XML 52 R28.htm IDEA: XBRL DOCUMENT v2.4.1.9
Operating Segments
 12 Months Ended
Dec. 31, 2014
Operating Segments  
Operating Segments

Note 19—Operating Segments

 

We manage our operations through three operating segments: Transportation, Facilities and Supply and Logistics.  See “Revenue Recognition” in Note 2 for a summary of the types of products and services from which each segment derives its revenues. Our Chief Operating Decision Maker (our Chief Executive Officer) evaluates segment performance based on measures including segment profit and maintenance capital investment. We define segment profit as revenues and equity earnings in unconsolidated entities less (a) purchases and related costs, (b) field operating costs and (c) segment general and administrative expenses. Each of the items above excludes depreciation and amortization.

 

As an MLP, we make quarterly distributions of our “available cash” (as defined in our partnership agreement) to our unitholders. We look at each period’s earnings before non-cash depreciation and amortization as an important measure of segment performance. The exclusion of depreciation and amortization expense could be viewed as limiting the usefulness of segment profit as a performance measure because it does not account in current periods for the implied reduction in value of our capital assets, such as crude oil pipelines and facilities, caused by age-related decline and wear and tear. We compensate for this limitation by recognizing that depreciation and amortization are largely offset by repair and maintenance investments, which act to partially offset the aging and wear and tear in the value of our principal fixed assets. These maintenance investments are a component of field operating costs included in segment profit or in maintenance capital, depending on the nature of the cost. Capital expenditures made to expand the existing operating and/or earnings capacity of our assets are classified as expansion capital. Capital expenditures for the replacement of partially or fully depreciated assets in order to maintain the operating and/or earnings capacity of our existing assets are classified as maintenance capital, which is deducted in determining “available cash”. Repair and maintenance expenditures incurred in order to maintain the day to day operation of our existing assets are charged to expense as incurred.

 

The following table reflects certain financial data for each segment for the periods indicated (in millions):

 

 

 

Transportation

 

Facilities

 

Supply and Logistics

 

Total

 

Year Ended December 31, 2014

 

 

 

 

 

 

 

 

 

Revenues (1):

 

 

 

 

 

 

 

 

 

External Customers

 

$
774 

 

$
576 

 

$
42,114 

 

$
43,464 

 

Intersegment (2)

 
881 

 
551 

 
36 

 
1,468 

 

Total revenues of reportable segments

 

$
1,655 

 

$
1,127 

 

$
42,150 

 

$
44,932 

 

Equity earnings in unconsolidated entities

 

$
108 

 

$

—

 

$

—

 

$
108 

 

Segment profit (3) (4) 

 

$
925 

 

$
584 

 

$
782 

 

$
2,291 

 

Capital expenditures (5)

 

$
2,483 

 

$
582 

 

$
60 

 

$
3,125 

 

Maintenance capital

 

$
165 

 

$
52 

 

$
7 

 

$
224 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2014

 

 

 

 

 

 

 

 

 

Total assets

 

$
9,637 

 

$
6,843 

 

$
5,776 

 

$
22,256 

 

Investments in unconsolidated entities

 

$
1,735 

 

$

—

 

$

—

 

$
1,735 

 

 

 

 

Transportation

 

Facilities

 

Supply and Logistics

 

Total

 

Year Ended December 31, 2013

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

External Customers

 

$
701 

 

$
856 

 

$
40,692 

 

$
42,249 

 

Intersegment (2)

 
797 

 
521 

 
4 

 
1,322 

 

Total revenues of reportable segments

 

$
1,498 

 

$
1,377 

 

$
40,696 

 

$
43,571 

 

Equity earnings in unconsolidated entities

 

$
64 

 

$

—

 

$

—

 

$
64 

 

Segment profit (3) (4)

 

$
729 

 

$
616 

 

$
822 

 

$
2,167 

 

Capital expenditures (5)

 

$
1,046 

 

$
549 

 

$
46 

 

$
1,641 

 

Maintenance capital

 

$
123 

 

$
38 

 

$
15 

 

$
176 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2013

 

 

 

 

 

 

 

 

 

Total assets

 

$
7,221 

 

$
6,555 

 

$
6,584 

 

$
20,360 

 

Investments in unconsolidated entities

 

$
485 

 

$

—

 

$

—

 

$
485 

 

 

 

 

Transportation

 

Facilities

 

Supply and Logistics

 

Total

 

Year Ended December 31, 2012

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

External Customers

 

$
623 

 

$
736 

 

$
36,438 

 

$
37,797 

 

Intersegment (2)

 
793 

 
362 

 
2 

 
1,157 

 

Total revenues of reportable segments

 

$
1,416 

 

$
1,098 

 

$
36,440 

 

$
38,954 

 

Equity earnings in unconsolidated entities

 

$
38 

 

$

—

 

$

—

 

$
38 

 

Segment profit (3) (4)

 

$
710 

 

$
482 

 

$
753 

 

$
1,945 

 

Capital expenditures (5)

 

$
1,244 

 

$
1,724 

 

$
503 

 

$
3,471 

 

Maintenance capital

 

$
108 

 

$
49 

 

$
13 

 

$
170 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2012

 

 

 

 

 

 

 

 

 

Total assets

 

$
6,423 

 

$
6,134 

 

$
6,678 

 

$
19,235 

 

Investments in unconsolidated entities

 

$
343 

 

$

—

 

$

—

 

$
343 

 

 

 

(1)

Effective January 1, 2014, our natural gas sales and costs, primarily attributable to the activities performed by our natural gas storage commercial optimization group, are reported in the Supply and Logistics segment. Such items were previously reported in the Facilities segment.

 

(2)

Segment revenues and purchases and related costs include intersegment amounts. Intersegment sales are conducted at posted tariff rates, rates similar to those charged to third parties or rates that we believe approximate market.

 

(3)

Supply and Logistics segment profit includes interest expense (related to hedged inventory purchases) of $12 million, $30 million and $12 million for the years ended December 31, 2014, 2013 and 2012, respectively.

 

(4)

The following table reconciles segment profit to net income attributable to PAA (in millions):

 

 

 

Year Ended December 31,

 

 

 

2014

 

2013

 

2012

 

Segment profit

 

$
2,291

 

$
2,167

 

$
1,945

 

Depreciation and amortization

 
(392

)
(375

)
(482

)

Interest expense, net

 
(340

)
(303

)
(288

)

Other income/(expense), net

 
(2

)
1

 
6

 

Income before tax

 
1,557

 
1,490

 
1,181

 

Income tax expense

 
(171

)
(99

)
(54

)

Net income

 
1,386

 
1,391

 
1,127

 

Net income attributable to noncontrolling interests

 
(2

)
(30

)
(33

)

Net income attributable to PAA

 

$
1,384

 

$
1,361

 

$
1,094

 

 

(5)

Expenditures for acquisition capital and expansion capital, including investments in unconsolidated entities.

 

Geographic Data

 

We have operations in the United States and Canada. Set forth below are revenues and long-lived assets attributable to these geographic areas (in millions):

 

 

 

Year Ended December 31,

 

Revenues (1)

 

2014

 

2013

 

2012

 

United States

 

$
34,860 

 

$
32,924 

 

$
29,978 

 

Canada

 
8,604 

 
9,325 

 
7,819 

 

 

 

$
43,464 

 

$
42,249 

 

$
37,797 

 

 

 

(1)

Revenues are primarily attributed to each region based on where the services are provided or the product is shipped.

 

 

 

December 31,

 

Long-Lived Assets (1)

 

2014

 

2013

 

United States

 

$
14,400 

 

$
11,743 

 

Canada

 
3,650 

 
3,623 

 

 

 

$
18,050 

 

$
15,366 

 

 

 

(1)

Excludes long-term derivative assets.