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Operating Segments
 3 Months Ended
Mar. 31, 2015
Operating Segments  
Operating Segments

 

Note 11—Operating Segments

 

We manage our operations through three operating segments: Transportation, Facilities and Supply and Logistics. 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. Maintenance capital consists of 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.

 

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

 

 

 

Transportation

 

Facilities

 

Supply and
Logistics

 

Total

 

Three Months Ended March 31, 2015

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

External Customers

 

$
185 

 

$
125 

 

$
5,632 

 

$
5,942 

 

Intersegment (1)

 
215 

 
132 

 
2 

 
349 

 

Total revenues of reportable segments

 

$
400 

 

$
257 

 

$
5,634 

 

$
6,291 

 

Equity earnings in unconsolidated entities

 

$
37 

 

$

—

 

$

—

 

$
37 

 

Segment profit (2) (3) 

 

$
241 

 

$
142 

 

$
130 

 

$
513 

 

Maintenance capital

 

$
33 

 

$
15 

 

$
2 

 

$
50 

 

 

 

 

Transportation

 

Facilities

 

Supply and
Logistics

 

Total

 

Three Months Ended March 31, 2014

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

External Customers

 

$
181 

 

$
157 

 

$
11,346 

 

$
11,684 

 

Intersegment (1)

 
206 

 
142 

 
22 

 
370 

 

Total revenues of reportable segments

 

$
387 

 

$
299 

 

$
11,368 

 

$
12,054 

 

Equity earnings in unconsolidated entities

 

$
20 

 

$

—

 

$

—

 

$
20 

 

Segment profit (2) (3) 

 

$
206 

 

$
154 

 

$
249 

 

$
609 

 

Maintenance capital

 

$
34 

 

$
10 

 

$
2 

 

$
46 

 

 

(1)

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. For further discussion, see “Analysis of Operating Segments” under Item 7 of our 2014 Annual Report on Form 10-K.

 

(2)

Supply and Logistics segment profit includes interest expense (related to hedged inventory purchases) of $1 million and $2 million for the three months ended March 31, 2015 and 2014, respectively.

 

(3)

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

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2015

 

2014

 

Segment profit

 

$
513

 

$
609

 

Depreciation and amortization

 
(107

)
(96

)

Interest expense, net

 
(102

)
(78

)

Other expense, net

 
(4

)
(2

)

Income before tax

 
300

 
433

 

Income tax expense

 
(16

)
(48

)

Net income

 
284

 
385

 

Net income attributable to noncontrolling interests

 
(1

)
(1

)

Net income attributable to PAA

 

$
283

 

$
384