TESORO LOGISTICS LP (Exact name of registrant as specified in its - PDF document

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 March 31, 2016 or ¨ 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 ‑ 35143 TESORO LOGISTICS LP (Exact name of registrant as specified in its charter) 27 ‑ 4151603 Delaware (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 19100 Ridgewood Pkwy, San Antonio, Texas 78259-1828 (Address of principal executive offices) (Zip Code) 210-626-6000 (Registrant’s telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sec�on 13 or 15(d) of the Securi�es Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨ Indicate by check mark whether the registrant has submi�ed electronically and posted on its corporate Web site, if any, every Interac�ve Data File required to be submi�ed and posted pursuant to Rule 405 of Regula�on S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller repor�ng company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer þ Accelerated filer ¨ ¨ (Do not check if a smaller reporting company) Non-accelerated filer Smaller reporting company ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ There were 93,633,156 common units and 1,900,515 general partner units of the registrant outstanding at April 28, 2016.

TABLE OF CONTENTS TESORO LOGISTICS LP QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2016 PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements (Unaudited) Condensed Statements of Combined Consolidated Operations - Three Months Ended March 31, 2016 and 2015 3 Condensed Consolidated Balance Sheets - March 31, 2016 and December 31, 2015 4 Condensed Statements of Combined Consolidated Cash Flows - Three Months Ended March 31, 2016 and 2015 5 Notes to Condensed Combined Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk 31 Item 4. Controls and Procedures #SectionPage# PART II. OTHER INFORMATION Item 1. Legal Proceedings 33 Item 1A. Risk Factors 33 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 34 Item 6. Exhibits 34 SIGNATURES 35 2 | Tesoro Logistics LP 2016

FINANCIAL STATEMENTS PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TESORO LOGISTICS LP CONDENSED STATEMENTS OF COMBINED CONSOLIDATED OPERATIONS (Unaudited) Three Months Ended March 31, 2016 2015 (In millions, except per unit amounts) Revenues Affiliate $ 169 $ 148 Third-party 131 115 Total Revenues 300 263 Costs and Expenses Operating and maintenance expenses 112 98 (7) Imbalance settlement gains and reimbursements (8) General and administrative expenses 24 25 Depreciation and amortization expenses 44 44 Net loss on asset disposals and impairments 1 — Total Costs and Expenses 174 159 Operating Income 126 104 (44) Interest and financing costs, net (37) Equity in earnings of unconsolidated affiliates 4 3 Other income, net 6 — Net Earnings $ 92 $ 70 Loss attributable to Predecessor $ — $ 4 — Net earnings attributable to noncontrolling interest (10) Net Earnings Attributable to Partners 92 64 (32) General partner’s interest in net earnings, including incentive distribution rights (14) Limited Partners’ Interest in Net Earnings $ 60 $ 50 Net Earnings per Limited Partner Unit: Common - basic $ 0.64 $ 0.63 Common - diluted $ 0.64 $ 0.63 Weighted Average Limited Partner Units Outstanding: Common units - basic 93.6 80.3 Common units - diluted 93.6 80.3 Cash Distributions Paid Per Unit $ 0.7800 $ 0.6675 See accompanying notes to condensed combined consolidated financial statements. Tesoro Logistics LP 2016 | 3

FINANCIAL STATEMENTS TESORO LOGISTICS LP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2016 2015 (In millions, except unit amounts) ASSETS Current Assets Cash and cash equivalents $ 4 $ 16 Receivables, net Trade 137 139 Affiliate 101 85 Prepayments and other 10 12 Total Current Assets 252 252 Net Property, Plant and Equipment 3,086 3,450 Acquired Intangibles, net 970 976 Goodwill 112 130 Investment in Unconsolidated Affiliates 346 58 Other Noncurrent Assets 27 26 Total Assets $ 4,793 $ 4,892 LIABILITIES AND EQUITY Current Liabilities Accounts payable Trade $ 60 $ 83 Affiliate 53 48 Accrued interest and financing costs 68 31 Other current liabilities 48 59 Total Current Liabilities 229 221 Other Noncurrent Liabilities 47 49 Debt, Net of Unamortized Issuance Costs 2,821 2,844 Total Liabilities 3,097 3,114 Commitments and Contingencies (Note 6) Equity Common unitholders; 93,633,156 units issued and outstanding (93,478,326 in 2015) 1,701 1,707 (5) General partner; 1,900,515 units issued and outstanding (1,900,515 in 2015) (13) — Noncontrolling interest 84 Total Equity 1,696 1,778 Total Liabilities and Equity $ 4,793 $ 4,892 See accompanying notes to condensed combined consolidated financial statements. 4 | Tesoro Logistics LP 2016

FINANCIAL STATEMENTS TESORO LOGISITICS LP CONDENSED STATEMENTS OF COMBINED CONSOLIDATED CASH FLOWS (Unaudited) Three Months Ended March 31, 2016 2015 (In millions) Cash Flows From (Used In) Operating Activities: Net earnings $ 92 $ 70 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization expenses 44 44 Other non-cash operating activities 14 2 Changes in current assets and current liabilities 14 15 (3) Changes in noncurrent assets and liabilities 17 Net cash from operating activities 161 148 Cash Flows Used In Investing Activities: (54) Capital expenditures (84) (4) Other investing — (58) Net cash used in investing activities (84) Cash Flows From (Used In) Financing Activities: Proceeds from issuance of units, net of issuance costs 5 24 (73) Quarterly distributions to unitholders (54) (25) Quarterly distributions to general partner (16) — Distributions to noncontrolling interest (9) Borrowings under revolving credit agreements 297 99 (67) Repayments under revolving credit agreement (124) (250) Repayment of term loan facility — (8) Financing costs — — Sponsor contributions of equity to the Predecessor 6 Capital contributions by affiliate 6 7 (115) Net cash used in financing activities (67) (12) Decrease in Cash and Cash Equivalents (3) Cash and Cash Equivalents, Beginning of Period 16 19 Cash and Cash Equivalents, End of Period $ 4 $ 16 See accompanying notes to condensed combined consolidated financial statements. Tesoro Logistics LP 2016 | 5