Susser Holdings CORP - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - Susser Holdings CORP	Financial_Report.xls
EX-31.2 - SECTION 302 CFO CERTIFICATION - Susser Holdings CORP	suss-2014629xexhibit312.htm
EX-32.2 - SECTION 906 CFO CERTIFICATION - Susser Holdings CORP	suss-2014629xexhibit322.htm
EX-32.1 - SECTION 906 CEO CERTIFICATION - Susser Holdings CORP	suss-2014629xexhibit321.htm
EX-31.1 - SECTION 302 CEO CERTIFICATION - Susser Holdings CORP	suss-2014629xexhibit311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: June 29, 2014



o	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: 001-33084

SUSSER HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)



Delaware		01-0864257
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

4525 Ayers Street

Corpus Christi, Texas 78415

(Address of principal executive offices)

(361) 884-2463

(Registrant’s telephone number, including area code)

N/A

(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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:



COMMON STOCK, $0.01 PAR VALUE		21,683,099 SHARES
(Class)		(Outstanding at August 1, 2014)

SUSSER HOLDINGS CORPORATION

FORM 10-Q

TABLE OF CONTENTS



	Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	38
Item 4. Controls and Procedures	38

PART II – OTHER INFORMATION
Item 1. Legal Proceedings	40
Item 1A. Risk Factors	40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3. Defaults Upon Senior Securities	40
Item 4. Mine Safety Disclosures	40
Item 5. Other Information	40
Item 6. Exhibits	40

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Susser Holdings Corporation

Consolidated Balance Sheets



	December 29, 2013			June 29, 2014
				unaudited
	(in thousands, except share amounts)
Assets
Current assets:
Cash and cash equivalents (SUSP: $8,150 and $6,769, respectively)	$	22,461		$	26,767
Accounts receivable, net of allowance for doubtful accounts of $480 at December 29, 2013 and $654 at June 29, 2014 (SUSP: $69,005 and $74,212, respectively)	139,146			163,437
Inventories, net (SUSP: $11,122 and $38,971, respectively)	126,521			166,739
Other current assets (SUSP: $66 and $710, respectively)	7,704			8,271
Total current assets	295,832			365,214
Property and equipment, net (SUSP: $180,127 and $239,590, respectively)	736,860			897,523
Other assets:
Marketable securities (SUSP: $25,952 and $0, respectively)	25,952			—
Goodwill (SUSP: $22,823 and $22,823, respectively)	254,285			255,273
Intangible assets, net (SUSP: $22,772 and $24,292, respectively)	41,984			44,912
Other noncurrent assets (SUSP: $188 and $259, respectively)	19,692			22,214
Total assets	$	1,374,605		$	1,585,136
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable (SUSP: $27,810 and $29,520, respectively)	$	189,587		$	222,739
Accrued expenses and other current liabilities (SUSP: $11,427 and $12,960, respectively)	64,571			69,286
Current maturities of long-term debt (SUSP: $500 and $499, respectively)	535			540
Total current liabilities	254,693			292,565
Revolving lines of credit (SUSP: $1,410 and $51,574, respectively)	345,460			529,860
Long-term debt (SUSP: $2,500 and $2,500, respectively)	29,874			3,986
Deferred tax liability, long-term portion (SUSP: $222 and $207, respectively)	77,119			72,620
Other noncurrent liabilities (SUSP: $2,159 and $2,192, respectively)	41,949			40,847
Total liabilities	749,095			939,878
Commitments and contingencies:
Shareholders’ equity:
Susser Holdings Corporation shareholders’ equity:
Common stock, $.01 par value; 125,000,000 shares authorized; 21,634,618 issued and 21,439,944 outstanding at December 29, 2013; 21,702,922 issued and 21,678,700 outstanding as of June 29, 2014	214			216
Additional paid-in capital	285,376			292,164
Treasury stock, common shares, at cost; 194,674 as of December 29, 2013; 24,222 as of June 29, 2014	(5,378		)	(1,955		)
Retained earnings	135,255			145,758
Total Susser Holdings Corporation shareholders’ equity	415,467			436,183
Noncontrolling interest	210,043			209,075
Total shareholders’ equity	625,510			645,258
Total liabilities and shareholders’ equity	$	1,374,605		$	1,585,136

Parenthetical amounts represent assets and liabilities attributable to Susser Petroleum Partners LP ("SUSP") as of December 31, 2013 and June 30, 2014, reportable due to SUSP being a consolidated variable interest entity.

See accompanying notes

Susser Holdings Corporation

Consolidated Statements of Operations and Comprehensive Income

Unaudited



	Three Months Ended						Six Months Ended
	June 30, 2013			June 29, 2014			June 30, 2013			June 29, 2014
	(dollars in thousands, except share and per share amounts)
Revenues:
Merchandise sales	$	274,727		$	318,186		$	522,205		$	594,561
Motor fuel sales	1,276,929			1,541,342			2,514,502			2,907,919
Other income	13,853			15,146			27,229			29,809
Total revenues	1,565,509			1,874,674			3,063,936			3,532,289
Cost of sales:
Merchandise	180,596			210,494			346,241			393,057
Motor fuel	1,216,042			1,470,359			2,400,752			2,784,697
Other	861			1,114			1,895			2,385
Total cost of sales	1,397,499			1,681,967			2,748,888			3,180,139
Gross profit	168,010			192,707			315,048			352,150
Operating expenses:
Personnel	50,655			63,332			101,622			121,598
General and administrative	11,263			18,375			25,310			35,832
Other operating	44,656			52,649			84,703			98,742
Rent	12,164			11,747			23,904			23,573
Loss on disposal of assets and impairment charge	679			898			1,127			1,871
Depreciation, amortization and accretion	15,144			18,338			29,326			35,379
Total operating expenses	134,561			165,339			265,992			316,995
Income from operations	33,449			27,368			49,056			35,155
Other income (expense):
Interest expense, net	(32,667		)	(3,621		)	(42,772		)	(6,793		)
Other miscellaneous	(161		)	—			(239		)	—
Total other expense, net	(32,828		)	(3,621		)	(43,011		)	(6,793		)
Income before income taxes	621			23,747			6,045			28,362
Income tax expense	(47		)	(6,641		)	(1,595		)	(8,030		)
Net income and comprehensive income	574			17,106			4,450			20,332
Less: Net income and comprehensive income attributable to noncontrolling interest	4,834			4,781			8,942			9,830
Net income (loss) and comprehensive income (loss) attributable to Susser Holdings Corporation	$	(4,260	)	$	12,325		$	(4,492	)	$	10,502
Net income (loss) per share attributable to Susser Holdings Corporation:
Basic	$	(0.20	)	$	0.57		$	(0.21	)	$	0.49
Diluted	$	(0.20	)	$	0.56		$	(0.21	)	$	0.48
Weighted average shares outstanding:
Basic	21,138,278			21,521,198			21,103,250			21,435,979
Diluted	21,138,278			21,892,850			21,103,250			21,913,534

See accompanying notes

Susser Holdings Corporation

Consolidated Statements of Cash Flows

Unaudited



	Six Months Ended
	June 30, 2013			June 29, 2014
	(in thousands)
Cash flows from operating activities:
Net income and comprehensive income	$	4,450		$	20,332
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	29,326			35,379
Amortization of deferred financing fees/debt discount, net	1,318			566
Loss on disposal of assets and impairment charge	1,127			1,871
Non-cash stock based compensation	2,818			6,611
Deferred income tax	4,980			(4,609		)
Loss on early extinguishment of debt	26,163			—
Excess tax benefits from stock-based compensation	(1,684		)	(2,801		)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(11,365		)	(24,172		)
Inventories	(15,548		)	(33,340		)
Other assets	(11,974		)	(287		)
Accounts payable	18,840			32,979
Accrued liabilities	(13,435		)	4,496
Other noncurrent liabilities	(7,656		)	(2,726		)
Net cash provided by operating activities	27,360			34,299
Cash flows from investing activities:
Capital expenditures	(98,906		)	(112,343		)
Purchase of intangibles	(868		)	(1,455		)
Proceeds from disposal of property and equipment	86			446
Acquisitions, net of cash acquired	—			(93,915		)
Redemption of marketable securities	565,233			25,952
Purchase of marketable securities	(512,863		)	—
Net cash used in investing activities	(47,318		)	(181,315		)
Cash flows from financing activities:
Payments on long-term debt	(495,378		)	(25,883		)
Revolving line of credit, net	269,280			184,400
Loan origination costs	(3,395		)	—
Proceeds from issuance of equity, net of issuance costs	872			810
Purchase of shares for treasury	(390		)	(8		)
Excess tax benefits from stock-based compensation	1,684			2,801
Distributions to noncontrolling unitholders	(9,559		)	(10,798		)
Net cash provided by (used in) financing activities	(236,886		)	151,322
Net increase (decrease) in cash	(256,844		)	4,306
Cash and cash equivalents at beginning of year	286,232			22,461
Cash and cash equivalents at end of period	$	29,388		$	26,767
Supplemental disclosure of noncash financing activity:
Issuance of stock from treasury	$	(1,137	)	$	—
Supplemental disclosure of noncash investing activity:
Capital expenditures included in accounts payable and accruals at end of period	$	3,495		$	3,771

See accompanying notes

Susser Holdings Corporation

Notes to Consolidated Financial Statements

Unaudited


1.	Organization and Principles of Consolidation

The consolidated financial statements are composed of Susser Holdings Corporation (“SUSS”, "Susser" or the “Company”), a Delaware Corporation, and its consolidated subsidiaries, which operate convenience stores and distribute motor fuels in Texas, New Mexico, Oklahoma and Louisiana. The Company was formed in May 2006 and in October 2006 completed an initial public offering (IPO). Susser, through its subsidiaries and predecessors, has been acquiring, operating and supplying motor fuel to service stations, convenience stores and commercial customers since the 1930’s.

On April 27, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Energy Transfer Partners, L.P. (“ETP”) and certain other related entities, under which ETP will acquire the outstanding common shares of Susser. By acquiring Susser, ETP will also own the general partner interest and the incentive distribution rights in SUSP, and approximately 11 million SUSP common units (representing approximately 50.2% of SUSP’s outstanding units). Under the terms of the Merger Agreement, the shareholders of Susser will have the option to elect to receive either $80.25 in cash or 1.4506 ETP common units, or a combination of both, for each share held. The shareholder election is subject to proration to ensure that aggregate cash paid and common units issued will each represent 50% of the aggregate merger consideration. All equity awards outstanding as of April 27, 2014 that have not vested on the date of completion of the Merger will immediately vest, with the exception of specified awards that will vest on January 2, 2015. For awards with open performance criteria, it will be assumed that performance was met at the target level.

Our board of directors has approved and adopted the Merger Agreement and has agreed to recommend that Susser’s shareholders approve and adopt the Merger Agreement, subject to certain exceptions set forth in the Merger Agreement. Susser has also agreed not to directly or indirectly solicit competing acquisition proposals or, subject to certain exceptions with respect to unsolicited proposals, to enter into discussions concerning, or provide confidential information in connection with, any alternative business combinations. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain circumstances, including in connection with the acceptance of an alternative transaction, Susser may be required to pay ETP a termination fee equal to $68 million. Completion of the Merger is subject to certain customary conditions, including approval by Susser shareholders and receipt of required regulatory approvals. The Merger Agreement also contains customary representations, warranties and covenants by each of the parties thereto. Additional information may be found in our filings with the U.S. Securities and Exchange Commission.

The consolidated financial statements include the accounts of the Company and all of its subsidiaries. The Company’s primary operations are conducted by the following consolidated subsidiaries:


•	Stripes LLC (“Stripes”), a Texas limited liability company, operates convenience stores located in Texas, New Mexico and Oklahoma.


•	Susser Petroleum Company LLC (“SPC”), a Texas limited liability company, operates a motor fuel consignment business and provides transportation logistics services in Texas, New Mexico, Oklahoma and Louisiana. SPC is a wholly owned subsidiary of Stripes. Prior to September 25, 2012, SPC also distributed motor fuels.

•

Effective September 25, 2012, Susser Petroleum Partners LP ("SUSP" or the "Partnership"), a Delaware limited partnership, distributes motor fuel and other petroleum lubricant products through its consolidated subsidiaries to SUSS and third parties in Texas, New Mexico, Oklahoma, and Louisiana. SUSS owns 50.2% of the SUSP common and subordinated units representing limited partner interests and owns 100% of SUSP's general partner, Susser Petroleum Partners GP LLC ("General Partner"). SUSP was formed in June 2012 and completed an initial public offering ("SUSP IPO") on September 25, 2012 (see Note 2 for additional information on SUSP).

The Company also offers environmental, maintenance and construction management services to the petroleum industry (including its own sites) through its subsidiary Applied Petroleum Technologies, Ltd. (“APT”), a Texas limited partnership.

All significant intercompany accounts and transactions have been eliminated in consolidation. The Company’s fiscal year is 52 or 53 weeks and ends on the Sunday closest to December 31. All references to fiscal 2013 refer to the 52-week period ended December 29, 2013. All references to the second quarter and first half 2013 and 2014 refer to the 13-week and 26-week periods ended June 30, 2013 and June 29, 2014, respectively. Stripes and APT follow the same accounting calendar as the Company. SUSP and SPC use calendar month accounting periods and end their fiscal year on December 31. The accompanying Consolidated Financial Statements include the financial results of SUSP and SPC through June 30.

The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The interim consolidated financial statements have been prepared from the accounting records of the Company and its subsidiaries, and all

amounts at June 29, 2014 and for the three and six months ended June 30, 2013 and June 29, 2014 are unaudited. Pursuant to Regulation S-X, certain information and note disclosures normally included in annual financial statements have been condensed or omitted. The information furnished reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented and which are of a normal, recurring nature.

Our results of operations for the three and six months ended June 30, 2013 and June 29, 2014 are not necessarily indicative of results to be expected for the full fiscal year. Our business is seasonal and we generally experience higher levels of revenues during the summer months than during the winter months.

The interim consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2013.

Certain line items have been reclassified for presentation purposes. In the fourth quarter of 2013, the Company revised its presentation of fuel taxes on motor fuel sales at its consignment locations to present such fuel taxes gross in motor fuel sales and cost of motor fuel sales to be consistent with its presentation of all other retail motor fuel sales. The effect of this immaterial error was to increase motor fuel sales and motor fuel cost of sales by $11.6 million and $23.7 million for the three and six months ended June 30, 2013. This revision had no impact on gross margin, income from operations, net income and comprehensive income, or the balance sheets or statements of cash flows.

2.Susser Petroleum Partners LP

Susser Petroleum Partners LP is a publicly traded limited partnership that was formed by SUSS to engage in the wholesale distribution of motor fuels to SUSS and third parties. Its operations are integral to the success of our retail operations and we purchase all of our motor fuel from SUSP. SUSP's assets consist of substantially all of SUSS' motor fuel distribution business (other than most of the motor fuel consignment business and transportation assets) and certain owned and leased convenience store properties.

On September 25, 2012, SUSP completed the SUSP IPO of 10,925,000 common units at a price of $20.50 per unit. The initial public offering represented the issuance by SUSP of a 49.9% noncontrolling interest in SUSP. SUSS currently owns a 50.2% interest in SUSP, all of the incentive distribution rights and 100% of the General Partner, which has a 0.0% non-economic general partner interest in SUSP. We are the primary beneficiary of SUSP's earnings and cash flows and therefore we consolidate SUSP into our financial results. All intercompany transactions with SUSP are eliminated in our consolidated balances.

The subordinated units we hold in the Partnership are eligible to participate in quarterly distributions made by the Partnership after the common units have received the minimum quarterly distribution plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. Subordinated units do not accrue arrearages. The subordinated units will convert into common units on a one-for-one basis on the first business day after the Partnership has paid at least (1)the minimum distribution on each outstanding common and subordinated unit for each of the three consecutive, non-overlapping four-quarter periods ending on or after September 30, 2015, or (2) 150.0% of the minimum quarterly distribution on each outstanding common and subordinated unit and the related distributions on the incentive distribution rights for the four-quarter period immediately preceding that date, in each case provided there are no arrearages on common units at that time.

Effective on the closing date of the SUSP IPO, SUSP entered into a revolving credit agreement ("SUSP Revolver") with a syndicate of banks which provides for borrowings under a revolving credit facility with total loan availability of $250 million. In December 2013, the revolving credit facility commitments were increased by $150 million to a total of $400 million. SUSP also entered into a term loan and security agreement (“SUSP Term Loan”) under which SUSP borrowed $180.7 million concurrent with the closing of its IPO. The SUSP Term Loan was collateralized by marketable securities in an amount equal to at least 98.0% of the SUSP Term Loan balance outstanding. The SUSP Term Loan was repaid and marketable securities liquidated during the first quarter of 2014.

SUSS entered into a guaranty of collection in connection with the SUSP Revolver and SUSP Term Loan, with maximum obligation to SUSS limited to $180.7 million. We are also contingently liable on $1.1 million in mortgage debt for SUSP. For additional information regarding SUSP and our credit and term loan facilities, see Note 9. In addition, we have provided guarantees of payment to certain of SUSP's vendors. With the exception of these liabilities, SUSP's creditors have no recourse to our assets. Furthermore, our creditors have no recourse to the assets of SUSP and its consolidated subsidiaries.

SUSP is a consolidated variable interest entity ("VIE"). The amounts shown in the parenthetical presentation on the Consolidated Balance Sheet represent the assets of SUSP that can only be used to settle the obligations of SUSP, and the liabilities of SUSP for which creditors have no access to the general credit of SUSS, as of December 31, 2013 and June 30, 2014.

The liabilities of SUSP which are guaranteed by us are as follows:



	December 31, 2013		June 30, 2014
	(in thousands)
Accounts payable	$	82,622	$	98,944
Current portion of long-term debt	25		26
Long-term debt and revolver	181,716		181,702

Commercial Agreements

We entered into two long-term, fee-based commercial agreements with SUSP, summarized as follows:

•

The distribution agreement is a 10-year agreement under which SUSP is the exclusive distributor of motor fuel to our existing Stripes® convenience stores and independently operated consignment locations, and to all future sites purchased by SUSP pursuant to the sale and leaseback option under the Omnibus Agreement (described below), at cost, including tax and transportation costs, plus a fixed profit margin of three cents per gallon. In addition, all future motor fuel volumes purchased by SUSS for its own account will be added to the distribution agreement pursuant to the terms of the Omnibus Agreement.


•	The transportation agreement is a 10-year transportation logistics agreement, pursuant to which SUSS arranges for motor fuel to be delivered from SUSP's suppliers to SUSP's customers at rates consistent with those charged to third parties for the delivery of motor fuel.

Omnibus Agreement

In addition to the commercial agreements described above, we also entered into an Omnibus Agreement with SUSP pursuant to which, among other things, SUSP received a three-year option to purchase from SUSS up to 75 of our new or recently constructed Stripes® convenience stores at our cost and lease the stores back to us at a specified rate for a 15-year initial term, with SUSP then being the exclusive distributor of motor fuel to such stores for a period of ten years from each date of purchase. SUSP also received a ten-year right to participate in acquisition opportunities with us, to the extent SUSP and SUSS are able to reach an agreement on terms, and the exclusive right to distribute motor fuel to certain of our newly constructed convenience stores and independently operated consignment locations. In addition, SUSP agreed to reimburse the General Partner and its affiliates for the costs incurred in managing and operating SUSP. The Omnibus Agreement also provides for certain indemnification obligations between SUSS and SUSP, including certain environmental costs and income tax liabilities.

In addition, the Omnibus Agreement provides that for future stores not included in the sale leaseback arrangement, SUSS is obligated to purchase any fuel it sells in the future from SUSP, for a period of ten years, either at a negotiated rate or a defined alternate fuel sales rate. We sold six convenience store properties to SUSP for $31.0 million during the quarter ended June 29, 2014, and these stores were leased back to SUSS. Since SUSP's IPO, we have sold a total of 46 convenience store properties to SUSP, for a total cost of $191.7 million, through June 29, 2014.

3.Acquisitions

The Company completed the acquisition of 47 convenience stores, 19 dealer supply contracts, one stand-alone branded quick-serve restaurant, five raw tracts of land for future store development and the right to acquire two tracts of land from related entities in January 2014 (“Sac-N-Pac Acquisition”). This transaction expands our retail and wholesale operations in a rapidly growing area of central Texas. The acquisition was recorded in the financial statements by allocating the purchase price to the assets acquired, including intangible assets, and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the acquisition cost over the net amounts assigned to the fair value of the assets acquired and the liabilities assumed is recorded as goodwill. Allocation of the purchase price for this acquisition was finalized during the second quarter 2014. The final purchase price allocation is reflected in the financial statements as follows:



	June 29, 2014
	(in thousands)
Assets acquired:
Inventories	$	6,879
Property and equipment	83,212
Total assets	90,091
Liabilities assumed:
Recapture liabilities	$	949
Other liabilities	627
Total liabilities	1,576
Net tangible assets acquired, net of cash	88,515
Goodwill and other intangible assets	5,400
Total consideration paid, net of cash acquired	$	93,915

Pro forma revenue and net income related to the Sac-N-Pac Acquisition is not presented as the pro forma impact is not material to our financial results.


4.	New Accounting Pronouncements

FASB ASU No. 2014-09. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." This update establishes a core principal requiring revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2016 and allows for either full retrospective or modified retrospective application, with early adoption not permitted. The Company has not yet determined the adoption method it will apply and the impact that this guidance will have on its financial statements and related disclosures.

FASB ASU No. 2013-11. In July 2013, the FASB issued ASU No. 2013-11, "Income Taxes - Presentation of an

Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists-

Subtopic 740-10." An unrecognized tax benefit, or a portion of an unrecognized tax benefit, shall be presented in the financial

statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit

carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at

the reporting date the unrecognized tax benefit should be presented in the financial statements as a liability and should not be

combined with deferred tax assets. The ASU was effective for annual and interim periods beginning after December 15, 2013 but early adoption was permitted. The adoption of this guidance did not have an impact on the presentation of our financial statements.

5.Accounts Receivable

Accounts receivable consisted of the following:



	December 29, 2013			June 29, 2014
	(in thousands)
Accounts receivable, trade	$	74,338		$	81,887
Credit card receivables	43,693			57,421
Vendor receivables for rebates, branding and others	10,580			11,354
ATM fund receivables	7,736			10,415
Notes receivable, short-term	670			534
Other receivables	2,609			2,480
Allowance for uncollectible accounts	(480		)	(654		)
Accounts receivable, net	$	139,146		$	163,437


6.	Inventories

Inventories consisted of the following:



	December 29, 2013			June 29, 2014
	(in thousands)
Merchandise	$	63,369		$	68,745
Fuel-retail	37,364			42,914
Fuel-consignment	6,543			7,510
Fuel-other wholesale	8,160			35,644
Lottery	2,362			2,605
Equipment and maintenance spare parts	9,398			9,851
Allowance for inventory shortage and obsolescence	(675		)	(530		)
Inventories, net	$	126,521		$	166,739


7.	Property and Equipment

Property and equipment consisted of the following:



	December 29, 2013		June 29, 2014
	(in thousands)
Land	$	209,081	$	257,876
Buildings and leasehold improvements	427,218		489,014
Equipment	358,413		399,947
Construction in progress	31,685		67,851
Total property and equipment	1,026,397		1,214,688
Less: Accumulated depreciation	289,537		317,165
Property and equipment, net	$	736,860	$	897,523


8.	Goodwill and Other Intangible Assets

Goodwill is not amortized, but is tested annually for impairment, or more frequently if events and circumstances indicate that the asset might be impaired. The annual impairment test is performed as of the first day of the fourth quarter of the fiscal year. At December 29, 2013 and June 29, 2014, we had $254.3 million and $255.3 million, respectively, of goodwill recorded in conjunction with business combinations. The increase of $1.0 million in 2014 is related to the Sac-N- Pac Acquisition. For additional information see Note 3. The 2013 impairment analysis indicated no impairment in goodwill. As of June 29, 2014, we evaluated potential impairment indicators and we believe no indicators of impairment occurred during the first six months of 2014, and we believe the assumptions used in the analysis performed in 2013 are still relevant and indicative of our current operating environment. As a result, no impairment was recorded to goodwill during the first six months of 2014.

The Company has finite-lived intangible assets recorded that are amortized and indefinite-lived assets that do not amortize. The indefinite-lived assets are evaluated annually for impairment. The finite-lived assets consist of supply agreements, favorable/unfavorable leasehold arrangements, loan origination costs, trade names and certain franchise rights, all of which are amortized over the respective lives of the agreements or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. Supply agreements are being amortized over an average period of approximately eight years. Favorable/unfavorable leasehold arrangements are being amortized over an average period of approximately 12 years. The Laredo Taco Company trade name is being amortized over 15 years. The Sac-N-Pac trade name is being amortized over five years. Non-compete intangibles are being amortized over the terms of the agreement and are included in other intangibles below. Loan origination costs are amortized over the life of the underlying debt as an increase to interest expense. Franchise rights are being amortized over the life of the contract.

The following table presents the gross carrying amount and accumulated amortization for each major class of intangible assets, excluding goodwill, at December 29, 2013 and June 29, 2014:



	December 29, 2013							June 29, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
	(in thousands)
Indefinite-lived
Trade name	$	45	$	—		$	45	$	45	$	—		$	45
Franchise rights	489		—			489		489		—			489
Liquor licenses	12,038		—			12,038		12,038		—			12,038
Finite-lived
Franchise rights	—		—			—		263		8			255
Supply agreements	34,573		12,924			21,649		38,119		14,681			23,438
Favorable leasehold arrangements, net	502		(82		)	584		502		(111		)	613
Loan origination costs	5,832		992			4,840		5,832		1,593			4,239
Trade names	4,246		2,264			1,982		5,537		2,513			3,024
Other	389		32			357		905		134			771
Intangible assets, net	$	58,114	$	16,130		$	41,984	$	63,730	$	18,818		$	44,912


9.	Long-Term Debt

Long-term debt consisted of the following:



	December 29, 2013		June 29, 2014
	(in thousands)
SUSS revolving credit agreement, bearing interest at Prime or LIBOR plus applicable margin	$	189,250	$	297,620
SUSP revolving credit agreement, bearing interest at Prime or LIBOR plus applicable margin	156,210		232,240
SUSP term loan, bearing interest at Prime or LIBOR plus applicable margin	25,866		—
Other notes payable	4,543		4,526
Total debt	375,869		534,386
Less: current maturities	535		540
Long-term debt, net of current maturities	$	375,334	$	533,846

The fair value of the revolving credit facilities and other notes payable are estimated to be $534.7 million as of June 29, 2014. Other notes payable consist of long-term, fixed-rate mortgage notes ranging from 4.0% to 7.0% maturing from 2016 to 2031. The fair value of the other notes payable is based on the par value of the loans and an analysis of the net present value of remaining payments at a rate calculated off U.S. Treasury Securities. Fair value approximates carrying value on revolving credit facilities due to their variability. The estimated fair value of the other notes payable is calculated using Level 3 inputs.

SUSP Term Loan

On September 25, 2012, in connection with the SUSP IPO, SUSP entered into a Term Loan and Security Agreement with Bank of America, N.A. for a $180.7 million term loan facility, expiring September 25, 2015 (the “SUSP Term Loan”). Borrowings under the SUSP Term Loan bear interest at (i) a base rate (a rate based off of the higher of (a) the Federal Funds Rate plus 0.5%, (b) Bank of America's prime rate or (c) LIBOR plus 1.00%) or (ii) LIBOR plus 0.25%. During the first quarter of 2014, the SUSP Term Loan was repaid and the collateral account was liquidated.

Credit Facilities

SUSS Revolving Credit Agreement. On April 8, 2013, Susser Holdings, L.L.C. (the "Borrower") entered into a Second Amended and Restated Credit Agreement (“2013 SUSS Revolver”) which provided for a new five year revolving credit facility in an aggregate principal amount of up to $500 million, maturing on April 8, 2018, and replaced the existing $100 million SUSS Revolver. The 2013 SUSS Revolver may be increased by up to $100 million. The Company and each of its existing and future direct and indirect subsidiaries (other than (i) any subsidiary that is a “controlled foreign corporation” under the Internal Revenue Code or a subsidiary that is held directly or indirectly by a “controlled foreign corporation,” (ii) Susser Company, Ltd. (iii) SUSP, its consolidated subsidiaries and its General Partner, and (iv) certain future non-operating subsidiaries) are guarantors under the Credit Agreement.

The interest rates under the 2013 SUSS Revolver are calculated at either a base rate or LIBOR plus a margin of 0.50% to 1.25% (in the case of base rate loans) or 1.50% to 2.25% (in the case of LIBOR loans), based on a leverage grid. In addition, the unused portion of the 2013 SUSS Revolver is subject to a commitment fee ranging from 0.30% to 0.40% based on SUSS' consolidated total leverage ratio. The 2013 SUSS Revolver may be prepaid at any time in whole or in part without premium or penalty, other than breakage costs if applicable, and requires the maintenance of (i) a senior secured leverage ratio of (a) prior to March 31, 2015, not more than 2.75 to 1.00 and (b) on and after March 31, 2015, not more than 2.50 to 1.00 and (ii) a fixed charge coverage ratio of not less than 1.50 to 1.00. We were in compliance with all financial covenants as of June 29, 2014.

The loans under the 2013 SUSS Revolver are secured by a first priority security interest in (a) 100% of the Borrower's outstanding equity interests, 100% of the outstanding equity interests of each of the Company's existing and future direct and indirect subsidiaries (subject to certain exclusions and limited, in the case of each foreign subsidiary (i) to first-tier foreign subsidiaries and (ii) with respect to any controlled foreign corporation, to 65% of the outstanding voting stock of each such foreign subsidiary); (b) all present and future intercompany debt of the borrower and Stripes Holdings LLC and each subsidiary guarantor; (c) certain real property, including equipment and fixtures located on such real property, owned by the subsidiary guarantors; (d) substantially all of the present and future personal property and assets of the borrower and Stripes Holdings LLC and each subsidiary guarantor, including, but not limited to, inventory, accounts receivable, license rights, and other general intangibles, insurance proceeds and instruments; and (e) all proceeds and products of all of the foregoing. SUSP, its consolidated subsidiaries and its General Partner are not guarantors of the 2013 SUSS Revolver.

As of June 29, 2014, we had $297.6 million in borrowings under the 2013 SUSS Revolver and $2.0 million in standby letters of credit. The unused availability on the 2013 SUSS Revolver at June 29, 2014, was $200.4 million.

SUSP Revolving Credit Facility. On September 25, 2012, in connection with the SUSP IPO, SUSP entered into a $250 million Revolving Credit Agreement with a syndicate of banks (the “SUSP Revolver”), expiring September 25, 2017. In December 2013, the SUSP Revolver commitments were increased by $150 million for a total of $400 million. The facility can be increased from time to time upon SUSP's written request, subject to certain conditions, up to an additional $100 million. Borrowings under this facility bear interest at a (i) base rate plus an applicable margin ranging from 1.00% to 2.25% or (ii) LIBOR plus an applicable margin ranging from 2.00% to 3.25% (determined with reference to SUSP's consolidated total leverage ratio). In addition, the unused portion of the SUSP Revolver is subject to a commitment fee ranging from 0.375% to 0.50%, based on SUSP's consolidated total leverage ratio.

The SUSP Revolver requires SUSP to maintain a minimum consolidated interest coverage ratio of not less than 2.50 to 1.00, and a consolidated total leverage ratio of not more than 4.50 to 1.00, subject to certain adjustments. Indebtedness under the SUSP Revolver is secured by a security interest in, among other things, all of SUSP's present and future personal property and all of the personal property of SUSP's guarantors, the capital stock of SUSP subsidiaries, and any intercompany debt. Additionally, if SUSP's consolidated total leverage ratio exceeds 3.00 to 1.00 at the end of any fiscal quarter, SUSP will be required, upon request of the lenders, to grant mortgage liens on all real property owned by the SUSP and its subsidiary guarantors.

As of June 29, 2014, the amount borrowed on the SUSP Revolver was $232.2 million and there were $10.9 million in standby letters of credit. The unused availability on the SUSP Revolver at June 29, 2014, was $156.9 million. SUSP was in compliance with all covenants at June 29, 2014.

Guaranty of SUSP Term Loan and SUSP Revolver

On September 25, 2012, in connection with the SUSP IPO, the Company entered into a Guaranty of Collection (the “Guaranty”) in connection with the SUSP Term loan and the SUSP Revolver. Pursuant to the Guaranty, SUSS guarantees the collection of (i) the principal amount outstanding under the SUSP Term Loan and (ii) the SUSP Revolver. SUSS' obligation under the Guaranty is limited to $180.7 million. SUSS is not required to make payments under the Guaranty unless and until (a) SUSP has failed to make a payment on the SUSP Term Loan or SUSP Revolver, (b) the obligations under such facilities

have been accelerated, (c) all remedies of the applicable lenders to collect the unpaid amounts due under such facilities, whether at law or equity, have been exhausted and (d) the applicable lenders have failed to collect the full amount owing on such facilities. In addition, effective September 25, 2012, the Company entered into a Reimbursement Agreement with Susser Petroleum Property Company LLC ("Propco"), a wholly owned subsidiary of SUSP, whereby the Company is obligated to reimburse Propco for any amounts paid by Propco under the guaranty of the SUSP Revolver executed by SUSP's subsidiaries. The Company's exposure under this reimbursement agreement is limited, when aggregated with its obligation under the Guaranty, to $180.7 million.

Fair Value Measurements

We use fair value measurements to measure, among other items, purchased assets and investments, leases and derivative contracts. We also use them to assess impairment of properties, equipment, intangible assets and goodwill. Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters, or is derived from such prices or parameters. Where observable prices or inputs are not available, use of unobservable prices or inputs is used to estimate the current fair value, often using an internal valuation model. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the item being valued.

ASC 820 “Fair Value Measurements and Disclosures” prioritizes the inputs used in measuring fair value into the following hierarchy:



Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;

Level 3	Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.


10.	Commitments and Contingencies

Leases

The Company leases a portion of its convenience store properties under non-cancellable operating leases whose initial terms are typically 10 to 20 years, along with options that permit renewals for additional periods. Minimum rent is expensed on a straight-line basis over the term of the lease. In addition to minimum rental payments, certain leases require additional contingent payments based on sales or motor fuel volume. The Company is typically responsible for payment of real estate taxes, maintenance expenses and insurance.

The components of net rent expense are as follows:



	Three Months Ended						Six Months Ended
	June 30, 2013			June 29, 2014			June 30, 2013			June 29, 2014
	(in thousands)
Cash rent:
Store base rent	$	11,900		$	12,072		$	23,775		$	24,094
Equipment rent	433			300			819			647
Contingent rent	76			81			146			149
Total cash rent	12,409			12,453			24,740			24,890
Non-cash rent:
Straight-line rent	312			(54		)	306			(107		)
Amortization of deferred gain	(557		)	(652		)	(1,142		)	(1,210		)
Net rent expense	$	12,164		$	11,747		$	23,904		$	23,573

Letters of Credit

We were contingently liable for $2.0 million related to irrevocable letters of credit required by various insurers and suppliers at June 29, 2014, under the SUSS Revolver. In addition there was $10.9 million related to irrevocable letters of credit required by various suppliers at June 29, 2014, under the SUSP Revolver.

Other

The Company periodically undergoes audits of sales and use tax. The Texas Comptroller of Public Accounts recently issued a sales and use tax deficiency determination in the amount of approximately $4.2 million, plus interest, for the period covering September 1, 2007 through November 30, 2011. The Company has reasonable arguments to support the position that substantial portions of the deficiency determinations are not due and owing. The Company intends to vigorously defend its position and believes its financial statements appropriately reflect any amounts that may be due as a result of this sales and use tax audit.

On May 6, 2014, two purported class action lawsuits were filed in the Court of Chancery of the State of Delaware challenging the proposed acquisition of the Company by Energy Transfer Partners, L.P.: John Bruce Copeland, III, On Behalf of Himself and All Others Similarly Situated, Plaintiff, v. Susser Holdings Corporation, et. al., Defendants, C.A. No. 9613-VCG; and Natalie Gordon, On Behalf of Herself and All Others Similarly Situated, Plaintiff, v. Susser Holdings Corporation, et. al., Defendants, C.A. No. 9620-VCG. Both complaints name as defendants the Company, the members of our Board of Directors, and Energy Transfer Partners, L.P. and related entities. The complaints assert claims for breach of fiduciary duty against the members of our Board of Directors and against the Company and Energy Transfer Partners, L.P. and related entities for aiding and abetting breach of fiduciary duty. The complaints allege that the proposed merger consideration is inadequate and unfair, that the process leading up to the proposed acquisition is unfair, and that the merger agreement contains preclusive deal protection devices. The complaints seek to enjoin the proposed acquisition or rescind the acquisition to the extent it is consummated, rescissory damages, an accounting, a constructive trust, attorneys’ fees, expert fees and costs, and other equitable relief. On June 17, 2014, the plaintiffs filed an amended consolidated class action complaint. The Company believes that the allegations of the complaints are without merit.


11.	Interest Expense and Interest Income

The components of net interest expense are as follows:



	Three Months Ended						Six Months Ended
	June 30, 2013			June 29, 2014			June 30, 2013			June 29, 2014
	(in thousands)
Cash interest expense	$	24,445		$	3,620		$	34,335		$	6,742
Capitalized interest	(268		)	(248		)	(758		)	(336		)
Amortization of loan costs and issuance discount, net	8,601			301			9,419			566
Cash interest income	(111		)	(52		)	(224		)	(179		)
Interest expense, net	$	32,667		$	3,621		$	42,772		$	6,793


12.	Income Tax

Our interim provision for income taxes is based on our estimated annual effective tax rate for the year of 27.8% plus any discrete items. For the six months ended June 29, 2014, our computed tax rate was 28.3%, as compared to the computed tax rate for the six months ended June 30, 2013 of 26.4%. These tax rates are computed as a percentage of net income before taxes and before reduction for noncontrolling interest. Included in our provision for income tax is a tax imposed by the state of Texas of 0.5% of gross profit in Texas (“margin tax”). SUSP, as a limited partnership, is not generally subject to state and federal income tax, with the exception of the margin tax in the state of Texas. SUSP is included in the SUSS combined margin tax return. In addition, SUSS includes its share of the components of SUSP's taxable income in its U.S. and state income tax returns.

It is the Company’s policy to recognize interest and penalties related to uncertain tax positions in general and administrative expense. The Company files several income tax returns as well as either state income or franchise tax returns in Texas, Oklahoma, New Mexico and Louisiana. The Company is subject to examinations in all jurisdictions for all returns for the 2010 through 2013 tax years.

As of June 29, 2014, all tax positions taken by the Company are considered highly certain or more likely than not. There are no positions the Company reasonably anticipates will significantly increase or decrease within 12 months of the reporting date, and therefore no adjustments have been recorded related to unrecognized tax benefits.

13.Shareholders’ Equity

A total of 125,000,000 shares of common stock $0.01 par value, have been authorized, of which 21,634,618 were issued and 21,439,944 were outstanding as of December 29, 2013, and 21,702,922 were issued and 21,678,700 were outstanding as of June 29, 2014. Included in these amounts are 159,558 and 133,872 shares as of December 29, 2013 and June 29, 2014, respectively, which represent restricted shares that are not yet vested. Treasury shares consist of 194,674 and 24,222 shares as of December 29, 2013 and June 29, 2014, respectively, which were originally issued as shares of restricted stock which were forfeited prior to vesting, were withheld to pay employee payroll taxes upon vesting or were repurchased in the open market. Options to purchase 335,990 shares of common stock are outstanding as of June 29, 2014, 237,853 of which are vested. Additionally, 456,949 restricted stock units are outstanding as of June 29, 2014, of which 329,666 remain subject to performance criteria in addition to time-vesting (See Note 14).

A total of 25,000,000 preferred shares have been authorized, par value $0.01 per share, although none have been issued.

Noncontrolling interest primarily represents the equity in SUSP owned by outside limited partners (see Note 2).

Changes to equity during the six months ended June 29, 2014 are presented below:



	Susser Holdings Corporation Shareholders' Equity			Noncontrolling Interest			Total Shareholders' Equity
	(in thousands)
Balance at December 29, 2013	$	415,467		$	210,043		$	625,510
Net income	10,502			9,830			20,332
Non-cash stock-based compensation	6,611			—			6,611
Excess tax benefits on stock-based compensation	2,801			—			2,801
Issuance of common stock	810			—			810
Repurchase of common stock	(8		)	—			(8		)
Distributions to noncontrolling interest	—			(10,798		)	(10,798		)
Balance at June 29, 2014	$	436,183		$	209,075		$	645,258


14.	Share-Based Compensation

The Company has granted options, restricted stock and restricted stock units subject to vesting requirements under its 2006 Equity Incentive Plan ("2006 Plan") and its 2013 Equity Incentive Plan ("2013 Plan"). Vesting of most grants is over two

to four years. The restricted stock units are subject to performance criteria in addition to time vesting requirements. Following is a summary of options, restricted stock and restricted stock units which have been granted under the Company’s plans:



	Stock Options
	Number of Options Outstanding		Weighted Average Exercise Price
Balance at December 30, 2012	589,163		$	13.24
Granted	65,000		48.12
Exercised	(101,543	)	14.05
Forfeited or expired	(4,500	)	20.98
Balance at December 29, 2013	548,120		17.17
Granted	—		—
Exercised	(201,630	)	10.97
Forfeited or expired	(10,500	)	50.21
Balance at June 29, 2014	335,990		$	19.85
Exercisable at June 29, 2014	237,853		$	13.17
Vested and expected to vest at June 29, 2014	331,734		$	19.87



	Restricted Stock
	Number of Shares		Grant-Date Average Fair Value Per Share
Nonvested at December 30, 2012	195,560		$	18.89
Granted	61,270		45.73
Vested	(89,535	)	17.62
Forfeited	(7,737	)	29.65
Nonvested at December 29, 2013	159,558		29.39
Granted	19,467		61.17
Vested	(36,924	)	17.42
Forfeited	(8,229	)	29.17
Nonvested at June 29, 2014	133,872		$	36.95



	Restricted Stock Units
	Number of Units		Grant-Date Average Fair Value Per Unit
Nonvested at December 30, 2012	332,364		$	21.85
Granted	465,299		48.01
Vested	(63,537	)	17.37
Forfeited (1)	(194,387	)	22.73
Nonvested at December 29, 2013	539,739		43.42
Granted	191,815		58.24
Vested	(43,305	)	60.58
Forfeited (2)	(231,300	)	45.08
Nonvested at June 29, 2014	456,949		$	49.96
Remain subject to performance criteria	329,666		$	56.83

(1) Includes a total of 171,192 units forfeited due to incomplete attainment of all performance criteria.

(2) Includes a total of 186,397 units forfeited due to incomplete attainment of all performance criteria.

During the second quarter of 2014, we granted 636 shares of restricted stock with an aggregate fair value of $50,000, which will be amortized over the requisite service period. During the second quarter of 2014, we granted 806 restricted stock units with an aggregate fair market value of $63,000, which will be amortized to expense over the requisite service period. The restricted stock units are subject to performance criteria and vest between 2015 and 2017.

Phantom Common Unit Awards

SUSP has issued a total of 54,669 phantom unit awards to certain directors and employees of SUSS under the Susser Petroleum Partners LP 2012 Long Term Incentive Plan ("2012 LTIP") of which 6,354 were issued in the first six months of 2014 with an aggregate fair value of $0.2 million. The fair value of each phantom unit on the grant date was equal to the market price of our common unit on that date reduced by the present value of estimated dividends over the vesting period, since the phantom units do not receive dividends until vested. The estimated fair value of our phantom units is amortized over the vesting period using the straight-line method. Non-employee director awards vest at the end of a one-to-three-year period and employee awards vest ratably over a two to five-year service period. The fair value of phantom units outstanding as of June 29, 2014 totaled $0.8 million.

We recognized consolidated non-cash stock compensation expense of $1.2 million and $3.4 million during the three months ended June 30, 2013 and June 29, 2014, respectively and $2.8 million and $6.6 million during the six months ended June 30, 2013 and June 29, 2014, respectively, which is included in general and administrative expense.

Any unvested options, restricted stock, restricted stock units and phantom common unit awards will vest upon closing of the merger with ETP, with the exception of certain specified restricted stock units and any awards that were granted subsequent to April 27, 2014.


15.	Segment Reporting

The Company operates its business in two primary operating segments, both of which are included as reportable segments. No operating segments have been aggregated in identifying the two reportable segments. The retail segment, Stripes, operates retail convenience stores in Texas, New Mexico and Oklahoma that sell merchandise, prepared food and motor fuel, and also offer a variety of services including car washes, lottery, ATM, money orders, prepaid phone cards and wireless services and movie rentals.

The wholesale segment purchases fuel from a number of refiners and supplies it to the Company's retail stores, to independently-operated dealer stations under long-term supply agreements and to other end users of motor fuel. The wholesale segment includes all of the operations of SUSP, a consolidated VIE which began operations on September 25, 2012, along with other wholesale-segment activities not contributed to SUSP.

There are no external customers who are individually material. Amounts in the “All Other” column include APT, corporate overhead and other costs not allocated to the two primary segments.

Segment Financial Data for the Three Months Ended June 30, 2013

(dollars and gallons in thousands)



	Retail Segment		Wholesale Segment		Intercompany Eliminations			All Other			Totals
Revenue:
Merchandise	$	274,727	$	—	$	—		$	—		$	274,727
Motor fuel (4)	805,850		1,132,081		(661,002		)	—			1,276,929
Other	9,980		9,283		(5,483		)	73			13,853
Total revenue (4)	1,090,557		1,141,364		(666,485		)	73			1,565,509
Gross profit:
Merchandise	94,131		—		—			—			94,131
Motor fuel	42,987		17,081		819			—			60,887
Other	9,979		5,086		(2,140		)	67			12,992
Total gross profit	147,097		22,167		(1,321		)	67			168,010
Selling, general and administrative (3)	109,345		7,188		—			2,205			118,738
Depreciation, amortization and accretion	12,698		2,893		(638		)	191			15,144
Other operating expenses (income) (1)	601		73		—			5			679
Operating income (loss)	24,453		12,013		(683		)	(2,334		)	33,449
Unallocated interest expense, net	—		—		—			—			(32,667		)
Unallocated other miscellaneous	—		—		—			—			(161		)
Income before income taxes	$	24,453	$	12,013	$	(683	)	$	(2,334	)	$	621
Gallons	236,075		389,569		(233,404		)	—			392,240
Total assets (5)	$	1,032,066	$	374,643	$	(80,165	)	$	38,044		$	1,364,588
Gross capital expenditures (2)	$	46,577	$	34,146	$	(26,419	)	$	—		$	54,304

(1) Includes loss (gain) on disposal of assets and impairment charges.

(2) Gross capital expenditures include acquisitions and purchases of intangible assets and accrued amounts related to capital projects.

(3) Includes personnel, general and administrative, other operating and rent expenses.


(4)	In the fourth quarter 2013, the Company revised its presentation of fuel taxes on motor fuel sales at its consignment locations to present such fuel taxes gross in motor fuel sales. Prior years' motor fuel sales have been adjusted to reflect this revision.


(5)	Properties subject to sale leaseback transactions between the wholesale and retail segments are included in assets for both segments and eliminated upon consolidation, due to their treatment in the retail segment as a financing arrangement.

Segment Financial Data for the Three Months Ended June 29, 2014

(dollars and gallons in thousands)



	Retail Segment		Wholesale Segment			Intercompany Eliminations			All Other			Totals
Revenue:
Merchandise	$	318,186	$	—		$	—		$	—		$	318,186
Motor fuel	926,686		1,385,551			(770,895		)	—			1,541,342
Other	11,522		12,220			(8,665		)	69			15,146
Total revenue	1,256,394		1,397,771			(779,560		)	69			1,874,674
Gross profit:
Merchandise	107,692		—			—			—			107,692
Motor fuel	49,475		20,705			803			—			70,983
Other	11,522		6,777			(4,247		)	(20		)	14,032
Total gross profit	168,689		27,482			(3,444		)	(20		)	192,707
Selling, general and administrative (3)	128,714		10,060			—			7,329			146,103
Depreciation, amortization and accretion	15,662		4,361			(1,895		)	210			18,338
Other operating expenses (income) (1)	1,168		(20		)	—			(250		)	898
Operating income (loss)	23,145		13,081			(1,549		)	(7,309		)	27,368
Unallocated interest expense, net	—		—			—			—			(3,621		)
Income before income taxes	$	23,145	$	13,081		$	(1,549	)	$	(7,309	)	$	23,747
Gallons	263,904		461,709			(262,604		)	—			463,009
Total assets (4)	$	1,288,603	$	449,833		$	(184,328	)	$	31,028		$	1,585,136
Gross capital expenditures (2)	$	60,822	$	38,073		$	(31,014	)	$	—		$	67,881

(1) Includes loss (gain) on disposal of assets and impairment charges.

(2) Gross capital expenditures include acquisitions and purchases of intangible assets and accrued amounts related to capital projects.

(3) Includes personnel, general and administrative, other operating and rent expenses.

(4) Properties subject to sale leaseback transactions between the wholesale and retail segments are included in assets for both segments and eliminated upon consolidation, due to their treatment in the retail segment as a financing arrangement.

Segment Financial Data for the Six Months Ended June 30, 2013

(dollars and gallons in thousands)



	Retail Segment		Wholesale Segment		Intercompany Eliminations			All Other			Totals
Revenue:
Merchandise	$	522,205	$	—	$	—		$	—		$	522,205
Motor fuel (4)	1,588,829		2,233,400		(1,307,727		)	—			2,514,502
Other	19,912		17,197		(10,095		)	215			27,229
Total revenue (4)	2,130,946		2,250,597		(1,317,822		)	215			3,063,936
Gross profit:
Merchandise	175,964		—		—			—			175,964
Motor fuel	79,997		32,246		1,507			—			113,750
Other	19,911		8,906		(3,586		)	103			25,334
Total gross profit	275,872		41,152		(2,079		)	103			315,048
Selling, general and administrative (3)	216,236		14,260		—			5,043			235,539
Depreciation, amortization and accretion	24,660		5,620		(1,259		)	305			29,326
Other operating expenses (income) (1)	986		89		—			52			1,127
Operating income (loss)	33,990		21,183		(820		)	(5,297		)	49,056
Unallocated interest expense, net	—		—		—			—			(42,772		)
Unallocated other miscellaneous	—		—		—			—			(239		)
Income before income taxes	$	33,990	$	21,183	$	(820	)	$	(5,297	)	$	6,045
Gallons	459,552		756,833		(454,016		)	—			762,369
Total assets (5)	$	1,032,066	$	374,643	$	(80,165	)	$	38,044		$	1,364,588
Gross capital expenditures (2)	$	85,765	$	63,388	$	(52,519	)	$	—		$	96,634

(1) Includes loss (gain) on disposal of assets and impairment charges.

(2) Gross capital expenditures include acquisitions and purchases of intangible assets and accrued amounts related to capital projects.

(3) Includes personnel, general and administrative, other operating and rent expenses.


(4)	In the fourth quarter 2013, the Company revised its presentation of fuel taxes on motor fuel sales at its consignment locations to present such fuel taxes gross in motor fuel sales. Prior years' motor fuel sales have been adjusted to reflect this revision.


(5)	Properties subject to sale leaseback transactions between the wholesale and retail segments are included in assets for both segments and eliminated upon consolidation, due to their treatment in the retail segment as a financing arrangement.

Segment Financial Data for the Six Months Ended June 29, 2014

(dollars and gallons in thousands)



	Retail Segment		Wholesale Segment			Intercompany Eliminations			All Other			Totals
Revenue:
Merchandise	$	594,561	$	—		$	—		$	—		$	594,561
Motor fuel	1,749,610		2,611,762			(1,453,453		)	—			2,907,919
Other	22,372		24,204			(16,813		)	46			29,809
Total revenue	2,366,543		2,635,966			(1,470,266		)	46			3,532,289
Gross profit:
Merchandise	201,504		—			—			—			201,504
Motor fuel	82,019		39,375			1,828			—			123,222
Other	22,372		13,399			(8,274		)	(73		)	27,424
Total gross profit	305,895		52,774			(6,446		)	(73		)	352,150
Selling, general and administrative (3)	248,472		19,316			—			11,957			279,745
Depreciation, amortization and accretion	29,964		8,688			(3,682		)	409			35,379
Other operating expenses (income) (1)	2,180		(20		)	—			(289		)	1,871
Operating income (loss)	25,279		24,790			(2,764		)	(12,150		)	35,155
Unallocated interest expense, net	—		—			—			—			(6,793		)
Income before income taxes	$	25,279	$	24,790		$	(2,764	)	$	(12,150	)	$	28,362
Gallons	514,174		895,465			(510,263		)	—			899,376
Total assets (4)	$	1,288,603	$	449,833		$	(184,328	)	$	31,028		$	1,585,136
Gross capital expenditures (2)	$	189,605	$	71,304		$	(58,549	)	$	—		$	202,360

(1) Includes loss (gain) on disposal of assets and impairment charges.

(2) Gross capital expenditures include acquisitions and purchases of intangible assets and accrued amounts related to capital projects.

(3) Includes personnel, general and administrative, other operating and rent expenses.


16.	Earnings Per Share

Basic EPS, which excludes dilution, is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common shares. Dilutive EPS includes in-the-money stock options and unvested stock using the treasury stock method. During a net loss period, the assumed exercise of in-the-money stock options and unvested stock has an anti-dilutive effect, and therefore such potential shares, unvested stock and unvested stock units are excluded from the diluted EPS computation.

Per share information is based on the weighted average number of common shares outstanding during each period for the basic computation and, if dilutive, the weighted average number of potential common shares resulting from the assumed conversion of outstanding stock options, unvested stock and unvested stock units for the diluted computation. Additionally, for the diluted earnings per share computation, net earnings (loss) attributable to SUSS is reduced, where applicable, for the decrease in earnings from SUSS' limited partner unit ownership in SUSP that would have resulted assuming the incremental units related to SUSP's equity incentive plans had been issued during the respective periods. Shares not included in the denominator for basic EPS but evaluated for inclusion in the denominator for diluted EPS included options, unvested stock and unvested stock units granted under the 2006 and 2013 Equity Incentive Plans (See Note 13).

A reconciliation of the numerators and denominators of the basic and diluted per share computations is as follows:



	Three Months Ended					Six Months Ended
	June 30, 2013			June 29, 2014		June 30, 2013			June 29, 2014
	(dollars in thousands, except per share amounts)
Basic:
Net income (loss) attributable to Susser Holdings Corporation	$	(4,260	)	$	12,325	$	(4,492	)	$	10,502
Weighted average number of common shares outstanding during the period	21,138,278			21,521,198		21,103,250			21,435,979
Per common share – basic	$	(0.20	)	$	0.57	$	(0.21	)	$	0.49
Diluted:
Net income (loss) attributable to Susser Holdings Corporation (a)	$	(4,272	)	$	12,325	$	(4,499	)	$	10,502
Denominator for diluted earnings per share:
Weighted average number of common shares outstanding during the period	21,138,278			21,521,198		21,103,250			21,435,979
Incremental common shares attributable to outstanding dilutive options and unvested restricted shares/units	—			371,652		—			477,555
Denominator for diluted earnings per common share	21,138,278			21,892,850		21,103,250			21,913,534
Per common share – diluted	$	(0.20	)	$	0.56	$	(0.21	)	$	0.48
Options and unvested restricted shares/units not included in diluted net income attributable to Susser Holdings Corporation common shareholders because the effect would be anti-dilutive	501,307			488		554,700			4,698

(a) Adjusted for dilutive impact of the noncontrolling interest in SUSP of SUSP dilutive units.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included elsewhere in this report. Additional discussion and analysis related to our company is contained in our Annual Report on Form 10-K, including the audited consolidated financial statements for the fiscal year ended December 29, 2013. Our fiscal year contains either 52 or 53 weeks and ends on the Sunday closest to December 31. All references to the second quarter and first half of 2013 and 2014 refer to the 13-week and 26-week periods ended June 30, 2013 and June 29, 2014, respectively. EBITDA, Adjusted EBITDA, Adjusted EBITDAR and fuel-margin-neutral Adjusted EBITDAR are non-GAAP financial measures of performance, each of which have limitations and should not be considered as a substitute for net income. Please see footnote (4) under “Key Operating Metrics” below for a discussion of our use of EBITDA, Adjusted EBITDA, Adjusted EBITDAR and fuel-margin-neutral Adjusted EBITDAR in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and a reconciliation to net income for the periods presented.

Forward-Looking Statements

This report, including without limitation, our discussion and analysis of our financial condition and results of operations, contains statements that we believe are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 and are intended to enjoy protection under the safe harbor for forward-looking statements provided by that Act. These forward-looking statements generally can be identified by use of phrases such as “believe,” “plan,” “expect,” “anticipate,” “intend,” “forecast” or other similar words or phrases. Descriptions of our objectives, goals, targets, plans, strategies, costs, anticipated capital expenditures, expected cost savings and benefits are also forward-looking statements. These forward-looking statements are based on our current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements, including:


•	Competitive pressures from convenience stores, gasoline stations, other non-traditional retailers located in our markets and other wholesale fuel distributors;


•	Dangers inherent in storing and transporting motor fuel;


•	Pending or future consumer or other litigation or adverse publicity concerning food quality, food safety or other health concerns related to our restaurant facilities;


•	Volatility in crude oil and wholesale petroleum costs;


•	Changing consumer preferences for alternative fuel sources or improvement in fuel efficiency;


•	Any changes in general economic, political or financial conditions;


•	Increasing consumer preferences for alternative motor fuels, or improvements in fuel efficiency;


•	Inability to build or acquire and successfully integrate new stores;


•	Dependence on our subsidiaries, including the Partnership, for cash flow generation;


•	Indirect exposure to the Partnership's business risks, by virtue of our significant relationships with the Partnership;


•	Operational limitations arising from our contractual agreements with the Partnership;


•	Our ability to comply with federal and state regulations including those related to environmental matters and the sale of alcohol and tobacco;


•	Wholesale cost increases of tobacco products or future legislation or campaigns to discourage smoking;


•	Healthcare reform legislation and regulation;


•	Compliance with, or changes in, tax laws - including those impacting the tax treatment of the Partnership;


•	Dependence on two principal suppliers for merchandise;


•	Dependence on suppliers for credit terms;


•	Seasonal trends in the industries in which we operate;


•	Dependence on senior management and the ability to attract qualified employees;


•	Acts of war and terrorism;


•	Dependence on our information technology systems;


•	Severe or unfavorable weather conditions;


•	Cross-border risks associated with the concentration of our stores in markets bordering Mexico;


•	Impairment of goodwill or indefinite lived assets; and


•	Other unforeseen factors.

For a full discussion of these and other risks and uncertainties, please refer to “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 29, 2013, and in each subsequent quarterly report on Form 10-Q, including this filing. The list of factors that could affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The forward-looking statements included in this report are based on, and include, our estimates as of the date hereof. We anticipate that subsequent events and market developments will cause our estimates to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if new information becomes available in the future.

Overview

Our operations include retail convenience stores and wholesale motor fuel distribution. We are a leading operator of convenience stores and one of the largest motor fuel distributors in Texas based on our store count and fuel volumes sold. As of June 29, 2014, our retail segment operated 636 convenience stores in Texas, New Mexico and Oklahoma offering

merchandise, food service, motor fuel and other services. Our consolidated results include the operations of SUSP, of which we currently own 50.2% of the limited partner interests and 100% of SUSP's general partner. The share of SUSP's net income allocated to public limited partners is reflected as income attributable to noncontrolling interest.

On April 27, 2014, the Company entered into an Agreement and Plan of Merger with Energy Transfer Partners, L.P. (“ETP”) and certain other related entities, under which ETP will acquire the outstanding common shares of SUSS. By acquiring SUSS, ETP will also own the general partner interest and the incentive distribution rights in SUSP, and approximately 11 million SUSP common units (representing approximately 50.2% of SUSP’s outstanding units). The merger is expected to close during the third quarter, subject to shareholder approval. A special shareholder meeting is scheduled for August 28, 2014. Additional information is provided in Note 1 of our Notes to Consolidated Financial Statements.

For the three and six months ended June 29, 2014, we sold 463.0 million and 899.4 million gallons of motor fuel, respectively. We purchase fuel directly from refiners and distribute it to our Stripes® convenience stores and independently operated consignment locations, contracted independent operators of convenience stores (“dealers”), unbranded convenience stores and other commercial users. We believe our combined retail/wholesale business model makes it possible for us to pursue strategic acquisition opportunities and operate acquired properties under either format, providing an optimized return on investment. Our market share and scale allows the integration of new or acquired stores while minimizing overhead costs. In addition, we believe our food service and merchandising offerings distinguish us from our competition, providing the opportunity for increased traffic in our stores.

We opened seven new or acquired retail stores during the second quarter of 2014, for a total of 636 retail stores operated at the end of the quarter. We have opened four additional retail stores to date in the third quarter of 2014. We currently have 17 new stores under construction, and expect to add a total of 27 to 33 new retail stores during 2014 in addition to the 47 stores we acquired from Sac-N-Pac in the first quarter of 2014. Our wholesale segment added 11 dealer and consignment sites and discontinued three during the second quarter of 2014, for a total of 624 independently operated sites supplied under long-term contracts at the end of the quarter. We expect to add a total of 50 to 65 new dealer and consignment sites during 2014, including 19 contracts acquired with the Sac-N-Pac transaction.

Our total revenues, net income (loss) attributable to Susser Holdings Corporation and Adjusted EBITDA were $1.9 billion, $12.3 million and $50.0 million, respectively, for second quarter 2014, compared to $1.6 billion, $(4.3) million and $50.5 million, respectively, for second quarter 2013. For the first half of 2014, our total revenues, net income (loss) attributable to Susser Holdings Corporation and Adjusted EBITDA were $3.5 billion, $10.5 million and $79.0 million, respectively, compared to $3.1 billion, $(4.5) million and $82.3 million, respectively, for the first half of 2013. We incurred $3.1 million pre-tax charges in the second quarter 2014 related to the ETP merger. Excluding these charges, net income for three and six months was $14.3 million and $12.5 million, respectively, and Adjusted EBITDA was $53.1 million and $82.1 million for the respective three and six months periods. In the second quarter of 2013, we incurred $26.2 million pre-tax charges related to debt refinancing. Excluding these charges, net income for the three and six months ended June 2013 was $12.5 million and $12.3 million, respectively. Our business is seasonal, and we generally experience higher sales and profitability in the second and third quarters during the summer activity months and lowest during the first and fourth quarters. For a description of our results of operations on a quarterly basis see “Quarterly Results of Operations and Seasonality.”

We typically experience lower fuel margins in periods when the cost of fuel increases gradually, and higher fuel margins in periods when the cost of fuel declines or is more volatile. We report retail fuel margins before credit card fees, but higher fuel prices result in higher credit card costs, which tends to drive fuel margins higher to cover the additional credit card fees. Additionally, our fuel margins have historically exhibited seasonal differences, with lower fuel margins during the first and fourth quarters and the highest fuel margins in the second or third quarter of the year. Crude oil costs averaged approximately $103 per barrel during the second quarter of 2014, a 9.8% increase over the second quarter of 2013 based on West Texas intermediate spot prices. Our motor fuel costs typically follow a similar pattern to crude oil movements, and generally, rising fuel costs during the second quarter of 2014 contributed to a retail fuel margin of 18.7 cents per gallon compared to the five-year average of 22.0 cents per gallon for the second quarter. However, this year’s margin was slightly higher than the 18.2 cents per gallon margin for the second quarter of 2013. For the first half of 2014, retail fuel margin averaged 16.0 cents per gallon compared to 17.4 cents per gallon for the same period in 2013.

Wholesale segment third-party fuel margin averaged 6.5 cents per gallon for the second quarter of 2014, compared to 6.4 cents per gallon for the second quarter of 2013. Third party fuel margin averaged 6.3 cents per gallon for first half 2014, compared to 6.2 cents per gallon for first half 2013. Total fuel gross profit represented approximately 35% of our consolidated gross profit for the first half of 2013 and 2014.

The economy in Texas, where the majority of our operations are conducted, continues to fare better than many other parts of the United States. Additionally, we believe our business has generally remained more resilient through economic cycles than many other retail formats. We have reported positive comparable annual merchandise results for each of the last 25 years, a key metric we use to monitor performance. For the second quarter of 2014 we grew same store merchandise sales by 4.0%. We also saw a 2.0% increase in average gallons sold per retail store for the second quarter 2014, excluding the recently acquired Sac-N-Pac stores. Average gallons per store decreased by 0.4% including the lower-volume Sac-N-Pac stores.

We believe we have adequate liquidity and financial flexibility to continue to operate and grow our business. As of June 29, 2014, we had total consolidated revolver borrowings for SUSS and SUSP of $529.9 million and $12.9 million in standby letters of credit, with consolidated unused availability of $357.2 million. We had consolidated cash on the balance sheet of $26.8 million. At the end of the second quarter 2014, our consolidated net debt (total debt less cash) to last 12 months adjusted EBITDA was approximately 3.0 times.

Key Operating Metrics

The following table sets forth, for the periods indicated, information concerning key measures we rely on to gauge our operating performance:



	Three Months Ended						Six Months Ended
	June 30, 2013			June 29, 2014			June 30, 2013			June 29, 2014
	(dollars and gallons in thousands, except motor fuel pricing and gross profit per gallon)
Revenue:
Merchandise sales	$	274,727		$	318,186		$	522,205		$	594,561
Motor fuel—retail	805,850			926,686			1,588,829			1,749,610
Motor fuel—wholesale to third parties (3)	471,079			614,656			925,673			1,158,309
Other	13,853			15,146			27,229			29,809
Total revenue (3)	$	1,565,509		$	1,874,674		$	3,063,936		$	3,532,289
Gross profit:
Merchandise	$	94,131		$	107,692		$	175,964		$	201,504
Motor fuel—retail	42,987			49,475			79,998			82,019
Motor fuel—wholesale to third parties (2)	10,066			12,886			18,723			24,211
Motor fuel—wholesale to Stripes (2)	7,015			7,819			13,523			15,164
Other, including intercompany eliminations	13,811			14,835			26,840			29,252
Total gross profit	$	168,010		$	192,707		$	315,048		$	352,150
Adjusted EBITDA (4):
Retail	$	37,752		$	39,975		$	59,636		$	57,423
Wholesale	15,380			18,199			27,698			34,942
Other	(2,601		)	(8,164		)	(5,007		)	(13,349		)
Total Adjusted EBITDA	$	50,531		$	50,010		$	82,327		$	79,016
Retail merchandise margin	34.3		%	33.8		%	33.7		%	33.9		%
Merchandise same-store sales growth (1)	2.2		%	4.0		%	3.2		%	3.0		%
Average per retail store per week:
Merchandise sales	$	37.5		$	38.8		$	35.8		$	36.8
Motor fuel gallons sold	32.5			32.4			31.8			32.0
Motor fuel gallons sold:
Retail	236,075			263,904			459,552			514,174
Wholesale - third party	156,165			199,105			302,817			385,202
Average retail price of motor fuel per gallon	$	3.41		$	3.51		$	3.46		$	3.40
Motor fuel gross profit cents per gallon:
Retail		18.2	¢		18.7	¢		17.4	¢		16.0	¢
Wholesale - third party (2)		6.4	¢		6.5	¢		6.2	¢		6.3	¢
Retail credit card expense cents per gallon		5.5	¢		5.9	¢		5.5	¢		5.7	¢


(1)	We include a store in the same store sales base in its thirteenth full month of our operation.


(2)	The wholesale margin from third parties excludes sales and gross profit to the retail segment.


(3)	In the fourth quarter of 2013, the Company revised its presentation of fuel taxes on motor fuel sales at its consignment locations to present such fuel taxes gross in motor fuel sales. Prior years' motor fuel sales have been adjusted to reflect this revision.


(4)	Excluding the ETP merger-related charges, Adjusted EBITDA was $53.1 million and $82.1 million for the three and six months ended June 29, 2014, respectively. This increase in reported EBITDA would be reflected in the "Other" line above.

We define EBITDA as net income (loss) attributable to Susser Holdings Corporation before net interest expense, income taxes, net income attributable to noncontrolling interest and depreciation, amortization and accretion. Adjusted EBITDA further adjusts EBITDA by excluding non-cash stock-based compensation expense and certain other operating expenses that are reflected in our net income that we do not believe are indicative of our ongoing core operations, such as significant non-

recurring transaction expenses and the gain or loss on disposal of assets and impairment charges. Adjusted EBITDAR adds back rent to Adjusted EBITDA. In addition, those expenses that we have excluded from our presentation of Adjusted EBITDA and Adjusted EBITDAR are also excluded in measuring our covenants under our revolving credit facility and indenture governing our debt agreements and indentures. EBITDA, Adjusted EBITDA and Adjusted EBITDAR are not presented in accordance with GAAP.

We believe EBITDA, Adjusted EBITDA and Adjusted EBITDAR are useful to investors in evaluating our operating performance because:


•	securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities;


•	they facilitate management’s ability to measure the operating performance of our business on a consistent basis by excluding the impact of items not directly resulting from our retail convenience stores and wholesale motor fuel distribution operations;


•	they are used by our management for internal planning purposes, including aspects of our consolidated operating budget, capital expenditures, as well as for segment and individual site operating targets; and


•	they are used by our Board and management for determining certain management compensation targets and thresholds.

EBITDA, Adjusted EBITDA and Adjusted EBITDAR are not recognized terms under GAAP and do not purport to be alternatives to net income (loss) as measures of operating performance. EBITDA, Adjusted EBITDA and Adjusted EBITDAR have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include:


•	they do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;


•	they do not reflect changes in, or cash requirements for, working capital;


•	they do not reflect significant interest expense, or the cash requirements necessary to service interest or principal payments on our existing revolving credit facilities or existing notes;


•	they do not reflect payments made or future requirements for income taxes;


•	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA, Adjusted EBITDA and Adjusted EBITDAR do not reflect cash requirements for such replacements; and


•	because not all companies use identical calculations, our presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDAR may not be comparable to similarly titled measures of other companies.

The following tables present a reconciliation of net income (loss) attributable to Susser Holdings Corporation to EBITDA, Adjusted EBITDA and Adjusted EBITDAR:



	Three Months Ended					Six Months Ended
	June 30, 2013			June 29, 2014		June 30, 2013			June 29, 2014
	(in thousands)
Net income (loss) and comprehensive income (loss) attributable to Susser Holdings Corporation	$	(4,260	)	$	12,325	$	(4,492	)	$	10,502
Net income and comprehensive income attributable to noncontrolling interest	4,834			4,781		8,942			9,830
Depreciation, amortization and accretion	15,144			18,338		29,326			35,379
Interest expense, net	32,667			3,621		42,772			6,793
Income tax expense	47			6,641		1,595			8,030
EBITDA	48,432			45,706		78,143			70,534
Non-cash stock based compensation	1,259			3,406		2,818			6,611
Loss on disposal of assets and impairment charge	679			898		1,127			1,871
Other miscellaneous expense	161			—		239			—
Adjusted EBITDA	50,531			50,010		82,327			79,016
Rent	12,164			11,747		23,904			23,573
Adjusted EBITDAR	$	62,695		$	61,757	$	106,231		$	102,589



	Fiscal Year Ended								Twelve Months Ended
	January 2, 2011		January 1, 2012		December 30, 2012		December 29, 2013		June 30, 2013		June 29, 2014
	(in thousands)
Net income and comprehensive income attributable to Susser Holdings Corporation	$	786	$	47,457	$	46,725	$	14,331	$	12,944	$	29,325
Net income and comprehensive income attributable to noncontrolling interest	3		14		4,572		18,473		13,512		19,361
Depreciation, amortization and accretion	43,998		47,320		51,434		61,368		55,645		67,421
Interest expense, net	64,039		40,726		41,019		47,673		63,364		11,694
Income tax expense	4,994		26,347		33,645		16,940		17,370		23,375
EBITDA	113,820		161,864		177,395		158,785		162,835		151,176
Non-cash stock based compensation	2,825		3,588		4,337		7,760		4,280		11,553
Loss on disposal of assets and impairment charge	3,193		1,220		694		2,216		1,787		2,960
Other miscellaneous expense	174		346		471		287		505		48
Adjusted EBITDA	120,012		167,018		182,897		169,048		169,407		165,737
Rent	42,623		45,738		46,407		47,468		47,222		47,137
Adjusted EBITDAR	$	162,635	$	212,756	$	229,304	$	216,516	$	216,629	$	212,874

________________


(1)	Each of the line items for the twelve month period ended June 29, 2014 reflects the corresponding items for the fiscal year ended December 29, 2013, plus the items for the six months ended June 29, 2014, less the items for the six months ended June 30, 2013.

Refer to Note 15 of the accompanying Notes to Consolidated Financial Statements for a description of our segment reporting. The following table presents a reconciliation of our segment operating income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR:



	Three Months Ended
	Retail Segment				Wholesale Segment					All Other						Total
	June 30, 2013		June 29, 2014		June 30, 2013		June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013			June 29, 2014
	(in thousands)
Operating income (loss)	$	24,453	$	23,145	$	12,013	$	13,081		$	(3,017	)	$	(8,858	)	$	33,449		$	27,368
Depreciation, amortization and accretion	12,698		15,662		2,893		4,361			(447		)	(1,685		)	15,144			18,338
Other miscellaneous	—		—		—		—			(161		)	—			(161		)	—
EBITDA	37,151		38,807		14,906		17,442			(3,625		)	(10,543		)	48,432			45,706
Non-cash stock based compensation	—		—		401		777			858			2,629			1,259			3,406
Loss (gain) on disposal of assets and impairment charge	601		1,168		73		(20		)	5			(250		)	679			898
Other operating expenses	—		—		—		—			161			—			161			—
Adjusted EBITDA	37,752		39,975		15,380		18,199			(2,601		)	(8,164		)	50,531			50,010
Rent	10,900		10,816		1,257		931			7			—			12,164			11,747
Adjusted EBITDAR	$	48,652	$	50,791	$	16,637	$	19,130		$	(2,594	)	$	(8,164	)	$	62,695		$	61,757



	Six Months Ended
	Retail Segment				Wholesale Segment					All Other						Total
	June 30, 2013		June 29, 2014		June 30, 2013		June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013			June 29, 2014
	(in thousands)
Operating income (loss)	$	33,990	$	25,279	$	21,183	$	24,790		$	(6,117	)	$	(14,914	)	$	49,056		$	35,155
Depreciation, amortization and accretion	24,660		29,964		5,620		8,688			(954		)	(3,273		)	29,326			35,379
Other miscellaneous	—		—		—		—			(239		)	—			(239		)	—
EBITDA	58,650		55,243		26,803		33,478			(7,310		)	(18,187		)	78,143			70,534
Non-cash stock based compensation	—		—		806		1,484			2,012			5,127			2,818			6,611
Loss (gain) on disposal of assets and impairment charge	986		2,180		89		(20		)	52			(289		)	1,127			1,871
Other operating expenses	—		—		—		—			239			—			239			—
Adjusted EBITDA	59,636		57,423		27,698		34,942			(5,007		)	(13,349		)	82,327			79,016
Rent	21,774		21,784		2,117		1,786			13			3			23,904			23,573
Adjusted EBITDAR	$	81,410	$	79,207	$	29,815	$	36,728		$	(4,994	)	$	(13,346	)	$	106,231		$	102,589

Another key metric we use to measure our performance is “Fuel-Margin-Neutral Adjusted EBITDAR”. This metric reflects Adjusted EBITDAR assuming a consistent fuel margin in each period being compared, to eliminate variability in performance due to fuel price volatility, credit card expenses (which increase or decrease with the absolute price of fuel), fluctuating fuel margins and changes in short-term competitive conditions. Growth in Fuel-Margin-Neutral Adjusted EBITDAR is therefore achieved through increasing merchandise sales and margins, increasing fuel gallons sold and controlling expenses. This metric is currently used to determine one-half of our management bonus compensation and is a primary performance criteria for equity awards. As shown in the table below, our Fuel-Margin-Neutral Adjusted EBITDAR, based on our latest five-year average fuel margin, has increased 5% for the last twelve months ended June 29, 2014 compared the last twelve months ended June 30, 2013.



	Fiscal Year Ended												Twelve Months Ended
	January 2, 2011			January 1, 2012			December 30, 2012			December 29, 2013			June 30, 2013			June 29, 2014
	(in thousands, except cents per gallon)
Adjusted EBITDAR, Actual (1)	$	162,635		$	212,756		$	229,304		$	216,516		$	216,629		$	212,874
Adjustments:
CPG neutral adjustment - retail (2)	5,794			(22,462		)	(18,416		)	4,134			(7,157		)	12,570
CPG neutral adjustment - wholesale (3)	1,774			(1,641		)	(3,315		)	(6,504		)	(4,165		)	(7,697		)
G&A bonus & 401(k) match adjustment (4)	8,558			9,927			9,707			3,018			6,366			5,015
Fuel-Neutral Adjusted EBITDAR	$	178,761		$	198,580		$	217,280		$	217,164		$	211,673		$	222,762
Percent change from prior period (5)	8		%	11		%	9		%	0		%				5		%

CPG adjustment - retail fuel (2)		0.8	¢		(2.9	)¢		(2.2	)¢		0.4	¢		(0.8	)¢		1.3	¢
CPG adjustment - wholesale fuel (3)		0.4	¢		(0.3	)¢		(0.6	)¢		(1.0	)¢		(0.7	)¢		(1.1	)¢


(1)	Adjusted EBITDAR is defined and reconciled to net income (loss) attributable to Susser Holdings Corporation in the preceding tables. This schedule has not been adjusted to exclude the $3.1 million ETP merger charge.

(2)

The retail segment adjustment was derived by taking the difference between the five-year average margin per gallon after credit cards (which for the five year period 2009 - 2013 was 14.9 cents per gallon, excluding the impact of the SUSP profit margin) and the actual margin per gallon after credit cards and excluding the SUSP profit margin reduction, and multiplying it by the actual retail gallons sold. The difference between the 5-year average and actual fuel margin is shown above. A positive adjustment indicates the actual margin was less than the 5-year average, while a negative adjustment indicates the actual margin was greater than the 5-year average.


(3)	The wholesale segment adjustment was derived by taking the difference between the five-year average third-party margin per gallon after credit cards (which for the five year period 2009 - 2013 was 5.6 cents per gallon) and the actual margin per gallon after credit cards, and multiplying it by the actual wholesale gallons sold to third parties.


(4)	Since our management bonus and discretionary 401(k) match are partly based on results including actual fuel margins, we also exclude these amounts to eliminate volatility related to fuel margins.


(5)	Calendar year periods compared to prior calendar year. Twelve-month period ended June 29, 2014 is compared to the twelve months ended June 30, 2013. Excluding the $3.1 million ETP merger charge would increase the percentage change for the twelve months ended June 2014 from 5% to 7%.

Second Quarter 2014 Compared to Second Quarter 2013

The following discussion of results for second quarter 2014 compared to second quarter 2013 compares the 13-week period of operations ended June 29, 2014 to the 13-week period of operations ended June 30, 2013. During the second quarter of 2014 we operated an average of 632 retail stores, 69 more than in the second quarter of 2013.

Total Revenue. Total revenue for second quarter 2014 was $1.9 billion, an increase of $309.2 million, or 19.7%, from second quarter 2013. The increase in total revenue was driven by a 30.5% increase in wholesale fuel revenue to third parties, an increase in merchandise sales of 15.8%, and a 15.0% increase in retail fuel revenue, as further discussed below.

Total Gross Profit. Total gross profit for second quarter 2014 was $192.7 million, an increase of $24.7 million, or 14.7% from second quarter 2013. The improvement was due to the increases in merchandise gross profit of $13.6 million, fuel gross profit of $10.1 million and other gross profit of $1.0 million. Included in the increase is the impact of new stores constructed or acquired during 2013 and 2014 ($16.1 million of growth in gross profit).

Merchandise Sales and Gross Profit. Merchandise sales were $318.2 million for second quarter 2014, an increase of $43.5 million, or 15.8% over second quarter 2013. The increase was due to a 4.0% merchandise same-store sales increase, accounting for $11.0 million of the increase, with the balance due to new stores built or acquired in 2013 and 2014. Merchandise same-store sales include food service sales but do not include motor fuel sales. Food service includes sales from restaurant operations, hot dogs, fountain beverages, coffee and other food and beverages prepared in the store. Key categories contributing to the merchandise same-store sales increase were food service, beer and packaged drinks.

Merchandise gross profit was $107.7 million for the second quarter 2014, a 14.4% increase over second quarter 2013, which was driven by the increase in merchandise sales and partly offset by a decrease in margin. Merchandise margin as a percent of sales was 33.8% in the second quarter of 2014, compared to 34.3% in the second quarter 2013. The difference in margin between the two periods is primarily related to timing difference of rebate recognition in 2013. Key categories contributing to the merchandise gross profit dollar growth were packaged drinks, food service and beer. Our reported merchandise margins do not include other income from services such as ATM’s, lottery, prepaid phone cards, car washes and movie rentals.

Retail Motor Fuel Sales, Gallons and Gross Profit. Retail sales of motor fuel for second quarter 2014 were $926.7 million, an increase of $120.8 million, or 15.0% over second quarter 2013, driven by an 11.8% increase in retail gallons sold, and by a 2.9% increase in the average retail price of motor fuel, to $3.51 per gallon. We sold an average of approximately 32,400 gallons per retail store per week in the second quarter 2014, 0.4% less than the second quarter 2013. Excluding the acquired Sac-N-Pac stores, which are lower volume stores, our average gallons per store grew 2.0% over the prior year. Retail motor fuel gross profit increased by $6.5 million or 15.1% from second quarter 2013, with $5.1 million related to the increase in gallons sold and $1.4 million attributable to increased gross profit per gallon sold. Our average retail fuel margin increased from 18.2 cents per gallon to 18.7 cents per gallon for second quarter 2013 and second quarter 2014, respectively. After deducting credit card fees, our net fuel margin increased from 12.7 cents per gallon to 12.8 cents per gallon from second quarter 2013 to second quarter 2014.

Wholesale Motor Fuel Sales, Gallons and Gross Profit. Wholesale motor fuel revenues from third parties for the second quarter 2014 were $614.7 million, a 30.5% increase over second quarter 2013. The increase was primarily driven by a 27.5% increase in gallons sold, almost half of which is attributable to the Gainesville Fuel acquisition completed in September 2013, and a 2.3% increase in the wholesale selling price per gallon. Wholesale motor fuel gross profit of $20.7 million increased $3.6 million or 21.2% from second quarter 2013, due to the increase in gallons sold and a 0.4% increase in the gross profit per gallon from third parties from 6.4 to 6.5 cents per gallon (resulting in a $0.1 million increase in gross profit).

Other Revenue and Gross Profit. Other revenue of $15.1 million for second quarter 2014 increased by $1.3 million or 9.3% from second quarter 2013, with a $1.0 million or 7.4% increase in associated gross profit. Of this increase, $0.6 million was attributable to an increase in ATM income, $0.6 million to an increase in lottery income and $0.4 million to an increase in car wash income.

Personnel Expense. Personnel expense consists primarily of retail store labor and overhead costs. For the second quarter 2014, personnel expense increased $12.7 million or 25.0% over second quarter 2013. Of the increase in personnel expense, $7.2 million was attributable to the new stores acquired or constructed during 2013 and 2014. As a percentage of merchandise sales, personnel expense increased by 150 basis points to 19.9% compared to last year, mostly attributable to start-up costs related to the increased number of new stores recently opened or acquired, including those acquired in the Sac-N-Pac acquisition, and a higher proportion of restaurant sales which require approximately two to three times the labor per dollar of sales. Also impacting personnel expense are the additional costs of healthcare mandated by the Affordable Care Act. Direct labor (excluding benefits) as a percentage of merchandise sales on a same-store basis increased by 13 basis points compared to second quarter 2013.



	Three Months Ended
	June 30, 2013				June 29, 2014
			% of Merchandise Sales				% of Merchandise Sales		$ Change		% Change
Personnel expense	$	50,655	18.4	%	$	63,332	19.9	%	$	12,677	25.0	%

General and Administrative Expenses. For second quarter 2014, general and administrative ("G&A") expenses increased by $7.1 million, or 63.1%, from second quarter 2013. The increase is primarily due to increased support expense related to additional stores and expanded wholesale fuel distribution business, increased non-cash stock based compensation expense, $1.7 million of additional bonus and 401(k) match accruals compared to prior year, and $3.1 million in costs related to the

pending merger with ETP. The following table shows the relative components of G&A expenses expressed as a percent of non-fuel revenue plus fuel gallons (in thousands):



	Three Months Ended
	June 30, 2013					June 29, 2014
				% of Non-Fuel Revenue and Fuel Gallons					% of Non-Fuel Revenue and Fuel Gallons		$ Change			% Change
General and administrative expense	$	11,263		1.7	%	$	18,375		2.3	%	$	7,112		63.1	%
Less: Non-cash stock based compensation	(1,259		)	(0.2	)%	(3,406		)	(0.4	)%	(2,147		)	170.5	%
Less: ETP merger expenses	—			—	%	(3,114		)	(0.4	)%	(3,114		)	100.0	%
Other G&A expense	$	10,004		1.5	%	$	11,855		1.5	%	$	1,851		18.5	%
Non-Fuel Revenue and Fuel Gallons (1)	680,820					796,342

(1) Non-fuel revenue and fuel gallons is the sum of merchandise revenue, other revenue, and total fuel gallons. This metric is used as a fuel-price-neutral proxy for total revenue, as it eliminates the variability of fuel prices.

Other Operating Expenses. Other operating expenses increased by $8.0 million or 17.9% over second quarter 2013. Operating expenses related to new stores accounted for $4.1 million of increased costs. Significant changes to operating expenses are presented in the table below.



	Three Months Ended
	June 30, 2013				June 29, 2014
			% of Merchandise Sales				% of Merchandise Sales		$ Change		% Change
Credit card expense	$	13,068	4.8	%	$	15,659	4.9	%	$	2,591	19.8	%
Utilities	6,822		2.5	%	8,881		2.8	%	2,059		30.2	%
Maintenance	7,780		2.8	%	8,767		2.8	%	987		12.7	%
Supplies	3,692		1.3	%	4,203		1.3	%	511		13.8	%
Other operating expenses	13,294		4.8	%	15,139		4.8	%	1,845		13.9	%
Total other operating expenses	$	44,656	16.2	%	$	52,649	16.6	%	$	7,993	17.9	%

Credit card expenses are directly tied to the cost of fuel and were 1.6% and 1.7% of retail fuel revenue for second quarter 2013 and second quarter 2014, respectively. The increase in other operating expenses is primarily related to the new stores and increased activity at existing stores, as well as increased costs related to the Gainesville Fuel business acquired in September 2013. Utility cost increases are attributable to increased natural gas prices, which drive higher electricity costs. Excluding credit card fees, other operating expenses as a percentage of merchandise sales was 11.6% in second quarter 2014 compared with second quarter 2013 at 11.5%.

Gain/Loss on sale and disposal of assets and impairment charge. We recognized a net loss on sale and disposal of $0.9 million in the second quarter 2014 compared to $0.7 million in the second quarter of 2013, primarily related to asset sales.

Depreciation, Amortization and Accretion. Depreciation, amortization and accretion expense for second quarter 2014 of $18.3 million was up $3.2 million, or 21.1%, from second quarter 2013 due to additional assets in service.

Income from Operations. Income from operations for second quarter 2014 was $27.4 million, compared to $33.4 million for second quarter 2013. The decrease is primarily attributable to increases in personnel, G&A and operating expenses partly offset by higher gross profit of $24.7 million, as described above.

Interest Expense. Interest expense for the quarter decreased by $29.0 million over last year, primarily attributable to the costs associated with the redemption of our $425 million 8.5% notes (2016 Notes) on May 15, 2013.

Income Tax. The income tax expense for second quarter 2014 was $6.6 million compared to less than $0.1 million for the second quarter of 2013. The effective rate for the second quarter of 2014 was 27.8%, compared to 25.5% for the second quarter of 2013. Income attributable to SUSP's public unitholders is not taxable to SUSS for federal and state income tax purposes. SUSP is subject to Texas gross franchise tax and is included in the SUSS consolidated Texas franchise tax return.

See Note 12 of the accompanying Notes to Consolidated Financial Statements for further discussion of our income tax provision.

Net income attributed to noncontrolling interest. The portion of SUSP's net income attributable to non-controlling interest for both the second quarter of 2014 and second quarter of 2013 was $4.8 million.

Net Income/Loss Attributable to Susser Holdings Corporation. We recorded net income attributable to Susser Holdings Corporation for the second quarter 2014 of $12.3 million, compared to net loss attributable to Susser Holdings Corporation of $4.3 million for second quarter 2013. Included in net income for 2014 is $3.1 million in pre-tax expenses related to the pending merger with ETP. Included in net loss for 2013 is the $26.2 loss on early extinguishment of debt, on a pre-tax basis. Excluding the charges related to the pending ETP merger and the redemption of our 2016 Notes in 2013, net income attributable to Susser Holdings Corporation was $14.3 million and diluted EPS was $0.66 for the three months ended June 29, 2014 compared to net income attributable to Susser Holdings Corporation of $12.5 million and diluted EPS of $0.59 for the three months ended June 30, 2013.

Adjusted EBITDA. Adjusted EBITDA for second quarter 2014 was $50.0 million, a decrease of $0.5 million, or 1.0% compared to second quarter 2013. Retail segment Adjusted EBITDA of $40.0 million increased by $2.2 million, or 5.9% compared to second quarter 2013. Wholesale segment Adjusted EBITDA of $18.2 million increased by $2.8 million, or 18.3% from second quarter 2013, primarily resulting from the higher fuel gross profit and increased gallons sold. Other segment Adjusted EBITDA reflects net expenses of $8.2 million for the quarter, compared to net expenses of $2.6 million for the same period in 2013, which $3.1 million of this increase is attributed to ETP merger expenses. Excluding these transaction costs, Adjusted EBITDA for the second quarter of 2014 was $53.1 million, a 5.1% increase over the prior year.

First Half 2014 Compared to First Half 2013

The following discussion of results for first half 2014 compared to first half 2013 compares the 26-week period of operations ended June 29, 2014 to the 26-week period of operations ended June 30, 2013. During the first half of 2014 we operated an average of 622 retail stores, 61 more than in the first half of 2013.

Total Revenue. Total revenue for first half 2014 was $3.5 billion, an increase of $468.4 million, or 15.3% from first half 2013. The increase in total revenue was driven by an increase in merchandise sales of 13.9%, a 10.1% increase in retail fuel revenue, and by a 25.1% increase in wholesale fuel revenue to third parties, as further discussed below.

Total Gross Profit. Total gross profit for first half 2014 was $352.1 million, an increase of $37.1 million, or 11.8% from first half 2013. The increase was due to the increase in merchandise gross profit of $25.5 million, fuel gross profit of $9.2 million and other gross profit of $2.4 million, as further discussed below. Included in these increases are the impact of new stores constructed or acquired during 2013 and 2014 ($28.2 million of growth in gross profit).

Merchandise Sales and Gross Profit. Merchandise sales were $594.6 million for first half 2014, an increase of $72.4 million, or 13.9% over first half 2013. The increase was due to a 3.0% merchandise same-store sales increase, accounting for $15.7 million of the increase, with the balance due to new stores built or acquired in 2013 and 2014. Merchandise same-store sales include food service sales but do not include motor fuel sales. Food service includes sales from restaurant operations, hot dogs, fountain beverages, coffee and other food and beverages prepared in the store. Key categories contributing to the merchandise same-store sales increase were food service, beer, packaged drinks, snacks and tobacco.

Merchandise gross profit was $201.5 million for the first half 2014, a 14.5% increase over first half 2013, which was driven by the increase in merchandise sales. Merchandise margin as a percent of sales was 33.9% in the first half 2014 compared to 33.7% in the first half 2013. Key categories contributing to the merchandise gross profit dollar growth were food service, packaged drinks and beer. Our reported merchandise margins do not include other income from services such as ATM’s, lottery, prepaid phone cards, car washes and movie rentals.

Retail Motor Fuel Sales, Gallons and Gross Profit. Retail sales of motor fuel for first half 2014 were $1.7 billion, an increase of $160.8 million, or 10.1% over first half 2013, driven by an 11.9% increase in retail gallons sold. The increase was partly offset by a 1.6% decrease in the average retail price of motor fuel, to $3.40 per gallon. We sold an average of approximately 32,000 gallons per retail store per week in the first half 2014, 0.8% more than first half 2013. Excluding the acquired Sac-N-Pac stores, our average gallons per store grew 3.1% over the prior year. Retail motor fuel gross profit increased by $2.0 million or 2.5% from first half 2013 due to $9.5 million gross profit related to the increase in gallons sold, offset by a decrease in the gross profit per gallon. The average retail fuel margin decreased from 17.4 cents per gallon to 16.0 cents per gallon for first half 2013 and first half 2014, respectively, resulting in a resulting in a decrease to retail fuel gross

profit of $7.5 million. After deducting credit card fees, the net margin decreased from 11.9 cents per gallon to 10.2 cents per gallon from first half 2013 to first half 2014.

Wholesale Motor Fuel Sales, Gallons and Gross Profit. Wholesale motor fuel revenues to third parties for the first half 2014 were $1.2 billion, a 25.1% increase over first half 2013. The increase was primarily driven by 27.2% increase in gallons sold, almost half of which is attributable to the Gainesville Fuel acquisition completed in September 2013, partly offset by 1.6% decrease in the wholesale selling price per gallon. Wholesale motor fuel gross profit of $39.4 million increased $7.1 million or 22.1% from first half 2013, due to the additional gallons sold and a 1.1% increase in the gross profit per gallon from third parties from 6.2 cents to 6.3 cents per gallon (responsible for a $0.3 million increase).

Other Revenue and Gross Profit. Other revenue of $29.8 million for first half 2014 increased by $2.6 million or 9.5% from first half 2013, with a $2.4 million or 9.0% increase in associated gross profit. Of this increase, $1.1 million is related to an increase in ATM income, $0.8 million increase in lottery income, $0.6 million increase in car wash income and $0.5 million increase in other income related to oil supplies.

Personnel Expense. Personnel expense consists primarily of retail store labor and overhead costs. For the first half 2014, personnel expense increased $20.0 million, or 19.7%, over first half 2013. Of the increase in personnel expense, $13.3 million was attributable to the new stores acquired or constructed during 2013 and 2014. As a percentage of merchandise sales, personnel expense increased by 100 basis points to 20.5% compared to last year, mostly attributable to start-up costs related to the large number of new stores recently opened or acquired, including those acquired in the Sac-N-Pac acquisition and a higher proportion of restaurant sales which require approximately two to three times the labor per dollar of sales. Also impacting personnel expense are the additional costs of healthcare mandated by the Affordable Care Act. Direct labor (excluding benefits) as a percentage of merchandise sales on a same-store basis was approximately the same as last year.



	Six Months Ended
	June 30, 2013				June 29, 2014
			% of Merchandise Sales				% of Merchandise Sales		$ Change		% Change
Personnel expense	$	101,622	19.5	%	$	121,598	20.5	%	$	19,976	19.7	%

General and Administrative Expenses. For first half 2014, general and administrative ("G&A") expenses increased by $10.5 million, or 41.6% from first half 2013. G&A expenses include non-cash stock-based compensation expenses, which were $6.6 million for the first half 2014, compared to $2.8 million for the first half 2013. The remaining $6.7 million increase was primarily due to additional support expenses related to additional stores, $2.5 million increase in bonus and 401(k) match accruals related to better performance against internal targets, and $3.1 million in costs related to the pending merger with ETP. The following table shows the relative components of G&A expenses expressed as a percent of non-fuel revenue plus fuel gallons (in thousands):



	Six Months Ended
	June 30, 2013					June 29, 2014
				% of Non-Fuel Revenue and Fuel Gallons					% of Non-Fuel Revenue and Fuel Gallons		$ Change			% Change
General and administrative expense	$	25,310		1.9	%	$	35,832		2.4	%	$	10,522		41.6	%
Less: Non-cash stock based compensation	(2,818		)	(0.2	)%	(6,611		)	(0.4	)%	(3,793		)	134.6	%
Less: ETP merger expenses	—			—	%	(3,114		)	(0.2	)%	(3,114		)	100.0	%
Other G&A expense	$	22,492		1.7	%	$	26,107		1.8	%	$	3,615		16.1	%
Non-Fuel Revenue and Fuel Gallons (1)	1,311,803					1,523,746

Other Operating Expenses. Other operating expenses increased by $14.0 million or 16.6% over first half 2013. Operating expenses related to new stores accounted for $6.8 million of increased costs. Significant changes to operating expenses are presented in the table below.



	Six Months Ended
	June 30, 2013		% of Merchandise Sales		June 29, 2014		% of Merchandise Sales		$ Change		% Change
Credit card expense	$	25,401	4.9	%	$	29,431	5.0	%	$	4,030	15.9	%
Utilities	12,492		2.4	%	15,817		2.7	%	3,325		26.6	%
Maintenance	15,056		2.9	%	16,335		2.7	%	1,279		8.5	%
Supplies	7,100		1.3	%	8,152		1.3	%	1,052		14.8	%
Other operating expenses	24,654		4.7	%	29,007		4.9	%	4,353		17.7	%
Total other operating expenses	$	84,703	16.2	%	$	98,742	16.6	%	$	14,039	16.6	%

Credit card expenses are directly tied to the cost of fuel and were 1.6% and 1.7% of retail fuel revenue for first half 2013 and first half 2014, repectively. The increase in other operating expenses is primarily related to the new stores and increased activity at existing stores, as well as increased costs related to the Gainesville Fuel business acquired in September 2013. Utility cost increases are resulting from increased natural gas prices, which drive higher electricity costs. Excluding credit card fees, other operating expenses as a percentage of merchandise sales were 11.7% in the first half 2014 compared to the first half 2013 at 11.4%.

Gain/Loss on sale and disposal of assets and impairment charge. We recognized a net loss on sale and disposal of $1.9 million in the first half 2014 compared to $1.1 million in the first half of 2013, primarily related to asset sales.

Depreciation, Amortization and Accretion. Depreciation, amortization and accretion expense for the first half 2014 of $35.4 million was up $6.1 million, or 20.6%, from first half 2013 due to the additional assets in service.

Income from Operations. Income from operations for first half 2014 was $35.2 million, compared to $49.1 million for first half 2013. The decrease is primarily attributed to an increase in personnel, G&A and operating expenses, partly offset by the increases merchandise gross profit of $25.5 million, wholesale fuel gross profit of $7.1 million and retail fuel gross profit of $2.0 million, as described above.

Interest Expense. Interest expense for the first half decreased by $6.8 million over last year, primarily reflecting the costs associated with the redemption of our $425 million 8.5% notes (2016 Notes) on May 15, 2013, offset by increased revolver activity.

Income Tax. The income tax expense for first half 2014 was $8.0 million, which consisted of $1.3 million of expense attributable to the Texas franchise tax and $6.7 million of income tax expense related to the federal and state income tax. This is an increase of $6.4 million from the first half of 2013. The effective tax rate for the first half of 2014 was 27.8%, compared to 26.4% for the first half of 2013. SUSP is subject to Texas franchise tax and will be included in the SUSS consolidated Texas franchise tax return. See Note 12 of the accompanying Notes to Consolidated Financial Statements for further discussion of our income tax provision.

Net income attributed to noncontrolling interest. The noncontrolling interest's portion of SUSP's net income for the first half 2014 was $9.8 million compared to $8.9 million in first half 2013, reflecting the increased net income of SUSP.

Net Income/Loss Attributable to Susser Holdings Corporation. We recorded net income attributable to Susser Holdings Corporation for the first half 2014 of $10.4 million, compared to net loss attributable to Susser Holdings Corporation of $4.5 million for first half 2013. Included in net income for 2014 is $3.1 million in expenses related to the pending merger with ETP. Included in net loss for 2013 is the $26.2 loss on early extinguishment of debt, on a pre-tax basis. Excluding the charges related to the pending ETP merger and the redemption of our 2016 Notes in 2013, net income attributable to Susser Holdings Corporation was $12.5 million and diluted EPS was $0.57 for the six months ended June 29, 2014 compared to net income attributable to Susser Holdings Corporation of $12.3 million and diluted EPS of $0.58 for the six months ended June 30, 2013

Adjusted EBITDA. Adjusted EBITDA for first half 2014 was $79.0 million, a decrease of $3.3 million, or 4.0% compared to first half 2013. Retail segment Adjusted EBITDA of $57.4 million decreased by $2.2 million, or 3.7% compared to first half 2013, primarily due to increased personnel costs and credit card expense partly offset by higher merchandise gross profit and higher fuel gross profit. Wholesale segment Adjusted EBITDA of $34.9 million increased by $7.2 million, or 26.2% from first half 2013, primarily resulting from the higher fuel gross profit per gallon and increased gallons sold. Other segment Adjusted EBITDA reflects net expenses of $13.3 million for the first half 2014, compared to net expenses of $5.0 million for the same period in 2013, which $3.1 million of this increase is attributed to ETP merger expenses. Excluding these transaction costs, Adjusted EBITDA for the second quarter of 2014 was $82.1 million, a 0.2% decrease from the prior year.

Liquidity and Capital Resources

Cash Flows from Operations. We rely primarily on cash provided by operating activities, supplemented as necessary from time to time by borrowings under our revolving credit facilities and other debt or equity transactions to finance our operations, to service our debt obligations, and to fund our capital expenditures. Due to the seasonal nature of our business, our operating cash flow is typically the lowest during the first quarter of the year since (i) sales tend to be lower during the winter months; (ii) we are building inventory in preparation for spring break and summer; (iii) fuel margins have historically trended lower in the first quarter; and (iv) we pay certain annual operating expenses during the first quarter. The summer months are our peak sales months, and therefore our operating cash flow tends to be the highest during the third quarter.

Cash flows provided by operations were $34.3 million and $27.4 million for the first six months of 2014 and 2013, respectively. The change in our cash provided by operating activities for the respective periods was primarily attributable to changes in operating results as previously discussed, and changes in working capital. Our daily working capital requirements fluctuate within each month, primarily in response to the timing of motor fuel tax, sales tax, interest and rent payments. We had $26.8 million of cash and cash equivalents on hand at June 29, 2014, compared to $22.5 million cash and cash equivalents at December 29, 2013.

Capital Expenditures. Gross capital expenditures, which include acquisitions, purchase of intangibles and accrued expenditures, were $202.4 million and $99.8 million during the first six months of 2014 and 2013, respectively. Included in capital expenditures for 2014 is approximately $88 million for the Sac-N-Pac acquisition, which includes 47 retail store and 19 dealer contracts. During the first six months of 2014, we opened nine newly constructed or acquired large-format retail stores, in addition to the Sac-N-Pac stores. Four additional stores have been opened to date in the third quarter. We currently have another 17 stores under construction.

Following is a summary of our recent operating site additions and closures by segment:



	Three Months Ended		Six Months Ended
	June 29, 2014		June 29, 2014
Retail stores:
Number at beginning of period	629		580
New stores	5		7
Acquired stores	2		49
Number at end of period	636		636
Wholesale dealer and consignment locations:
Number at beginning of period	616		591
New locations	11		38
Closed locations	(3	)	(5	)
Number at end of period	624		624

Other Investing Activities. During the first six months of 2014, we funded a portion of our new store construction by selling and leasing back 13 newly-constructed Stripes® stores to SUSP for a total of $58.6 million in proceeds. SUSP funded these purchases by liquidating the remaining balance of its marketable securities and borrowing on its revolving credit facility.

Cash Flows from Financing Activities. At June 29, 2014, our consolidated outstanding debt was $534.4 million and cash on the balance sheet was $26.8 million. Our net debt position at the end of the quarter is summarized as follows (in thousands):



	SUSP		SUSS		Total Consolidated
2013 SUSS revolver	$	—	$	297,620	$	297,620
SUSP revolver	232,240		—		232,240
Other notes payable	4,062		464		4,526
Total debt outstanding	236,302		298,084		534,386
Cash	6,769		19,998		26,767
Debt less cash	$	229,533	$	278,086	$	507,619

Additional details of our long-term debt are provided in Note 9 in the accompanying Notes to Consolidated Financial Statements.

SUSP made a $5.3 million distribution to public unit holders on February 28, 2014, related to its operations for the fourth quarter of 2013 and $5.5 million distribution to public unitholders on May 30, 2014, related to its operations for the first quarter of 2014. SUSP declared a quarterly distribution of $0.5197 per unit related to its second quarter 2014 operations on August 4, 2014.

Long Term Liquidity. We expect that our cash flows from operations, cash on hand, lease and mortgage financing and our revolving credit facilities will be adequate to provide for our short-term and long-term liquidity needs. Short-term liquidity under our revolving credit facilities at quarter-end is summarized below (in thousands):



	Total Capacity		Amount Borrowed		Outstanding Letters of Credit		Available Capacity
SUSP Revolver	$	400,000	$	232,240	$	10,875	$	156,885
2013 SUSS Revolver	500,000		297,620		2,017		200,363
Total	$	900,000	$	529,860	$	12,892	$	357,248

Our ability to meet our debt service obligations and other capital requirements including capital expenditures, as well as the cost of potential acquisitions and new store openings, will depend on our future performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. As a normal part of our business, depending on market conditions, we from time to time consider opportunities to repay, redeem or repurchase our existing indebtedness, and although we may refinance all or part of our indebtedness in the future, there can be no assurances that we will do so. Changes in our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause us to need to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. In addition, any of the items discussed in detail under “Item A. Risk Factors” of our Annual Report on Form 10-K may also significantly impact our liquidity.

Contractual Obligations and Commitments

Contractual Obligations. We have contractual obligations which are required to be settled in cash. Since the end of 2013, we have repaid the SUSP Term Loan and borrowed additional amounts on the SUSS and SUSP revolvers. See Note 9 in the accompanying Notes to Consolidated Financial Statements for more information on our debt transactions.

Properties. Most of our leases are net leases requiring us to pay taxes, insurance and maintenance costs. We believe that no individual site is material to us. The following table summarizes the number of owned and leased properties:



	June 29, 2014
	Owned	Leased
Operating sites:
Retail	301	335
Wholesale - SPC	9	26
Wholesale - SUSP	94	12
Inter-company leases	—	(46	)
Total	404	327
Office locations	13	8
Properties under construction	16	1
Properties held for future development	57	—
Income producing properties	45	14
Surplus properties	58	2

We lease our corporate and retail segment headquarters facility, which consists of approximately 83,000 square feet of office and warehouse space located in Corpus Christi. The annual lease expense is approximately $144,000 net of taxes, insurance and maintenance. We own the headquarters of our wholesale segment, which consists of approximately 43,000 square feet of office and warehouse space in Houston.

Quarterly Results of Operations and Seasonality

The following table sets forth certain unaudited financial and operating data for each of the last six quarters. Each quarter consists of 13 weeks, unless noted otherwise. Our business is seasonal and we generally experience higher levels of revenues during the summer months than during the winter months.



	2013												2014
	(dollars and gallons in thousands, except per share amounts)
	1^st QTR			2^nd QTR			3^rd QTR			4^th QTR			1^st QTR			2^nd QTR
Merchandise sales	$	247,478		$	274,727		$	281,610		$	262,207		$	276,375		$	318,186
Motor fuel sales:
Retail	782,979			805,850			825,440			756,797			822,924			926,686
Wholesale	454,594			471,079			490,996			504,996			543,653			614,656
Other income	13,376			13,853			13,550			14,283			14,663			15,146
Total revenue	1,498,427			1,565,509			1,611,596			1,538,283			1,657,615			1,874,674
Merchandise gross profit	81,833			94,131			95,195			90,195			93,812			107,692
Motor fuel gross profit:
Retail	37,011			42,987			43,708			34,664			32,544			49,475
Wholesale	15,165			17,081			19,949			18,335			18,670			20,705
Other gross profit	13,029			13,811			13,367			13,702			14,417			14,835
Total gross profit	147,038			168,010			172,219			156,896			159,443			192,707
Income from operations	15,607			33,449			31,043			17,605			7,787			27,368
Net income (loss) attributable to Susser Holdings Corporation	$	(232	)	$	(4,260	)	$	12,897		$	5,926		$	(1,823	)	$	12,325
Earnings (loss) per common share:
Basic	$	(0.01	)	$	(0.20	)	$	0.61		$	0.28		$	(0.09	)	$	0.57
Diluted	$	(0.01	)	$	(0.20	)	$	0.59		$	0.27		$	(0.09	)	$	0.56
Merchandise margin	33.1		%	34.3		%	33.8		%	34.4		%	33.9		%	33.8		%
Fuel gallons:
Retail	223,477			236,075			239,387			237,293			250,270			263,904
Wholesale	146,652			156,165			162,117			177,164			186,097			199,105
Motor fuel margin:
Retail (a)		16.6	¢		18.2	¢		18.3	¢		14.6	¢		13.0	¢		18.7	¢
Wholesale (b)		5.9	¢		6.4	¢		7.8	¢		6.3	¢		6.1	¢		6.5	¢


(a)	Before deducting credit card, fuel maintenance and other fuel related expenses.


(b)	Third party sales excludes sales to the retail segment.

Summary of Significant Accounting Policies

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and results of operations, and require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. Our significant accounting policies are described in our Annual Report on Form 10-K for the year ended December 29, 2013.

As one of our critical accounting policies, goodwill is not amortized, but is tested annually for impairment, or more frequently, if events and circumstances indicate that the asset might be impaired. There are no indicators of impairment as of June 29, 2014.

SUSP is a VIE as defined under GAAP. A VIE is legal entity whose equity owners do not have sufficient equity at risk or a controlling interest in the entity, or have voting rights that are not proportionate to their economic interest. As the general partner of SUSP, we have the sole ability to direct the activities of SUSP that most significantly impact SUSP's economic performance. Additionally, since our obligation to absorb losses and receive benefits from SUSP are significant to SUSP, we are SUSP's primary beneficiary and therefore we consolidate SUSP.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to market risk from exposure to changes in interest rates based on our financing, investing and cash management activities. As of June 29, 2014, we had a total of $529.9 million variable rate debt outstanding, on a consolidated basis. The annualized effect of a one percentage point change in floating interest rates on our variable rate debt obligations outstanding at June 29, 2014, would be to change interest expense by approximately $5.3 million.

Our primary exposure relates to:


•	Interest rate risk on revolver and term loan borrowings


•	The impact of interest rate movements on our ability to obtain adequate financing to fund future acquisitions.

We manage interest rate risk on our outstanding long-term and short-term debt through the use of fixed and variable rate debt. While we cannot predict or manage our ability to refinance existing debt or the impact interest rate movements will have on our existing debt, management evaluates our financial position on an ongoing basis.

From time to time, we enter into interest rate swaps to either reduce the impact of changes in interest rates on our floating rate long-term debt or to take advantage of favorable variable interest rates compared to our fixed rate long-term debt. We had no interest swaps outstanding at December 29, 2013 or June 29, 2014.

We also periodically purchase motor fuel in bulk and hold in inventory. We hedge this inventory risk associated with bulk fuel operations through the use of fuel futures contracts which are matched in quantity and timing to the anticipated usage of the inventory. Fuel hedging positions are not significant to our operations.

Item 4. Controls and Procedures

As required by paragraph (b) of Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective at the reasonable assurance level for which they were designed in that the information required to be disclosed by the Company in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the second quarter of 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we make changes to our internal control over financial reporting that are intended to enhance its effectiveness and which do not have a material effect on our overall internal control over financial reporting. We will continue to evaluate the effectiveness of our disclosure controls and procedures and internal control over financial reporting on an ongoing basis and will take action as appropriate.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

On May 6, 2014, two purported class action lawsuits were filed in the Court of Chancery of the State of Delaware challenging the proposed acquisition of the Company by Energy Transfer Partners, L.P.: John Bruce Copeland, III, On Behalf of Himself and All Others Similarly Situated, Plaintiff, v. Susser Holdings Corporation, et. al., Defendants, C.A. No. 9613-VCG; and Natalie Gordon, On Behalf of Herself and All Others Similarly Situated, Plaintiff, v. Susser Holdings Corporation, et. al., Defendants, C.A. No. 9620-VCG. Both complaints name as defendants the Company, the members of our Board of Directors, and Energy Transfer Partners, L.P. and related entities. The complaints assert claims for breach of fiduciary duty against the members of our Board of Directors and against the Company and Energy Transfer Partners, L.P. and related entities for aiding and abetting breach of fiduciary duty. The complaints allege that the proposed merger consideration is inadequate and unfair, that the process leading up to the proposed acquisition is unfair, and that the merger agreement contains preclusive deal protection devices. The complaints seek to enjoin the proposed acquisition or rescind the acquisition to the extent it is consummated, rescissory damages, an accounting, a constructive trust, attorneys’ fees, expert fees and costs, and other equitable relief. The Company believes that the allegations of the complaints are without merit. On June 17, 2014, the plaintiffs filed an amended consolidated class action complaint.

Additionally, we are parties to various legal actions in the ordinary course of our business. We believe these actions are generally routine in nature and incidental to the operation of our business or are otherwise immaterial. While the outcome of these actions cannot be predicted with certainty, we believe that the ultimate resolutions of these matters will not have a material adverse effect on our business, financial condition or prospects.

Item 1A. Risk Factors

You should carefully consider the risks described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 29, 2013, as well as the section within this report entitled “Forward-Looking Statements” under Part I. Financial Information – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, before making any investment decision with respect to our securities. The risks and uncertainties described in our annual report are not the only ones facing us. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, could negatively impact our results of operations or financial condition in the future. If any of such risks actually occur, our business, financial condition or results of operations could be materially adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The list of exhibits attached to this Quarterly Report on Form 10-Q is incorporated herein by reference.

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.



	SUSSER HOLDINGS CORPORATION
Date: August 8, 2014	By	/s/ Mary E. Sullivan
		Mary E. Sullivan
		Executive Vice President and Chief Financial Officer (On behalf of the registrant, and in her capacity as principal financial officer and principal accounting officer)

EXHIBIT INDEX



Exhibit No.		Description
2.1		Agreement and Plan of Merger, dated as of April 27, 2014 by and among Energy Transfer Partners, L.P., Drive Acquisition Corporation, Heritage Holdings, Inc., Energy Transfer Partners GP, L.P., Susser Holdings Corporation, and, for certain limited purposes set forth therein, Energy Transfer Equity, L.P. (1)*

10.1		Support Agreement, dated April 27, 2014, by and among Energy Transfer Partners, L.P., Drive Acquisition Corporation, Sam L. Susser and Susser Family Limited Partnership.(1)

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation

101.DEF		XBRL Taxonomy Extension Definition

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation

(1) Incorporated by reference to the Current Report on Form 8-K of Susser Holdings Corporation filed April 28, 2014.

* Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the SEC upon request.

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