SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998 or
Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 1-9356
BUCKEYE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 23-2432497
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5 Radnor Corporate Center, Suite 500
100 Matsonford Road
Radnor, PA 19087
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: 610-254-4600
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report).
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at July 14, 1998
Limited Partnership Units 26,742,306 Units
BUCKEYE PARTNERS, L.P.
INDEX
Page No.
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Statements of Income 1
for the three months and six months
ended June 30, 1998 and 1997
Consolidated Balance Sheets 2
June 30, 1998 and December 31, 1997
Consolidated Statements of Cash Flows 3
for the six months ended June 30, 1998
and 1997
Notes to Consolidated Financial Statements 4-7
Item 2. Management's Discussion and Analysis 7-10
of Financial Condition and Results
of Operations
Part II. Other Information
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Item 1. Consolidated Financial Statements
Buckeye Partners, L.P.
Consolidated Statements of Income
(In thousands, except per Unit amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
- - ------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
$47,034 $46,398 Revenue $90,082 $90,213
- - ------- ------- ------- -------
Costs and expenses
20,565 23,168 Operating expenses 38,913 44,053
4,082 2,842 Depreciation and amortization 8,184 5,693
3,524 3,742 General and administrative expenses 7,761 6,977
- - ------- ------- ------- -------
28,171 29,752 Total costs and expenses 54,858 56,723
- - ------- ------- ------- -------
18,863 16,646 Operating income 35,224 33,490
Other income (expenses)
133 528 Investment income 153 1,077
(3,884) (5,343) Interest and debt expense (7,818) (10,758)
(1,666) (450) Minority interests and other (3,197) (902)
- - ------- ------- ------- -------
(5,417) (5,265) Total other income (expenses) (10,862) (10,583)
- - ------- ------- ------- -------
$13,446 $11,381 Net income $24,362 $22,907
======= ======= ======= =======
Net income allocated to General
$ 121 $ 114 Partner $ 220 $ 229
Net income allocated to Limited
$13,325 $11,267 Partners $24,142 $22,678
Earnings per Partnership Unit:
Net income allocated to General
and Limited Partners per Partnership
$ 0.50 $ 0.47 Unit $ 0.90 $ 0.94
======= ======= ======= =======
Earnings per Partnership Unit -
assuming dilution:
Net income allocated to General
and Limited Partners per Partnership
$ 0.50 $ 0.47 Unit $ 0.90 $ 0.94
======= ======= ======= =======
See notes to consolidated financial statements.
Buckeye Partners, L.P.
Consolidated Balance Sheets
(In thousands)
June 30, December 31,
1998 1997
----------- ------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $7,195 $7,349
Temporary investments - 2,854
Trade receivables 9,756 10,195
Inventories 2,781 2,087
Prepaid and other current assets 7,673 7,297
-------- --------
Total current assets 27,405 29,782
Property, plant and equipment, net 527,466 520,941
Other non-current assets 62,778 64,339
-------- --------
Total assets $617,649 $615,062
======== ========
Liabilities and partners' capital
Current liabilities
Accounts payable $3,950 $3,664
Accrued and other current liabilities 25,672 21,073
-------- --------
Total current liabilities 29,622 24,737
Long-term debt 240,000 240,000
Minority interests 2,503 2,535
Other non-current liabilities 46,355 45,012
Commitments and contingent liabilities - -
-------- --------
Total liabilities 318,480 312,284
-------- --------
Partners' capital
General Partner 2,396 2,432
Limited Partners 296,773 300,346
-------- --------
Total partners' capital 299,169 302,778
-------- --------
Total liabilities and partners' capital $617,649 $615,062
======== ========
See notes to consolidated financial statements.
Buckeye Partners, L.P.
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
(Unaudited)
Six Months Ended
June 30,
----------------------
1998 1997
---- ----
Cash flows from operating activities:
Net income $24,362 $22,907
------- -------
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on sale of property, plant and equipment (196) -
Depreciation and amortization 8,184 5,693
Minority interests 278 239
Distributions to minority interests (310) (191)
Changes in assets and liabilities:
Temporary investments 2,854 1,683
Trade receivables 439 2,255
Inventories (694) (26)
Prepaid and other current assets (376) 1,304
Accounts payable 286 (3,534)
Accrued and other current liabilities 4,599 2,871
Other non-current assets (788) 160
Other non-current liabilities 1,343 (305)
------- -------
Total adjustments 15,619 10,149
------- -------
Net cash provided by operating activities 39,981 33,056
------- -------
Cash flows from investing activities:
Capital expenditures (11,996) (8,240)
Expenditures for disposal of property,
plant and equipment, net (168) (125)
------- -------
Net cash used in investing activities (12,164) (8,365)
------- -------
Cash flows from financing activities:
Capital contribution - 3
Proceeds from exercise of unit options 359 341
Payment of long-term debt - (5,950)
Distributions to Unitholders (28,330) (18,285)
------- -------
Net cash used in financing activities (27,971) (23,891)
------- -------
Net (decrease) increase in cash and cash
equivalents (154) 800
Cash and cash equivalents at beginning of period 7,349 17,416
------- -------
Cash and cash equivalents at end of period $7,195 $18,216
======= =======
Supplemental cash flow information:
Cash paid during the period for interest
(net of amount capitalized) $7,856 $10,899
======= =======
See notes to consolidated financial statements.
BUCKEYE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying financial statements of Buckeye
Partners, L.P. (the "Partnership"), which are unaudited except that the
Balance Sheet as of December 31, 1997 is derived from audited financial
statements, include all adjustments necessary to present fairly the
Partnership's financial position as of June 30, 1998 and the results of
operations for the three month and six month periods ended June 30, 1998 and
1997 and cash flows for the six month periods ended June 30, 1998 and 1997.
The American Institute of Certified Public Accountants issued Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," which provides guidance on accounting
for the costs of computer software developed or obtained for internal use.
The Partnership adopted SOP 98-1 on January 1, 1998 with no significant impact
on the Partnership's operating results or financial condition.
The Financial Accounting Standards Board issued Statement No. 130, "Reporting
Comprehensive Income," which establishes standards for the reporting and
display of comprehensive income and its components (revenues, expenses, gains
and losses) in a full set of general purpose financial statements. The
Partnership has not reported comprehensive income due to the absence of items
of other comprehensive income in any period presented.
The Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for the way that those business enterprises report
selected information about operating segments in annual financial statements
and requires that those enterprises report selected information about
operating segments in the interim financial reports issued to shareholders.
It also establishes standards for related disclosures about products and
services, geographic areas, and major customers. This standard will be
effective for the Partnership's 1998 Annual Report.
In February 1998, the Financial Accounting Standards Board issued Statement
No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits." This standard revises employers' disclosures about pension and
other postretirement plans but does not change the measurement or recognition
of those plans. This standard will be effective for the Partnership's 1998
Annual Report.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. This standard is effective for the Partnership's
financial statements for all quarters beginning in the year 2000.
Pursuant to the rules and regulations of the Securities and Exchange
Commission, the financial statements do not include all of the information and
notes normally included with financial statements prepared in accordance with
generally accepted accounting principles. These financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Partnership's Annual Report on Form 10-K/A for the
year ended December 31, 1997.
2. CONTINGENCIES
The Partnership and its subsidiaries (the "Operating Partnerships"), in the
ordinary course of business, are involved in various claims and legal
proceedings, some of which are covered in whole or in part by insurance.
Buckeye Management Company (the "General Partner") is unable to predict the
timing or outcome of these claims and proceedings. Although it is possible
that one or more of these claims or proceedings, if adversely determined,
could, depending on the relative amounts involved, have a material effect on
the Partnership's results of operations for a future period, the General
Partner does not believe that their outcome will have a material effect on the
Partnership's consolidated financial condition or results of operations.
Environmental
Certain Operating Partnerships (or their predecessors) have been named as a
defendant in lawsuits or have been notified by federal or state authorities
that they are a potentially responsible party ("PRP") under federal laws or a
respondent under state laws relating to the generation, disposal, or release
of hazardous substances into the environment. These proceedings generally
relate to potential liability for clean-up costs. The total potential
remediation costs relating to these clean-up sites cannot be reasonably
estimated.
With respect to each site, however, the Operating Partnership involved is one
of several or as many as several hundred PRPs that would share in the total
costs of clean-up under the principle of joint and several liability. The
General Partner believes that the generation, handling and disposal of
hazardous substances by the Operating Partnerships and their predecessors have
been in material compliance with applicable environmental and regulatory
requirements. Additional claims for the cost of cleaning up releases of
hazardous substances and for damage to the environment resulting from the
activities of the Operating Partnerships or their predecessors may be asserted
in the future under various federal and state laws.
Guaranteed Investment Contract
The Buckeye Pipe Line Company Retirement and Savings Plan (the "Plan") held a
guaranteed investment contract ("GIC") issued by Executive Life Insurance
Company ("Executive Life"), which entered conservatorship proceedings in the
state of California in April 1991. The GIC was purchased in July 1989, with
an initial principal investment of $7.4 million earning interest at an effec
tive rate per annum of 8.98 percent through June 30, 1992. Pursuant to the
Executive Life Plan of Rehabilitation, the Plan has received an interest only
contract from Aurora National Life Assurance Company in substitution for its
Executive Life GIC. The contract provides for semi-annual interest payments
at a rate of 5.61 percent per annum through September 1998, the maturity date
of the contract. In addition, the Plan has and will receive certain
additional cash payments through the maturity date of the contract pursuant to
the Plan of Rehabilitation. The Plan also received a payment of approximately
$2 million in March, 1998, from the Pennsylvania Life and Health Insurance
Guaranty Association for partial reimbursement of losses of Plan participants
who were Pennsylvania residents on December 6, 1991. The timing and amount of
any additional reimbursements cannot be estimated accurately at this time. In
May 1991, the General Partner, in order to safeguard the basic retirement and
savings benefits of its employees, announced its intention to enter an
arrangement with the Plan that would guarantee that the Plan would receive at
least its initial principal investment of $7.4 million plus interest at an
effective rate per annum of 5 percent from July 1, 1989. The General
Partner's present intention is to effectuate its commitment no later than
September 1998. The costs and expenses of the General Partner's employee
benefit plans are reimbursable by the Partnership under the applicable limited
partnership and management agreements. The General Partner believes that an
adequate provision has been made for costs which may be incurred by the
Partnership in connection with the guarantee.
3. PARTNERS' CAPITAL
Partners' capital consists of the following:
General Limited
Partner Partners Total
------- -------- --------
(In thousands)
Partners' Capital - 1/1/98 $2,432 $300,346 $302,778
Net Income 220 24,142 24,362
Distributions (256) (28,074) (28,330)
Exercise of unit options - 359 359
------ -------- --------
Partners' Capital - 6/30/98 $2,396 $296,773 $299,169
====== ======== ========
The following is a reconciliation of basic and dilutive income per Partnership
Unit for the three and six month periods ended June 30:
Three Months Ended June 30,
-------------------------------------------------
1998 1997
----------------------- -----------------------
Income Units Per Income Units Per
(Numer- (Denomi- Unit (Numer- (Denomi- Unit
ator) nator) Amount ator) nator) Amount
------ ------ ------ ------ ------ ------
(in thousands, except per unit amounts)
Net income $13,446 $11,381
------- -------
Basic earnings
per Partnership Unit 13,446 26,984 $0.50 11,381 24,382 $0.47
Effect of dilutive
securities - options - 97 - - 64 -
------- ------ ----- ------- ------ -----
Diluted earnings per
Partnership Unit $13,446 27,081 $0.50 $11,381 24,446 $0.47
======= ====== ===== ======= ====== =====
Six Months Ended June 30,
-------------------------------------------------
1998 1997
----------------------- -----------------------
Income Units Per Income Units Per
(Numer- (Denomi- Unit (Numer- (Denomi- Unit
ator) nator) Amount ator) nator) Amount
------ ------ ------ ------ ------ ------
(in thousands, except per unit amounts)
Net income $24,362 $22,907
------- -------
Basic earnings
per Partnership Unit 24,362 26,978 $0.90 22,907 24,377 $0.94
Effect of dilutive
securities - options - 101 - - 65 -
------- ------ ----- ------- ------ -----
Diluted earnings per
Partnership Unit $24,362 27,079 $0.90 $22,907 24,442 $0.94
======= ====== ===== ======= ====== =====
Options reported as dilutive securities are related to unexercised options
outstanding under the Option Plan.
4. CASH DISTRIBUTIONS
The Partnership will generally make quarterly cash distributions of
substantially all of its available cash, generally defined as consolidated
cash receipts less consolidated cash expenditures and such retentions for
working capital, anticipated cash expenditures and contingencies as the
General Partner deems appropriate.
The Partnership has declared a cash distribution of $0.525 per unit payable on
August 31, 1998 to unitholders of record on August 5, 1998. The total
distribution will amount to approximately $14,168,000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Amounts in the following discussion and analysis of financial condition and
results of operations relate to continuing operations unless otherwise
indicated.
RESULTS OF OPERATIONS
Second Quarter
Revenue for the second quarter 1998 was $47.0 million or 1.3 percent greater
than revenue of $46.4 million for the second quarter 1997. Volumes for the
second quarter 1998 were 1,044,300 barrels per day, 22,200 barrels per day or
2.2 percent greater than volumes of 1,022,100 barrels per day for the second
quarter 1997. Gasoline volumes were 1.5 percent greater than 1997 levels.
Strong demand in the East, particularly in the Pittsburgh, Pennsylvania area
as a result of a new connection at Midland, Pennsylvania offset declines on
other systems. Distillate volumes declined by 0.5 percent from 1997 levels as
a result of warmer weather. This decline was offset somewhat by favorable
heating oil prices that led to some inventory building. Turbine fuel volumes
were 3.7 percent greater than 1997 levels as a result of higher deliveries to
Newark, Miami and Detroit Metro airports. Tariff increases instituted during
the first quarter 1998 contributed approximately $0.7 million of additional
revenue over the second quarter of 1997.
Costs and expenses for the second quarter 1998 were $28.2 million or 5.4
percent less than costs and expenses of $29.8 million for the second quarter
1997. Declines in payroll benefits, outside service, operating power and
property tax expense were partially offset by the amortization of a deferred
charge related to the ESOP restructuring that occurred during the third
quarter 1997.
Other income (expenses), which is the net of non-operating income and
expenses, was a net expense of $5.4 million during the second quarter 1998
compared to a net expense of $5.3 million during the second quarter 1997.
Higher incentive compensation paid to the General Partner, due to an increase
in per unit distributions, was partially offset by a decline in interest
expense related to a debt refinancing in December 1997.
First Six Months
Revenue for the first six months of 1998 was $90.1 million or 0.1 percent less
than revenue of $90.2 million for the first six months of 1997. Volumes for
the first six months of 1998 were 1,021,200 barrels per day, 16,700 barrels
per day or 1.7 percent greater than volumes of 1,004,500 barrels per day for
the first six months of 1997. Gasoline volumes were 2.4 percent greater than
1997 levels. Strong volumes to the Pittsburgh, Pennsylvania area and Long
Island were offset by declines in other market areas. Distillate volumes
declined by 2.3 percent from 1997 levels primarily as a result of mild winter
weather experienced throughout a majority of Buckeye's system, partially
offset by favorable heating oil prices during the second quarter that led to
some inventory building. Turbine fuel volumes increased by 3.1 percent from
1997 levels. Demand was strong at most airports served by the Partnership
particularly at Newark airport where a combination of new business and
increased international air traffic led to increased volumes. Tariff
increases instituted during the first quarter 1998 contributed approximately
$1.4 million of additional revenue during the first six months of 1998.
Costs and expenses for the first six months of 1998 were $54.9 million or 3.2
percent less than costs and expenses of $56.7 million for the first six months
of 1997. Declines in payroll benefits, outside service, operating power and
property tax expense were partially offset by the amortization of a deferred
charge related to the ESOP restructuring and payroll expense provisions with
respect to the realignment of senior management.
Other income (expenses), which is the net of non-operating income and
expenses, was a net expense of $10.9 million during the first six months of
1998 compared to a net expense of $10.6 million during the first six months of
1997. Higher incentive compensation paid to the General Partner due to an
increase in per unit distributions was partially offset by a decline in
interest expense related to a debt refinancing in December 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's financial condition at June 30, 1998 is highlighted in the
following comparative summary:
Liquidity and Capital Indicators
As of
-----------------------
6/30/98 12/31/97
-------- --------
Current ratio 0.9 to 1 1.2 to 1
Ratio of cash and cash equivalents,
temporary investments and trade
receivables to current liabilities 0.6 to 1 0.8 to 1
Working capital (in thousands) $(2,217) $5,045
Ratio of total debt to total capital .44 to 1 .44 to 1
Book value (per Unit) $11.09 $11.23
The Partnership's cash flow from operations is generally sufficient to meet
current working capital requirements. In addition, the Partnership maintains
$10.0 million in short-term credit facilities under which there are no current
outstanding borrowings.
Cash Provided by Operations
For the six months ended June 30, 1998, cash provided by operations of $40.0
million was derived principally from $32.5 million of income before
depreciation and amortization. Depreciation and amortization of $8.2 million
increased by $2.5 million over the first six months of 1997 as a result of the
amortization of deferred charge associated with the ESOP Restructuring that
occurred in August 1997. Changes in current assets and current liabilities
resulted in a net cash source of $7.1 million, resulting primarily from
maturities of temporary investments, the continued improvement in the
collection of trade receivables and an increase in outstanding liabilities.
Cash provided by operations was used to pay distributions to Unitholders of
$28.3 million, an increase of $10.0 million over the first six months of 1997,
and capital expenditures of $12.0 million. Changes in non-current assets and
liabilities resulted in a net cash source of $0.5 million.
Debt Obligation and Credit Facilities
At June 30, 1998, the Partnership had $240.0 million in outstanding long-term
debt representing the Senior Notes of Buckeye Pipe Line Company, L.P.
("Buckeye"). The indenture pursuant to which the Senior Notes were issued
(the "Senior Note Indenture") contains covenants which affect Buckeye, Laurel
Pipe Line Company, L.P. and Buckeye Pipe Line Company of Michigan, L.P. (the
"Indenture Parties"). Generally, the Senior Note Indenture (a) limits
outstanding indebtedness of Buckeye based upon certain financial ratios of the
Indenture Parties, (b) prohibits the Indenture Parties from creating or
incurring certain liens on their property, (c) prohibits the Indenture Parties
from disposing of property which is material to their operations, and (d)
limits consolidation, merger and asset transfers of the Indenture Parties. In
addition, the Amended and Restated Agreement of Limited Partnership contains
certain restrictions which limit the incurrence of debt to (a) any future debt
of Buckeye permitted by the Senior Note Indenture and (b) other debt not in
excess of an aggregate principal amount of $25 million plus the aggregate
proceeds from the sale of additional Partnership Units.
Buckeye has a $10 million short-term line of credit secured by accounts
receivable. At June 30, 1998, there were no outstanding borrowings under these
facilities.
At June 30, 1998, the ratio of total debt to total capital was 44 percent.
For purposes of the calculation of this ratio, total capital consists of long-
term debt, minority interests in subsidiaries and partners' capital.
Capital Expenditures
At June 30, 1998, approximately 85 percent of total consolidated assets
consisted of property, plant and equipment.
Capital expenditures during the six months ended June 30, 1998 totaled $12.0
million compared to $8.2 million during the six months ended June 30, 1997.
During both periods, capital expenditures were paid from internally generated
funds.
The Partnership Agreement provides that the consolidated capital expenditures
of the Partnership and the Operating Partnerships in any calendar year may not
exceed an amount equal to 20 percent of the sum of consolidated operating
income and depreciation and amortization for such calendar year unless, in the
good faith opinion of the General Partner, capital expenditures in excess of
such amount are required to sustain or improve the existing pipeline
operations of the Operating Partnerships. If capital expenditures in excess
of the 20 percent limit are incurred, the General Partner will use its best
efforts to finance the amount of such excess within six months after its
incurrence through additional permitted indebtedness, the sale of additional
partnership interests, or both. This provision may be waived by a majority of
the holders of limited partnership interests as to particular capital
expenditures.
OTHER MATTERS
Accounting Pronouncements
The American Institute of Certified Public Accountants issued Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," which provides guidance on accounting
for the costs of computer software developed or obtained for internal use.
The Partnership adopted SOP 98-1 on January 1, 1998 with no significant impact
on the Partnership's operating results or financial condition.
The Financial Accounting Standards Board issued Statement No. 130, "Reporting
Comprehensive Income," which establishes standards for the reporting and
display of comprehensive income and its components (revenues, expenses, gains
and losses) in a full set of general purpose financial statements. The
Partnership has not reported comprehensive income due to the absence of items
of other comprehensive income in any period presented.
The Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for the way that those business enterprises report
selected information about operating segments in annual financial statements
and requires that those enterprises report selected information about
operating segments in the interim financial reports issued to shareholders.
It also establishes standards for related disclosures about products and
services, geographic areas, and major customers. This standard will be
effective for the Partnership's 1998 Annual Report.
In February 1998, the Financial Accounting Standards Board issued Statement
No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits." This standard revises employers' disclosures about pension and
other postretirement plans but does not change the measurement or recognition
of those plans. This standard will be effective for the Partnership's 1998
Annual Report.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. This standard is effective for the Partnership's
financial statements for all quarters beginning in the year 2000.
Forward Looking Statements
This SEC Form 10-Q includes forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the General Partner believes that its
expectations are based on reasonable assumptions, it can give no assurance
that such assumptions will materialize.
Part II - Other Information
Item 1. Legal Proceedings
On June 19, 1998, a putative class action complaint (Shakerdge v. Martinelli,
et al) was filed in the Delaware Court of Chancery against the Partnership,
Buckeye Management Company (the "General Partner"), Glenmoor Ltd., the parent
of the General Partner, and the directors of the General Partner alleging that
the Consent Solicitation Statement is materially false and misleading because
it fails to disclose that the incentive payments made to the General Partner
by the Partnership may be affected by an increase in the number of LP Units
outstanding; that the elimination of the restrictions contained in the
Partnership Agreement will remove the checks and balances imposed on the
Partnership and the General Partner; and whether the defendants were planning
or considering any specific transactions that would be affected by the removal
of the restrictions at the time of the Consent Solicitation Statement. The
complaint seeks, among other things, an injunction prohibiting the
consummation of the consent solicitation or giving effect to any other
proposed amendments to the Partnership Agreement. The General Partner and the
other defendants believe that the Consent Solicitation Statement disclosed all
material information to the Unitholders and that the complaint is without
merit.
Item 4. Submission of Matters to a Vote of Security Holders
On May 22, 1998, the Partnership commenced a consent solicitation seeking
Unitholder approval of certain amendments to the Partnership Agreement. The
solicitation of consents is set to expire at 5:00 p.m., Eastern Standard Time,
on July 17, 1998, unless extended.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Management Agreement, dated as of January 1, 1998,
among Buckeye Management Company, Buckeye Pipe Line
Company and Glenmoor Ltd.
10.2 Transition and Retirement Agreement, dated as of May 22, 1998,
by and among Buckeye Management Company, Buckeye Pipe Line
Services Company, Buckeye Pipe Line Company, Glenmoor, Ltd.,
and C. Richard Wilson.
10.3 First Amendment to the Unit Option and Distribution Equivalent
Plan of Buckeye Partners, L.P., dated as of July 14, 1998.
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUCKEYE PARTNERS, L.P.
(Registrant)
By: Buckeye Management Company,
as General Partner
Dated: July 14, 1998 By: /s/ Steven C. Ramsey
------------------------------
Steven C. Ramsey
Senior Vice President, Finance
and Chief Financial Officer
(Principal Accounting and
Financial Officer)