United States securities and exchange commission logo
March 16, 2023
Jeff Holman
Chief Financial Officer
Magellan Midstream Partners, L.P.
One Williams Center
P.O. Box 22186
Tulsa, OK 74121-2186
Re: Magellan Midstream
Partners, L.P.
Form 10-K for the
Fiscal Year ended December 31, 2022
Filed February 21,
2023
File No. 001-16335
Dear Jeff Holman:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year ended December 31, 2022
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 40
1. We note that you
identify Product Margin as a non-GAAP measure that is used by
management to evaluate
the profitability of your commodity-related activities, including
the gas liquids
blending and fractionation activities of your Refined Products segment.
You define the measure
as "product sales revenue less cost of product sales" and state that
"its components are
determined in accordance with GAAP" on page 5 and in earnings
releases. You also
state on page 39, with reference to the commodity related activities,
that your measure
"...better represents its importance to our results of operations."
Jeff Holman
FirstName LastNameJeff Holman
Magellan Midstream Partners, L.P.
Comapany
March NameMagellan Midstream Partners, L.P.
16, 2023
March2 16, 2023 Page 2
Page
FirstName LastName
We believe that you will need to revise disclosures in your periodic
filings and earnings
releases to adhere to the requirements in Item 10(e) of Regulation S-K
and 244.100 of
Regulation G. For example, you must present the most directly
comparable GAAP-based
measure with equal or greater prominence and include a reconciliation
between these
measures to comply with paragraphs (1)(i)(A) and (B) of this guidance.
We believe that gross margin (or gross profit), as described in the
FASB Master Glossary,
would be the most directly comparable GAAP-based measure.
Your characterization of Product Margin as better representing the
importance of your
commodity related activities is contrary to this guidance and should
therefore be tempered
with reference and contrast to the GAAP-based measure of gross margin
(or gross profit).
Your description of the components as being determined in accordance
with GAAP also
appears to be contrary to general requirements pertaining to costs of
tangible goods sold,
considering the associated guidance on inventory and contract
accounting in FASB ASC
330-10-30-1 and 340-40-25-7, and the presentation guidance in Rule
5-03.2 of Regulation
S-X. The cost of product sales utilized in your non-GAAP measure and
presented in your
Statements of Income on page 56 and associated tabulations on pages 40
and 60-
67 appears to be incomplete. For example, we note that you have
excluded depreciation
and amortization. It is also unclear whether some portion of costs
reported as operating
would be attributable to cost of product sales under applicable GAAP.
Please modify the associated disclosures to clarify that you are using
an incomplete
measure and expand your accounting policy disclosures in Note 2 to
describe the
composition of costs reported as "Operating" and "Cost of product
sales."
While you may present attributable costs separately, you would need to
follow the
labeling conventions described in SAB Topic 11:B, to specify or
identify the separately
reported attributable amounts in your presentation.
Please submit the revisions that you propose to address the concerns
outlined above, and
explain to us how you evaluated the amounts reported as Operating in
determining the
extent to which those amounts are attributable to Cost of product
sales.
Liquidity and Capital Resources
Cash Flows and Capital Expenditures, page 45
2. We note that you attribute the change in operating cash flows to
non-specific changes in
working capital accounts and income from continuing operations and
provide a general
reference to adjustments made in reconciling net income to operating
cash flows for non-
cash items and distributions from non-controlled entities.
Please expand your disclosure to provide a more informative analysis
and discussion of
changes in operating cash flows, to more clearly convey the underlying
reasons for, and
Jeff Holman
Magellan Midstream Partners, L.P.
March 16, 2023
Page 3
implications of, material changes between periods and to provide
investors with an
understanding of trends and variability in cash flows.
Please consider the nature of activity that would be reported under
the direct method of
presenting operating cash flows pursuant to FASB ASC 230-10-45-25, and
the guidance
in Section IV.B.1 of SEC Release 33-8350, in formulating your
disclosures, and submit
the revisions that you proposed to address this concern.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Sondra Snyder, Staff Accountant at (202) 551-3332, or
Robert Babula,
Staff Accountant at (202) 551-3339 with any questions.
FirstName LastNameJeff Holman Sincerely,
Comapany NameMagellan Midstream Partners, L.P.
Division of
Corporation Finance
March 16, 2023 Page 3 Office of Energy &
Transportation
FirstName LastName