Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20142015
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-35782
 
 
SUNCOKE ENERGY PARTNERS, L.P.
(Exact name of Registrant as specified in its charter)
 
 
Delaware 35-2451470
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1011 Warrenville Road, Suite 600
Lisle, Illinois 60532
(630) 824-1000
(Registrant’s telephone number, including area code)
 
 
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.    ý  Yes    ¨  No
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     ý  Yes    ¨  No
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 ¨  Accelerated filer ý
Non-accelerated filer ¨(Do not check if a smaller reporting company) Smaller reporting company ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act) of 1934.    Yes  ¨    No  ý

The registrant had 21,693,16030,712,494 common units and 15,709,697 subordinated units outstanding at October 24, 2014.23, 2015.
 


Table of Contents

SUNCOKE ENERGY PARTNERS, L.P.
TABLE OF CONTENTS
 
PART I - FINANCIAL INFORMATION
  
Item 1. Combined and Consolidated Financial Statements
1
  
Combined and Consolidated Statements of Income (Unaudited) For the Three and Nine Months Ended September 30, 20142015 and 20132014
1
  
Combined and Consolidated Balance Sheets At September 30, 20142015 (Unaudited) and December 31, 20132014
2
  
Combined and Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 20142015 and 20132014
3
  
Combined and Consolidated Statement of Equity (Unaudited) For the Nine Months Ended September 30, 20142015
4
  
Notes to the Combined and Consolidated Financial Statements
5
  
1. General
5
2. Acquisition
6
3. Related Party Transactions and Agreements
10
4. Cash Distributions and Net Income Per Unit
12
5. Inventories
15
6. Income Taxes
15
7. Debt
15
8. Supplemental Cash Flow Information
17
9. Commitments and Contingent Liabilities
17
10. Fair Value Measurements
17
11. Business Segment Disclosures
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
1722
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
3137
  
Item 4. Controls and Procedures
3137
 
PART II - OTHER INFORMATION
  
Item 1. Legal Proceedings
3238
  
Item 1A. Risk Factors
3238
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
38
  
Item 6. Exhibits
3339
  
Signature
3440

Table of Contents

PART I - FINANCIAL INFORMATION
Item 1.Combined and Consolidated Financial Statements

SunCoke Energy Partners, L.P.
Combined and Consolidated Statements of Income
(Unaudited)
 Three Months Ended September 30, Nine Months Ended September 30,
 Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014
 2014 2013 2014 2013        
 (Dollars and units in millions, except per unit amounts) (Dollars and units in millions, except per unit amounts)
Revenues                
Sales and other operating revenue $158.7
 $162.0
 $480.8
 $514.6
 $210.2
 $216.8
 $621.1
 $649.1
Costs and operating expenses                
Cost of products sold and operating expenses 115.3
 118.9
 353.5
 383.3
Selling, general and administrative expenses 5.1
 7.4
 16.4
 16.5
Cost of products sold and operating expense 149.7
 157.6
 452.7
 485.3
Selling, general and administrative expense 9.8
 6.7
 24.7
 20.8
Depreciation and amortization expense 10.2
 8.3
 30.1
 23.5
 17.0
 13.7
 47.0
 40.3
Total costs and operating expenses 130.6
 134.6
 400.0
 423.3
 176.5
 178.0
 524.4
 546.4
Operating income 28.1
 27.4
 80.8
 91.3
 33.7
 38.8
 96.7
 102.7
Interest expense, net 6.8
 2.8
 30.1
 12.3
 12.4
 6.8
 43.8
 30.1
Income before income tax expense 21.3
 24.6
 50.7
 79.0
 21.3
 32.0
 52.9
 72.6
Income tax expense 0.5
 0.1
 1.0
 4.2
Income tax expense (benefit) 0.5
 4.9
 (2.4) 9.0
Net income 20.8
 24.5
 49.7
 74.8
 20.8
 27.1
 55.3
 63.6
Less: Net income attributable to noncontrolling interests 0.6
 10.8
 15.1
 30.0
 1.3
 0.6
 5.6
 15.1
Net income attributable to SunCoke Energy Partners, L.P./Predecessor 20.2
 13.7
 34.6
 44.8
 $19.5
 $26.5
 $49.7
 $48.5
Less: Predecessor net income prior to initial public offering on January 24, 2013 —
 —
 —
 3.5
Net income attributable to SunCoke Energy Partners, L.P. subsequent to initial public offering $20.2
 $13.7
 $34.6
 $41.3
Less: Net income attributable to Predecessor —
 6.3
 0.6
 13.9
Net income attributable to SunCoke Energy Partners, L.P. $19.5
 $20.2
 $49.1
 $34.6
                
General partner's interest in net income $0.7
 $0.3
 $1.4
 $0.9
 $1.9
 $7.0
 $5.1
 $15.3
Limited partners' interest in net income $19.5
 $13.4
 $33.2
 $40.4
 $17.6
 $19.5
 $44.6
 $33.2
Net income per common unit (basic and diluted) $0.52
 $0.43
 $1.01
 $1.29
 $0.43
 $0.52
 $1.16
 $1.01
Net income per subordinated unit (basic and diluted) $0.52
 $0.43
 $0.89
 $1.29
 $0.38
 $0.52
 $1.00
 $0.89
Weighted average common units outstanding (basic and diluted) 21.7
 15.7
 19.0
 15.7
 27.4
 21.7
 24.8
 19.0
Weighted average subordinated units outstanding (basic and diluted) 15.7
 15.7
 15.7
 15.7
 15.7
 15.7
 15.7
 15.7
Cash distribution per unit paid during period $0.5150
 $0.4225
 $1.4900
 $0.7296

(See Accompanying Notes)
1
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SunCoke Energy Partners, L.P.
Combined and Consolidated Balance Sheets

 September 30, 2014 December 31, 2013 September 30, 2015 December 31, 2014
 (Unaudited)   (Unaudited)  
 (Dollars in millions) (Dollars in millions)
Assets    
Cash and cash equivalents $26.9
 $46.3
 $61.3
 $33.3
Receivables 26.2
 20.2
 59.7
 36.3
Receivables from affiliates, net 0.8
 6.4
 1.9
 3.1
Inventories 71.2
 59.3
 75.4
 90.4
Other current assets 2.0
 1.7
 2.9
 1.5
Total current assets 127.1
 133.9
 201.2
 164.6
Restricted cash 21.5
 —
Properties, plants and equipment, net 894.3
 871.1
 1,331.3
 1,213.4
Goodwill and other intangible assets, net 15.3
 16.0
Goodwill 69.1
 8.2
Other intangible assets, net 190.2
 6.9
Deferred income taxes —
 21.6
Deferred charges and other assets 14.1
 6.5
 1.1
 2.3
Total assets $1,050.8
 $1,027.5
 $1,814.4
 $1,417.0
Liabilities and Equity        
Accounts payable $46.7
 $58.7
 $51.1
 $61.1
Accrued liabilities 6.5
 6.4
 20.0
 11.2
Short-term debt —
 40.0
Current portion of long-term debt 1.1
 —
Interest payable 4.9
 4.6
 8.3
 12.3
Total current liabilities 58.1
 109.7
 80.5
 84.6
Long-term debt 412.0
 149.7
 939.8
 399.0
Deferred income taxes 3.7
 2.8
 38.1
 —
Asset retirement obligations 5.6
 5.3
Other deferred credits and liabilities 1.1
 0.6
 9.1
 1.4
Total liabilities 474.9
 262.8
 1,073.1
 490.3
Equity        
Held by public:        
Common units (issued and outstanding 16,788,408 and 13,503,456 units at September 30, 2014 and December 31, 2013, respectively)
 238.8
 240.8
Common units (issued 21,006,495 and 16,789,164 units at September 30, 2015 and December 31, 2014, respectively)
 300.4
 239.1
Held by parent: 

 

 

 

Common units (issued and outstanding 4,904,752 and 2,209,697 units at September 30, 2014 and December 31, 2013, respectively) 113.8
 41.0
Subordinated units (issued and outstanding 15,709,697 units at September 30, 2014 and December 31, 2013) 203.4
 290.4
General partner interest (2% interest) 8.9
 8.3
Common units (issued 9,705,999 and 4,904,752 units at September 30, 2015 and December 31, 2014, respectively) 209.9
 113.8
Subordinated units (issued 15,709,697 units at September 30, 2015 and December 31, 2014, respectively) 201.5
 203.7
General partner interest 13.6
 9.2
Parent net equity —
 349.8
Partners' capital attributable to SunCoke Energy Partners, L.P. 564.9
 580.5
 725.4
 915.6
Noncontrolling interest 11.0
 184.2
 15.9
 11.1
Total equity 575.9
 764.7
 741.3
 926.7
Total liabilities and partners' net equity $1,050.8
 $1,027.5
 $1,814.4
 $1,417.0

(See Accompanying Notes)
2
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SunCoke Energy Partners, L.P.
Combined and Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended September 30, Nine Months Ended September 30,
 2014 2013 2015 2014
   
   
 (Dollars in millions) (Dollars in millions)
Cash Flows from Operating Activities:        
Net income $49.7
 $74.8
 $55.3
 $63.6
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization expense 30.1
 23.5
 47.0
 40.3
Deferred income tax expense 0.9
 3.9
Deferred income tax (benefit) expense (3.1) 9.0
Loss on debt extinguishment 15.4
 —
 9.4
 15.4
Changes in working capital pertaining to operating activities:    
Changes in working capital pertaining to operating activities (net of acquisitions):    
Receivables (6.0) (33.2) (28.0) (6.0)
Receivables from affiliate, net 5.6
 —
 2.8
 5.6
Inventories (11.9) 8.0
 16.7
 (15.0)
Accounts payable (12.0) —
 (4.1) (12.8)
Accrued liabilities 0.1
 (13.5) 1.4
 (12.7)
Interest payable 0.3
 1.8
 (8.7) 0.3
Other (0.7) 4.4
 (0.5) (1.1)
Net cash provided by operating activities 71.5
 69.7
 88.2
 86.6
Cash Flows from Investing Activities:        
Capital expenditures (53.1) (20.4) (31.7) (57.0)
Acquisition of business —
 (28.6) (193.1) —
Restricted cash (21.5) —
Net cash used in investing activities (53.1) (49.0) (246.3) (57.0)
Cash Flows from Financing Activities:        
Proceeds from issuance of common units of SunCoke Energy Partners, L.P., net of offering costs 90.5
 231.8
 30.0
 90.5
Proceeds from issuance of long-term debt 268.1
 150.0
 210.8
 268.1
Repayment of long-term debt, including market premium (276.3) (225.0) (149.8) (276.3)
Debt issuance costs (5.8) (6.8) (4.5) (5.8)
Proceeds from revolving credit facility 40.0
 —
 185.0
 40.0
Repayment of revolving facility (80.0) —
 —
 (80.0)
Distributions to unitholders (public and parent) (54.2) (23.3) (75.0) (54.2)
Distributions to noncontrolling interest (SunCoke Energy, Inc.) (20.4) (69.5) (2.7) (20.4)
Common public unit repurchases (10.0) —
Capital contributions from SunCoke Energy Partners GP LLC 0.3
 0.6
 2.3
 0.3
Net cash (used in) provided by financing activities (37.8) 57.8
Net (decrease) increase in cash and cash equivalents (19.4) 78.5
Net transfers to parent —
 (11.2)
Net cash provided by (used in) financing activities 186.1
 (49.0)
Net increase (decrease) in cash and cash equivalents 28.0
 (19.4)
Cash and cash equivalents at beginning of period 46.3
 —
 33.3
 46.3
Cash and cash equivalents at end of period $26.9
 $78.5
 $61.3
 $26.9

(See Accompanying Notes)
3
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SunCoke Energy Partners, L.P.
Combined and Consolidated Statement of Equity
(Unaudited)
  Common
- Public		 Common
- SunCoke		 Subordinated
- SunCoke		 General Partner
- SunCoke		 Noncontrolling Interest Total
 (Dollars in millions)
At December 31, 2013 $240.8
 $41.0
 $290.4
 $8.3
 $184.2
 $764.7
Partnership net income 14.6
 3.6
 15.0
 1.4
 15.1
 49.7
Distribution to unitholders (23.4) (6.0) (23.4) (1.4) —
 (54.2)
Distributions to noncontrolling interest —
 —
 —
 —
 (17.0) (17.0)
Proceeds from equity issuance to public unitholders 90.5
 —
 —
 —
 —
 90.5
Acquisition of additional interest in Haverhill and Middletown:            
Issuances of units —
 80.0
 —
 3.3
 —
 83.3
Cash payment (1.6) (0.2) (1.5) (0.1) —
 (3.4)
Adjustments to equity related to the acquisition (82.1) (4.6) (77.1) (2.9) (171.3) (338.0)
Capital contribution —
 —
 —
 0.3
 —
 0.3
At September 30, 2014 $238.8
 $113.8
 $203.4
 $8.9
 $11.0
 $575.9
  Parent Net Equity Common
- Public		 Common
- SunCoke		 Subordinated
- SunCoke		 General Partner
- SunCoke		 Noncontrolling Interest Total
               
 (Dollars in millions)
At December 31, 2014 $349.8
 $239.1
 $113.8
 $203.7
 $9.2
 $11.1
 $926.7
Partnership net income 0.6
 19.3
 8.0
 17.3
 4.5
 5.6
 55.3
Distribution to unitholders —
 (31.0) (13.2) (26.7) (4.1) —
 (75.0)
Distributions to noncontrolling interest —
 —
 —
 —
 —
 (2.7) (2.7)
Unit repurchases —
 (10.0) —
 —
 —
 —
 (10.0)
Issuance of units —
 75.0
 98.0
 —
 3.7
 —
 176.7
Adjustments to equity for the acquisition of an interest in Granite City —
 (106.7) (44.6) (94.4) (5.1) —
 (250.8)
Allocation of parent net equity in Granite City to SunCoke Energy Partners, L.P. (271.5) 114.7
 47.9
 101.6
 5.4
 1.9
 —
Granite City net assets not assumed by SunCoke Energy Partners, L.P. (78.9) —
 —
 —
 —
 —
 (78.9)
At September 30, 2015 $—
 $300.4
 $209.9
 $201.5
 $13.6
 $15.9
 $741.3


(See Accompanying Notes)
4
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SunCoke Energy Partners, L.P.
Notes to the Combined and Consolidated Financial Statements
1. General
Description of Business
SunCoke Energy Partners, L.P., (the "Partnership", "we", "our", and "us"), is a Delaware limited partnership formed in July 2012, which primarily manufacturesproduces coke used in the blast furnace production of steel. On January 24, 2013,At September 30, 2015, we completed the initial public offering ("IPO") of our common units representing limited partner interests. In connection with the IPO, we acquired from SunCoke Energy, Inc. ("SunCoke"),owned a 65.098 percent interest in each of Haverhill Coke Company LLC ("Haverhill") and, Middletown Coke Company, LLC ("Middletown") and theGateway Energy and Coke Company, LLC ("Granite City"). The remaining 2 percent ownership interest in our three cokemaking facilities and related assets heldwas owned by Haverhill and Middletown. On May 9, 2014, we completed the acquisition of an additional 33.0 percent interest in the Haverhill and Middletown cokemaking facilities. See Note 2.SunCoke Energy, Inc. ("SunCoke"). At September 30, 2014,2015, SunCoke, through itsa subsidiary, ownsowned a 54.053.7 percent partnership interest in us and all of our incentive distribution rights and indirectly ownsowned and controlscontrolled our general partner, which holds a 2.0 percent general partner interest in us.
During 2013, we expanded our operations into coal handling and blending services through two acquisitions. On August 30, 2013, the Partnership completed its acquisition of Lakeshore Our Coal Handling Corporation ("Lake Terminal"). Located in East Chicago, Indiana, Lake TerminalLogistics business provides coal handling andand/or blending services to SunCoke's Indiana Harborthird party customers as well as to our own cokemaking operations. On October 1,facilities.
Incorporated in Delaware in 2012 and headquartered in Lisle, Illinois, we became a publicly-traded partnership in 2013 and our stock is listed on the Partnership acquired Kanawha River Terminals ("KRT"New York Stock Exchange (“NYSE”). KRT is a leading metallurgical and thermal coal blending and handling terminal service provider with collective capacity to blend and transload 30 million tons of coal annually through its operations in West Virginia and Kentucky. under the symbol “SXCP.”
Basis of Presentation
The accompanying unaudited combined and consolidated financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP") for interim reporting. Certain information and disclosures normally included in financial statements have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). In management’s opinion, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The results of operations for the period ended September 30, 20142015 are not necessarily indicative of the operating results for the full year. These unaudited interim combined and consolidated financial statements and notes should be read in conjunction with the audited combined and consolidated financial statements and notes included in our Current Report on Form 8-K dated April 30, 2015 and our Annual Report on Form 10-K for the year ended December 31, 2013.2014.
On January 13, 2015, the Partnership acquired an initial 75 percent interest in SunCoke's Granite City cokemaking facility (the "Granite City Dropdown"). On August 12, 2015, the Partnership acquired an additional 23 percent interest in SunCoke's Granite City cokemaking facility (the "Granite City Supplemental Dropdown"). The combined and consolidated financial statements for the periods presented pertain to the operations of the Partnership and give retrospective effect to include the results of operations, financial position and cash flows of Granite City as a result of the Granite City Dropdown.
Granite City participated in centralized financing and cash management programs not maintained at the Partnership for periods prior to the Granite City Dropdown. Accordingly, none of SunCoke’s cash or interest income for periods prior to the Granite City Dropdown has been assigned to Granite City in the combined and consolidated financial statements. Advances between Granite City and SunCoke that are specifically related to Granite City have been reflected in the combined and consolidated financial statements for periods prior to the IPOGranite City Dropdown. Transfers of cash to and from SunCoke’s financing and cash management program are reflected as a component of parent net equity on the results of SunCoke Energy Partners' Predecessor (the "Predecessor")Combined and Consolidated Balance Sheets. The Granite City Dropdown did not impact historical earnings per unit as pre-acquisition earnings were prepared using SunCoke's historical basis in the assets and liabilities of the Predecessor, and include all revenues, costs, assets and liabilities attributedallocated to the Predecessor after the elimination of all significant intercompany accounts and transactions. The consolidated financial statements for the period after the IPO pertain to the operations of the Partnership.our general partner.
New Accounting Pronouncements
In May 2014,September 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”("ASU") 2014-09, “Revenue from Contracts with Customers,” which provides guidance2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for revenue recognition. Under thisMeasurement-Period Adjustments." ASU an entity is required2015-16 eliminates the requirement to recognize revenue upon transfer of promised goods or servicesretrospectively account for adjustments made to customers, in an amount that reflectsprovisional amounts recognized at the consideration to which the company expects to be entitled in exchange for those goods or services.  The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASUacquisition date. It is effective for annual reportingfiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently reviewing the provisions of ASU 2014-09 but does not expect it to have a material effect on the Company's financial condition, results of operations, or cash flows.
In April 2014, FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. It is effective for annual periods beginning on or after December 15, 20142015, with early adoption permitted. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in previously issued financial statements. The Company does not expect this ASU to have a material effect on the Company's financial condition, results of operations, or cash flows.


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In August 2014,July 2015, the FASB issued ASU 2014-15, "Presentation2015-11, "Inventory (Topic 330): Simplifying the Measurement of Financial Statements-Going Concern". ThisInventory." ASU is intended2015-11 requires an entity to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concernmeasure inventory at the lower of cost and to provide related footnote disclosures.net realizable value, removing the consideration of current replacement cost. It is effective for annualfiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. The Company does not expect itthis ASU to have a material effect on the Company's financial condition, results of operations, andor cash flows.
In April 2015, the FASB issued ASU 2015-06, "2015-06-Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (a consensus of the Emerging Issues Task Force)."


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ASU 2015-06 indicates how the earnings (losses) of a transferred business before the date of a dropdown transaction should be allocated to the various interest holders, such as the general partner, in a master limited partnership for purposes of calculating earnings per unit under the two-class method. It is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company is currently assessing presentation matters related to this ASU.
In April 2015, the FASB issued ASU 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost." ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. It is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company early adopted this ASU during the first quarter of 2015. See Note 7.
In February 2015, the FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis." ASU 2015-02 eliminates the deferral of FASB Statement No. 167, "Amendments to FASB Interpretation No. 46(R)," and makes changes to both the variable interest model and the voting model. It is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect this ASU to have a material effect on the Company's financial condition, results of operations, or cash flows.
Reclassifications
Certain amounts in the prior period combined and consolidated financial statements have been reclassified to conform to the current year presentation.
2. Acquisitions
Convent Marine Terminal Acquisition
On August 12, 2015, the Partnership completed the acquisition of a 100 percent ownership interest in Raven Energy LLC, which owns Convent Marine Terminal ("CMT") for a total transaction value of $404.5 million. This transaction represents a significant expansion of the Partnership's Coal Logistics business and marks our entry into export coal handling. CMT is one of the largest export terminals on the U.S. gulf coast and provides strategic access to seaborne markets for coal and other industrial materials. Supporting low-cost Illinois basin coal producers, the terminal provides loading and unloading services and has direct rail access and the capability to transload 10 million tons of coal annually. The facility is supported by long-term contracts with volume commitments covering all of its current 10 million ton capacity.
The total transaction value of $404.5 million included the issuance of 4.8 million of the Partnership's common units to the previous owner of Raven Energy LLC, The Cline Group, with an aggregate value of $75.0 million, based on the unit price on the date of close. In addition, the Partnership assumed $114.9 million of a six-year term loan from Raven Energy LLC. The Partnership obtained additional funding for the transaction by drawing $185.0 million on the Partnership's revolving credit facility. The Partnership paid $193.1 million in cash, which was partially funded by SunCoke in exchange for 1.8 million of the Partnership's common units, with an aggregate value of $30.0 million. In connection with the acquisition, the Partnership’s general partner made a capital contribution to the Partnership of approximately $2.3 million in order to preserve its 2 percent general partner interest. An additional $21.5 million in cash was withheld to fund the completion of expansion capital improvements at CMT and is recorded in restricted cash on the Combined and Consolidated Balance Sheet.
The following table summarizes the consideration transferred to acquire CMT:
Fair Value of Consideration Transferred:(Dollars in millions)
Cash$193.1
Partnership common units75.0
Assumption of Raven Energy LLC term loan114.9
Cash withheld to fund capital expenditures21.5
Total fair value of consideration transferred:$404.5
The purchase price allocation has been determined provisionally, and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The Partnership is in the process of finalizing appraisals of tangible and intangible assets acquired. Accordingly, the provisional measurements are subject to change. In addition, we are in the process of finalizing working capital adjustments for the acquisition, which may result in a corresponding adjustment to the total purchase price as well as the value of assets acquired. Any change in the acquisition date fair value of the acquired net assets will change the amount of the purchase price allocated to goodwill.


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The following table summarizes the amounts of identified assets acquired and liabilities assumed based on the estimated fair value at the acquisition date:
Recognized amounts of identifiable assets acquired and liabilities assumed:(Dollars in millions)
Receivables$6.1
Inventories1.7
Other current assets0.1
Properties, plants and equipment, net145.1
Accounts payable(0.5)
Accrued liabilities(7.5)
Current portion of long-term debt(1.1)
Long-term debt(113.8)
Contingent consideration(7.9)
Net recognized amounts of identifiable assets acquired$22.2
Intangible assets185.0
Goodwill60.9
Total assets acquired, net of liabilities assumed$268.1
Plus: 
Debt assumed$114.9
Cash withheld to fund capital expenditures21.5
Total fair value of consideration transferred$404.5
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The primary factors that contributed to a premium in the purchase price and the resulting recognition of goodwill were the value of additional capacity and potential for future additional throughput.
The purchase price allocation to identifiable intangible assets, which are all amortizable, along with their respective weighted-average amortization periods at the acquisition date are as follows:
 Weighted - Average Remaining Amortization Years (Dollars in millions)
Customer contracts7 $24.0
Customer relationships17 22.0
Permits27 139.0
Total  $185.0
The purchase price includes a contingent consideration arrangement that requires the Partnership to make future payments to The Cline Group based on future volume, price, and contract renewals.  The fair value of the contingent consideration at the acquisition date was estimated at $7.9 million and was based on a probability-weighted analysis using significant inputs that are not observable in the market, or Level 3 inputs. Key assumptions included probability adjusted levels of coal handling services provided by CMT, anticipated price per ton on future sales, and probability of contract renewal including length of future contracts, volume commitment, and anticipated price per ton. Contingent consideration is included in other deferred credits and liabilities on the Combined and Consolidated Balance Sheet. 
The results of CMT have been included in the combined and consolidated financial statements since the acquisition date and are included in the Coal Logistics segment. CMT contributed revenues of $5.7 million and operating income of $2.6 million from the acquisition date to September 30, 2015.
The below unaudited pro forma estimated combined results of operations have been prepared assuming the acquisition of CMT had taken place at January 1, 2014. The following unaudited pro forma combined results of operations were prepared


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using historical financial information of CMT:
 Three Months Ended September 30, Nine Months Ended September 30,
 2015 2014 2015 2014
        
 (Dollars in millions, except per unit amounts)
Sales and other operating revenue$216.8
 $233.4
 $653.8
 $692.8
Net income$20.3
 $35.1
 $55.4
 $77.5
Net income per limited partner unit (basic and diluted)$0.37
 $0.58
 $0.95
 $1.06
The pro forma combined results of operations reflect historical results adjusted for interest expense, depreciation adjustments based on the fair value of acquired property, plant and equipment, amortization of acquired identifiable intangible assets, and income tax expense. The pro forma combined results do not include acquisition costs or new contracts.
Cash received from customers based on pro-rata volume commitments under take-or-pay contracts that is in excess of cash earned for services provided during the quarter is recorded as deferred revenue. Deferred revenue on take-or-pay contracts is recognized into income annually based on the terms of the contract. For the nine months ended September 30, 2015 and 2014, CMT deferred $5.1 million and $2.6 million in revenue, respectively, for its take-or-pay contracts. The unaudited pro forma combined and consolidated financial statements are presented for informational purposes only and do not necessarily reflect future results given the timing of new customer contracts, revenue recognition related to take-or-pay shortfalls, and other effects of integration, nor do they purport to be indicative of the results of operations that actually would have resulted had the acquisition of CMT occurred on January 1, 2014, or future results.
Granite City Dropdowns
On January 13, 2015, the Partnership acquired a 75 percent interest in SunCoke's Granite City cokemaking facility for a total transaction value of $244.4 million. The Granite City cokemaking facility, which began operations in 2009, has annual cokemaking capacity of 650 thousand tons and produces super-heated steam for power generation. Both the coke and the steam are provided to U.S. Steel under a long-term take-or-pay contract that expires in 2025.
The Granite City Dropdown was a transfer of businesses between entities under common control. Accordingly, our historical financial information has been retrospectively adjusted to include Granite City’s historical results and financial position for all periods presented. The Partnership accounted for the Granite City Dropdown as an equity transaction, with SunCoke's interest in Granite City reflected in parent net equity until the date of the transaction. On the date of the Granite City Dropdown, the historical cost of the Granite City assets acquired of $203.6 million was allocated to the general partner and limited partners based on their ownership interest in the Partnership immediately following the equity issuances described below, and $67.9 million was allocated to noncontrolling interest for the 25 percent of Granite City retained by SunCoke. The net impact on Partnership equity of the book value acquired, net of the transaction value was $15.1 million representing the net book value acquired of $203.6 million partially offset by transaction value recorded through equity of $188.5 million. The remaining transaction value of $55.9 million includes cash retained to pre-fund the environmental project, interest expensed, redemption premium, and debt issuance costs discussed below and in Note 7.
In connection with the Granite City Dropdown, the Partnership issued 1.9 million common units totaling approximately $50.1 million and $1.0 million of general partner interest to SunCoke. In addition, the Partnership assumed and repaid $135.0 million principal amount of SunCoke’s outstanding 7.625 percent senior notes ("Notes") and $1.0 million of related accrued interest. The total transaction value also included $4.6 million of interest and $7.7 million of redemption premium in connection therewith, both of which were included in interest expense, net on the Combined and Consolidated Statements of Income. The Partnership retained the remaining cash of $45.0 million to pre-fund SunCoke’s obligation to indemnify the Partnership for the anticipated cost of an environmental project at Granite City. To fund the Granite City Dropdown, the Partnership issued an additional $200.0 million of its 7.375 percent unsecured senior notes, due 2020 (the "Partnership Notes").
On August 12, 2015, the Partnership acquired an additional 23 percent interest in SunCoke's Granite City cokemaking facility for a total transaction value of $65.2 million (the "Granite City Supplemental Dropdown"). The Partnership accounted for the Granite City Supplemental Dropdown as an equity transaction. On the date of the Granite City Supplemental Dropdown, the historical cost of the Granite City assets acquired was $66.0 million, which was allocated to the general partner and limited partners based on their ownership of the Partnership immediately following the equity issuances described below with an equal and offsetting decrease in noncontrolling interest. The net impact on Partnership equity of the $66.0 million book value acquired, net of the transaction value recorded through equity of $62.3 million was $3.7 million. The remaining transaction value of $2.9 million includes interest expensed, redemption premium and debt issuance costs discussed below and in Note 7.


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The total transaction value for the Granite City Supplemental Dropdown also included the issuance of 1.2 million common units totaling $17.9 million and $0.4 million of general partner interest to Suncoke. In addition, the Partnership assumed $44.6 million of Suncoke's Notes and $0.1 million of related accrued interest. The total transaction value also included $0.5 million of interest, which was included in interest expense, net on the Combined and Consolidated Statement of Income and the applicable redemption premium of approximately $1.7 million, which will be recorded to interest expense upon redemption. The Partnership expects to access the capital markets for long-term financing at a later date.
As the results of Granite City are presented combined with the results of the Partnership for periods prior to the Granite City dropdowns, the only impacts on our Combined and Consolidated Statements of Cash Flows for the Granite City Dropdown and Granite City Supplemental Dropdown were the related financing activities discussed above.
Subsequent to the Granite City Supplemental Dropdown and the acquisition of CMT, SunCoke, through a subsidiary, owned a 53.4 percent partnership interest in us and all of our incentive distribution rights and indirectly owned and controlled our general partner, which holds a 2.0 percent general partner interest in us.
Haverhill and Middletown Dropdown
On May 9, 2014, we completed the acquisition of an additional 33.033 percent interest in each of the Haverhill, Ohio ("Haverhill") and Middletown, Ohio ("Middletown") cokemaking facilities, in each of which we previously had a 65 percent interest, for total considerationtransaction value of $365.0 million (the "Drop-Down"). The terms of the contribution agreement and the acquisition of the interests in Haverhill"Haverhill and Middletown were approved by the conflicts committee of our general partner’s Board of Directors, which consists entirely of independent directors.Dropdown").
The results of the Haverhill and Middletown operations are consolidated in the combined and consolidated financial statements of the Partnership for all periods presented and any interest in the Haverhill and Middletown operations retained by Sun Coal & CokeSunCoke is recorded as a noncontrolling interest of the Partnership. Sun Coal & Coke retainedSunCoke held a 35.035 percent interest in Haverhill and Middletown prior to the Drop-DownHaverhill and Middletown Dropdown and retained a 2.02 percent interest in Haverhill and Middletown subsequent to the Drop-Down.Haverhill and Middletown Dropdown. We accounted for the Drop-DownHaverhill and Middletown Dropdown as an equity transaction, which resulted in a$171.3 $171.3 millionreduction to noncontrolling interest for the additional 33.033 percentinterest acquired by the Partnership. Partnership equity was decreased $170.1 million for the difference between the considerationtransaction value discussed below and the $171.3 million $171.3 millionof noncontrolling interest acquired.
Total considerationtransaction value for the Drop-DownHaverhill and Middletown Dropdown included $3.4 million of cash to SunCoke, 2.7 million common units totaling $80.0 million issued to SunCoke and $3.3 million of general partner interests issued to SunCoke. We retained $7.0 million of the considerationin cash to pre-fund SunCoke’s obligation to indemnify us for the anticipated cost of thean environmental remediation project at Haverhill, which did not impact Partnership equity. In addition, we assumed and repaid approximately $271.3 million of outstanding SunCoke debt and other liabilities, which includes a market premium of $11.4 million to complete the tender of certain debt. The market premium was included in Partnershipinterest expense, net income.on the Combined and Consolidated Statement of Income. In conjunction with the assumption of this debt, the Partnership also assumed the related debt issuance costs and debt discount, which were included in the adjustments to equity related to the acquisition in the Combined and Consolidated StatementStatements of Equity.
We funded the Drop-DownHaverhill and Middletown Dropdown with $88.7 million of net proceeds from the sale of 3.2 million common units to the public, which was completed on April 30, 2014, and approximately $263.1 million of gross proceeds from the issuance of an additional $250.0 million aggregate principal amount of 7.375 percentPartnership Notes due in 2020 through a private placement on May 9, 2014. In conjunction with the new senior notes,issuance of the additional Partnership Notes, the Partnership incurred debt issuance costs of $4.9 million, $0.9 million of which was considered a modification of debt and was included in other operating cash flows in the Combined and Consolidated StatementStatements of Cash Flows with the remainder included in financing cash flows. In addition, the Partnership received $5.0 million to fund interest from February 1, 2014 to May 9, 2014, the period prior to the issuance. This interest was paid to noteholders on August 1, 2014.
As Haverhill and Middletown were consolidated both prior to and subsequent to the Drop-Down,Haverhill and Middletown Dropdown, the only impact on our Combined and Consolidated Statement of Cash Flows was the related financing activities discussed above.
In conjunction with the closing of the Drop-Down, the Partnership also increased itsrevolving credit facility by an additional$100.0 millionto$250.0 million and extended its maturity date from January 2018 to May 2019.The Partnership paid $1.8 million in fees relatedSubsequent to the Revolver amendment,Haverhill and Middletown Dropdown, SunCoke, through a subsidiary, owned a 54.1 percent partnership interest in us and all of our incentive distribution rights and indirectly owned and controlled our general partner, which were includedholds a 2.0 percent general partner interest in financing cash flows in the Combined and Consolidated Statementus.



9
Table of Cash Flows. See Note 7. Contents

The table below summarizes the effects of the changes in the Partnership’sPartnership's ownership interest in Haverhill, Middletown and Granite City on the Partnership's equity.
  Three Months Ended September 30, Nine Months Ended September 30,
  2015 2014 2015 2014
         
  (Dollars in millions)
Net income attributable to SunCoke Energy Partners, L.P. $19.5
 $20.2
 $49.1
 $34.6
Increase in SunCoke Energy Partners, L.P. partnership equity for the purchase of a 75 percent interest in Granite City —
 —
 15.1
 —
Increase in SunCoke Energy Partners, L.P. partnership equity for the purchase of an additional 23 percent interest in Granite City 3.7
 —
 3.7
 —
Decrease in SunCoke Energy Partners, L.P. partnership equity for the purchase of an additional 33 percent interest in Haverhill and Middletown —
 (170.1) —
 (170.1)
Change from net income attributable to SunCoke Energy Partners, L.P. and dropdown transactions $23.2
 $(149.9) $67.9
 $(135.5)
The terms of the contribution agreements and the acquisitions of the interest in Granite City and interest in Haverhill and Middletown were approved by the conflicts committee of our general partner’s Board of Directors, which consists entirely of independent directors.
The Partnership incurred $2.2 million and $2.6 million, respectively, in acquisition and business development costs for the three and nine months ended September 30, 2015. These expenses are included in selling, general and administrative expenses on the Partnership’s equity.Combined and Consolidated Statements of Income.
 Three months ended Nine months ended
 September 30, 2014
 (Dollars in millions)
Net income attributable to SunCoke Energy Partners, L.P.$20.2
 $34.6
Change in SunCoke Energy Partners, L.P. partnership equity for the purchase of an additional 33.0 percent interest in Haverhill and Middletown—
 (170.1)
Change from net income attributable to SunCoke Energy Partners, L.P. and transfers to noncontrolling interest$20.2
 $(135.5)


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3. Related Party Transactions and Agreements
The related party transactions with SunCoke and its affiliates are described below.
Transactions with Affiliate
Our Coal Logistics business provides coal handling andand/or blending services to certain SunCoke cokemaking operations. During the three and nine months ended September 30, 2014, Coal Logistics recorded $3.6 million and $10.2 million in revenues respectively, derived from services provided to SunCoke’s cokemaking operations. Coal Logistics recorded $1.0operations of $4.0 million in revenues derived from services provided to SunCoke's cokemaking operations during bothand $10.3 million for the three and nine months ended September 30, 2013.2015, respectively, and $3.3 million and $9.3 million during the three and nine months ended September 30, 2014, respectively. The Partnership also purchased coal and other services from SunCoke and its affiliates totaling $10.1$1.3 million and $27.0 million during the three and nine months ended September 30, 2014, respectively, and $5.9 million and $12.3$3.9 million during the three and nine months ended September 30, 2013,2015, respectively, and $10.1 million and $27.0 million during the three and nine months ended September 30, 2014, respectively. At September 30, 20142015, net receivables withfrom SunCoke and affiliates were $0.8$1.9 million, which is recorded in receivables from affiliates, net on the Combined and at December 31, 2013 netConsolidated Balance Sheets.
Transactions with Related Parties
Our Coal Logistics business provides coal handling and storage services to Murray Energy Corporation ("Murray") and Foresight Energy LP ("Foresight"), who are related parties with The Cline Group. The Cline Group was the previous owner of Raven Energy LLC and currently owns a 10.2 percent interest in the Partnership as part of the CMT acquisition. See Note 2. Coal Logistics recorded revenues derived from services provided to these related parties of $4.4 million for the three and nine months ended September 30, 2015. At September 30, 2015, receivables with SunCokefrom Murray and its affiliatesForesight were $6.4 million.$4.5 million, which is recorded in receivables on the Combined and Consolidated Balance Sheets.
Allocated Expenses
SunCoke charges us for all direct costs and expenses incurred on our behalf and allocated costs associated with support services provided to our operations. Allocated expenses from SunCoke for general corporate and operations support costs are included in selling, general and administrative expenses totaled $4.7$6.5 million and $13.2 million for the three and nine months ended September 30, 2014, respectively, and $4.1 million and $12.2$19.8 million for the three and nine months ended September 30, 2013,2015, respectively, and are included in selling, general$6.2 million and administrative expenses.$17.4 million for the three and nine months ended September 30, 2014, respectively. These costs include legal, accounting, tax, treasury, engineering, information technology, insurance, employee benefit costs, communications, human resources, and procurement. Corporate allocations for periods subsequent to the IPO are recorded based uponin accordance with the terms of our omnibus agreement. Corporateagreement with SunCoke and our general partner. These allocations were updated inincreased concurrently with the second quarterHaverhill and Middletown Dropdown.


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Table of 2014.Contents

Omnibus Agreement
In connection with the closing of the IPO,our initial public offering on January 24, 2013 ("IPO"), we entered into an omnibus agreement with SunCoke and our general partner that addresses certain aspects of our relationship with them, including:
Business Opportunities. We have preferential rights to invest in, acquire and construct cokemaking facilities in the United States and Canada. SunCoke has preferential rights to all other business opportunities.
Potential Defaults by Coke Agreement Counterparties. For a period of five years from the closing date of the IPO, SunCoke has agreed to make us whole (including an obligation to pay for coke) to the extent (i) AK Steel exercises the early termination right provided in its Haverhill coke sales agreement, (ii) any customer fails to purchase coke or defaults in payment under its coke sales agreement (other than by reason of force majeure or our default) or (iii) we amend a coke sales agreement's terms to reduce a customer's purchase obligation as a result of the customer's financial distress. We and SunCoke will share in any damages and other amounts recovered from third parties arising from such events in proportion to our relative losses.
Environmental Indemnity. SunCoke will indemnify us to the full extent of any remediation at the Haverhill and Middletown cokemaking facilitiesfacility arising from any environmental matter discovered and identified as requiring remediation prior to the closing of the IPO. SunCoke contributed $67.0 million in partial satisfaction of this obligation from the proceeds of the IPO and an additional $7.0 million in connection with the Haverhill and Middletown Dropdown. SunCoke also has agreed to indemnify us to the full extent of any required remediation at the Granite City cokemaking facility arising from any environmental matter discovered and identified as requiring remediation prior to the Drop-Down transaction.Granite City Dropdown. SunCoke has contributed $45.0 million in partial satisfaction of this obligation. See Note 2. If, prior to the fifth anniversary of the closing of the IPO, a pre-existing environmental matter that was discovered either before or after the closing of the IPO is identified as requiring remediation, SunCoke will indemnify us for up to $50.0 million of any such remediation costs (we will bear the first $5.0 million of any such costs).
Other Indemnification. SunCoke will fully indemnify us with respect to any additional tax liability arisingrelated to periods prior to or in connection with the closing of the IPO.IPO or the Granite City Dropdown to the extent not currently presented on the Combined and Consolidated Balance Sheets. Additionally, SunCoke will either cure or fully indemnify us for losses resulting from any material title defects at the properties owned by the entities acquired in connection with the closing of the IPO or the Granite City Dropdown to the extent that those defects interfere with or could reasonably be expected to interfere with the operations of the related cokemaking facilities. We will indemnify SunCoke for events relating to our operations except to the extent that we are entitled to indemnification by SunCoke.
License. SunCoke has granted us a royalty-free license to use the name “SunCoke” and related marks. Additionally, SunCoke has granted us a non-exclusive right to use all of SunCoke's current and future cokemaking and related technology. We have not paid and will not pay a separate license fee for the rights we receive under the license.
Expenses and Reimbursement. SunCoke will continue to provide us with certain corporate and other services, and we will reimburse SunCoke for all direct costs and expenses incurred on our behalf and a portion of corporate and other costs and expenses attributable to our operations. Additionally, we paid all fees in connection with our senior notesthe Partnership Notes offerings and our


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the Partnership's revolving credit facility and have agreed to pay all additional fees in connection with any future financing arrangement entered into for the purpose of replacing the Partnership's revolving credit facility or the senior notes.Partnership Notes.
So long as SunCoke controls our general partner, the omnibus agreement will remain in full force and effect unless mutually terminated by the parties. If SunCoke ceases to control our general partner, the omnibus agreement will terminate, but our rights to indemnification and use of SunCoke's existing cokemaking and related technology will survive. The omnibus agreement can be amended by written agreement of all parties to the agreement, but we may not agree to any amendment that would, in the reasonable discretion of our general partner, be adverse in any material respect to the holders of our common units without prior approval of the conflicts committee.


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4. Cash Distributions and Net Income Per Unit
Cash Distributions
Our partnership agreement generally provides that we will make our distribution,cash distributions, if any, each quarter in the following manner:
first, 98 percent to the holders of common units and 2 percent to our general partner, until each common unit has received the minimum quarterly distribution of $0.412500 plus any arrearages from prior quarters;
second, 98 percent to the holders of subordinated units and 2 percent to our general partner, until each subordinated unit has received the minimum quarterly distribution of $0.412500; and
third, 98 percent to all unitholders, pro rata, and 2 percent to our general partner, until each unit has received a distribution of $0.474375.
If cash distributions to our unitholders exceed $0.474375 per unit in any quarter, our unitholders and our general partner will receive distributions according to the following percentage allocations:
 Total Quarterly Distribution Per Unit Target Amount 
Marginal Percentage
Interest in Distributions
 Unitholders General Partner
Minimum Quarterly Distribution$0.412500 98% 2%
First Target Distributionabove $0.412500 up to $0.474375 98% 2%
Second Target Distributionabove $0.474375 up to $0.515625 85% 15%
Third Target Distributionabove $0.515625 up to $0.618750 75% 25%
Thereafterabove $0.618750 50% 50%
In accordance with our partnership agreement, on April 21, 2014, we declared a quarterly cash distribution of $0.5000 per unit. This distribution was paid on May 30, 2014 to unitholders of record on May 15, 2014, which included equity issuances related to the Drop-Down, and totaled $19.2 million. On July 21, 2014, we declared a quarterly cash distribution of $0.5150 per unit. This distribution was paid on August 29, 2014 to unitholders of record on August 15, 2014 and totaled $19.8 million. On October 21, 2014 we declared a quarterly cash distribution of $0.5275 per unit. This distribution will be paid on November 28, 2014 to unitholders of record on November 14, 2014.


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The allocation of total quarterly cash distributions to general and limited partners based on the number of units is as follows. Our distributions are declared subsequent to quarter end; therefore, theend. The table below represents total cash distributions applicable to the period in which the distributions were earned:
  Three Months Ended September 30, Nine Months Ended September 30,
  2014 2013 2014 2013
  (Dollars in millions, except per unit amounts)
General partner's distributions:        
General partner's distributions $0.3
 $0.3
 $0.9
 $0.8
General partner's incentive distribution rights 0.4
 —
 0.8
 —
Total general partner's distributions 0.7
 0.3
 1.7
 0.8
Limited partners' distributions:        
Common 11.5
 6.8
 30.5
 18.2
Subordinated 8.3
 6.8
 24.3
 18.2
Total limited partners' distributions 19.8
 13.6
 54.8
 36.4
Total Cash Distributions $20.5
 $13.9
 $56.5
 $37.2
Cash distributions per unit applicable to limited partners $0.5275
 $0.4325
 $1.5425
 $1.6210


Earned in Quarter Ended Total Quarterly Distribution Per Unit Total Cash Distribution including general partners IDRs Date of Distribution Unitholders Record Date
    (Dollars in millions)    
March 31, 2014 $0.5000
 $19.2
 May 30, 2014 May 15, 2014
June 30, 2014 $0.5150
 $19.8
 August 29, 2014 August 15, 2014
September 30, 2014 $0.5275
 $20.5
 November 28, 2014 November 14, 2014
December 31, 2014 $0.5408
 $22.2
 February 27, 2015 February 13, 2015
March 31, 2015 $0.5715
 $23.8
 May 29, 2015 May 15, 2015
June 30, 2015 $0.5825
 $29.0
 August 31, 2015 August 14, 2015
September 30, 2015(1)
 $0.5940
 $29.6
 December 1, 2015 November 13, 2015
(1) On October 9,
Table 2015, our Board of Contentsdirectors declared a cash distribution of $0.5940 per unit. It will be paid on December 1, 2015, to unitholders of record on November 13, 2015.

Earnings Per Unit
Our net income is allocated to the general partner and limited partners in accordance with their respective partnership percentages, after giving effect to priority income allocations for incentive distributions, if any, to our general partner, pursuant to our partnership agreement. Net income per unit is only calculated for the Partnership subsequent to the IPO as no units were outstanding prior to January 24, 2013. Distributions less than or greater than earnings are allocated in accordance with our partnership agreement. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.
In addition to the common and subordinated units, we also have also identified the general partner interest and incentive distribution rights as participating securities and we use the two-class method when calculating the net income per unit applicable to limited partners, which is based on the weighted-average number of common units outstanding during the period. Basic and diluted net income per unit applicable to limited partners are the same because we do not have any potentially dilutive units outstanding. The Granite City Dropdown does not impact historical earnings per unit as the earnings of Granite City prior to the Granite City Dropdown were allocated entirely to our general partner.


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The calculation of earnings per unit is as follows:
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine months ended September 30,
 2014 2013 2014 2013 2015 2014 
2015(1)
 
2014(2)
 (Dollars and units in millions, except per unit amounts)        
 (Dollars and units in millions, except per unit amounts)
Net income attributable to SunCoke Energy L.P./Predecessor $19.5
 $26.5
 $49.7
 $48.5
Less: Allocation of Granite City's net income to the general partner prior to the Granite City Dropdown
 —
 6.3
 0.6
 13.9
Net income attributable to partners $20.2
 $13.7
 $34.6
 $41.3
 19.5
 20.2
 49.1
 34.6
General partner's distributions (including incentive distribution rights) 0.7
 0.3
 1.7
 0.8
General partner's distributions (including, $1.6, $0.4, $3.6 and $0.8 million of incentive distribution rights, respectively) 2.0
 0.7
 5.2
 1.8
Limited partners' distributions on common units 11.5
 6.8
 30.5
 18.2
 18.2
 11.5
 49.6
 33.4
Limited partners' distributions on subordinated units 8.3
 6.8
 24.3
 18.2
 9.4
 8.3
 27.6
 24.3
Distributions (greater than) less than earnings (0.3) (0.2) (21.9) 4.1
Distributions greater than earnings (10.1) (0.3) (33.3) (24.9)
General partner's earnings:                
Distributions (including incentive distribution rights) 0.7
 0.3
 1.7
 0.8
Allocation of distributions (greater than) less than earnings —
 —
 (0.4) 0.1
Distributions (including $1.6, $0.4, $3.6 and $0.8 million of incentive distribution rights, respectively) 2.0
 0.7
 5.2
 1.8
Allocation of distributions greater than earnings (0.1) —
 (0.7) (0.4)
Granite City's net income prior to the Granite City Dropdown
 —
 6.3
 0.6
 13.9
Total general partner's earnings 0.7
 0.3
 1.3
 0.9
 1.9
 7.0
 5.1
 15.3
Limited partners' earnings on common units:                
Distributions 11.5
 6.8
 30.5
 18.2
 18.2
 11.5
 49.6
 33.4
Allocation of distributions (greater than) less than earnings (0.2) (0.1) (12.3) 2.0
Allocation of distributions greater than earnings (6.6) (0.2) (20.9) (14.2)
Total limited partners' earnings on common units 11.3
 6.7
 18.2
 20.2
 11.6
 11.3
 28.7
 19.2
Limited partners' earnings on subordinated units:                
Distributions 8.3
 6.8
 24.3
 18.2
 9.4
 8.3
 27.6
 24.3
Allocation of distributions (greater than) less than earnings (0.1) (0.1) (9.2) 2.0
Allocation of distributions greater than earnings (3.4) (0.1) (11.7) (10.3)
Total limited partners' earnings on subordinated units 8.2
 6.7
 15.1
 20.2
 6.0
 8.2
 15.9
 14.0
Weighted average limited partner units outstanding:                
Common - basic and diluted 21.7
 15.7
 19.0
 15.7
 27.4
 21.7
 24.8
 19.0
Subordinated - basic and diluted 15.7
 15.7
 15.7
 15.7
 15.7
 15.7
 15.7
 15.7
Net income per limited partner unit:                
Common - basic and diluted $0.52
 $0.43
 $1.01
 $1.29
 $0.43
 $0.52
 $1.16
 $1.01
Subordinated - basic and diluted $0.52
 $0.43
 $0.89
 $1.29
 $0.38
 $0.52
 $1.00
 $0.89
(1)Includes the total cash distribution paid on August 31, 2015 of $29.0 million, which included $4.6 million related to units issued to fund the acquisition of CMT and the Granite City Supplemental Dropdown during August 2015.
(2)Includes the total cash distribution paid on May 30, 2014 of $19.2 million, which included $3.0 million related to units issued to fund the Haverhill and Middletown Dropdown during May 2014.


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Allocation of Net IncomeUnit Activity
The following is a summary of net incomeUnit activity for the nine months ended September 30, 2014 and 2013 including a summary of net income disaggregated between the Predecessor and the Partnership nine months ended September 30, 2013:2015:
  Nine Months Ended September 30,  SunCoke Energy Partners, L.P.
Predecessor		 SunCoke Energy Partners, L.P.
     Period from January 1, 2013 to January 23, 2013 Period from January 24, 2013 to September 30, 2013
  2014 2013   
Revenues (Dollars in millions)
Sales and other operating revenue $480.8
 $514.6
  $47.6
 $467.0
Costs and operating expenses         
Cost of products sold and operating expenses 353.5
 383.3
  36.8
 346.5
Selling, general and administrative expenses 16.4
 16.5
  1.1
 15.4
Depreciation and amortization expense 30.1
 23.5
  1.9
 21.6
Total costs and operating expenses 400.0
 423.3
  39.8
 383.5
Operating income 80.8
 91.3
  7.8
 83.5
Interest expense, net 30.1
 12.3
  0.6
 11.7
Income before income tax expense 50.7
 79.0
  7.2
 71.8
Income tax expense 1.0
 4.2
  3.7
 0.5
Net income 49.7
 74.8
  $3.5
 $71.3
Less: Net income attributable to noncontrolling interests 15.1
 30.0
     
Net income attributable to SunCoke Energy Partners, L.P./Predecessor 34.6
 44.8
     
Less: Predecessor net income prior to initial public offering on January 24, 2013 —
 3.5
     
Net income attributable to SunCoke Energy Partners, L.P. subsequent to initial public offering $34.6
 $41.3
     
  Common - Public Common - SunCoke Total Common Subordinated - SunCoke
At December 31, 2014 16,789,164
 4,904,752
 21,693,916
 15,709,697
Units issued in conjunction with the Granite City Dropdown —
 1,877,697
 1,877,697
 —
Units issued in conjunction with the Granite City Supplemental Dropdown —
 1,158,760
 1,158,760
 —
Units issued in conjunction with the acquisition of CMT 4,847,287
 1,764,790
 6,612,077
 —
Units issued to directors 3,820
 —
 3,820
 —
Unit repurchases(1)
 (633,776) —
 (633,776) —
At September 30, 2015 21,006,495
 9,705,999
 30,712,494
 15,709,697
(1)On July 20, 2015, the Partnership's Board of Directors authorized a program for the Partnership to repurchase up to $50.0 million of its common units. The Partnership repurchased $10.0 million, or 633,776 common units, in the open market, for an average price of $15.78 per unit, during the three months ended September 30, 2015, leaving $40.0 million available under the authorized unit repurchase program.
Allocation of Net Income
Our partnership agreement contains provisions for the allocation of net income to the unitholders and the general partner. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions allocated 100 percent to the general partner. Net income from Granite City’s operations prior to the Granite City Dropdown is allocated to the general partner.
The calculation of net income allocated to the general and limited partners was as follows:
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
 2014 2013 2014 2013 2015 2014 2015 2014
 (Dollars and units in millions)        
 (Dollars in millions)
Net income attributable to SunCoke Energy L.P./Predecessor $19.5
 $26.5
 $49.7
 $48.5
Less: Allocation of Granite City's net income to the general partner prior to the Granite City Dropdown —
 6.3
 0.6
 13.9
Net income attributable to partners $20.2
 $13.7
 $34.6
 $41.3
 19.5
 20.2
 49.1
 34.6
General partner's incentive distribution rights 0.4
 —
 0.8
 —
 1.6
 0.4
 3.6
 0.8

 19.8
 13.7
 33.8
 41.3
 17.9
 19.8
 45.5
 33.8
General partner's ownership interest 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
General partner's allocated interest in net income 0.3
 0.3
 0.6
 0.9
 0.3
 0.3
 0.9
 0.6
General partner's incentive distribution rights 0.4
 —
 0.8
 —
 1.6
 0.4
 3.6
 0.8
Granite City's net income prior to the Granite City Dropdown
 —
 6.3
 0.6
 13.9
Total general partner's interest in net income $0.7
 $0.3
 $1.4
 $0.9
 $1.9
 $7.0
 $5.1
 $15.3
Common - public unitholder's interest in net income $8.7
 $5.8
 $14.6
 $17.3
 $7.7
 $8.7
 $19.3
 $14.6
Common - SunCoke interest in net income 2.6
 0.9
 3.6
 2.9
 3.4
 2.6
 8.0
 3.6
Subordinated - SunCoke interest in net income 8.2
 6.7
 15.0
 20.2
 6.5
 8.2
 17.3
 15.0
Total limited partners' interest in net income $19.5
 $13.4
 $33.2
 $40.4
 $17.6
 $19.5
 $44.6
 $33.2


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5. Inventories
The components of inventories were as follows:
 September 30, 2015 December 31, 2014
 September 30, 2014 December 31, 2013    
 (Dollars in millions) (Dollars in millions)
Coal $42.4
 $33.1
 $44.5
 $60.4
Coke 6.1
 4.1
 2.4
 2.0
Material, supplies, and other 22.7
 22.1
Materials, supplies, and other 28.5
 28.0
Total inventories $71.2
 $59.3
 $75.4
 $90.4
6. Income Taxes
The Partnership is a limited partnership and generally is not subject to federal or state income taxes. However, as part of the Granite City Dropdown in the first quarter of 2015, the Partnership acquired an interest in Gateway Cogeneration Company, LLC, which is subject to income taxes for federal and state purposes. In addition, due to the Granite City Dropdown, earnings of the Partnership are subject to an additional state income tax. Earnings from our Middletown operations however, are subject to a local income tax.
The Predecessor’sPartnership recorded an income tax provision was determinedexpense of $0.5 million for the three months ended September 30, 2015 and an income tax benefit of $2.4 million for the nine months ended September 30, 2015, compared to income tax expense of $4.9 million and $9.0 million for the three and nine months ended September 30, 2014, respectively. The nine months ended September 30, 2015 included an income tax benefit of $4.0 million related to the tax impacts of the Granite City Dropdown. Earnings from our Granite City operations include federal and state income taxes calculated on a theoretical separate-return basis.basis until the date of the Granite City Dropdown. Additionally, the nine months ended September 30, 2015 includes an equity settlement of $62.8 million of net deferred tax assets calculated on a hypothetical separate-return basis related to our Granite City operations that had been previously utilized by the Predecessor.
7. Debt
Total debt, including the current portion of long-term debt, consisted of the following:
  September 30, 2015 December 31, 2014
  (Dollars in millions)
7.375% senior notes, due 2020 ("Partnership Notes"), including original issue premium of $13.6 million and $11.5 million at September 30, 2015 and December 31, 2014, respectively.
 613.6
 411.5
7.625% senior notes, due 2019 ("Notes") 44.6
 —
Promissory note payable, due 2021 ("Promissory Note") 114.6
 —
Revolving credit facility, due 2019 ("Partnership Revolver") 185.0
 —
Debt issuance cost (16.9) (12.5)
Total debt $940.9
 $399.0
Less: current portion of long-term debt 1.1
 —
Total long-term debt $939.8
 $399.0
The Partnership has a $250.0 million Partnership Revolver. On May 9, 2014August 12, 2015, in connection with the Drop-Down,funding of the acquisition of CMT, the Partnership drew $185.0 million on the Partnership Revolver at a rate that bears interest at a variable rate of LIBOR plus 250 basis points or an alternative base rate, based on the Partnership's total ratios as defined by the Partnership's credit agreement. The spread is subject to change based on the Partnership's total leverage ratio, as defined in the credit agreement. As of September 30, 2015, the Partnership had $65.0 million available on the Partnership Revolver. During the nine months ended September 30, 2015, the Partnership incurred $0.3 million of debt issuance costs in connection with amendments of the Partnership Revolver.    
Also in connection with the acquisition of CMT, the Partnership assumed Raven Energy LLC's Promissory Note of $114.9 million. Under the Partnership's third amendment to the amended and restated credit agreement ("Promissory Agreement") dated August 12, 2015, the Partnership will repay a principal amount of $0.3 million each fiscal quarter ending prior to August 12, 2018. For each fiscal quarter ending after August 12, 2018, the Partnership shall repay a principal amount of $2.5 million. The entire outstanding amount of the Promissory Note is due in full on August 12, 2021. The Promissory Note


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shall bear interest on the outstanding principal amount for each day from August 12, 2015, until it becomes due, at a rate per annum equal to 6.0 percent until August 12, 2018. After August 12, 2018, that rate will be the LIBOR for the interest period then in effect plus 4.5 percent. Interest is due at the end of each fiscal quarter.
On January 13, 2015, in connection with the Granite City Dropdown, the Partnership issued $250.0an additional $200.0 million senior notes as additional notes under the indenture pursuant to which the of Partnership issued $150.0 million senior notes on January 24, 2013 ("Partnership Notes"). The Partnership Notes bear interest at a rate of 7.375 percent per annum and will mature on February 1, 2020. Interest is payable semi-annually in arrears on February 1 and August 1 of each year.Notes.  Proceeds of $263.1$204.0 million included an original issue premium of $13.1 million.$4.0 million. In addition, the Partnership received $5.0$6.8 million to fund interest from FebruaryAugust 1, 2014 to May 9, 2014,January 13, 2015, the interest period prior to the issuance. This interest was paid to noteholders on AugustFebruary 1, 2014.2015. The Partnership incurred debt issuance costs of $4.9$5.2 million,, of which $0.9$1.0 million was considered a modification of debt and was recorded in interest expense, net on the Combined and Consolidated StatementStatements of Income and was included in other operating cash flows inon the Combined and Consolidated StatementStatements of Cash Flows.Flow.
Furthermore, inIn connection with the Drop-Down,Granite City Dropdown, the Partnership assumed from SunCoke and repaid certain SunCoke debt$135.0 million principal amount of SunCoke’s Notes and other liabilities totaling $271.3 million, includingpaid interest of $5.6 million. The Partnership also paid a marketredemption premium of $11.4$7.7 million, to complete the tender of certain debt, which was included in interest expense, net on the Combined and Consolidated StatementStatements of Income. The Partnership assumed $4.6$2.2 million in debt issuance costs and $0.6 million in original issue discount in connection with the assumption of this debt from SunCoke, $3.1$0.7 million of which related to the portion of the debt extinguished and was recorded in interest expense, net on the Combined and Consolidated StatementStatements of Income. 
Also,On August 12, 2015, in connection with the Drop-Down,Granite City Supplemental Dropdown, the Partnership repaid $40.0assumed from SunCoke an additional $44.6 million of Notes and unpaid interest of $0.6 million, of which $0.5 million was included in interest expense, net on the revolving credit facility (the “Partnership Revolver”)Combined and amended the Partnership Revolver to include (i) an increase in the total aggregate commitments from lenders from $150.0 million to $250.0 million and (ii) an extensionConsolidated Statements of the maturity date from January 2018 to May 2019.Operations. The Partnership paid $1.8 million in fees related to the Revolver amendment, which are included in deferred charges and other assets in the Consolidated Balance Sheet. As of September 30, 2014, the Partnership had letters of credit outstanding ofalso assumed $0.7 million leaving $249.3 million available.     of debt issuance costs in connection with the assumption of this debt from SunCoke Energy.
The Partnership is subject to certain debt covenants that, among other things, limit the Partnership’s ability and the ability of certain of the Partnership’s subsidiaries to (i) incur indebtedness, (ii) pay dividends or make other distributions, (iii) prepay, redeem or repurchase certain debt, (iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates and (viii) consolidate or merge. These covenants are subject to a number of exceptions and qualifications set forth in the respective agreements. Additionally, underagreements governing the Partnership's debt.
Under the terms of the Partnership Revolver, the Partnership is subject to a maximum consolidated leverage ratio of 4.00 to 4.50:1.00 (and, if applicable, 5.00:1.00 during the remainder of any fiscal quarter and the two immediately succeeding fiscal quarters following our acquisition of additional assets having a fair market value greater than $50 million), calculated by dividing total debt by EBITDA as defined by the Partnership Revolver, and a minimum consolidated interest coverage ratio of 2.50 to 2.50:1.00, calculated by dividing EBITDA by interest expense as defined by the Partnership Revolver.
Under the terms of the Promissory Agreement, Raven Energy LLC, a wholly-owned subsidiary of the Partnership, is subject to a maximum leverage ratio of 5.00:1.00 for any fiscal quarter ending prior to August 12, 2018, calculated by dividing total debt by EBITDA as defined by the Promissory Agreement. For any fiscal quarter ending on or after August 12, 2018 the maximum leverage ratio is 4.50:1.00. Additionally in order to make restricted payments, Raven Energy LLC is subject to a fixed charge ratio of greater than 1.00:1.00, calculated by dividing EBITDA by fixed charges as defined by the Promissory Agreement.
If we fail to perform our obligations under these and other covenants, the lenders' credit commitment could be terminated and any outstanding borrowings, together with accrued interest, under the Partnership Revolver could be declared immediately due and payable. The Partnership has a cross-default provision that applies to our indebtedness having a principal amount in excess of $20 million.
As of September 30, 2014,2015, the Partnership was in compliance with all applicable debt covenants contained in the Partnership Revolver.Revolver and Promissory Agreement. We do not anticipate violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing.


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8. Supplemental Cash Flow Information
Significant non-cash activities were as follows:
  Nine Months Ended September 30,
  2015 2014
     
  (Dollars in millions)
Debt assumed by SunCoke Energy Partners, L.P. $294.5
 $259.9
Equity Issuances 144.4
 83.3
Net assets of the Predecessor not assumed by SunCoke Energy Partners, L.P.    
Receivables 9.1
 —
Property, plant and equipment 7.0
 —
Net deferred tax assets 62.8
 —
Restricted Cash 21.5
 —
8.9. Commitments and Contingent Liabilities
The United States Environmental Protection Agency ("EPA"(the "EPA") and state regulators havehas issued Notices of Violations (“NOVs”) for the Partnership’s Haverhill and Granite City cokemaking facilityfacilities which stem from alleged violations of the air emission operating permits for this facility. The Partnership isthese facilities. We are working in a cooperative manner with the EPA, and the Ohio Environmental Protection Agency ("OEPA")and the Illinois Environmental Protection Agency to address the allegations, and has lodgedhave entered into a Consent Decreeconsent degree in federal district court that is undergoing review. Settlement may require payment ofwith these parties. The consent decree includes a $2.2 million civil penalty for alleged past violationspayment that was paid by SunCoke in December 2014, as well as the capital projects already underway to


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improve the reliability of the energy recovery systems and enhance environmental performance at the Haverhill facility. Any potential penalty for alleged past violations will be paid by SunCoke.and Granite City cokemaking facilities.
Spending for these projects depends on the timing and finality of the settlement. We retained $74an aggregate of $119 million in proceeds from the Partnership offering, the Haverhill and Drop-Down transaction forMiddletown Dropdown and the Granite City Dropdown to fund these environmental capital expenditures related to these projects.remediation projects at the Haverhill and Granite City cokemaking facilities. Pursuant to the Omnibus Agreement between SunCoke and the Partnership,omnibus agreement, any amounts that we spend on these projects in excess of $74the $119 million will be reimbursed by SunCoke. Prior to our formation, SunCoke spent approximately $5$7 million related to these projects. The Partnership hasWe have spent $66approximately $81 million to date and expectsthe remaining capital is expected to spend approximately $3 million inbe spent through the remainderfirst quarter of 2014 and $6 million in 2015. 2018.
The Partnership is a party to certain other pending and threatened claims. Although the ultimate outcome of these claims cannot be ascertained at this time, it is reasonably possible that some portion of these claims could be resolved unfavorably to the Partnership. Management of the Partnership believes that any liability which may arise from claims would not be material in relation to the financial position, results of operations or cash flows of the Partnership.Partnership at September 30, 2015.
9.10. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs.
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:
Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.
Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.
Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.
Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). At


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Convent Marine Terminal Contingent Consideration
Contingent consideration related to the CMT acquisition is measured at fair value and amounted to $7.9 million at September 30, 2014, no material fair value adjustments or fair value measurements were required for these non-financial assets or liabilities.2015. See Note 2.
Certain Financial Assets and Liabilities not Measured at Fair Value
At September 30, 20142015, the estimated fair value of the Partnership's long-termtotal debt was $417.6$890.9 million compared to a carrying amount of $412.0 million.$957.8 million, which includes the original issue premium. The fair value was estimated by management based upon estimates of debt pricing provided by financial institutions which are considered Level 32 inputs.
10. Equity Distribution Agreement
On August 5, 2014, the Partnership entered into an Equity Distribution Agreement (the “Equity Agreement”) with Wells Fargo Securities, LLC (“Wells Fargo”). Pursuant to the terms of the Equity Agreement, the Partnership may sell from time to time through Wells Fargo, the Partnership’s common units representing limited partner interests having an aggregate offering price of up to $75.0 million. Sales of the common units, if any, will be made by means of ordinary brokers’ transactions through the facilities of the New York Stock Exchange at market prices, in block transactions, or as otherwise agreed by the Partnership and Wells Fargo, by means of any other existing trading market for the common units or to or through a market maker other than on an exchange. The common units will be issued pursuant to the Partnership’s existing effective shelf registration statement.
Under the terms of the Equity Agreement, the Partnership also may sell common units to Wells Fargo as principal for its own account at a price to be agreed upon at the time of sale. Any sale of common units to Wells Fargo as principal would be pursuant to the terms of a separate terms agreement between the Partnership and Wells Fargo.
During the quarter the Partnership sold 62,956 common units under the Equity Agreement with an aggregate offering price of $1.8 million, leaving $73.2 million available under the Equity Agreement.


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11. Business Segment Disclosures
The Partnership derives its revenues from the Domestic Coke and Coal Logistics reportable segments. Domestic Coke operations are comprised of the Haverhill and Middletown cokemaking facilities located in Ohio. BothOhio and the Granite City cokemaking facility located in Illinois. These facilities use similar production processes to produce coke and to recover waste heat that is converted to either steam or electricity. Steam is sold to third party customers primarily pursuant to steam supply and purchase agreements. Electricity is sold into the regional power market or to AK Steel pursuant to energy sales agreements. Coke sales at each of the Partnership's cokemaking facilities are made pursuant to long-term take-or-pay agreements with ArcelorMittal, AK Steel and AKU.S. Steel. Each of the coke sales agreements contain pass-through provisions for costs incurred in the cokemaking process, including coal procurement costs (subject to meeting contractual coal-to-coke yields), operating and maintenance expenses, costs related to the transportation of coke to the customers, taxes (other than income taxes) and costs associated with changes in regulation, in addition to containing a fixed fee. In the prior year period, all corporate costs were included in the Domestic Coke segment as the Partnership had only one reportable segment.
Coal Logistics operations are comprised of SunCoke Lake Terminal, and KRT facilitiesLLC ("Lake Terminal") located in Indiana and Kanawha River Terminals ("KRT") located in Kentucky respectively. The Partnership acquired Lake Terminal on August 30, 2013 and KRT on October 1, 2013West Virginia and began providingCMT located in Louisiana. This business provides coal handling andand/or blending services. This businessservices to third party customers as well as SunCoke cokemaking facilities and has a collective capacity to blend and transload more than 3040 million tons of coal annually. Coal handling and blending services are provided to third party customers as well as SunCoke cokemaking facilities. Coal handling and blending results are presented in the Coal Logistics segment below.segment.
Corporate and other expenses that can be identified with a segment have been included in determining segment results. The remainder is included in Corporate and Other. Interest expense, net is also excluded from segment results. Segment assets, net of tax are those assets that are utilized within a specific segment.segment and excludes deferred taxes.


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The following table includes Adjusted EBITDA, which is the measure of segment profit or loss reported to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance:
 Three Months Ended September 30, Nine Months Ended September 30,
 Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014
 2014 2013 2014 2013        
 (Dollars in millions) (Dollars in millions)
Sales and other operating revenue:                
Domestic Coke $146.5
 $160.9
 $442.6
 $513.5
 $192.4
 $204.8
 $581.1
 $611.7
Coal Logistics 12.2
 1.1
 38.2
 1.1
 17.8
 12.0
 40.0
 37.4
Coal Logistics intersegment sales 1.4
 —
 3.5
 —
 1.7
 1.6
 5.0
 4.3
Elimination of intersegment Sales (1.4) —
 (3.5) —
Total Sales and other operating revenue $158.7
 $162.0
 $480.8
 $514.6
Elimination of intersegment sales (1.7) (1.6) (5.0) (4.3)
Total sales and other operating revenue $210.2
 $216.8
 $621.1
 $649.1
Adjusted EBITDA:                
Domestic Coke $36.0
 $38.7
 $105.7
 $119.1
 $46.6
 $50.2
 $137.3
 $137.3
Coal Logistics 3.8
 0.7
 10.9
 0.7
 10.4
 3.8
 18.0
 10.9
Corporate and Other (1.5) (3.7) (5.7) (5.6) (5.2) (1.5) (10.5) (5.7)
Total Adjusted EBITDA $38.3
 $35.7
 $110.9
 $114.2
 $51.8
 $52.5
 $144.8
 $142.5
Depreciation and amortization expense:                
Domestic Coke $8.2
 $8.1
 $24.5
 $23.3
 $13.5
 $11.7
 $39.8
 $34.7
Coal Logistics 2.0
 0.2
 5.6
 0.2
 3.5
 2.0
 7.2
 5.6
Total Depreciation and amortization expense $10.2
 $8.3
 $30.1
 $23.5
Total depreciation and amortization expense $17.0
 $13.7

$47.0
 $40.3
Capital expenditures:                
Domestic Coke $18.5
 $9.9
 $51.1
 $20.4
 $14.7
 $19.4
 $30.4
 $55.0
Coal Logistics 1.2
 —
 2.0
 —
 0.8
 1.2
 1.3
 2.0
Total Capital expenditures $19.7
 $9.9
 $53.1
 $20.4
Total capital expenditures $15.5
 $20.6
 $31.7
 $57.0
The following table sets forth the Partnership’s total sales and other operating revenue by product or service, excluding intersegment revenues:
  Three Months Ended September 30, Nine Months Ended September 30,
  2015 2014 2015 2014
         
  (Dollars in millions)
Sales and other operating revenue:        
Cokemaking revenues $176.9
 $188.7
 $534.0
 $562.1
Energy revenues 15.5
 16.2
 47.0
 49.6
Coal logistics revenues 17.2
 11.6
 38.7
 35.8
Other revenues 0.6
 0.3
 1.4
 1.6
Total revenues $210.2
 $216.8
 $621.1
 $649.1


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The following table sets forth the Company's segment assets:
 September 30, 2015 December 31, 2014
 September 30, 2014 December 31, 2013    
 (Dollars in millions) (Dollars in millions)
Segment assets:        
Domestic Coke $917.9
 $884.2
 $1,277.4
 $1,276.3
Coal Logistics 118.7
 120.6
 533.4
 116.6
Corporate and Other 14.2
 22.7
 3.6
 2.5
Total Assets $1,050.8
 $1,027.5
Segment assets, excluding deferred tax assets 1,814.4
 1,395.4
Deferred tax assets —
 21.6
Total assets $1,814.4
 $1,417.0
The Partnership evaluates the performance of its segments based on segment Adjusted EBITDA, which is defined asrepresents earnings before interest, taxes, depreciation and amortization (“EBITDA”) adjusted for sales discounts.discounts and Coal Logistics deferred revenue. Prior to the expiration of our nonconventional fuel tax credits in June 2012,2013, Adjusted EBITDA reflectedincluded an add-back of sales discounts included as a reduction in sales and other operating revenue. The sales discounts representrelated to the sharing of these credits with customers of a portion of nonconventional fuel tax credits,our customers. Any adjustments to these amounts subsequent to 2013 have been included in Adjusted EBITDA. Coal Logistics deferred revenue represents cash received on Coal Logistics take-or-pay contracts for which reduce our income tax expense. However, we believe ourrevenue has not yet been recognized under GAAP. Including Coal Logistics deferred revenue in Adjusted EBITDA would be inappropriately penalized if these discounts were treated as a reductionreflects the cash flow of EBITDA since they represent sharing of a tax benefit that is not included in EBITDA. Accordingly, in computingour contractual arrangements. Adjusted EBITDA we have added back these sales discounts. EBITDA and Adjusted EBITDA dodoes not represent and should not be considered alternativesan alternative to net income or operating income under GAAP and may not be comparable to other similarly titled measures in other businesses.
Management believes Adjusted EBITDA is an important measure of the operating performance and liquidity of the Partnership's net assets and its ability to incur and service debt, fund capital expenditures and make distributions. Adjusted EBITDA provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it eliminates items that have less bearing on our operating performance.performance and liquidity. EBITDA and Adjusted EBITDA is a measure of operating performance that isare not defined bymeasures calculated in accordance with GAAP, does not represent and they should not be considered a substitute foran alternative to net income, as determinedoperating cash flow or any other measure of financial performance presented in accordance with GAAP. Calculations of Adjusted EBITDA may not be comparable to those reported by other companies.
Set forth below is additional detail as to how we use Adjusted EBITDA as a measure of operating performance, as well as a discussion of the limitations of Adjusted EBITDA as an analytical tool.
Operating Performance. Our management uses Adjusted EBITDA in a number of ways to assess our consolidated financial and operating performance, and we believe this measure is helpful to management in identifying trends in our performance. Adjusted EBITDA helps management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance while neutralizing the impact of capital structure on financial results. Accordingly, we believe this metric measures our financial performance based on operational factors that management can impact in the short-term, namely our cost structure and expenses.
Limitations.Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. Adjusted EBITDA also has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations include that Adjusted EBITDA:
does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
does not reflect items such as depreciation and amortization;
does not reflect changes in, or cash requirementrequirements for, working capital needs;
does not reflect our interest expense, or the cash requirements necessary to service interest on or principal payments of our debt;
does not reflect certain other non-cash income and expenses;
excludes income taxes that may represent a reduction in available cash; and
includes net income attributable to noncontrolling interests.


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Below is a reconciliation of Adjusted EBITDA (unaudited) to net income and net cash provided by operating activities, which are its closest GAAP measuremost directly comparable financial measures calculated and presented in accordance with disaggregated results for periods prior to and subsequent to the IPO:GAAP:
 Three Months Ended September 30, Nine Months Ended September 30, SunCoke Energy Partners, L.P.
Predecessor		 SunCoke Energy Partners, L.P. Three Months Ended September 30, Nine Months Ended September 30,
 2014 2013 2014 2013 Period from January 1, 2013 to January 23, 2013 Period from January 24, 2013 to September 30, 2013 2015 2014 2015 2014
 (Dollars in millions)        
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P./Predecessor $37.6
 $22.1
 $92.0
 $75.9
  $9.7
 $66.2
Add: Adjusted EBITDA attributable to noncontrolling interest(1)
 0.7
 13.6
 18.9
 38.3
  —
 38.3
 (Dollars in millions)
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $49.9
 $37.6
 $135.8
 $92.0
Add: Adjusted EBITDA attributable to Predecessor(1)
 —
 14.2
 1.5
 31.6
Add: Adjusted EBITDA attributable to noncontrolling interest(2)
 1.9
 0.7
 7.5
 18.9
Adjusted EBITDA $38.3
 $35.7
 $110.9
 $114.2
  $9.7
 $104.5
 $51.8
 $52.5
 $144.8
 $142.5
Subtract:                     
Depreciation and amortization expense 10.2
 8.3
 30.1
 23.5
  1.9
 21.6
 17.0
 13.7
 47.0
 40.3
Interest expense, net 6.8
 2.8
 30.1
 12.3
  0.6
 11.7
 12.4
 6.8
 43.8
 30.1
Income tax expense 0.5
 0.1
 1.0
 4.2
  3.7
 0.5
Sales discounts provided to customers due to sharing of nonconventional fuel tax credits(2)
 —
 —
 —
 (0.6)  —
 (0.6)
Income tax expense (benefit) 0.5
 4.9
 (2.4) 9.0
Sales discounts provided to customers due to sharing of nonconventional fuel tax credits(3)
 —
 —
 —
 (0.5)
Coal Logistics deferred revenue(4)
 1.1
 —
 1.1
 —
Net income $20.8
 $24.5
 $49.7
 $74.8
  $3.5
 $71.3
 $20.8
 $27.1
 $55.3
 $63.6
Add:        
Depreciation and amortization expense 17.0
 13.7
 47.0
 40.3
Loss on extinguishment of debt —
 —
 9.4
 15.4
Changes in working capital and other (22.1) (6.3) (23.5) (32.7)
Net cash provided by operating activities $15.7
 $34.5
 $88.2
 $86.6
(1)Reflects Granite City Adjusted EBITDA prior to the January 13, 2015 dropdown transaction.
(2)Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest share of interest, taxes, income, depreciation and amortization expense.depreciation.
(2)(3)Sales discounts are related to nonconventional fuel tax credits, which expired in 2013. At December 31, 2012,2013, we had $12.4$13.6 million in accrued related to sales discounts to be paid to a customer at our Haverhill facility.Granite City customer. During the first quarter of 2013,2014, we settled this obligation for $11.8$13.1 million which resulted in a gain of $0.6$0.5 million. TheThis gain wasis recorded in sales and other operating revenue on our Combined and Consolidated StatementStatements of Income. Sales discounts are
(4)Coal Logistics deferred revenue represents revenue excluded from sales and other operating income for GAAP purposes related to nonconventional fuel tax credits, which expired in 2012.the timing of revenue recognition on the Coal Logistics take-or-pay contracts. Including take-or-pay shortfalls within Adjusted EBITDA matches cash flows with Adjusted EBITDA.
The following table sets forth the Partnership’s total sales and other operating revenue by product or service excluding intersegment revenues:
  Three Months Ended September 30, Nine Months Ended September 30,
  2014 2013 2014 2013
  (Dollars in millions)
Cokemaking revenues $135.2
 $149.6
 $407.6
 $480.2
Energy revenues 11.3
 11.3
 35.0
 33.3
Coal logistics revenues 12.2
 1.1
 38.2
 1.1
Total revenues $158.7
 $162.0
 $480.8
 $514.6


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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains certain forward-looking statements of expected future developments, as defined in the Private Securities Litigation Reform Act of 1995. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe under “Cautionary Statement Concerning Forward-Looking Statements.”
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on financial data derived from the financial statements prepared in accordance with United States ("U.S.") generally accepted accounting principles (“GAAP”) and certain other financial data that is prepared using non-GAAP measures. For a reconciliation of these non-GAAP measures to the most comparable GAAP components, see “Non-GAAP Financial Measures” at the end of this Item.
The following discussion assumes that our business was operated as a separate entity priorcombined and consolidated financial statements pertain to the IPO.operations of the Partnership and the operations of Gateway Energy and Coke Company, LLC ("Granite City"), as Granite City and the Partnership were under common control for all periods presented. The entities that own our cokemaking facilities have been acquired as a reorganizationtransfers of net assets between entities under common control were accounted for as if the transfer occurred at the beginning of the period, and have therefore been recorded at historical cost. Unless the context otherwise requires, references in this reportprior year periods were recast to "the Partnership," "we," "us," or like terms, when used in a historical context (periods prior to January 24, 2013), refer to the cokemaking operations of our Predecessor. References when used in the present tense or prospectively (after January 24, 2013) refer to SunCoke Energy Partners, L.P. and its subsidiaries.furnish comparative information.
Overview
SunCoke Energy Partners, L.P., (the "Partnership", "we", "our", and "us"), is a Delaware limited partnership formed in July 2012 which primarily manufacturesproduces coke used in the blast furnace production of steel. On January 24, 2013,At September 30, 2015, we completed the initial public offering ("IPO") of our common units representing limited partner interests. In connection with the IPO, we acquired from SunCoke Energy, Inc. ("SunCoke"),owned a 65.098 percent interest in each of Haverhill Coke Company LLC ("Haverhill") and, Middletown Coke Company, LLC ("Middletown") and theGateway Energy and Coke Company, LLC ("Granite City"). The remaining 2 percent ownership interest in our three cokemaking facilities and related assets heldis owned by Haverhill and Middletown. On May 9, 2014, we completed the acquisition of an additional 33.0 percent interest in the Haverhill and Middletown cokemaking facilities for total consideration of $365.0 million. See Recent Developments discussion below.SunCoke Energy, Inc. ("SunCoke"). At September 30, 2014, SunCoke owns the remaining 2.0 percent interest in each of Haverhill and Middletown.2015, SunCoke, through itsa subsidiary, ownsowned a 54.053.7 percent partnership interest in us and all of our incentive distribution rights and indirectly ownsowned and controlscontrolled our general partner, which holds a 2.0 percent general partner interest in us. Our Coal Logistics business provides coal handling and/or blending services to third party customers as well as to our and SunCoke's cokemaking facilities.
All of our coke sales are made pursuant to long-term take-or-pay agreements. These coke sales agreements have an average remaining term of approximately 12ten years and contain pass-through provisions for costs we incur in the cokemaking process, includingincluding: coal procurement costs subject(subject to meeting contractual coal-to-coke yields,yields), operating and maintenance expenses, costs related to the transportation of coke to our customers, taxes (other than income taxes) and costs associated with changes in regulation. The coke sales agreement and energy sales agreement with AK Steel at our Haverhill facility are subject to early termination by AK Steel beginning in January 2014 under limited circumstances and provided that AK Steel has given at least two years prior notice of its intention to terminate the agreements and certain other conditions are met. In addition, AK Steel is required to pay a significant termination payment to us if it exercises its termination right prior to 2019.2018. No other coke sales contract has an early termination clause. For a five yearfive-year period following the IPO,our initial public offering on January 24, 2013 ("IPO"), SunCoke has agreed to make us whole or purchase all of our coke production not taken by our customers in the event of a customer's default or exercise of certain termination rights, under the same terms as those provided for in the coke sales agreements with our customers.
Our Granite City facility and the first phase of our Haverhill facility, or Haverhill 1, have steam generation facilities which use hot flue gas from the cokemaking process to produce steam for sale to customers pursuant to steam supply and purchase agreements. Granite City sells steam to third parties. Prior to the second quarter of 2015, Haverhill 1 sold steam to Haverhill Chemicals LLC, a third party. See further discussion in "Recent Developments" below. Our Middletown facility and the second phase of our Haverhill facility, or Haverhill 2, have cogeneration plants that use the hot flue gas created by the cokemaking process to generate electricity, which is either sold into the regional power market or to AK Steel pursuant to energy sales agreements.


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The following table sets forth information about our cokemaking facilities and our coke, steam and energy sales agreements:
Facility Location 
Coke
Customer
 
Year of
Start Up
 
Contract
Expiration
 
Number of
Coke Ovens
 
Annual Cokemaking
Capacity
(thousands of tons)
 Use of Waste Heat Location 
Coke
Customer
 
Year of
Start Up
 
Contract
Expiration
 
Number of
Coke Ovens
 
Annual Cokemaking
Capacity
(thousands of tons)
 Use of Waste Heat
Granite City Granite City, Illinois U.S. Steel 2009 2025 120
 650
 Steam for power generation
Haverhill 1 Franklin Furnace, Ohio ArcelorMittal 2005 2020 100
 550
 Process steam Franklin Furnace, Ohio ArcelorMittal 2005 2020 100
 550
 Process steam
Haverhill 2 Franklin Furnace, Ohio AK Steel 2008 2022 100
 550
 Power generation Franklin Furnace, Ohio AK Steel 2008 2022 100
 550
 Power generation
Middletown(1)
 Middletown, Ohio AK Steel 2011 2032 100
 550
 Power generation Middletown, Ohio AK Steel 2011 2032 100
 550
 Power generation
Total 300
 1,650
  420
 2,300
 


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(1)
Cokemaking capacity represents stated capacity for the production of blast furnace coke. The Middletown coke sales agreement provides for coke sales on a “run of oven” basis, which includes both blast furnace coke and small coke. Middletown capacity on a “run of oven” basis is 578 thousand tons per year.
Our business strategy has evolved to include the expansion of our operations into adjacent business lines within the steelmaking value chain. During 2013, we expanded our operations intoWe also provide coal handling andand/or blending services with our Coal Logistics business. Our newly acquired Convent Marine Terminal is one of the largest export terminals on the U.S. gulf coast and has direct rail access and the capability to transload 10 million tons of coal annually through two acquisitions. On August 30, 2013, the Partnership completed its acquisition of Lakeshore Coal Handling Corporation ("Lake Terminal"). Locatedoperations in Convent, Louisiana. Our terminal located in East Chicago, Indiana, SunCoke Lake Terminal, LLC ("Lake Terminal") provides coal handling and blending services to SunCoke's Indiana Harbor cokemaking operations. On October 1, 2013, the Partnership acquired Kanawha River Terminals ("KRT"). KRT is a leading metallurgical and thermal coal blending and handling terminal service provider with collective capacity to blend and transload 30 million tons of coal annually through its operations in West Virginia and Kentucky. Coal is transported from the mine site in numerous ways, including rail, truck, barge or ship. Our coal terminals act as intermediaries between coal producers and coal end users by providing transloading, storage and blending services. We do not take possession of coal in our Coal Logistics business, but instead derive ourearn revenue by providing coal handling andand/or blending services to our customers on a fee per ton basis. Our coalWe provide blending and handling services are provided to steel, coke (including some of our and SunCoke’s domestic cokemaking facilities), electric utility and coal producing customers.
Further, we are exploring opportunities for entry into the ferrous segments of the steel value chain, such as iron ore concentration and pelletizing and direct reduced iron production ("DRI"). We received a favorable IRS private letter ruling for DRI in the second quarter of 2014. DRI, an alternative method of ironmaking is used today in conventional blast furnaces and electric arc furnaces. The capital investment required to build DRI plants is low compared to integrated steel plants and operating costs can be favorable if low cost energy supplies are available. We believe there is additional demand for DRI capacity in the U.S., driven in part by the available supply of low cost natural gas.
Organized in Delaware in July 2012, and headquartered in Lisle, Illinois, we are a master limited partnership whose common units, representing limited partnership interests, were first listed for trading on the New York Stock Exchange (“NYSE”) in January 2013 under the symbol “SXCP.”
Recent Developments
Cokemaking Drop-Down2015 Guidance Update
In October 2015, we increased our full year outlook for 2015 Adjusted EBITDA attributable to SunCoke Energy Partners to a range of $185 million to $190 million. This reflects an expected Adjusted EBITDA benefit from the acquisition and related financing transactionsof the Convent Marine Terminal of approximately $20 million.
Acquisition of Convent Marine Terminal
On May 9, 2014, weAugust 12, 2015, the Partnership completed the acquisition of a 100 percent ownership interest in Raven Energy LLC, which owns Convent Marine Terminal ("CMT") for a total transaction value of $404.5 million. This transaction represents a significant expansion of the Partnership's Coal Logistics business and marks our entry into export coal handling. CMT is one of the largest export terminals on the U.S. gulf coast and provides strategic access to seaborne markets for coal and other industrial materials. Supporting low-cost Illinois basin coal producers, the terminal provides loading and unloading services and has direct rail access and the capability to transload 10 million tons of coal annually. The facility is supported by long-term contracts with volume commitments covering all of its current 10 million ton capacity. A $100 million capital investment has modernized and increased efficiency at the facility and when augmented with an additional 33.0$21.5 million in pre-funded investment, will expand capacity to 15 million tons and strengthen the terminal’s competitive profile.
The total transaction value of $404.5 million included the issuance of 4.8 million of the Partnership's common units to the previous owner of Raven Energy LLC, The Cline Group, with an aggregate value of $75.0 million, based on the unit price on the date of close. In addition, the Partnership assumed $114.9 million of a six-year term loan from Raven Energy LLC. The Partnership obtained additional funding for the transaction by drawing


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$185.0 million on the Partnership's revolving credit facility. The Partnership paid $193.1 million in cash, which was partially funded by SunCoke in exchange for 1.8 million of the Partnership's common units, with an aggregate value of $30.0 million. In connection with the acquisition, the Partnership’s general partner made a capital contribution to the Partnership of approximately $2.3 million in order to preserve its 2 percent general partner interest. An additional $21.5 million in cash was withheld to fund the completion of expansion capital improvements at CMT and is recorded in restricted cash on the Combined and Consolidated Balance Sheet.
The following table summarizes the consideration transferred to acquire CMT:
Fair Value of Consideration Transferred:(Dollars in millions)
Cash$193.1
Partnership common units75.0
Assumption of Raven Energy LLC term loan114.9
Cash withheld to fund capital expenditures21.5
Total fair value of consideration transferred:$404.5
Granite City Dropdowns
On January 13, 2015, the Partnership acquired a 75 percent interest in the Haverhill and MiddletownSunCoke's Granite City cokemaking facilitiesfacility for a total considerationtransaction value of $365.0$244.4 million (the "Drop-Down""Granite City Dropdown"). The terms of the contribution agreement and the acquisition of the interests in Haverhill and Middletown were approved by the conflicts committee of our general partner’s Board of Directors, which consists entirely of independent directors.
The results of the Haverhill and Middletown operations are consolidatedGranite City Dropdown is reflected in the combined and consolidated financial statements of the Partnership for allas if the transfer occurred at the beginning of the period and prior periods presentedhave been revised to include the Granite City financial position, results of operations and any interest incash flows as the Haverhill and Middletown operations retained by Sun Coal & Coke is recordedGranite City Dropdown was accounted for as a noncontrolling interest ofcommon control transaction. In connection with the Partnership. Sun Coal & Coke retained a 35.0 percent interest in Haverhill and Middletown prior toGranite City Dropdown, the Drop-Down and a 2.0 percent interest in Haverhill and Middletown subsequent to the Drop-Down.
Total consideration for the Drop-Down included $3.4 million of cash to SunCoke, 2.7 million common units totaling $80.0 million issued to SunCoke and $3.3 million of general partner interests issued to SunCoke. We retained $7.0 million of the consideration to pre-fund SunCoke’s obligation to indemnify us for the anticipated cost of the environmental remediation project at Haverhill, which did not impact Partnership equity. In addition, we assumed and repaid approximately $271.3$135.0 million of outstanding SunCoke debt and other liabilities, which includes a market premium of $11.4 million to complete the tender of certain debt. The market premium was included in Partnership net income. In conjunction with the assumption of this debt, the Partnership also assumed the related debt issuance costs and debt discount, which were included in the adjustments to equity related to the acquisition in the Consolidated Statement of Equity.
We funded the Drop-Down with $88.7 million of net proceeds from the sale of 3.2 million common units to the public, which was completed on April 30, 2014, and approximately $263.1 million of gross proceeds from the issuance of $250.0 million aggregate principal amount of SunCoke's outstanding 7.625 percent senior notes ("Notes") and issued an additional $200.0 million of its 7.375 percent Partnership Notesunsecured senior notes, due in 2020 through a private placement on May 9, 2014. In addition,(the "Partnership Notes").
On August 12, 2015, the Partnership received acquired an additional 23 percent interest in SunCoke's Granite City cokemaking facility for a total transaction value of $65.2 million (the "Granite City Supplemental Dropdown"). In connection with the Granite City Supplemental Dropdown, the Partnership assumed $44.6 million of Suncoke's Notes.
See Note 2 and Note 7 to our combined and consolidated financial statements for additional information on the Granite City Dropdown, Granite City Supplemental Dropdown and related debt activities.
•$5.0 million to fund interest from February 1, 2014 to May 9, 2014, the period prior to the issuance. This interest was paid to noteholders on August 1, 2014.Temporary Idling of AK Steel Ashland, Kentucky Works and U.S. Steel Granite City Works Operations
In conjunction withOctober, 2015, AK Steel announced it intends to temporarily idle portions of its Ashland, Kentucky Works operations as a result of challenging market conditions and U.S. Steel announced it may temporarily idle its Granite City Works operations subject to customer demand. Our Haverhill II cokemaking facility supplies coke to AK Steel's Ashland, Kentucky Works under a long-term, take-or-pay contract until 2022. Our Granite City cokemaking facility supplies coke to U.S. Steel’s Granite City Works under a long-term, take-or-pay contract until 2025. The temporary idling does not change any obligations that AK Steel or U.S. Steel have under these contracts.  Since the closingannouncement, AK Steel and U.S. Steel have not idled their facilities and have continued to take all of the Drop-Down,coke we have produced at our Haverhill II and Granite City facilities. Additionally, we are supported by our omnibus agreement with SunCoke, our general partner, that provides certain commercial protections through January of 2018.  See Note 3 to our combined and consolidated financial statements.
Unit Repurchase Program
On July 20, 2015, the Partnership's Board of Directors authorized a $50.0 million program for the Partnership also increasedto repurchase common units from time to time in open market transactions, including block trades, or in privately negotiated transactions. The Partnership repurchased $10.0 million of its revolving creditcommon units during the three months ended September 30, 2015 receiving 634 thousand units for an average price of $15.78 per unit, leaving $40.0 million available for future repurchase under this program.
Haverhill Chemicals
During the second quarter of 2015, Haverhill Chemicals LLC announced plans to shut down their facility by anadjacent to our Haverhill cokemaking operations.  This shutdown, were it to occur, would not impact our ability to produce coke.  The lost energy revenue from Haverhill Chemicals LLC and additional $100.0costs we expect to incur at our Haverhill facility are expected to be approximately $6 million during 2015. The negative impact to $250.0 millionthe three and extended its maturity date from January 2018 to May 2019.


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Haverhillnine months ended September 30, 2015 results of $2.9 million and Middletown$4.2 million, respectively, were consolidated both prior to and subsequent to the Drop-Down. The Consolidated Statement of Income includes $18.9 million of costs related to the Drop-Down recorded during the second quarter of 2014, including the $11.4 million market premium to tender of certain debt, $4.0 million of debt extinguishment costs, $0.8 million of transaction costs and $2.7 million of incremental interest expense related to the notes issuance. An additional $4.6 million of incremental interest expense was recorded during the third quarter of 2014.
The additional interest in the Haverhill and Middletown cokemaking facilities we acquired under the Drop-Down is expected to generate on an annual basis Adjusted EBITDA attributable to unitholders of approximately $44 million, net of additional allocated corporate costs.
Equity Distribution Agreement
On August 5, 2014, the Partnership entered into an Equity Distribution Agreement (the “Equity Agreement”)line with Wells Fargo Securities, LLC (“Wells Fargo”). Pursuant to the terms of the Equity Agreement, the Partnership may sell from time to time through Wells Fargo, the Partnership’s common units representing limited partner interests having an aggregate offering price of up to $75.0 million. Sales of the common units, if any, will be made by means of ordinary brokers’ transactions through the facilities of the New York Stock Exchange at market prices, in block transactions, or as otherwise agreed by the Partnership and Wells Fargo, by means of any other existing trading market for the common units or to or through a market maker other than on an exchange. The common units will be issued pursuant to the Partnership’s existing effective shelf registration statement.
Under the terms of the Equity Agreement, the Partnership also may sell common units to Wells Fargo as principal for its own account at a price to be agreed upon at the time of sale. Any sale of common units to Wells Fargo as principal would be pursuant to the terms of a separate terms agreement between the Partnership and Wells Fargo. The Partnership intends to use the net proceeds from any sales pursuant to the Equity Agreement, after deducting Wells Fargo’s commissions and the Partnership’s offering expenses, for general partnership purposes, which may include repaying or refinancing all or a portion of the Partnership’s outstanding indebtedness and funding working capital, capital expenditures or acquisitions.
During the quarter the Partnership sold 62,956 common units under the Equity Agreement with an aggregate offering price of $1.8 million, leaving $73.2 million available under the Equity Agreement.management's expectations.
Third Quarter Key Financial Results
Total revenues decreased $3.3$6.6 million, or 2.03.0 percent, to $158.7$210.2 million in the three months ended September 30, 20142015 due primarily due to the pass-through of lower coal prices and lower coke sales volumes in our Domestic Coke segment, partially offset by $11.1revenue of $5.7 million generated by our newly acquired CMT business.
Adjusted EBITDA decreased $0.7 million to $51.8 million in the three months ended September 30, 2015 compared to $52.5 million for the same period in 2014. Adjusted EBITDA contributed by CMT of additional revenues from$5.4 million was more than offset by acquisition and business development costs and lower energy contributions as a result of our Coal Logistics segment acquiredcustomer's decision to idle its Haverhill Chemicals LLC facility during the second half of 2014.current year period.
Net income attributable to unitholders increased $6.5decreased $0.7 million to $19.5 million for the three months ended September 30, 2014, to $20.2 million compared with2015, reflecting the results of both Granite City and CMT mostly offset by the related acquisition and business development costs as well as higher interest expense on higher debt balances.
Cash distributions paid per unit were $0.5825 and $0.5150 for the three months ended September 30, 2013. This increase is mainly attributable to the increased ownership interest in our cokemaking facilities2015 and the contribution of the Coal Logistics segment.
Adjusted EBITDA was $38.3 million in the third quarter of 2014, compared to $35.7 million for the same period in 2013. The increase in Adjusted EBITDA of $2.6 million was driven primarily by the increase in the Coal Logistics segment Adjusted EBITDA of $3.1 million, offset by lower volumes in our cokemaking operations.respectively.
Items Impacting Comparability
Coal Logistics.Interest Expense, net.  On August 30Comparisons of interest expense, net between periods were impacted by higher debt balances and October 1, 2013, the Partnership acquired Lake Terminaldebt extinguishment costs.
Interest expense, net was$12.4 million and KRT, respectively. The results of these newly acquired facilities have been included in the Consolidated Financial Statements since the dates of acquisition and are presented in the Coal Logistics segment. Coal Logistics reported revenues of $13.6$6.8 million for the three months ended September 30, 2015 and 2014, respectively. The increase of which $1.4$5.6 million were intercompany revenues,was primarily driven by higher debt balances in the current year period.
Interest expense, net was $43.8 million and $41.7$30.1 million for the nine months ended September 30, 2015 and 2014, respectively. The increase of $13.7 million was primarily driven by higher debt balances in the current year period which $3.5 million were intercompany. Adjusted EBITDA was $3.8increased interest expense, net by $19.7 million and $10.9loss on extinguishment of debt of $9.4 million related to the Granite City Dropdown in the current year period. These increases were partially offset by a loss on extinguishment of debt of $15.4 million related to the Haverhill and Middletown Dropdown in the prior year period.
See Note 7 to our combined and consolidated financial statements.
Income Taxes. Income tax expense was $0.5 million and Adjusted EBITDA per ton handled was $0.80 and $0.74 for the three and nine months ended September 30, 2014, respectively. During both the three and nine months ended September 30, 2013, Coal Logistics included only one month of operations at Lake Terminal resulting in revenues of $1.1 million and Adjusted EBITDA of $0.7 million.
Interest Expense, net. Interest expense, net was $6.8 million and $2.8$4.9 million for the three months ended September 30, 2015 and 2014, and 2013, respectively, and $30.1 million and $12.3respectively. Income tax benefit was $2.4 million for the nine months ended September 30, 20142015 compared to income tax expense of $9.0 million in the same prior year period. The periods presented were not comparable, as earnings from our Granite City operations include federal and 2013, respectively. The third quarterstate income taxes calculated on a theoretical separate-return basis until the date of 2014 was impacted by interest expense on the


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additional Partnership Notes. Granite City Dropdown. The nine months ended September 30, 2014 was impacted by debt extinguishment costs2015 includes an income tax benefit of $15.4 million, which included an $11.4 million market premium to tender the senior notes, as well as interest expense on the additional Partnership Notes. The first quarter of 2013 was also impacted by debt restructuring costs of $0.8$4.0 million related to the portiontax impacts of the term loan extinguishedGranite City Dropdown and income tax expense of $0.4 million related to taxes on earnings from our Granite City operations calculated on a theoretical separate-return basis until the date of the Granite City Dropdown.
Noncontrolling Interest. Income attributable to noncontrolling interest represents SunCoke's retained ownership interest in conjunction withour cokemaking facilities. Income attributable to noncontrolling interest was $1.3 million and $0.6 million for the IPO as well as the issuance of $150.0 million of senior notes.
In addition, interest expense, net during the three and nine months ended September 30, 2015 and 2014, included $1.0respectively. The increase in noncontrolling interest was primarily due to the Granite City Dropdown and Granite City Supplemental Dropdown, which resulted in noncontrolling interest for SunCoke's retained ownership in Granite City.
Noncontrolling interest was $5.6 million and $2.6 million, respectively, of interest capitalized in connection with the environmental remediation project at Haverhill. In the three and nine months ended September 30, 2013, capitalized interest amounted to $0.4 million and $0.7 million, respectively.
Income Tax Expense. Income tax expense decreased $3.2 million to $1.0$15.1 million for the nine months ended September 30, 2015 and 2014, compared to $4.2respectively. The decrease of $9.5 million for the corresponding period of 2013. Following the IPO, the Partnership is not subject to federal or state income taxes. Earnings from our Middletown operations, however, are subject to a local income tax, which is reflected in both periods.The nine months ended September 30, 2013 included additional expense of $0.6 million related to prior period adjustments associated with local income taxes due for our Middletown operations and a $0.3 million adjustment to our valuation allowance associated with a local income tax net operating loss carryforward. We do not expect local income tax to affect our cash distribution as we do not expect to pay cash taxes until 2017.
Noncontrolling Interest. Net Income attributable to noncontrolling interest was $0.6 million and $10.8 million for the three months ended September 30, 2014 and 2013, respectively and was $15.1 million and $30.0 million for the nine months ended September 30, 2014 and 2013, respectively. These decreases were primarily the result of the Drop-Down transaction on May 9, 2014, which increased ourPartnership's 33.0 percent increase in ownership ofinterest in the Haverhill and Middletown ownershipcokemaking facilities in May 2014 ("Haverhill and Middletown Dropdown"), which decreased noncontrolling interest by an additional 33.0 percent,$13.4 million. This decrease was offset by a $3.9 million increase in noncontrolling interest from 65.0 percent to 98.0 percent. SunCoke continues to holdthe Granite City Dropdown and Granite City Supplemental Dropdown, which in turn established noncontrolling interest for the remaining 2.0 percent interest.Granite City interest not acquired.
See Note 2 to our combined and consolidated financial statements for further discussion of these transactions.


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Results of Operations
The following table sets forth amounts from the Combined and Consolidated Statements of Income for the three and nine months ended September 30, 20142015 and 20132014: 
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
 2014 2013 2014 2013 2015 2014 2015 2014
 (Unaudited)        
 (Dollars in millions) (Dollars in millions)
Revenues                
Sales and other operating revenue $158.7
 $162.0
 $480.8
 $514.6
 $210.2
 $216.8
 $621.1
 $649.1
Costs and operating expenses               ��
Cost of products sold and operating expenses 115.3
 118.9
 353.5
 383.3
Selling, general and administrative expenses 5.1
 7.4
 16.4
 16.5
Cost of products sold and operating expense 149.7
 157.6
 452.7
 485.3
Selling, general and administrative expense 9.8
 6.7
 24.7
 20.8
Depreciation and amortization expense 10.2
 8.3
 30.1
 23.5
 17.0
 13.7
 47.0
 40.3
Total costs and operating expenses 130.6
 134.6
 400.0
 423.3
 176.5
 178.0
 524.4
 546.4
Operating income 28.1
 27.4
 80.8
 91.3
 33.7
 38.8
 96.7
 102.7
Interest expense, net 6.8
 2.8
 30.1
 12.3
 12.4
 6.8
 43.8
 30.1
Income before income tax expense 21.3
 24.6
 50.7
 79.0
 21.3
 32.0
 52.9
 72.6
Income tax expense 0.5
 0.1
 1.0
 4.2
Income tax expense (benefit) 0.5
 4.9
 (2.4) 9.0
Net income 20.8
 24.5
 $49.7
 $74.8
 20.8
 27.1
 55.3
 63.6
        
Less: Net income attributable to noncontrolling interests 0.6
 10.8
 15.1
 30.0
 1.3
 0.6
 5.6
 15.1
Net income attributable to SunCoke Energy Partners, L.P./Predecessor 20.2
 13.7
 $34.6
 $44.8
 $19.5
 $26.5
 $49.7
 $48.5
Less: Predecessor net income prior to initial public offering on January 24, 2013 —
 —
 —
 3.5
Net income attributable to SunCoke Energy Partners, L.P. subsequent to initial public offering $20.2
 $13.7
 $34.6
 $41.3
Less: Net income attributable to Predecessor —
 6.3
 0.6
 13.9
Net income attributable to SunCoke Energy Partners, L.P. $19.5
 $20.2
 $49.1
 $34.6


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Revenues. Total revenues net of sales discounts, were $158.7$210.2 million and $162.0$216.8 million for the three months ended September 30, 20142015 and 2013,2014, respectively, and were $480.8$621.1 million and $514.6$649.1 million for the nine months ended September 30, 2015 and 2014, and 2013, respectively. TheThese decreases were primarily due to the pass-through of lower coal prices and lower coke sales volumes in our Domestic Coke segment. The nine-month period also includes the impact of severe weather on production and yields at both our cokemaking facilities. The three and nine months ended September 30, 2014 included $12.2 million and $38.2 million, respectively, of revenue from the Coal Logistics business compared to the three and nine months ended September 30, 2013 which each only included one month of Coal Logisticssegment, partially offset by additional revenues of $1.1$5.7 million due to the timing of acquisitions.generated by our newly acquired CMT business.
Costs and Operating Expenses. Total operating expenses were $130.6$176.5 million and $134.6$178.0 million for the three months ended September 30, 20142015 and 2013,2014, respectively, and were $400.0$524.4 million and $423.3$546.4 million for the nine months ended September 30, 2015 and 2014, respectively. For both the three and 2013, respectively. The decreasesnine months ended September 30, 2014, the decrease in cost of products soldcosts and operating expenses werewas primarily driven primarily by reduced coal costs in our Domestic Coke segment, partially offset by higher repairCMT costs and maintenance costs. The nine-month period also includes incremental operating expenses associated with the severe winter weatherof $3.1 million as well as higher depreciation on certain environmental remediation assets placed in the first quarter.service at our Haverhill cokemaking facility.
Interest Expense, net. Interest expense, net was $6.8$12.4 million and $2.8$6.8 million for the three months ended September 30, 20142015 and 2013,2014, respectively, and was $30.1$43.8 million and $12.3$30.1 million for the nine months ended September 30, 20142015 and 2013,2014, respectively. Comparability between periods iswas impacted by changes in debt balances and financing costs associated with the dropdown financing activities previously discussed.discussed in "Items Impacting Comparability."
Income Taxes. Income tax expense was $0.5 million and $0.1$4.9 million for the three months ended September 30, 20142015 and 2013,2014, respectively, and was $1.0 million and $4.2an income tax benefit of $2.4 million for the nine months ended September 30, 2014 and 2013, respectively.2015 as compared to expense of $9.0 million in the prior year period. Comparability between periods iswas impacted by the income tax itemsGranite City Dropdown previously discussed.discussed in "Items Impacting Comparability."
Noncontrolling Interest. Income attributable to noncontrolling interest represents SunCoke's retained ownership interest in our cokemaking facilities. Income attributable to noncontrolling interest was $0.6$1.3 million and $10.8$0.6 million for the three months ended September 30, 20142015 and 2013,2014, respectively, and was $15.1$5.6 million and $30.0$15.1 million for the nine months ended September 30, 20142015 and 2013,2014, respectively. Comparability between periods iswas impacted by the Drop-Down activitiesHaverhill and Middletown Dropdown, the Granite City Dropdown and Granite City Supplemental Dropdown previously discussed.discussed in "Items Impacting Comparability."
Net Income Attributable to Predecessor. Net income attributable to Predecessor reflects Granite City net income for periods prior to the Granite City Dropdown.


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Results of Reportable Business Segments
We report our business results through two segments:
Domestic Coke consists of our Haverhill, Middletown and MiddletownGranite City cokemaking and heat recovery operations located in Franklin Furnace, OhioOhio; Middletown, Ohio; and Middletown, Ohio,Granite City, Illinois, respectively.
Coal Logistics consists of our coal handling andand/or blending services in East Chicago, Indiana; Credo,Ceredo, West Virginia; Belle, West Virginia; Catlettsburg, Kentucky; and Catlettsburg, Kentucky.Convent, Louisiana.
Management believes Adjusted EBITDA is an important measure of operating performance and liquidity and it is used as the primary basis for the Chief Operating Decision Maker ("CODM") to evaluate the performance of each of our reportable segments. Adjusted EBITDA should not be considered a substitute for the reported results prepared in accordance with U.S. GAAP. See “Non-GAAP"Non-GAAP Financial Measures”Measures" near the end of this Item.
Segment Operating Data
The following tables set forth financial and operating data for the three and nine months ended September 30, 20142015 and 20132014:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 20132015 2014 2015 2014
(Unaudited)       
(Dollars in millions)(Dollars in millions)
Sales and other operating revenues:              
Domestic Coke$146.5
 $160.9
 $442.6
 $513.5
$192.4
 $204.8
 $581.1
 $611.7
Coal Logistics12.2
 1.1
 38.2
 1.1
17.8
 12.0
 40.0
 37.4
Coal Logistics intersegment sales1.4
 —
 3.5
 —
1.7
 1.6
 5.0
 4.3
Elimination of intersegment sales(1.4) —
 (3.5) —
(1.7) (1.6) (5.0) (4.3)
Total$158.7
 $162.0
 $480.8
 $514.6
$210.2
 $216.8
 $621.1
 $649.1
Adjusted EBITDA(1):
              
Domestic Coke$36.0
 $38.7
 $105.7
 $119.1
$46.6
 $50.2
 $137.3
 $137.3
Coal Logistics3.8
 0.7
 10.9
 0.7
10.4
 3.8
 18.0
 10.9
Corporate and Other(1.5) (3.7) (5.7) (5.6)(5.2) (1.5) (10.5) (5.7)
Total$38.3
 $35.7
 $110.9
 $114.2
$51.8
 $52.5
 $144.8
 $142.5
Coke Operating Data:              
Domestic Coke capacity utilization (%)107
 108
 105
 109
107
 109
 106
 105
Domestic Coke production volumes (thousands of tons)447
 447
 1,295
 1,344
619
 629
 1,828
 1,807
Domestic Coke sales volumes (thousands of tons)435
 447
 1,284
 1,353
615
 616
 1,826
 1,795
Domestic Coke Adjusted EBITDA per ton(2)
$82.76
 $86.58
 $82.32
 $88.03
$75.77
 $81.49
 $75.19
 $76.49
Coal Logistics Operating Data:              
Tons handled (thousands of tons)4,772
 136
 14,736
 136
5,149
 4,772
 13,309
 14,736
Coal Logistics Adjusted EBITDA per ton handled(3)
$0.80
 $5.15
 $0.74
 $5.15
$2.02
 $0.80
 $1.35
 $0.74
(1)See definition of Adjusted EBITDA and reconciliation to GAAP at the end of this Item.
(2)Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.
(3)Reflects Coal Logistics Adjusted EBITDA divided by Coal Logistics tons handled.


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Analysis of Segment Results
Three Months Ended September 30, 20142015 compared to Three Months Ended September 30, 20132014
Domestic Coke
Sales and Other Operating Revenue
Sales and other operating revenue decreased $14.4$12.4 million, or 8.96.1 percent, to $146.5$192.4 million for the three months ended September 30, 20142015 compared to $160.9$204.8 million for the corresponding period of 2013.2014. The decrease was mainly attributable to


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the pass-through of lower coal prices, which lowered revenues by $13.7$13.0 million. Lower overall sales volumes of 12 thousand tons decreased revenues by $3.0 million. These decreases were partiallyThis decrease was slightly offset by increases of $2.3 million, primarily related to higher reimbursable operating and maintenance costs.
Adjusted EBITDA
Domestic Coke Adjusted EBITDA decreased $2.7$3.6 million, or 7.07.2 percent, to $36.0$46.6 million for the three months ended September 30, 20142015 compared to $38.7$50.2 million in the corresponding period of 2013. Lower coal-to-coke yields and lower sales volumes2014. The impact of 12 thousand tonsour customer's decision to idle its Haverhill Chemicals LLC facility, with whom we have a steam supply agreement, decreased Adjusted EBITDA $2.4by $2.9 million. The remaining decrease of $0.7 million and $0.3 million, respectively, as comparedis primarily related to the prior year period.lower coal-to-coke yields resulting from higher coal moistures.
Depreciation expense, which was not included in segment profitability, was $8.2$13.5 million for the three months ended September 30, 20142015 compared to $8.1$11.7 million in the prior year period. This increase was primarily the result of depreciation expense in the current year period on certain environmental remediation assets placed in service at our Haverhill cokemaking facility.
Coal Logistics
Sales and Other Operating Revenue
Inclusive of intersegment sales, sales and other operating revenue were $13.6$19.5 million for the three months ended September 30, 20142015 compared to $1.1$13.6 million for the corresponding period of 2013. Comparison between periods2014. This increase was impactedprimarily due to additional revenue from our newly acquired CMT business of $5.7 million. Excluding CMT, more favorable pricing on higher volumes of blending services, which increased revenues $1.4 million, were largely offset by timinglower volumes of acquisitions.440 tons, which decreased revenues $1.2 million.
Adjusted EBITDA
Coal Logistics Adjusted EBITDA was $3.8$10.4 million for the three months ended September 30, 20142015 compared to $0.7$3.8 million in the corresponding periodprior year period. The acquisition of 2013. Comparison between periods was impactedCMT provided additional Adjusted EBITDA of $5.4 million. Excluding CMT, higher margins caused by timinga shift in sales mix and cost savings primarily drove the remaining increase of acquisitions.$1.2 million.
Depreciation and amortization expense, which was not included in segment profitability, was $3.5 million during the three months ended September 30, 2015 compared to $2.0 million during the same prior year period, primarily due to additional depreciation and amortization expense associated with CMT, which was acquired on August 12, 2015.
Corporate and Other
Corporate and other expenses increased $3.7 million to $5.2 million for the three months ended September 30, 20142015 compared to $0.2 million for the corresponding period of 2013.
Corporate and Other
Corporate and other expenses decreased $2.2 million to $1.5 million for the three months ended September 30, 2014 compared to $3.7 million in the same period of 2013. The decrease is mainly attributable to2014, primarily resulting from $2.2 million of acquisition relatedand business development costs incurred in 2013.the current year period as well as a higher allocation of costs from SunCoke in conjunction with the Haverhill and Middletown Dropdown.
Nine Months Ended September 30, 20142015 compared to Nine Months Ended September 30, 20132014
Domestic Coke
Sales and Other Operating Revenue
Sales and other operating revenue decreased $70.9$30.6 million, or 13.85.0 percent, to $442.6$581.1 million for the nine months ended September 30, 20142015 compared to $513.5$611.7 million for the corresponding period of 2013.2014. The decrease was mainly attributable to the pass-through of lower coal prices, which lowered revenues by $56.5 million. Lower overall sales volumes of 69 thousand tons, in part due to severe winter weather during the first quarter of 2014, also decreased revenues by $23.0$38.0 million. These decreases were partiallyThis decrease was partly offset by increases of $8.6$7.4 million primarily related todriven by higher reimbursable operating and maintenance costs.volumes of 31 thousand tons compared the prior year period.
Adjusted EBITDA
Domestic Coke Adjusted EBITDA decreased $13.4remained consistent at $137.3 million or 11.3 percent, to $105.7 million for both the nine months ended September 30, 2014 compared2015 and 2014. Adjusted EBITDA increased $2.4 million due to $119.1 million in the corresponding period of 2013. The decrease was primarily related to lower coal-to-coke yields and lower saleshigher coke volumes of 6931 thousand tons, in part duetons. This increase was offset primarily by lower energy sales driven by the impact of our customer's decision to severe winter weather in the first quarter of 2014, decreasing Adjusted EBITDA $10.6 million and $6.4 million, respectively, as compared to the prior year period. These decreases were partially offset by increases of $3.6 million primarily related toidle its Haverhill Chemicals LLC facility, with whom we have a lower allocation of corporate costs.steam supply agreement.
Depreciation expense, which was not included in segment profitability, was relatively consistent at $24.5$39.8 million for the nine months ended September 30, 20142015 compared to $23.3$34.7 million in the prior year period. This increase was primarily the result of depreciation expense in the current year period on certain environmental remediation assets placed in service at our Haverhill cokemaking facility.


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Coal Logistics
Sales and Other Operating Revenue
Inclusive of intersegment sales, sales and other operating revenue were $41.7$45.0 million for the nine months ended September 30, 20142015 compared to $1.1$41.7 million for the corresponding period of 2013. Comparison between periods2014. The increase was impactedprimarily due to additional revenue from our newly acquired CMT business of $5.7 million. Excluding CMT, more favorable pricing on higher volumes of blending services increased revenues $3.7 million but were more than offset by timing of acquisitions.an overall decrease in volume, which decreased revenues $6.1 million.
Adjusted EBITDA
Coal Logistics Adjusted EBITDA was $10.9$18.0 million for the nine months ended September 30, 20142015 compared to $0.7$10.9 million in the corresponding period of 2013. Comparison between periods was impacted2014. The acquisition of CMT provided additional Adjusted EBITDA of $5.4 million on 817 thousand tons. Excluding CMT, the increase reflected a higher volume of blending services compared to the prior year period, which yielded more favorable margins and increased Adjusted EBITDA $3.2 million. Lower spending also increased Adjusted EBITDA $0.6 million. These increases were partially offset by timingdecreases of acquisitions.$2.1 million, primarily driven by lower overall volume.
Depreciation and amortization expense, which was not included in segment profitability, was $5.6$7.2 million for the nine months ended September 30, 20142015 compared to $0.2$5.6 million infor the same prior year period, primarily due to additional depreciation and is impacted by the timing of acquisitions.amortization expense associated with CMT, which was acquired on August 12, 2015.
Corporate and Other
Corporate and other expenses increased $4.8 million to $5.7 million from $5.6$10.5 million for the nine months ended September 30, 20142015 compared to $5.7 million in the samecorresponding period the prior year.of 2014. The current year period includedreflects $2.6 million of acquisition and business development costs as well as a higher allocation of costs from SunCoke in conjunction with the Drop-Down transaction. The prior year period included costs related to the acquisition of our Coal Logistics business.Haverhill and Middletown Dropdown.
Liquidity and Capital Resources
We operate in a capital-intensive industry, and ourOur primary liquidity needs are to finance the replacement of partially or fully depreciated assets and other capital expenditures, service our debt, fund investments, fund working capital, maintain cash reserves, and pay distributions. We also intend to repurchase units. We are prudently managing liquidity in light of our customers' ongoing labor negotiations. We believe our current resources, including the potential borrowings under our revolving credit facility, are sufficient to meet our working capital requirements for our current business for the foreseeable future.
On August 5, 2014, the Partnership entered into an Equity Distribution Agreement (the “Equity Agreement”) with Wells Fargo Securities, LLC (“Wells Fargo”). Pursuant to the terms of the Equity Agreement, the Partnership may sell from time to time through Wells Fargo, the Partnership’s common units representing limited partner interests having an aggregate offering price of up to $75.0 million. During the quarter the Partnership sold 62,956 common units under the Equity Agreement with an aggregate offering price of $1.8 million, leaving $73.2 million available under the Equity Agreement.
In conjunction with the closing of the Drop-Down, the Partnership amended the Partnership Revolver to include (i) an increase in the total aggregate commitments from lenders from $150.0 million to $250.0 million and (ii) an extension of the maturity date from January 2018 to May 2019. As of September 30, 2014, we had $26.9 million of cash and cash equivalents and $249.3 million of borrowing availability under our revolving credit facility. Our sources of liquidity include cash generated from operations, borrowings under our new revolving credit facility and, from time to time, debt and equity offerings.
The Partnership is subject to certain debt covenants that, among other things, limit the Partnership’s ability and the ability of certain of the Partnership’s subsidiaries to (i) incur indebtedness, (ii) pay dividends or make other distributions, (iii) prepay, redeem or repurchase certain debt, (iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates and (viii) consolidate or merge. These covenants are subject to a number of exceptions and qualifications set forth in the respective agreements. Additionally, under the terms of the Partnership Revolver, the Partnership is subject to a maximum consolidated leverage ratio of 4.00 to 1.00, calculated by dividing total debt by EBITDA as defined by the Partnership Revolver, and a minimum consolidated interest coverage ratio of 2.50 to 1.00, calculated by dividing EBITDA by interest expense as defined by the Partnership Revolver. As of September 30, 2014,2015, we had $61.3 million of cash and cash equivalents and $65.0 million of borrowing availability under the Partnership wasRevolver.
As discussed above in compliance"Recent Developments,"on August 12, 2015, the Partnership drew $185.0 million on the Partnership Revolver to partially fund the acquisition of CMT. The Partnership expects to access the capital markets for long-term financing at a later date.
Also in connection with all applicable debt covenants containedthe acquisition of CMT, the Partnership assumed Raven Energy LLC's term loan of $114.9 million ("Promissory Note"). Under the Partnership's third amendment to the amended and restated credit agreement ("Promissory Agreement") dated August 12, 2015, the Partnership will repay a principal amount of $0.3 million each fiscal quarter ending prior to August 12, 2018. For each fiscal quarter ending after August 12, 2018, the Partnership shall repay a principal amount of $2.5 million. The entire outstanding amount of the Promissory Note is due in full on August 12, 2021. The Promissory Note shall bear interest on the outstanding principal amount for each day from August 12, 2015, until it becomes due, at a rate per annum equal to 6.0 percent until August 12, 2018. After August 12, 2018, that rate will be the LIBOR for the interest period then in effect plus 4.5 percent. Interest is due at the end of each fiscal quarter.
On July 20, 2015, the Partnership's Board of Directors authorized a $50.0 million program for the Partnership to repurchase common units from time to time in open market transactions, including block trades, or in privately negotiated transactions. The Partnership repurchased $10.0 million of its common units, in the Partnership Revolver. We do not anticipate violationopen market, for an average purchase price of these covenants nor do we anticipate that any$15.78 per unit during the three months ended September 30, 2015, leaving $40.0 million available for future repurchase under this program.
On October 9, 2015, our Board of these covenants will restrict our operations or our ability to obtain additional financing.
In accordance with our partnership agreement, on October 21, 2014, weDirectors declared a quarterly cash distribution of $0.5275$0.5940 per unit. This distribution will be paid on November 28, 2014December 1, 2015 to unitholders of record on November 14, 2014.13, 2015. Because we generally intend to distribute substantially all of our cash available for distribution, our growth may not be as fastrapid as the growth of businesses that reinvest their available cash to expand ongoing operations. Moreover, our future growth may be slower than our historical growth.


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We expect that we will, in large part, rely upon external financing sources, including bank borrowings and issuances of debt and equity securities, to fund acquisitions and expansion capital expenditures. To the extent we are unable to finance growth externally, our cash distribution policy could significantly impair our ability to grow. To the extent we issue additional units in connection with any acquisitions or expansion capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level. The incurrence of additional debt by us would result in increased interest expense, which in turn may also affect the amount of cash that we have available to distribute to our unitholders.


The Partnership is subject to certain debt covenants that, among other things, limit the Partnership’s ability and the ability of certain of the Partnership’s subsidiaries to (i) incur indebtedness, (ii) pay dividends or make other distributions, (iii) prepay, redeem or repurchase certain debt, (iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates and (viii) consolidate or merge. These covenants are subject to a number of exceptions and qualifications set forth in the respective agreements governing the Partnership's debt.
24
TableUnder the terms of Contentsthe Partnership Revolver, the Partnership is subject to a maximum consolidated leverage ratio of 4.50:1.00 (and, if applicable, 5.00:1.00 during the remainder of any fiscal quarter and the two immediately succeeding fiscal quarters following our acquisition of additional assets having a fair market value greater than $50 million), calculated by dividing total debt by EBITDA as defined by the Partnership Revolver, and a minimum consolidated interest coverage ratio of 2.50:1.00, calculated by dividing EBITDA by interest expense as defined by the Partnership Revolver.

Under the terms of the Promissory Agreement, Raven Energy LLC, a wholly-owned subsidiary of the Partnership, is subject to a maximum leverage ratio of 5.00:1.00 for any fiscal quarter ending prior to August 12, 2018, calculated by dividing total debt by EBITDA as defined by the Promissory Agreement. For any fiscal quarter ending on or after August 12, 2018 the maximum leverage ratio is 4.50:1.00. Additionally in order to make restricted payments, Raven Energy LLC is subject to a fixed charge ratio of greater than 1.00:1.00, calculated by dividing EBITDA by fixed charges as defined by the Promissory Agreement.
If we fail to perform our obligations under these and other covenants, the lenders' credit commitment could be terminated and any outstanding borrowings, together with accrued interest, under the Partnership Revolver could be declared immediately due and payable. The Partnership has a cross-default provision that applies to our indebtedness having a principal amount in excess of $20 million.
As of September 30, 2015, the Partnership was in compliance with all applicable debt covenants contained in the Partnership Revolver and Promissory Agreement. We do not anticipate violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing.
The following table sets forth a summary of the net cash provided by (used in) operating, investing and financing activities for the nine months ended September 30, 20142015 and 2013:2014:
 Nine Months Ended September 30,
 Nine Months Ended September 30, 2015 2014
 2014 2013    
 (Dollars in millions) (Dollars in millions)
Net cash provided by operating activities $71.5
 $69.7
 $88.2
 $86.6
Net cash used in investing activities (53.1) (49.0) (246.3) (57.0)
Net cash (used in) provided by financing activities (37.8) 57.8
Net (decrease) increase in cash and cash equivalents $(19.4) $78.5
Net cash provided by (used in) financing activities 186.1
 (49.0)
Net increase (decrease) in cash and cash equivalents $28.0
 $(19.4)
Cash Provided by Operating Activities
Net cash provided by operating activities increased by $1.8$1.6 million to $71.5$88.2 million for the nine months ended September 30, 20142015 as compared to $69.7$86.6 million in the corresponding period of 2013.2014. The increase was primarily reflects working capital changes associated with lower inventory due to changeslower coal prices as well as the current year period wind down of a strategic build in working capital.inventory levels from the second half of 2014 and the settlement of $13.1 million of accrued sales discounts in the prior year period. These increases were offset by a late customer payment, received on October 1, 2015, which increased accounts receivable $18.0 million and lower operating performance during the current year period.
Cash Used in Investing Activities
Cash used in investing activities increased $4.1$189.3 million to $53.1$246.3 million for the nine months ended September 30, 20142015 as compared to $49.0$57.0 million in the corresponding period in 2013.2014. The acquisition of CMT resulted in an investing cash outflow of $193.1 and an additional $21.5 million of restricted cash withheld to fund the completion of expansion capital improvements. The cash withheld is included in restricted cash on the Combined and Consolidated Balance Sheet. This


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increase is attributablewas partially offset by higher capital expenditures related to higherthe environmental remediation expendituresproject at our Haverhill facility as well as higher ongoing capital expenditures as compared toin the prior year period partially offset by the costs associated with the acquisition of our Coal Logistics business in the prior year.period.
Cash (Used in) Provided byUsed in Financing Activities
Net cash used inprovided by financing activities was $37.8$186.1 million for the nine months ended September 30, 20142015 as compared to net cash provided byused in financing activities of $57.8$49.0 million for the corresponding period of 2013.2014. In the second quarter of 2014,2015, we received net proceeds of $88.7$210.8 million from the issuance of 3,220,000Partnership Notes, $185.0 million drawn on the Partnership Revolver, $30.0 million from the issuance of 1.8 million common units in SunCoke Energy Partners, L.P.L.P and $2.3 million from the issuance of general partner interest to SunCoke. These cash inflows were partially offset by debt issuance costs of $4.5 million, distributions to our unitholders of $75.0 million, repurchase of $10.0 million of common unitholdersunits under the unit repurchase program, distributions to SunCoke of $2.7 million, and grossthe repayment of debt assumed from Suncoke and other liabilities of $149.8 million, including a redemption premium of $7.7 million.
In the nine months ended September 30, 2014, we received proceeds of $90.5 million from the issuance of 3.2 million common units in SunCoke Energy Partners, L.P. proceeds of $268.1 million from the issuance of SeniorPartnership Notes. These cash inflows were partially offset by the repayment of $276.3 million of long term debt, including a market premium of $11.4 million to complete the tender of certain debt, and debt issuance costs of $5.8 million and cash payments to SunCoke of $3.4 million. In the third quarter of 2014 we received net proceeds of $1.8 million for additional units issued to the market under our Equity Agreement. During the nine months ended September 30, 2014,Additionally, we made distributions to our unitholders of $54.2 million, and distributions to SunCoke of $17.0 million. Additionally, we made$20.4 million and had net repayments of $40.0 million on the revolver.
In the nine months ended September 30, 2013, we received net proceeds of $231.8 million from the issuance of 13,500,000 common units in SunCoke Energy Partners, L.P. and $150.0 million from the issuance of the Senior Notes. These cash inflows were partially offset by the repayment of $225.0 million of our term loan, debt issuance costs of $6.8 million and distributions of $69.5 million to SunCoke, $33.1 million to reimburse SunCoke for expenditures made during the two-year period prior to the IPO for the expansion and improvement of certain assets and $36.4 million of distributions from earnings of Haverhill and Middletown subsequent to the IPO. Distributions to unitholders of $23.3 million further offset the cash proceeds.
Capital Requirements and Expenditures
Our cokemaking operations are capital intensive, requiring significant investment to upgrade or enhance existing operations and to meet environmental and operational regulations. The level of future capital expenditures will depend on various factors, including market conditions and customer requirements, and may differ from current or anticipated levels. Material changes in capital expenditures levels may impact financial results, including but not limited to the amount of depreciation, interest expense and repair and maintenance expense.
Our capital requirements have consisted, and are expected to consist, primarily of:
ongoingOngoing capital expenditures required to maintain equipment reliability, ensure the integrity and safety of our coke ovens and steam generators and comply with environmental regulations;
environmentalEnvironmental remediation capital expenditures required to implement design changes to ensure that our existing facilities operate in accordance with existing environmental permits; and
expansionExpansion capital expenditures to acquire and/or construct complementary assets to grow our business and to expand existing facilities as well as capital expenditures made to enable the renewal of a coke sales agreement and on which we expect to earn a reasonable return.


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The following table summarizes capital expenditures for the nine months ended September 30, 20142015 and 20132014:
 Nine Months Ended September 30,
 Nine Months Ended September 30, 2015 2014
 2014 2013    
   (Dollars in millions)
Ongoing capital $14.1
 $6.3
 $13.1
 $16.9
Environmental remediation capital 39.0
 14.1
Environmental remediation capital(1)
 18.6
 40.1
Total $53.1
 $20.4
 $31.7
 $57.0
(1)Includes capitalized interest of $2.6 million in both the nine months ended September 30, 2015 and 2014, respectively.
Our capital expenditures for 20142015 are expected to be approximately $60$40 million, of which ongoing capital expenditures are anticipatedexpected to be approximately $18$20 million. Ongoing capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and/or extend their useful lives. Ongoing capital expenditures also include new equipment that improves the efficiency, reliability or effectiveness of existing assets. Ongoing capital expenditures do not include normal repairs and maintenance expenses, which are expensed as incurred.
The EPA and state regulators have issued Notices of Violations (“NOVs”) for the Haverhill cokemaking facility which stem from alleged violations of air operating permits for this facility. SunCoke is currently working in a cooperative manner with the EPA to address the allegations and has lodged a consent decree in federal district court that is undergoing review. Settlement may require payment of a penalty for alleged past violations as well as the capital projects underway to improve the reliability of the energy recovery systems and enhance environmental performance at the Haverhill facility. We retained $74$119 million in proceeds from the Partnership offering, the Haverhill and Drop-Down transaction for theseMiddletown Dropdown and the Granite City Dropdown to fund our environmental remediation projects to comply with the expected terms of a consent decree. Spending for these projects depends ondecree at the timingHaverhill and finality of the settlement.Granite City cokemaking operations. Pursuant to the omnibus agreement, with SunCoke, any amounts that we spend on these projects in excess of the $74$119 million retained will be reimbursed by SunCoke. Prior to our formation, SunCoke spent $5$7 million related to these projects. The PartnershipWe have spent $27approximately $81 million during 2013to date and hasthe remaining capital is expected to be spent $39 million during 2014. We anticipate spending approximately $3 million inthrough the remainderfirst quarter of 2014 and $6 million in 2015. Any potential penalties for alleged past violations will be paid by SunCoke. 2018.


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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies
Goodwill, which represents the excess of the purchase price over the fair value of net assets acquired is tested for impairment at least annually during the fourth quarter. There were no impairments of goodwill or other intangible assets during the periods presented. All other intangible assets have finite useful lives and are amortized over their useful lives in a manner that reflects the pattern in which the economic benefit of the intangible asset is consumed. Intangible assets are assessed for impairment when a triggering event occurs.
Other than the item discussed above, there have been no significant changes to our accounting policies during the nine months ended September 30, 20142015. Please refer to our Current Report on Form 8-K dated April 30, 2015 and our Annual Report on Form 10-K dated February 28, 201424, 2015 for a summary of these policies.
Recent Accounting Standards
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which provides guidance for revenue recognition. Under this ASU, an entity is requiredSee Note 1 to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.  The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently reviewing the provisions of ASU 2014-09 but does not expect it to have a material effect on the Company's financial condition, results of operations, or cash flows.
In April 2014, FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. It is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in previously issuedour consolidated financial statements.    The Company does not expect this ASU to have a material effect on the Company's financial condition, results of operations, or cash flows.
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements-Going Concern". This ASU is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to


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continue as a going concern and to provide related footnote disclosures. It is effective for annual periods beginning after December 15, 2016, with early adoption permitted. The Company does not expect it to have a material effect on the Company's financial condition, results of operations, and cash flows.
Non-GAAP Financial Measures
In addition to the GAAP results provided in the Quarterly Report on Form 10-Q, we have provided a non-GAAP financial measure, Adjusted EBITDA. Reconciliation from GAAP to the non-GAAP measurement is presented below.
Our management, as well as certain investors, use this non-GAAP measure to analyze our current and expected future financial performance. This measure is not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.
Adjusted EBITDA. Adjusted EBITDA represents earnings before interest, taxes, depreciation (“EBITDA”),and amortization adjusted for sales discounts.discounts and Coal Logistics deferred revenue. Prior to the expiration of our nonconventional fuel tax credits in June 2012,2013, Adjusted EBITDA included an add-back of sales discounts related to the sharing of these credits with our customers. Any adjustments to these amounts subsequent to 2013 have been included in Adjusted EBITDA. Coal Logistics deferred revenue represents cash received on Coal Logistics take-or-pay contracts for which revenue has not yet been recognized under GAAP. Including Coal Logistics deferred revenue in Adjusted EBITDA reflects sales discounts included as a reduction in sales and other operating revenue. The sales discounts represent the sharing with customerscash flow of a portion of nonconventional fuel tax credits, which reduce our income tax expense. However, we believe ourcontractual arrangements. Adjusted EBITDA would be inappropriately penalized if these discounts were treated as a reduction of EBITDA since they represent sharing of a tax benefit that is not included in EBITDA. Accordingly, in computing Adjusted EBITDA, we have added back these sales discounts. EBITDA and Adjusted EBITDA dodoes not represent and should not be considered alternativesan alternative to net income or operating income under GAAP and may not be comparable to other similarly titled measures in other businesses.
Management believes Adjusted EBITDA is an important measure of the operating performance and liquidity of the Partnership's net assets and its ability to incur and service debt, fund capital expenditures and make distributions. Adjusted EBITDA provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it eliminates items that have less bearing on our operating performance.performance and liquidity. EBITDA and Adjusted EBITDA is a measure of operating performance that isare not defined bymeasures calculated in accordance with GAAP, does not represent and they should not be considered a substitute foran alternative to net income, as determinedoperating cash flow or any other measure of financial performance presented in accordance with GAAP. Calculations of Adjusted EBITDA may not be comparable to those reported by other companies.
Set forth below is additional detail as to how we use Adjusted EBITDA as a measure of operating performance, as well as a discussion of the limitations of Adjusted EBITDA as an analytical tool.
Operating PerformanceLimitations.. Our management uses Adjusted EBITDA in a number of ways to assess our combined financial and operating performance, and we believe this measure is helpful to management in identifying trends in our performance. Adjusted EBITDA helps management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance while neutralizing the impact of capital structure on financial results. Accordingly, we believe this metric measures our financial performance based on operational factors that management can impact in the short-term, namely our cost structure and expenses.
Limitations. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. Adjusted EBITDA also has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations include that Adjusted EBITDA:
does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
does not reflect items such as depreciation and amortization;
does not reflect changes in, or cash requirements for, working capital needs;
does not reflect our interest expense, or the cash requirements necessary to service interest on or principal payments of our debt;
does not reflect certain other non-cash income and expenses;
excludes income taxes that may represent a reduction in available cash; and
includes net income attributable to noncontrolling interests.


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Below is a reconciliation of Adjusted EBITDA and reconcile this non-GAAP financial measure(unaudited) to our net income and net cash provided by operating activities, which isare its most directly comparable financial measuremeasures calculated and presented in accordance with GAAP.GAAP:
  Three Months Ended September 30, Nine Months Ended September 30,
  2015 2014 2015 2014
         
  (Dollars in millions)
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $49.9
 $37.6
 $135.8
 $92.0
Add: Adjusted EBITDA attributable to Predecessor(1)
 —
 14.2
 1.5
 31.6
Add: Adjusted EBITDA attributable to noncontrolling interest(2)
 1.9
 0.7
 7.5
 18.9
Adjusted EBITDA $51.8

$52.5

$144.8

$142.5
Subtract:        
Depreciation and amortization expense 17.0
 13.7
 47.0
 40.3
Interest expense, net 12.4
 6.8
 43.8
 30.1
Income tax expense (benefit) 0.5
 4.9
 (2.4) 9.0
Sales discounts provided to customers due to sharing of nonconventional fuel tax credits(3)
 —
 —
 —
 (0.5)
Coal Logistics deferred revenue(4)
 1.1
 —
 1.1
 —
Net income $20.8

$27.1

$55.3

$63.6
Add:        
Depreciation and amortization expense 17.0
 13.7
 47.0
 40.3
Loss on extinguishment of debt —
 —
 9.4
 15.4
Changes in working capital and other (22.1) (6.3) (23.5) (32.7)
Net cash provided by operating activities $15.7

$34.5

$88.2

$86.6
(1)Reflects Granite City Adjusted EBITDA prior to the January 13, 2015 dropdown transaction.
(2)Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest share of interest, taxes, income, and depreciation.
(3)Sales discounts are related to nonconventional fuel tax credits, which expired in 2013. At December 31, 2013, we had $13.6 million accrued related to sales discounts to be paid to our Granite City customer. During first quarter of 2014, we settled this obligation for $13.1 million which resulted in a gain of $0.5 million. This gain is recorded in sales and other operating revenue on our Combined and Consolidated Statements of Income.
(4)Coal Logistics deferred revenue represents revenue excluded from sales and other operating income for GAAP purposes related to the timing of revenue recognition on the Coal Logistics take-or-pay contracts. Including take-or-pay shortfalls within Adjusted EBITDA matches cash flows with Adjusted EBITDA.


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Below is a reconciliation of 2015 Estimated Adjusted EBITDA to its closest GAAP measure with disaggregated results for periods prior to and subsequent to the IPO:measures:
 Three Months Ended September 30, Nine Months Ended September 30, SunCoke Energy Partners, L.P.
Predecessor		 SunCoke Energy Partners, L.P. 2015
 2014 2013 2014 2013 Period from January 1, 2013 to January 23, 2013 Period from January 24, 2013 to September 30, 2013 Low High
     (Dollars in millions)
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P./Predecessor $37.6
 $22.1
 $92.0
 $75.9
  $9.7
 $66.2
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $185
 $190
Add: Adjusted EBITDA attributable to noncontrolling interest(1)
 0.7
 13.6
 18.9
 38.3
  —
 38.3
 10
 10
Adjusted EBITDA $38.3
 $35.7
 $110.9
 $114.2
  $9.7
 $104.5
 $195
 $200
Subtract:                 
Depreciation and amortization expense 10.2
 8.3
 30.1
 23.5
  1.9
 21.6
 65
 65
Interest expense, net 6.8
 2.8
 30.1
 12.3
  0.6
 11.7
 59
 59
Income tax expense (benefit) (2) (2)
Coal Logistics deferred revenue(2)
 (3) (3)
Net income $76
 $81
Add:    
Depreciation and amortization expense 65
 65
Loss on extinguishment of debt 9
 9
Changes in working capital and other (5) —
Coal Logistics deferred revenue(2)
 (3) (3)
Income tax expense 0.5
 0.1
 1.0
 4.2
  3.7
 0.5
 (2) (2)
Sales discounts provided to customers due to sharing of nonconventional fuel tax credits(2)
 —
 —
 —
 (0.6)  —
 (0.6)
Net income $20.8
 $24.5
 $49.7
 $74.8
  $3.5
 $71.3
Net cash provided by operating activities $140
 $150
(1)Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest share of interest, taxes, income and depreciation.
(2)At December 31, 2012, we had $12.4 million in accrued sales discounts to be paid to our customer at our Haverhill facility. During the first quarter of 2013, we settled this obligation for $11.8 million which resulted in a gain of $0.6 million. This gain is recorded inCoal Logistics deferred revenue represents revenue excluded from sales and other operating revenue on our Combined and Consolidated Statement of Income. Sales discounts areincome related to nonconventional fuel tax credits,the timing of revenue recognition on the Coal Logistics take-or-pay contracts, and reflects take-or-pay volume during the pre-acquisition period which, expired in 2012.for GAAP purposes, is recognized as earnings at year-end.



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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this Quarterly Report on Form 10-Q, including, among others, in the sections entitled “Business,“Risk Factors,” “Risk Factors”“Quantitative and Qualitative Disclosures About Market Risk” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Such forward-looking statements are based on management’s beliefs and assumptions and on information currently available. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and may be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “will,” “should” or the negative of these terms or similar expressions. In particular, statements in this Quarterly Report on Form 10-Q concerning future distributions are subject to approval by our Board of Directors and will be based upon circumstances then existing.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements. We do not have any intention or obligation to update any forward-looking statement (or its associated cautionary language), whether as a result of new information or future events, after the date of this Quarterly Report on Form 10-Q, except as required by applicable law.
The risk factors discussed in “Risk Factors” could cause our results to differ materially from those expressed in forward-looking statements. There also may be other risks that we are unable to predict at this time. Such risks and uncertainties include, without limitation:
changes in levels of production, production capacity, pricing and/or margins for coal and coke;
variation in availability, quality and supply of metallurgical coal used in the cokemaking process, including as a result of non-performance by our suppliers;
changes in the marketplace that may affect our coal logisticsCoal Logistics business, including the supply and demand for thermal and metallurgical coals;
change in the marketplace that may affect our cokemaking business, including the supply and demand for our coke, as well as increased imports of coke from foreign producers;
competition from alternative steelmaking and other technologies that have the potential to reduce or eliminate the use of coke;
our dependence on, relationships with, and other conditions affecting, our customers;
severe financial hardship or bankruptcy of one or more of our major customers, or the occurrence of a customer default or other event affecting our ability to collect payments from our customers;
volatility and cyclical downturns the coal market in the carbon steel industry and other industries in which our customers operate;
our ability to enter into new, or renew existing, agreements upon favorable terms for the supply of coke to steel producers, or for the use of our coal logisticsCoal Logistics services;
our ability to identify acquisitions, execute them under favorable terms and integrate them into our existing business operations;
our ability to realize expected benefits from investments and acquisitions;
our ability to consummate investments under favorable terms, including with respect to existing cokemaking facilities, which may utilize by-product technology, in the U.S. and Canada, and integrate them into our existing businesses and have them perform at anticipated levels;
our ability to develop, design, permit, construct, start up or operate new cokemaking facilities in the U.S.;
our ability to successfully implement our growth strategy;
age of, and changes in the reliability, efficiency and capacity of the various equipment and operating facilities used in our cokemaking and/or coal logisticsCoal Logistics operations, and in the operations of our major customers, business partners and/or suppliers;
changes in the expected operating levels of our assets;


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our ability to meet minimum volume requirements, coal-to-coke yield standards and coke quality standards in our coke sales agreements;


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changes in the level of capital expenditures or operating expenses, including any changes in the level of environmental capital, operating or remediation expenditures;
our ability to service our outstanding indebtedness;
our ability to comply with the restrictions imposed by our financing arrangements;
nonperformance or force majeure by, or disputes with, or changes in contract terms with, major customers, suppliers, dealers, distributors or other business partners;
availability of skilled employees for our cokemaking and/or coal logisticsCoal Logistics operations, and other workplace factors;
effects of railroad, barge, truck and other transportation performance and costs, including any transportation disruptions;
effects of adverse events relating to the operation of our facilities and to the transportation and storage of hazardous materials (including equipment malfunction, explosions, fires, spills, and the effects of severe weather conditions);
disruption in our information technology infrastructure and/or loss of our ability to securely store, maintain, or transmit data due to security breach by hackers, employee error or malfeasance, terrorist attack, power loss, telecommunications failure or other events;
our ability to enter into joint ventures and other similar arrangements under favorable terms;
our ability to consummate assets sales, other divestitures and strategic restructuring in a timely manner upon favorable terms, and/or realize the anticipated benefits from such actions;
changes in the availability and cost of equity and debt financing;
impact on our liquidity and ability to raise capital as a result of changes in the credit ratings assigned to our indebtedness;
changes in credit terms required by our suppliers;
risks related to labor relations and workplace safety;
proposed or final changes in existing, or new, statutes, regulations, rules, governmental policies and taxes, or their interpretations, including those relating to environmental matters;matters and taxes;
the existence of hazardous substances or other environmental contamination on property owned or used by us;
receipt of regulatory approvals and compliance with contractual obligations required in connection with our operations;
claims of noncompliance with any statutory and regulatory requirements;
the accuracy of our estimates of any necessary reclamation and/or remediation activities;
proposed or final changes in the status of, accounting and/or initiation of new litigation, arbitration,tax methodologies, laws, regulations, rules, or other proceedings to which we are a partypolicies, or liability resulting from such litigation, arbitration,their interpretations, including those affecting inventories, leases, pensions, or other proceedings;income;
historical combined and consolidated financial data may not be reliable indicator of future results;
public company costs;
our indebtedness and certain covenants in our debt documents;
changes in product specifications for the coke that we produce or the coals that we blend, store and transport;
changes in insurance markets impacting costs and the level and types of coverage available, and the financial ability of our insurers to meet their obligations;
changes in accounting rules and/or tax laws or their interpretations, including the method of accounting for inventories, leases and/or pensions;
changes in financial markets impacting pension expense and funding requirements; and
effects of geologic conditions, weather, natural disasters and other inherent risks beyond our control.    


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The factors identified above are believed to be important factors, but not necessarily all of the important factors, that could cause actual results to differ materially from those expressed in any forward-looking statement made by us. Other factors not discussed herein could also have material adverse effects on us. All forward-looking statements included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by the foregoing cautionary statements.


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Item 3.Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the Partnership's exposure to market risk since December 31, 2013.2014.
Item 4.Controls and Procedures
Management’s Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-1513a-15(b) under the Exchange Act, as of the end of the period covered by this report, the Partnership carried out an evaluation of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures.procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2015. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officerChief Executive Officer and principal financial officer.Chief Financial Officer.
DisclosureOur disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in Partnership reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Partnership reports filed or submitted under the Exchange Act is accumulated and communicated to management, including the Partnership's Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.
Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report,September 30, 2015, the Partnership's disclosure controls and procedures were effective to provideat the reasonable assurance that financial information was processed, recorded and reported accurately based on criteria established in the 1992 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.level.
Changes in Internal Control over Financial Reporting
On August 12, 2015, we acquired Raven Energy LLC ("Raven") and consider the transaction material to our results of operations, cash flows and financial position from the date of the acquisition. In conducting our evaluation of the effectiveness of our internal control over financial reporting, we have elected to exclude Raven from our evaluation in the year of acquisition as permitted by the Securities and Exchange Commission. We are currently in the process of evaluating and integrating Raven’s controls over financial reporting. See Note 2 to the combined and consolidated financial statements included in this Quarterly Report on Form 10-Q for discussion of the acquisition and related financial data. There waswere no changechanges in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2014,2015 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.




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PART II - OTHER INFORMAITON
Item 1.Legal Proceedings
The information presented in Note 8 entitled "Commitments and Contingent Liabilities"9 to our Combinedcombined and Consolidated Financial Statementsconsolidated financial statements within this Quarterly Report on Form 10-Q is incorporated herein by reference.
ItemsItem 1A.Risk Factors
There have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013.2014, Form 8-K filed on April 30, 2015 and Quarterly Report on Form 10-Q for the six months ended June 30, 2015.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
On July 20, 2015, the Partnership's Board of Directors authorized a $50.0 million program for the Partnership to repurchase common units from time to time in open market transactions, including block trades, or in privately negotiated transactions. The Partnership repurchased $10.0 million of its common units during the three months ended September 30, 2015 receiving 634 thousand units for an average price of $15.78 per unit, leaving $40.0 million available for future repurchase under this program.
Period Total Number
of Units
Purchased		 Average
Price Paid
per Unit		 
Total Number
of Units
Purchased as
Part of Publicly
Announced
Plans or
Programs
 
Maximum
Dollar Value
that May Yet
Be Purchased
under the
Plans or
Programs
   
July 1 – 31, 2015 250,000
 $16.41
 250,000
 $45,896,724
August 1 – 31, 2015 383,776
 $15.36
 633,776
 $40,000,011
September 1 – 30, 2015 —
 $—
 —
 $40,000,011
For the quarter ended September 30, 2015 633,776
      


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Item 6.Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Form 10-Q.
Exhibit
Number
   Description
10.1*   
Amendment No. 1 to Omnibus Agreement,
4.1*Fifth Supplemental Indenture, dated as of MarchAugust 17, 2014, by and2015, among SunCoke Energy Partners, L.P., SunCoke Energy Partners GPFinance Corp., the Guarantors named therein and the Bank of New York Mellon, as trustee
10.1Contribution Agreement, dated as of July 20, 2015, by and between Raven Energy Holdings, LLC and SunCoke Energy Inc.


Partners, L.P. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001.35782) filed on August 18, 2015
   
31.1*   Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
31.2*   Chief Financial Officer Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1*   
Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     
32.2*   
Chief Financial Officer Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     
95.1*   Mine Safety Disclosures
     
101101*   
The following financial statements from SunCoke Energy Partners L.P.'s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2014,2015, filed with the Securities and Exchange Commission on October 28, 2014,27, 2015, formatted in XBRL (eXtensible Business Reporting Language is attached to this report): (i) the Combined and Consolidated Statements of Operations;Income; (ii) the Combined and Consolidated Balance Sheets; (iii) the Combined and Consolidated Statements of Cash Flows; (iv) the Combined and (iv)Consolidated Statement of Equity; and, (v) the Notes to Combined and Consolidated Financial Statements. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.


*Filed herewith.



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SIGNATURE
Pursuant to the requirements of Section 13 or 15(a) 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, in the City of Lisle, State of Illinois, on October 28, 2014.27, 2015.
SunCoke Energy Partners, L.P.
  
By: SunCoke Energy Partners GP LLC, its general partner
  
By: /s/ Fay West
  Fay West
  
Senior Vice President and Chief Financial Officer
(As Principal Financial Officer and Duly Authorized Officer of SunCoke Energy Partners GP LLC)


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