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Item 7. Management’s Discussion and Analysis

2026-03-04 compared with 2025-03-05 · 72 added, 67 removed, 276 unchanged (33% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying consolidated financial statements, the notes thereto, and the other financial information appearing elsewhere in this report.

The following discussion and analysis is management's perspective of our current financial condition and results of operations and should be read in conjunction with "Items 1A.

"Risk Factors" and "Item 8.

Financial Statements and Supplementary Data" included in this report.

This discussion and analysis includes the years ended December 31, 2025 and 2024 and comparison between such years.

The discussion for the year ended December 31, 2023 and comparison between the years ended December 31, 2024 and 2023 have been omitted from this Annual Report on Form 10-K for the year ended December 31, 2025, as such information can be found in Part II, "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024 which was filed with the Securities and Exchange Commission on March 5, 2025.

The following discussion includes forward-looking statements that involve certain risks and uncertainties.

See "Cautionary Statement Regarding Forward-Looking Statements" and "Item 1A.

Risk Factors" included within this report.

See "Cautionary Statement Regarding Forward-Looking Statements" included within this report.

We are a Delaware limited partnership formed by Westlake to operate, acquire and develop ethylene production facilities and related assets.

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OpCo's assets include (1) two ethylene production facilities ("Petro 1" and "Petro 2" and, collectively, "Lake Charles Olefins") at Westlake's Lake Charles, Louisiana site;

(2) one ethylene production facility ("Calvert City Olefins") at Westlake's Calvert City, Kentucky site;

(2) one ethylene production facility ("Calvert City Olefins") at Westlake's Calvert City, Kentucky sit e;

and (3) a 200-mile common carrier ethylene pipeline (the "Longview Pipeline") that runs from Mont Belvieu, Texas to Westlake's Longview, Texas facility.

Neither we nor OpCo has any employees.

OpCo and Westlake are parties to the Services and Secondment Agreement, pursuant to which Westlake provides OpCo with various utility services, comprehensive operating services for OpCo's units, services for the maintenance and operation of the common facilities and seconded employees to perform all services required under the agreement.

The Services and Secondment Agreement, as amended, provides for an initial term through December 31, 2026 and, subject to the simultaneous renewal of the Ethylene Sales Agreement, automatic 12-month renewal periods until terminated at the end of the initial term or any renewal term on not less than 12-months' notice.

How We Generate Revenue

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The Ethylene Sales Agreement is a long-term, fee-based agreement with a minimum purchase commitment and includes variable pricing based on OpCo's actual feedstock and natural gas costs and estimated other costs of producing ethylene (including OpCo's estimated operating costs and a five-year average of OpCo's expected future maintenance capital expenditures and other turnaround expenditures based on OpCo's planned ethylene production capacity for the year), plus a fixed margin per pound of $0.10 less revenue from co-products sales.

Pursuant to the Ethylene Sales Agreement, Westlake's obligation to pay for the annual minimum commitment (95% of OpCo's budgeted ethylene production), which is measured on an annual basis, is not reduced for a force majeure event lasting fewer than 45 consecutive days.

In the event of a force majeure event, we recognize buyer deficiency fees representing fixed margin and unavoid ed operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure period.

In the event Westlake purchases less than its annual commitment, we recognize buyer deficiency fees representing fixed margin and all expenses and expenditures incurred per pound of volume committed but not taken by Westlake.

Payment for the buyer deficiency fee is scheduled to be received by the Partnership after the conclusion of the year.

Westlake has an option to take 95% of volumes in excess of the minimum commitment on an annual basis under the Ethylene Sales Agreement if we produce more than our planned production.

Pursuant to the Ethylene Sales Agreement, Westlake is obligated to pay for the annual minimum quantity (95% of OpCo's budgeted ethylene production), which is measured on an annual basis, is not reduced for a force majeure event lasting fewer than 45 consecutive days.In the event Westlake purchases less than its annual commitment, we recognize a buyer deficiency fee ("Buyer Deficiency Fee") representing fixed margin and all expenses and expenditures incurred per pound of volume committed but not taken by Westlake.

The annual commitment is not reduced for a force majeure event affecting OpCo's plants that lasts fewer than 45 consecutive days;

however, in the event of such a force majeure event, we recognize a Buyer Deficiency Fee representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure period.

Payment of the Buyer Deficiency Fee is scheduled to be received by the Partnership after the conclusion of the year in which the annual commitment was not purchased and taken by Westlake.Westlake has an option to take 95% of volumes in excess of the minimum commitment on an annual basis under the Ethylene Sales Agreement if we produce more than our planned production.

Under the Ethylene Sales Agreement, the price for the sale of such excess ethylene to Westlake is based on a formula similar to that used for the minimum purchase commitment, with the exception of certain fixed costs.

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Under the Services and Secondment Agreement, OpCo uses a portion of its production capacity to process purge gas for Westlake.

On August 4, 2016, OpCo and Westlake entered into an amendment to the Ethylene Sales Agreement in order to provide that certain of the pricing components that make up the price for ethylene sold thereunder would be modified to reflect the portion of OpCo's production capacity that is used to process Westlake's purge gas instead of producing ethylene and to clarify that costs specific to the processing of Westlake's purge gas would be recovered under the Services and Secondment Agreement, and not the Ethylene Sales Agreement.

Please refer to Note 2 to the consolidated financial statements included in Item 8 of this form 10-K for more information on the Ethylene Sales Agreement.

On August 4, 2016, OpCo and Westlake entered into an amendment to the Ethylene Sales Agreement in order to provide that certai n of the pricing components that make up the price for ethylene sold thereunder would be modified to reflect the portion of OpCo's production capacity that is used to process Westlake's purge gas instead of producing ethylene and to clarify that costs specific to the processing of Westlake's purge gas would be recovered under the Services and Secondment Agreement, and not the Ethylene Sales Agreement.

On October 28, 2025, OpCo and Westlake agreed to renew the Ethylene Sales Agreement through December 31, 2027 in accordance with its terms, which provide for an initial term through December 31, 2026 and automatic 12-month renewal periods until terminated at the end of the initial term or any renewal term on not less than 12-months' notice.

Please refer to Note 2, "Agreements with Westlake and Related Parties," to Consolidated Financial Statements included in Item 8 of this form 10-K for more information on the Ethylene Sales Agreement.

How We Source Feedstock

OpCo has entered into a 12-year feedstock supply agreement (the "Feedstock Supply Agreement") with Westlake Petrochemicals LLC, a wholly owned subsidiary of Westlake, under which Westlake Petrochemicals LLC supplies OpCo with ethane and other feedstocks that OpCo uses to produce ethylene under the Ethylene Sales Agreement.

OpCo is party to a feedstock supply agreement (the "Feedstock Supply Agreement") with Westlake Petrochemicals LLC, a wholly owned subsidiary of Westlake, under which Westlake Petrochemicals LLC supplies OpCo with ethane and other feedstocks that OpCo uses to produce ethylene under the Ethylene Sales Agreement.

For its approximately 5% merchant sales, OpCo may purchase the ethane and other feedstocks to produce ethylene and resulting co-products to sell to unrelated third parties from Westlake Petrochemicals LLC.

Please refer to Note 2 to the consolidated financial statements included in Item 8 of this form 10-K for more information on the Feedstock Supply Agreement.

On October 28, 2025, OpCo and Westlake agreed to renew the Feedstock Supply Agreement through December 31, 2027 in accordance with its terms, which provide for an initial term through December 31, 2026 and automatic 12-month renewal periods until terminated at the end of the initial term or any renewal term on not less than 12-months' notice.

Please refer to Note 2, "Agreements with Westlake and Related Parties," to Consolidated Financial Statements included in Item 8 of this form 10-K for more information on the Feedstock Supply Agreement.

How We Evaluate Operations

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We capitalize the costs of major maintenance activities, or turnarounds, and amortize the costs over the period until the next planned turnaround of the affected facility.

We commenced the next maintenance turnaround at Petro 1 in the first quarter of 2025.

Operating expenses, maintenance capital expenditures and turnaround costs are built into the price per pound of ethylene charged to Westlake under the Ethylene Sales Agreement.

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The purchase price under the Ethylene Sales Agreement is not designed to cover capital expenditures for expansions.

Recent Developments

Renewal of the Ethylene Sales Agreement and Feedstock Supply Agreement

On October 28, 2025, OpCo and Westlake agreed to renew both the Ethylene Sales Agreement and the Feedstock Supply Agreement through December 31, 2027 in accordance with their respective terms (together, the "Renewal"), which each provide for an initial term through December 31, 2026 and automatic 12-month renewal periods until terminated at the end of the initial term or any renewal term on not less than 12-months' notice.

Amendments to the Services and Secondment Agreement and Omnibus Agreement

In connection with the Renewal, on October 28, 2025, OpCo and certain affiliates of Westlake entered into an amendment to the Services and Secondment Agreement to align the date of expiration of such agreement with the date of expiration of the Ethylene Sales Agreement.

In addition, the Partnership, OpCo and certain affiliates of Westlake also entered into an amendment to the Omnibus Agreement to provide that the Omnibus Agreement would terminate upon termination of the Ethylene Sales Agreement.

The amendment also addressed certain procedural requirements in connection with Westlake's obligation to indemnify the Partnership for certain matters, including, among others, environmental and tax matters, under the Omnibus Agreement.

Petro 1 Turnaround

In January 2025, we commenced our planned maintenance turnaround of the Petro 1 production facility.

The turnaround concluded in April 2025.

MLP Distributable Cash Flow and EBITDA

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We use the non-GAAP measures of MLP distributable cash flow and EBITDA to analyze our performance.

We define distributable cash flow as net income plus depreciation, amortization and disposition of property, plant and equipment, less contributions for turnaround reserves, maintenance capital expenditures and mark-to-market adjustment on derivative contracts.

We define MLP distributable cash flow as distributable cash flow less distributable cash flow attributable to Westlake's noncontrolling interest in OpCo and distributions attributable to the incentive distribution rights holder.

We define MLP distributable cash flow as net income plus depreciation, amortization and disposition of property, plant and equipment, less contributions for turnaround reserves, maintenance capital expenditures and mark-to-market adjustment on derivative contracts less distributable cash flow attributable to Westlake's noncontrolling interest in OpCo and distributions attributable to the incentive distribution rights holder.

There were no mark-to-market adjustments on derivative contracts or distributions attributable to the incentive distribution rights holder during the years ended December 31, 2024 or 2025.

MLP distributable cash flow does not reflect changes in working capital balances.

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We use each of MLP distributable cash flow and EBITDA to analyze our performance.

Fees for a buyer deficiency and Shortfall are included in net income in the periods in which they are recognized.

Buyer Deficiency Fee and Shortfall are included in net income in the periods in which they are recognized.

MLP distributable cash flow and EBITDA are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess our operating performance as compared to other publicly-traded partnerships;

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While we believe we have substantially mitigated our indirect exposure to commodity price fluctuations during the term of the Ethylene Sales Agreement through the minimum purchase commitment and the cost-plus based pricing, our ability to execute our growth strategy in our areas of operation will depend, in part, on the demand for ethylene derivatives in the geographical areas served by our ethylene production facilities.

Recent Development

Petro 1 Turnaround

During the first quarter of 2025, we commenced our planned maintenance turnaround of the Petro 1 production facility.

Results of Operations

The table below and descriptions that follow represent the consolidated results of operations of the Partnership for the years ended December 31, 2025 and 2024.

A detailed comparison of the Partnership's 2023 operating results to its 2022 operating results can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in the Partnership's 2023 Annual Report on Form 10-K filed February 28, 2024.

Year Ended December 31,

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$ 450,000 $ 507,594

(1) See above for discussions on non-GAAP financial measures.

Reconciliations for each of MLP distributable cash flow and EBITDA are included below.

Year Ended December 31,

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Feedstock (Ethane) +32.8 % -22.6 %

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(1) See above for discussions on non-GAAP financial measures.

Reconciliations for each of MLP distributable cash flow and EBITDA are included below.

Reconciliation of MLP Distributable Cash Flow to Net Income and Net Cash Provided by Operating Activities

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Year Ended December 31,

2024 2023 2022

(in thousands of dollars)

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Net income 298,576 369,159

Depreciation, amortization and disposition of property, plant and

Depreciation, amortization and disposition of property, plant and equipment

130,732 114,244

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Maintenance capital expenditures (71,081) (50,731)

Distributable cash flow attributable to noncontrolling interest in

OpCo (321,928) (308,456) (310,316)

Distributable cash flow attributable to noncontrolling interest in OpCo

(265,812) (321,928)

MLP distributable cash flow $ 53,398 $ 66,864

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Year Ended December 31,

2024 2023 2022

(in thousands of dollars)

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For the year ended December 31, 2025, net income was $298.6 million on net sales of $1,166.7 million.

This represents an increase in net income of $34.6 million as compared to net income of $334.6 million on net sales of $1,190.8 million for the year ended December 31, 2023.

Net income attributable to the Partnership in 2024 was $62.4 million as compared to $54.3 million in 2023, an increase of $8.1 million.

Income from operations was $390.4 million for 2024, as compared to $357.7 million for 2023, an increase of $32.7 million .

Net sales for 2024 decreased by $54.9 million as compared to 2023 primarily due to lower ethylene sales prices to Westlake in 2024 compared to 2023, including the impact of the sale of excess quantities of ethylene in 2024 at prices that excluded certain non-variable costs of production pursuant to the Ethylene Sales Agreement, partially offset by higher ethylene and co-products sales volumes and higher third-party ethylene sales prices.

Income from operations, net income and net income attributable to the Partnership for 2024 increased compared to 2023 due to higher third-party ethylene sales prices, lower ethane feedstock and natural gas costs and higher ethylene and co-products sales volumes, partially offset by lower ethylene sales prices to Westlake including the impact of the sale of excess quantities of ethylene at prices that excluded certain non-variable costs of production.

This represents a decrease in net income of $70.6 million as compared to net income of $369.2 million on net sales of $1,135.9 million for the year ended December 31, 2024.

Net income attributable to the Partnership in 2025 was $48.7 million as compared to $62.4 million in 2024, a decrease of $13.7 million.

Income from operations was $319.6 million for 2025, as compared to $390.4 million for 2024, a decrease of $70.8 million .

Net sales for 2025 increased by $30.8 million as compared to 2024 primarily due to higher ethylene sales prices to Westlake in 2025 as well as a Buyer Deficiency Fee of $5.8 million from an annual production deficiency as a result of the Petro 1 turnaround extending into April 2025, which was later than the planned completion in March 2025, partially offset by lower ethylene and co-products sales volumes to Westlake and third parties as a result of lower production volumes attributable to the Petro 1 turnaround.

Income from operations, net income and net income attributable to the Partnership for 2025 decreased compared to 2024 due to lower sales volumes and higher ethane feedstock and natural gas costs, partially offset by higher ethylene sales prices to Westlake.

2025 Compared with 2024

Net sales decreased by $54.9 million, or 4.6%, to $1,135.9 million in 2024 from $1,190.8 million in 2023.

The decrease in net sales in 2024 was primarily due to lower ethylene sales prices to Westlake in 2024 as compared to 2023 including the impact of the sale of excess quantities of ethylene at prices that excluded certain non-variable costs of production, partially offset by higher ethylene and co-products sales volumes and higher third-party ethylene sales prices.

Lower average sales prices in 2024 contributed to a 6.6% decrease in net sales compared to 2023.

Higher sales volumes in 2024 contributed to a 2.0% increase in net sales compared to 2023.

Net sales increased by $30.8 million, or 2.7%, to $1,166.7 million in 2025 from $1,135.9 million in 2024.

The increase in net sales in 2025 was primarily due to higher ethylene sales prices to Westlake in 2025 as compared to 2024 as well as a Buyer Deficiency Fee of $5.8 million from an annual production deficiency as a result of the Petro 1 turnaround extending into April 2025, which was later than the planned completion in March 2025, partially offset by lower ethylene and co-products sales volumes to Westlake and third parties as a result of lower production volumes attributable to the Petro 1 turnaround.

Higher average sales prices in 2025 contributed to a 10.4% increase in net sales compared to 2024.

Lower sales volumes in 2025 contributed to an 8.2% decrease in net sales compared to 2024.

Gross Profit .

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The gross profit margin was 29.8% in 2025 as compared to 36.9% in 2024.

The increased gross profit margin in 2024 was primarily due to lower ethane feedstock and natural gas costs and higher third-party ethylene sales prices in 2024 as compared to 2023.

The decreased gross profit margin in 2025 was primarily due to higher ethane feedstock and natural gas costs in 2025 as compared to 2024.

Selling, General and Administrative Expenses .

Selling, general and administrative expenses decreased by $1.3 million , or 4.4%, to $28.5 million in 2024 from $29.8 million in 2023.

The decrease in 2024, as compared to 2023, was mainly attributable to lower service costs.

Selling, general and administrative expenses remained relatively consistent at $28.3 million in 2025 as compared to $28.5 million in 2024.

Interest Expense—Westlake .

Interest expense remained relatively consistent at $25.7 million in 2024 compared to $26.5 million in 2023.

Interest expense decreased to $22.9 million in 2025 compared to $25.7 million in 2024, primarily due to lower interest rates on the outstanding debt in 2025 as compared to 2024.

Other Income, net.

Other income, net increased by $1.1 million to $5.3 million in 2024 from $4.2 million in 2023 primarily due to an increase in interest earned on the balance with Westlake under the Investment Management Agreement due to a higher average amount of cash invested in 2024 as compared to 2023.

Other income, net decreased by $2.9 million to $2.4 million in 2025 from $5.3 million in 2024 primarily due to a decrease in interest earned on investments with Westlake under the Investment Management Agreement due to a lower average amount of cash invested and lower interest rates in 2025 as compared to 2024.

Provision for Income Taxes.

Provision for income taxes remained consistent at $0.8 million in 2024 as compared to $0.8 million in 2023.

Provision for income taxes remained relatively consistent at $0.5 million in 2025 as compared to $0.8 million in 2024.

MLP Distributable Cash Flow.

MLP distributable cash flow increased by $4.3 million to $66.9 million in 2024 from $62.6 million in 2023.

The increase in MLP distributable cash flow was primarily a result of higher net income, partially offset by higher reserves for future turnarounds.

EBITDA increased by $35.5 million to $507.6 million in 2024 from EBITDA of $472.1 million in 2023.

The increased EBITDA, as compared to the prior year, was primarily due to higher third-party ethylene sales prices, lower ethane feedstock and natural gas costs and higher ethylene and co-products sales volumes in 2024 as compared to 2023, partially offset by lower ethylene sales prices to Westlake including the impact of the sale of excess quantities of ethylene at prices that excluded certain non-variable costs of production.

MLP distributable cash flow decreased by $13.5 million to $53.4 million in 2025 from $66.9 million in 2024, primarily due to lower ethylene and co-products sales volumes to Westlake and third parties as a result of lower production volumes in 2025 attributable to the Petro 1 turnaround and higher maintenance capital expenditures associated with the Petro 1 turnaround.

EBITDA decreased by $57.6 million to $450.0 million in 2025 from EBITDA of $507.6 million in 2024.

The decrease in EBITDA, as compared to the prior year, was primarily due to higher ethane feedstock and natural gas costs and lower ethylene and co-products sales volumes to Westlake and third parties as a result of lower production volumes in 2025 attributable to the Petro 1 turnaround, partially offset by higher ethylene sales prices to Westlake as well as a Buyer Deficiency Fee of $5.8 million f rom an annual production deficiency as a result of the Petro 1 turnaround extending into April 2025, which was later than the planned completion in March 2025.

Operating Activities

Operating activities provided cash of $280.5 million in 2025 as compared to cash provided by operating activities of $485.0 million in 2024.

The $33.0 million increase in cash flows from operating activities was mainly due to higher income from operations, which was partially offset by a decrease in cash provided by working capital.

Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, provided cash of $24.8 million in 2024 as compared to $34.4 million of cash provided in 2023, resulting in a unfavorable change of $9.6 million.

The unfavorable change in working capital was mainly attributable to unfavorable changes in accrued and other liabilities and accounts payable—third parties primarily due to higher maintenance costs accrual at December 31, 2023 as compared to December 31, 2024.

These unfavorable changes were partially offset by a favorable change in accounts receivable, net—third parties due to collection of a maintenance cost reimbursement and lower third party receivables at the end of 2024.

The $204.5 million decrease in cash flows from operating activities was mainly due to cash used in connection with the Petro 1 turnaround, lower income from operations in 2025 as compared to 2024 and a decrease in cash provided by working capital.

Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, used cash of $23.7 million in 2025 as compared to $24.8 million of cash provided in 2024, resulting in a unfavorable change of $48.5 million.

The unfavorable change in working capital was mainly attributable to an unfavorable change in net accounts receivable—Westlake due to the Buyer Deficiency Fee recognized in 2025 and lower receivables with Westlake outstanding as of the fourth quarter of 2024 due to sales of excess quantities of ethylene at a lower sales price.

This unfavorable change was partially offset by a favorable change in accrued and other liabilities due to the impact of the Petro 1 turnaround activities and timing of payments.

Investing Activities

Net cash used for investing activities during 2024 was $89.0 million as compared to net cash used for investing activities of $75.9 million in 2023.

The $13.1 million increase in cash used for investing activities was mainly due to an increase in net cash invested under the Investment Management Agreement in 2024 as compared to 2023.

During 2024, we invested $40.0 million with Westlake.

During 2023, we invested $174.1 million with Westlake, and $145.0 million of such investments matured.

Capital expenditures were $49.0 million in 2024 as compared to $46.8 million in 2023.

Capital expenditures during 2024 and 2023 were related to projects to improve production capacity or reduce costs, maintenance and safety and environmental projects at our facilities.

Net cash provided by investing activities during 2025 was $31.2 million as compared to net cash used for investing activities of $89.0 million in 2024, resulting in an overall favorable change of $120.2 million in investing cash flows.

The favorable change in investing activities was primarily due to a decrease in net cash invested under the Investment Management Agreement.

During 2025, there were investments with Westlake of $10.0 million and maturities of investments with Westlake of $120.0 million under the Investment Management Agreement, whereas during 2024 there were investments with Westlake of $40.0 million and no maturities under the Investment Management Agreement .

Capital expenditures increased to $78.8 million in 2025 as compared to $49.0 million in 2024 due to the Petro 1 turnaround.

Capital expenditures in 2025 and 2024 were primarily related to projects to increase production capacity or reduce costs, maintenance costs and safety and environmental projects at our facilities.

Financing Activities

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By reserving additional cash annually, we intend to reduce the variability in OpCo's cash flow.

Although we had previously planned to commence the next maintenance turnaround at the Petro 1 ethylene unit in the third quarter of 2024, we made the decision to defer the planned turnaround in order to maintain production and capitalize on higher average third-party ethylene sales prices during the third quarter of 2024.

We commenced the planned maintenance turnaround in the first quarter of 2025.

Westlake's purchase price for ethylene purchased under the Ethylene Sales Agreement includes a component (adjusted annually) designed to cover, over the long term, substantially all of OpCo's turnaround expenditures.

Westlake's purchase price for its minimum commitment of ethylene under the Ethylene Sales Agreement includes a component (adjusted annually) designed to cover, over the long term, substantially all of OpCo's turnaround expenditures.

Our cash is generated from cash distributions from OpCo.

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We have evaluated the accounting policies used in the preparation of the accompanying consolidated financial statements and related notes and believe those policies are reasonable and appropriate.

Our significant accounting policies are summarized in Note 1 in the Notes to Consolidated Financial Statements in Item 8 of this form 10-K.

Our significant accounting policies are summarized in Note 1, "Description of Business and Significant Accounting Policies," in the Notes to Consolidated Financial Statements in Item 8 of this form 10-K.

Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

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Expensing turnaround costs as incurred would likely result in greater variability of our quarterly operating results and would adversely affect our financial position and results of operations.

Additional information concerning long-lived assets and related depreciation and amortization appears in Notes 5 and 7 to the consolidated financial statements included in Item 8 of this form 10-K.

Additional information concerning long-lived assets and related depreciation and amortization appears in Note 5, "Property, Plant and Equipment," and Note 7, "Deferred Charges and Other Assets," to Consolidated Financial Statements included in Item 8 of this form 10-K.

Fair Value Estimates.

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While we believe that the amounts recorded in the accompanying consolidated financial statements related to these contingencies are based on the best estimates and judgments available, the actual outcomes could differ from our estimates.

Additional information about certain legal proceedings and environmental matters appears in "Item 1.

Business — Environmental" and in Note 16 to the consolidated financial statements included in Item 8 of this form 10-K.

Additional information about legal proceedings and environmental matters appears in "Item 1.

Business — Environmental" and in Note 16, "Commitments and Contingencies," to Consolidated Financial Statements included in Item 8 of this form 10-K.

The Partnership has conditional asset retirement obligations for the removal and disposal of hazardous materials and the remediation of the cause of any such release from certain of the Partnership's manufacturing facilities.

However, no asset retirement obligations have been recognized because the fair value of the conditional legal obligation cannot be measured due to the indeterminate settlement date of the obligation.

Settlement of these conditional asset retirement obligations is not expected to have a material adverse effect on the Partnership's financial condition, results of operations or cash flows in any individual reporting period.

As such, the impact of the settlement of these conditional asset retirement obligations on the Partnership's financial condition, results of operations or cash flows in any individual reporting period cannot be determined at this time.

Recent Accounting Pronouncements

See Note 1 to the consolidated financial statements included in Item 8 of this form 10-K for a full description of recent accounting pronouncements, including expected dates of adoption and estimated effects on results of operations and financial condition, which is incorporated herein by reference.

See Note 1, "Description of Business and Significant Accounting Policies," to Consolidated Financial Statements included in Item 8 of this form 10-K for a full description of recent accounting pronouncements, including expected dates of adoption and estimated effects on results of operations and financial condition, which is incorporated herein by reference.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis