affect the Partnership's
disclosure controls and procedures subsequent to the date of their
evaluation, nor were there any significant deficiencies or material
weaknesses in the Partnership's internal controls. As a result, no
corrective actions were required or undertaken.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, As adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 2002.
SIGNATURE
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.
BUCKEYE PARTNERS, L.P.
(Registrant)
By: Buckeye Pipe Line Company,
as General Partner
Date: October 25, 2002 By:/s/ Steven C. Ramsey
Steven C. Ramsey
Senior Vice President, Finance
and Chief Financial Officer
(Principal Accounting and
Financial Officer)
CERTIFICATIONS
I, William H. Shea, Jr. certify that:
1. I have reviewed this quarterly report on Form 10-Q of Buckeye Partners,
L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: October 25, 2002 /s/ William H. Shea, Jr.
William H. Shea, Jr.
President and Chief Executive Officer
Buckeye Pipe Line Company
as General Partner of Buckeye Partners, L.P.
I, Steven C. Ramsey certify that:
1. I have reviewed this quarterly report on Form 10-Q of Buckeye Partners,
L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors.
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: October 25, 2002 /s/ Steven C. Ramsey
Steven C. Ramsey
Senior Vice President, Finance
and Chief Financial Officer
Buckeye Pipe Line Company
as General Partner of Buckeye Partners, L.P.