For the twelve months ended December 31, 2008, net income increased to $214.5 million compared to $120.9 million for the twelve months ended December 31, 2007. Operating income for the twelve months ended December 31, 2008 increased $89.4 million, or 57 percent, when compared to the prior year period. The increase was the result of higher fees across all segments, significantly improved lease acquisition margins increased volumes within certain segments of the Western Pipeline system and the addition of assets through both organic projects and acquisitions. Decreased interest expense contributed further to the $93.6 million increase in net income.
“2008 has proven to be an excellent year for us and the record fourth quarter confirms that in a volatile market environment, Sunoco Logistics’ mix of assets and geographic diversity allows us to take advantage of market place opportunities to increase cash flow,” said Deborah M. Fretz, President and Chief Executive Officer. “Over the year we focused on maximizing our asset base with higher fees for rental and services, continuing our organic growth throughout our system with new tankage particularly at our Nederland Terminal and strengthening our Lease Acquisition business by identifying new opportunities to support growth. Additionally, in November we closed on our largest acquisition to date, the MagTex refined products pipeline and terminal system in Texas. Volume on the system and financial results are in line with our expectations. We are moving ahead to implement organic growth opportunities for MagTex that will enhance cash flow.”
“We enter 2009 with a strong balance sheet and excellent distribution coverage,” Ms. Fretz continued. “The unprecedented volatility in the oil markets during the last six months provided our Lease Acquisition group opportunities to enhance our base cash flow which they executed well. We have developed a Lease business that performs well in any market. However, we do not believe that all of this cash flow is sustainable and therefore our coverage ratio will be higher than historical levels. Our Debt/EBITDA ratio of 2.6x is among the lowest in the sector and we intend to continue to conservatively manage our balance sheet going forward.”
“I have confidence in the ratability of cash flows from our base business and the oil markets which are now in a contango structure are providing us new opportunities in 2009.”
