##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2010
 OR
 o
    
    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 1-32963
 Buckeye GP Holdings L.P.
  Delaware
    
    11-3776228(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification number)One Greenway PlazaSuite 600Houston, TX
    
    77046(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (832) 615-8600
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1.Financial StatementsCondensed Consolidated Statements of Operations for the Three and Nine Months Ended
September 30, 2010 and 2009 (Unaudited)
    
    
    2Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009
(Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2010 and 2009 (Unaudited)
    
    
    4Condensed Consolidated Statements of Partners Capital for the Nine Months Ended
September 30, 2010 and 2009 (Unaudited)
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements:1. Organization and Basis of Presentation
    
    
    62. Acquisitions and Disposition
    
    
    83. Commitments and Contingencies
    
    
    94. Inventories
    
    
    115. Prepaid and Other Current Assets
    
    
    116. Equity Investments
    
    
    127. Intangible Assets
    
    
    138. Other Non-Current Assets
    
    
    139. Accrued and Other Current Liabilities
    
    
    1410. Debt Obligations
    
    
    1411. Other Non-Current Liabilities
    
    
    1712. Derivative Instruments, Hedging Activities and Fair Value Measurements
    
    
    1813. Pensions and Other Postretirement Benefits
    
    
    2414. Unit-Based Compensation Plans
    
    
    2515. Related Party Transactions
    
    
    2716. Cash Distributions
    
    
    2817. Earnings Per Partnership Unit
    
    
    2818. Business Segments
    
    
    2919. Supplemental Cash Flow Information
    
    
    3020. Subsequent Events
    
    
    30Item 2.Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    31Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    50Item 4.Controls and Procedures
    
    
    53PART II. OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    53Item 1A.Risk Factors
    
    
    53Item 6.Exhibits
    
    
    54EX-31.1EX-31.2EX-32.1EX-32.2
  1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 BUCKEYE GP HOLDINGS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Product sales
    
    $
    564,044
    
    
    $
    258,188
    
    
    $
    1,633,958
    
    
    $
    728,744Transportation and other services
    
    
    170,813
    
    
    
    165,256
    
    
    
    499,349
    
    
    
    462,760Total revenue
    
    
    734,857
    
    
    
    423,444
    
    
    
    2,133,307
    
    
    
    1,191,504Costs and expenses:Cost of product sales
and natural gas storage services
    
    
    560,248
    
    
    
    258,507
    
    
    
    1,628,630
    
    
    
    702,623Operating expenses
    
    
    68,685
    
    
    
    66,100
    
    
    
    204,037
    
    
    
    208,842Depreciation and amortization
    
    
    15,062
    
    
    
    13,138
    
    
    
    44,259
    
    
    
    40,061Asset impairment expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,540General and administrative
    
    
    11,349
    
    
    
    9,814
    
    
    
    35,438
    
    
    
    30,007Reorganization expense
    
    
    
    
    
    
    996
    
    
    
    
    
    
    
    29,109Total costs and expenses
    
    
    655,344
    
    
    
    348,555
    
    
    
    1,912,364
    
    
    
    1,083,182Operating income
    
    
    79,513
    
    
    
    74,889
    
    
    
    220,943
    
    
    
    108,322Other income (expense):Investment income
    
    
    140
    
    
    
    65
    
    
    
    380
    
    
    
    359Interest and debt expense
    
    
    (22,082
    )
    
    
    (20,391
    )
    
    
    (65,088
    )
    
    
    (54,030
    )Total other expense
    
    
    (21,942
    )
    
    
    (20,326
    )
    
    
    (64,708
    )
    
    
    (53,671
    )Income before earnings from equity investments
    
    
    57,571
    
    
    
    54,563
    
    
    
    156,235
    
    
    
    54,651Earnings from equity investments
    
    
    3,391
    
    
    
    3,807
    
    
    
    8,807
    
    
    
    9,031Net income
    
    
    60,962
    
    
    
    58,370
    
    
    
    165,042
    
    
    
    63,682Less: net income attributable
to noncontrolling interests
    
    
    (49,021
    )
    
    
    (47,275
    )
    
    
    (130,324
    )
    
    
    (32,666
    )Net income attributable
to Buckeye GP Holdings L.P.
    
    $
    11,941
    
    
    $
    11,095
    
    
    $
    34,718
    
    
    $
    31,016Earnings per partnership unit:Basic
    
    $
    0.42
    
    
    $
    0.39
    
    
    $
    1.23
    
    
    $
    1.10Diluted
    
    $
    0.42
    
    
    $
    0.39
    
    
    $
    1.23
    
    
    $
    1.10Weighted average number
of common units outstanding:Basic
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300Diluted
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300
  2




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BUCKEYE GP HOLDINGS L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit amounts)
(Unaudited)
 September 30,
    
    
    December 31,2010
    
    
    2009Assets:Current assets:Cash and cash equivalents
    
    $
    15,922
    
    
    $
    37,574Trade receivables, net
    
    
    133,695
    
    
    
    124,165Construction and pipeline relocation receivables
    
    
    8,844
    
    
    
    14,095Inventories
    
    
    267,724
    
    
    
    310,214Derivative assets
    
    
    2,600
    
    
    
    4,959Assets held for sale
    
    
    
    
    
    
    22,000Prepaid and other current assets
    
    
    74,484
    
    
    
    104,251Total current assets
    
    
    503,269
    
    
    
    617,258Property, plant and equipment, net
    
    
    2,248,866
    
    
    
    2,238,321Equity investments
    
    
    108,143
    
    
    
    96,851Goodwill
    
    
    432,124
    
    
    
    432,124Intangible assets, net
    
    
    41,817
    
    
    
    45,157Other non-current assets
    
    
    37,732
    
    
    
    56,860Total assets
    
    $
    3,371,951
    
    
    $
    3,486,571Liabilities and partners capital:Current liabilities:Line of credit
    
    $
    211,800
    
    
    $
    239,800Current portion of long-term debt
    
    
    3,059
    
    
    
    6,178Accounts payable
    
    
    56,346
    
    
    
    56,723Derivative liabilities
    
    
    10,978
    
    
    
    14,665Accrued and other current liabilities
    
    
    115,489
    
    
    
    113,474Total current liabilities
    
    
    397,672
    
    
    
    430,840Long-term debt
    
    
    1,441,287
    
    
    
    1,500,495Long-term derivative liabilities
    
    
    40,910
    
    
    
    Other non-current liabilities
    
    
    109,521
    
    
    
    102,942Total liabilities
    
    
    1,989,390
    
    
    
    2,034,277Commitments and contingent liabilities
    
    
    
    
    
    
    Partners capital:Buckeye GP Holdings L.P. capital:General Partner (2,830 common units outstanding
as of September 30, 2010 and December 31, 2009)
    
    
    7
    
    
    
    7Limited Partners (27,771,186 common units outstanding
as of September 30, 2010 and December 31, 2009)
    
    
    232,985
    
    
    
    236,545Management (525,984 units outstanding
as of September 30, 2010 and December 31, 2009)
    
    
    3,157
    
    
    
    3,225Equity gains on issuance of Buckeye Partners, L.P.
limited partner units
    
    
    2,557
    
    
    
    2,557Total Buckeye GP Holdings L.P. capital
    
    
    238,706
    
    
    
    242,334Noncontrolling interests
    
    
    1,143,855
    
    
    
    1,209,960Total partners capital
    
    
    1,382,561
    
    
    
    1,452,294Total liabilities and partners capital
    
    $
    3,371,951
    
    
    $
    3,486,571
  3




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BUCKEYE GP HOLDINGS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months EndedSeptember 30,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    165,042
    
    
    $
    63,682Adjustments to reconcile net income to cash provided by operating activities:Value of ESOP shares released
    
    
    3,480
    
    
    
    768Depreciation and amortization
    
    
    44,259
    
    
    
    40,061Asset impairment expense
    
    
    
    
    
    
    72,540Net changes in fair value of derivatives
    
    
    (16,152
    )
    
    
    (5,632
    )Non-cash deferred lease expense
    
    
    3,176
    
    
    
    3,375Earnings from equity investments of Buckeye Partners, L.P.
    
    
    (8,807
    )
    
    
    (9,031
    )Distributions from equity investments of Buckeye Partners, L.P.
    
    
    11,027
    
    
    
    4,281Amortization of other non-cash items
    
    
    7,552
    
    
    
    4,765Change in assets and liabilities:Trade receivables
    
    
    (9,530
    )
    
    
    (8,428
    )Construction and pipeline relocation receivables
    
    
    5,251
    
    
    
    9,394Inventories
    
    
    56,657
    
    
    
    (90,579
    )Prepaid and other current assets
    
    
    31,289
    
    
    
    (19,804
    )Accounts payable
    
    
    (377
    )
    
    
    (2,308
    )Accrued and other current liabilities
    
    
    (2,367
    )
    
    
    8,196Other non-current assets
    
    
    3,059
    
    
    
    (21,069
    )Other non-current liabilities
    
    
    2,548
    
    
    
    14,469Total adjustments from operating activities
    
    
    131,065
    
    
    
    998Net cash provided by operating activities
    
    
    296,107
    
    
    
    64,680Cash flows from investing activities:Capital expenditures
    
    
    (49,275
    )
    
    
    (58,803
    )Acquisition of additional interest in equity investment
    
    
    (13,512
    )
    
    
    Contributions to equity investments
    
    
    
    
    
    
    (3,870
    )Acquisitions
    
    
    (1,269
    )
    
    
    (10
    )Net proceeds from disposal of property, plant and equipment
    
    
    22,448
    
    
    
    1,248Net cash used in investing activities
    
    
    (41,608
    )
    
    
    (61,435
    )Cash flows from financing activities:Net proceeds from issuance of Buckeye Partners, L.P. limited partner units
    
    
    
    
    
    
    104,633Proceeds from exercise of Buckeye Partners, L.P. unit options
    
    
    4,275
    
    
    
    1,901Issuance of long-term debt
    
    
    
    
    
    
    273,210Repayment of long-term debt
    
    
    (4,644
    )
    
    
    (4,730
    )Borrowings under credit facility
    
    
    175,900
    
    
    
    160,720Repayments under credit facility
    
    
    (233,900
    )
    
    
    (458,987
    )Net (repayments) borrowings under BES credit agreement
    
    
    (28,000
    )
    
    
    53,600Debt issuance costs
    
    
    (3,245
    )
    
    
    (2,138
    )Costs associated with agreement and plan of merger
    
    
    (4,514
    )
    
    
    Distributions paid to noncontrolling partners of Buckeye Partners, L.P.
    
    
    (145,516
    )
    
    
    (133,104
    )Distributions paid to partners
    
    
    (36,507
    )
    
    
    (29,716
    )Net cash used in financing activities
    
    
    (276,151
    )
    
    
    (34,611
    )Net decrease in cash and cash equivalents
    
    
    (21,652
    )
    
    
    (31,366
    )Cash and cash equivalents  Beginning of period
    
    
    37,574
    
    
    
    61,281Cash and cash equivalents  End of period
    
    $
    15,922
    
    
    $
    29,915
  4




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BUCKEYE GP HOLDINGS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
(In thousands)
(Unaudited)
 Buckeye GP Holdings L.P. UnitholdersEquity GainsGeneral
    
    
    Limited
    
    
    
    
    
    
    on IssuancePartner
    
    
    Partner
    
    
    
    
    
    
    of BuckeyesCommon
    
    
    Common
    
    
    Management
    
    
    Limited
    
    
    NoncontrollingUnits
    
    
    Units
    
    
    Units
    
    
    Partner Units
    
    
    Interests
    
    
    TotalBalance  January 1, 2009
    
    $
    7
    
    
    $
    226,565
    
    
    $
    3,037
    
    
    $
    2,451
    
    
    $
    1,166,774
    
    
    $
    1,398,834Net income*
    
    
    
    
    
    
    30,434
    
    
    
    582
    
    
    
    
    
    
    
    32,666
    
    
    
    63,682Distributions paid to partners
    
    
    
    
    
    
    (29,159
    )
    
    
    (557
    )
    
    
    
    
    
    
    
    
    
    
    (29,716
    )Recognition of unit-based compensation charges
    
    
    
    
    
    
    972
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    990Equity gains on issuance of Buckeyes
limited partner units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    (106
    )
    
    
    Net proceeds from issuance of 3.0 million of
Buckeyes limited partner units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,633
    
    
    
    104,633Amortization of Buckeyes
unit-based compensation awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,210
    
    
    
    1,210Exercise of limited partner unit options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,901
    
    
    
    1,901Services Companys non-cash ESOP distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,740
    )
    
    
    (4,740
    )Distributions paid to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (133,104
    )
    
    
    (133,104
    )Adjustment to funded status of benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,400
    
    
    
    6,400Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,261
    
    
    
    3,261Balance  September 30, 2009
    
    $
    7
    
    
    $
    228,812
    
    
    $
    3,080
    
    
    $
    2,557
    
    
    $
    1,178,895
    
    
    $
    1,413,351Balance  January 1, 2010
    
    $
    7
    
    
    $
    236,545
    
    
    $
    3,225
    
    
    $
    2,557
    
    
    $
    1,209,960
    
    
    $
    1,452,294Net income*
    
    
    
    
    
    
    34,068
    
    
    
    650
    
    
    
    
    
    
    
    130,324
    
    
    
    165,042Costs associated with agreement and
plan of merger
    
    
    
    
    
    
    (2,746
    )
    
    
    (52
    )
    
    
    
    
    
    
    (4,129
    )
    
    
    (6,927
    )Distributions paid to partners
    
    
    
    
    
    
    (35,823
    )
    
    
    (684
    )
    
    
    
    
    
    
    
    
    
    
    (36,507
    )Recognition of unit-based compensation charges
    
    
    
    
    
    
    941
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    959Amortization of Buckeyes
unit-based compensation awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,159
    
    
    
    5,159Exercise of limited partner unit options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,275
    
    
    
    4,275Services Companys non-cash ESOP distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,639
    )
    
    
    (2,639
    )Distributions paid to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (145,516
    )
    
    
    (145,516
    )Change in value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58,772
    )
    
    
    (58,772
    )Investment in Buckeyes limited partner units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,503
    
    
    
    4,503Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    690
    
    
    
    690Balance  September 30, 2010
    $
    7

    
    
    $
    232,985
    
    
    $
    3,157
    
    
    $
    2,557
    
    
    $
    1,143,855
    
    
    $
    1,382,561
 
 *
    
    Comprehensive income equals net income.  5




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 1. ORGANIZATION AND BASIS OF PRESENTATION
 Partnership Organization
 we us our BGH Buckeye
    Agreement and Plan of Merger
  6




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    Basis of Presentation
  Reclassifications
  
    
    We have separately disclosed cash flows from the issuance of long-term debt and
borrowings under our credit facilities for the nine months ended September 30, 2009.
These amounts had been included within the same line item in the 2009 period.
  Recent Accounting Developments
 Consolidation of Variable Interest Entities (VIEs)
 7




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurements
 
 2. ACQUISITIONS AND DISPOSITION
 Refined Petroleum Products Terminals and Pipeline Assets Acquisition
  Inventory
    
    $
    7,287Property, plant and equipment
    
    
    44,400Intangible assets
    
    
    4,580Environmental and other liabilities
    
    
    (1,834
    )Allocated purchase price
    
    $
    54,433
 Acquisition of Additional Interest in West Shore Pipe Line Company
  Acquisition of Other Pipeline Assets
  Sale of Buckeye NGL Pipeline
  8




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 3. COMMITMENTS AND CONTINGENCIES
 Claims and Proceedings
   Broadbased Equities v. Forrest E. Wylie, et. al Henry James Steward v. Forrest E. Wylie, et. al. JR Garrett Trust v. Buckeye GP Holdings L.P.,
et al., Broadbased Equities v. Forrest E. Wylie, et al.
    9




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Environmental Contingencies
 .
 Ammonia Contract Contingencies
   Customer Bankruptcy
  10




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 4. INVENTORIES
  September 30,
    
    
    December 31,2010
    
    
    2009Refined petroleum products (1)
    
    $
    257,124
    
    
    $
    299,473Materials and supplies
    
    
    10,600
    
    
    
    10,741Total inventories
    
    $
    267,724
    
    
    $
    310,214
 
 (1)
    
    Ending inventory was 115.8 million and 141.7 million gallons of refined petroleum
products at September 30, 2010 and December 31, 2009, respectively.  
 5. PREPAID AND OTHER CURRENT ASSETS
  September 30,
    
    December 31,2010
    
    2009Prepaid insurance
    
    $
    4,750
    
    
    $
    7,088Insurance receivables
    
    
    9,942
    
    
    
    13,544Ammonia receivable
    
    
    1,902
    
    
    
    7,429Margin deposits
    
    
    11,807
    
    
    
    21,037Prepaid services
    
    
    24,830
    
    
    
    21,571Unbilled revenue
    
    
    3,425
    
    
    
    13,201Tax receivable
    
    
    260
    
    
    
    7,162Prepaid taxes
    
    
    7,197
    
    
    
    2,213Other
    
    
    10,371
    
    
    
    11,006Total prepaid and other current assets
    
    $
    74,484
    
    
    $
    104,251
 11




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 6. EQUITY INVESTMENTS
  September 30,
    
    
    December 31,Ownership (1)
    
    
    2010
    
    
    2009Muskegon Pipeline LLC
    
    
    40.0
    %
    
    $
    14,536
    
    
    $
    15,273Transport4, LLC
    
    
    25.0
    %
    
    
    349
    
    
    
    379West Shore Pipe Line Company (2)
    
    
    34.6
    %
    
    
    43,500
    
    
    
    30,320West Texas LPG Pipeline Limited
Partnership
    
    
    20.0
    %
    
    
    49,758
    
    
    
    50,879Total equity investments
    
    
    
    
    
    $
    108,143
    
    
    $
    96,851
 
 (1)
    
    Represents ownership interest in equity investment at September 30, 2010.(2)
    
    See Note 2 for a discussion of the acquisition of an additional interest in West Shore.  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Muskegon Pipeline LLC
    
    $
    488
    
    
    $
    385
    
    
    $
    1,059
    
    
    $
    923Transport4, LLC
    
    
    51
    
    
    
    31
    
    
    
    120
    
    
    
    101West Shore Pipe Line Company
    
    
    1,229
    
    
    
    1,204
    
    
    
    3,730
    
    
    
    3,401West Texas LPG Pipeline Limited Partnership
    
    
    1,623
    
    
    
    2,187
    
    
    
    3,898
    
    
    
    4,606Total earnings from equity investments
    
    $
    3,391
    
    
    $
    3,807
    
    
    $
    8,807
    
    
    $
    9,031
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    36,546
    
    
    $
    36,212
    
    
    $
    103,845
    
    
    $
    100,626Costs and expenses
    
    
    19,690
    
    
    
    17,351
    
    
    
    55,934
    
    
    
    49,964Non-operating expense
    
    
    3,983
    
    
    
    3,184
    
    
    
    11,021
    
    
    
    9,053Net income
    
    
    12,873
    
    
    
    15,677
    
    
    
    36,890
    
    
    
    41,609
 12




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 7. INTANGIBLE ASSETS
  September 30,
    
    
    December 31,2010
    
    
    2009Customer relationships
    
    $
    38,300
    
    
    $
    38,300Accumulated amortization
    
    
    (7,858
    )
    
    
    (5,631
    )Net carrying amount
    
    
    30,442
    
    
    
    32,669Customer contracts
    
    
    16,380
    
    
    
    16,380Accumulated amortization
    
    
    (5,005
    )
    
    
    (3,892
    )Net carrying amount
    
    
    11,375
    
    
    
    12,488Total intangible assets
    
    $
    41,817
    
    
    $
    45,157
  
 8. OTHER NON-CURRENT ASSETS
  September 30,
    
    
    December 31,2010
    
    
    2009Prepaid services
    
    $
    8,051
    
    
    $
    11,640Derivative assets
    
    
    
    
    
    
    17,204Debt issuance costs
    
    
    11,678
    
    
    
    11,058Insurance receivables
    
    
    7,109
    
    
    
    7,265Other
    
    
    10,894
    
    
    
    9,693Total other non-current assets
    
    $
    37,732
    
    
    $
    56,860
 13




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 9. ACCRUED AND OTHER CURRENT LIABILITIES
  September 30,
    
    
    December 31,2010
    
    
    2009Taxes  other than income
    
    $
    17,190
    
    
    $
    15,487Accrued employee benefit liability
    
    
    3,287
    
    
    
    3,287Environmental liabilities
    
    
    10,387
    
    
    
    10,799Accrued interest
    
    
    18,429
    
    
    
    30,613Payable for ammonia purchase
    
    
    2,215
    
    
    
    7,015Deferred revenue
    
    
    19,395
    
    
    
    6,829Compensation and vacation
    
    
    12,910
    
    
    
    11,385Accrued capital expenditures
    
    
    2,639
    
    
    
    1,611Reorganization
    
    
    
    
    
    
    2,133Deferred consideration
    
    
    2,010
    
    
    
    1,675Other
    
    
    27,027
    
    
    
    22,640Total accrued and other current liabilities
    
    $
    115,489
    
    
    $
    113,474
 
 10. DEBT OBLIGATIONS
  September 30,
    
    
    December 31,2010
    
    
    2009BGH:BGH Credit Agreement
    
    $
    
    
    
    $
    Services Company:3.60% ESOP Notes due March 28, 2011
    
    
    3,076
    
    
    
    7,790Retirement premium
    
    
    (17
    )
    
    
    (87
    )Buckeye:4.625% Notes due July 15, 2013 (1)
    
    
    300,000
    
    
    
    300,0005.300% Notes due October 15, 2014 (1)
    
    
    275,000
    
    
    
    275,0005.125% Notes due July 1, 2017 (1)
    
    
    125,000
    
    
    
    125,0006.050% Notes due January 15, 2018 (1)
    
    
    300,000
    
    
    
    300,0005.500% Notes due August 15, 2019 (1)
    
    
    275,000
    
    
    
    275,0006.750% Notes due August 15, 2033 (1)
    
    
    150,000
    
    
    
    150,000Credit Facility
    
    
    20,000
    
    
    
    78,000BES Credit Agreement
    
    
    211,800
    
    
    
    239,800Total debt
    
    
    1,659,859
    
    
    
    1,750,503Other, including unamortized discounts
and fair value hedges
    
    
    (3,713
    )
    
    
    (4,030
    )Subtotal debt
    
    
    1,656,146
    
    
    
    1,746,473Less: Current portion of long-term debt
    
    
    (214,859
    )
    
    
    (245,978
    )Total long-term debt
    
    $
    1,441,287
    
    
    $
    1,500,495
 
 (1)
    
    We make semi-annual interest payments on these notes based on the rates noted above
with the principal balances outstanding to be paid on or before the due dates as shown
above. 14




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  BGH
    Services Company ESOP Notes
  15




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Credit Facility
     BES Credit Agreement
   16




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Borrowings
    
    Minimum
    
    Minimum
    
    Maximumoutstanding on
    
    Consolidated Tangible
    
    Consolidated Net
    
    ConsolidatedBES Credit Agreement
    
    Net Worth
    
    Working Capital
    
    Leverage Ratio$150
    
    $
    40
    
    
    $
    30
    
    
    
    7.0 to 1.0Above $150 up to $200
    
    $
    50
    
    
    $
    40
    
    
    
    7.0 to 1.0Above $200 up to $250
    
    $
    60
    
    
    $
    50
    
    
    
    7.0 to 1.0Above $250 up to $300
    
    $
    72
    
    
    $
    60
    
    
    
    7.0 to 1.0Above $300 up to $350
    
    $
    84
    
    
    $
    70
    
    
    
    7.0 to 1.0Above $350 up to $400
    
    $
    96
    
    
    $
    80
    
    
    
    7.0 to 1.0Above $400 up to $450
    
    $
    108
    
    
    $
    90
    
    
    
    7.0 to 1.0Above $450 up to $500
    
    $
    120
    
    
    $
    100
    
    
    
    7.0 to 1.0
   
 11. OTHER NON-CURRENT LIABILITIES
  September 30,
    
    
    December 31,2010
    
    
    2009Accrued employee benefit liabilities (see Note 13)
    
    $
    45,274
    
    
    $
    45,837Accrued environmental liabilities
    
    
    18,447
    
    
    
    19,053Deferred consideration
    
    
    16,918
    
    
    
    18,425Deferred rent
    
    
    12,334
    
    
    
    9,158Deferred revenue
    
    
    7,269
    
    
    
    1,532Other
    
    
    9,279
    
    
    
    8,937Total other non-current liabilities
    
    $
    109,521
    
    
    $
    102,942
 17




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 12. DERIVATIVE INSTRUMENTS, HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS
   Interest Rate Derivatives
    18




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Commodity Derivatives
     Volume (1)
    
    AccountingDerivative Purpose
    
    Current
    

Long-Term (2)
    
    TreatmentDerivatives NOT designated as hedging instruments:Fixed-price contracts
    
    
    45,380
    
    
    
    42
    
    
    Mark-to-marketFutures contracts for fixed-price sales contracts
    
    
    21,672
    
    
    
    
    
    
    Mark-to-marketFutures contracts for inventory
    
    
    14,448
    
    
    
    
    
    
    Mark-to-marketDerivatives designated as hedging instruments:Futures contracts for inventory
    
    
    107,730
    
    
    
    
    
    
    Fair Value HedgeFutures contracts for natural gas (BBtu) (3)
    
    
    300
    
    
    
    
    
    
    Cash Flow Hedge
 
 (1)
    
    Volume represents absolute value of net notional volume position.(2)
    
    The maximum term for derivatives included in the long-term column is October 2011.(3)
    
    BBtu represents one billion British thermal units. 19




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  September 30, 2010
    
    
    December 31, 2009Derivative
    
    
    
    
    
    
    
    
    
    
    DerivativeAssets
    
    
    (Liabilities)
    
    
    Net Carrying
    
    
    Assets
    
    
    (Liabilities)
    
    
    Net CarryingFair Value
    
    
    Fair Value
    
    
    Value
    
    
    Fair Value
    
    
    Fair Value
    
    
    ValueDerivatives NOT designated as
hedginginstruments:Fixed-price contracts
    
    $
    2,747
    
    
    $
    (2,130
    )
    
    $
    617
    
    
    $
    4,959
    
    
    $
    (3,662
    )
    
    $
    1,297Futures contracts for fixed-price sales contracts
    
    
    2,808
    
    
    
    (398
    )
    
    
    2,410
    
    
    
    7,594
    
    
    
    (384
    )
    
    
    7,210Futures contracts for inventory
    
    
    25,241
    
    
    
    (24,550
    )
    
    
    691
    
    
    
    
    
    
    
    
    
    
    
    Derivatives designated as
hedging instruments:Futures contracts for inventory
    
    
    795
    
    
    
    (12,530
    )
    
    
    (11,735
    )
    
    
    1,992
    
    
    
    (20,517
    )
    
    
    (18,525
    )Futures contracts for natural gas
    
    
    
    
    
    
    (361
    )
    
    
    (361
    )
    
    
    312
    
    
    
    
    
    
    
    312Interest rate contracts
    
    
    
    
    
    
    (40,910
    )
    
    
    (40,910
    )
    
    
    17,204
    
    
    
    
    
    
    
    17,204Total
    
    
    
    
    
    
    
    
    
    $
    (49,288
    )
    
    
    
    
    
    
    
    
    
    $
    7,498
 September 30,
    
    
    December 31,Balance Sheet Locations:
    
    2010
    
    
    2009Derivative assets
    
    $
    2,600
    
    
    $
    4,959Other non-current assets
    
    
    
    
    
    
    17,204Derivative liabilities
    
    
    (10,978
    )
    
    
    (14,665
    )Long-term derivative liabilities
    
    
    (40,910
    )
    
    
    Total
    
    $
    (49,288
    )
    
    $
    7,498
  20




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Gain (Loss) Recognized in Income on DerivativesThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Location
    
    2010
    
    2009
    
    2010
    
    2009Derivatives NOT designated as hedging instruments:Fixed-price
contracts
   
    Product sales
    


    $
    (1,974
    )
    
    $
    3,937
    
    
    $
    6,704
    
    
    $
    3,366Futures contracts for fixed-price sales contracts
    

Cost
of product sales and natural gas storage services
    
    
    3,363
    
    
    
    (3,972
    )
    
    
    (103
    )
    
    
    7,489Futures contracts for inventory
    

Cost
of product sales and natural gas storage services
    
    
    65
    
    
    
    
    
    
    
    331
    
    
    
    Derivatives designated as
fair value hedging instruments:Futures contracts for inventory
    

Cost
of product sales and natural gas storageservices
    
    $
    (18,509
    )
    
    $
    4,273
    
    
    $
    (5,296
    )
    
    $
    670
  Gain (Loss) Reclassified from AOCI to IncomeThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Location
    
    2010
    
    2009
    
    2010
    
    2009Derivatives designated as
cash flow hedging
instruments:Futures contracts for natural gas
    

Cost
of product sales andnatural gas storage services
    
    $
    (122
    )
    
    $
    (192
    )
    
    $
    (291
    )
    
    $
    (407
    )Futures
contracts for refinedpetroleum products
    

Cost
of product sales and natural gas storage services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (146
    )Interest rate contracts
    
    Interest and debt expense
    
    
    (241
    )
    
    
    (1,393
    )
    
    
    (723
    )
    
    
    (2,049
    )
 Change in Value Recognized in OCI on DerivativesThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2010
    
    2009
    
    2010
    
    2009Derivatives designated as cash flow hedging instruments:Futures contracts for natural gas
    
    $
    (337
    )
    
    $
    (1
    )
    
    $
    (949
    )
    
    $
    162Interest rate contracts
    
    
    (21,957
    )
    
    
    (3,849
    )
    
    
    (58,114
    )
    
    
    (4,006
    )
 21




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurements
   
    
    Level 1 inputs are based on quoted prices, which are available in active markets for
identical assets or liabilities as of the reporting date. Active markets are defined
as those in which transactions for identical assets or liabilities occur with
sufficient frequency and volume to provide pricing information on an ongoing basis.
    
    Level 2 inputs are based on pricing inputs other than quoted prices in active
markets and are either directly or indirectly observable as of the measurement date.
Level 2 fair values include instruments that are valued using financial models or other
appropriate valuation methodologies and include the following:
 §
    
    Quoted prices in active markets for similar assets or liabilities.§
    
    Quoted prices in markets that are not active for identical or similar assets or
liabilities.§
    
    Inputs other than quoted prices that are observable for the asset or liability.§
    
    Inputs that are derived primarily from or corroborated by observable market data
by correlation or other means.
 
    
    Level 3 inputs are based on unobservable inputs for the asset or liability.
Unobservable inputs are used to measure fair value to the extent that observable inputs
are not available, thereby allowing for situations in which there is little, if any,
market activity for the asset or liability at the measurement date. Unobservable
inputs reflect the reporting entitys own ideas about the assumptions that market
participants would use in pricing an asset or liability (including assumptions about
risk). Unobservable inputs are based on the best information available in the
circumstances, which might include the reporting entitys internally developed data.
The reporting entity must not ignore information about market participant assumptions
that is reasonably available without undue cost and effort. Level 3 inputs are
typically used in connection with internally developed valuation methodologies where
management makes its best estimate of an instruments fair value.
 22




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Recurring
  September 30, 2010
    
    
    December 31, 2009Significant
    
    
    
    
    
    
    SignificantQuoted Prices
    
    
    Other
    
    
    Quoted Prices
    
    
    Otherin Active
    
    
    Observable
    
    
    in Active
    
    
    ObservableMarkets
    
    
    Inputs
    
    
    Markets
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 1)
    
    
    (Level 2)Financial assets:Fixed-price contracts
    
    $
    
    
    
    $
    2,497
    
    
    $
    
    
    
    $
    4,959Futures contracts for inventory
and fixed-price sales contracts
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    Asset held in trust
    
    
    
    
    
    
    
    
    
    
    1,793
    
    
    
    Interest rate derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,204Financial liabilities:Fixed-price contracts
    
    
    
    
    
    
    (1,880
    )
    
    
    
    
    
    
    (3,662
    )Futures contracts for inventory
and fixed-price sales contracts
    
    
    (8,737
    )
    
    
    
    
    
    
    (11,003
    )
    
    
    Futures contracts for natural gas
    
    
    (361
    )
    
    
    
    
    
    
    
    
    
    
    Interest rate derivatives
    
    
    
    
    
    
    (40,910
    )
    
    
    
    
    
    
    Total
    
    $
    (8,995
    )
    
    $
    (40,293
    )
    
    $
    (9,210
    )
    
    $
    18,501
    23




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Non-Recurring
  September 30,
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total2009
    
    Level 1
    
    Level 2
    
    Level 3
    
    LossesPrepaid and other
current assets (1)
    
    $
    8,639
    
    
    $
    
    
    
    $
    
    
    
    $
    8,639
    
    
    $
    72,540
 
 (1)
    
    Represents the property, plant and equipment of net assets held for sale that was included in
prepaid and other current assets at September 30, 2009 (see Note 2).  
 13. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
    RIGP
    
    
    Retiree Medical PlanThree Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    66
    
    
    $
    (44
    )
    
    $
    74
    
    
    $
    37Interest cost
    
    
    226
    
    
    
    146
    
    
    
    495
    
    
    
    419Expected return on plan assets
    
    
    (86
    )
    
    
    (47
    )
    
    
    
    
    
    
    Amortization of prior service benefit
    
    
    (11
    )
    
    
    (47
    )
    
    
    (741
    )
    
    
    (679
    )Amortization of unrecognized losses
    
    
    241
    
    
    
    90
    
    
    
    223
    
    
    
    220Settlement/curtailment charge (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,571
    )Net periodic benefit costs
    
    $
    436
    
    
    $
    98
    
    
    $
    51
    
    
    $
    (1,574
    )
 
 (1)
    
    In connection with Buckeyes reorganization in 2009, $6.4 million of the aggregate
amount of $29.1 million of expenses incurred through September 30, 2009 was recorded as an
adjustment to the funded status of the RIGP and the Retiree Medical Plan, which represent
settlement and curtailment adjustments. 24




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  RIGP
    
    
    Retiree Medical PlanNine Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    199
    
    
    $
    371
    
    
    $
    221
    
    
    $
    247Interest cost
    
    
    685
    
    
    
    886
    
    
    
    1,486
    
    
    
    1,402Expected return on plan assets
    
    
    (260
    )
    
    
    (427
    )
    
    
    
    
    
    
    Amortization of prior service benefit
    
    
    (34
    )
    
    
    (282
    )
    
    
    (2,223
    )
    
    
    (2,397
    )Amortization of unrecognized losses
    
    
    731
    
    
    
    802
    
    
    
    670
    
    
    
    743Settlement/curtailment charge (1)
    
    
    
    
    
    
    7,171
    
    
    
    
    
    
    
    (771
    )Net periodic benefit costs
    
    $
    1,321
    
    
    $
    8,521
    
    
    $
    154
    
    
    $
    (776
    )
 
 (1)
    
    In connection with Buckeyes reorganization in 2009, $6.4 million of the aggregate
amount of $29.1 million of expenses incurred through September 30, 2009 was recorded as an
adjustment to the funded status of the RIGP and the Retiree Medical Plan, which represent
settlement and curtailment adjustments.  
 14. UNIT-BASED COMPENSATION PLANS
   25




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 BGH GPs Override Units
  Number of Override Units
    
    
    Total NumberOperating
    
    
    of UnitsValue A Units
    
    
    Value B Units
    
    
    Units
    
    
    AwardedUnvested at December 31, 2009
    
    
    1,699
    
    
    
    1,699
    
    
    
    812
    
    
    
    4,210Vested
    
    
    
    
    
    
    
    
    
    
    (266
    )
    
    
    (266
    )Unvested at September 30, 2010
    
    
    1,699
    
    
    
    1,699
    
    
    
    546
    
    
    
    3,944
 Compensation Costs for Override UnitsOperatingValue A Units
    
    
    Value B Units
    
    
    Units
    
    
    TotalsTotal fair value of all outstanding override units
    
    $
    3,587
    
    
    $
    2,179
    
    
    $
    5,808
    
    
    $
    11,574Less: Expense recorded from plan inception to
September 30, 2010
    
    
    
    
    
    
    
    
    
    
    (4,301
    )
    
    
    (4,301
    )Estimated future compensation costs at September
30, 2010
    
    $
    3,587
    
    
    $
    2,179
    
    
    $
    1,507
    
    
    $
    7,273
 Buckeyes Long-Term Incentive Plan
   Awards under the LTIP
  26




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##### Table of Contents



BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  WeightedAverageGrant DateNumber of
    
    
    Fair ValueLP Units
    
    
    per LP Unit (1)
    
    
    Total ValueUnvested at January 1, 2010
    
    
    140,095
    
    
    $
    39.81
    
    
    $
    5,577Granted
    
    
    258,352
    
    
    
    56.22
    
    
    
    14,525Vested
    
    
    (18,518
    )
    
    
    39.18
    
    
    
    (725
    )Forfeited
    
    
    (15,234
    )
    
    
    49.44
    
    
    
    (753
    )Unvested at September 30, 2010
    
    
    364,695
    
    
    $
    51.07
    
    
    $
    18,624
 
 (1)
    
    Determined by dividing the aggregate grant date fair value of awards by the number of
awards issued. The weighted-average grant date fair value per LP Unit for forfeited and
vested awards is determined before an allowance for forfeitures.  Buckeyes Unit Option and Distribution Equivalent Plan
   
 15. RELATED PARTY TRANSACTIONS
     27




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 16. CASH DISTRIBUTIONS
   
 17. EARNINGS PER PARTNERSHIP UNIT
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic:Weighted average common units outstanding
    
    
    27,774
    
    
    
    27,770
    
    
    
    27,774
    
    
    
    27,770Weighted average management units outstanding
    
    
    526
    
    
    
    530
    
    
    
    526
    
    
    
    530Units for basic
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300Diluted:Units used for basic calculation
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300Dilutive effect of additional management units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Units for diluted
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300
    
    
    
    28,300
 28




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 18. BUSINESS SEGMENTS
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue:Pipeline Operations
    
    $
    103,621
    
    
    $
    96,714
    
    
    $
    299,497
    
    
    $
    294,084Terminalling & Storage
    
    
    41,900
    
    
    
    34,036
    
    
    
    125,039
    
    
    
    94,108Natural Gas Storage
    
    
    21,663
    
    
    
    28,576
    
    
    
    68,318
    
    
    
    60,325Energy Services
    
    
    566,804
    
    
    
    258,407
    
    
    
    1,636,955
    
    
    
    728,563Development & Logistics
    
    
    9,082
    
    
    
    7,516
    
    
    
    27,382
    
    
    
    25,446Intersegment
    
    
    (8,213
    )
    
    
    (1,805
    )
    
    
    (23,884
    )
    
    
    (11,022
    )Total revenue
    
    $
    734,857
    
    
    $
    423,444
    
    
    $
    2,133,307
    
    
    $
    1,191,504Operating income (loss):Pipeline Operations
    
    $
    48,991
    
    
    $
    41,846
    
    
    $
    138,891
    
    
    $
    35,208Terminalling & Storage
    
    
    23,656
    
    
    
    17,323
    
    
    
    70,695
    
    
    
    39,095Natural Gas Storage
    
    
    2,795
    
    
    
    7,591
    
    
    
    9,548
    
    
    
    19,572Energy Services
    
    
    2,581
    
    
    
    5,620
    
    
    
    (1,287
    )
    
    
    10,404Development & Logistics
    
    
    1,490
    
    
    
    2,509
    
    
    
    3,096
    
    
    
    4,043Total operating income
    
    $
    79,513
    
    
    $
    74,889
    
    
    $
    220,943
    
    
    $
    108,322Depreciation and amortization:Pipeline Operations
    
    $
    9,263
    
    
    $
    8,659
    
    
    $
    27,295
    
    
    $
    26,482Terminalling & Storage
    
    
    2,386
    
    
    
    1,813
    
    
    
    7,051
    
    
    
    5,401Natural Gas Storage
    
    
    1,643
    
    
    
    1,241
    
    
    
    4,924
    
    
    
    3,943Energy Services
    
    
    1,331
    
    
    
    986
    
    
    
    3,702
    
    
    
    2,946Development & Logistics
    
    
    439
    
    
    
    439
    
    
    
    1,287
    
    
    
    1,289Total depreciation and amortization
    
    $
    15,062
    
    
    $
    13,138
    
    
    $
    44,259
    
    
    $
    40,061Capital additions, net:(1)Pipeline Operations
    
    
    
    
    
    
    
    
    
    $
    22,013
    
    
    $
    20,813Terminalling & Storage
    
    
    
    
    
    
    
    
    
    
    16,116
    
    
    
    15,186Natural Gas Storage
    
    
    
    
    
    
    
    
    
    
    7,466
    
    
    
    18,884Energy Services
    
    
    
    
    
    
    
    
    
    
    2,835
    
    
    
    2,973Development & Logistics
    
    
    
    
    
    
    
    
    
    
    845
    
    
    
    947Total capital additions, net
    
    
    
    
    
    
    
    
    
    $
    49,275
    
    
    $
    58,803
 
 (1)
    
    Amount excludes $1.0 million and ($2.6) million of non-cash changes in accruals for capital
expenditures for the nine months ended September 30, 2010 and 2009, respectively (see Note
19). 29




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September 30,
    
    
    December 31,2010
    
    
    2009Total Assets:Pipeline Operations (1)
    
    $
    1,543,935
    
    
    $
    1,592,916Terminalling & Storage
    
    
    522,941
    
    
    
    532,971Natural Gas Storage
    
    
    549,243
    
    
    
    573,261Energy Services
    
    
    461,146
    
    
    
    482,025Development & Logistics
    
    
    60,386
    
    
    
    74,476Consolidating level
    
    
    234,300
    
    
    
    230,922Total assets
    
    $
    3,371,951
    
    
    $
    3,486,571Goodwill:Pipeline Operations
    
    $
    198,632
    
    
    $
    198,632Terminalling & Storage
    
    
    49,618
    
    
    
    49,618Natural Gas Storage
    
    
    169,560
    
    
    
    169,560Energy Services
    
    
    1,132
    
    
    
    1,132Development & Logistics
    
    
    13,182
    
    
    
    13,182Total goodwill
    
    $
    432,124
    
    
    $
    432,124
 
 (1)
    
    All equity investments are included in the assets of the Pipeline Operations segment. 
 19. SUPPLEMENTAL CASH FLOW INFORMATION
  Nine Months EndedSeptember 30,2010
    
    
    2009Cash paid for interest (net of capitalized interest)
    
    $
    73,230
    
    
    $
    59,101Cash paid for income taxes
    
    
    801
    
    
    
    1,650Capitalized interest
    
    
    1,710
    
    
    
    2,906Non-cash changes in assets and liabilities:Change in capital expenditures in accounts payable
    
    $
    1,028
    
    
    $
    (2,606
    )
 
 20. SUBSEQUENT EVENTS
 Terminal Acquisitions
   30




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
   Cautionary Note Regarding Forward-Looking Statements
 This discussion contains various forward-looking statements and information that are based on
our beliefs, as well as assumptions made by us and information currently available to us. When
used in this document, words such as proposed, anticipate, project, potential, could,
should, continue, estimate, expect, may, believe, will, plan, seek, outlook and
similar expressions and statements regarding our plans and objectives for future operations are
intended to identify forward-looking statements. Although we believe that such expectations
reflected in such forward-looking statements are reasonable, we cannot give any assurances that
such expectations will prove to be correct. Such statements are subject to a variety of risks,
uncertainties and assumptions as described in more detail in Item 1A Risk Factors included in our
Annual Report on Form 10-K for the year ended December 31, 2009 and in our Quarterly Report on Form
10-Q for the quarter ended June 30, 2010. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, our actual results may vary materially
from those anticipated, estimated, projected or expected. You should not put undue reliance on any
forward-looking statements. The forward-looking statements in this Quarterly Report speak only as
of the date hereof. Except as required by federal and state securities laws, we undertake no
obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future events or any other reason.
 Overview of Critical Accounting Policies and Estimates
  Overview of BGH
 we us our BGH Buckeye
 31




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##### Table of Contents




    
    the incentive distribution rights in Buckeye;
    
    the indirect ownership of the general partner interests in certain of Buckeyes
operating subsidiaries (representing an approximate 1% interest in each of such
operating subsidiaries);
    
    the general partner interests in Buckeye (representing 243,914 general partner units
(the GP Units), or an approximate 0.5% interest in Buckeye); and
    
    80,000 of Buckeyes LP Units.
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Incentive payments from Buckeye
    
    $
    12,886
    
    
    $
    11,742
    
    
    $
    37,804
    
    
    $
    33,713Distributions from the indirect 1% ownership in
certain of Buckeyes operating subsidiaries
    
    
    534
    
    
    
    519
    
    
    
    937
    
    
    
    1,415Distributions from the ownership of 243,914 of
Buckeyes GP Units
    
    
    235
    
    
    
    223
    
    
    
    695
    
    
    
    659Distributions from the ownership of 80,000 of
Buckeyes LP Units
    
    
    77
    
    
    
    73
    
    
    
    228
    
    
    
    216Cash received
    
    $
    13,732
    
    
    $
    12,557
    
    
    $
    39,664
    
    
    $
    36,003
 Overview of Buckeye Partners, L.P.
   32




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Recent Developments
 Agreement and Plan of Merger
     Amendment to BES Credit Agreement
  Purchase of Additional Interest in West Shore Pipe Line Company
  33




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##### Table of Contents



Sale of Buckeye NGL Pipeline
  Results of Operations
  
    
    Interest of noncontrolling partners in Buckeye  Our condensed consolidated balance
sheets include a noncontrolling interests capital account that reflects the proportion of
Buckeye owned by its partners other than us. Similarly, the ownership interests in Buckeye
held by its partners other than us are reflected in our condensed consolidated statements
of operations as income attributable to noncontrolling interests. These noncontrolling
interest accounts are not reflected in Buckeyes condensed consolidated financial
statements.
    
    Our capital structure  In addition to incorporating the assets and liabilities of
Buckeye, our condensed consolidated balance sheets include our own indebtedness and related
debt placement costs, and the partners capital on our condensed consolidated balance
sheets represent our partners capital as opposed to the capital reflected in Buckeyes
condensed consolidated balance sheets, which reflects the ownership interest of all its
partners, including its owners other than us or Services Company. Consequently, our
condensed consolidated statements of operations reflect additional interest expense,
interest income and debt amortization expense that is not reflected in Buckeyes condensed
consolidated financial statements.
    
    Inclusion of Services Company  The financial statements of Services Company, which
employs the employees who manage and operate our assets, are consolidated into our
financial statements. The condensed consolidated financial statements of Buckeye do not
include the financial statements of Services Company.
    
    Our general and administrative expenses  We incur general and administrative expenses
that are independent from Buckeyes operations and are not reflected in Buckeyes condensed
consolidated financial statements.
    
    Elimination of intercompany transactions  Intercompany obligations and payments among
Buckeye and its consolidated subsidiaries, us and Services Company are reflected in
Buckeyes condensed consolidated financial statements but are eliminated in our condensed
consolidated financial statements.
 34




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##### Table of Contents



Segment Results
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Pipeline Operations
    
    $
    103,621
    
    
    $
    96,714
    
    
    $
    299,497
    
    
    $
    294,084Terminalling & Storage
    
    
    41,900
    
    
    
    34,036
    
    
    
    125,039
    
    
    
    94,108Natural Gas Storage
    
    
    21,663
    
    
    
    28,576
    
    
    
    68,318
    
    
    
    60,325Energy Services
    
    
    566,804
    
    
    
    258,407
    
    
    
    1,636,955
    
    
    
    728,563Development & Logistics
    
    
    9,082
    
    
    
    7,516
    
    
    
    27,382
    
    
    
    25,446Intersegment
    
    
    (8,213
    )
    
    
    (1,805
    )
    
    
    (23,884
    )
    
    
    (11,022
    )Total revenues
    
    $
    734,857
    
    
    $
    423,444
    
    
    $
    2,133,307
    
    
    $
    1,191,504Total costs and expenses:(1)Pipeline Operations
    
    $
    54,630
    
    
    $
    54,868
    
    
    $
    160,606
    
    
    $
    258,876Terminalling & Storage
    
    
    18,244
    
    
    
    16,713
    
    
    
    54,344
    
    
    
    55,013Natural Gas Storage
    
    
    18,868
    
    
    
    20,985
    
    
    
    58,770
    
    
    
    40,753Energy Services
    
    
    564,223
    
    
    
    252,787
    
    
    
    1,638,242
    
    
    
    718,159Development & Logistics
    
    
    7,592
    
    
    
    5,007
    
    
    
    24,286
    
    
    
    21,403Intersegment
    
    
    (8,213
    )
    
    
    (1,805
    )
    
    
    (23,884
    )
    
    
    (11,022
    )Total costs and expenses
    
    $
    655,344
    
    
    $
    348,555
    
    
    $
    1,912,364
    
    
    $
    1,083,182Depreciation and amortization:Pipeline Operations
    
    $
    9,263
    
    
    $
    8,659
    
    
    $
    27,295
    
    
    $
    26,482Terminalling & Storage
    
    
    2,386
    
    
    
    1,813
    
    
    
    7,051
    
    
    
    5,401Natural Gas Storage
    
    
    1,643
    
    
    
    1,241
    
    
    
    4,924
    
    
    
    3,943Energy Services
    
    
    1,331
    
    
    
    986
    
    
    
    3,702
    
    
    
    2,946Development & Logistics
    
    
    439
    
    
    
    439
    
    
    
    1,287
    
    
    
    1,289Total depreciation and amortization
    
    $
    15,062
    
    
    $
    13,138
    
    
    $
    44,259
    
    
    $
    40,061Asset impairment expense:Pipeline Operations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    72,540Reorganization expense:Pipeline Operations
    
    $
    
    
    
    $
    518
    
    
    $
    
    
    
    $
    23,572Terminalling and Storage
    
    
    
    
    
    
    163
    
    
    
    
    
    
    
    2,565Natural Gas Storage
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    382Energy Services
    
    
    
    
    
    
    206
    
    
    
    
    
    
    
    1,150Development & Logistics
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    1,440Total reorganization expense
    
    $
    
    
    
    $
    996
    
    
    $
    
    
    
    $
    29,109Operating income (loss):Pipeline Operations
    
    $
    48,991
    
    
    $
    41,846
    
    
    $
    138,891
    
    
    $
    35,208Terminalling & Storage
    
    
    23,656
    
    
    
    17,323
    
    
    
    70,695
    
    
    
    39,095Natural Gas Storage
    
    
    2,795
    
    
    
    7,591
    
    
    
    9,548
    
    
    
    19,572Energy Services
    
    
    2,581
    
    
    
    5,620
    
    
    
    (1,287
    )
    
    
    10,404Development & Logistics
    
    
    1,490
    
    
    
    2,509
    
    
    
    3,096
    
    
    
    4,043Total operating income
    
    $
    79,513
    
    
    $
    74,889
    
    
    $
    220,943
    
    
    $
    108,322
 
 (1)
    
    Total costs and expenses includes depreciation and amortization, asset impairment expense and
reorganization expense. 35




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Attributable to Buckeye
    
    $
    653,261
    
    
    $
    347,479
    
    
    $
    1,906,852
    
    
    $
    1,079,944Elimination of Buckeye
deferred charge
    
    
    (1,174
    )
    
    
    (1,174
    )
    
    
    (3,523
    )
    
    
    (3,523
    )Net effect of ESOP charges
    
    
    1,400
    
    
    
    564
    
    
    
    3,486
    
    
    
    1,209Attributable to BGH
    
    
    1,857
    
    
    
    1,686
    
    
    
    5,549
    
    
    
    5,552Total costs and expenses
    
    $
    655,344
    
    
    $
    348,555
    
    
    $
    1,912,364
    
    
    $
    1,083,182
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Payroll and payroll benefits
    
    $
    1,109
    
    
    $
    1,086
    
    
    $
    3,334
    
    
    $
    3,455Professional fees
    
    
    272
    
    
    
    103
    
    
    
    704
    
    
    
    759Other
    
    
    476
    
    
    
    497
    
    
    
    1,511
    
    
    
    1,338Total
    
    $
    1,857
    
    
    $
    1,686
    
    
    $
    5,549
    
    
    $
    5,552
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Pipeline Operations (average bpd):Gasoline
    
    
    663,900
    
    
    
    666,900
    
    
    
    647,400
    
    
    
    661,700Jet fuel
    
    
    350,700
    
    
    
    350,000
    
    
    
    337,500
    
    
    
    342,900Diesel fuel
    
    
    237,000
    
    
    
    199,900
    
    
    
    229,200
    
    
    
    205,000Heating oil
    
    
    35,000
    
    
    
    33,600
    
    
    
    61,400
    
    
    
    72,000LPGs
    
    
    16,700
    
    
    
    17,700
    
    
    
    19,500
    
    
    
    17,000NGLs
    
    
    
    
    
    
    9,600
    
    
    
    
    
    
    
    17,100Other products
    
    
    3,300
    
    
    
    5,000
    
    
    
    2,600
    
    
    
    9,400Total Pipeline Operations
    
    
    1,306,600
    
    
    
    1,282,700
    
    
    
    1,297,600
    
    
    
    1,325,100Terminalling & Storage (average bpd):Products throughput (1)
    
    
    566,200
    
    
    
    472,000
    
    
    
    564,200
    
    
    
    470,800Energy Services (in thousands of gallons):Sales volumes
    
    
    278,000
    
    
    
    138,500
    
    
    
    780,000
    
    
    
    455,500
 
 (1)
    
    Reported quantities exclude transfer volumes, which are non-revenue generating transfers
among our various terminals, and include volumes from the Albany terminal, which had not been
previously reported in the 2009 periods. For the three and nine months ended September 30,
2009, we previously reported total products throughput of 486.5 thousand and 491.9 thousand,
respectively, which included transfer volumes and excluded volumes from the Albany terminal. 36




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Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009
 Consolidated
 Consolidated income attributable to unitholders
 Revenue.
 
    
    an increase of $308.4 million in revenue from the Energy Services segment, resulting
from an overall increase in refined petroleum product prices and volumes of product
sold during the three months ended September 30, 2010 as compared to the corresponding
period in 2009;
    
    an increase of $7.9 million in revenue from the Terminalling & Storage segment,
resulting from increased revenue from terminals acquired in November 2009, internal
growth projects and increased throughput volumes, including $1.4 million in storage
fees from previously underutilized tankage identified in connection with our best
practices initiative and other marketing opportunities;
    
    an increase of $6.9 million in revenue from the Pipeline Operations segment,
resulting from the benefit of higher tariff rates, increased revenues from the
contribution of pipeline assets acquired in November 2009, increased other revenues and
more favorable settlement experience; and
    
    an increase of $1.6 million in revenue from the Development & Logistics segment,
resulting primarily from the assignment of certain service contracts from the Pipeline
Operations segment to the Development & Logistics segment in April 2010.
  
    
    a decrease of $6.9 million in revenue from the Natural Gas Storage segment,
resulting primarily from lower fees from hub services transactions as a result of
general market conditions, including reduced market-based fees charged for storage
services as a result of low natural gas prices, compressed seasonal spreads, lower
recontracting rates, above normal temperatures and general uncertainty regarding the
economic recovery.
 Total Costs and Expenses.
 
    
    an increase of $310.4 million in the Energy Services segments cost of product sales
in the 2010 period as compared to the 2009 period, primarily as a result of increased
refined petroleum product prices and increased volumes sold;
    
    an increase of $2.6 million in costs and expenses of the Development & Logistics
segment, primarily due to the assignment of certain service contracts from the Pipeline
Operations segment to the Development & Logistics segment and higher income tax
expense, partially offset by reduced construction contract activity;
    
    an increase of $1.5 million in costs and expenses of the Terminalling & Storage
segment, resulting primarily from higher operating expenses for terminals acquired in
November 2009 and certain environmental remediation expenses; and
 37




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
    
    an increase of $2.0 million in depreciation and amortization, primarily on assets
placed in service in the second half of 2009 in connection with the Kirby Hills Phase
II expansion project, certain internal-use software placed in service in the fourth
quarter of 2009 and on assets acquired in November 2009, and an increase of $0.7
million in non-cash unit-based compensation expense.
   
    
    a decrease of $2.1 million in costs and expenses of the Natural Gas Storage segment,
resulting from lower costs associated with hub services transactions recognized as an
expense; and
    
    a decrease of $0.3 million in costs and expenses of the Pipeline Operations segment,
resulting substantially from a decrease related to the organizational restructuring
charges recognized in the 2009 period as discussed above, lower environmental expenses
and lower operating power costs, partially offset by increased project costs.
 Operating Income.
 Income attributable to noncontrolling interests.
  Pipeline Operations
 Revenue
 38




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Total Costs and Expenses
 Operating Income
 Terminalling & Storage
 Revenue
 Total Costs and Expenses
 Operating Income
 Natural Gas Storage
 Revenue
 39




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Total Costs and Expenses
 Operating Income
 Energy Services
 Revenue
 Total Costs and Expenses
 Operating Income
 Development & Logistics
 Revenue
 40




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Total Costs and Expenses
 Operating Income
 Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009
 Consolidated
  Revenue
 
    
    an increase of $908.4 million in revenue from the Energy Services segment, resulting
from an overall increase in refined petroleum product prices and volumes of product
sold during the nine months ended September 30, 2010 as compared to the corresponding
period in 2009;
    
    an increase of $30.9 million in revenue from the Terminalling & Storage segment,
resulting from increased revenue from terminals acquired in November 2009, increased
throughput volumes, increased fees, storage and rental revenue, including $4.6 million
in storage fees from previously underutilized tankage identified in connection with our
best practices initiative and other marketing opportunities and favorable settlement
experience;
    
    an increase of $8.0 million in revenue from the Natural Gas Storage segment,
resulting primarily from higher fees from hub services transactions recognized as
revenue;
    
    an increase of $5.4 million in revenue from the Pipeline Operations segment,
resulting primarily from the benefit of higher tariff rates, favorable settlement
experience and increased revenues from pipeline assets acquired in November 2009,
partially offset by the impact of lower transportation volumes; and
    
    an increase of $2.0 million in revenue from the Development & Logistics segment,
resulting primarily from the sale of ammonia linefill and from the assignment of
certain service contracts from the Pipeline Operations segment to the Development &
Logistics segment in April 2010.
 Total Costs and Expenses
 
    
    an increase in refined petroleum product prices, which, coupled with an increase in
volume sold, resulted in a $920.0 million increase in the Energy Services segments
cost of product sales in the 2010 period as compared to the 2009 period;
 41




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
    
    an increase of $18.0 million in costs and expenses of the Natural Gas Storage
segment, resulting from higher costs associated with hub services transactions
recognized as expense caused primarily by general market conditions;
 
    
    an increase of $4.2 million in depreciation and amortization, primarily on assets
placed in service in the second half of 2009 in connection with the Kirby Hills Phase
II expansion project, certain internal-use software placed in service in the fourth
quarter of 2009 and on assets acquired in November 2009, and an increase of $3.0
million in non-cash unit-based compensation expense; and
    
    an increase of $2.9 million in costs and expenses of the Development & Logistics
segment, primarily resulting from $2.4 million of expenses related to the write-off in
the 2010 period of a portion of an outstanding receivable balance and other costs
associated with a customer bankruptcy and due to the assignment of certain service
contracts from the Pipeline Operations segment to the Development & Logistics segment
in April 2010.
   
    
    a decrease in costs and expenses of the Pipeline Operations segment, resulting
substantially from a decrease related to the asset impairment expense and the
organizational restructuring charges recognized in the 2009 period as discussed above
and lower payroll and benefits costs, which were primarily attributable to the
organizational restructuring that occurred in 2009 and resulted in reduced headcount,
as well as from lower environmental remediation expenses, lower operating power costs
due to lower transportation volumes and power contract renegotiations as part of our
best practices initiative and lower contract service activities, partially offset by
higher pipeline integrity program expenses and higher project costs; and
    
    a decrease in costs and expenses of the Terminalling & Storage segment, resulting
primarily from a decrease related to expenses for organizational restructuring
recognized in the 2009 period, lower environmental remediation expenses and lower
payroll and benefits costs, partially offset by higher operating expense for terminals
acquired in November 2009 and higher bad debt expense.
 Operating Income
 Income attributable to noncontrolling interests.
  42




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Pipeline Operations
 Revenue
 Total Costs and Expenses
 Operating Income
 Terminalling & Storage
 Revenue
 Total Costs and Expenses
 43




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Operating Income
 Natural Gas Storage
 Revenue
 Total Costs and Expenses
 Operating Income
 Energy Services
 Revenue
 Total Costs and Expenses
 44




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Operating Income (Loss )
 Development & Logistics
 Revenue
 Total Costs and Expenses
 Operating Income
 Liquidity and Capital Resources
 BGH
     45




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##### Table of Contents



Services Company
  Buckeye
     
    
    $300.0 million of 4.625% Notes due 2013 (the 4.625% Notes);
    
    $275.0 million of 5.300% Notes due 2014 (the 5.300% Notes);
    
    $125.0 million of 5.125% Notes due 2017 (the 5.125% Notes);
    
    $300.0 million of 6.050% Notes due 2018 (the 6.050% Notes);
    
    $275.0 million of 5.500% Notes due 2019 (the 5.500% Notes);
    
    $150.0 million of 6.750% Notes due 2033 (the 6.750% Notes);
    
    $20.0 million outstanding under the Credit Facility; and
    
    $211.8 million outstanding under the BES Credit Agreement.
  46




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Registration Statement
  Cash Flows from Operating, Investing and Financing Activities
  Nine Months EndedSeptember 30,2010
    
    
    2009Cash provided by (used in):Operating activities
    
    $
    296,107
    
    
    $
    64,680Investing activities
    
    
    (41,608
    )
    
    
    (61,435
    )Financing activities
    
    
    (276,151
    )
    
    
    (34,611
    )
 Operating Activities
  
    
    The net change in fair values of derivatives was a decrease of $16.2 million to cash
flows from operating activities for the nine months ended September 30, 2010, resulting
from the increase in value related to fixed-price contracts compared to a lower level
of opposite fluctuations in futures contracts purchased to hedge such fluctuations.
    
    The net impact of working capital changes was an increase of $80.9 million to cash
flows from operating activities for the nine months ended September 30, 2010. The
principal factors affecting the working capital changes were:
 o
    
    Inventories decreased by $56.7 million due to a decrease in
volume of hedged inventory stored by the Energy Services segment. From time to
time, the Energy Services segment stores hedged inventory to attempt to capture
value when market conditions are economically favorable.o
    
    Prepaid and other current assets decreased by $31.3 million
primarily due to a decrease in margin deposits on futures contracts in our
Energy Services segment as a result of increased commodity prices during the
nine months ended September 30, 2010 (increased commodity prices result in an
increase in our broker equity account and therefore less margin deposit is
required), a decrease in unbilled revenue within our Natural Gas Storage
segment reflecting billings to counterparties in accordance with terms of their
storage agreements, a decrease in
receivables related to ammonia contracts, a decrease in tax receivables due to
the collection of an amount outstanding from a regulatory agency and a decrease
in prepaid insurance due to continued amortization of the balance over the
policy period, partially offset by an increase in prepaid fuel taxes in our
Energy Services segment.
 47




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o
    
    Construction and pipeline relocation receivables decreased by
$5.3 million primarily due to a decrease in construction activity in the 2010
period.o
    
    Accounts payable decreased by $0.4 million primarily due to
higher payable balances at September 30, 2010 as a result of increased trading
activity at BES resulting from increased volumes and increased commodity prices
during the period.o
    
    Trade receivables increased by $9.5 million primarily due to
the timing of collections from customers, including increased activity from our
Energy Services segment due to higher volumes and higher commodity prices in
the 2010 period.o
    
    Accrued and other current liabilities decreased by $2.4 million
primarily due to a decrease in accrued interest as a result of interest
payments made during the period, a decrease due to the payment of accrued
ammonia purchases during the period and a reduction in the reorganization
accrual, partially offset by increases in unearned revenue primarily in the
Natural Gas Storage segment as a result of increased hub services contracts
during the nine months ended September 30, 2010 for which the customer is
billed up front for services provided over the entire term of the contract.
 Investing Activities
  
    
    Capital expenditures decreased by $9.5 million for the nine months ended September
30, 2010 compared with the nine months ended September 30, 2009. See below for a
discussion of capital spending.
    
    We acquired additional shares of West Shore common stock from an affiliate of BP plc
for $13.5 million, resulting in an increase in our ownership interest in West Shore
from 24.9% to 34.6%.
    
    We contributed $3.9 million to West Texas LPG Pipeline Limited Partnership in the
nine months ended September 30, 2009 for our pro-rata share of an expansion project
required to meet increased pipeline demand caused by increased product production in
the Fort Worth basin and East Texas regions.
    
    We acquired pipeline assets for $1.3 million during the nine months ended September
30, 2010.
    
    Cash proceeds from the sale of the Buckeye NGL Pipeline were $22.0 million during
the nine months ended September 30, 2010.
  Nine Months EndedSeptember 30,2010
    
    
    2009Sustaining capital expenditures
    
    $
    18,513
    
    
    $
    11,869Expansion and cost reduction
    
    
    30,762
    
    
    
    46,934Total capital expenditures, net
    
    $
    49,275
    
    
    $
    58,803
  48




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Financing Activities
  
    
    Buckeye borrowed $175.9 million and $160.7 million and repaid $233.9 million and
$459.0 million under its Credit Facility during the nine months ended September 30,
2010 and 2009, respectively.
    
    Net repayments under the BES Credit Agreement were $28.0 million during the nine
months ended September 30, 2010, while net borrowings under the BES Credit Agreement
were $53.6 million during the nine months ended September 30, 2009.
    
    We incurred $3.2 million of debt issuance costs during the nine months ended
September 30, 2010 related to the amendment to the BES Credit Agreement in June 2010
(see Note 10 in the Notes to Unaudited Condensed Consolidated Financial Statements).
    
    Buckeye received $273.2 million (net of debt issuance costs of $2.1 million) from
the issuance in August 2009 of $275.0 million in aggregate principal amount of the
5.500% Notes in an underwritten public offering. Proceeds from this offering were used
to reduce amounts outstanding under the Credit Facility.
    
    Buckeye received $4.3 million and $1.9 million in net proceeds from the exercise of
its LP Unit options during the nine months ended September 30, 2010 and 2009,
respectively. Buckeye received $104.6 million in net proceeds from an underwritten
equity offering in March and April of 2009 for its public issuance of 3.0 million LP
Units.
    
    Cash distributions paid to our partners increased by $6.8 million period-to-period
due to an increase in our quarterly cash distribution rate per Common Unit. We paid
cash distributions of $36.5 million ($1.29 per Common Unit) and $29.7 million ($1.05
per Common Unit) during the nine months ended September 30, 2010 and 2009,
respectively.
    
    We paid $4.5 million of costs associated with the Merger during the nine months
ended September 30, 2010.
 Derivatives
  Other Considerations
 Contractual Obligations
   49




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##### Table of Contents



Off-Balance Sheet Arrangements
  Related Party Transactions
  Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk  Trading Instruments
  Market Risk  Non-Trading Instruments
  Commodity Risk
 Natural Gas Storage
   September 30,2010Assets:Hub service agreements
    
    $
    37,100Liabilities:Hub service agreements
    
    
    (25,510
    )Total
    
    $
    11,590
 Energy Services
  50




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September 30,2010Assets:Fixed-price contracts
    
    $
    2,497Futures contracts for inventory and
fixed-price sales contracts
    
    
    103Liabilities:Fixed-price sales contracts
    
    
    (1,880
    )Futures contracts for inventory and
fixed-price sales contracts
    
    
    (8,737
    )Futures contracts for natural gas
    
    
    (361
    )Total
    
    $
    (8,378
    )
   Commodity
Financial
InstrumentResulting
    
    PortfolioScenario
    
    Classification
    
    Fair ValueFair value assuming no
change in underlying
commodity prices (as is)
    
    Liability
    
    $
    (8,378
    )Fair value assuming 10% increase
in underlying
commodity prices
    
    Liability
    
    $
    (32,115
    )Fair value assuming 10% decrease
in underlying
commodity prices
    
    Asset
    
    $
    15,359
  51




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Interest Rate Risk
      52




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FinancialInstrumentResulting
    
    PortfolioScenario
    
    Classification
    
    Fair ValueFair value assuming no
change in underlying
interest rates (as is)
    
    Liability
    
    $
    (40,910
    )Fair value assuming 10% increase
in underlying
interest rates
    
    Liability
    
    $
    (22,382
    )Fair value assuming 10% decrease
in underlying
interest rates
    
    Liability
    
    $
    (60,046
    )
 
 Item 4. Controls and Procedures
     
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  53




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Item 6. Exhibits
  2.1
    
    First Amended and Restated Agreement and Plan of Merger, dated August 18,
2010, by and among Buckeye Partners, L.P., Buckeye GP LLC, Buckeye GP Holdings
L.P., MainLine Management LLC and Grand Ohio, LLC (Incorporated by reference
to Annex A to Buckeye Partners, L.P.s Registration Statement on Form S-4/A
filed on August 19, 2010).2.2
    
    First Amendment to First Amended and Restated Agreement and Plan of Merger,
dated October 29, 2010, by and among Buckeye Partners, L.P., Buckeye GP LLC,
Buckeye GP Holdings L.P., MainLine Management LLC and Grand Ohio, LLC
(Incorporated by reference to Exhibit 2.1 of Buckeye GP Holdings L.P.s
Current Report on Form 8-K filed on November 3, 2010).3.1
    
    Certificate of Limited Partnership of Buckeye GP Holdings L.P., dated as of
March 7, 2006 (Incorporated by reference to Exhibit 3.1 of Buckeye GP Holdings
L.P.s Registration Statement on Form S-1 filed on April 20, 2006).3.2
    
    First Amended and Restated Agreement of Limited Partnership of Buckeye GP
Holdings L.P., dated as of August 9, 2006 (Incorporated by reference to
Exhibit 3.1 of Buckeye GP Holdings L.P.s Current Report on Form 8-K filed on
August 14, 2006).10.1
    
    Amendment No. 1 to the Amended and Restated Agreement of Limited Partnership
of Buckeye Partners, L.P. (Incorporated by reference to Exhibit 3.1 of Buckeye
Partners, L.P.s Current Report on Form 8-K filed on August 11, 2010).10.2
    
    Form of Amended and Restated Agreement of Limited Partnership of Buckeye
Partners, L.P. (Incorporated by reference to Annex B to the Joint Proxy
Statement/Prospectus in Part I of Buckeye Partners, L.P.s Registration
Statement on Form S-4 filed on September 14, 2010).10.3
    
    Sixth Amendment to Credit Agreement, dated September 29, 2010, among Buckeye
Partners, L.P., SunTrust Bank, as administrative agent, and the lenders
signatory thereto (Incorporated by reference to Exhibit 10.1 of Buckeye
Partners, L.P.s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2010).**31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) under the
Securities Exchange Act of 1934.**31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.**32.1
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.**32.2
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
 
 **
    
    Filed herewith.
    
    Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. BGH agrees to
furnish supplementally a copy of the omitted schedules to the SEC upon request. 54




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SIGNATURES
  By:
    BUCKEYE GP HOLDINGS L.P.(Registrant)By:
    MainLine Management LLC,as General PartnerDate:  November 8, 2010
    By:
    /s/ Keith E. St.ClairKeith E. St.ClairSenior Vice President and Chief Financial Officer
(Principal Accounting Officer and Principal
Financial Officer) 55