Acquisitions

9 Months Ended

Sep. 30, 2011

3.	Acquisitions

Acquisitions of Assets

In January 2011, we acquired the remaining undivided interest in our Southlake, Texas terminal. We accounted for this purchase as an acquisition of assets. The operating results of the Southlake terminal are reported in our petroleum pipeline system segment.

In April 2011, we acquired a petroleum products pipeline segment connected to our petroleum pipeline system at Reagan, Texas. We accounted for this purchase as an acquisition of assets. The operating results of these assets have been included in our petroleum pipeline system segment from the acquisition date.

In May 2011, we acquired petroleum products storage tanks in Riverside, Missouri. We accounted for this purchase as an acquisition of assets. The operating results of these assets have been included in our petroleum pipeline system segment from the acquisition date.

Collectively, the costs for the above-noted asset acquisitions were $17.8 million.

Acquisition of Non-Controlling Owners' Interest

In February 2011, we acquired a private investment group's common equity in Magellan Crude Oil, LLC ("MCO") for $40.5 million, which represented all of the non-controlling owners' interest in subsidiaries on our consolidated balance sheet (see Note 2 - Owners' Equity). The operating results of MCO continue to be reported in our petroleum terminals segment.

Business Combination

In September 2010, we acquired certain assets from BP Pipelines (North America), Inc. ("BP") and accounted for this purchase as a business combination. We have completed our process of determining the fair value of the assets acquired and liabilities assumed. As a result, we have adjusted the preliminary purchase price and fair value of the assets acquired and liabilities assumed as reported in our Annual Report on Form 10-K for the year ended December 31, 2010. The final allocation of the purchase price of the fair value of the assets acquired and liabilities assumed were as follows (in thousands):




Purchase price	$	291,292
Fair value of assets acquired (liabilities assumed):
Property, plant and equipment	$	249,381
Other current assets	2,877
Goodwill	38,496
Other intangibles	3,898
Environmental liabilities	(375		)
Other current liabilities	(2,985		)
Total	$	291,292

Changes to the preliminary purchase price allocation were a reduction in property, plant and equipment of $13.3 million with a corresponding increase in goodwill. The change related to a fair value amount that was preliminarily assigned to an inactive pipeline section, which we subsequently determined had no value at the date of acquisition.

The following summarized pro forma consolidated income statement information assumes that the business acquired from BP referred to above occurred as of January 1, 2010. These pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred had this acquisition been completed on January 1, 2010 or the results that will be attained in the future. The amounts presented below are in thousands:




	Three Months Ended September 30,
	2010						2011
	As Reported		Pro Forma Adjustments		Pro Forma		As Reported
Revenues	$	406,201	$	9,027	$	415,228	$	435,510
Net income	$	56,637	$	4,790	$	61,427	$	110,240




	Nine Months Ended September 30,
	2010						2011
	As Reported		Pro Forma Adjustments		Pro Forma		As Reported
Revenues	$	1,158,956	$	36,483	$	1,195,439	$	1,261,734
Net income	$	223,623	$	15,740	$	239,363	$	303,304

Significant pro forma adjustments include historical results of the acquired assets and our calculation of general and administrative ("G&A") costs, depreciation expense and interest expense on borrowings necessary to finance the acquisition.