More annual reports from Global Partners:
2023 ReportPeers and competitors of Global Partners:
Global PartnersTable of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10‑K(Mark One) ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number 001‑32593Global Partners LP(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization) 74‑3140887(I.R.S. Employer Identification No.)P.O. Box 9161800 South StreetWaltham, Massachusetts 02454‑9161(Address of principal executive offices, including zip code)(781) 894‑8800(Registrant’s telephone number, including area code)Securities registered pursuant to section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon Units representing limited partner interests New York Stock ExchangeSecurities registered pursuant to section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during 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 requirementsfor the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requiredto be submitted and posted pursuant to Rule 405 of Regulation S‑T during the preceding 12 months (or for such shorter period that the registrant was required tosubmit and post such files. Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to thisForm 10‑K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” inRule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒Non-accelerated filer ☐(Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any newor revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Act). Yes ☐ No ☒The aggregate market value of common units held by non‑affiliates of the registrant (treating directors and executive officers of the registrant’s generalpartner and their affiliates, for this purpose, as if they were affiliates of the registrant) as of June 30, 2017 was approximately $479,439,299 based on a price percommon unit of $18.05, the price at which the common units were last sold as reported on the New York Stock Exchange on such date.As of March 6, 2018, 33,995,563 common units were outstanding. Table of ContentsTABLE OF CONTENTSPART I Items 1. and 2. Business and Properties 6Item 1A. Risk Factors 19Item 1B. Unresolved Staff Comments 46Item 3. Legal Proceedings 47Item 4. Mine Safety Disclosures 49PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities 50Item 6. Selected Financial Data 51Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 54Item 7A. Quantitative and Qualitative Disclosures About Market Risk 89Item 8. Financial Statements and Supplementary Data 91Item 9. Changes in and Disagreements With Accountants on Accounting and FinancialDisclosure 91Item 9A. Controls and Procedures 91Item 9B. Other Information 92PART III Item 10. Directors, Executive Officers and Corporate Governance 93Item 11. Executive Compensation 97Item 12. Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters 118Item 13. Certain Relationships and Related Transactions, and Director Independence 119Item 14. Principal Accounting Fees and Services 123PART IV Item 15. Exhibits and Financial Statement Schedules 124 2 Table of ContentsForward‑Looking Statements Certain statements and information in this Annual Report on Form 10‑K may constitute “forward‑lookingstatements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or othersimilar expressions are intended to identify forward‑looking statements, which are generally not historical in nature. Theseforward‑looking statements are based on our current expectations and beliefs concerning future developments and theirpotential effect on us. While management believes that these forward‑looking statements are reasonable as and when made,there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerningour expectations for future revenues and operating results are based on our forecasts for our existing operations and do notinclude the potential impact of any future acquisitions. Our forward‑looking statements involve significant risks anduncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially fromour historical experience and our present expectations or projections. Known material factors that could cause our actualresults to differ from those in the forward-looking statements are those described in Part I, Item 1A. “Risk Factors.” Theserisks and uncertainties include, among other things:·We may not have sufficient cash from operations to enable us to maintain distributions at current levelsfollowing establishment of cash reserves and payment of fees and expenses, including payments to our generalpartner.·A significant decrease in price or demand for the products we sell or a significant decrease in demand for ourlogistics activities could have an adverse effect on our financial condition, results of operations and cashavailable for distribution to our unitholders.·Our crude oil sales and logistics activities have been and could continue to be adversely affected by, amongother things, changes in the crude oil market structure, grade differentials and volatility (or lack thereof),implementation of regulations that adversely impact the market for transporting crude oil or other products byrail, changes in refiner demand, severe weather conditions, significant changes in prices and interruptions inrail transportation services and other necessary services and equipment, such as railcars, barges, trucks, loadingequipment and qualified drivers.·We depend upon marine, pipeline, rail and truck transportation services for a substantial portion of our logisticsbusiness in transporting the products we sell. Implementation of regulations and directives that adverselyimpact the market for transporting these products by rail or otherwise could adversely affect that business. Inaddition, a disruption in these transportation services could have an adverse effect on our financial condition,results of operations and cash available for distribution to our unitholders.·We have contractual obligations for certain transportation assets such as railcars, barges and pipelines. Adecline in demand for (i) the products we sell, including crude oil and ethanol, or (ii) our logistics activities,which has resulted and could continue to result in a decrease in the utilization of our transportation assets,could negatively impact our financial condition, results of operations and cash available for distribution to ourunitholders.·Our sales of home heating oil and residual oil continue to be reduced by conversions to natural gas andutilization of propane and/or natural gas (instead of heating oil) as primary fuel sources.·We may not be able to fully implement or capitalize upon planned growth projects. Even if we consummateacquisitions or expend capital in pursuit of growth projects that we believe will be accretive, they may in factresult in no increase or even a decrease in cash available for distribution to our unitholders.·Erosion of the value of major gasoline brands could adversely affect our gasoline sales and customer traffic.3 Table of Contents·Our gasoline sales could be significantly reduced by a reduction in demand due to higher prices and to newtechnologies and alternative fuel sources, such as electric, hybrid or battery powered motor vehicles.·Changes in government usage mandates and tax credits could adversely affect the availability and pricing ofethanol, which could negatively impact our sales.·Warmer weather conditions could adversely affect our home heating oil and residual oil sales.·Our risk management policies cannot eliminate all commodity risk, basis risk or the impact of unfavorablemarket conditions which can adversely affect our financial condition, results of operations and cash availablefor distribution to our unitholders. In addition, noncompliance with our risk management policies could resultin significant financial losses.·Our results of operations are affected by the overall forward market for the products we sell, and pricingvolatility may adversely impact our results.·Our business could be affected by a range of issues, such as changes in commodity prices, energy conservation,competition, the global economic climate, movement of products between foreign locales and within theUnited States, changes in refiner demand, weekly and monthly refinery output levels, changes in local,domestic and worldwide inventory levels, changes in safety regulations, failure to obtain renewal permits onterms favorable to us, seasonality, supply, weather and logistics disruptions and other factors and uncertaintiesinherent in the transportation, storage, terminalling and marketing of crude oil, refined products and renewablefuels.·Increases and/or decreases in the prices of the products we sell could adversely impact the amount of borrowingavailable for working capital under our credit agreement, which credit agreement has borrowing baselimitations and advance rates.·We are exposed to trade credit risk and risk associated with our trade credit support in the ordinary course ofour business.·The condition of credit markets may adversely affect our liquidity.·Our credit agreement and the indentures governing our senior notes contain operating and financial covenants,and our credit agreement contains borrowing base requirements. A failure to comply with the operating andfinancial covenants in our credit agreement, the indentures and any future financing agreements could impactour access to bank loans and other sources of financing as well as our ability to pursue our business activities.·A significant increase in interest rates could adversely affect our results of operations and cash available fordistribution to our unitholders and our ability to service our indebtedness.·Our gasoline station and convenience store business could expose us to an increase in consumer litigation andresult in an unfavorable outcome or settlement of one or more lawsuits where insurance proceeds areinsufficient or otherwise unavailable.·Physical effects from climate change have the potential to adversely affect our assets and operations in areasprone to sea level rise or other extreme weather events.·Our business could expose us to litigation and result in an unfavorable outcome or settlement of one or morelawsuits where insurance proceeds are insufficient or otherwise unavailable.4 Table of Contents·Adverse developments in the areas where we conduct our business could have a material adverse effect on suchbusinesses and can reduce our ability to make distributions to our unitholders.·A serious disruption to our information technology systems could significantly limit our ability to manage andoperate our business efficiently.·We are exposed to performance risk in our supply chain.·Our businesses are subject to both federal and state environmental and non-environmental regulations whichcould have a material adverse effect on such businesses.·Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which could permitthem to favor their own interests to the detriment of our unitholders.·Unitholders have limited voting rights and are not entitled to elect our general partner or its directors or removeour general partner without the consent of the holders of at least 66 2/3% of the outstanding units (includingunits held by our general partner and its affiliates), which could lower the trading price of our common units.·Our tax treatment depends on our status as a partnership for federal income tax purposes.·Unitholders may be required to pay taxes on their share of our income even if they do not receive any cashdistributions from us.Readers are cautioned not to place undue reliance on forward‑looking statements, which speak only as of the datehereof. We undertake no obligation to publicly update or revise any forward‑looking statements after the date they are made,whether as a result of new information, future events or otherwise.Available InformationWe make available free of charge through our website, www.globalp.com, our Annual Reports on Form 10‑K,Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K and amendments to those reports filed or furnished pursuantto Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically fileor furnish such material with the Securities and Exchange Commission (“SEC”). These documents are also available at theSEC’s website at www.sec.gov. Our website also includes our Code of Business Conduct and Ethics, our GovernanceGuidelines and the charters of our Audit Committee and Compensation Committee.A copy of any of these documents will be provided without charge upon written request to the General Counsel,Global Partners LP, P.O. Box 9161, 800 South Street, Suite 500, Waltham, MA 02454; fax (781) 398‑9211.5 Table of Contents PART I References in this Annual Report on Form 10‑K to “Global Partners LP,” “Partnership,” “we,” “our,” “us” or liketerms refer to Global Partners LP and its subsidiaries. References to “our general partner” refer to Global GP LLC. Items 1. and 2. Business and Properties.OverviewWe are a midstream logistics and marketing master limited partnership formed in March 2005 engaged in thepurchasing, selling, storing and logistics of transporting petroleum and related products, including gasoline and gasolineblendstocks (such as ethanol), distillates (such as home heating oil, diesel and kerosene), residual oil, renewable fuels, crudeoil and propane. We own, control or have access to one of the largest terminal networks of refined petroleum products andrenewable fuels in Massachusetts, Maine, Connecticut, Vermont, New Hampshire, Rhode Island, New York, New Jersey andPennsylvania (collectively, the “Northeast”). We are one of the largest distributors of gasoline, distillates, residual oil andrenewable fuels to wholesalers, retailers and commercial customers in the New England states and New York. We are also oneof the largest independent owners, suppliers and operators of gasoline stations and convenience stores in these areas. As ofDecember 31, 2017, we had a portfolio of 1,455 owned, leased and/or supplied gasoline stations, including 264 directlyoperated convenience stores, in the Northeast, Maryland and Virginia. We also receive revenue from convenience store sales,rental income and sundries. In addition, we own transload and storage terminals in North Dakota and Oregon that extend ourorigin‑to‑destination capabilities from the mid‑continent region of the United States and Canada.We purchase refined petroleum products, renewable fuels, crude oil and propane primarily from domestic andforeign refiners and ethanol producers, crude oil producers, major and independent oil companies and trading companies. Weoperate our business under three segments: (i) Wholesale, (ii) Gasoline Distribution and Station Operations (“GDSO”) and(iii) Commercial.Global GP LLC, our general partner, manages our operations and activities and employs our officers andsubstantially all of our personnel, except for most of our gasoline station and convenience store employees who areemployed by our wholly owned subsidiary, Global Montello Group Corp. (“GMG”).2017 TransactionsAcquisition of Gasoline and Convenience Store Assets—On October 18, 2017, we completed the acquisition ofretail gasoline and convenience store assets from Honey Farms, Inc. (“Honey Farms”) in a cash transaction. The acquisitionincluded 11 company-operated retail sites with gasoline and convenience stores and 22 company-operated stand-aloneconvenience stores. All of the sites are located in and around the greater Worcester, Massachusetts area. See Note 18 of Notesto Consolidated Financial Statements for additional information.Amended and Restated Credit Agreement—On April 25, 2017, we and certain of our subsidiaries entered into a thirdamended and restated credit agreement with aggregate commitments of $1.3 billion and a maturity date of April 30,2020. See Note 6 of Notes to Consolidated Financial Statements for additional information on our credit agreement.Sale of Natural Gas and Electricity Business—On February 1, 2017, we completed the sale of our natural gasmarketing and electricity brokerage businesses for a purchase price of approximately $17.3 million, subject to customaryclosing adjustments. Proceeds from the sale amounted to approximately $16.3 million, and we realized a gain on the sale of$14.2 million. The sale of our natural gas marketing and electricity brokerage businesses reflects our ongoing program tomonetize non-strategic assets that are not fundamental to our growth strategy. Prior to the sale, the results of our natural gasmarketing and electricity brokerage businesses were included in our Commercial segment. 6 Table of ContentsOperating SegmentsWe purchase refined petroleum products, renewable fuels, crude oil and propane primarily from domestic andforeign refiners and ethanol producers, crude oil producers, major and independent oil companies and trading companies. Weoperate our business under three segments: (i) Wholesale, (ii) GDSO and (iii) Commercial. In 2017, our Wholesale, GDSO andCommercial sales accounted for approximately 48%, 42% and 10% of our total sales, respectively.WholesaleIn our Wholesale segment, we engage in the logistics of selling, gathering, storage and transportation of refinedpetroleum products, renewable fuels, crude oil and propane. We transport these products by railcars, barges and/or pipelinespursuant to spot or long‑term contracts. From time to time, we aggregate crude oil by truck or pipeline in the mid‑continentregion of the United States and Canada, transport it by rail and ship it by barge to refiners. We sell home heating oil, brandedand unbranded gasoline and gasoline blendstocks, diesel, kerosene, residual oil and propane to home heating oil andpropane retailers and wholesale distributors. Generally, customers use their own vehicles or contract carriers to take deliveryof the gasoline and distillates at bulk terminals and inland storage facilities that we own or control or at which we havethroughput or exchange arrangements. Ethanol is shipped primarily by rail and by barge.Gasoline Distribution and Station OperationsIn our GDSO segment, gasoline distribution includes sales of branded and unbranded gasoline to gasoline stationoperators and sub-jobbers. Station operations include (i) convenience stores, (ii) rental income from gasoline stations leasedto dealers, from commissioned agents and from cobranding arrangements and (iii) sundries (such as car wash sales, lottery andATM commissions).As of December 31, 2017, we had a portfolio of owned, leased and/or supplied gasoline stations, primarily in theNortheast, that consisted of the following:Company operated 264 Commissioned agents 267 Lessee dealers 230 Contract dealers 694 Total 1,455 CommercialIn our Commercial segment, we include sales and deliveries to end user customers in the public sector and to largecommercial and industrial end users of unbranded gasoline, home heating oil, diesel, kerosene, residual oil and bunker fuel.In the case of public sector commercial and industrial end user customers, we sell products primarily either through acompetitive bidding process or through contracts of various terms. We generally arrange for the delivery of the product to thecustomer’s designated location, and we respond to publicly issued requests for product proposals and quotes. OurCommercial segment also includes sales of custom blended fuels delivered by barges or from a terminal dock to shipsthrough bunkering activity.7 Table of ContentsProductsGeneralThe following table presents our product sales and other revenues as a percentage of our consolidated sales for theyears ended December 31: 2017 2016 2015 Gasoline sales: gasoline and gasoline blendstocks (such as ethanol) 65% 64% 59% Crude oil sales and crude oil logistics revenue 5% 7% 12% Distillates (home heating oil, diesel and kerosene), residual oil, natural gas and propanesales 26% 24% 25% Convenience store sales, rental income and sundries 4% 5% 4% Total 100% 100% 100% Gasoline. We sell all grades of branded and unbranded gasoline and we sell gasoline blendstocks, such as ethanol,that comply with seasonal and geographical requirements in the areas in which we market.Crude Oil. We engage in the purchasing, selling, storing and logistics of transporting domestic and Canadian crudeoil and other products via rail and barge from the mid‑continent region of the United States and Canada for distribution torefiners and other customers.Distillates. Distillates are primarily divided into home heating oil, diesel and kerosene. In 2017, sales of homeheating oil, diesel and kerosene accounted for approximately 53%, 46% and 1%, respectively, of our total volume ofdistillates sold. The distillates we sell are used primarily for fuel for trucks and off‑road construction equipment and for spaceheating of residential and commercial buildings.We sell generic home heating oil and Heating Oil Plus™, our proprietary premium branded heating oil that iselectronically blended at the delivery facility, to wholesale distributors and retailers. In addition, we sell the additive used tocreate Heating Oil Plus™ to some wholesale distributors, make injection systems available to them and provide technicalsupport to assist them with blending. We also educate the sales force of our customers to better prepare them for marketingour products to their customers.We have a fixed price sales program that we market primarily to wholesale distributors and retailers which uses theNew York Mercantile Exchange (“NYMEX”) heating oil contract as the pricing benchmark and as the vehicle to manage thecommodity risk. Please read “—Commodity Risk Management.” In 2017, approximately 25% of our home heating oilvolume was sold using forward fixed price contracts. A forward fixed price contract requires our customer to purchase aspecific volume at a specific price during a specific period. The remaining home heating oil volume was sold on either aposted price or a price based on various indices which, in both instances, reflect current market conditions.We sell generic diesel and Diesel One, our proprietary premium diesel fuel product. We offer marketing andtechnical support for those customers who purchase Diesel One.Residual Oil. We sell residual oil to industrial, commercial and marine customers. We specially blend product forusers in accordance with their individual power specifications and for marine transport.Propane. We sell propane to home heating oil and propane retailers and wholesale distributors primarily from ourrail‑fed propane storage and distribution facility near our Church Street terminal in Albany, New York.Natural Gas. Prior to the sale of our natural gas marketing and electricity brokerage businesses in February 2017,we sold natural gas to industrial and commercial customers.8 ®® Table of ContentsConvenience Store Items and Sundries. We sell a broad selection of food, beverages, snacks, grocery and non‑foodmerchandise at our convenience store locations and generate sundry sales, such as car wash sales, lottery and ATMcommissions, at our convenience store locations.Significant CustomersNone of our customers accounted for greater than 10% of total sales for years ended December 31, 2017, 2016 and2015.AssetsTerminalsAs of December 31, 2017, we owned, leased or maintained dedicated storage facilities at 24 bulk terminals, eachwith the capacity of more than 50,000 barrels, with a collective storage capacity of 10.1 million barrels. Twenty‑one of thesebulk terminals are located throughout the Northeast. Some of our storage tankage is versatile, allowing us to switch tankagefrom one product to another.In addition to refined products, we also own or operate two rail facilities in New York and Oregon capable ofhandling crude oil and ethanol and two rail facilities in North Dakota capable of handling crude oil. At select locations, wehave capacity to store renewable fuels, and in Albany, New York, we also have an additional rail‑fed propane storageterminal.The bulk terminals and inland storage facilities from which we distribute product are supplied by ship, barge, truck,pipeline and/or rail. The inland storage facilities, which we use primarily to store distillates, are supplied with productdelivered by truck from bulk terminals. Our customers receive product from our network of bulk terminals and inland storagefacilities via truck, barge, rail and/or pipeline.As of December 31, 2017, we supported our rail activity with a fleet of approximately 1,400 leased railcars. Themakeup of this fleet is split between general‑purpose cars, typically used for light crude oil, ethanol and refined products, andcoiled, insulated cars, typically used for heavy crude oil and residual oil.In connection with our business, we may lease or otherwise secure the right to use certain third-party assets (such asrailcars, pipelines and barges). We lease railcars through various lease arrangements with various expiration dates, and welease barges through various time charter lease arrangement also with various expiration dates. We also have various pipelineconnection agreements that extend for five to seven years. See Note 9, “Commitments and Contingencies,” for additionalinformation on our railcar leases, barge leases and pipeline commitments. Many of our bulk terminals operate 24 hours a day and consist of multiple storage tanks and automated truckloading equipment. These automated systems monitor terminal access, volumetric allocations, credit control and carriercertification through the remote identification of customers. In addition, some of the bulk terminals from which we market areequipped with truck loading racks capable of providing automated blending and additive packages which meet ourcustomers’ specific requirements.Throughput arrangements allow storage of product at terminals owned by others. Our customers can load product atthese terminals, and we pay the owners of these terminals fees for services rendered in connection with the receipt, storageand handling of such product. Compensation to the terminal owners may be fixed or based upon the volume of our productthat is delivered and sold at the terminal.We have exchange agreements with customers and suppliers. An exchange is a contractual agreement where theparties exchange product at their respective terminals or facilities. For example, we (or our customers) receive product that isowned by our exchange partner from such party’s facility or terminal, and we deliver the same volume of our product to suchparty (or to such party’s customers) out of one of the terminals in our terminal network. Generally, both sides of an exchangetransaction pay a handling fee (similar to a throughput fee), and often one party also pays a location9 Table of Contentsdifferential that covers any excess transportation costs incurred by the other party in supplying product to the location atwhich the first party receives product. Other differentials that may occur in exchanges (and result in additional payments)include product value differentials and timing differentials.Gasoline StationsAs of December 31, 2017, we had a portfolio of 1,455 owned, leased and/or supplied gasoline stations, including264 directly operated convenience stores, primarily in the Northeast.At our company‑operated stores, we operate the gasoline stations and convenience stores with our employees, andwe set the retail price of gasoline at the station. At commissioned agent locations, we own the gasoline inventory, and we setthe retail price of gasoline at the station and pay the commissioned agent a fee related to the gallons sold. We receive rentalincome from commissioned agent leased gasoline stations for the leasing of the convenience store premises, repair bays andother businesses that may be conducted by the commissioned agent. At dealer‑leased locations, the dealer purchases gasolinefrom us, and the dealer sets the retail price of gasoline at the dealer’s station. We also receive rental income from(i) dealer‑leased gasoline stations and (ii) cobranding arrangements. We also supply gasoline to locations owned and/orleased by independent contract dealers. Additionally, we have contractual relationships with distributors in certain NewEngland states pursuant to which we source and supply these distributors’ gasoline stations with ExxonMobil‑brandedgasoline.SupplyOur products come from some of the major energy companies in the world as well as North American crude oilproducers. Products can be sourced from the United States, Canada, South America, Europe, Russia and occasionally fromAsia. Most of our products are delivered by water, pipeline, rail or truck. During 2017, we purchased an average ofapproximately 311,000 barrels per day of refined petroleum products, renewable fuels, crude oil and propane. We enter intosupply agreements with these suppliers on a term basis or a spot basis. With respect to trade terms, our supply purchases varydepending on the particular contract from prompt payment (usually two days) to net 30 days. Please read “—CommodityRisk Management.” We obtain our convenience store inventory from traditional suppliers.SeasonalityDue to the nature of our business and our reliance, in part, on consumer travel and spending patterns, we mayexperience more demand for gasoline during the late spring and summer months than during the fall and winter. Travel andrecreational activities are typically higher in these months in the geographic areas in which we operate, increasing thedemand for gasoline. Therefore, our volumes in gasoline are typically higher in the second and third quarters of the calendaryear. As demand for some of our refined petroleum products, specifically home heating oil and residual oil for space heatingpurposes, is generally greater during the winter months, heating oil and residual oil volumes are generally higher during thefirst and fourth quarters of the calendar year. These factors may result in fluctuations in our quarterly operating results.Commodity Risk ManagementWhen we take title to the products that we sell, we are exposed to commodity risk. Commodity risk is the risk ofunfavorable market fluctuations in the price of commodities such as refined petroleum products, renewable fuels, crude oiland propane. We endeavor to minimize commodity risk in connection with our daily operations through hedging by sellingexchange‑traded futures contracts on regulated exchanges or using other over‑the‑counter derivatives, and then lift hedges aswe sell the product for physical delivery to third parties. Products are generally purchased and sold at spot market prices,fixed prices or indexed prices. While we use these transactions to seek to maintain a position that is substantially balancedwithin our commodity product purchase and sales activities, we may experience net unbalanced positions for short periods oftime as a result of variances in daily purchases and sales and transportation and delivery schedules as well as other logisticalissues inherent in the business, such as weather conditions. In connection with managing these positions, we are aided bymaintaining a constant presence in the marketplace. We also engage in a controlled trading program for up to an aggregate of250,000 barrels of commodity products at any one point in time.10 Table of ContentsOur policy is generally to purchase only products for which we have a market and to structure our sales contracts so that pricefluctuations do not materially affect our profit. While our policies are designed to minimize market risk, as well as inherentbasis risk, exposure to fluctuations in market conditions remains.In addition, because a portion of our crude oil business may be conducted in Canadian dollars, we may use foreigncurrency derivatives to minimize the risks of unfavorable exchange rates. These instruments may include foreign currencyexchange contracts and forwards. In conjunction with entering into the commodity derivative, we may enter into a foreigncurrency derivative to hedge the resulting foreign currency risk. These foreign currency derivatives are generally short‑termin nature and not designated for hedge accounting.Operating results are sensitive to a number of factors. Such factors include commodity location, grades of product,individual customer demand for grades or location of product, localized market price structures, availability of transportationfacilities, daily delivery volumes that vary from expected quantities and timing and costs to deliver the commodity to thecustomer. Basis risk is the inherent market price risk created when a commodity of a certain grade or location is purchased,sold or exchanged as compared to a purchase, sale or exchange of commodity at a different time or place, includingtransportation costs and timing differentials. We attempt to reduce our exposure to basis risk by grouping our purchase andsale activities by geographical region and commodity quality in order to stay balanced within such designated region.However, basis risk cannot be entirely eliminated, and basis exposure, particularly in backward markets (when prices forfuture deliveries are lower than current prices) or other adverse market conditions, can adversely affect our financialcondition, results of operations and cash available for distribution to our unitholders.With respect to the pricing of commodities, we utilize exchange-traded futures contracts and other derivativeinstruments to minimize or hedge the impact of commodity price changes on our inventories and forward fixed pricecommitments. Any hedge ineffectiveness is reflected in our results of operations. We utilize regulated exchanges, includingthe NYMEX, the Chicago Mercantile Exchange (“CME”) and the Intercontinental‑Exchange (“ICE”), which are exchangesfor the respective commodities that each trades, thereby reducing potential delivery and supply risks. Generally, our practiceis to close all exchange positions rather than to make or receive physical deliveries. With respect to other products such asethanol, which may not have a correlated exchange contract, we enter into derivative agreements with counterparties that webelieve have a strong credit profile, in order to hedge market fluctuations and/or lock‑in margins relative to ourcommitments.We monitor processes and procedures to prevent unauthorized trading by our personnel and to maintain substantialbalance between purchases and sales or future delivery obligations. We can provide no assurance, however, that these stepswill eliminate commodity risk or detect and prevent all violations of such trading processes and procedures, particularly ifdeception or other intentional misconduct is involved.In our Wholesale segment, we obtain Renewable Identification Numbers (“RINs”) in connection with our purchaseof ethanol which is used for our bulk supply requirements or for blending with gasoline through our terminal system. A RINis a renewable identification number associated with government‑mandated renewable fuel standards. To evidence that therequired volume of renewable fuel is blended with gasoline and diesel motor vehicle fuels, obligated parties must retiresufficient RINs to cover their Renewable Volume Obligation (“RVO”). Our U.S. Environmental Protection Agency (“EPA”)obligations relative to renewable fuel reporting are largely limited to the foreign gasoline and diesel that we may choose toimport and any gasoline blending operations we conduct at certain facilities. As a wholesaler of transportation fuels throughour terminals, we separate RINs from renewable fuel through blending with gasoline and can use those separated RINs tosettle our RVO. While the annual compliance period for the RVO is a calendar year and the settlement of the RVO typicallyoccurs by March 31 of the following year, the settlement of the RVO can occur, under certain EPA deferral actions, more thanone year after the close of the compliance period. Our Wholesale segment operating results may be sensitive to the timingassociated with our RIN position relative to our RVO at a point in time, and we may recognize a mark‑to‑market liability for ashortfall in RINs at the end of each reporting period. To the extent that we do not have a sufficient number of RINs to satisfyour RVO as of the balance sheet date, we charge cost of sales for such deficiency based on the market price of the RINs as ofthe balance sheet date and record a liability representing our obligation to purchase RINs. Our 2016 RIN obligation maychange due to a court decision requiring the EPA to revise the calculation methodology for determining the 2016 renewablefuel obligation.11 Table of ContentsWe do not believe that any impacts associated with any such change will have a material adverse effect on our financialposition, results of operations or cash available for distribution to our unitholders.For more information about our policies and procedures to minimize our exposure to market risk, includingcommodity market risk, please read Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.”CompetitionIn each of our operating segments, we encounter varying degrees of competition based on product and geographiclocations and available logistics. Our competitors include terminal companies, major integrated oil companies and theirmarketing affiliates, wholesalers, producers and independent marketers of varying sizes, financial resources and experience.In our Northeast market, we compete in various product lines and for all customers. In the residual oil markets, however,where product is heated when stored and cannot be delivered long distances, we face less competition because of thestrategic locations of our residual oil storage facilities. We supply oil to industrial, commercial and marine customers. Wecompete with other transloaders in our logistics activities including, in part, storage and transportation of crude oil,renewable fuels and gasoline and the movement of product by alternative means (e.g., pipelines). We also compete withnatural gas suppliers and marketers in our home heating oil, residual oil and propane product lines. Bunkering requiresfacilities at ports to service vessels. In various other geographic markets, particularly with respect to unbranded gasoline anddistillates markets, we compete with integrated refiners, merchant refiners and regional marketing companies. Our retailgasoline stations compete with unbranded and branded retail gasoline stations as well as supermarket and warehouse storesthat sell gasoline.EmployeesTo carry out our operations, our general partner and certain of our operating subsidiaries employed approximately2,000 full‑time employees as of December 31, 2017, of which approximately 100 employees were represented by laborunions under collective bargaining agreements with various expiration dates. We may not be able to renegotiate thecollective bargaining agreements when they expire on satisfactory terms or at all. A failure to do so may increase our costs. Inaddition, existing labor agreements may not prevent a future strike or work stoppage, and any work stoppage couldnegatively affect our results of operations and financial condition. We believe we have good relations with our employees.We have a shared services agreement with GPC. The services provided by employees shared pursuant to thisagreement do not limit the ability of such employees to provide all services necessary to properly run our business. Pleaseread Part III, Item 13, “Certain Relationships and Related Transactions, and Director Independence—Shared ServicesAgreement.”Title to Properties, Permits and LicensesWe believe we have all of the assets needed, including leases, permits and licenses, to operate our business in allmaterial respects. With respect to any consents, permits or authorizations that have not been obtained, we believe that thefailure to obtain these consents, permits or authorizations will have no material adverse effect on our financial position,results of operations or cash available for distribution to our unitholders.We believe we have satisfactory title to all of our assets. Title to property, including certain sites within our GDSOsegment, may be subject to encumbrances, including repurchase rights and use, operating and environmental covenants andrestrictions. We believe that none of these encumbrances will materially detract from the value of our properties or from ourinterest in these properties, nor will they materially interfere with the use of these properties in the operation of our business.The name GLOBAL, our logos and the name Global Petroleum Corp. are our trademarks. In addition, we havetrademarks for our premium fuels and additives, Diesel One, Heating Oil Plus™, SubZero and the pending trademarksDiesel 1™ and Legacy. Technology. Performance. ™. We also have the following trademarks for our convenience storebusiness: ALLTOWN, YOUR TOWN.MYTOWN.ALLTOWN!, ALLTOWN MARKET 12 ®®®®®®® Table of ContentsCENTRE ST. KITCHEN, Buck Stop, Fast Freddie’s, Mr. Mike’s, Deli Joe’s, Deli Joe’s logo, Diamond Fuels, Xtra,XtraCafé logo, Xtra Mart and the Xtramart logo, the Honey Farms logo, Honey Money and the Honey Money logoFacilitiesWe lease office space for our principal executive office in Waltham, Massachusetts. This lease expires on July 31,2026 with extension options through July 31, 2036. In addition, we lease office space in Branford, Connecticut. This leaseexpires on July 31, 2024 with extension options through July 31, 2034.EnvironmentalGeneralOur businesses of supplying refined petroleum products, renewable fuels, crude oil and propane involve a number ofactivities that are subject to extensive and stringent environmental laws. In addition, these laws are frequently modified orrevised to impose new obligations.Our operations also use a number of petroleum storage and distribution facilities, including rail transloadingfacilities and gasoline stations that we do not own or operate, but at which refined petroleum products, renewable fuels, crudeoil and propane are stored. We use these facilities through several different contractual arrangements, including leases andthroughput and terminalling services agreements. If facilities with which we contract that are owned and operated by thirdparties fail to comply with environmental laws, they could be shut down, requiring us to incur costs to use alternativefacilities.State, federal, and municipal environmental laws and regulations, including, without limitation, those governingenvironmental matters can restrict or impact our business activities in many ways, such as:·requiring remedial action to mitigate releases of hydrocarbons, hazardous substances or wastes caused by ouroperations or attributable to former operators;·requiring our operations to obtain, maintain and renew permits which can obligate us to incur capitalexpenditures to comply with environmental control requirements and which may restrict our operations;·enjoining the operations of facilities found to be noncompliant with applicable laws and regulations; and·inability to renew permits on satisfactory terms and conditions.Any such failures to comply may also trigger administrative, civil and possibly criminal enforcement measures,including monetary penalties and remedial requirements. Certain statutes impose strict, joint and several liability for costsrequired to clean up and restore sites where hydrocarbons, hazardous substances or wastes have been released or disposed of.Moreover, neighboring landowners and other third parties may file claims for personal injury and property damage allegedlycaused by the release of hydrocarbons, hazardous substances or other wastes into the environment.Our operating permits are subject to modification, renewal and revocation. We regularly monitor and review ouroperations, procedures and policies for compliance with permits, laws and regulations. Risk of noncompliance, permitinterpretation, permit modification, renewal of permits on less favorable terms, judicial or administrative challenges ofpermits or permit revocation are inherent in the operation of our business, as it is with other companies engaged in similarbusinesses.The trend in environmental regulation has been to place more restrictions and limitations on activities that mayaffect the environment over time. As a result, there can be no assurance as to the amount or timing of future expenditures forenvironmental compliance or remediation, and actual future expenditures may be different from the amounts we13 ®®®®®®®®®®® Table of Contentscurrently anticipate. We try to anticipate future regulatory requirements that might be imposed and plan accordingly toremain in compliance with changing environmental laws and regulations and minimize the costs of such compliance.We do not believe that compliance with federal, state or local laws, including environmental laws and regulationswill have a material adverse effect on our financial position, results of operations or cash available for distribution to ourunitholders. We can provide no assurance, however, that future events, such as changes in existing laws (including changesin the interpretation of existing laws), the promulgation of new laws, or the development or discovery of new facts orconditions will not cause us to incur significant costs or will not have a material adverse effect on our financial position,results of operations or cash available for distribution to our unitholders.For additional information concerning certain environmental proceedings, please read Part I, Item 3. “LegalProceedings.”Hazardous Material Releases and Waste HandlingOur business is subject to laws that relate to the release of hazardous substances into the water or soils and require,among other things, measures to control pollution of the environment. For instance, the Comprehensive EnvironmentalResponse, Compensation, and Liability Act, as amended, also known as CERCLA or the Superfund law, and comparablestate laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons whoare considered to be responsible for the release of hazardous substances into the environment. Under the Superfund law, thesepersons may be subject to joint and several liability for the costs of cleaning up hazardous substances that have been releasedinto the environment, for damages to natural resources and for the costs of certain health studies. In the course of our ordinaryoperations, we may generate, store or otherwise handle materials and wastes that fall within the Superfund law’s definition ofa hazardous substance and, as a result, we may be jointly and severally liable under the Superfund law for all or part of thecosts required to clean up sites at which those hazardous substances have been released into the environment. Under theselaws, we could be required to remove or remediate previously disposed wastes, including wastes disposed of or released byprior owners or operators, clean up contaminated property, including groundwater contaminated by prior owners or operators,or make capital improvements to prevent future contamination.Our operations generate a variety of wastes, including some hazardous wastes that are subject to the federalResource Conservation and Recovery Act, as amended (“RCRA”) and comparable state laws. These regulations imposedetailed requirements for the handling, storage, treatment and disposal of hazardous waste. Our operations also generate solidwastes which are regulated under state law or the less stringent solid waste requirements of the federal Solid Waste DisposalAct. We believe that our operations are in substantial compliance with the existing requirements of RCRA, the Solid WasteDisposal Act and similar state and local laws, and the cost involved in complying with these requirements is not material. Wealso incur ongoing costs for monitoring groundwater and/or remediation of contamination at several facilities that weoperate.Above Ground Storage TanksAbove ground tanks that contain petroleum and other hazardous substances are subject to comprehensive regulationunder environmental and other laws. Generally, these laws require secondary containment systems for tanks or that theoperators take alternative precautions to ensure that no contamination results from tank leaks or spills and impose liabilityfor releases from the tanks. We believe we are in substantial compliance with environmental laws and regulations applicableto above ground storage tanks.Under the Oil Pollution Act of 1990 (“OPA”) and comparable state laws, responsible parties for a regulated facilityfrom which oil products so regulated are discharged may be subject to strict, joint and several liability for removal costs andcertain other consequences of an oil spill such as natural resource damages, where the spill is into navigable waters or alongshorelines.Under the authority of the federal Clean Water Act, the EPA imposes specific requirements for Spill Prevention,Control and Countermeasure plans that are designed to prevent, and minimize the impacts of, releases of oil and other14 Table of Contentsproducts from above ground storage tanks. We believe we are in substantial compliance with regulations pursuant to OPA,the Clean Water Act and similar state laws. We follow the American Petroleum Institute’s inspection, maintenance and repairstandard applicable to our above ground storage tanks.Underground Storage TanksWe are required to make financial expenditures to comply with regulations governing underground storage tanks(“USTs”) which store gasoline or other regulated substances adopted by federal, state and local regulatory agencies. Pursuantto RCRA, the EPA has established a comprehensive regulatory program for the detection, prevention, investigation andcleanup of leaking USTs. State or local agencies may be delegated the responsibility for implementing the federal program ordeveloping and implementing equivalent or stricter state or local regulations. We have a comprehensive program in place forperforming routine tank testing and other compliance activities which are intended to promptly detect and investigate anypotential releases. We believe we are in substantial compliance with applicable environmental requirements, including thoseapplicable to our USTs. Compliance with existing and future environmental laws regulating UST systems of the kind we usemay require significant capital expenditures in the future. These expenditures may include upgrades, modifications, and thereplacement of USTs and related piping to comply with current and future regulatory requirements designed to ensure thedetection, prevention, investigation and remediation of leaks and spills.Water DischargesThe federal Clean Water Act imposes restrictions regarding the discharge of pollutants, including oil and refinedpetroleum products, renewable fuels and crude oil, into navigable waters. This law and comparable state laws may requirepermits for discharging pollutants into state and federal waters and impose substantial liabilities and remedial obligations fornoncompliance. We hold these discharge permits for our facilities. Certain waters and wetlands, known as waters of theUnited States, are also subject to the protections and requirements of the Clean Water Act. Considerable legal uncertaintycurrently exists surrounding what standard should be used to identify waters of the United States as a result of legalchallenges to a rulemaking by the former administration and proposed rulemaking by the current administration that is alsolikely to be subject to legal challenges. This uncertainty and the outcome of these legal challenges may result in a need forsuch permits in areas that were not formerly subject to the CWA, which may delay, limit or increase the costs of theexploration and production of crude oil and other materials we transport and may also adversely affect shippers who use ourtransportation assets. Any resulting restriction of supply could adversely affect our financial position, results of operations orcash available for distribution to our unitholders.EPA regulations also may require us to obtain permits to discharge certain storm water runoff. Storm water dischargepermits also may be required by certain states in which we operate. We believe that we hold the required permits and operatein material compliance with those permits. While we have experienced permit discharge exceedences at some of ourterminals, we do not expect any noncompliance with existing permits and foreseeable new permit requirements to have amaterial adverse effect on our financial position, results of operations or cash available for distribution to our unitholders.Air EmissionsUnder the federal Clean Air Act (the “CAA”) and comparable state and local laws, permits are typically required toemit regulated air pollutants into the atmosphere above certain thresholds. We believe that we currently hold or have appliedfor all necessary air permits and that we are in substantial compliance with applicable air laws and regulations. Although wecan give no assurances, we are aware of no changes to air quality regulations that will have a material adverse effect on ourfinancial condition, results of operations or cash available for distribution to our unitholders.Various federal, state and local agencies have the authority to prescribe product quality specifications for thepetroleum products and renewable fuels that we sell, largely in an effort to reduce air pollution. Failure to comply with theseregulations can result in substantial penalties. Although we can give no assurances, we believe we are currently in substantialcompliance with these regulations.15 Table of ContentsChanges in product quality specifications could require us to incur additional handling costs or reduce ourthroughput volume. For instance, different product specifications for different markets could require the construction ofadditional storage. Also, many states where we sell heating oil, including New York, Massachusetts, Connecticut, Maine, andVermont, have limited the sulfur content of home heating oil.In addition, the CAA and similar state laws impose requirements on emissions to the air from motor fueling activitiesin certain areas of the country, including those that do not meet state or national ambient air quality standards. These lawsmay require the installation of vapor recovery systems to control emissions of volatile organic compounds to the air duringthe motor fueling process.In November 2015, the EPA also revised the existing National Ambient Air Quality Standards (“NAAQS”) forground‑level ozone, which made the standard more stringent. Nitrogen oxides and volatile organic compounds arerecognized as pre‑cursors of ozone, and emissions of those materials are associated with mobile sources and the petroleumindustry. A designation of nonattainment can lead the governing state to issue more stringent limits on existing sources ofthose precursor pollutants within the designated nonattainment area. Also, a nonattainment designation may increase theburdens on permitting new activities in those areas. The EPA issued attainment designations in December 2017 for mostareas of the country, and has announced its intention to issue designations for the remainder during the first half of 2018.While we are not able to determine the extent to which this new standard will impact our business at this time, it does havethe potential to have a material impact on our operations and cost‑structure.Climate ChangeFederal climate change legislation in the United States appears unlikely in the near‑term. As a result, domesticefforts to curb greenhouse gas (“GHG”) emissions continue be led by the EPA GHG regulations and the efforts of states. Tothe extent that our operations are subject to the EPA’s GHG regulations, we may face increased capital and operating costsassociated with new or expanded facilities. Significant expansions of our existing facilities or construction of new facilitiesmay be subject to the CAA’s requirements for review of pollutants regulated under the Prevention of SignificantDeterioration and Title V programs. Some of our facilities and operations are also subject to the EPA’s Mandatory Reportingof Greenhouse Gases rule, and any further regulation may increase our operational costs. Some states in which we dobusiness, including New York, have enacted measures requiring regulatory agencies to consider potential sea level rise in theperformance of their regulatory duties.In May 2016, the EPA finalized New Source Performance Standards for methane and volatile organic compoundemissions from certain activities in the oil and gas production sector, not including crude oil or refined producttransportation. This rule is currently subject to a pending judicial challenge in the D.C. Circuit. The EPA also released newcontrol guidance for reducing volatile organic compound emissions from existing oil and gas sources in certain ozonenon‑attainment areas. However, the EPA announced in April 2017 that it intends to reconsider certain aspects of the 2016New Source Performance Standards, and in May 2017, the EPA issued an administrative stay of key provisions of the rule,but was promptly ordered by the D.C. Circuit to implement the rule. The EPA also proposed 60-day and two-year stays ofcertain provisions in June 2017 and published a Notice of Data Availability in November 2017 seeking comment andproviding clarification regarding the agency’s legal authority to stay the rule. Collectively, these rules could impose newcompliance costs and additional permitting burdens on upstream oil and gas operations, which could in turn affect thecompanies that produce the crude oil that we transport. Currently, however, it is not possible to estimate the likely financialimpact of potential future regulation on our operations.Under Subpart MM of the Mandatory Greenhouse Gas Reporting Rule (“MRR”), importers of petroleum products,including distillates, must report the GHG emissions that would result from the complete combustion of all importedproducts if such combustion would result in the emission of at least 25,000 metric tons of carbon dioxide equivalent per year.We currently report under Subpart MM because of the volume of petroleum products we typically import. Compliance withthe MRR does not substantially impact our operations. However, any change in regulations based on GHG emissionsreported in compliance with MRR may limit our ability to import petroleum products or increase our costs to import suchproducts.16 Table of ContentsOverall, there has been a trend towards increased regulation of GHGs and initiatives, both domestically andinternationally, to limit GHG emissions. Future efforts to limit emissions associated with transportation fuels and heatingfuels could reduce the market for, or pricing of, our products, and thus adversely impact our business. For example, at the2015 United Nations Framework Convention on Climate Change in Paris, the United States and nearly 200 other nationsentered into an international climate agreement. Although this agreement does not create any binding obligations for nationsto limit their GHG emissions, it does include pledges to voluntarily limit or reduce future emissions. The Paris Agreementbecame effective in November 2016. The United States was one of over 100 nations that indicated an intent to comply withthe agreement; however, in August 2017, the U.S. State Department officially informed the United Nations of the intent of theU.S. to withdraw from the agreement, with the earliest possible effective date of withdrawal being November 4, 2020. Inaddition, it should be noted that some scientists have concluded that increasing concentrations of GHG in the earth’satmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity ofstorms, droughts, and floods and other climatic events. If any of those effects were to occur, they could have an adverse effecton our assets and operations.Activists concerned about the potential effects of climate change have, in certain instances, directed their attentionat sources of funding for fossil-fuel energy companies. This could make it more difficult to secure funding for projects.Convenience Store RegulationsOur convenience store operations are subject to extensive governmental laws and regulations that include legalrestrictions on the sale of alcohol, tobacco and lottery products, food labelling, safety and health requirements and publicaccessibility, as well as sanitation, environmental, safety and fire standards. State and local regulatory agencies have theauthority to approve, revoke, suspend or deny applications for, and renewals of, permits and licenses. Our operations are alsosubject to federal and state laws governing matters such as wage rates, overtime, working conditions and citizenshiprequirements. At the federal level, there are proposals under consideration from time to time to increase minimum wage ratesand to introduce a system of mandated health insurance, each of which could adversely affect our results of operations. InJune 2009, Congress passed the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”) which gave the Food andDrug Administration (“FDA”) broad authority to regulate tobacco products. Under the FSPTCA, the FDA has passedregulations that, among other things, prohibit the sale of cigarettes or smokeless tobacco to anyone under the age of 18 years(state laws are permitted to set a higher minimum age); prohibit the sale of single cigarettes or packs with less than 20cigarettes; and prohibit the sale or distribution of non‑tobacco items such as hats and t‑shirts with tobacco brands, names orlogos. Governmental actions and regulations, such as these, could materially impact our retail price of cigarettes, cigaretteunit volume and revenues, merchandise gross profit and overall customer traffic, which could in turn have a material adverseeffect on our results of operations.Ethanol MarketThe market for ethanol is dependent on several economic incentives and regulatory mandates for blending ethanolinto gasoline, including the availability of federal tax incentives, ethanol use mandates and oxygenate blendingrequirements. For instance, the Renewable Fuels Standard (“RFS”) requires that a certain amount of renewable fuels, such asethanol, be utilized in transportation fuels, including gasoline, in the United States each year. Additionally, the EPA imposesoxygenate blending requirements for reformulated gasoline that are best met with ethanol blending. Gasoline marketers mayalso choose to discretionally blend ethanol into conventional gasoline for economic reasons. A change or waiver of the RFSmandate or the reformulated gasoline oxygenate blending requirements could adversely affect the availability and pricing ofethanol. Any change in the RFS mandate could also result in reduced discretionary blending of ethanol into conventionalgasoline. Discretionary blending is when gasoline blenders use ethanol to reduce the cost of blended gasoline.Environmental InsuranceWe maintain insurance which may cover, in whole or in part, certain costs relating to environmental mattersassociated with the releases of the products we store, sell and/or ship. We maintain insurance policies with insurers inamounts and with coverage and deductibles as we believe are reasonable and prudent. These policies may not cover all17 Table of Contentsenvironmental risks and costs and may not provide sufficient coverage in the event an environmental claim is made againstus.Security RegulationSince the September 11, 2001 terrorist attacks on the United States, the U.S. government has issued warnings thatenergy infrastructure assets may be future targets of terrorist organizations. These developments have subjected ouroperations to increased risks. Increased security measures taken by us as a precaution against possible terrorist attacks haveresulted in increased costs to our business. Where required by federal or local laws, we have prepared security plans for thestorage and distribution facilities we operate. Terrorist attacks aimed at our facilities and any global and domestic economicrepercussions from terrorist activities could adversely affect our financial condition, results of operations and cash availablefor distribution to our unitholders. For instance, terrorist activity could lead to increased volatility in prices for home heatingoil, gasoline and other products we sell.Insurance carriers are currently required to offer coverage for terrorist activities as a result of the federal TerrorismRisk Insurance Act of 2002 (“TRIA”). We purchased this coverage with respect to our property and casualty insuranceprograms, which resulted in additional insurance premiums. Pursuant to the Terrorism Risk Insurance ProgramReauthorization Act of 2015, TRIA has been extended through December 31, 2020. Although we cannot determine the futureavailability and cost of insurance coverage for terrorist acts, we do not expect the availability and cost of such insurance tohave a material adverse effect on our financial condition, results of operations or cash available for distribution to ourunitholders.Hazardous Materials TransportationOur operations include the preparation and shipment of some hazardous materials by truck, rail and marine vessel.We are subject to regulations promulgated under the Hazardous Materials Transportation Act (and subsequent amendments)and administered by the U.S. Department of Transportation (“DOT”) under the Federal Highway Administration, the FederalRailroad Administration (“FRA”), the United States Coast Guard and the Pipeline and Hazardous Materials SafetyAdministration (“PHMSA”).We conduct loading and unloading of refined petroleum products, renewable fuels, crude oil and propane to andfrom cargo transports, including tanker trucks, railcars and marine vessels. In large part, the cargo transports are owned andoperated by third parties. However, we lease a fleet of railcars and charter barges associated with the shipment of refinedpetroleum products, renewable fuels and crude oil. We conduct ongoing training programs to help ensure that our operationsare in compliance with applicable regulations.The trend in hazardous material transportation is to increase oversight and regulation of these operations. High-profile derailments of freight trains carrying hazardous materials, including the tragic events in July 2013 in Lac Méganticand other subsequent events, have led federal and state regulators to introduce a number of new requirements regulating thetransportation of hazardous materials including crude oil and other products. These regulations address the testing andensuing designations of crude oil; the safety of tank cars that are used in transporting crude oil and other flammable orpetroleum type liquids by rail, including a requirement to phase out certain older DOT-111 tank cars; braking standards forcertain trains; and new operational protocols for trains transporting large volumes of flammable liquids, such as routingrequirements, speed restrictions and the provision of information to local government agencies. In July 2016, PHMSA alsoproposed a new rule that would expand the applicability of comprehensive oil spill response plans so that any railroad thattransports a single train carrying 20 or more loaded tank cars of liquid petroleum oil in a continuous block or a single traincarrying 35 or more loaded tank cars of liquid petroleum oil throughout the train must have a current, comprehensive, writtenplan. In January 2017, PHMSA issued an Advance Notice of Proposed Rulemaking announcing that it is considering revisingthe Hazardous Materials Regulations to establish vapor pressure limits for the transportation of crude oil and potentially allClass 3 flammable liquid hazardous materials. It remains to be seen how the current administration may act on theseproposals. In addition to action taken or proposed by federal agencies, a number of states proposed or enacted laws in recentyears that encourage safer rail operations or urge the federal government to strengthen requirements for these operations.18 Table of ContentsCanadian regulators have also take measures to assess and address risks from the transport of crude oil by rail.Transport Canada phased out the use of DOT-111 tank cars in crude oil service as of November 1, 2016. Transport Canadahas also implemented regulations imposing a 40 mile‑per‑hour speed limit on certain trains carrying hazardous materials inhighly populated areas, requiring railways to give municipalities and first responders more information about the hazardousmaterials they carry, requiring that approved Emergency Response Assistance Plans be in place prior to transporting certainquantities of hazardous materials, and requiring railways to carry minimum levels of insurance depending on the quantity ofcrude oil or dangerous goods that they transport. We believe we are in substantial compliance with applicable hazardous materials transportation requirementsrelated to our operations. We do not believe that compliance with federal, state or local hazardous materials transportationregulations will have a material adverse effect on our financial position, results of operations or cash available fordistribution to our unitholders. However, these and future statutes, regulatory changes or initiatives regarding hazardousmaterial transportation, could directly and indirectly increase our operation, compliance and transportation costs and lead toshortages in availability of tank cars. We cannot assure that costs incurred to comply with standards and regulationsemerging from these and future rulemakings will not be material to our business, financial condition or results of operations.Furthermore, we can provide no assurance that future events, such as changes in existing laws (including changes in theinterpretation of existing laws), the promulgation of new laws and regulations, including any voluntary measures by the railindustry, that result in new requirements for the design, construction or operation of tank cars used to transport crude oil, or,or the development or discovery of new facts or conditions will not cause us to incur significant costs. Any such requirementswould apply to the industry as a whole.Employee SafetyWe are subject to the requirements of the Occupational Safety and Health Act (“OSHA”) and comparable statestatutes that regulate the protection of the health and safety of workers. In addition, OSHA’s hazard communication standardsrequire that information be maintained about hazardous materials used or produced in operations and that this information beprovided to employees, state and local government authorities and citizens. We believe that we are in substantial compliancewith the applicable OSHA requirements. Item 1A. Risk Factors.Risks Related to Our BusinessWe may not have sufficient cash from operations to enable us to maintain distributions at current levels followingestablishment of cash reserves and payment of fees and expenses, including payments to our general partner.We may not have sufficient available cash each quarter to maintain distributions at current levels. The amount ofcash we can distribute on our units principally depends upon the amount of cash we generate from our operations, which willfluctuate from quarter to quarter based on, among other things:·competition from other companies that sell refined petroleum products, renewable fuels, crude oil and propaneand convenience store items and sundries;·demand for refined petroleum products, renewable fuels, crude oil and propane in the markets we serve;·absolute price levels, as well as the volatility of prices, of refined petroleum products, renewable fuels, RINs,crude oil and propane in both the spot and futures markets;·supply, extreme weather and logistics disruptions;·seasonal variation in temperatures, which affects demand for home heating oil and residual oil to the extent thatit is used for space heating;19 Table of Contents·the level of our operating costs, including payments to our general partner; and·prevailing economic conditions.In addition, the actual amount of cash we have available for distribution will depend on other factors such as:·the level of capital expenditures we make;·the restrictions contained in our credit agreement and the indentures governing our senior notes, includingfinancial covenants, borrowing base limitations and advance rates;·our debt service requirements;·the cost of acquisitions;·fluctuations in our working capital needs;·our ability to borrow under our credit agreement to make distributions to our unitholders; and·the amount of cash reserves established by our general partner.The amount of cash we have available for distribution to unitholders depends on our cash flow and not solely onprofitability.The amount of cash we have available for distribution depends primarily on our cash flow, including borrowings,and not solely on profitability, which will be affected by non‑cash items. As a result, we may make cash distributions duringperiods when we record losses and may not make cash distributions during periods when we record net income.We may not be able to fully implement or capitalize upon planned growth projects.We could have a number of organic growth projects that may require the expenditure of significant amounts ofcapital in the aggregate. Many of these projects involve numerous regulatory, environmental, commercial and legaluncertainties beyond our control. As these projects are undertaken, required approvals, permits and licenses may not beobtained, may be delayed or may be obtained with conditions that materially alter the expected return associated with theunderlying projects. Moreover, revenues associated with these organic growth projects may not increase immediately uponthe expenditures of funds with respect to a particular project and these projects may be completed behind schedule or inexcess of budgeted cost. We may pursue and complete projects in anticipation of market demand that dissipates or marketgrowth that never materializes. As a result of these uncertainties, the anticipated benefits associated with our capital projectsmay not be achieved.We commit substantial resources to pursuing acquisitions and expending capital for growth projects, although there is nocertainty that we will successfully complete any acquisitions or growth projects or receive the economic results weanticipate from completed acquisitions or growth projects.We are continuously engaged in discussions with potential sellers and lessors of existing (or suitable fordevelopment) terminalling, storage, logistics and/or marketing assets, including gasoline stations, convenience stores andrelated businesses. Our growth largely depends on our ability to make accretive acquisitions and/or accretive developmentprojects. We may be unable to execute such accretive transactions for a number of reasons, including the following: (1) weare unable to identify attractive transaction candidates or negotiate acceptable terms; (2) we are unable to obtain financingfor such transactions on economically acceptable terms; or (3) we are outbid by competitors. In addition, we mayconsummate transactions that at the time of consummation we believe will be accretive but that ultimately may not beaccretive. If any of these events were to occur, our future growth and ability to increase or20 Table of Contentsmaintain distributions could be limited. We can give no assurance that our transaction efforts will be successful or that anysuch efforts will be completed on terms that are favorable to us.Even if we consummate acquisitions that we believe will be accretive, they may in fact result in no increase or evena decrease in cash available for distribution to our unitholders. Any acquisition involves potential risks, including:·performance from the acquired assets and businesses that is below the forecasts we used in evaluating theacquisition;·mistaken assumptions about price, demand, volumes, revenues and costs, including synergies;·a significant increase in our indebtedness and working capital requirements;·an inability to hire, train or retain qualified personnel to manage and operate our business and newly acquiredassets;·the inability to timely and effectively integrate the operations of recently acquired businesses or assets,particularly those in new geographic areas or in new lines of business;·mistaken assumptions about the overall costs of equity or debt;·the assumption of substantial unknown or unforeseen environmental and other liabilities arising out of theacquired businesses or assets, including liabilities arising from the operation of the acquired businesses or assetsprior to our acquisition, for which we are not indemnified or for which the indemnity is inadequate;·limitations on rights to indemnity from the seller;·customer or key employee loss from the acquired businesses;·unforeseen difficulties operating in new and existing product areas or new and existing geographic areas; and·diversion of our management’s and employees’ attention from other business concerns.If any acquisitions we ultimately consummate do not generate expected increases in cash available for distributionto our unitholders, our ability to increase or maintain distributions may be reduced.Our gasoline financial results, with particular impact to our GDSO segment, are seasonal and can be lower in the first andfourth quarters of the calendar year.Due to the nature of our business and our reliance, in part, on consumer travel and spending patterns, we mayexperience more demand for gasoline during the late spring and summer months than during the fall and winter. Travel andrecreational activities are typically higher in these months in the geographic areas in which we operate, increasing thedemand for gasoline that we sell. Therefore, our results of operations in gasoline can be lower in the first and fourth quartersof the calendar year.Our heating oil and residual oil financial results are seasonal and can be lower in the second and third quarters of thecalendar year.Demand for some refined petroleum products, specifically home heating oil and residual oil for space heatingpurposes, is generally higher during November through March than during April through October. We obtain a significantportion of these sales during the winter months. Therefore, our results of operations in heating oil and residual oil for the firstand fourth calendar quarters can be better than for the second and third quarters.21 Table of ContentsWarmer weather conditions could adversely affect our results of operations and financial condition.Weather conditions generally have an impact on the demand for both home heating oil and residual oil. Because wesupply distributors whose customers depend on home heating oil and residual oil for space heating purposes during thewinter, warmer‑than‑normal temperatures during the first and fourth calendar quarters in the Northeast can decrease the totalvolume we sell and the gross profit realized on those sales. Therefore, our results of operations in heating oil and residual oilfor the first and fourth calendar quarters can be better than for the second and third quarters.A significant decrease in price or demand for the products we sell or a significant decrease in demand for our logisticsactivities could reduce our ability to make distributions to our unitholders.A significant decrease in price or demand for the products we sell or a significant decrease in demand for ourlogistics activities could reduce our revenues and, therefore, reduce our ability to make or increase distributions to ourunitholders. Factors that could lead to a decrease in market demand for refined petroleum products, renewable fuels, crude oiland propane include:·a recession or other adverse economic conditions or an increase in the market price or of an oversupply ofrefined petroleum products, renewable fuels, crude oil and propane or higher fuel taxes or other governmental orregulatory actions that increase, directly or indirectly, the cost of gasoline or other refined petroleum products,renewable fuels crude oil and propane;·a shift by consumers to more fuel‑efficient or alternative fuel vehicles or an increase in fuel economy ofvehicles, whether as a result of technological advances by manufacturers, governmental or regulatory actions orotherwise; and·conversion from consumption of home heating oil or residual oil to natural gas.Certain of our operating costs and expenses are fixed and do not vary with the volumes we store and distribute.Should we experience a reduction in our volumes stored, distributed and sold and in our related logistics activities, suchcosts and expenses may not decrease ratably or at all. As a result, we may experience declines in our margin if our volumesdecrease.Our business is influenced by the overall markets for refined petroleum products, renewable fuels, crude oil and propaneand increases and/or decreases in the prices of these products may adversely impact our financial condition, results ofoperations and cash available for distribution to our unitholders and the amount of borrowing available for workingcapital under our credit agreement.Results from our purchasing, storing, terminalling, transporting and selling operations are influenced by prices forrefined petroleum products, renewable fuels, crude oil and propane, price volatility and the market for such products. Pricesin the overall markets for these products may affect our financial condition, results of operations and cash available fordistribution to our unitholders. Our margins can be significantly impacted by the forward product pricing curve, oftenreferred to as the futures market. We typically hedge our exposure to petroleum product and renewable fuel price moves withfutures contracts and, to a lesser extent, swaps. In markets where future prices are higher than current prices, referred to ascontango, we may use our storage capacity to improve our margins by storing products we have purchased at lower prices inthe current market for delivery to customers at higher prices in the future. In markets where future prices are lower thancurrent prices, referred to as backwardation, inventories can depreciate in value and hedging costs are more expensive. Forthis reason, in these backward markets, we attempt to reduce our inventories in order to minimize these effects.When prices for the products we sell rise, some of our customers may have insufficient credit to purchase supplyfrom us at their historical purchase volumes, and their customers, in turn, may adopt conservation measures which reduceconsumption, thereby reducing demand for product. Furthermore, when prices increase rapidly and dramatically, we may beunable to promptly pass our additional costs on to our customers, resulting in lower margins which could adversely affect ourresults of operations. Higher prices for the products we sell may (1) diminish our access22 Table of Contentsto trade credit support and/or cause it to become more expensive and (2) decrease the amount of borrowings available forworking capital under our credit agreement as a result of total available commitments, borrowing base limitations andadvance rates thereunder.When prices for the products we sell decline, our exposure to risk of loss in the event of nonperformance by ourcustomers of our forward contracts may be increased as they and/or their customers may breach their contracts and purchasethe products we sell at the then lower market price from a competitor. A significant decrease in the price for crude oiladversely affected the economics of domestic crude oil production which, in turn, had an adverse effect on our crude oillogistics activities and sales. A significant decrease in crude oil differentials has also had an adverse effect on our crude oillogistics activities and sales. In addition, the prolonged decline in crude oil prices and crude oil differentials has indicated animpairment of our long-lived assets at our terminals in North Dakota. As a result of these events, we recognized a goodwilland long-lived asset impairment of $149.9 million for year ended December 31, 2016.We have contractual obligations for certain transportation assets such as railcars, barges and pipelines.A decline in demand for (i) the products we sell, including crude oil and ethanol, or (ii) our logistics activities, couldresult in a decrease in the utilization of our transportation assets, which could negatively impact our financial condition,results of operations and cash available for distribution to our unitholders.The condition of credit markets may adversely affect our liquidity.In the past, world financial markets experienced a severe reduction in the availability of credit. Possible negativeimpacts in the future could include a decrease in the availability of borrowings under our credit agreement, increasedcounterparty credit risk on our derivatives contracts and our contractual counterparties requiring us to provide collateral. Inaddition, we could experience a tightening of trade credit from our suppliers.Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities.As of December 31, 2017, our total debt, including amounts outstanding under our credit agreement and seniornotes, was approximately $1.1 billion. We have the ability to incur additional debt, including the capacity to borrow up to$1.3 billion under our credit agreement, subject to limitations in our credit agreement. Our level of indebtedness could haveimportant consequences to us, including the following:·our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions orother purposes may be impaired or such financing may not be available on favorable terms;·covenants contained in our existing and future credit and debt arrangements will require us to meet financialtests that may affect our flexibility in planning for and reacting to changes in our business, including possibleacquisition opportunities;·we will need a substantial portion of our cash flow to make principal and interest payments on our indebtedness,reducing the funds that would otherwise be available for operations, future business opportunities anddistributions to unitholders;·our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or adownturn in our business or the economy generally; and·our debt level may limit our flexibility in responding to changing business and economic conditions.Our ability to service our indebtedness depends upon, among other things, our financial and operating performance,which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some ofwhich are beyond our control. If our operating results are not sufficient to service our current or future23 Table of Contentsindebtedness, we will be forced to take actions, such as reducing or eliminating distributions, reducing or delaying ourbusiness activities, acquisitions, investments and/or capital expenditures, selling assets, restructuring or refinancing ourindebtedness, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of theseremedies on satisfactory terms or at all.A significant increase in interest rates could adversely affect our ability to service our indebtedness.The interest rates on our credit agreement are variable; therefore, we have exposure to movements in interest rates. Asignificant increase in interest rates could adversely affect our ability to service our indebtedness. The increased cost couldmake the financing of our business activities more expensive. These added expenses could have an adverse effect on ourfinancial condition, results of operations and cash available for distribution to our unitholders.We may not be able to obtain funding on acceptable terms or obtain additional requested funding in excess of totalcommitments under our credit agreement, which could have a material adverse effect on our financial condition, results ofoperations and cash available for distribution to our unitholders.In the past, global financial markets and economic conditions were disrupted and volatile. The debt and equitycapital markets were exceedingly distressed. These issues, along with significant write‑offs in the financial services sector,the re‑pricing of credit risk and the economic conditions, had made and, along with any other potential future economic ormarket uncertainties, could make it difficult to obtain funding. Activists concerned about the potential effects of climatechange have, in certain instances, directed their attention at sources of funding for fossil-fuel energy companies. This couldmake it more difficult to secure funding for projects.As a result, the cost of raising money in the debt and equity capital markets could increase while the availability offunds from those markets could diminish. The cost of obtaining money from the credit markets could increase as manylenders and institutional investors increase interest rates, enact tighter lending standards and reduce and, in some cases, ceaseto provide funding to borrowers.In addition, we may be unable to obtain adequate funding under our credit agreement because (i) one or more of ourlenders may be unable to meet its funding obligations or (ii) our borrowing base under our credit agreement, as redeterminedfrom time to time, may decrease as a result of price fluctuations, counterparty risk, advance rates and borrowing baselimitations and customer nonpayment or nonperformance.Due to these factors, we cannot be certain that funding will be available if needed and to the extent required orrequested on acceptable terms. If funding is not available when needed, or is available only on unfavorable terms, we may beunable to maintain our business as currently conducted, enhance our existing business, complete acquisitions or otherwisetake advantage of business opportunities or respond to competitive pressures, any of which could have a material adverseeffect on our financial condition, results of operations and cash available for distribution to our unitholders.Operating and financial restrictions and covenants in our credit agreement and the indentures governing our senior notesand borrowing base requirements in our credit agreement may restrict our business and financing activities.The operating and financial restrictions and covenants in our credit agreement and the indentures governing oursenior notes and any future financing agreements could restrict our ability to finance future operations or capital needs or toengage, expand or pursue our business activities. For example, our credit agreement restricts our ability to:·grant liens;·make certain loans or investments;·incur additional indebtedness or guarantee other indebtedness;·make any material change to the nature of our business or undergo a fundamental change;24 Table of Contents·make any material dispositions;·acquire another company;·enter into a merger, consolidation, sale-leaseback transaction or purchase of assets;·make distributions if any potential default or event of default occurs; or·modify borrowing base components and advance rates.In addition, the indentures governing our senior notes limit our ability to, among other things:·incur additional indebtedness;·make distributions to equity owners;·make certain investments;·restrict distributions by our subsidiaries;·create liens;·enter into sale‑leaseback transactions;·sell assets; or·merge with other entities.Our ability to comply with the covenants and restrictions contained in our credit agreement and the indentures maybe affected by events beyond our control, including prevailing economic, financial and industry conditions. If market orother economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we violate any of therestrictions, covenants, ratios or tests in our credit agreement or the indentures, a significant portion of our indebtedness maybecome immediately due and payable, and our lenders’ commitment to make further loans to us may terminate. We might nothave, or be able to obtain, sufficient funds to make these accelerated payments. In addition, our obligations under our creditagreement are secured by substantially all of our assets, and if we are unable to repay our indebtedness under our creditagreement, the lenders could seek to foreclose on such assets.Restrictions in our credit agreement and the indentures limit our ability to pay distributions upon the occurrence of certainevents.Our credit agreement and the indentures limit our ability to pay distributions upon the occurrence of certain events.For example, each of our credit agreement and the indentures limits our ability to pay distributions upon the occurrence ofthe following events, among others:·failure to pay any principal, interest, fees or other amounts when due;·failure to perform or otherwise comply with the covenants in the credit agreement, the indentures or in otherloan documents to which we are a borrower; and·a bankruptcy or insolvency event involving us, our general partner or any of our subsidiaries.25 Table of ContentsAny subsequent refinancing of our current debt or any new debt could have similar restrictions. For moreinformation regarding our credit agreement and the indentures, please read Part II, Item 7, “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Agreement” andNote 6 of Notes to Consolidated Financial Statements.We can borrow money under our credit agreement to pay distributions, which would reduce the amount of credit availableto operate our business.Our partnership agreement allows us to borrow under our credit agreement to pay distributions. Accordingly, we canmake distributions on our units even though cash generated by our operations may not be sufficient to pay suchdistributions. For more information, please read Part II, Item 7, “Management’s Discussion and Analysis of FinancialCondition and Results of Operations—Liquidity and Capital Resources” and Note 6 of Notes to Consolidated FinancialStatements.The enactment of derivatives legislation could have an adverse effect on our ability to use derivative instruments to reducethe effect of commodity price, interest rate and other risks associated with our business.On July 21, 2010, new comprehensive financial reform legislation, known as the Dodd‑Frank Wall Street Reformand Consumer Protection Act (the “Act”), was enacted that establishes federal oversight and regulation of theover‑the‑counter derivatives market and entities, such as us, that participate in that market. The Act requires the CommoditiesFutures Trading Commission (“CFTC”), the SEC and other regulators to promulgate rules and regulations implementing thenew legislation. Although the CFTC has finalized certain regulations, others remain to be finalized or implemented and it isnot possible at this time to predict when this will be accomplished.In October 2010, pursuant to its rulemaking under the Act, the CFTC issued rules to set position limits for certainfutures and option contracts in the major energy markets and for swaps that are their economic equivalents. The initialposition limits rule was vacated by the United States District Court for the District of Columbia in September of 2012.However, in December 2016, the CFTC re-proposed new rules that would place limits on positions in certain core futures andequivalent swaps contracts for, or linked to, certain physical commodities, subject to exceptions for certain bona fidehedging transactions. As these new position limit rules are not yet final, the impact of those provisions on us is uncertain atthis time.The CFTC has designated certain interest rate swaps and credit default swaps for mandatory clearing and exchangetrading. To the extent we engage in such transactions or transactions that become subject to such rules in the future, we willbe required to comply or take steps to qualify for an exemption to such requirements. Although we expect to qualify for theend‑user exception to the mandatory clearing requirements for swaps entered to hedge our commercial risks, the applicationof the mandatory clearing and trade execution requirements to other market participants, such as swap dealers, may changethe cost and availability of the swaps that we use for hedging. If our swaps do not qualify for the commercial end‑userexception, or the cost of entering into uncleared swaps becomes prohibitive, we may be required to clear such transactions.The ultimate effect of the rules and any additional regulations on our business is uncertain at this time.In addition, the Act requires that regulators establish margin rules for uncleared swaps. Banking regulators and theCFTC have adopted final rules establishing minimum margin requirements for uncleared swaps. Although we expect toqualify for the end‑user exception from such margin requirements for swaps entered into to hedge our commercial risks, theapplication of such requirements to other market participants, such as swap dealers, may change the cost and availability ofthe swaps that we use for hedging. If any of our swaps do not qualify for the commercial end‑user exception, posting of initialor variation margin could impact our liquidity and reduce cash available for capital expenditures, therefore reducing ourability to execute hedges to reduce risk and protect cash flows.The full impact of the Act and related regulatory requirements upon our business will not be known until all of therelated regulations are implemented. The Act and any new regulations could significantly increase the cost of derivativecontracts (including from swap recordkeeping and reporting requirements and through requirements to post collateral whichcould adversely affect our available liquidity), materially alter the terms of derivative contracts, reduce26 Table of Contentsthe availability of some derivatives to protect against risks we encounter and reduce our ability to monetize or restructure ourexisting derivative contracts. If we reduce our use of derivatives as a result of the Act and regulations, our results ofoperations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability toplan for and fund capital expenditures. Any of these consequences could have material adverse effect on our financialcondition, results of operations and cash available for distributions to our unitholders.In addition, the European Union and other non‑U.S. jurisdictions are implementing regulations with respect to thederivatives market. To the extent we transact with counterparties in foreign jurisdictions, we may become subject to suchregulations.Our risk management policies cannot eliminate all commodity risk, basis risk or the impact of unfavorable marketconditions which can adversely affect our financial condition, results of operations and cash available for distribution toour unitholders. In addition, any noncompliance with our risk management policies could result in significant financiallosses.While our hedging policies are designed to minimize commodity risk, some degree of exposure to unforeseenfluctuations in market conditions remains. For example, we change our hedged position daily in response to movements inour inventory. If we overestimate or underestimate our sales from inventory, we may be unhedged for the amount of theoverestimate or underestimate. Also, significant increases in the costs of the products we sell can materially increase our coststo carry inventory. We use our credit facility as our primary source of financing to carry inventory and may be limited on theamounts we can borrow to carry inventory.Basis risk is the inherent market price risk created when a commodity of certain grade or location is purchased, soldor exchanged as compared to a purchase, sale or exchange of a like commodity at a different time or place. Transportationcosts and timing differentials are components of basis risk. For example, we use the NYMEX to hedge our commodity riskwith respect to pricing of energy products traded on the NYMEX. Physical deliveries under NYMEX contracts are made inNew York Harbor. To the extent we take deliveries in other ports, such as Boston Harbor, we may have basis risk. In abackward market (when prices for future deliveries are lower than current prices), basis risk is created with respect to timing.In these instances, physical inventory generally loses value as basis declines over time. Basis risk cannot be entirelyeliminated, and basis exposure, particularly in backward or other adverse market conditions, can adversely affect ourfinancial condition, results of operations and cash available for distribution to our unitholders.We monitor processes and procedures to prevent unauthorized trading and to maintain substantial balance betweenpurchases and sales or future delivery obligations. We can provide no assurance, however, that these steps will detect and/orprevent all violations of such risk management policies and procedures, particularly if deception or other intentionalmisconduct is involved.We are exposed to trade credit risk and risk associated with our trade credit support in the ordinary course of our businessactivities.We are exposed to risks of loss in the event of nonperformance by our customers, by counterparties of our forwardand futures contracts, options and swap agreements and by our suppliers. Some of our customers, counterparties and suppliersmay be highly leveraged and subject to their own operating and regulatory risks. The tightening of credit in the financialmarkets may make it more difficult for customers and counterparties to obtain financing and, depending on the degree towhich it occurs, there may be a material increase in the nonpayment and nonperformance of our customers andcounterparties. Even if our credit review and analysis mechanisms work properly, we may experience financial losses in ourdealings with other parties. Any increase in the nonpayment or nonperformance by our customers and/or counterparties andthe nonperformance by our suppliers could reduce our ability to make distributions to our unitholders.Additionally, our access to trade credit support could diminish and/or become more expensive. Our ability tocontinue to receive sufficient trade credit on commercially acceptable terms could be adversely affected by fluctuations inpetroleum product and renewable fuel prices or disruptions in the credit markets or for any other reason. Any of these27 Table of Contentsevents could adversely affect our financial condition, results of operations and cash available for distribution to ourunitholders.We are exposed to performance risk in our supply chain.We rely upon our suppliers to timely produce the volumes and types of refined petroleum products, renewable fuels,crude oil and propane for which they contract with us. In the event one or more of our suppliers does not perform inaccordance with its contractual obligations, we may be required to purchase product on the open market to satisfy forwardcontracts we have entered into with our customers in reliance upon such supply arrangements. We may purchase refinedpetroleum products, renewable fuels, crude oil and propane from a variety of suppliers under term contracts and on the spotmarket. In times of extreme market demand, we may be unable to satisfy our supply requirements. Furthermore, a portion ofour supply comes from other countries, which could be disrupted by political events. In the event such supply becomesscarce, whether as a result of political events, natural disaster, logistical issues associated with delivery schedules orotherwise, we may not be able to satisfy our supply requirements. If any of these events were to occur, we may be required topay more for product that we purchase on the open market, which could result in financial losses and adversely affect ourfinancial condition, results of operations and cash available for distribution to our unitholders.Historical prices for certain products we sell have been volatile and significant changes in such prices in the future mayadversely affect our financial condition, results of operations and cash available for distribution to our unitholders.Historical prices for certain products we sell have been volatile. General political conditions, acts of war, terrorismand instability in oil producing regions, particularly in the United States, Canada, Middle East, Russia, Africa and SouthAmerica, could significantly impact crude oil supplies and crude oil and refined petroleum product costs. Significantincreases and volatility in wholesale gasoline costs could result in significant increases in the retail price of motor fuelproducts and in lower margins per gallon. Increases in the retail price of motor fuel products could impact consumer demandfor motor fuel. This volatility makes it extremely difficult to predict the impact future wholesale cost fluctuations will haveon our operating results and financial condition. Dramatic increases in crude oil prices squeeze fuel margins because fuelcosts typically increase faster than can pass along such increases to customers. Higher fuel prices trigger higher credit cardexpenses, because credit card fees are calculated as a percentage of the transaction amount, not as a percentage of gallonssold. A significant change in any of these factors could materially impact our customers’ needs, motor fuel gallon volumes,gross profit and overall customer traffic, which in turn could have a material adverse effect on our financial condition, resultsof operations and cash available for distribution to our unitholders.Our gasoline sales could be significantly reduced by a reduction in demand due to higher prices and to new technologiesand alternative fuel sources, such as electric, hybrid or battery powered motor vehicles.Technological advances and alternative fuel sources, such as electric, hybrid or battery powered motor vehicles,may adversely affect the demand for gasoline. We could face additional competition from alternative energy sources as aresult of future government‑mandated controls or regulations which promote the use of alternative fuel sources. A number ofnew legal incentives and regulatory requirements, and executive initiatives, including the Clean Power Plan and variousgovernment subsidies including the extension of certain tax credits for renewable energy, have made these alternative formsof energy more competitive. A reduction in demand for our gasoline products could have an adverse effect on our financialcondition, results of operations and cash available for distributions to our unitholders. In addition, higher prices could reducethe demand for gasoline and adversely impact our gasoline sales. A reduction in gasoline sales could have an adverse effecton our financial condition, results of operations and cash available for distribution to our unitholders.Energy efficiency, higher prices, new technology and alternative fuels could reduce demand for our products.Higher prices and new technologies and alternative fuel sources, such as electric, hybrid or battery powered motorvehicles, could reduce the demand for transportation fuels and adversely impact our sales of transportation fuels.28 Table of ContentsA reduction in sales of transportation fuels could have an adverse effect on our financial condition, results of operations andcash available for distribution to our unitholders. In addition, increased conservation and technological advances haveadversely affected the demand for home heating oil and residual oil. Consumption of residual oil has steadily declined overthe last three decades. We could face additional competition from alternative energy sources as a result of futuregovernment‑mandated controls or regulations further promoting the use of cleaner fuels. End users who are dual‑fuel usershave the ability to switch between residual oil and natural gas. Other end users may elect to convert to natural gas. During aperiod of increasing residual oil prices relative to the prices of natural gas, dual‑fuel customers may switch and other endusers may convert to natural gas. During periods of increasing home heating oil prices relative to the price of natural gas,residential users of home heating oil may also convert to natural gas. As described above, such switching or conversion couldhave an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.Erosion of the value of major gasoline brands could adversely affect our gasoline sales and customer traffic.As a significant number of our retail gasoline stations and convenience stores are branded Mobil or other majorgasoline brands, they may be dependent, in part, upon the continuing favorable reputation of such brands. Erosion of thevalue of major gasoline brands could have a negative impact on our gasoline sales, which in turn may cause our acquisitionto be less profitable.We depend upon marine, pipeline, rail and truck transportation services for a substantial portion of our logistics businessin transporting the products we sell. A disruption in these transportation services could have an adverse effect on ourfinancial condition, results of operations and cash available for distribution to our unitholders.Hurricanes, flooding and other severe weather conditions could cause a disruption in the transportation services wedepend upon which could affect the flow of service. In addition, accidents, labor disputes between providers and theiremployees and labor renegotiations, including strikes, lockouts or a work stoppage, shortage of railcars, mechanicaldifficulties or bottlenecks and disruptions in transportation logistics could also disrupt our businesses. These events couldresult in service disruptions and increased cost which could also adversely affect our financial condition, results ofoperations and cash available for distribution to our unitholders. Other disruptions, such as those due to an act of terrorism orwar, could also adversely affect our business.Changes in government usage mandates and tax credits could adversely affect the availability and pricing of ethanol,which could negatively impact our sales.The EPA has implemented a RFS pursuant to the Energy Policy Act of 2005 and the Energy Independence andSecurity Act of 2007. The RFS program seeks to promote the incorporation of biofuels in the nation’s fuel supply and, to thatend, sets annual quotas for the quantity of renewable fuels (such as ethanol) that must be blended into transportation fuelsconsumed in the United States. A RIN is assigned to each gallon of renewable fuel produced in or imported into the UnitedStates.We are exposed to the volatility in the market price of RINs. We cannot predict the future prices of RINs. RIN pricesare dependent upon a variety of factors, including EPA regulations related to the amount of RINs required and the totalamounts that can be generated, the availability of RINs for purchase, the price at which RINs can be purchased, and levels oftransportation fuels produced, all of which can vary significantly from quarter to quarter. If sufficient RINs are unavailable forpurchase or if we have to pay a significantly higher price for RINs, or if we are otherwise unable to meet the EPA’s RFSmandates, our results of operations and cash flows could be adversely affected.Future demand for ethanol will be largely dependent upon the economic incentives to blend based upon the relativevalue of gasoline and ethanol, taking into consideration the EPA’s regulations on the RFS program and oxygenate blendingrequirements. A reduction or waiver of the RFS mandate or oxygenate blending requirements could adversely affect theavailability and pricing of ethanol, which in turn could adversely affect our future gasoline and ethanol sales. In addition,changes in blending requirements or broadening the definition of what constitutes a renewable fuel could affect the price ofRINs which could impact the magnitude of the mark‑to‑market liability recorded for the deficiency, if any, in our RINposition relative to our RVO at a point in time.29 Table of ContentsWe may not be able to obtain state fund or insurance reimbursement of our environmental remediation costs.Where releases of products, including, without limitation, refined petroleum products, renewable fuels, crude oil andpropane have occurred, federal and state laws and regulations require that contamination caused by such releases be assessedand remediated to meet applicable standards. Our obligation to remediate this type of contamination varies, depending uponapplicable laws and regulations and the extent of, and the facts relating to, the release. A portion of the remediation costs forcertain petroleum products may be recoverable from the reimbursement fund of the applicable state and/or from third partyinsurance after any deductible has been met, but there are no assurances that such reimbursement funds or insurance proceedswill be available to us.Future consumer or other litigation could adversely affect our financial condition and results of operations.Our retail gasoline and convenience store operations are characterized by a high volume of customer traffic and bytransactions involving an array of products.These operations carry a higher exposure to consumer litigation risk when compared to the operations of companiesoperating in many other industries. Consequently, we may become a party to individual personal injury or products liabilityand other legal actions in the ordinary course of our retail gasoline and convenience store business. Any such action couldadversely affect our financial condition and results of operations. Additionally, we are occasionally exposed to industry‑wideor class action claims arising from the products we carry or industry‑specific business practices. Our defense costs and anyresulting damage awards or settlement amounts may not be fully covered by our insurance policies. An unfavorable outcomeor settlement of one or more of these lawsuits could have a material adverse effect on our financial condition, results ofoperations and cash available for distributions.We may incur costs or liabilities as a result of litigation or adverse publicity resulting from concerns over food quality,health or other issues that could cause customers to avoid our convenience stores.We may be the subject of complaints or litigation arising from food-related illness or injury in general which couldhave a negative impact on our business. Additionally, negative publicity, regardless of whether the allegations are valid,concerning food quality, food safety or other health concerns, employee relations or other matters related to our preparedfood operations may materially adversely affect demand for our offerings and could result in a decrease in customer traffic toour convenience stores.We depend upon a small number of suppliers for a substantial portion of our convenience store merchandise inventory. Adisruption in supply or an unexpected change in our relationships with our principal merchandise suppliers could have anadverse effect on our convenience store results of operations.We purchase convenience store merchandise inventory from a small number of suppliers for our directly operatedconvenience stores. A change of merchandise suppliers, a disruption in supply or a significant change in our relationshipswith our principal merchandise suppliers could have an adverse effect on our financial condition, results of operations andcash available for distribution to our unitholders.Governmental action and campaigns to discourage smoking may have a material adverse effect on our revenues and grossprofit.Congress has given the FDA broad authority to regulate tobacco products, and the FDA has enacted numerousregulations restricting the sale of such products. These governmental actions, as well as national, state and local campaignsto discourage smoking and other factors, may result in reduced volume and consumption levels, and could materially affectthe retail price of cigarettes, unit volume and revenues, gross profit and overall customer traffic, which in turn could have amaterial adverse effect on our business, financial condition and results of operations.30 Table of ContentsWe face intense competition in our purchasing, selling, terminalling, transporting, storage and logistics activities.Competition from other providers of refined petroleum products, renewable fuels, crude oil and propane that are able tosupply our customers with those products and services at a lower price and have capital resources many times greater thanours could reduce our ability to make distributions to our unitholders.We are subject to competition from distributors and suppliers of refined petroleum products, renewable fuels, crudeoil and propane that may be able to supply our customers with the same or comparable products and terminalling,transporting and storage services and logistics on a more competitive basis. We compete with terminal companies, majorintegrated oil companies and their marketing affiliates, wholesalers, producers and independent marketers of varying sizes,financial resources and experience. In our Northeast market, we compete in various product lines and for all customers. In theresidual oil markets, however, where product is heated when stored and cannot be delivered long distances, we face lesscompetition because of the strategic locations of our residual oil storage facilities. We compete with other transloaders in ourlogistics activities including, in part, storage and transportation of crude oil, and the movement of product by alternativemeans (e.g., pipelines). We also compete with natural gas suppliers and marketers in our home heating oil, residual oil andpropane product lines. Bunkering requires facilities at ports to service vessels. In various other geographic markets,particularly the unbranded gasoline and distillates markets, we compete with integrated refiners, merchant refiners andregional marketing companies. Our retail gasoline stations compete with unbranded and branded retail gas stations as well assupermarket and warehouse stores that sell gasoline.Some of our competitors are substantially larger than us, have greater financial resources and control greatersupplies of refined petroleum products, renewable fuels, crude oil and propane than we do. If we are unable to competeeffectively, we may lose existing customers or fail to acquire new customers, which could have a material adverse effect onour financial condition, results of operations and cash available for distribution to our unitholders. For example, if acompetitor attempts to increase market share by reducing prices, our operating results and cash available for distribution toour unitholders could be adversely affected. We may not be able to compete successfully with these companies, and ourability to compete could be harmed by factors including price competition and the availability of alternative and lessexpensive fuels.New entrants or increased competition in the convenience store industry could result in reduced gross profits.We compete with numerous other convenience store chains, independent convenience stores, supermarkets,drugstores, discount warehouse clubs, motor fuel service stations, mass merchants, fast food operations and other similarretail outlets. Several non-traditional retailers, including supermarkets and club stores, compete directly with conveniencestores.We may not be able to renew our leases or our agreements for dedicated storage when they expire.The bulk terminals we own or lease or at which we maintain dedicated storage facilities play a key role in movingproduct to our customers. As of December 31, 2017, we owned, operated and maintained dedicated storage facilities at 18bulk terminals, leased the entirety of two bulk terminals that we operated exclusively for our business, and maintaineddedicated storage at four facilities for which we have terminalling agreements. The lease and terminalling agreements aresubject to expiration through 2019 and 2022, respectively. If these lease and terminalling agreements are not renewed or weare unable to renew them at rates and on terms at least as favorable, it could have an adverse effect on our financial condition,results of operations and cash available for distribution to our unitholders.We may not be able to lease sites we own or sub‑lease sites we lease with respect to the sale of gasoline on favorable termsand any such failure could adversely affect our financial condition, results of operations and cash available fordistribution to our unitholders.If we are unable to obtain tenants on favorable terms for sites we own or lease, the lease payments we receive maynot be adequate to cover our rent expense for leased sites and may not be adequate to ensure that we meet our debt servicerequirements. We may lease certain sites where the rent expense we pay is more than the lease payments we collect. Wecannot provide any assurance that our gross margin from the sale of transportation fuels and related31 Table of Contentsconvenience store items at sites will be adequate to offset unfavorable lease terms. The occurrence of these events couldadversely affect our financial condition, results of operations and cash available for distribution to our unitholders.Some of our sales are generated under contracts that must be renegotiated or replaced periodically. If we are unable tosuccessfully renegotiate or replace these contracts, our financial condition, results of operations and cash available fordistribution to our unitholders could be adversely affected.Most of our arrangements with our customers are renegotiated or replaced periodically. As these contracts expire,they must be renegotiated or replaced. We may be unable to renegotiate or replace these contracts when they expire, and theterms of any renegotiated contracts may not be as favorable as the contracts they replace. Whether these contracts aresuccessfully renegotiated or replaced is often subject to factors beyond our control. Such factors include fluctuations inrefined petroleum product, renewable fuels, crude oil and propane prices, counterparty ability to pay for or accept thecontracted volumes and a competitive marketplace for the services offered by us. If we cannot successfully renegotiate orreplace our contracts or renegotiate or replace them on less favorable terms, sales from these arrangements could decline, andour financial condition, results of operations and cash available for distribution to our unitholders could be adverselyaffected.Due to our lack of asset and geographic diversification, adverse developments in the terminals we use or in our operatingareas would reduce our ability to make distributions to our unitholders.We rely primarily on sales generated from products distributed from the terminals we own or control or to which wehave access. Furthermore, the majority of our assets and operations are located in the Northeast. Due to our lack ofdiversification in asset type and location, an adverse development in these businesses or areas, including adversedevelopments due to catastrophic events or weather and decreases in demand for refined petroleum products, renewable fuels,crude oil and propane, could have a significantly greater impact on our results of operations and cash available fordistribution to our unitholders than if we maintained more diverse assets and locations.Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequatelyinsured.We are not fully insured against all risks incident to our business. Our operations are subject to operational hazardsand unforeseen interruptions such as natural disasters, adverse weather, accidents, fires, explosions, hazardous materialsreleases, mechanical failures, disruptions in supply infrastructure or logistics and other events beyond our control. If any ofthese events were to occur, we could incur substantial losses because of personal injury or loss of life, severe damage to anddestruction of property and equipment, and pollution or other environmental damage resulting in curtailment or suspensionof our related operations.We store gasoline, renewable fuels, crude oil and propane in underground and above ground storage tanks. Ouroperations are also subject to significant hazards and risks inherent in storing gasoline. These hazards and risks include fires,explosions, spills, discharges and other releases, any of which could result in distribution difficulties and disruptions,environmental pollution, governmentally‑imposed fines or clean‑up obligations, personal injury or wrongful death claimsand other damage to our properties and the properties of others.Furthermore, we may be unable to maintain or obtain insurance of the type and amount we desire at reasonable rates.As a result of market conditions, premiums and deductibles for certain of our insurance policies have increased and couldescalate further. In some instances, certain insurance could become unavailable or available only for reduced amounts ofcoverage. If we were to incur a significant liability for which we are not fully insured, it could have a material adverse effecton our financial condition, results of operations and cash available for distribution to unitholders.32 Table of ContentsNew, stricter environmental laws and other industry-related regulations or environmental litigation could significantlyimpact our operations and/or increase our costs, which could adversely affect our results of operations and financialcondition.Our operations are subject to federal, state and local laws and regulations regulating, among other matters, logisticsactivities, product quality specifications and other environmental matters. The trend in environmental regulation has beentowards more restrictions and limitations on activities that may affect the environment over time. Our business may beadversely affected by increased costs and liabilities resulting from such stricter laws and regulations. We try to anticipatefuture regulatory requirements that might be imposed and plan accordingly to remain in compliance with changingenvironmental laws and regulations and to minimize the costs of such compliance. Risks related to our environmentalpermits, including the risk of noncompliance, permit interpretation, permit modification, renewal of permits on less favorableterms, judicial or administrative challenges to permits by citizens groups or federal, state or local entities or permitrevocation are inherent in the operation of our business, as it is with other companies engaged in similar businesses. We maynot be able to renew the permits necessary for our operations, or we may be forced to accept terms in future permits that limitour operations or result in additional compliance costs.In recent years, the transport of crude oil and ethanol has become subject to additional regulation. Theestablishment of more stringent design or construction standards, or other requirements for railroad tank cars that are used totransport crude oil and ethanol with too short of a timeframe for compliance may lead to shortages of compliant railcarsavailable to transport crude oil and ethanol, which could adversely affect our business. Likewise, in recent years, efforts havecommenced to seek to use federal, state and local laws to contest issuance of permits, contest renewal of permits and restrictthe types of railroad tanks cars that can be used to deliver products, including, without limitation, crude oil and ethanol tobulk storage terminals. Were such laws to come into effect and were they to survive appeals and judicial review, they wouldpotentially expose our operations to duplicative and possibly inconsistent regulation.There can be no assurances as to the timing and type of such changes in existing laws or the promulgation of newlaws or the amount of any required expenditures associated therewith.Our terminalling operations are subject to federal, state and local laws and regulations relating to environmentalprotection and operational safety that could require us to incur substantial costs.The risk of substantial environmental costs and liabilities is inherent in terminal operations, and we may incursubstantial environmental costs and liabilities. Our terminalling operations involving the receipt, storage and delivery ofrefined petroleum products, renewable fuels, crude oil and propane are subject to stringent federal, state and local laws andregulations governing the discharge of materials into the environment, or otherwise relating to the protection of theenvironment, operational safety and related matters. Compliance with these laws and regulations increases our overall cost ofbusiness, including our capital costs to maintain and upgrade equipment and facilities. We utilize a number of terminals thatare owned and operated by third parties who are also subject to these stringent federal, state and local environmental laws intheir operations. Their compliance with these requirements could increase the cost of doing business with these facilities.Please read Part I, Items 1. and 2. “Business and Properties—Environmental.”In addition, our operations could be adversely affected if shippers of refined petroleum products, renewable fuels,crude oil and propane incur additional costs or liabilities associated with regulations, including environmental regulations.These shippers could increase their charges to us or discontinue service altogether. Similarly, many of our suppliers face atrend of increasing environmental regulations, which could likewise restrict their ability to produce crude oil or fuels, orincrease their costs of production, and thus impact the price of, and/or their ability to deliver, these products.Various governmental authorities, including the EPA, have the power to enforce compliance with these regulationsand the permits issued under them, and violators are subject to administrative, civil and criminal penalties, including fines,injunctions or both. Joint and several liability may be incurred, without regard to fault or the legality of the original conduct,under federal and state environmental laws for the remediation of contaminated areas at our facilities and those where we dobusiness. Private parties, including the owners of properties located near our terminal facilities and those with whom we dobusiness, also may have the right to pursue legal actions against us to enforce33 Table of Contentscompliance with environmental laws, as well as seek damages for personal injury or property damage. We may also be heldliable for damages to natural resources.The possibility exists that new, stricter laws, regulations or enforcement policies could significantly increase ourcompliance costs and the cost of any remediation that may become necessary, some of which may be material. Our insurancemay not cover all environmental risks and costs or may not provide sufficient coverage in the event an environmental claimis made against us. We may incur increased costs because of stricter pollution control requirements or liabilities resultingfrom noncompliance with required operating or other regulatory permits. New environmental regulations, such as thoserelated to the emissions of GHGs, might adversely affect the market for our products and activities, including the storage ofrefined petroleum products, renewable fuels, crude oil and propane, as well as our waste management practices and ourcontrol of air emissions. Enactment of laws and passage of regulations regarding GHG emissions, or other actions to limitGHG emissions may reduce demand for fossil fuels and impact our business. Federal and state agencies also could imposeadditional safety regulations to which we would be subject. Because the laws and regulations applicable to our operationsare subject to change, we cannot provide any assurance that compliance with future laws and regulations will not have amaterial effect on our results of operations.Additionally, the construction of new terminals or the expansion of an existing terminal involves numerousregulatory, environmental, political and legal uncertainties, most of which are not in our control. Delays, litigation, localconcerns and difficulty in obtaining approvals for projects requiring federal, state or local permits could impact our ability tobuild, expand and operate strategic facilities and infrastructure, which could adversely impact growth and operationalefficiency.Increased regulation of GHG emissions could result in increased operating costs and reduced demand for refinedpetroleum products as a fuel source, which could reduce demand for our products, decrease our revenues and reduce ourprofitability.Combustion of fossil fuels, such as the refined petroleum products we sell, results in the emission of carbon dioxideinto the atmosphere. On December 15, 2009, the EPA published its findings that emissions of carbon dioxide and other GHGspresent an endangerment to public health and the environment because emissions of such gases are, according to the EPA,contributing to warming of the earth’s atmosphere and other climatic changes. Based on these findings, the EPA haspromulgated or adopted regulations to address GHG emissions from the combustion of fossil fuels from large stationarysources. With respect to emissions of GHGs from the use of fossil fuels for mobile sources, the EPA has also issued CorporateAverage Fuel Economy (“CAFE”) standards for fleets of 2022-2025 model year vehicles that may, should the standardsbecome effective, reduce demand for gasoline, thereby reducing emissions of GHGs from the operation of motor vehicles andalso reducing demand for our products and services. In addition, it is possible federal legislation could be adopted in thefuture to restrict GHGs, as Congress has considered various proposals to reduce GHG emissions from time to time. Manystates and regions have adopted GHG initiatives. Please read Part I, Items 1. and 2. “Business and Properties—Environmental—Air Emissions.”Future international, federal and state initiatives to control GHG emissions, or an unfavorable outcome in themethane judicial challenges, could result in increased costs associated with refined petroleum products consumption, suchas costs to install additional controls to reduce GHG emissions or costs to purchase emissions reduction credits to complywith future emissions trading programs. Please read Part I, Items 1. and 2. “Business and Properties—Environmental—AirEmissions.” Such increased costs could result in reduced demand for refined petroleum products and some customersswitching to alternative sources of fuel which could have a material adverse effect on our financial condition, results ofoperations and cash available for distributions to our unitholders.Climate change continues to attract considerable public and scientific attention. Recently, litigation has been filedagainst companies in the energy industry related to climate change. Should such suits succeed, we could face additionalcompliance costs or litigation risks.34 Table of ContentsOur business involves the buying, selling and shipping of refined petroleum products, renewable fuels and crude oil by rail,which involves risks of derailment, accidents and liabilities associated with cleanup and damages, as well as potentialregulatory changes that may adversely impact our business, financial condition or results of operations.Our operations involve the buying and selling of refined petroleum products, renewable fuels and crude oil andshipping it by rail to various markets including on railcars that we lease. The derailments of trains transporting such productsin North America have caused various regulatory agencies and industry organizations, as well as federal, state and municipalgovernments, to focus attention on transportation by rail of flammable materials. Additional measures have been taken inboth the United States. and Canada to regulate the transportation of these products. Please read Part I, Items 1. and 2.“Business and Properties—Environmental— Hazardous Materials Transportation.”Any changes to the existing laws and regulations, or promulgation of new laws and regulations, including anyvoluntary measures by the rail industry, that result in new requirements for the design, construction or operation of tank cars,including those used to transport crude oil, may require us to make expenditures to comply with new standards that arematerial to our operations, and, to the extent that new regulations require design changes or other modifications of tank cars,we may incur significant constraints on transportation capacity during the period while tank cars are being retrofitted ornewly constructed to comply with the new regulations. We cannot assure that the totality of costs incurred to comply withany new standards and regulations and any impacts on our operations will not be material to our business, financialcondition or results of operations. In addition, any derailment of railcars involving products that we have purchased or areshipping may result in claims being brought against us that may involve significant liabilities. Although we believe that weare adequately insured against such events, we cannot assure you that our policies will cover the entirety of any damages thatmay arise from such an event.We are subject to federal, state and local laws and regulations that govern the product quality specifications of the refinedpetroleum products, renewable fuels, crude oil and propane we purchase, store, transport and sell.Various federal, state and local government agencies have the authority to prescribe specific product qualityspecifications to the sale of commodities. Our business includes such commodities. Changes in product qualityspecifications, such as reduced sulfur content in refined petroleum products, or other more stringent requirements for fuels,could reduce our ability to procure product and our sales volume, require us to incur additional handling costs and/or requirethe expenditure of capital. For instance, different product specifications for different markets could require additionalstorage. If we are unable to procure product or recover these costs through increased sales, we may not be able to meet ourfinancial obligations. Failure to comply with these regulations could result in substantial penalties.We are subject to federal and state environmental regulations which could have a material adverse effect on our retailoperations business.Our retail operations are subject to extensive federal and state laws and regulations, including those relating to theprotection of the environment, waste management, discharge of hazardous materials, pollution prevention, as well as lawsand regulations relating to public safety and health. Certain of these laws and regulations may require assessment orremediation efforts. Retail operations with USTs are subject to federal and state regulations and legislation. Compliance withexisting and future environmental laws regulating USTs may require significant capital expenditures and increased operatingand maintenance costs. The operation of USTs also poses certain other risks, including damages associated with soil andgroundwater contamination. Leaks from USTs which may occur at one or more of our gas stations may impact soil orgroundwater and could result in fines or civil liability for us. We may be required to make material expenditures to modifyoperations, perform site cleanups or curtail operations.We are subject to federal and state non‑environmental regulations which could have an adverse effect on our conveniencestore business and results of operations.Our convenience store business is subject to extensive governmental laws and regulations that include legalrestrictions on the sale of alcohol, tobacco and lottery products, food labelling, safety and health requirements and publicaccessibility. Furthermore, state and local regulatory agencies have the power to approve, revoke, suspend, or denyapplications for and renewals of permits and licenses relating to the sale of alcohol, tobacco and lottery products or to35 Table of Contentsseek other remedies. A violation of or change in such laws and/or regulations could have an adverse effect on ourconvenience store business and results of operations.Regulations related to wages also affect our business. Any increase in the statutory minimum wage would result inan increase in our labor costs and such cost increase could adversely affect our business, financial condition and results ofoperations.Any terrorist attacks aimed at our facilities and any global and domestic economic repercussions from terrorist activitiesand the government’s response could adversely affect our financial condition, results of operations and cash available fordistribution to our unitholders.Since the September 11, 2001 terrorist attacks on the United States, the U.S. government has issued warnings thatenergy assets may be future targets of terrorist organizations. In addition to the threat of terrorist attacks, we face variousother security threats, including cyber security threats to gain unauthorized access to sensitive information or systems or torender data or systems unusable; threats to the safety of our employees; threats to the security of our facilities, such asterminals and pipelines, and infrastructure or third‑party facilities and infrastructure. These developments have subjected ouroperations to increased risks.Although we utilize various procedures and controls to monitor these threats and mitigate our exposure to securitythreats, there can be no assurance that these procedures and controls will be sufficient in preventing security threats frommaterializing. If any of these events were to materialize, they could lead to losses of sensitive information, criticalinfrastructure, personnel or capabilities, essential to our operations and could have a material adverse effect on ourreputation, financial position, results of operations, or cash flows. Cyber security attacks in particular are evolving andinclude malicious software, attempts to gain unauthorized access to, or otherwise disrupt, our pipeline control systems,attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in criticalsystems, including our pipeline control systems, unauthorized release of confidential or otherwise protected information andcorruption of data. These events could damage our reputation and lead to financial losses from remedial actions, loss ofbusiness or potential liability.We incur costs for providing facility security and may incur additional costs in the future with respect to the receipt,storage and distribution of our products. Additional security measures could also restrict our ability to distribute refinedpetroleum products, renewable fuels, crude oil and propane. Any future terrorist attack on our facilities, or those of ourcustomers, could have a material adverse effect on our financial condition, results of operations and cash available fordistribution to our unitholders.Terrorist activity could lead to increased volatility in prices for home heating oil, gasoline and other products wesell, which could decrease our customers’ demand for these products. Insurance carriers are required to offer coverage forterrorist activities as a result of federal legislation. We purchase this coverage with respect to our property and casualtyinsurance programs. This additional coverage resulted in additional insurance premiums which could increase further in thefuture.We depend on key personnel for the success of our business.We depend on the services of our senior management team and other key personnel. The loss of the services of anymember of senior management or key employee could have an adverse effect on our financial condition, results of operationsand cash available for distribution to our unitholders. We may not be able to locate or employ on acceptable terms qualifiedreplacements for senior management or other key employees if their services were no longer available.Certain executive officers of our general partner perform services for one of our affiliates pursuant to a sharedservices agreement. Please read Part III, Item 13, “Certain Relationships and Related Transactions, and Director Independence—Relationship of Management with Global Petroleum Corp.”36 Table of ContentsWe depend on unionized labor for the operation of certain of our terminals. Any work stoppages or labor disturbances atthese terminals could disrupt our business.Any work stoppages or labor disturbances by our unionized labor force at facilities with an organized workforcecould have an adverse effect on our financial condition, results of operations and cash available for distribution to ourunitholders. In addition, employees who are not currently represented by labor unions may seek representation in the future,and any renegotiation of collective bargaining agreements may result in terms that are less favorable to us.We rely on our information technology systems to manage numerous aspects of our business, and a disruption of thesesystems could adversely affect our business.We depend on our information technology (“IT”) systems to manage numerous aspects of our business and toprovide analytical information to management. Our IT systems are an essential component of our business and growthstrategies, and a serious disruption to our IT systems could significantly limit our ability to manage and operate our businesseffectively. These systems are vulnerable to, among other things, damage and interruption from power loss or naturaldisasters, computer system and network failures, loss of telecommunication services, physical and electronic loss of data,cyber and other security breaches and computer viruses. While we believe we have adequate systems and controls in place,we are continuously working to install new, and upgrade our existing, information technology systems and provideemployee awareness around phishing, malware and other cyber risks in an effort to ensure that we are protected against cyberrisks and security breaches. We have a disaster recovery plan in place, but this plan may not entirely prevent delays or othercomplications that could arise from an IT systems failure. Any failure or interruption in our IT systems could have a negativeimpact on our operating results, cause our business and competitive position to suffer and damage our reputation.In the normal course of our business, we may obtain personal data, including credit card information. While webelieve we have adequate cyber and other security controls over individually identifiable customer, employee and vendordata provided to us, a breakdown or a breach in our systems that results in the unauthorized release of individuallyidentifiable customer or other sensitive data could nonetheless occur and have a material adverse effect on our reputation,operating results and financial condition.If we fail to maintain an effective system of internal controls, then we may not be able to accurately report our financialresults or prevent fraud. As a result, current and potential unitholders could lose confidence in our financial reporting,which would harm our business and the trading price of our common units.Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operatesuccessfully as a public company. If our efforts to maintain internal controls are not successful or if we are unable to maintainadequate controls over our financial processes and reporting in the future or if we are unable to comply with our obligationsunder Section 404 of the Sarbanes‑Oxley Act of 2002, our operating results could be harmed or we may fail to meet ourreporting obligations. Ineffective internal controls also could cause investors to lose confidence in our reported financialinformation, which would likely have a negative effect on the trading price of our common units.Risks Related to our StructureOur general partner and its affiliates have conflicts of interest and limited fiduciary duties, which could permit them tofavor their own interests to the detriment of our unitholders.As of March 6, 2018, affiliates of our general partner, including directors and executive officers and their affiliates,owned 21.4% of our common units and the entire general partner interest. Although our general partner has a fiduciary dutyto manage us in a manner beneficial to us and our unitholders, the directors and officers of our general partner have afiduciary duty to manage our general partner in a manner beneficial to its owners. Furthermore, certain directors and officersof our general partner are directors or officers of affiliates of our general partner. Conflicts of interest may arise between ourgeneral partner and its affiliates, on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts,our general partner may favor its own interests and the interests of its affiliates over the interests of our unitholders. Pleaseread “—Our partnership agreement limits our general partner’s fiduciary duties to37 Table of Contentsunitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwiseconstitute breaches of fiduciary duty.” These conflicts include, among others, the following situations:·Our general partner is allowed to take into account the interests of parties other than us, such as affiliates of itsmembers, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to our unitholders.·Affiliates of our general partner may engage in competition with us under certain circumstances. Please read “—Certain members of the Slifka family and their affiliates may engage in activities that compete directly with us.”·Neither our partnership agreement nor any other agreement requires owners of our general partner to pursue abusiness strategy that favors us. Directors and officers of our general partner’s owners have a fiduciary duty tomake these decisions in the best interest of such owners which may be contrary to our interests.·Some officers of our general partner who provide services to us devote time to affiliates of our general partner.·Our general partner has limited its liability and reduced its fiduciary duties under the partnership agreement,while also restricting the remedies available to our unitholders for actions that, without these limitations, mightconstitute breaches of fiduciary duty. As a result of purchasing common units, unitholders consent to someactions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties underapplicable state law.·Our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances ofadditional partnership securities and reserves, each of which can affect the amount of cash available fordistribution to our unitholders.·Our general partner determines the amount and timing of any capital expenditures and whether a capitalexpenditure is a maintenance capital expenditure, which reduces distributable cash flow, or a capitalexpenditure for acquisitions or capital improvements, which does not, and determination can affect the amountof cash distributed to our unitholders.·In some instances, our general partner may cause us to borrow funds in order to permit the payment of cashdistributions, even if the purpose or effect of the borrowing is to make incentive distributions.·Our general partner determines which costs incurred by it and its affiliates are reimbursable by us.·Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for anyservices rendered on terms that are fair and reasonable to us or entering into additional contractual arrangementswith any of these entities on our behalf.·Our general partner intends to limit its liability regarding our contractual and other obligations.·Our general partner may exercise its limited right to call and purchase common units if it and its affiliates ownmore than 80% of the common units.·Our general partner controls the enforcement of obligations owed to us by it and its affiliates.·Our general partner decides whether to retain separate counsel, accountants or others to perform services for us.38 Table of ContentsPlease read Part III, Item 13, “Certain Relationships and Related Transactions, and Director Independence—Omnibus Agreement and Business Opportunity Agreement.”Our partnership agreement limits our general partner’s fiduciary duties to unitholders and restricts the remedies availableto unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.Our partnership agreement contains provisions that reduce the standards to which our general partner wouldotherwise be held by state fiduciary duty law. For example, our partnership agreement:·permits our general partner to make a number of decisions in its individual capacity, as opposed to in itscapacity as our general partner. This entitles our general partner to consider only the interests and factors that itdesires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, ouraffiliates or any limited partner. Examples include the exercise of its limited call right, its voting rights withrespect to the units it owns, its registration rights and its determination whether or not to consent to any mergeror consolidation of us;·provides that our general partner shall not have any liability to us or our unitholders for decisions made in itscapacity as general partner so long as it acted in good faith, meaning it believed that the decision was in ourbest interests;·generally provides that affiliated transactions and resolutions of conflicts of interest not approved by theconflicts committee of the board of directors of our general partner and not involving a vote of unitholders mustbe on terms no less favorable to us than those generally being provided to or available from unrelated thirdparties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair andreasonable,” our general partner may consider the totality of the relationships between the parties involved,including other transactions that may be particularly advantageous or beneficial to us; and·provides that our general partner and its officers and directors will not be liable for monetary damages to us, ourlimited partners or assignees for any acts or omissions unless there has been a final and non‑appealablejudgment entered by a court of competent jurisdiction determining that the general partner or those otherpersons acted in bad faith or engaged in fraud or willful misconduct.By purchasing a common unit, a common unitholder will become bound by the provisions of the partnershipagreement, including the provisions described above.Unitholders have limited voting rights and are not entitled to elect our general partner or its directors or remove ourgeneral partner without the consent of the holders of at least 66 2/3% of the outstanding units (including units held by ourgeneral partner and its affiliates), which could lower the trading price of our common units.Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on mattersaffecting our business and, therefore, limited ability to influence management’s decisions regarding our business.Unitholders have no right to elect our general partner or its board of directors on an annual or other continuing basis. Theboard of directors of our general partner is chosen entirely by its members and not by the unitholders. Furthermore, if theunitholders are dissatisfied with the performance of our general partner, they have limited ability to remove our generalpartner. The vote of the holders of at least 66 2/3% of all outstanding common units (including units held by our generalpartner and its affiliates) is required to remove our general partner. As a result of these limitations, the price at which thecommon units trade could diminish because of the absence or reduction of a takeover premium in the trading price.39 Table of ContentsWe may issue additional units without unitholder approval, which would dilute unitholders’ ownership interests.At any time, we may issue an unlimited number of limited partner interests of any type without the approval of ourunitholders. The issuance by us of additional common units or other equity securities of equal or senior rank will have thefollowing effects:·our unitholders’ proportionate ownership interest in us will decrease;·the amount of cash available for distribution on each unit may decrease;·the relative voting strength of each previously outstanding unit may be diminished; and·the market price of the common units may decline.The market price of our common units could be adversely affected by sales of substantial amounts of our common units,including sales by our existing unitholders.A substantial number of our securities may be sold in the future either pursuant to Rule 144 under the Securities Actor pursuant to a registration statement filed with the SEC. Rule 144 under the Securities Act provides that after a holdingperiod of six months, non‑affiliates may resell restricted securities of reporting companies, provided that current publicinformation for the reporting company is available. After a holding period of one year, non‑affiliates may resell withoutrestriction, and affiliates may resell in compliance with the volume, current public information and manner of salerequirements of Rule 144. Pursuant to our partnership agreement, members of the Slifka family have registration rights withrespect to the common units owned by them.Sales by any of our existing unitholders of a substantial number of our common units, or the perception that suchsales might occur, could have a material adverse effect on the price of our common units or could impair our ability to obtaincapital through an offering of equity securities.Future market fluctuations may result in a lower price of our common units.An increase in interest rates may cause the market price of our common units to decline.Like all equity investments, an investment in our common units is subject to certain risks. In exchange for acceptingthese risks, investors may expect to receive a higher rate of return than would otherwise be obtainable from lower‑riskinvestments. Accordingly, as interest rates rise, the ability of investors to obtain higher risk‑adjusted rates of return bypurchasing government‑backed debt securities may cause a corresponding decline in demand for riskier investmentsgenerally, including yield‑based equity investments such as publicly‑traded limited partnership interests. Reduced demandfor our common units resulting from investors seeking other more favorable investment opportunities may cause the tradingprice of our common units to decline.Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable timeor price.If at any time our general partner and its affiliates own more than 80% of the common units, our general partner willhave the right, but not the obligation, which it may assign to any of its affiliates or to us, to acquire all, but not less than all,of the common units held by unaffiliated persons at a price not less than their then‑current market price. As a result,unitholders may be required to sell their common units at an undesirable time or price and may not receive any return ontheir investment. Unitholders may also incur a tax liability upon a sale of their units. Our general partner is not obligated toobtain a fairness opinion regarding the value of the common units to be repurchased by it upon exercise of the limited callright. There is no restriction in our partnership agreement that prevents our general partner from issuing additional commonunits and exercising its call right. If our general partner exercises its limited call right, the effect would be to take us privateand, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of theSecurities Exchange Act of 1934.40 Table of ContentsOur partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.Our partnership agreement restricts unitholders’ voting rights by providing that any units held by a person that owns20% or more of any class of units then outstanding, other than our general partner, its affiliates, their transferees and personswho acquired such units with the prior approval of the board of directors of our general partner, cannot vote on any matter.Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or acquire informationabout our operations, as well as other provisions limiting the unitholders’ ability to influence the manner or direction ofmanagement.Cost reimbursements due to our general partner and its affiliates will reduce cash available for distribution to ourunitholders.Prior to making any distribution on the common units, we reimburse our general partner and its affiliates for allexpenses they incur on our behalf, which is determined by our general partner in its sole discretion. These expenses includeall costs incurred by the general partner and its affiliates in managing and operating us, including costs for renderingcorporate staff and support services to us. We are managed and operated by directors and executive officers of our generalpartner. In addition, the majority of our operating personnel are employees of our general partner. Please read Part III, Item 13,“Certain Relationships and Related Transactions, and Director Independence.” The reimbursement of expenses and paymentof fees, if any, to our general partner and its affiliates could adversely affect our ability to pay cash distributions to ourunitholders.Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business.A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except forthose contractual obligations of the partnership that are expressly made without recourse to the general partner. Ourpartnership is organized under Delaware law, and we conduct business in a number of other states. The limitations on theliability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established insome of the other states in which we do business. A unitholder could be liable for our obligations as if he were a generalpartner if:·a court or government agency determined that we were conducting business in a state but had not compliedwith that particular state’s partnership statute; or·a unitholder’s right to act with other unitholders to remove or replace the general partner, approve someamendments to our partnership agreement or take other actions under our partnership agreement constitute“control” of our business.Unitholders may have liability to repay distributions.Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them.Under Delaware law, we may not make a distribution to unitholders if the distribution would cause our liabilities to exceedthe fair value of our assets. Delaware law provides that for a period of three years from the date of the impermissibledistribution, limited partners who received the distribution and who knew at the time of the distribution that it violatedDelaware law will be liable to the limited partnership for the distribution amount. Purchasers of units who become limitedpartners are liable for the obligations of the transferring limited partner to make contributions to us that are known to thepurchaser of units at the time it became a limited partner and for unknown obligations if the liabilities could be determinedfrom the partnership agreement. Liabilities to partners on account of their partnership interests and liabilities that arenon‑recourse to us are not counted for purposes of determining whether a distribution is permitted.The control of our general partner may be transferred to a third party without unitholder consent.Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all orsubstantially all of its assets without the consent of the unitholders. Furthermore, there is no restriction in the partnershipagreement on the ability of the members of our general partner from transferring their respective membership interests in41 Table of Contentsour general partner to a third party. The new members of our general partner would then be in a position to replace the boardof directors and officers of our general partner with their own choices and control the decisions taken by the board ofdirectors and officers of our general partner.Certain members of the Slifka family and their affiliates may engage in activities that compete directly with us.Mr. Richard Slifka and his affiliates (other than us) are subject to noncompetition provisions in the omnibusagreement and business opportunity agreement. In addition Mr. Eric Slifka’s and Mr. Andrew Slifka’s employmentagreements contain noncompetition provisions. These agreements do not prohibit Messrs. Richard Slifka, Eric Slifka andAndrew Slifka and certain affiliates of our general partner from owning certain assets or engaging in certain businesses thatcompete directly or indirectly with us. Please read Part III, Item 13, “Certain Relationships and Related Transactions, andDirector Independence—Omnibus Agreement and Business Opportunity Agreement.”Tax RisksOur tax treatment depends on our status as a partnership for federal income tax purposes and not being subject to amaterial amount of entity-level taxation. If the Internal Revenue Service, or IRS, were to treat us as a corporation forfederal income tax purposes, or we become subject to entity level taxation for state tax purposes, our cash available fordistribution to our unitholders would be substantially reduced.The anticipated after‑tax economic benefit of an investment in our common units depends largely on our beingtreated as a partnership for federal income tax purposes.Despite the fact that we are organized as a limited partnership under Delaware law, we would be treated as acorporation for U.S. federal income tax purposes unless we satisfy a “qualifying income” requirement. Based upon ourcurrent operations, we believe we satisfy the qualifying income requirement. However, no ruling has been or will berequested regarding our treatment as a partnership for U.S. federal income tax purposes. Failing to meet the qualifyingincome requirement or a change in current law could cause us to be treated as a corporation for U.S. federal income taxpurposes or otherwise subject us to taxation as an entity.If we were treated as a corporation for federal income tax purposes, we would pay U.S. federal income tax on ourtaxable income at the corporate tax rate. Distributions to our unitholders would generally be taxed again as corporatedistributions, and no income, gains, losses or deductions would flow through to our unitholders. Because a tax would beimposed upon us as a corporation, our cash available for distribution to our unitholders would be substantially reduced.Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-taxreturn to our unitholders, likely causing a substantial reduction in the value of our common units.Our partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a mannerthat subjects us to taxation as a corporation or otherwise subjects us to additional amounts of entity level taxation for federal,state, local or foreign income tax purposes, the minimum quarterly distribution amount and the target distribution amountsmay be adjusted to reflect the impact of that law or interpretation on us. At the state level, several states have been evaluatingways to subject partnerships to entity-level taxation through the imposition of state income, franchise or other forms oftaxation. We currently own assets and conduct business in several states that impose a margin or franchise tax. In the future,we may expand our operations. Imposition of a similar tax on us in other jurisdictions that we may expand to couldsubstantially reduce our cash available for distribution to our unitholders.The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potentiallegislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis.The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in ourcommon units may be modified by administrative, legislative or judicial changes or differing interpretations at any time.From time to time, members of Congress have proposed and considered substantive changes to the existing U.S. federalincome tax laws that would affect publicly traded partnerships. Although there is no current legislative proposal,42 Table of Contentsa prior legislative proposal would have eliminated the qualifying income exception to the treatment of all publicly tradedpartnerships as corporations upon which we rely for our treatment as a partnership for U.S. federal income tax purposes.In addition, on January 24, 2017, final regulations regarding which activities give rise to qualifying income withinthe meaning of Section 7704 of the Code (the “Final Regulations”) were published in the Federal Register. The FinalRegulations are effective as of January 19, 2017 and apply to taxable years beginning on or after January 19, 2017. We donot believe the Final Regulations affect our ability to be treated as a partnership for U.S. federal income tax purposes.However, any modification to the U.S. federal income tax laws may be applied retroactively and could make it moredifficult or impossible for us to meet the exception for certain publicly traded partnerships to be treated as partnerships forU.S. federal income tax purposes. We are unable to predict whether any of these changes or other proposals will ultimately beenacted. Any similar or future legislative changes could negatively impact the value of an investment in our common units.You are urged to consult with your own tax advisor with respect to the status of regulatory or administrative developmentsand proposals and their potential effect on your investment in our common units.We have subsidiaries that are treated as corporations for federal income tax purposes and subject to corporate‑levelincome taxes.As of December 31, 2017, we conducted substantially all of our operations of our end‑user business through sixsubsidiaries that are treated as corporations for federal income tax purposes. These corporations primarily engage in the retailsale of gasoline and/or operates convenience stores and collect rents on personal property leased to dealers andcommissioned agents at other stations. We may elect to conduct additional operations through these corporate subsidiaries inthe future. These corporate subsidiaries are subject to corporate‑level taxes, which reduce the cash available for distributionto us and, in turn, to unitholders. If the IRS were to successfully assert that these corporations have more tax liability than weanticipate or legislation were enacted that increased the corporate tax rate, our cash available for distribution to unitholderswould be further reduced.If the IRS were to contest the federal income tax positions we take, it may adversely impact the market for our commonunits, and the costs of any such contest would reduce our cash available for distribution to our unitholders. We have not requested a ruling from the IRS with respect to our treatment as a partnership for U.S. federal incometax purposes. The IRS may adopt positions that differ from the conclusions of our counsel expressed in this prospectus orfrom the positions we take. It may be necessary to resort to administrative or court proceedings to sustain some or all of ourcounsel’s conclusions or the positions we take. A court may not agree with some or all of the positions we take. Any contestwith the IRS may materially and adversely impact the market for our common units and the price at which they trade.Moreover, the costs of any contest between us and the IRS will result in a reduction in our cash available for distribution toour unitholders and thus will be borne indirectly by our unitholders.If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it(and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from suchaudit adjustments directly from us, in which case our cash available for distribution to our unitholders might besubstantially reduced and our current and former unitholders may be required to indemnify us for any taxes (including anyapplicable penalties and interest) resulting from such audit adjustments that were paid on such unitholders behalf.Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makesaudit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicablepenalties and interest) resulting from such audit adjustments directly from us. To the extent possible under the new rules, ourgeneral partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if weare eligible, issue a revised information statement to each unitholder and former unitholder with respect to an audited andadjusted return. Although our general partner may elect to have our unitholders and former unitholders take such auditadjustment into account and pay any resulting taxes (including applicable penalties or43 Table of Contentsinterest) in accordance with their interests in us during the tax year under audit, there can be no assurance that such electionwill be practical, permissible or effective in all circumstances. As a result, our current unitholders may bear some or all of thetax liability resulting from such audit adjustment, even if such unitholders did not own units in us during the tax year underaudit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties and interest, our cashavailable for distribution to our unitholders might be substantially reduced and our current and former unitholders may berequired to indemnify us for any taxes (including any applicable penalties and interest) resulting from such audit adjustmentsthat were paid on such unitholders behalf. These rules are not applicable for tax years beginning on or prior to December 31,2017.Even if our unitholders do not receive any cash distributions from us, they will be required to pay taxes on their share ofour taxable income.Because unitholders are treated as partners to whom we allocate taxable income, which could be different in amountthan the cash we distribute, unitholders are required to pay any federal income taxes and, in some cases, state and localincome taxes on their share of our taxable income even if they do not receive any cash distributions from us. For example, ifwe sell assets and use the proceeds to repay existing debt or fund capital expenditures, you may be allocated taxable incomeand gain resulting from the sale and our cash available for distribution would not increase. Similarly, taking advantage ofopportunities to reduce our existing debt, such as debt exchanges, debt repurchases, or modifications of our existing debtcould result in “cancellation of indebtedness income” being allocated to our unitholders as taxable income without anyincrease in our cash available for distribution. Our unitholders may not receive cash distributions from us equal to their shareof our taxable income or even equal to the tax liability that results from that income.Tax gain or loss on the disposition of our common units could be more or less than expected.If a unitholder sells common units, the unitholder will recognize a gain or loss equal to the difference between theamount realized and that unitholder’s tax basis in those common units. Because distributions in excess of a unitholder’sallocable share of our net taxable income decrease such unitholder’s tax basis in its common units, the amount, if any, ofsuch prior excess distributions with respect to the units a unitholder sells will, in effect, become taxable income to aunitholder if it sells such units at a price greater than its tax basis in those units, even if the price such unitholder receives isless than its original cost. In addition, because the amount realized includes a unitholder’s share of our nonrecourseliabilities, if a unitholder sells its units, a unitholder may incur a tax liability in excess of the amount of cash received fromthe sale.A substantial portion of the amount realized from a unitholder’s sale of our units, whether or not representing gain,may be taxed as ordinary income to such unitholder due to potential recapture items, including depreciation recapture. Thus,a unitholder may recognize both ordinary income and capital loss from the sale of units if the amount realized on a sale ofsuch units is less than such unitholder’s adjusted basis in the units. Net capital loss may only offset capital gains and, in thecase of individuals, up to $3,000 of ordinary income per year. In the taxable period in which a unitholder sells its units, suchunitholder may recognize ordinary income from our allocations of income and gain to such unitholder prior to the sale andfrom recapture items that generally cannot be offset by any capital loss recognized upon the sale of units.Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.In general, we are entitled to a deduction for interest paid or accrued on indebtedness properly allocable to our tradeor business during our taxable year. However, under the Tax Cuts and Jobs Act, for taxable years beginning afterDecember 31, 2017, our deduction for “business interest” is limited to the sum of our business interest income and 30% ofour “adjusted taxable income.” For the purposes of this limitation, our adjusted taxable income is computed without regardto any business interest expense or business interest income and, in the case of taxable years beginning before January 1,2022, any deduction allowable for depreciation, amortization, or depletion.44 Table of ContentsTax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences tothem.Investment in our common units by tax-exempt entities, such as employee benefit plans and individual retirementaccounts (known as IRAs) raises issues unique to them. For example, virtually all of our income allocated to organizationsthat are exempt from U.S. federal income tax, including IRAs and other retirement plans, will be unrelated business taxableincome and will be taxable to them. Further, with respect to taxable years beginning after December 31, 2017, a tax-exemptentity with more than one unrelated trade or business (including by attribution from investment in a partnership such as oursthat is engaged in one or more unrelated trade or business) is required to compute the unrelated business taxable income ofsuch tax-exempt entity separately with respect to each such trade or business (including for purposes of determining any netoperating loss deduction). As a result, for years beginning after December 31, 2017, it may not be possible for tax-exemptentities to utilize losses from an investment in our partnership to offset unrelated business taxable income from anotherunrelated trade or business and vice versa. Tax-exempt entities should consult a tax advisor before investing in our commonunits.Non-U.S. Unitholders will be subject to U.S. taxes and withholding with respect to their income and gain fromowning our units.Non-U.S. unitholders are generally taxed and subject to income tax filing requirements by the United States onincome effectively connected with a U.S. trade or business (“effectively connected income”). Income allocated to ourunitholders and any gain from the sale of our units will generally be considered to be “effectively connected” with a U.S.trade or business. As a result, distributions to a Non-U.S. unitholder will be subject to withholding at the highest applicableeffective tax rate and a Non-U.S. unitholder who sells or otherwise disposes of a unit will also be subject to U.S. federalincome tax on the gain realized from the sale or disposition of that unit.The Tax Cuts and Jobs Act imposes a withholding obligation of 10% of the amount realized upon a Non-U.S.unitholder’s sale or exchange of an interest in a partnership that is engaged in a U.S. trade or business. However, due tochallenges of administering a withholding obligation applicable to open market trading and other complications, the IRS hastemporarily suspended the application of this withholding rule to open market transfers of interest in publicly tradedpartnerships pending promulgation of regulations or other guidance that resolves the challenges. It is not clear if or whensuch regulations or other guidance will be issued. Non-U.S. unitholders should consult a tax advisor before investing in ourcommon units.We treat each purchaser of our common units as having the same tax benefits without regard to the common units actuallypurchased. The IRS may challenge this treatment, which could adversely affect the value of our common units.Because we cannot match transferors and transferees of common units, we have adopted certain methods forallocating depreciation and amortization deductions that may not conform to all aspects of existing Treasury Regulations. Asuccessful IRS challenge to the use of these methods could adversely affect the amount of tax benefits available to ourunitholders. It also could affect the timing of these tax benefits or the amount of gain from any sale of common units andcould have a negative impact on the value of our common units or result in audit adjustments to a unitholder’s tax returns.We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our commonunits each month based upon the ownership of our common units on the first day of each month, instead of on the basis ofthe date a particular common unit is transferred. The IRS may challenge this treatment, which could change the allocationof items of income, gain, loss and deduction among our unitholders.We generally prorate our items of income, gain, loss and deduction between transferors and transferees of ourcommon units each month based upon the ownership of our common units on the first day of each month (the “AllocationDate”), instead of on the basis of the date a particular common unit is transferred. Similarly, we generally allocate certaindeductions for depreciation of capital additions, gain or loss realized on a sale or other disposition of our assets and, in thediscretion of the general partner, any other extraordinary item of income, gain, loss or deduction based45 Table of Contentsupon ownership on the Allocation Date. Treasury Regulations allow a similar monthly simplifying convention, but suchregulations do not specifically authorize all aspects of our proration method. If the IRS were to challenge our prorationmethod, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.A unitholder whose common units are the subject of a securities loan (e.g., a loan to a “short seller” to cover a short sale ofcommon units) may be considered to have disposed of those common units. If so, such unitholder would no longer betreated for tax purposes as a partner with respect to those common units during the period of the loan and may recognizegain or loss from the disposition.Because there are no specific rules governing the U.S. federal income tax consequences of loaning a partnershipinterest, a unitholder whose common units are the subject of a securities loan may be considered to have disposed of theloaned units. In that case, the unitholder may no longer be treated for tax purposes as a partner with respect to those commonunits during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition.Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those common units maynot be reportable by the unitholder and any cash distributions received by the unitholder as to those common units could befully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognitionfrom a securities loan are urged consult a tax advisor to determine whether it is advisable to modify any applicable brokerageaccount agreements to prohibit their brokers from borrowing their common units.We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss anddeduction. The IRS may challenge these methodologies or the resulting allocations, which could adversely affect the valueof our common units.In determining the items of income, gain, loss and deduction allocable to our unitholders, we must routinelydetermine the fair market value of our assets. Although we may, from time to time, consult with professional appraisersregarding valuation matters, we make many fair market value estimates using a methodology based on the market value ofour common units as a means to measure the fair market value of our assets. The IRS may challenge these valuation methodsand the resulting allocations of income, gain, loss and deduction.A successful IRS challenge to these methods or allocations could adversely affect the timing or amount of taxableincome or loss being allocated to our unitholders. It also could affect the amount of gain recognized from the sale of ourcommon units, have a negative impact on the value of our common units or result in audit adjustments to our unitholders’tax returns without the benefit of additional deductions.Unitholders may be subject to state and local taxes and return filing requirements in jurisdictions where they do not live asa result of investing in our common units.In addition to U.S. federal income taxes, our unitholders may be subject to other taxes, including foreign, state andlocal taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the variousjurisdictions in which we conduct business or own property now or in the future, even if they do not live in any of thosejurisdictions. Our unitholders will likely be required to file foreign, state and local income tax returns and pay state and localincome taxes in some or all of these various jurisdictions. Further, our unitholders may be subject to penalties for failure tocomply with those requirements.We currently own assets and conduct business in several states, some of which impose a personal income tax onindividuals, corporations and other entities. As we make acquisitions or expand our business, we may own assets or conductbusiness in additional states that impose a personal income tax. It is our unitholders’ responsibility to file all U.S. federal,state, local and non‑U.S. tax returns. Item 1B. Unresolved Staff Comments.None.46 Table of Contents Item 3. Legal Proceedings.GeneralAlthough we may, from time to time, be involved in litigation and claims arising out of our operations in the normalcourse of business, we do not believe that we are a party to any litigation that will have a material adverse impact on ourfinancial condition or results of operations. Except as described below, we are not aware of any significant legal orgovernmental proceedings against us, or contemplated to be brought against us. We maintain insurance policies with insurersin amounts and with coverage and deductibles as our general partner believes are reasonable and prudent. However, we canprovide no assurance that this insurance will be adequate to protect us from all material expenses related to potential futureclaims or that these levels of insurance will be available in the future at economically acceptable prices.EnvironmentalIn connection with the October 2017 acquisition of retail gasoline and convenience store assets from Honey Farms,we assumed certain environmental liabilities, including certain ongoing environmental remediation efforts. As a result, weinitially recorded, on an undiscounted basis, a total environmental liability of approximately $1.3 million.In connection with the June 2015 acquisition of retail gasoline stations from Capitol Petroleum Group (“Capitol”),we assumed certain environmental liabilities, including future remediation activities required by applicable federal, state orlocal law or regulation at certain of the retail gasoline stations owned by Capitol. Certain environmental remediationobligations at most of the acquired retail gasoline station assets from Capitol are being funded by third parties who assumedcertain liabilities in connection with Capitol’s acquisition of these assets from ExxonMobil Corporation (“ExxonMobil”) in2009 and 2010 and, therefore, cost estimates for such obligations at these stations are not included in this estimate ofliability to us. As a result, we initially recorded, on an undiscounted basis, a total environmental liability of approximately$0.3 million for those locations not covered by third parties.In connection with the January 2015 acquisition of the Revere terminal (the “Revere Terminal”) located in BostonHarbor in Revere, Massachusetts from Global Petroleum Corp. (“GPC”), we assumed certain environmental liabilities,including certain ongoing environmental remediation efforts. As a result, we initially recorded, on an undiscounted basis, atotal environmental liability of approximately $3.1 million.In connection with the January 2015 acquisition of Warren Equities, Inc. (“Warren”), we assumed certainenvironmental liabilities, including certain ongoing environmental remediation efforts at certain of the retail gasolinestations owned or leased by Warren and future remediation activities required by applicable federal, state or local law orregulation. As a result, we initially recorded, on an undiscounted basis, a total environmental liability of approximately$36.5 million.In connection with the December 2012 acquisition of six New England retail gasoline stations from Mutual OilCompany, we assumed certain environmental liabilities, including certain ongoing remediation efforts. As a result, weinitially recorded, on an undiscounted basis, a total environmental liability of approximately $0.6 million.In connection with the March 2012 acquisition of Alliance Energy LLC (“Alliance”), we assumed Alliance’senvironmental liabilities, including ongoing environmental remediation at certain of the retail gasoline stations owned byAlliance and future remediation activities required by applicable federal, state or local law or regulation. Remedial actionplans are in place, as may be applicable with the state agencies regulating such ongoing remediation. Based on reports fromenvironmental consultants, our estimated cost of the ongoing environmental remediation for which Alliance was responsibleand future remediation activities required by applicable federal, state or local law or regulation is estimated to beapproximately $16.1 million to be expended over an extended period of time. Certain environmental remediationobligations at the retail stations acquired by Alliance from ExxonMobil in 2011 are being funded by a third‑party whoassumed the liability in connection with the Alliance/ExxonMobil transaction in 2011 and, therefore, cost estimates for suchobligations at these stations are not included in this estimate. As a result, we initially recorded, on an undiscounted basis,total environmental liabilities of approximately $16.1 million.47 Table of ContentsIn connection with the September 2010 acquisition of retail gasoline stations from ExxonMobil, we assumed certainenvironmental liabilities, including ongoing environmental remediation at and monitoring activities at certain of theacquired sites and future remediation activities required by applicable federal, state or local law or regulation. Remedialaction plans are in place with the applicable state regulatory agencies for the majority of these locations, including plans forsoil and groundwater treatment systems at certain sites. Based on consultations with environmental consultants, ourestimated cost of the remediation is expected to be approximately $30.0 million to be expended over an extended period oftime. As a result, we initially recorded, on an undiscounted basis, total environmental liabilities of approximately$30.0 million.In connection with the June 2010 acquisition of three refined petroleum products terminals in Newburgh, New York,we assumed certain environmental liabilities, including certain ongoing remediation efforts. As a result, we initiallyrecorded, on an undiscounted basis, a total environmental liability of approximately $1.5 million.In addition to the above-mentioned environmental liabilities related to our retail gasoline stations, we retain someof the environmental obligations associated with certain gasoline stations that we have sold.For additional information regarding our environmental liabilities, see Note 12 of Notes to Consolidated FinancialStatements included elsewhere in this report.OtherDuring the second quarter ended June 30, 2016, we determined that gasoline loaded from certain loading bays atone of our terminals did not contain the necessary additives as a result of an IT-related configuration error. The error wascorrected and all gasoline being sold at the terminal now contains the appropriate additives. Based upon current information,we believe approximately 14 million gallons of gasoline were impacted. We have notified the EPA of this error. As a result ofthis error, we could be subject to fines, penalties and other related claims, including customer claims.On August 2, 2016, we received a Notice of Violation (“NOV”) from the EPA, alleging that permits for ourpetroleum product transloading facility in Albany, New York (the “Albany Terminal”), issued by the New York StateDepartment of Environmental Conservation (“NYSDEC”) between August 9, 2011 and November 7, 2012, violated theClean Air Act (the “CAA”) and the federally enforceable New York State Implementation Plan (“SIP”) by increasingthroughput of crude oil at the Albany Terminal without complying with the New Source Review (“NSR”) requirements of theSIP. The Albany Terminal is a 63-acre licensed, permitted and operational stationary bulk petroleum storage and transferterminal that currently consists of petroleum product storage tanks, along with truck, rail and marine loading facilities, for thestorage, blending and distribution of various petroleum and related products, including gasoline, ethanol, distillates, heatingand crude oils. The applicable permits issued by the NYSDEC to us in 2011 and 2012 specifically authorize us to increasethe throughput of crude oil at the Albany Terminal. According to the allegations in the NOV, the NYSDEC permit actionsshould have been treated as a major modification under the NSR program, requiring additional emission control measuresand compliance with other NSR requirements. The NYSDEC has not alleged that our permits were subject to the NSRprogram. The CAA authorizes the EPA to take enforcement action in response to violations of the New York SIP seekingcompliance and penalties. We believe that the permits issued by the NYSDEC comply with the CAA and applicable state airpermitting requirements and that no material violation of law has occurred. We dispute the claims alleged in the NOV andresponded to the EPA in September 2016. We met with the EPA and provided additional information at the agency’s request.On December 16, 2016, the EPA proposed a Settlement Agreement in a letter to us relating to the allegations in the NOV. OnJanuary 17, 2017, we responded to the EPA indicating that the EPA had failed to explain or provide support for itsallegations and that the EPA needed to better explain its positions and the evidence on which it was relying. The EPA didnot respond with such evidence, but instead requested that we enter into a further tolling agreement. We have signed anumber of tolling agreements with respect to this matter and such agreements currently extend through June 29, 2018. Todate, the EPA has not taken any further formal action with respect to the NOV.On February 3, 2016, Earthjustice, an environmental advocacy organization, filed suit on behalf of the County ofAlbany, New York, a public housing development owned and operated by the Albany Housing Authority and certainenvironmental organizations against us in federal court in Albany under the citizen suit provisions of the CAA. In48 Table of Contentssummary, this lawsuit alleged that certain of our operations at the Albany Terminal are in violation of the CAA. OnFebruary 26, 2016, we filed a motion to dismiss the CAA action. On September 26, 2017, the United States District Courtgranted our motion to dismiss the suit in its entirety. The plaintiffs filed a Notice of Appeal with the Second Circuit Court ofAppeals, which was subsequently withdrawn in December 2017, thereby ending the lawsuit.By letter dated January 25, 2017, we received a notice of intent to sue (the “2017 NOI”) from Earthjustice related toalleged violations of the CAA; specifically alleging that we were operating the Albany Terminal without a valid CAA Title VPermit. On February 9, 2017, we responded to Earthjustice advising that the 2017 NOI was without factual or legal merit andthat we would move to dismiss any action commenced by Earthjustice. No action was taken by either the EPA or theNYSDEC with regard to the Earthjustice allegations. At this time, there has been no further action taken by Earthjustice.Neither the EPA nor the NYSDEC has followed up on the 2017 NOI. The Albany Terminal is currently operating pursuant toits Title V Permit. We believe that we have meritorious defenses against all allegations.On May 29, 2015 and in connection with a commercial dispute with Tethys Trading Company LLC (“Tethys”), wereceived a notice from Tethys alleging a default under, and purporting to terminate, our contract with Tethys for crude oilservices at our Oregon facility. However, we do not believe Tethys had the right to terminate the contract, and we willcontinue to investigate and determine the appropriate action to take to enforce our rights under the agreement. On March 26, 2015, we received a Notice of Non-Compliance (“NON”) from the Massachusetts Department ofEnvironmental Protection (“DEP”) with respect to the Revere Terminal, alleging certain violations of the National PollutantDischarge Elimination System Permit (“NPDES Permit”) related to storm water discharges. The NON required us to submit aplan to remedy the reported violations of the NPDES Permit. We have responded to the NON with a plan and haveimplemented modifications to the storm water management system at the Revere Terminal in accordance with the plan. Wehave requested that the DEP acknowledge completion of the required modifications to the storm water management systemin satisfaction of the NON. While no response has yet been received, we believe that compliance with the NON has beenachieved, and implementation of the plan will have no material impact on our operations.We received letters from the EPA dated November 2, 2011 and March 29, 2012, containing requirements and testingorders (collectively, the “Requests for Information”) for information under the CAA. The Requests for Information were partof an EPA investigation to determine whether we have violated sections of the CAA at certain of our terminal locations inNew England with respect to residual oil and asphalt. On June 6, 2014, a NOV was received from the EPA, alleging certainviolations of its Air Emissions License issued by the Maine Department of Environmental Protection, based upon the testresults at the South Portland, Maine terminal. We met with and provided additional information to the EPA with respect tothe alleged violations. On April 7, 2015, the EPA issued a Supplemental Notice of Violation (the “Supplemental NOV”)modifying the allegations of violations of the terminal’s Air Emissions License. We have responded to the SupplementalNOV and engaged in further negotiations with the EPA. A tolling agreement was executed with the United States onDecember 1, 2015, which has currently been extended through June 29, 2018. While we do not believe that a materialviolation has occurred, and we contest the allegations presented in the NOV and Supplemental NOV, we do not believe anyadverse determination in connection with the NOV would have a material impact on our operations. Item 4. Mine Safety DisclosuresNot applicable.49 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities.Our common units trade on the New York Stock Exchange (“NYSE”) under the symbol “GLP.” The closing saleprice per common unit on March 5, 2018 was $16.20. At the close of business on March 5, 2018, based upon informationreceived from our transfer agent and brokers and nominees, we had 9,320 common unitholders, including beneficial ownersof common units held in street name. The following table sets forth the range of the daily high and low sales prices percommon unit as quoted on the NYSE and the cash distributions per common unit for the periods indicated. Price Range Cash Distribution High Low Per Common Unit (a) 2017 Fourth Quarter $19.95 $14.85 $0.4625 Third Quarter 17.00 12.82 0.4625 Second Quarter 14.23 12.28 0.4625 First Quarter 19.82 12.55 0.4625 2016 Fourth Quarter $35.00 $14.80 $0.4625 Third Quarter 35.67 26.55 0.6975 Second Quarter 42.74 32.01 0.6925 First Quarter 40.37 32.68 0.6800 (a)Represents cash distributions attributable to the quarter. Cash distributions declared in respect of a calendar quarter arepaid in the following calendar quarter.We intend to make cash distributions to unitholders on a quarterly basis, although there is no assurance as to thefuture cash distributions since they are dependent upon future earnings, capital requirements, financial condition and otherfactors. Our credit agreement prohibits us from making cash distributions if any potential default or event of default, asdefined in the credit agreement, occurs or would result from the cash distribution. The indentures governing our outstandingsenior notes also limit our ability to make distributions to our unitholders in certain circumstances.Within 45 days after the end of each quarter, we will distribute all of our Available Cash (as defined in ourpartnership agreement) to unitholders of record on the applicable record date. The amount of Available Cash is all cash onhand on the date of determination of Available Cash for the quarter, less the amount of cash reserves established by ourgeneral partner to provide for the proper conduct of our business, to comply with applicable law, any of our debt instrumentsor other agreements, or to provide funds for distributions to unitholders and our general partner for any one or more of thenext four quarters.We will make distributions of Available Cash from distributable cash flow for any quarter in the following manner:99.33% to the common unitholders, pro rata, and 0.67% to the general partner, until we distribute for each outstandingcommon unit an amount equal to the minimum quarterly distribution for that quarter; and thereafter, cash in excess of theminimum quarterly distribution is distributed to the unitholders and the general partner based on the percentages as providedbelow.50 Table of ContentsAs holder of the incentive distribution rights, the general partner is entitled to incentive distributions if the amountwe distribute with respect to any quarter exceeds specified target levels shown below: Marginal Percentage Total Quarterly Distribution Interest in Distributions Target Amount Unitholders General Partner First Target Distribution up to $0.4625 99.33% 0.67% Second Target Distribution above $0.4625 up to $0.5375 86.33% 13.67% Third Target Distribution above $0.5375 up to $0.6625 76.33% 23.67% Thereafter above $0.6625 51.33% 48.67% The equity compensation plan information required by Item 201(d) of Regulation S‑K in response to this item isincorporated by reference from Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters—Equity Compensation Plan Table.”Recent Sales of Unregistered SecuritiesNone.Issuer Purchases of Equity SecuritiesWe did not repurchase any of our common units during the quarter ended December 31, 2017. Item 6. Selected Financial Data.The following table presents selected historical financial and operating data of Global Partners LP for the years andas of the dates indicated. The selected historical financial data is derived from the historical consolidated financialstatements of Global Partners LP.This table should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” and the historical consolidated financial statements of Global Partners LP and thenotes thereto included elsewhere in this report. In addition, this table presents non‑GAAP financial measures which we use inour business. These measures are not calculated or presented in accordance with generally accepted accounting principles inthe United States (“GAAP”). We explain these measures and present reconciliations to the most directly comparable financialmeasures calculated in accordance with GAAP in Part II, Item 7, “Management’s51 Table of ContentsDiscussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Key PerformanceIndicators.” Year Ended December 31, 2017 2016 2015 2014 2013 (dollars in millions except per unit amounts) Statement of Income Data: Sales $8,920.6 $8,239.6 $10,314.9 $17,269.9 $19,589.6 Cost of sales 8,337.5 7,693.1 9,717.2 16,725.1 19,185.1 Gross profit 583.1 546.5 597.7 544.8 404.5 Selling, general and administrative expenses 155.0 149.7 177.0 154.0 115.5 Operating expenses 283.6 288.5 290.3 204.1 185.7 Loss on trustee taxes 16.2 — — — — Lease exit and termination expenses — 80.7 — — — Amortization expense 9.2 9.4 13.5 18.9 19.2 Net (gain) loss on sale and disposition of assets (1.6) 20.5 2.1 2.2 (1.3) Goodwill and long-lived asset impairment 0.8 149.9 — — — Total operating costs and expenses 463.3 698.7 482.9 379.2 319.1 Operating income (loss) 119.8 (152.2) 114.7 165.6 85.4 Interest expense (86.2) (86.3) (73.3) (47.7) (43.5) Income (loss) before income tax benefit (expense) 33.5 (238.5) 41.4 117.9 41.9 Income tax benefit (expense) 23.6 (0.1) 1.9 (0.9) (0.9) Net income (loss) 57.1 (238.6) 43.3 117.0 41.0 Net loss (income) attributable to noncontrolling interest (1) 1.6 39.2 0.3 (2.3) 1.6 Net income (loss) attributable to Global Partners LP 58.8 (199.4) 43.6 114.7 42.6 Less: General partners’ interest in net income (loss) 0.4 (1.3) 7.7 6.0 3.5 Limited partners’ interest in net income (loss) $58.4 $(198.1) $35.9 $108.7 $39.1 Per Unit Data Basic net income (loss) per limited partner unit (2) $1.74 $(5.91) $1.12 $3.97 $1.43 Diluted net income (loss) per limited partner unit (2) $1.74 $(5.91) $1.11 $3.95 $1.42 Cash distributions per limited partner unit (3) $1.85 $1.85 $2.74 $2.53 $2.34 Cash Flow Data: Net cash provided by (used in): Operating activities $348.4 $(119.9) $62.5 $344.9 $255.1 Investment activities $(61.6) $6.4 $(649.7) $(91.1) $(243.2) Financing activities $(282.0) $122.4 $583.1 $(257.8) $(8.7) Other Financial Data: EBITDA (4) $225.0 $(4.9) $225.7 $242.3 $157.4 Adjusted EBITDA (4) $224.2 $129.7 $227.8 $244.5 $156.1 Distributable cash flow (5) $108.3 $(121.4) $126.9 $161.2 $105.2 Capital expenditures—acquisitions (6) $38.5 $ — $561.2 $ — $185.3 Capital expenditures—maintenance and expansion (6) $49.8 $71.3 $92.9 $95.1 $67.1 Operating Data: Normal heating degree days (7) 5,630 5,661 5,630 5,630 5,630 Actual heating degree days 5,310 5,177 5,651 5,664 5,521 Variance from normal heating degree days (6)% (9)% 0.37% 1% (2)%Variance from prior year actual degree days 3% (8)% (0.23)% 3% 16%Total gallons sold (in millions) 4,766 5,133 5,648 6,356 6,956 Variance in volume sold from prior year (7)% (9)% (11)% (9)% 14% Balance Sheet Data (at period end): Total assets $2,320.2 $2,564.0 $2,663.7 $2,030.8 $2,425.9 Long—term debt $957.8 $1,025.9 $1,075.6 $593.9 $910.0 Total debt $1,084.5 $1,300.5 $1,173.7 $594.6 $913.7 Total liabilities $1,925.9 $2,166.2 $1,969.7 $1,394.7 $1,962.7 Partners’ equity $394.3 $397.8 $694.0 $636.1 $463.2 The above table reflects certain rounding conventions.(1)On February 1, 2013, we acquired a 60% membership interest in Basin Transload, LLC (“Basin Transload”). The netincome (loss) in the table above is attributable to the noncontrolling interest which represents Basin Transload’s 40%interest.(2)See Note 2 of Notes to Consolidated Financial Statements included elsewhere in this report for net income (loss) perlimited partner unit calculation.52 Table of Contents(3)Cash distributions declared in one calendar quarter are paid in the following calendar quarter. This amount is based oncash distributions paid during each respective year. See Note 16 of Notes to Consolidated Financial Statements includedelsewhere in this report.(4)Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA, which is EBITDAfurther adjusted for gains or losses on the sale and disposition of assets and goodwill and long-lived asset impairmentcharges, are non‑GAAP financial measures which are discussed under “Results of Operations—Evaluating Our Results ofOperations” and reconciled to the most directly comparable GAAP financial measures under “Results of Operations—Key Performance Indicators” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition andResults of Operations.” In 2016, Adjusted EBITDA includes lease exit and termination expenses of $80.7 million whichwere recorded as a result of our December 2016 voluntary early termination of a sublease for 1,610 railcars (see Note 2 ofNotes to Consolidated Financial Statements). Excluding these expenses, Adjusted EBITDA would have been$210.4 million in 2016.(5)Distributable cash flow is a non‑GAAP financial measure which is discussed under “Results of Operations—EvaluatingOur Results of Operations” and reconciled to its most directly comparable GAAP financial measures under “Results ofOperations—Key Performance Indicators” in Part II, Item 7, “Management’s Discussion and Analysis of FinancialCondition and Results of Operations.” As defined by our partnership agreement, distributable cash flow is not adjustedfor certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived assetimpairment charges. In 2016, distributable cash flow includes a net loss on sale and disposition of assets of$20.5 million, a net goodwill and long-lived asset impairment of $114.1 million ($149.9 million attributed to us, offsetby $35.8 million attributed to the noncontrolling interest) and lease exit and termination expenses of $80.7 million (seeNote 2 of Notes to Consolidated Financial Statements for additional information on the impairment charges and leasetermination). Excluding these charges, distributable cash flow would have been $93.9 million in 2016.(6)Capital expenditures are discussed under “Liquidity and Capital Resources” in Part II, Item 7, “Management’sDiscussion and Analysis of Financial Condition and Results of Operations.”(7)Degree days is an industry measurement of temperature designed to evaluate energy demand and consumption which isfurther discussed under “Results of Operations—Evaluating Our Results of Operations” in Part II, Item 7,“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”53 Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.The following discussion and analysis of financial condition and results of operations of Global Partners LPshould be read in conjunction with the historical consolidated financial statements of Global Partners LP and the notesthereto included elsewhere in this report.OverviewGeneralWe are a midstream logistics and marketing company engaged in the purchasing, selling, storing and logistics oftransporting petroleum and related products, including gasoline and gasoline blendstocks (such as ethanol), distillates (suchas home heating oil, diesel and kerosene), residual oil, renewable fuels, crude oil and propane. We own, control or haveaccess to one of the largest terminal networks of refined petroleum products and renewable fuels in the Northeast. We are oneof the largest distributors of gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercialcustomers in the New England states and New York. We are also one of the largest independent owners, suppliers andoperators of gasoline stations and convenience stores in these areas. As of December 31, 2017, we had a portfolio of 1,455owned, leased and/or supplied gasoline stations, including 264 directly operated convenience stores, in the Northeast,Maryland and Virginia. We also receive revenue from convenience store sales, rental income and sundries. In addition, weown transload and storage terminals in North Dakota and Oregon that extend our origin‑to‑destination capabilities from themid‑continent region of the United States and Canada.Collectively, we sold approximately $8.5 billion of refined petroleum products, renewable fuels, crude oil, propaneand small amounts of natural gas for the year ended December 31, 2017. In addition, we had other revenues of approximately$0.4 billion for the year ended December 31, 2017 from convenience store sales at our directly operated stores, rental incomefrom dealer leased and commissioned agent leased gasoline stations and from cobranding arrangements, and sundries.We base our pricing on spot prices, fixed prices or indexed prices and routinely use the NYMEX, CME, ICE or othercounterparties to hedge the risk inherent in buying and selling commodities. Through the use of regulated exchanges orderivatives, we seek to maintain a position that is substantially balanced between purchased volumes and sales volumes orfuture delivery obligations.Operating SegmentsWe purchase refined petroleum products, renewable fuels, crude oil and propane primarily from domestic andforeign refiners and ethanol producers, crude oil producers, major and independent oil companies and trading companies. Weoperate our business under three segments: (i) Wholesale, (ii) GDSO and (iii) Commercial.WholesaleIn our Wholesale segment, we engage in the logistics of selling, gathering, storage and transportation of refinedpetroleum products, renewable fuels, crude oil and propane. We transport these products by railcars, barges and/or pipelinespursuant to spot or long-term contracts. From time to time, we aggregate crude oil by truck or pipeline in the mid-continentregion of the United States and Canada, transport it by rail and ship it by barge to refiners. We sell home heating oil, brandedand unbranded gasoline and gasoline blendstocks, diesel, kerosene, residual oil and propane to home heating oil andpropane retailers and wholesale distributors. Generally, customers use their own vehicles or contract carriers to take deliveryof the gasoline and distillates at bulk terminals and inland storage facilities that we own or control or at which we havethroughput or exchange arrangements. Ethanol is shipped primarily by rail and by barge.In our Wholesale segment, we obtain RINs in connection with our purchase of ethanol which is used for bulk tradingpurposes or for blending with gasoline through our terminal system. A RIN is a renewable identification number associatedwith government‑mandated renewable fuel standards. To evidence that the required volume of renewable fuel is blended withgasoline, obligated parties must retire sufficient RINs to cover their RVO. Our EPA obligations relative54 Table of Contentsto renewable fuel reporting are largely limited to the foreign gasoline and diesel that we may import.Gasoline Distribution and Station OperationsIn our GDSO segment, gasoline distribution includes sales of branded and unbranded gasoline to gasoline stationoperators and sub-jobbers. Station operations include (i) convenience stores, (ii) rental income from gasoline stations leasedto dealers, from commissioned agents and from cobranding arrangements and (iii) sundries (such as car wash sales, lottery andATM commissions).As of December 31, 2017, we had a portfolio of owned, leased and/or supplied gasoline stations, primarily in theNortheast, that consisted of the following: Company operated 264 Commissioned agents 267 Lessee dealers 230 Contract dealers 694 Total 1,455 At our company‑operated stores, we operate the gasoline stations and convenience stores with our employees, andwe set the retail price of gasoline at the station. At commissioned agent locations, we own the gasoline inventory, and we setthe retail price of gasoline at the station and pay the commissioned agent a fee related to the gallons sold. We receive rentalincome from commissioned agent leased gasoline stations for the leasing of the convenience store premises, repair bays andother businesses that may be conducted by the commissioned agent. At dealer‑leased locations, the dealer purchases gasolinefrom us, and the dealer sets the retail price of gasoline at the dealer’s station. We also receive rental income from(i) dealer‑leased gasoline stations and (ii) cobranding arrangements. We also supply gasoline to locations owned and/orleased by independent contract dealers. Additionally, we have contractual relationships with distributors in certain NewEngland states, pursuant to which we source and supply these distributors’ gasoline stations with ExxonMobil‑brandedgasoline.CommercialIn our Commercial segment, we include sales and deliveries to end user customers in the public sector and to largecommercial and industrial end users of unbranded gasoline, home heating oil, diesel, kerosene, residual oil and bunker fuel.In the case of public sector commercial and industrial end user customers, we sell products primarily either through acompetitive bidding process or through contracts of various terms. We generally arrange for the delivery of the product to thecustomer’s designated location, and we respond to publicly‑issued requests for product proposals and quotes. OurCommercial segment also includes sales of custom blended fuels delivered by barges or from a terminal dock to shipsthrough bunkering activity.SeasonalityDue to the nature of our business and our reliance, in part, on consumer travel and spending patterns, we mayexperience more demand for gasoline during the late spring and summer months than during the fall and winter. Travel andrecreational activities are typically higher in these months in the geographic areas in which we operate, increasing thedemand for gasoline. Therefore, our volumes in gasoline are typically higher in the second and third quarters of the calendaryear. As demand for some of our refined petroleum products, specifically home heating oil and residual oil for space heatingpurposes, is generally greater during the winter months, heating oil and residual oil volumes are generally higher during thefirst and fourth quarters of the calendar year. These factors may result in fluctuations in our quarterly operating results.55 Table of ContentsOutlookThis section identifies certain risks and certain economic or industry‑wide factors that may affect our financialperformance and results of operations in the future, both in the short‑term and in the long‑term. Our results of operations andfinancial condition depend, in part, upon the following:·Our business is influenced by the overall markets for refined petroleum products, renewable fuels, crude oiland propane and increases and/or decreases in the prices of these products may adversely impact our financialcondition, results of operations and cash available for distribution to our unitholders and the amount ofborrowing available for working capital under our credit agreement Results from our purchasing, storing,terminalling, transporting and selling operations are influenced by prices for refined petroleum products,renewable fuels, crude oil and propane, price volatility and the market for such products. Prices in the overallmarkets for these products may affect our financial condition, results of operations and cash available fordistribution to our unitholders. Our margins can be significantly impacted by the forward product pricing curve,often referred to as the futures market. We typically hedge our exposure to petroleum product and renewablefuel price moves with futures contracts and, to a lesser extent, swaps. In markets where future prices are higherthan current prices, referred to as contango, we may use our storage capacity to improve our margins by storingproducts we have purchased at lower prices in the current market for delivery to customers at higher prices in thefuture. In markets where future prices are lower than current prices, referred to as backwardation, inventories candepreciate in value and hedging costs are more expensive. For this reason, in these backward markets, weattempt to reduce our inventories in order to minimize these effects. When prices for the products we sell rise,some of our customers may have insufficient credit to purchase supply from us at their historical purchasevolumes, and their customers, in turn, may adopt conservation measures which reduce consumption, therebyreducing demand for product. Furthermore, when prices increase rapidly and dramatically, we may be unable topromptly pass our additional costs on to our customers, resulting in lower margins which could adversely affectour results of operations. Higher prices for the products we sell may (1) diminish our access to trade creditsupport and/or cause it to become more expensive and (2) decrease the amount of borrowings available forworking capital under our credit agreement as a result of total available commitments, borrowing baselimitations and advance rates thereunder. When prices for the products we sell decline, our exposure to risk ofloss in the event of nonperformance by our customers of our forward contracts may be increased as they and/ortheir customers may breach their contracts and purchase the products we sell at the then lower market price froma competitor. A significant decrease in the price for crude oil adversely affected the economics of domesticcrude oil production which, in turn, had an adverse effect on our crude oil logistics activities and sales. Asignificant decrease in crude oil differentials has also had an adverse effect on our crude oil logistics activitiesand sales. In addition, the prolonged decline in crude oil prices and crude oil differentials has indicated animpairment of our long-lived assets at our terminals in North Dakota. As a result of these events, we recognizeda goodwill and long-lived asset impairment of $149.9 million for year ended December 31, 2016.·We commit substantial resources to pursuing acquisitions and expending capital for growth projects, althoughthere is no certainty that we will successfully complete any acquisitions or growth projects or receive theeconomic results we anticipate from completed acquisitions or growth projects. We are continuouslyengaged in discussions with potential sellers and lessors of existing (or suitable for development) terminalling,storage, logistics and/or marketing assets, including gasoline stations, convenience stores and relatedbusinesses. Our growth largely depends on our ability to make accretive acquisitions and/or accretivedevelopment projects. We may be unable to execute such accretive transactions for a number of reasons,including the following: (1) we are unable to identify attractive transaction candidates or negotiate acceptableterms; (2) we are unable to obtain financing for such transactions on economically acceptable terms; or (3) weare outbid by competitors. In addition, we may consummate transactions that at the time of consummation webelieve will be accretive but that ultimately may not be accretive. If any of these events were to occur, our futuregrowth and ability to increase or maintain distributions could be limited. We can give no assurance that ourtransaction efforts will be successful or that any such efforts will be completed on terms that are favorable to us.56 Table of Contents·The condition of credit markets may adversely affect our liquidity. In the past, world financial marketsexperienced a severe reduction in the availability of credit. Possible negative impacts in the future couldinclude a decrease in the availability of borrowings under our credit agreement, increased counterparty creditrisk on our derivatives contracts and our contractual counterparties requiring us to provide collateral. Inaddition, we could experience a tightening of trade credit from our suppliers.·We depend upon marine, pipeline, rail and truck transportation services for a substantial portion of ourlogistics business in transporting the products we sell. A disruption in these transportation services could havean adverse effect on our financial condition, results of operations and cash available for distribution to ourunitholders. Hurricanes, flooding and other severe weather conditions could cause a disruption in thetransportation services we depend upon which could affect the flow of service. In addition, accidents, labordisputes between providers and their employees and labor renegotiations, including strikes, lockouts or a workstoppage, shortage of railcars, mechanical difficulties or bottlenecks and disruptions in transportation logisticscould also disrupt our businesses. These events could result in service disruptions and increased cost whichcould also adversely affect our financial condition, results of operations and cash available for distribution toour unitholders. Other disruptions, such as those due to an act of terrorism or war, could also adversely affect ourbusiness.·We have contractual obligations for certain transportation assets such as railcars, barges and pipelines. Adecline in demand for (i) the products we sell, including crude oil and ethanol, or (ii) our logistics activities,could result in a decrease in the utilization of our transportation assets, which could negatively impact ourfinancial condition, results of operations and cash available for distribution to our unitholders.·Our gasoline financial results, with particular impact to our GDSO segment, are seasonal and can be lower inthe first and fourth quarters of the calendar year. Due to the nature of our business and our reliance, in part,on consumer travel and spending patterns, we may experience more demand for gasoline during the late springand summer months than during the fall and winter. Travel and recreational activities are typically higher inthese months in the geographic areas in which we operate, increasing the demand for gasoline that we sell.Therefore, our results of operations in gasoline can be lower in the first and fourth quarters of the calendar year.·Our heating oil and residual oil financial results are seasonal and can be lower in the second and thirdquarters of the calendar year. Demand for some refined petroleum products, specifically home heating oil andresidual oil for space heating purposes, is generally higher during November through March than during Aprilthrough October. We obtain a significant portion of these sales during the winter months. Therefore, our resultsof operations in heating oil and residual oil for the first and fourth calendar quarters can be better than for thesecond and third quarters.·Warmer weather conditions could adversely affect our results of operations and financial condition. Weatherconditions generally have an impact on the demand for both home heating oil and residual oil. Because wesupply distributors whose customers depend on home heating oil and residual oil for space heating purposesduring the winter, warmer‑than‑normal temperatures during the first and fourth calendar quarters in theNortheast can decrease the total volume we sell and the gross profit realized on those sales. Therefore, ourresults of operations in heating oil and residual oil for the first and fourth calendar quarters can be better than forthe second and third quarters.·Energy efficiency, higher prices, new technology and alternative fuels could reduce demand for ourproducts. Higher prices and new technologies and alternative fuel sources, such as electric, hybrid or batterypowered motor vehicles, could reduce the demand for transportation fuels and adversely impact our sales oftransportation fuels. A reduction in sales of transportation fuels could have an adverse effect on our financialcondition, results of operations and cash available for distribution to our unitholders. In addition, increasedconservation and technological advances have adversely affected the demand for home heating oil and residualoil. Consumption of residual oil has steadily declined over the last three decades. We could face additionalcompetition from alternative energy sources as a result of future government-mandated57 Table of Contentscontrols or regulations further promoting the use of cleaner fuels. End users who are dual-fuel users have theability to switch between residual oil and natural gas. Other end users may elect to convert to natural gas.During a period of increasing residual oil prices relative to the prices of natural gas, dual-fuel customers mayswitch and other end users may convert to natural gas. During periods of increasing home heating oil pricesrelative to the price of natural gas, residential users of home heating oil may also convert to natural gas. Asdescribed above, such switching or conversion could have an adverse effect on our financial condition, resultsof operations and cash available for distribution to our unitholders. ·Changes in government usage mandates and tax credits could adversely affect the availability and pricing ofethanol, which could negatively impact our sales. The EPA has implemented a RFS pursuant to the EnergyPolicy Act of 2005 and the Energy Independence and Security Act of 2007. The RFS program seeks to promotethe incorporation of biofuels in the nation’s fuel supply and, to that end, sets annual quotas for the quantity ofrenewable fuels (such as ethanol) that must be blended into transportation fuels consumed in the United States.A RIN is assigned to each gallon of renewable fuel produced in or imported into the United States. We areexposed to the volatility in the market price of RINs. We cannot predict the future prices of RINs. RIN prices aredependent upon a variety of factors, including EPA regulations related to the amount of RINs required and thetotal amounts that can be generated, the availability of RINs for purchase, the price at which RINs can bepurchased, and levels of transportation fuels produced, all of which can vary significantly from quarter toquarter. If sufficient RINs are unavailable for purchase or if we have to pay a significantly higher price for RINs,or if we are otherwise unable to meet the EPA’s RFS mandates, our results of operations and cash flows could beadversely affected. Future demand for ethanol will be largely dependent upon the economic incentives to blendbased upon the relative value of gasoline and ethanol, taking into consideration the EPA’s regulations on theRFS program and oxygenate blending requirements. A reduction or waiver of the RFS mandate or oxygenateblending requirements could adversely affect the availability and pricing of ethanol, which in turn couldadversely affect our future gasoline and ethanol sales. In addition, changes in blending requirements orbroadening the definition of what constitutes a renewable fuel could affect the price of RINs which couldimpact the magnitude of the mark‑to‑market liability recorded for the deficiency, if any, in our RIN positionrelative to our RVO at a point in time.·We may not be able to fully implement or capitalize upon planned growth projects. We could have a numberof organic growth projects that may require the expenditure of significant amounts of capital in the aggregate.Many of these projects involve numerous regulatory, environmental, commercial and legal uncertaintiesbeyond our control. As these projects are undertaken, required approvals, permits and licenses may not beobtained, may be delayed or may be obtained with conditions that materially alter the expected returnassociated with the underlying projects. Moreover, revenues associated with these organic growth projects maynot increase immediately upon the expenditures of funds with respect to a particular project and these projectsmay be completed behind schedule or in excess of budgeted cost. We may pursue and complete projects inanticipation of market demand that dissipates or market growth that never materializes. As a result of theseuncertainties, the anticipated benefits associated with our capital projects may not be achieved.·New, stricter environmental laws and other industry-related regulations or environmental litigation couldsignificantly impact our operations and/or increase our costs, which could adversely affect our results ofoperations and financial condition. Our operations are subject to federal, state and local laws and regulationsregulating, among other matters, logistics activities, product quality specifications and other environmentalmatters. The trend in environmental regulation has been towards more restrictions and limitations on activitiesthat may affect the environment over time. Our business may be adversely affected by increased costs andliabilities resulting from such stricter laws and regulations. We try to anticipate future regulatory requirementsthat might be imposed and plan accordingly to remain in compliance with changing environmental laws andregulations and to minimize the costs of such compliance. Risks related to our environmental permits, includingthe risk of noncompliance, permit interpretation, permit modification, renewal of permits on less favorableterms, judicial or administrative challenges to permits by citizens groups or federal, state or local entities orpermit revocation are inherent in the operation of our58 Table of Contentsbusiness, as it is with other companies engaged in similar businesses. We may not be able to renew the permitsnecessary for our operations, or we may be forced to accept terms in future permits that limit our operations orresult in additional compliance costs. In recent years, the transport of crude oil and ethanol has become subjectto additional regulation. The establishment of more stringent design or construction, or other requirements forrailroad tank cars that are used to transport crude oil and ethanol with too short of a timeframe for compliancemay lead to shortages of compliant railcars available to transport crude oil and ethanol, which could adverselyaffect our business. Likewise, in recent years, efforts have commenced to seek to use federal, state and local lawsto contest issuance of permits, contest renewal of permits and restrict the types of railroad tanks cars that can beused to deliver products, including, without limitation, crude oil and ethanol to bulk storage terminals. Weresuch laws to come into effect and were they to survive appeals and judicial review, they would potentiallyexpose our operations to duplicative and possibly inconsistent regulation. There can be no assurances as to thetiming and type of such changes in existing laws or the promulgation of new laws or the amount of any requiredexpenditures associated therewith. Climate change continues to attract considerable public and scientificattention. In recent years environmental interest groups have filed suit against companies in the energy industryrelated to climate change. Should such suits succeed, we could face additional compliance costs or litigationrisks.Results of OperationsEvaluating Our Results of OperationsOur management uses a variety of financial and operational measurements to analyze our performance. Thesemeasurements include: (1) product margin, (2) gross profit, (3) EBITDA and Adjusted EBITDA, (4) distributable cash flow,(5) selling, general and administrative expenses (“SG&A”), (6) operating expenses and (7) degree day.Product MarginWe view product margin as an important performance measure of the core profitability of our operations. We reviewproduct margin monthly for consistency and trend analysis. We define product margin as our product sales minus productcosts. Product sales primarily include sales of unbranded and branded gasoline, distillates, residual oil, renewable fuels, crudeoil and propane, as well as convenience store sales, gasoline station rental income and revenue generated from our logisticsactivities when we engage in the storage, transloading and shipment of products owned by others. Product costs include thecost of acquiring the refined petroleum products, renewable fuels, crude oil and propane and all associated costs includingshipping and handling costs to bring such products to the point of sale as well as product costs related to convenience storeitems and costs associated with our logistics activities. We also look at product margin on a per unit basis (product margindivided by volume). Product margin is a non‑GAAP financial measure used by management and external users of ourconsolidated financial statements to assess our business. Product margin should not be considered an alternative to netincome, operating income, cash flow from operations, or any other measure of financial performance presented in accordancewith GAAP. In addition, our product margin may not be comparable to product margin or a similarly titled measure of othercompanies.Gross ProfitWe define gross profit as our product margin minus terminal and gasoline station related depreciation expenseallocated to cost of sales.EBITDA and Adjusted EBITDAEBITDA and Adjusted EBITDA are non‑GAAP financial measures used as supplemental financial measures bymanagement and may be used by external users of our consolidated financial statements, such as investors, commercial banksand research analysts, to assess:·our compliance with certain financial covenants included in our debt agreements;59 Table of Contents·our financial performance without regard to financing methods, capital structure, income taxes or historical costbasis;·our ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to ourpartners;·our operating performance and return on invested capital as compared to those of other companies in thewholesale, marketing, storing and distribution of refined petroleum products, renewable fuels, crude oil andpropane, and in the gasoline stations and convenience stores business, without regard to financing methods andcapital structure; and·the viability of acquisitions and capital expenditure projects and the overall rates of return of alternativeinvestment opportunities.Adjusted EBITDA is EBITDA further adjusted for gains or losses on the sale and disposition of assets and goodwilland long-lived asset impairment charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to netincome, operating income, cash flow from operating activities or any other measure of financial performance or liquiditypresented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income,and these measures may vary among other companies. Therefore, EBITDA and Adjusted EBITDA may not be comparable tosimilarly titled measures of other companies.Distributable Cash FlowDistributable cash flow is an important non‑GAAP financial measure for our limited partners since it serves as anindicator of our success in providing a cash return on their investment. Distributable cash flow as defined by our partnershipagreement is net income plus depreciation and amortization minus maintenance capital expenditures, as well as adjustmentsto eliminate items approved by the audit committee of the board of directors of our general partner that are extraordinary ornon-recurring in nature and that would otherwise increase distributable cash flow.Distributable cash flow as used in our partnership agreement determines our ability to make cash distributions onour incentive distribution rights. The investment community also uses a distributable cash flow metric similar to the metricused in our partnership agreement with respect to publicly traded partnerships to indicate whether or not such partnershipshave generated sufficient earnings on a current or historic level that can sustain or support an increase in quarterly cashdistribution. Our partnership agreement does not permit adjustments for certain non-cash items, such as net losses on the saleand disposition of assets and goodwill and long-lived asset impairment charges. Distributable cash flow should not be considered as an alternative to net income, operating income, cash flow fromoperations, or any other measure of financial performance presented in accordance with GAAP. In addition, our distributablecash flow may not be comparable to distributable cash flow or similarly titled measures of other companies.Selling, General and Administrative ExpensesOur SG&A expenses include, among other things, marketing costs, corporate overhead, employee salaries andbenefits, pension and 401(k) plan expenses, discretionary bonuses, non‑interest financing costs, professional fees andinformation technology expenses. Employee‑related expenses including employee salaries, discretionary bonuses andrelated payroll taxes, benefits, and pension and 401(k) plan expenses are paid by our general partner which, in turn, arereimbursed for these expenses by us.Operating ExpensesOperating expenses are costs associated with the operation of the terminals, transload facilities and gasoline stationsused in our business. Lease payments, maintenance and repair, property taxes, utilities, credit card fees, taxes, labor andlabor‑related expenses comprise the most significant portion of our operating expenses. The majority of these60 Table of Contentsexpenses remains relatively stable, independent of the volumes through our system, but fluctuate slightly depending on theactivities performed during a specific period.Degree DayA “degree day” is an industry measurement of temperature designed to evaluate energy demand and consumption.Degree days are based on how far the average temperature departs from a human comfort level of 65°F. Each degree oftemperature above 65°F is counted as one cooling degree day, and each degree of temperature below 65°F is counted as oneheating degree day. Degree days are accumulated each day over the course of a year and can be compared to a monthly or along‑term (multi‑year) average, or normal, to see if a month or a year was warmer or cooler than usual. Degree days areofficially observed by the National Weather Service and officially archived by the National Climatic Data Center. Forpurposes of evaluating our results of operations, we use the normal heating degree day amount as reported by the NationalWeather Service at its Logan International Airport station in Boston, Massachusetts. Recent DevelopmentIn the first quarter of 2018, we will recognize a one-time income item of approximately $52.6 million as a result ofthe extinguishment of a contingent liability related to the Volumetric Ethanol Excise Tax Credit, which tax credit programexpired in 2011. Based upon the significant passage of time from that 2011 expiration date, including underlying statutes oflimitation, as of January 31, 2018 we determined that the liability was no longer required. This recognition of one-timeincome will not impact cash flows from operations for the year ending December 31, 2018.2017 TransactionsAcquisition Gasoline Stations and Convenience Stores—On October 18, 2017, we completed the acquisition ofretail gasoline and convenience store assets from Honey Farms in a cash transaction. The acquisition included 11 company-operated retail sites with gasoline and convenience stores and 22 company-operated stand-alone convenience stores. All ofthe sites are located in and around the greater Worcester, Massachusetts area. See Note 18 of Notes to Consolidated FinancialStatements for additional information. Amended and Restated Credit Agreement—On April 25, 2017, we and certain of our subsidiaries entered into athird amended and restated credit agreement with aggregate commitments of $1.3 billion and a maturity date of April 30,2020. See Note 6 of Notes to Consolidated Financial Statements for additional information on the credit agreement.Sale of Natural Gas and Electricity Brokerage Businesses—On February 1, 2017, we completed the sale of ournatural gas marketing and electricity brokerage businesses for a purchase price of approximately $17.3 million, subject tocustomary closing adjustments. Proceeds from the sale amounted to approximately $16.3 million, and we realized a gain onthe sale of $14.2 million. Prior to the sale, the results of the natural gas marketing and electricity brokerage businesses wereincluded in the Commercial segment.2016 TransactionsEarly Termination of Railcar Sublease—On December 21, 2016 (effective December 31, 2016), we voluntarilyterminated early a sublease with a counterparty for 1,610 railcars that were underutilized due to unfavorable marketconditions in the crude oil by rail market. Separately, we entered into a fleet management services agreement (effectiveJanuary 1, 2017) with the counterparty, pursuant to which we provide railcar storage, freight, cleaning, insurance and otherservices on behalf of the counterparty. As a result of the sublease termination, we recognized one-time discounted lease exitand termination expenses of $80.7 million in the fourth quarter of 2016 consisting of (i) $61.7 million cash consideration,(ii) $10.7 million of accrued incremental costs relating to our obligations under the sublease, and (iii) $8.3 million associatedwith derecognizing accumulated prepaid rent. The $61.7 million cash consideration represents a discount of $10.2 million from $71.9 million in railcar leasepayments that we would have been obligated to pay over the next three years. The termination of the sublease eliminatedlease payments related to these railcars of approximately $30.0 million in 2017 and future lease payments of61 Table of Contentsapproximately $29.0 million and $13.0 million in 2018 and 2019, respectively. In addition to the discounted leasetermination payment, the one-time expense includes costs for future railcar storage, freight, cleaning, insurance and otherservices, as well as certain non-cash accounting adjustments associated with the early termination. See Note 2 of Notes toConsolidated Financial Statements for additional information.Goodwill and Long-Lived Asset Impairment—In 2016, we recognized a goodwill impairment charge of$121.7 million related to the Wholesale reporting unit and a long-lived asset impairment charge of $28.2 million,substantially all of which is due to crude oil related activities. See Note 2 of Notes to Consolidated Financial Statements for adescription of the facts and circumstances related to the impairment charges.Dock Expansion and Tank Conversion—In the third quarter of 2016, we completed the measures at our West Coastfacility, including cleaning of tanks and associated infrastructure, to convert the facility from crude oil to ethanoltransloading and began transloading ethanol.Sale of Gasoline Stations—On August 22, 2016, Drake Petroleum Company, Inc., a subsidiary of ours, sold toMirabito Holdings, Inc. 30 gasoline stations and convenience stores located in New York and Pennsylvania (the “DrakeSites”) for an aggregate total cash purchase price of approximately $40.0 million. In connection with closing, the partiesentered into long-term supply contracts for branded and unbranded gasoline and other petroleum products. See Note 5 ofNotes to Consolidated Financial Statements.Sale-Leaseback Transaction—On June 29, 2016, we sold real property assets, including the buildings,improvements and appurtenances thereto, at 30 gasoline stations and convenience stores located in Connecticut, Maine,Massachusetts, New Hampshire and Rhode Island for a purchase price of approximately $63.5 million. In connection with thesale, we entered into a master unitary lease agreement with the buyer to lease back those real property assets sold with respectto these sites. See Note 6 of Notes to Consolidated Financial Statements. Expanded Retail Network—In April 2016, we expanded our gasoline station and convenience-store network inWestern Massachusetts with the addition of 22 leased retail sites (“22 leased sites”). Located in the Pittsfield and Springfieldareas, these sites were added through long-term leases.2015 TransactionsOn January 7, 2015, we acquired, through one of our wholly owned subsidiaries, GMG, 100% of the equity interestsin Warren from The Warren Alpert Foundation. On January 14, 2015, through our wholly owned subsidiary, Global Companies LLC, we acquired the Revereterminal located in Boston Harbor in Revere, Massachusetts from GPC and related entities. On June 1, 2015, through our wholly owned subsidiary, Alliance, we acquired retail gasoline stations and dealersupply contracts from Capitol. See Note 18 of Notes to Consolidated Financial Statements for additional information on our businesscombinations. 62 Table of ContentsKey Performance IndicatorsThe following table provides a summary of some of the key performance indicators that may be used to assess ourresults of operations. These comparisons are not necessarily indicative of future results (gallons and dollars in thousands): Year Ended December 31, 2017 2016 2015 Net income (loss) attributable to Global Partners LP$58,752 $(199,412) $43,563 EBITDA (1)$225,020 $(4,851) $225,689 Adjusted EBITDA (1)(2)$224,205 $129,782 $227,786 Distributable cash flow (3)(4)$108,264 $(121,380) $126,855 Wholesale Segment: Volume (gallons) 2,654,551 3,018,575 3,680,201 Sales Gasoline and gasoline blendstocks$2,097,811 $2,026,315 $2,714,057 Crude oil (5) 464,234 546,541 1,190,560 Other oils and related products (6) 1,725,537 1,534,165 2,006,668 Total$4,287,582 $4,107,021 $5,911,285 Product margin Gasoline and gasoline blendstocks$82,124 $83,742 $66,031 Crude oil (5) 7,279 (13,098) 74,182 Other oils and related products (6) 62,799 74,271 67,709 Total$152,202 $144,915 $207,922 Gasoline Distribution and Station Operations Segment: Volume (gallons) 1,582,056 1,588,163 1,515,702 Sales Gasoline$3,434,581 $3,071,517 $3,289,742 Station operations (7) 351,876 371,661 381,194 Total$3,786,457 $3,443,178 $3,670,936 Product margin Gasoline$326,536 $289,420 $276,848 Station operations (7) 174,986 183,708 178,487 Total$501,522 $473,128 $455,335 Commercial Segment: Volume (gallons) 529,705 526,486 452,089 Sales$846,513 $689,440 $732,631 Product margin$17,858 $24,018 $29,201 Combined sales and product margin: Sales$8,920,552 $8,239,639 $10,314,852 Product margin (8)$671,582 $642,061 $692,458 Depreciation allocated to cost of sales (88,530) (95,571) (94,789) Combined gross profit$583,052 $546,490 $597,669 GDSO portfolio as of December 31, 2017, 2016 and 2015: Company operated 264 248 281 Commissioned agents 267 281 283 Lessee dealers 230 246 280 Contract dealers 694 683 665 Total GDSO portfolio 1,455 1,458 1,509 63 Table of Contents Year Ended December 31, 2017 2016 2015 Weather conditions: Normal heating degree days 5,630 5,661 5,630 Actual heating degree days 5,310 5,177 5,651 Variance from normal heating degree days (6)% (9)% 0.37%Variance from prior period actual heating degree days 3% (8)% (0.23)%(1)EBITDA and Adjusted EBITDA are non‑GAAP financial measures which are discussed above under “—Evaluating OurResults of Operations.” The table below presents reconciliations of EBITDA and Adjusted EBITDA to the most directlycomparable GAAP financial measures.(2)Adjusted EBITDA in 2016 also includes lease exit and termination expenses of $80.7 million which were recorded as aresult of our December 2016 voluntary early termination of a sublease for 1,610 railcars (see Note 2 of Notes toConsolidated Financial Statements). Excluding these expenses, Adjusted EBITDA would have been $210.4 million for2016.(3)Distributable cash flow is a non‑GAAP financial measure which is discussed above under “—Evaluating Our Results ofOperations.” As defined by our partnership agreement, distributable cash flow is not adjusted for certain non-cashitems, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.The table below presents reconciliations of distributable cash flow to the most directly comparable GAAP financialmeasures.(4)Distributable cash flow includes a net loss on sale and disposition of assets of $12.5 million, $20.5 million and$2.1 million for 2017, 2016 and 2015, respectively. Distributable cash flow also includes a net goodwill and long-livedasset impairment of $0.8 million, $114.1 million ($149.9 million attributed to us, offset by $35.8 million attributed tothe noncontrolling interest) and $0 for 2017, 2016 and 2015, respectively. Distributable cash flow for 2016 alsoincludes lease exit and termination expenses of $80.7 million which were recorded as a result of our voluntary earlytermination of a sublease for 1,610 railcars. See Note 2 of Notes to Consolidated Financial Statements for additionalinformation on the lease termination and impairment charges. Excluding the loss on sale and disposition of assets,impairment charges and lease exit and termination expenses, distributable cash flow would have been $121.6 million,$93.9 million and $128.9 million for 2017, 2016 and 2015, respectively. In 2017, distributable cash flow also includesa $14.2 million gain on the sale of our natural gas marketing and electricity brokerage businesses in February 2017 (seeNote 1 of Notes to Consolidated Financial Statements).(5)Crude oil consists of our crude oil sales and revenue from our logistics activities.(6)Other oils and related products primarily consist of distillates, residual oil and propane.(7)Station operations consist of convenience store sales, rental income and sundries.(8)Product margin is a non‑GAAP financial measure which is discussed above under “—Evaluating Our Results ofOperations.” The table above includes a reconciliation of product margin on a combined basis to gross profit, a directlycomparable GAAP financial measure. 64 Table of ContentsThe following table presents reconciliations of EBITDA and Adjusted EBITDA to the most directly comparableGAAP financial measures on a historical basis (in thousands): Year Ended December 31, 2017 2016 2015 Reconciliation of net income (loss) to EBITDA and Adjusted EBITDA: Net income (loss)$57,117 $(238,623) $43,264 Net loss attributable to noncontrolling interest 1,635 39,211 299 Net income (loss) attributable to Global Partners LP 58,752 (199,412) 43,563 Depreciation and amortization, excluding the impact of noncontrolling interest 103,601 108,189 110,670 Interest expense, excluding the impact of noncontrolling interest 86,230 86,319 73,329 Income tax (benefit) expense (23,563) 53 (1,873) EBITDA 225,020 (4,851) 225,689 Net (gain) loss on sale and disposition of assets (1,624) 20,495 2,097 Goodwill and long-lived asset impairment 809 149,972 — Goodwill and long-lived asset impairment attributable to noncontrolling interest — (35,834) — Adjusted EBITDA (1)$224,205 $129,782 $227,786 Reconciliation of net cash provided by (used in) operating activities to EBITDA andAdjusted EBITDA: Net cash provided by (used in) operating activities$348,442 $(119,886) $62,506 Net changes in operating assets and liabilities and certain non-cash items (185,673) (6,795) 96,609 Net cash from operating activities and changes in operating assets and liabilitiesattributable to noncontrolling interest (416) 35,458 (4,882) Interest expense, excluding the impact of noncontrolling interest 86,230 86,319 73,329 Income tax (benefit) expense (23,563) 53 (1,873) EBITDA 225,020 (4,851) 225,689 Net (gain) loss on sale and disposition of assets (1,624) 20,495 2,097 Goodwill and long-lived asset impairment 809 149,972 — Goodwill and long-lived asset impairment attributable to noncontrolling interest — (35,834) — Adjusted EBITDA (1)$224,205 $129,782 $227,786 (1)Adjusted EBITDA in 2016 also includes lease exit and termination expenses of $80.7 million which were recorded as aresult of our December 2016 voluntary early termination of a sublease for 1,610 railcars (see Note 2 of Notes toConsolidated Financial Statements). Excluding these expenses, Adjusted EBITDA would have been $210.4 million for2016. 65 Table of ContentsThe following table presents reconciliations of distributable cash flow to the most directly comparable GAAPfinancial measures on a historical basis (in thousands): Year Ended December 31, 2017 2016 2015 Reconciliation of net income (loss) to distributable cash flow: Net income (loss)$57,117 $(238,623) $43,264 Net loss attributable to noncontrolling interest 1,635 39,211 299 Net income (loss) attributable to Global Partners LP 58,752 (199,412) 43,563 Depreciation and amortization, excluding the impact of noncontrolling interest 103,601 108,189 110,670 Amortization of deferred financing fees and senior notes discount 7,089 7,412 6,988 Amortization of routine bank refinancing fees (4,277) (4,580) (4,516) Non-cash tax reform benefit (22,183) — — Maintenance capital expenditures, excluding the impact of noncontrolling interest (34,718) (32,989) (29,850) Distributable cash flow (1)(2)$108,264 $(121,380) $126,855 Reconciliation of net cash provided by (used in) operating activities to distributable cashflow: Net cash provided by (used in) operating activities$348,442 $(119,886) $62,506 Net changes in operating assets and liabilities and certain non-cash items (185,673) (6,795) 96,609 Net cash from operating activities and changes in operating assets and liabilitiesattributable to noncontrolling interest (416) 35,458 (4,882) Amortization of deferred financing fees and senior notes discount 7,089 7,412 6,988 Amortization of routine bank refinancing fees (4,277) (4,580) (4,516) Non-cash tax reform benefit (22,183) — — Maintenance capital expenditures, excluding the impact of noncontrolling interest (34,718) (32,989) (29,850) Distributable cash flow (1)(2)$108,264 $(121,380) $126,855 (1)Distributable cash flow is a non-GAAP financial measure which is discussed above under “—Evaluating Our Results ofOperations.” As defined by our partnership agreement, distributable cash flow is not adjusted for certain non-cash items,such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges. (2)Distributable cash flow includes a net loss on sale and disposition of assets of $12.5 million, $20.5 million and$2.1 million for 2017, 2016 and 2015, respectively. Distributable cash flow also includes a net goodwill and long-livedasset impairment of $0.8 million, $114.1 million ($149.9 million attributed to us, offset by $35.8 million attributed tothe noncontrolling interest) and $0 for 2017, 2016 and 2015, respectively. Distributable cash flow for 2016 alsoincludes lease exit and termination expenses of $80.7 million which were recorded as a result of our voluntary earlytermination of a sublease for 1,610 railcars. See Note 2 of Notes to Consolidated Financial Statements for additionalinformation on the lease termination and impairment charges. Excluding the loss on sale and disposition of assets,impairment charges and lease exit and termination expenses, distributable cash flow would have been $121.6 million,$93.9 million and $128.9 million for 2017, 2016 and 2015, respectively. In 2017, distributable cash flow also includes a$14.2 million gain on the sale of our natural gas marketing and electricity brokerage businesses in February 2017 (seeNote 1 of Notes to Consolidated Financial Statements).Results of Operations for Years 2017, 2016 and 2015Consolidated SalesOur total sales were $8.9 billion and $8.2 billion for 2017 and 2016, respectively, an increase of $0.7 billion, or 8%,due to an increase in prices, partially offset by a decline in volume sold, primarily in our Wholesale segment. Our aggregatevolume of product sold was 4.7 billion gallons and 5.1 billion gallons for 2017 and 2016, respectively, a decrease of0.4 billion gallons. The decline in volume sold includes decreases of 364 million gallons in our Wholesale segment and6 million gallons in our GDSO segment. We had an increase of 3 million gallons in our Commercial segment.66 Table of ContentsOur total sales were $8.2 billion and $10.3 billion for 2016 and 2015, respectively, a decrease of $2.1 billion, or20%, due to a decrease in prices during 2016 and to a decline in volume sold. Our aggregate volume of product sold was5.1 billion gallons and 5.6 billion gallons for 2016 and 2015, respectively, a decrease of approximately 0.5 billion gallons.The decrease in volume sold includes a decrease of 661 million gallons in our Wholesale segment, primarily in crude oil andgasoline blendstocks. The decrease in volume sold was offset by increases of 74 million gallons in our Commercial segment,primarily in gasoline, and 72 million gallons in our GDSO segment, primarily due to the Capitol acquisition in June of 2015as well as the addition of 22 leased sites in April of 2016.Gross ProfitOur gross profit was $583.1 million and $546.5 million for 2017 and 2016, respectively, an increase of$36.6 million, or 7%, primarily due to improved product margins in gasoline distribution in our GDSO segment and crude oilin our Wholesale segment. The increase in gross profit was partially offset by product margin declines in other oils andrelated products in our Wholesale segment due to less favorable market conditions and in station operations in our GDSOsegment due to the sale of sites, including the Drake Sites sold in August 2016.Our gross profit was $546.5 million and $597.7 million for 2016 and 2015, respectively, a decrease of $51.2 million,or 9%, primarily due to less activity in crude oil caused by tighter crude oil differentials. The decrease in gross profit waspartially offset by favorable market conditions in our Wholesale segment in gasoline and gasoline blendstocks and anincrease in our GDSO segment, substantially attributed to a full year of results from the Capitol acquisition in June 2015 andto the addition of 22 leased sites in April 2016.Results for Wholesale SegmentGasoline and Gasoline Blendstocks. Sales from wholesale gasoline and gasoline blendstocks were $2.1 billion and$2.0 billion for 2017 and 2016, respectively, an increase of approximately $0.1 billion, or 5%, due to an increase in prices,partially offset by a decrease in volume. Our gasoline and gasoline blendstocks product margin was $82.1 million and$83.7 million for 2017 and 2016, respectively, a decrease of $1.6 million, or 2%, primarily due to less favorable marketconditions in gasoline in the second quarter of 2017, partially offset by weather-related supply disruptions in the thirdquarter of 2017.Sales from wholesale gasoline and gasoline blendstocks were $2.0 billion and $2.7 billion for 2016 and 2015,respectively, a decrease of $0.7 billion, or 25%, due to a decrease in prices during 2016 and to a decline in volume sold,primarily in gasoline blendstocks. The decrease in volume sold in 2016 was due, in part, to a change in gasoline blendstockssupply logistics as we supplied more by rail into our Albany, New York terminal for consumption at Albany and/or fortransfer to another one of our gasoline facilities. Capacity was available given the decrease in crude oil by rail volume at thatterminal. Previously, supplying our system by barge prompted sales to third parties of excess quantities aggregated to fillbarge capacity. Our gasoline and gasoline blendstocks product margin was $83.7 million and $66.0 million for 2016 and2015, respectively, an increase of $17.7 million, or 27%, primarily due to favorable market conditions in wholesale gasolineand gasoline blendstocks and higher volume through our terminals.Crude Oil. Crude oil sales and logistics revenues were approximately $0.5 billion for each of 2017 and 2016,decreasing by $82.3 million, or 15%, due to a decline in volume sold as crude oil did not discount sufficiently to make railtransport to the East Coast competitive with imports. Our crude oil product margin was $7.3 million and negative$13.1 million for 2017 and 2016, respectively, an increase of $20.4 million, or 155%. Our crude oil product margin for 2017was positively impacted by $43.2 million in revenue as compared to $28.0 million in 2016 related to the absence of logisticsnominations from one particular contract customer, and a $34.4 million decrease in railcar lease expense to $11.3 million as aresult of our early termination of a sublease in December 2016. Our crude oil product margin for 2017 was negativelyimpacted by a $13.1 million expense associated with the acceleration and corresponding termination of a contractualobligation under a pipeline connection agreement with Tesoro related to the Beulah, North Dakota facility and by lessvolume through our system.Crude oil sales and logistics revenues were $0.5 billion and $1.2 billion in 2016 and 2015, respectively, a decreaseof $0.7 billion, or 54%, primarily due to a decrease in volume sold. We had a negative product margin from67 Table of Contentscrude oil of $13.1 million for 2016 compared to a product margin of $74.2 million for 2015, a decrease of $87.3 million, or118%, primarily due to tighter crude oil differentials as mid-continent crude oil did not discount sufficiently to make railtransport to the East Coast competitive with imports. Our crude oil product margin for 2016 and 2015 was also negativelyimpacted by fixed costs which included barges, pipeline commitments and railcar leases. The primary fixed cost allocated tocrude oil was our railcar lease expense of $45.7 million and $49.0 million in 2016 and 2015, respectively. Our productmargin for 2016 includes $28.0 million in revenue related to the absence of logistics nominations from one particularcontract customer, specifically in the second, third and fourth quarters, and logistics revenue related to this contract in thefirst quarter. Our product margin for 2015 includes a $5.0 million reserve related to a customer dispute in the first quarter of2015.Other Oils and Related Products. Sales from other oils and related products (primarily distillates, residual oil andpropane) were $1.7 billion and $1.5 billion for 2017 and 2016, respectively, an increase of $0.2 billion, or 13%, primarilydue to an increase in prices, partially offset by a decrease in volume. Our product margin from other oils and related productswas $62.8 million and $74.3 million for 2017 and 2016, respectively, a decrease of $11.5 million, or 15%. Our productmargin for 2017 was negatively impacted due to less favorable market conditions during the second and fourth quarters of2017.Sales from other oils and related products were $1.5 billion and $2.0 billion for 2016 and 2015, respectively, adecrease of $0.5 billion, or 25%, primarily due to a decrease in prices. Our product margin from other oils and relatedproducts was $74.3 million and $67.7 million for 2016 and 2015, respectively, an increase of $6.6 million, or 10%, primarily,due to more favorable market conditions in distillates, improved margins in propane and an increase in residual oil volume.Our product margin was negatively impacted in 2016 due to warmer weather during the first quarter of 2016 whentemperatures were 12% warmer than normal and 26% warmer than the first quarter of 2015.Results for Gasoline Distribution and Station Operations SegmentGasoline Distribution. Sales from gasoline distribution were $3.4 billion and $3.1 billion for 2017 and 2016,respectively, an increase of $0.3 billion, or 10%, due to an increase in price. Our product margin from gasoline distributionwas $326.5 million and $289.4 million for 2017 and 2016, respectively, an increase of $37.1 million, or 13%. The increase inour gasoline product margin was primarily due to declining wholesale gasoline prices during the second, third and fourthquarters of 2017. Declining wholesale gasoline prices typically improve our gasoline product margin, the extent of whichdepends on the magnitude and duration.Sales from gasoline distribution were $3.1 billion and $3.3 billion for 2016 and 2015, respectively, a decrease of$0.2 billion, or 6%, primarily due to lower prices during the year, offset by an increase in volume sold primarily due to theacquisition of Capitol in June 2015 and the addition of 22 leased sites in April 2016. Our volume was not negativelyimpacted due to the sale of the Drake Sites as we have supply contracts related to those sites. Our product margin fromgasoline distribution was $289.4 million and $276.8 million for 2016 and 2015, respectively, an increase of $12.6 million, or5%, primarily due to the Capitol acquisition, the expansion of our leased portfolio, including the addition of 22 leased sitesand the opening for business of certain raze and rebuild projects and new-to-industry sites, offset by a decrease in productmargin due to the sale of the Drake Sites.Station Operations. Our station operations, which include (i) convenience stores sales at our directly operatedstores, (ii) rental income from gasoline stations leased to dealers or from commissioned agents and from cobrandingarrangements and (iii) sale of sundries, such as car wash sales, lottery and ATM commissions, collectively generated revenuesof $0.4 billion for each of 2017 and 2016, decreasing $19.8 million, or 5%. Our product margin from station operations was$175.0 million and $183.7 million for 2017 and 2016, respectively, a decrease of $8.7 million, or 5%. The decreases in salesand product margin in 2017 are primarily due to the sale of sites, including the Drake Sites sold in August 2016, partiallyoffset by the addition of leased company operated sites in April 2016 and the acquisition of Honey Farms in October 2017.Revenues from our station operations were $0.4 billion for each of 2016 and 2015, decreasing $9.5 million, or 2%,in part due to the sale of the Drake Sites. Our product margin from station operations was $183.7 million and $178.5 millionfor 2016 and 2015, respectively, an increase of $5.2 million, or 3%, primarily due to a full year of rental68 Table of Contentsincome from the Capitol acquisition.Results for Commercial SegmentOur commercial sales were $0.8 billion and $0.7 billion for 2017 and 2016, respectively, increasing by$157.1 million, or 23%, primarily due to higher prices. Our commercial product margin was $17.9 million and $24.0 millionfor 2017 and 2016, respectively, a decrease of $6.1 million, or 25%. The decreases in sales and product margin are primarilydue to the sale of our natural gas marketing and electricity brokerage businesses in February 2017 sales.Our commercial sales were $0.7 billion for each of 2016 and 2015. Our commercial product margin was$24.0 million and $29.2 million for 2016 and 2015, respectively, a decrease of $5.2 million, or 18%, primarily due to warmerweather in the first quarter of 2016, which negatively impacted demand for distillates and residual oil, and a decrease inbunkering activity.Selling, General and Administrative ExpensesSG&A expenses were $155.0 million and $149.7 million for 2017 and 2016, respectively, an increase of$5.3 million, or 4%, including increases of $5.2 million in accrued incentive compensation and $2.4 million in professionalfees. In addition, during 2017, we incurred $1.1 million for certain costs in connection with a compensation fundingagreement with our general partner (see Note 15 of Notes to Consolidated Financial Statements). The increase in SG&Aexpenses was offset, in part, by decreases of $0.9 million in bad debt expense and $0.6 million in salaries and wages, as wellas a decline of $1.9 million in severance charges incurred primarily in 2016 related to a reduction in our workforce.SG&A expenses were $149.7 million and $177.0 million for 2016 and 2015, respectively, a decrease of$27.3 million, or 15%, including decreases of $12.9 million in professional fees and due diligence expenses, primarilyrelated to potential acquisitions and growth opportunities and $8.0 million in wages and benefits. The decrease in SG&Aexpenses also reflects $7.7 million in acquisition costs and restructuring charges in connection with the Warren acquisitionand $3.5 million in acquisition costs in connection with the Capitol acquisition in 2015. The decrease in SG&A expenseswas offset by increases of $2.6 million in severance charges incurred related to a reduction in our workforce and theseverance and retention payments related to the sale of our natural gas business, $1.0 million in information technologyrelated licenses and $1.2 million in other SG&A expenses.Operating ExpensesOperating expenses were $283.6 million and $288.5 million for 2017 and 2016, respectively, a decrease of$4.9 million, or 2%. Operating expenses decreased by $2.6 million associated with our GDSO operations due, in part, to thesale of sites, including the Drake Sites sold in August 2016, partially offset by increases in credit card fees due to higherwholesale gasoline prices and in rent expense associated with the addition of leased sites, and the Honey Farms acquisitionin October 2017. Operating expenses also decreased by $2.5 million at our Basin Transload facilities in North Dakota due toless activity. In addition, in 2016, we incurred $3.1 million in costs associated with cleaning tanks and related infrastructureat our Oregon facility in order to convert the facility to ethanol transloading. The decrease in operating expenses was offsetby an increase of $3.3 million associated with our terminal operations.Operating expenses were $288.5 million and $290.3 million for 2016 and 2015, respectively, a decrease of$1.8 million. Operating expenses decreased by $5.4 million associated with our terminal operations (excluding our NorthDakota facilities) and $5.0 million at our facilities in North Dakota, including decreases in wages and benefits at theselocations of $2.9 million and $3.0 million, respectively. Included in the terminal operating expenses was $3.1 million incosts associated with cleaning tanks and related infrastructure at our Oregon facility in order to convert the facility to ethanoltransloading. Operating expenses increased by $8.6 million associated with our GDSO segment, primarily due to the additionof 22 leased sites and a full year of operations from the Capitol acquisition, primarily in rent expense, direct overhead,property taxes and maintenance and repairs. The increase in operating expenses in our GDSO segment was offset, in part, bythe sale of the Drake Sites.69 Table of ContentsLoss on Trustee TaxesWe recognized a loss on trustee taxes of $16.2 million for 2017 related to an administratively closed New York Statetax audit of our fuel and sales tax returns for the periods between December 2008 through August 2013. See Note 2 of Notesto Consolidated Financial Statements, “Summary of Significant Accounting Policies—Trustee Taxes” for additionalinformation.Lease Exit and Termination ExpensesLease exit and termination expenses of $80.7 million for 2016 represent a one-time discounted lease terminationexpense related to the early termination of a sublease for 1,610 railcars leased from a third party. See Note 2 of Notes toConsolidated Financial Statements, “Summary of Significant Accounting Policies—Early Termination of Railcar Sublease”for additional information. Amortization ExpenseAmortization expense related to our intangible assets was $9.2 million, $9.4 million and $13.5 million for 2017,2016 and 2015, respectively. The decrease in amortization expense in 2016 compared to 2015 was primarily due tointangibles that became fully amortized in the second quarter of 2015, partially offset by a full year of amortization expenserelated to the intangibles acquired in the Capitol acquisition.Net Gain (Loss) on Sale and Disposition of AssetsNet gain (loss) on sale and disposition of assets was $1.6 million, ($20.5 million) and ($2.1 million) for 2017, 2016and 2015, respectively. During 2017, we recorded a $14.2 million gain associated with the sale of our natural gas marketingand electricity brokerage businesses in February 2017 and a net loss on the sale and disposition of assets of approximately$12.5 million. The net losses on the sale and disposition of assets are primarily due to the sale of GDSO sites. Included in thenet gain (loss) on sale and disposition of assets for 2017 and 2016 is approximately $4.0 million and $17.9 million,respectively, of goodwill derecognized as part of the site divestitures. See Note 5 of Notes to Consolidated FinancialStatements for additional information.Goodwill and Long-Lived Asset ImpairmentIn 2017, we recognized a long-lived asset impairment charge of $0.8 million relating to long-lived assets used atcertain gasoline stations and convenience stores associated with our GDSO segment. In 2016, we recognized a goodwillimpairment charge of $121.7 million related to the Wholesale reporting unit and a long-lived asset impairment charge of$28.2 million, substantially all of which is due to crude oil related activities. See Note 2 of Notes to Consolidated FinancialStatements for a description of the facts and circumstances related to the impairment charges.Interest ExpenseInterest expense was $86.2 million and $86.3 million for 2017 and 2016, respectively, a decrease of $0.1 million,primarily due to lower average balances on our credit facilities and lower interest rates due to the May 2016 expiration of ourinterest rate swap, partially offset by a full year of our financing obligation recognized in connection with our sale-leasebacktransaction entered into in June 2016.Interest expense was $86.3 million and $73.3 million for 2016 and 2015, respectively, an increase of $13.0 million,or 18%. The increase was primarily due to (i) increased interest related to the issuance of our 7.00% senior notes in June of2015; (ii) additional borrowings related to the Capitol acquisition; (iii) an increase in working capital borrowings, primarilydue to higher inventory levels; (iv) an increase of $6.2 million in 2016 associated with the financing obligations recognizedin connection with the acquisition of Capitol and our sale-leaseback transaction; and (v) $1.8 million associated with thewrite-off of a portion of our deferred financing fees associated with the elective reduction in our prior working capitalrevolving credit facility and our prior revolving credit facility in February 2016. The increase in interest expense waspartially offset by lower average interest rates for 2016 due to the May 201670 Table of Contentsexpiration of our interest rate swap.See Note 6 of Notes to Consolidated Financial Statements for additional information on our 7.00% senior notes, ourfinancing obligations and the write-offs of deferred financing fees.Income Tax Benefit (Expense)Income tax benefit (expense) of $23.6 million, ($0.1 million) and $1.9 million for 2017, 2016 and 2015,respectively, reflect income tax expense on the operating results of GMG, which is a taxable entity for federal and stateincome tax purposes. The income tax benefit in 2017 is primarily due to the impact of the enactment of the Tax Cuts andJobs Act in December 2017. As a result of the enactment of this law, we remeasured certain deferred tax assets and liabilitiesbased on the rates at which they are anticipated to reverse in the future, resulting in a decrease to our net deferred tax liabilityof $22.2 million in the fourth quarter of 2017. We are still in the process of analyzing the impact of the Tax Cuts and JobsAct and, therefore, the benefit was recorded based on provisional amounts. See Notes 2 and 11 of Notes to ConsolidatedFinancial Statements for additional information on income taxes.Net Loss Attributable to Noncontrolling InterestIn February 2013, we acquired a 60% membership interest in Basin Transload. The net loss income attributable tononcontrolling interest was $1.6 million, $39.2 million and $0.3 million for 2017, 2016 and 2015, respectively, whichrepresents the 40% noncontrolling ownership of the net loss reported. The noncontrolling interest for 2016 includes a$35.8 million goodwill and long-lived asset impairment.Liquidity and Capital ResourcesLiquidityOur primary liquidity needs are to fund our working capital requirements, capital expenditures and distributions andto service our indebtedness. Our primary sources of liquidity are cash generated from operations, amounts available under ourworking capital revolving credit facility and equity and debt offerings. Please read “—Credit Agreement” for moreinformation on our working capital revolving credit facility.Working capital was $209.5 million and $276.2 million at December 31, 2017 and 2016, respectively, a decrease of$66.7 million, primarily due to a decrease of $171.1 million in inventories, largely due to reduced inventory volume in partdue to a change in market structure and to lower crude oil volume, and an increase of $29.1 million in accrued expenses andother current liabilities, for a total decrease of $200.2 million. The decrease in working capital was offset primarily by adecrease of $147.9 million in the current portion of our working capital revolving credit facility, which represents theamount we expect to pay down during the course of the year (see Note 6 of Notes to Consolidated Financial Statements), duein part to the decline in inventory volume.Cash DistributionsDuring 2017, we paid the following cash distributions to our common unitholders and our general partner: Distribution Paid for the Cash Distribution Payment Date Total Paid Quarterly Period Ended February 14, 2017 $15.8 million Fourth quarter 2016 May 15, 2017 $15.8 million First quarter 2017 August 14, 2017 $15.8 million Second quarter 2017 November 14, 2017 $15.8 million Third quarter 2017 In addition, on January 29, 2018, the board of directors of our general partner declared a quarterly cash distributionof $0.4625 per unit ($1.85 per unit on an annualized basis) on all of our outstanding common units for the period fromOctober 1, 2017 through December 31, 2017 to our unitholders of record as of the close of business71 Table of ContentsFebruary 9, 2018. On February 14, 2018, we paid the total cash distribution of approximately $15.8 million.Contractual ObligationsWe have contractual obligations that are required to be settled in cash. The amounts of our contractual obligationsat December 31, 2017 were as follows (in thousands): Payments due by period 2022 and Contractual Obligations 2018 2019 2020 2021 Thereafter Total Credit facility obligations (1) $142,159 $230,119 $74,902 $ — $ — $447,180 Senior notes obligations (2) 44,438 44,438 44,438 44,438 718,320 896,072 Operating lease obligations (3) 99,359 62,627 39,909 34,526 161,301 397,722 Capital lease obligations 70 — — — — 70 Other long-term liabilities (4) 24,973 25,150 25,633 23,291 51,093 150,140 Financing obligations (5) 14,409 14,643 14,882 15,128 129,438 188,500 Total $325,408 $376,977 $199,764 $117,383 $1,060,152 $2,079,684 (1)Includes principal and interest on our working capital revolving credit facility and our revolving credit facility at December 31, 2017 andassumes a ratable payment through the expiration date. Our credit agreement has a contractual maturity of April 30, 2020 and no principalpayments are required prior to that date. However, we repay amounts outstanding and reborrow funds based on our working capitalrequirements. Therefore, the current portion of the working capital revolving credit facility included in the accompanying balance sheets isthe amount we expect to pay down during the course of the year, and the long-term portion of the working capital revolving credit facilityis the amount we expect to be outstanding during the entire year. Please read “—Credit Agreement” for more information on our workingcapital revolving credit facility.(2)Includes principal and interest on our senior notes. No principal payments are required prior to maturity.(3)Includes operating lease obligations related to leases for office space and computer equipment, land, terminals and throughputs, gasolinestations, railcars, mobile equipment, access rights and barges. See Note 9 of Notes to Consolidated Financial Statements for additionalinformation.(4)Includes amounts related to our 15-year brand fee agreement entered into in 2010 with ExxonMobil and amounts related to our pipelineconnection agreements and our natural gas transportation and reservation agreements (see Note 9 of Notes to Consolidated FinancialStatements for additional information on these agreements) and pension and deferred compensation obligations.(5)Includes lease rental payments in connection with (i) the acquisition of Capitol related to properties previously sold by Capitol within twosale-leaseback transactions; and (ii) the sale of real property assets at 30 gasoline stations and convenience stores. These transactions didnot meet the criteria for sale accounting and the lease rental payments are classified as interest expense on the respective financingobligation and the pay-down of the related financing obligation. See Note 6 of Notes to Consolidated Financial Statement for additionalinformation. See Note 9 of Notes to Consolidated Financial Statements with respect to purchase commitments and subleaseinformation related to certain lease agreements.Capital ExpendituresOur operations require investments to maintain, expand, upgrade and enhance existing operations and to meetenvironmental and operational regulations. We categorize our capital requirements as either maintenance capitalexpenditures or expansion capital expenditures. Maintenance capital expenditures represent capital expenditures to repair orreplace partially or fully depreciated assets to maintain the operating capacity of, or revenues generated by, existing assetsand extend their useful lives. Maintenance capital expenditures also include expenditures required to maintain equipmentreliability, tank and pipeline integrity and safety and to address certain environmental regulations. We anticipate thatmaintenance capital expenditures will be funded with cash generated by operations. We had approximately $34.7 million,$33.0 million and $30.0 million in maintenance capital expenditures for the years ended December 31, 2017, 2016 and2015, respectively, which are included in capital expenditures in the accompanying consolidated statements of cash flows, ofwhich approximately $27.9 million, $25.7 million and $20.8 million for 2017, 2016 and 2015, respectively, are related toour investments in our gasoline stations. Repair and maintenance expenses72 Table of Contentsassociated with existing assets that are minor in nature and do not extend the useful life of existing assets are charged tooperating expenses as incurred.Expansion capital expenditures include expenditures to acquire assets to grow our business or expand our existingfacilities, such as projects that increase our operating capacity or revenues by, for example, increasing dock capacity andtankage, diversifying product availability, investing in raze and rebuilds and new‑to‑industry gasoline stations andconvenience stores, increasing storage flexibility at various terminals and by adding terminals to our storage network. Wehave the ability to fund our expansion capital expenditures through cash from operations or our credit agreement or byissuing debt securities or additional equity. We had approximately $29.2 million, $38.3 million and $496.1 million inexpansion capital expenditures for the years ended December 31, 2017, 2016 and 2015, respectively, which are included incapital expenditures in the accompanying consolidated statements of cash flows.In 2017, the $29.2 million in expansion capital expenditures included approximately $14.1 million in property andequipment associated with the acquisition of Honey Farms. In addition, we had $15.1 million in expansion capitalexpenditures which consists of $8.7 million in raze and rebuilds, expansion and improvements at retail gasoline stations andnew-to-industry sites, and $6.4 million in other expansion capital expenditures, primarily related to investments ininformation technology and computer equipment.In 2016, the $38.3 million in expansion capital expenditures included approximately (i) $25.4 million in raze andrebuilds, expansion and improvements at retail gasoline stations and new-to-industry sites, and includes $5.7 million relatedto the addition of 22 leased sites in April 2016; (ii) $7.9 million in costs associated with our terminal assets, including$7.5 million in dock and infrastructure expansion at our Oregon facility, and (iii) $5.0 million in other expansion capitalexpenditures, primarily related to investments in information technology and computer equipment.In 2015, the $496.1 million in expansion capital expenditures included approximately $433.2 million in propertyand equipment associated with the acquisitions of Warren, the Revere Terminal and Capitol. In addition, we had$62.9 million in expansion capital expenditures which consists of (i) $36.8 million in rebuilds, expansion and improvementsat retail gasoline stations and new-to-industry sites, (ii) $15.0 million in costs associated with our crude oil activities,including, tank construction projects, dock and rail expansion and improvement costs and equipment upgrades and(iii) $11.1 million in other expansion capital expenditures including, in part, investments in information technology andcomputer and equipment upgrades at various terminals. Certain of the $15.0 million in costs associated with our crude oilactivities include expenditures related to our Beulah, North Dakota facility, 60% of which was funded by us and 40% wasfunded by the noncontrolling interest at Basin Transload. These costs are reported in the accompanying consolidatedstatements of cash flows as we concluded that we control the entity based on an evaluation of the outstanding votinginterests.We currently expect maintenance capital expenditures of approximately $40.0 million to $50.0 million andexpansion capital expenditures, excluding acquisitions, of approximately $30.0 million to $40.0 million in 2018, relatingprimarily to investments in our gasoline station business. These current estimates depend, in part, on the timing ofcompletion of projects, availability of equipment, weather and unanticipated events or opportunities requiring additionalmaintenance or investments.We believe that we will have sufficient cash flow from operations, borrowing capacity under our credit agreementand the ability to issue additional common units and/or debt securities to meet our financial commitments, debt serviceobligations, contingencies and anticipated capital expenditures. However, we are subject to business and operational risksthat could adversely affect our cash flow. A material decrease in our cash flows would likely have an adverse effect on ourborrowing capacity as well as our ability to issue additional common units and/or debt securities.73 Table of ContentsCash FlowThe following table summarizes cash flow activity for the years ended December 31 (in thousands): 2017 2016 2015 Net cash provided by (used in) operating activities $348,442 $(119,886) $62,506 Net cash (used in) provided by investing activities $(61,644) $6,447 $(649,764) Net cash (used in) provided by financing activities $(281,968) $122,351 $583,136 Operating ActivitiesCash flow from operating activities generally reflects our net income, balance sheet changes arising from inventorypurchasing patterns, the timing of collections on our accounts receivable, the seasonality of parts of our business,fluctuations in product prices, working capital requirements and general market conditions.Net cash provided by operating activities was $348.4 million for 2017 compared to net cash used in operatingactivities of $119.9 million for 2016, for a year‑over‑year increase in cash flows from operating activities of $468.3 million. Net cash used in operating activities was $119.9 million for 2016 compared to net cash provided by operatingactivities of $62.5 million for 2015, for a year‑over‑year decrease in cash flows from operating activities of $182.4 million.The primary drivers of the changes in operating activities include the following (in thousands): 2017 2016 Change 2016 2015 Change Decrease (increase) in accounts receivable $3,886 $(110,237) $114,123 $(110,237) $154,716 $(264,953) Decrease (increase) in inventories $173,167 $(135,888) $309,055 $(135,888) $(32,648) $(103,240) (Decrease) increase in accounts payable $(6,850) $17,410 $(24,260) $17,410 $(172,318) $189,728 Decrease (increase) in derivatives $2,346 $40,218 $(37,872) $40,218 (8,869) $49,087 In 2017, the decrease in inventories is due to reduced inventory volume, in part due to a change in market structureand to lower crude oil volume as compared to an increase in inventories in 2016 primarily due to higher prices. Accountsreceivable decreased slightly in 2017 as compared to a $110.2 million increase in 2016 which was primarily due to higherprices and an increase in the take-or-pay receivable with one particular crude oil contract customer. The increase in cashflows from operating activities also reflects the period over period increase in net income which in part reflects the$80.7 million lease exit and termination expenses incurred in 2016.In 2016, the increases in accounts receivable, inventories and accounts payable are primarily due to higher prices.An increase in the take-or-pay receivable with one particular crude oil contract customer also contributed to the increase inaccounts receivable. The $182.4 million decrease in cash flow from operating activities also reflects the decrease in netincome which, in part, reflects the $80.7 million lease exit and termination expenses and the decline in crude oil productmargin due to tight rail differentials. The change in derivatives year over year provided funds of $49.1 million.In 2015, the decreases in accounts payable and accounts receivable were primarily due to declining prices duringthe year. In addition, due to favorable market conditions, we elected to use our storage capacity to carry increased levels ofinventory.74 Table of ContentsInvesting ActivitiesNet cash used in investing activities was $61.6 million for 2017 and included $38.5 million in cash to fund theacquisition of Honey Farms, including inventory, $34.7 million in maintenance capital expenditures, $15.1 million inexpansion capital expenditures and $6.0 million in seller note issuances, offset by $32.7 million in proceeds from the sale ofproperty and equipment ($16.3 million from the sale of our natural gas marketing and electricity brokerage businesses, less$0.5 million in related transaction costs, and $16.9 million primarily from the sales of GDSO sites). The seller note issuancesrepresent notes we received from buyers in connection with the sale of certain of our gasoline stations.Net cash provided by investing activities was $6.4 million for 2016 and included $77.7 million in proceeds from thesale of property and equipment, primarily associated with the sale of the Drake Sites, the periodic divestiture of gasolinestations and the strategic asset divestiture program (see Note 5 of Notes to Consolidated Financial Statements), offset by$38.3 million in expansion capital expenditures and $33.0 million in maintenance capital expenditures.Net cash used in investing activities was $649.8 million for 2015 and included $381.8 million, $155.7 million and$23.7 million in cash used to fund the acquisitions of Warren, Capitol and the Revere Terminal, respectively, $62.9 millionin expansion capital expenditures and $30.0 million in maintenance capital expenditures, offset by $4.3 million in proceedsfrom the sale of property and equipment.Please read “—Capital Expenditures” for a discussion of our expansion capital expenditures for the years endedDecember 31, 2017, 2016 and 2015.Financing ActivitiesNet cash used in financing activities was $282.0 million for 2017 and included $197.9 million in net payments onour working capital revolving credit facility, due in part to reduced inventory volume which was partially due to a change inmarket structure, $62.7 million in cash distributions to our common unitholders and our general partner, $20.7 million in netpayments on our revolving credit facility, $0.5 million in LTIP units withheld for tax obligations related to awards thatvested in 2017 and $0.5 million in distributions to our noncontrolling interest at Basin Transload, offset by $0.3 million incapital contributions from our noncontrolling interest at Basin Transload.Net cash provided by financing activities was $122.4 million for 2016 and included $176.5 million in netborrowings from our working capital revolving credit facility, primarily due to an increase in prices, and $62.5 million in netproceeds from our sale-leaseback transaction (see Note 6 to Notes to Consolidated Financial Statements), offset by$62.5 million in cash distributions to our common unitholders and our general partner, $52.3 million in net payments on ourrevolving credit facility representing proceeds from asset sales which was partially offset by $61.7 million in borrowings inconnection with our railcar sublease termination, and $1.8 million in distributions to our noncontrolling interest at BasinTransload.Net cash provided by financing activities was $583.1 million for 2015 and included $295.3 million in net proceedsfrom the issuance of our 7.00% senior notes, $148.1 million in net borrowings from our working capital revolving creditfacility, in part to fund an increase in stored inventory due to favorable market conditions, $135.2 million in net borrowingsfrom our revolving credit facility to fund the acquisitions of Warren, the Revere Terminal and Capitol, $109.3 million in netproceeds from our June 2015 issuance of common units and $2.6 million in capital contributions from our noncontrollinginterest at Basin Transload. Net cash provided by financing activities was offset by $97.5 million in cash distributions to ourcommon unitholders and our general partner, $5.3 million in distributions to our noncontrolling interest at Basin Transload,$3.9 million in the repurchase of common units pursuant to our repurchase program for future satisfaction of our LTIPobligations and $0.7 million in net payments on our line of credit related to Basin Transload.See Note 22 of Notes to Consolidated Financial Statement for supplemental cash flow information related to ourworking capital revolving credit facility and revolving credit facility for 2017, 2016 and 2015.75 Table of ContentsCredit AgreementCertain subsidiaries of ours, as borrowers, and we and certain of our subsidiaries, as guarantors, have a $1.3 billionsenior secured credit facility. We repay amounts outstanding and reborrow funds based on our working capital requirementsand, therefore, classify as a current liability the portion of the working capital revolving credit facility we expect to pay downduring the course of the year. The long-term portion of the working capital revolving credit facility is the amount we expectto be outstanding during the entire year. The credit agreement matures on April 30, 2020.There are two facilities under the credit agreement:·a working capital revolving credit facility to be used for working capital purposes and letters of credit in theprincipal amount equal to the lesser of our borrowing base and $850.0 million; and·a $450.0 million revolving credit facility to be used for acquisitions, joint ventures, capital expenditures, lettersof credit and general corporate purposes.In addition, the credit agreement has an accordion feature whereby we may request on the same terms and conditionsthen applicable to the credit agreement, provided no Event of Default (as defined in the credit agreement) then exists, anincrease to the working capital revolving credit facility, the revolving credit facility, or both, by up to another$300.0 million, in the aggregate, for a total credit facility of up to $1.6 billion. Any such request for an increase must be in aminimum amount of $25.0 million. We cannot provide assurance, however, that our lending group will agree to fund anyrequest by us for additional amounts in excess of the total available commitments of $1.3 billion.In addition, the credit agreement includes a swing line pursuant to which Bank of America, N.A., as the swing linelender, may make swing line loans in U.S. dollars in an aggregate amount equal to the lesser of (a) $75.0 million and (b) theAggregate WC Commitments (as defined in the credit agreement). Swing line loans will bear interest at the Base Rate (asdefined in the credit agreement). The swing line is a sub-portion of the working capital revolving credit facility and is not anaddition to the total available commitments of $1.3 billion.Borrowings under the credit agreement are available in U.S. dollars and Canadian dollars. The aggregate amount ofloans made under the credit agreement denominated in Canadian dollars cannot exceed $200.0 million.Availability under the working capital revolving credit facility is subject to a borrowing base which is redeterminedfrom time to time and based on specific advance rates on eligible current assets. Under the credit agreement, borrowingsunder the working capital revolving credit facility cannot exceed the then current borrowing base. Availability under theborrowing base may be affected by events beyond our control, such as changes in petroleum product prices, collectioncycles, counterparty performance, advance rates and limits and general economic conditions. These and other events couldrequire us to seek waivers or amendments of covenants or alternative sources of financing or to reduce expenditures. We canprovide no assurance that such waivers, amendments or alternative financing could be obtained or, if obtained, would be onterms acceptable to us.Borrowings under the working capital revolving credit facility bear interest at (1) the Eurocurrency rate plus 2.00%to 2.50%, (2) the cost of funds rate plus 2.00% to 2.50%, or (3) the base rate plus 1.00% to 1.50%, each depending on theUtilization Amount (as defined in the credit agreement). Borrowings under the revolving credit facility bear interest at (1) theEurocurrency rate plus 2.00% to 3.00%, (2) the cost of funds rate plus 2.00% to 3.00%, or (3) the base rate plus 1.00% to2.00%, each depending on the Combined Total Leverage Ratio (as defined in the credit agreement).The average interest rates for the credit agreement were 3.7%, 3.5% and 3.6% for the years ended December 31,2017, 2016 and 2015, respectively. The increase for 2017 compared to 2016 is due to increases in market interest rates. Thedecline in the average interest rates in 2016 compared to 2015 is due to the May 2016 expiration of an interest rate swap. 76 Table of ContentsThe credit agreement provides for a letter of credit fee equal to the then applicable working capital rate or thenapplicable revolver rate (each such rate as defined in the credit agreement) per annum for each letter of credit issued. Inaddition, we incur a commitment fee on the unused portion of each facility under the credit agreement, ranging from 0.35%to 0.50% per annum.As of December 31, 2017, we had total borrowings outstanding under the credit agreement of $422.7 million,including $196.0 million outstanding on the revolving credit facility. In addition, we had outstanding letters of credit of$67.0 million. Subject to borrowing base limitations, the total remaining availability for borrowings and letters of credit was$810.3 million and $764.8 million at December 31, 2017 and 2016, respectively.The credit agreement is secured by substantially all of our assets and the assets of our wholly owned subsidiaries andis guaranteed by us and our subsidiaries, Bursaw Oil LLC, Global Partners Energy Canada ULC, Warex TerminalsCorporation, Drake Petroleum Company, Inc., Puritan Oil Company, Inc. and Maryland Oil Company, Inc. The credit agreement also includes (i) a $25.0 million general secured indebtedness basket, (ii) a $25.0 milliongeneral investment basket, (iii) a $75.0 million secured indebtedness basket to permit the borrowers to enter into a ContangoFacility (as defined in the credit agreement), (iv) a Sale/Leaseback Transaction (as defined in the credit agreement) basket of$100.0 million, and (v) a basket of $50.0 million in an aggregate amount over the life of the credit agreement for thepurchase of our common units, provided that no Event of Default exists or would occur immediately following suchpurchase(s).In addition, the credit agreement provides the ability for the borrowers to repay certain junior indebtedness, subjectto a $100.0 million cap, so long as no Event of Default has occurred or will exist immediately after making such repayment.The credit agreement imposes financial covenants that require us to maintain certain minimum working capitalamounts, a minimum combined interest coverage ratio, a maximum senior secured leverage ratio and a maximum totalleverage ratio. We were in compliance with the foregoing covenants at December 31, 2017. The credit agreement alsocontains a representation whereby there can be no event or circumstance, either individually or in the aggregate, that has hador could reasonably be expected to have a Material Adverse Effect (as defined in the credit agreement). In addition, the creditagreement limits distributions by us to our unitholders to the amount of Available Cash (as defined in the partnershipagreement).6.25% Senior NotesOn June 19, 2014, we and GLP Finance Corp. (collectively, the “Issuers”) entered into a Purchase Agreement (the“Purchase Agreement”) with the Initial Purchasers (as defined therein) (the “Initial Purchasers”) pursuant to which the Issuersagreed to sell $375.0 million aggregate principal amount of the Issuers’ 6.25% senior notes due 2022 (the “6.25% Notes”) tothe Initial Purchasers in a private placement exempt from the registration requirements under the Securities Act of 1933, asamended (the “Securities Act”). The 6.25% Notes were resold by the Initial Purchasers to qualified institutional buyerspursuant to Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under theSecurities Act.The Purchase Agreement contained customary representations and warranties of the parties and indemnification andcontribution provisions under which the Issuers and the subsidiary guarantors, on one hand, and the Initial Purchasers, on theother, agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. In addition, thePurchase Agreement required the execution of a registration rights agreement, described below, relating to the 6.25% Notes.Closing of the offering occurred on June 24, 2014.IndentureIn connection with the private placement of the 6.25% Notes on June 24, 2014, the Issuers and the subsidiaryguarantors and Deutsche Bank Trust Company Americas, as trustee, entered into an indenture (the “Indenture”).77 Table of ContentsThe 6.25% Notes mature on July 15, 2022 with interest accruing at a rate of 6.25% per annum and payablesemi‑annually in arrears on January 15 and July 15 of each year, commencing January 15, 2015. The 6.25% Notes areguaranteed on a joint and several senior unsecured basis by each of the Issuers and the subsidiary guarantors to the extent setforth in the Indenture. Upon a continuing event of default, the trustee or the holders of at least 25% in principal amount ofthe 6.25% Notes may declare the 6.25% Notes immediately due and payable, except that an event of default resulting fromentry into a bankruptcy, insolvency or reorganization with respect to us, any restricted subsidiary of ours that is a significantsubsidiary or any group of our restricted subsidiaries that, taken together, would constitute a significant subsidiary of ours,will automatically cause the 6.25% Notes to become due and payable.The Issuers have the option to redeem up to 35% of the 6.25% Notes prior to July 15, 2017 at a redemption price(expressed as a percentage of principal amount) of 106.25% plus accrued and unpaid interest, if any. The Issuers have theoption to redeem the 6.25% Notes, in whole or in part, at any time on or after July 15, 2017, at the redemption prices of104.688% for the twelve‑month period beginning on July 15, 2017, 103.125% for the twelve‑month period beginningJuly 15, 2018, 101.563% for the twelve‑month period beginning July 15, 2019, and 100.0% beginning on July 15, 2020 andat any time thereafter, together with any accrued and unpaid interest to the date of redemption. In addition, before July 15,2017, the Issuers may redeem all or any part of the 6.25% Notes at a redemption price equal to the sum of the principalamount thereof, plus a make whole premium at the redemption date, plus accrued and unpaid interest, if any, to theredemption date. The holders of the notes may require the Issuers to repurchase the 6.25% Notes following certain asset salesor a Change of Control (as defined in the Indenture) at the prices and on the terms specified in the Indenture.The Indenture contains covenants that will limit our ability to, among other things, incur additional indebtednessand issue preferred securities, make certain dividends and distributions, make certain investments and other restrictedpayments, restrict distributions by our subsidiaries, create liens, enter into sale‑leaseback transactions, sell assets or mergewith other entities. Events of default under the Indenture include (i) a default in payment of principal of, or interest orpremium, if any, on, the 6.25% Notes, (ii) breach of our covenants under the Indenture, (iii) certain events of bankruptcy andinsolvency, (iv) any payment default or acceleration of indebtedness of ours or certain subsidiaries if the total amount of suchindebtedness unpaid or accelerated exceeds $15.0 million and (v) failure to pay within 60 days uninsured final judgmentsexceeding $15.0 million.Registration Rights AgreementOn June 24, 2014, the Issuers and the subsidiary guarantors entered into a registration rights agreement (the“Registration Rights Agreement”) with the Initial Purchasers in connection with the Issuers’ private placement of the 6.25%Notes. Under the Registration Rights Agreement, the Issuers and the subsidiary guarantors agreed to file and usecommercially reasonable efforts to cause to become effective a registration statement relating to an offer to exchange the6.25% Notes for an issue of SEC‑registered notes with terms identical to the 6.25% Notes (except that the exchange notes arenot subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with the RegistrationRights Agreement) that are registered under the Securities Act so as to permit the exchange offer to be consummated by the360th day after June 24, 2014. The exchange offer was completed on April 21, 2015, and 100% of the 6.25% Notes wereexchanged for SEC-registered notes.7.00% Senior NotesOn June 1, 2015, the Issuers entered into a Purchase Agreement (the “7.00% Notes Purchase Agreement”) with theInitial Purchasers (as defined therein) (the “7.00% Notes Initial Purchasers”) pursuant to which the Issuers agreed to sell$300.0 million aggregate principal amount of the Issuers’ 7.00% senior notes due 2023 (the “7.00% Notes”) to the 7.00%Notes Initial Purchasers in a private placement exempt from the registration requirements under the Securities Act. The 7.00%Notes were resold by the 7.00% Notes Initial Purchasers to qualified institutional buyers pursuant to Rule 144A under theSecurities Act and to persons outside the United States pursuant to Regulation S under the Securities Act.The 7.00% Notes Purchase Agreement contained customary representations and warranties of the parties andindemnification and contribution provisions under which the Issuers and the subsidiary guarantors, on one hand, and the78 Table of Contents7.00% Notes Initial Purchasers, on the other, agreed to indemnify each other against certain liabilities, including liabilitiesunder the Securities Act. In addition, the 7.00% Notes Purchase Agreement required the execution of a registration rightsagreement, described below, relating to the 7.00% Notes. Closing of the offering occurred on June 4, 2015.IndentureIn connection with the private placement of the 7.00% Notes on June 4, 2015 the Issuers and the subsidiaryguarantors and Deutsche Bank Trust Company Americas, as trustee, entered into an indenture (the “7.00% Notes Indenture”).The 7.00% Notes will mature on June 15, 2023 with interest accruing at a rate of 7.00% per annum and payablesemi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2015. The 7.00% Notes areguaranteed on a joint and several senior unsecured basis by each of the Issuers and the subsidiary guarantors to the extent setforth in the 7.00% Notes Indenture. Upon a continuing event of default, the trustee or the holders of at least 25% in principalamount of the 7.00% Notes may declare the 7.00% Notes immediately due and payable, except that an event of defaultresulting from entry into a bankruptcy, insolvency or reorganization with respect to us, any restricted subsidiary of ours thatis a significant subsidiary or any group of our restricted subsidiaries that, taken together, would constitute a significantsubsidiary of ours, will automatically cause the 7.00% Notes to become due and payable.The Issuers will have the option to redeem up to 35% of the 7.00% Notes prior to June 15, 2018 at a redemptionprice (expressed as a percentage of principal amount) of 107.00% plus accrued and unpaid interest, if any. The Issuers havethe option to redeem the 7.00% Notes, in whole or in part, at any time on or after June 15, 2018, at the redemption prices of105.250% for the twelve-month period beginning June 15, 2018, 103.500% for the twelve-month period beginning June 15,2019, 101.750% for the twelve-month period beginning June 15, 2020, and 100.0% beginning June 15, 2021 and at anytime thereafter, together with any accrued and unpaid interest to the date of redemption. In addition, before June 15, 2018,the Issuers may redeem all or any part of the 7.00% Notes at a redemption price equal to the sum of the principal amountthereof, plus a make whole premium, plus accrued and unpaid interest, if any, to the redemption date. The holders of the7.00% Notes may require the Issuers to repurchase the 7.00% Notes following certain asset sales or a Change of Control (asdefined in the 7.00% Notes Indenture) at the prices and on the terms specified in the 7.00% Notes Indenture.The 7.00% Notes Indenture contains covenants that will limit our ability to, among other things, incur additionalindebtedness and issue preferred securities, make certain dividends and distributions, make certain investments and otherrestricted payments, restrict distributions by our subsidiaries, create liens, enter into sale-leaseback transactions, sell assets ormerge with other entities. Events of default under the 7.00% Notes Indenture include (i) a default in payment of principal of,or interest or premium, if any, on, the 7.00% Notes, (ii) breach of our covenants under the 7.00% Notes Indenture, (iii) certainevents of bankruptcy and insolvency, (iv) any payment default or acceleration of indebtedness of ours or certain subsidiariesif the total amount of such indebtedness unpaid or accelerated exceeds $50.0 million and (v) failure to pay within 60 daysuninsured final judgments exceeding $50.0 million.Registration Rights AgreementOn June 4, 2015, the Issuers and the subsidiary guarantors entered into a registration rights agreement (the “7.00%Notes Registration Rights Agreement”) with the 7.00% Notes Initial Purchasers in connection with the Issuers’ privateplacement of the 7.00% Notes. Under the 7.00% Notes Registration Rights Agreement, the Issuers and the subsidiaryguarantors agreed to file and use commercially reasonable efforts to cause to become effective a registration statementrelating to an offer to exchange the 7.00% Notes for an issue of SEC-registered notes with terms identical to the 7.00% Notes(except that the exchange notes are not subject to restrictions on transfer or to any increase in annual interest rate for failureto comply with the 7.00% Notes Registration Rights Agreement) that are registered under the Securities Act so as to permitthe exchange offer to be consummated by the 420th day after June 4, 2015. The exchange79 Table of Contentsoffer was completed on October 22, 2015, and 100% of the 7.00% Notes were exchanged for SEC-registered notes.Financing ObligationsCapitol AcquisitionIn connection with the Capitol acquisition on June 1, 2015, we assumed a financing obligation of $89.6 millionassociated with two sale-leaseback transactions by Capitol for 53 leased sites that did not meet the criteria for saleaccounting. During the terms of these leases, which expire in May 2028 and September 2029, in lieu of recognizing leaseexpense for the lease rental payments, we incur interest expense associated with the financing obligation. Interest expense ofapproximately $9.6 million, $9.6 million and $5.6 million was recorded for the years ended December 31, 2017, 2016 and2015, respectively, and is included in interest expense in the accompanying statements of operations. The financingobligation will amortize through expiration of the leases based upon the lease rental payments which were $9.7 million,$9.5 million and $5.4 million for the years ended December 31, 2017, 2016 and 2015, respectively. The financing obligationbalance outstanding at December 31, 2017 was $87.8 million associated with the Capitol acquisition.Sale-Leaseback TransactionOn June 29, 2016, we sold to a premier institutional real estate investor (the “Buyer”) real property assets, includingthe buildings, improvements and appurtenances thereto, at 30 gasoline stations and convenience stores located inConnecticut, Maine, Massachusetts, New Hampshire and Rhode Island (the “Sale-Leaseback Sites”) for a purchase price ofapproximately $63.5 million. In connection with the sale, we entered into a Master Unitary Lease Agreement with the Buyerto lease back the real property assets sold with respect to the Sale-Leaseback Sites (such Master Lease Agreement, togetherwith the Sale-Leaseback Sites, the “Sale-Leaseback Transaction”). The Master Unitary Lease Agreement provides for aninitial term of fifteen years that expires in 2031. We have one successive option to renew the lease for a ten-year periodfollowed by two successive options to renew the lease for five-year periods on the same terms, covenants, conditions andrental as the primary non-revocable lease term. We do not have any residual interest nor the option to repurchase any of thesites at the end of the lease term. The proceeds from the Sale-Leaseback Transaction were used to reduce indebtednessoutstanding under our revolving credit facility.The sale did not meet the criteria for sale accounting as of December 31, 2017 due to prohibited continuinginvolvement. Specifically, the sale is considered a partial-sale transaction, which is a form of continuing involvement as wedid not transfer to the Buyer the storage tank systems which are considered integral equipment of the Sale-Leaseback Sites.Additionally, a portion of the sold sites have material sub-lease arrangements, which is also a form of continuinginvolvement. As the sale of the Sale-Leaseback Sites did not meet the criteria for sale accounting, we did not recognize a gainor loss on the sale of the Sale-Leaseback Sites for the year ended December 31, 2017.As a result of not meeting the criteria for sale accounting for these sites, the Sale-Leaseback Transaction isaccounted for as a financing arrangement. As such, the property and equipment sold and leased back by us has not beenderecognized and continues to be depreciated. We recognized a corresponding financing obligation of $62.5 million equalto the $63.5 million cash proceeds received for the sale of these sites, net of $1.0 million financing fees. During the term ofthe lease, which expires in June 2031, in lieu of recognizing lease expense for the lease rental payments, we incur interestexpense associated with the financing obligation. Lease rental payments are recognized as both interest expense and areduction of the principal balance associated with the financing obligation. Interest expense was $4.4 million and$2.2 million for the years ended December 31, 2017 and 2016, respectively, and lease rental payments were $4.5 million and$2.2 million for the years ended December 31, 2017 and 2016, respectively. The financing obligation balance outstanding atDecember 31, 2017 was $62.5 million associated with the Sale-Leaseback Transaction.Deferred Financing FeesWe incur bank fees related to our credit agreement and other financing arrangements. These deferred financing feesare capitalized and amortized over the life of the credit agreement or other financing arrangements. In connection with theamendment to the credit agreement in April 2017, we capitalized additional financing fees of $8.0 million for80 Table of Contentsthe year ended December 31, 2017. We had unamortized deferred financing fees of $15.9 million and $14.1 million atDecember 31, 2017 and 2016, respectively.Unamortized fees related to the credit agreement are included in other current assets and other long-term assets andamounted to $9.6 million and $6.5 million at December 31, 2017 and 2016, respectively. Unamortized fees related to thesenior notes are presented as a direct deduction from the carrying amount of that debt liability, consistent with debtdiscounts, and amounted to $5.4 million and $6.6 million at December 31, 2017 and 2016, respectively. Unamortized feesrelated to the Sale-Leaseback Transaction are presented as a direct deduction from the carrying amount of the financingobligation and amounted to $0.9 million and $1.0 million at December 31, 2017 and 2016, respectively.On April 25, 2017, we entered into the credit agreement, a new facility that has extended the maturity date andreduced the total commitment of the prior credit agreement. As a result, we incurred expenses of approximately $0.6 millionassociated with the write-off of a portion of the related deferred financing fees. These expenses are included in interestexpense in the accompanying statement of operations for the year ended December 31, 2017.On February 24, 2016, under our prior credit agreement, we voluntarily elected to reduce our working capitalrevolving credit facility from $1.0 billion to $900.0 million and our revolving credit facility from $775.0 million to$575.0 million. As a result, we incurred expenses of approximately $1.8 million associated with the write-off of a portion ofthe related deferred financing fees. These expenses are included in interest expense in the accompanying statement ofoperations for the year ended December 31, 2016.Amortization expense of approximately $5.6 million, $6.0 million and $5.9 million for the years endedDecember 31, 2017, 2016 and 2015, respectively, is included in interest expense in the accompanying consolidatedstatements of operations.Off‑Balance Sheet ArrangementsWe have no off‑balance sheet arrangements.Impact of InflationInflation has been relatively low in recent years and did not have a material impact on our results of operations forthe years ended December 31, 2017, 2016 and 2015Environmental MattersOur business of supplying refined petroleum products, renewable fuels, crude oil and propane, and other businessactivities, involves a number of activities that are subject to extensive and stringent environmental laws. For a completediscussion of the environmental laws and regulations affecting our business, please read Items 1 and 2, “Business andProperties—Environmental.” For additional information regarding our environmental liabilities, see Note 12 of Notes toConsolidated Financial Statements included elsewhere in this report.Critical Accounting Policies and EstimatesA summary of the significant accounting policies that we have adopted and followed in the preparation of ourconsolidated financial statements is detailed in Note 2 of Notes to Consolidated Financial Statements. Certain of theseaccounting policies require the use of estimates. These estimates are based on our knowledge and understanding of currentconditions and actions that we may take in the future. Changes in these estimates will occur as a result of the passage of timeand the occurrence of future events. Subsequent changes in these estimates may have a significant impact on our financialcondition and results of operations and are recorded in the period in which they become known. We have identified thefollowing estimates that, in our opinion, are subjective in nature, require the exercise of judgment and involve complexanalysis:81 Table of ContentsInventoryWe hedge substantially all of our petroleum and ethanol inventory using a variety of instruments, primarilyexchange‑traded futures contracts. These futures contracts are entered into when inventory is purchased and are eitherdesignated as fair value hedges against the inventory on a specific barrel basis for inventories qualifying for fair value hedgeaccounting or not designated and maintained as economic hedges against certain inventory of ours on a specific barrel basis.Changes in fair value of these futures contracts, as well as the offsetting change in fair value on the hedged inventory, arerecognized in earnings as an increase or decrease in cost of sales. All hedged inventory designated in a fair value hedgerelationship is valued using the lower of cost, as determined by specific identification, or net realizable value, as determinedat the product level. All petroleum and ethanol inventory not designated in a fair value hedging relationship is carried at thelower of historical cost, on a first‑in, first‑out basis, or net realizable value.Convenience store inventory and RIN inventory are carried at the lower of historical cost or net realizable value.In addition to our own inventory, we have exchange agreements for petroleum products and ethanol with unrelatedthird-party suppliers, whereby we may draw inventory from these other suppliers and suppliers may draw inventory from us.Positive exchange balances are accounted for as accounts receivable. Negative exchange balances are accounted for asaccounts payable. Exchange transactions are valued using current carrying costs.LeasesWe have terminal and throughput lease arrangements with various other oil terminals and third parties, certain ofwhich arrangements have minimum usage requirements. In addition, we lease certain gasoline stations from third partiesunder long‑term arrangements with various expiration dates. We also have several long‑term lease agreements with GettyRealty, which enables us to supply and operate certain Getty Realty gasoline station sites, and with the Port of St. Helens inClatskanie, Oregon for land and for access rights to a rail spur and dock located at our Oregon facility.We have future commitments, principally for office space and computer equipment, under the terms of operatinglease arrangements. We also lease railcars and barges through various lease arrangements with various expiration dates. Wehave rental income from gasoline stations and cobranding arrangements and lease income from space leased to severalunrelated third parties at several of our terminals. Additionally, we have capital leases for other computer equipment andleasehold improvements.In addition, in June of 2016, we sold real property assets, including the buildings, improvements and appurtenancesthereto, at 30 gasoline stations and convenience stores. In connection with this sale-leaseback transaction, we are party to amaster unitary lease agreement with the buyer to lease back those real property assets sold with respect to such sites. See Note6 of Notes to Consolidated Financial Statements for additional information.Accounting and reporting guidance for leases requires that leases be evaluated and classified as operating or capitalleases for financial reporting purposes. The lease term used for lease evaluation includes option periods only in instances inwhich the exercise of the option period can be reasonably assured and failure to exercise such options would result in aneconomic penalty. Lease rental expense and income is recognized on a straight‑line basis over the term of the lease.Revenue RecognitionSales relate primarily to the sale of refined petroleum products, renewable fuels, crude oil and propane and arerecognized along with the related receivable upon delivery, net of applicable provisions for discounts and allowances. Wemay also provide for shipping costs at the time of sale, which are included in cost of sales. In addition, we generate revenuefrom our logistics activities when we engage in the storage, transloading and shipment of products owned by others. Revenuefor logistics services is recognized as services are provided.We have certain logistics agreements that require counterparties to throughput a minimum volume over an agreed-upon period. These agreements may include make-up rights if the minimum volume is not met. We recognize revenueassociated with make-up rights at the earlier of when the make-up volume is shipped, the make-up right expires82 Table of Contentsor when it is determined that the likelihood that the shipper will utilize the make-up right is remote.We also recognize convenience store sales of gasoline, grocery and other merchandise and commissions on lotteryat the time of the sale to the customer. Gasoline station rental income is recognized on a straight‑line basis over the term ofthe lease.Product revenue is not recognized on exchange agreements, which are entered into primarily to acquire variousrefined petroleum products, renewable fuels and crude oil of a desired quality or to reduce transportation costs by takingdelivery of products closer to our end markets. We recognize net exchange differentials due from exchange partners in salesupon delivery of product to an exchange partner. We recognize net exchange differentials due to exchange partners in cost ofsales upon receipt of product from an exchange partner.The amounts recorded for bad debts are generally based upon a specific analysis of aged accounts while alsofactoring in any new business conditions that might impact the historical analysis, such as market conditions andbankruptcies of particular customers. Bad debt provisions are included in selling, general and administrative expenses.Trustee TaxesWe collect trustee taxes, which consist of various pass through taxes collected on behalf of taxing authorities, andremit such taxes directly to those taxing authorities. Examples of trustee taxes include, among other things, motor fuel excisetax and sales and use tax. As such, it is our policy to exclude trustee taxes from revenues and cost of sales and account forthem as current liabilities. See Note 10 of Notes to Consolidated Financial Statements for additional information.We may be subject to audits of our state and federal tax returns prepared for trustee taxes. Historically, any taxadjustments from such audits have been deemed immaterial by us and have been included in cost of sales. In November of2017, we received an assessment from a state taxing authority in connection with its audit of our fuel and sales tax returns forthe periods from December 2008 through August 2013 (the “Audit”). In February of 2018, we agreed to administrativelyclose the Audit, and, as a result, recognized a loss on trustee taxes of $16.2 million during the fourth quarter of 2017, which isincluded in the accompanying consolidated statement of operations for the year ended December 31, 2017. The loss ontrustee taxes consists of both tax and interest, with no penalties being assessed. Although the Audit has been administrativelyclosed, we have the right to seek recovery of the payment of the trustee tax. While we believe we have meritorious argumentsand defenses to recover a majority of the tax and interest assessed, we cannot be certain of such outcome.Derivative Financial InstrumentsWe principally use derivative instruments, which include regulated exchange‑traded futures and options contracts(collectively, “exchange‑traded derivatives”) and physical and financial forwards and over‑the counter (“OTC”) swaps(collectively, “OTC derivatives”), to reduce our exposure to unfavorable changes in commodity market prices and interestrates. We use these exchange‑traded and OTC derivatives to hedge commodity price risk associated with our inventory andundelivered forward commodity purchases and sales (“physical forward contracts”) and use interest rate swap instruments toreduce our exposure to fluctuations in interest rates associated with our credit facilities. We account for derivativetransactions in accordance with ASC Topic 815, “Derivatives and Hedging,” and recognize derivatives instruments as eitherassets or liabilities in the consolidated balance sheet and measure those instruments at fair value. The changes in fair value ofthe derivative transactions are presented currently in earnings, unless specific hedge accounting criteria are met.The fair value of exchange‑traded derivative transactions reflects amounts that would be received from or paid toour brokers upon liquidation of these contracts. The fair value of these exchange‑traded derivative transactions are presentedon a net basis, offset by the cash balances on deposit with our brokers, presented as brokerage margin deposits in theconsolidated balance sheets. The fair value of OTC derivative transactions reflects amounts that would be received from orpaid to a third party upon liquidation of these contracts under current market conditions. The fair value of these OTCderivative transactions is presented on a gross basis as derivative assets or derivative liabilities in the consolidated83 Table of Contentsbalance sheets, unless a legal right of offset exists. The presentation of the change in fair value of our exchange‑tradedderivatives and OTC derivative transactions depends on the intended use of the derivative and the resulting designation.Derivatives Accounted for as Hedges—We utilize fair value hedges and cash flow hedges to hedge commodityprice risk and interest rate risk.Fair Value HedgesDerivatives designated as fair value hedges are used to hedge price risk in commodity inventories and principallyinclude exchange‑traded futures contracts that are entered into in the ordinary course of business. For a derivative instrumentdesignated as a fair value hedge, the gain or loss is recognized in earnings in the period of change together with the offsettingchange in fair value on the hedged item of the risk being hedged. Gains and losses related to fair value hedges are recognizedin the consolidated statements of operation through cost of sales. These futures contracts are settled on a daily basis by usthrough brokerage margin accounts.Our fair value hedges include exchange-traded futures contracts and OTC derivative contracts that are hedgesagainst inventory with specific futures contracts matched to specific barrels. The change in fair value of these futurescontracts and the change in fair value of the underlying inventory generally provide an offset to each other in theconsolidated statement of operations.Cash Flow HedgesDerivatives designated as cash flow hedges are used to hedge interest rate risk from fluctuations in interest rates andmay include various interest rate derivative instruments entered into with major financial institutions. For a derivativeinstrument being designated as a cash flow hedge, the effective portion of the derivative gain or loss is initially reported as acomponent of other comprehensive income (loss) and subsequently reclassified into the consolidated statement of operationsthrough interest expense in the same period that the hedged exposure affects earnings. The ineffective portion is recognizedin the consolidated statement of operations immediately.Derivatives Not Accounted for as Hedges—We utilize petroleum and ethanol commodity contracts, foreigncurrency derivatives and commodity contracts to hedge price and currency risk in certain commodity inventories andphysical forward contracts.Petroleum and Ethanol Commodity ContractsWe use exchange‑traded derivative contracts to hedge price risk in certain commodity inventories which do notqualify for fair value hedge accounting or are not designated by us as fair value hedges. Additionally, we useexchange‑traded derivative contracts, and occasionally financial forward and OTC swap agreements, to hedge commodityprice exposure associated with our physical forward contracts which are not designated by us as cash flow hedges. Thesephysical forward contracts, to the extent they meet the definition of a derivative, are considered OTC physical forwards andare reflected as derivative assets or derivative liabilities in the consolidated balance sheet. The related exchange‑tradedderivative contracts (and financial forward and OTC swaps, if applicable) are also reflected as brokerage margin deposits (andderivative assets or derivative liabilities, if applicable) in the consolidated balance sheet, thereby creating an economichedge. Changes in fair value of these derivative instruments are recognized in the consolidated statement of operationsthrough cost of sales. These exchange traded derivatives are settled on a daily basis by us through brokerage marginaccounts.While we seek to maintain a position that is substantially balanced within our commodity product purchase and saleactivities, we may experience net unbalanced positions for short periods of time as a result of variances in daily purchasesand sales and transportation and delivery schedules as well as other logistical issues inherent in the business, such as weatherconditions. In connection with managing these positions, we are aided by maintaining a constant presence in themarketplace. We also engage in a controlled trading program for up to an aggregate of 250,000 barrels of commodityproducts at any one point in time. Changes in fair value of these derivative instruments are recognized in the consolidatedstatement of operations through cost of sales.84 Table of ContentsForeign Currency ContractsWe may use forward foreign currency contracts to hedge certain foreign denominated (Canadian) commodityproduct purchases. These forward foreign currency contracts are not designated by us as hedges and are reflected as prepaidexpenses and other current assets or accrued expenses and other current liabilities in the consolidated balance sheets.Changes in fair values of these forward foreign currency contracts are reflected in cost of sales.Margin DepositsAll of our exchange‑traded derivative contracts (designated and not designated) are transacted through clearingbrokers. We deposit initial margin with the clearing brokers, along with variation margin, which is paid or received on a dailybasis, based upon the changes in fair value of open futures contracts and settlement of closed futures contracts. Cash balanceson deposit with clearing brokers and open equity are presented on a net basis within brokerage margin deposits in theconsolidated balance sheets.GoodwillGoodwill represents the future economic benefits arising from assets acquired in a business combination that are notindividually identified and separately recognized. We have concluded that our operating segments are also our reportingunits. Goodwill is tested for impairment annually as of October 1 or when events or changes in circumstances indicate thatthe carrying amount of goodwill may not be recoverable. Derecognized goodwill associated with our disposition activities ofGDSO sites is included in the carrying value of assets sold in determining the gain or loss on disposal, to the extent thedisposition of assets qualifies as a disposition of a business under ASC 805. GDSO reporting unit goodwill that wasderecognized related to the disposition of sites that met the definition of a business was $4.0 million and $17.9 million forthe years ended December 31, 2017 and 2016, respectively (see Note 5 of Notes to Consolidated Financial Statements).Goodwill Impairment Test—2017 On January 1, 2017, we early adopted Accounting Standards Update (“ASU”) 2017-04, “Intangibles-Goodwill andOther” (“ASU 2017-04”), which eliminates step two from the goodwill impairment test, and instead requires an entity torecognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’sfair value. See Note 2 of Notes to Consolidated Financial Statements for additional information.During 2017, we completed a quantitative assessment for the GDSO reporting unit. Factors included in theassessment included both macro‑economic conditions and industry specific conditions, and the fair value of the GDSOreporting unit was estimated using a weighted average of a discounted cash flow approach and a market comparablesapproach. Based on our assessment, no impairment was identified.Goodwill Impairment Test—2016 and 2015As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015, the declining crude oilprices, changes in certain market conditions and decline in our common unit price, collectively caused us to reassess ourgoodwill allocated to the Wholesale reporting unit for impairment as of December 31, 2015. Our results in 2015 werenegatively impacted by tighter crude oil differentials. Certain of the key assumptions in the development of discounted cashflows used to evaluate the Wholesale reporting unit included the expectation of a recovery from tight crude oil differentialsand low crude oil prices within 2017. Based on the results of this assessment, we concluded that step two of the quantitativeassessment was not necessary and no impairment was required for the year ended December 31, 2015.During the first quarter ended March 31, 2016 and second quarter ended June 30, 2016, we considered whether therewere any change of circumstances or events which would more likely than not reduce the fair value of the Wholesalereporting unit below its carrying amount. While we had then concluded that such events and circumstances had not occurred,we disclosed the possibility that a continuation of low crude oil prices and tight crude oil differentials might cause us toconclude that the timing of a market recovery might be more extended than estimated within our five-85 Table of Contentsyear forecast and estimate of terminal values.We further disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015 and in our QuarterlyReports on Forms 10-Q as of March 31, 2016 and June 30, 2016, that a further sustained decline in commodity prices maycause us to reassess our long-lived assets and goodwill for impairment, and could result in future non-cash impairmentcharges as a result of such impairment assessments. If we are required to perform step two in the future for the Wholesalereporting unit, up to $121.7 million of goodwill assigned to this reporting unit could be written off in the period of suchimpairment assessment.During the third quarter ended September 30, 2016, we continued to monitor the extent and timing of futuredemand. Crude oil prices had remained at lower levels but, more importantly, tight crude oil differentials continued such thatwe might no longer reasonably include an assumption that the market for crude oil by rail to the coasts might recoversometime within 2017 as previously expected. Factors contributing to our assumption included: ·Lack of logistics nominations by one particular customer and the expectations for limited, if any, nominationsfor the balance of 2016 by that customer;·A decline in spot crude oil volume indicating weakening demand for our services/assets;·Increased pipeline capacity out of the Bakken region; and·The lifting of the export ban, which provides another clearing mechanism for crude oil.These market conditions, in addition to declines noted during fiscal year 2015 as well as the first and secondquarters of 2016, negatively affected our then current period results and future projections sufficiently to constitutetriggering events for the Wholesale reporting unit. Based on our consideration of the factors above, we concluded it wasnecessary to perform an interim goodwill impairment test for the Wholesale reporting unit pursuant to the guidelines ofASC Topic 350, “Intangibles–Goodwill and Other” (“ASC 350”). We did not extend the interim test for recoverability to theGDSO reporting unit, as the indicators described above were specific to the Wholesale reporting unit.The process of testing goodwill for impairment involves numerous judgments, assumptions and estimates made bymanagement which inherently reflect a high degree of uncertainty. Prior to the adoption of ASU 2017-04, the impairment testincluded either a qualitative assessment or a two-step quantitative assessment. The impairment test’s qualitative assessmentwas to be used in order to conclude if it was more likely than not that the reporting unit’s fair value exceeded its carryingvalue. Factors considered in the qualitative analysis included changes in the business and industry, as well as macro-economic conditions, that would have influenced the fair value of the reporting unit as well as changes in the carrying valuesof the reporting unit. In the impairment test’s two-step quantitative assessment, the fair value of each reporting unit was to bedetermined and compared to the book value of the reporting unit as determined under step one. If the fair value of thereporting unit was less than the book value, including goodwill, then step two was to be performed to compare the carryingamount of reporting unit goodwill to the implied fair value of that goodwill. If the carrying amount of reporting unitgoodwill exceeded the implied fair value of that goodwill, an impairment loss would have been recognized for that excesswith a charge to operations. We calculated the fair value of each reporting unit using a combination of discounted cash flowsand market comparables.In 2016, the key assumptions included in the development of the discounted cash flow value for each reporting unitincluded:Future commodity volumes and margins. The discounted cash flows were based on a five-year forecast with anestimate of terminal values. In general, the reporting units’ fair values were most sensitive to volume and gross marginassumptions. The Wholesale reporting unit’s cash flows were significantly influenced by the crude oil market, given our2013 investment in transloading terminals in North Dakota and Oregon.Discount rate commensurate with the risks involved. We applied a discount rate to our expected cash flows basedon a variety of factors, including market and economic conditions, operational risk, regulatory risk and political risk. Ahigher discount rate decreases the net present value of cash flows.Future capital requirements. Our estimates of future capital requirements were based upon a combination of86 Table of Contentsauthorized spending and internal forecasts.As of September 30, 2016, as a result of the impairment indicators discussed above, we completed a preliminaryassessment of the impairment of the Wholesale reporting unit’s goodwill. As a result of the step one assessment, weconcluded that the fair value of the Wholesale reporting unit no longer exceeded its carrying value and as a result, performeda step two assessment to measure the impairment. In step two of the quantitative assessment, the implied fair value ofgoodwill is determined by assigning the fair value of a reporting unit to all the assets and liabilities of that unit (includingany unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. If the carryingamount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized forthat excess. Upon applying step two of the impairment test, we preliminarily determined that the implied fair value of theWholesale reporting unit goodwill was $0, and accordingly we recorded an impairment charge of $121.7 million as ofSeptember 30, 2016, or all of the goodwill previously allocated to this reporting unit.The following procedures were, among others, the more significant analyses that we completed during the fourthquarter of 2016 to finalize our step one and step two impairment tests:·Final appraisals to determine the estimated fair value of Wholesale, Commercial and GDSO reporting units,including final calculation of discount rates;·Final appraisals, certain of which were determined by third-party valuation specialists, to determine theestimated fair value of intangible assets, leases, and property and equipment within the Wholesale reporting unit;and·Final analysis for the Wholesale reporting unit to determine the estimated fair value adjustments required tocertain other assets and liabilities of the reporting unit.As a result of finalizing the step one assessment, we concluded that no impairment was identified for the GDSOreporting unit and that there was no change to the conclusion that the fair value of the Wholesale reporting unit no longerexceeded its carrying value.In connection with finalizing the step two impairment test, we made what we considered to be reasonable estimatesof each of the above items in order to determine the goodwill impairment loss under the theoretical purchase price allocationrequired for a step two impairment test. Based on finalizing our assessment, the impairment charges recognized in the thirdquarter for goodwill and long-lived assets were appropriate and no additional charges were necessary.Evaluation of Long-Lived Asset ImpairmentAccounting and reporting guidance for long‑lived assets requires that a long‑lived asset (group) be reviewed forimpairment when events or changes in circumstances indicate that the carrying amount might not be recoverable.Accordingly, we evaluate long-lived assets for impairment whenever indicators of impairment are identified. If indicators ofimpairment are present, we assess impairment by comparing the undiscounted projected future cash flows from the long‑livedassets to their carrying value. If the undiscounted cash flows are less than the carrying value, the long‑lived assets will bereduced to their fair value.In 2017, we recognized an impairment charge of $0.8 million relating to long-lived assets at certain gasolinestations and convenience stores. These assets are allocated to the GDSO segment, and the impairment is included in goodwilland long-lived asset impairment in the accompanying statements of operations for the year ended December 31, 2017. In 2016, we recognized an impairment charge of $23.2 million for the year ended December 31, 2016 relating tolong-lived assets used at our crude oil transloading terminals in North Dakota. Additionally, we recognized an impairmentcharge of approximately $2.9 million during the year ended December 31, 2016 associated with certain long-lived assets atour Albany, New York terminal and all development work in Port Arthur, Texas associated with the initial investmentsrelated to expanding our ability to handle crude oil at those locations. The long-term recoverability of these assets has beenadversely impacted by a prolonged decline in crude oil prices and crude oil differentials. The method87 Table of Contentsused for determining fair value of these assets relied on a combination of the cost and market approaches. These terminalassets are allocated to the Wholesale segment, and the total impairment charge of $26.1 million is included in goodwill andlong-lived asset impairment in the accompanying statement of operations for the year ended December 31, 2016.Also in 2016, we recognized an impairment charge of $1.9 million associated with the long-lived assets used insupplying compressed natural gas (“CNG”) which is viewed as an alternative fuel to oil. The long-term recoverability ofthese assets has been adversely impacted by the decline in commodity prices and the cost differential between natural gasand oil. As oil has remained an attractive alternative to CNG due to lower oil prices, the related impact on the CNG operatingand cash flows was determined to be an impairment indicator, resulting in the impairment of the CNG long-lived assetsduring the year ended December 31, 2016. The method used for determining fair value of the CNG assets relied on the marketapproach. The impairment charge is included in goodwill and long-lived asset impairment in the accompanying statement ofoperations for the year ended December 31, 2016. The CNG assets were allocated to the Commercial segment. OnNovember 1, 2016, we sold our CNG assets. Additionally in 2016, we recognized an impairment charge of $0.3 million associated with the long-lived assets ofone discrete GDSO site in the GDSO segment. The method used for determining fair value of this site relied on the marketapproach. The impairment charge is included in goodwill and long-lived asset impairment in the accompanying statement ofoperations for the year ended December 31, 2016. In 2015, no material impairment charges were recognized.Environmental and Other LiabilitiesWe record accrued liabilities for all direct costs associated with the estimated resolution of contingencies at theearliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can bereasonably estimated. Costs accrued are estimated based upon an analysis of potential results, assuming a combination oflitigation and settlement strategies and outcomes.Estimated losses from environmental remediation obligations generally are recognized no later than completion ofthe remedial feasibility study. Loss accruals are adjusted as further information becomes available or circumstances change.Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveriesof environmental remediation costs from other parties are recognized when related contingencies are resolved, generallyupon cash receipt.We are subject to other contingencies, including legal proceedings and claims arising out of our business that covera wide range of matters, including, among others, environmental matters and contract and employment claims.Environmental and other legal proceedings may also include matters with respect to businesses previously owned. Further,due to the lack of adequate information and the potential impact of present regulations and any future regulations, there arecertain circumstances in which no range of potential exposure may be reasonably estimated. Please read Part I, Item 3, “LegalProceedings.”Related Party TransactionsA discussion of related party transactions is included in Note 14 of Notes to Consolidated Financial Statementsincluded elsewhere in this report.Recent Accounting PronouncementsA description and related impact expected from the adoption of certain new accounting pronouncements is providedin Note 2 of Notes to Consolidated Financial Statements included elsewhere in this report.88 Table of Contents Item 7A. Quantitative and Qualitative Disclosures About Market Risk.Market risk is the risk of loss arising from adverse changes in market rates and prices. The principal market risks towhich we are exposed are interest rate risk and commodity risk. We currently utilize an interest rate swap to manage exposureto interest rate risk and various derivative instruments to manage exposure to commodity risk.Interest Rate RiskWe utilize variable rate debt and are exposed to market risk due to the floating interest rates on our credit agreement.Therefore, from time to time, we utilize interest rate collars, swaps and caps to hedge interest obligations on specific andanticipated debt issuances.As of December 31, 2017, we had total borrowings outstanding under our credit agreement of $422.7 million. Pleaseread Part II, Item 7, “Management’s Discussion and Analysis—Liquidity and Capital Resources—Credit Agreement,” forinformation on interest rates related to our borrowings. The impact of a 1% increase in the interest rate on this amount of debtwould have resulted in an increase in interest expense, and a corresponding decrease in our results of operations, ofapproximately $4.2 million annually, assuming, however, that our indebtedness remained constant throughout the year.In October 2009, we executed an interest rate swap with a major financial institution. The swap, which becameeffective on May 16, 2011 and expired on May 16, 2016, was used to hedge the variability in interest payments due tochanges in the one‑month LIBOR swap curve with respect to $100.0 million of one‑month LIBOR‑based borrowings on thecredit facility at a fixed rate of 3.93%.In April 2011, we executed an interest rate cap with a major financial institution. The rate cap, which becameeffective on April 13, 2011 and expired on April 13, 2016, was used to hedge the variability in interest payments due tochanges in the one‑month LIBOR rate above 5.5% with respect to $100.0 million of one‑month LIBOR‑based borrowings onthe credit facility.In September 2013, we executed a forward interest rate swap with a major financial institution. The swap, whichbecame effective on October 2, 2013 and expires on October 2, 2018, is used to hedge the variability in cash flows inmonthly interest payments due to changes in the one‑month LIBOR swap curve with respect to $100.0 million of one‑monthLIBOR‑based borrowings on the credit facility at a fixed rate of 1.819%.At December 31, 2017, we had in place one interest rate swap agreement which is hedging $100.0 million ofvariable rate debt and continues to be accounted for as a cash flow hedge.See Notes 2 and 7 of Notes to Consolidated Financial Statements for additional information on our derivativeinstruments.Commodity RiskWe hedge our exposure to price fluctuations with respect to refined petroleum products, renewable fuels, crude oiland gasoline blendstocks in storage and expected purchases and sales of these commodities. The derivative instrumentsutilized consist primarily of exchange‑traded futures contracts traded on the NYMEX, CME and ICE and over‑the‑countertransactions, including swap agreements entered into with established financial institutions and other credit‑approved energycompanies. Our policy is generally to purchase only products for which we have a market and to structure our sales contractsso that price fluctuations do not materially affect our profit. While our policies are designed to minimize market risk, as wellas inherent basis risk, exposure to fluctuations in market conditions remains. Except for the controlled trading programdiscussed below, we do not acquire and hold futures contracts or other derivative products for the purpose of speculating onprice changes that might expose us to indeterminable losses.While we seek to maintain a position that is substantially balanced within our commodity product purchase andsales activities, we may experience net unbalanced positions for short periods of time as a result of variances in daily89 Table of Contentspurchases and sales and transportation and delivery schedules as well as other logistical issues inherent in the business, suchas weather conditions. In connection with managing these positions, we are aided by maintaining a constant presence in themarketplace. We also engage in a controlled trading program for up to an aggregate of 250,000 barrels of commodityproducts at any one point in time. Changes in the fair value of these derivative instruments are recognized in theconsolidated statements of operations through cost of sales. In addition, because a portion of our crude oil business may beconducted in Canadian dollars, we may use foreign currency derivatives to minimize the risks of unfavorable exchange rates.These instruments may include foreign currency exchange contracts and forwards. In conjunction with entering into thecommodity derivative, we may enter into a foreign currency derivative to hedge the resulting foreign currency risk. Theseforeign currency derivatives are generally short‑term in nature and not designated for hedge accounting.We utilize exchange‑traded futures contracts and other derivative instruments to minimize or hedge the impact ofcommodity price changes on our inventories and forward fixed price commitments. Any hedge ineffectiveness is reflected inour results of operations. We utilize regulated exchanges, including the NYMEX, CME and ICE, which are exchanges for therespective commodities that each trades, thereby reducing potential delivery and supply risks. Generally, our practice is toclose all exchange positions rather than to make or receive physical deliveries. With respect to other products such asethanol, which may not have a correlated exchange contract, we enter into derivative agreements with counterparties that webelieve have a strong credit profile, in order to hedge market fluctuations and/or lock‑in margins relative to ourcommitments.At December 31, 2017, the fair value of all of our commodity risk derivative instruments and the change in fairvalue that would be expected from a 10% price increase or decrease are shown in the table below (in thousands): Fair Value at Gain (Loss) December 31, Effect of 10% Effect of 10% 2017 Price Increase Price Decrease Exchange traded derivative contracts $(38,599) $(28,491) $28,491 Forward derivative contracts (9,868) (216) 216 Total $(48,467) $(28,707) $28,707 The fair values of the futures contracts are based on quoted market prices obtained from the NYMEX, CME and ICE.The fair value of the swaps and option contracts are estimated based on quoted prices from various sources such asindependent reporting services, industry publications and brokers. These quotes are compared to the contract price of theswap, which approximates the gain or loss that would have been realized if the contracts had been closed out at December 31,2017. For positions where independent quotations are not available, an estimate is provided, or the prevailing market price atwhich the positions could be liquidated is used. All hedge positions offset physical exposures to the physical market; noneof these offsetting physical exposures are included in the above table. Price‑risk sensitivities were calculated by assuming anacross‑the‑board 10% increase or decrease in price regardless of term or historical relationships between the contractual priceof the instruments and the underlying commodity price. In the event of an actual 10% change in prompt month prices, thefair value of our derivative portfolio would typically change less than that shown in the table due to lower volatility inout‑month prices. We have a daily margin requirement to maintain a cash deposit with our brokers based on the prior day’smarket results on open futures contracts. The balance of this deposit will fluctuate based on our open market positions andthe commodity exchange’s requirements. The brokerage margin balance was $9.7 million at December 31, 2017.We are exposed to credit loss in the event of nonperformance by counterparties to our exchange‑traded derivativecontracts, physical forward contracts and swap agreements. We anticipate some nonperformance by some of thesecounterparties which, in the aggregate, we do not believe at this time will have a material adverse effect on our financialcondition, results of operations or cash available for distribution to our unitholders. Exchange‑traded derivative contracts,the primary derivative instrument utilized by us, are traded on regulated exchanges, greatly reducing potential credit risks.We utilize primarily three clearing brokers, all major financial institutions, for all NYMEX, CME and ICE derivativetransactions and the right of offset exists with these financial institutions. Accordingly, the fair value of our exchange‑tradedderivative instruments is presented on a net basis in the consolidated balance sheet. Exposure on90 Table of Contentsphysical forward contracts and swap agreements is limited to the amount of the recorded fair value as of the balance sheetdates. Item 8. Financial Statements and Supplementary Data.The information required here is included in the report as set forth in the “Index to Financial Statements” onpage F‑1. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.None. Item 9A. Controls and Procedures.Disclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that the information required to bedisclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded,processed, summarized and reported within the time periods specified in SEC rules and forms and that information isaccumulated and communicated to our management, including our principal executive officer and principal financial officer,as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation ofour principal executive officer and principal financial officer, management evaluated the effectiveness of our disclosurecontrols and procedures (as defined in Rules 13a‑15(e) or 15d‑15(e) of the Exchange Act). Based on this evaluation, ourprincipal executive officer and principal financial officer concluded that our disclosure controls and procedures wereoperating and effective as of December 31, 2017.Internal Control Over Financial ReportingManagement’s Annual ReportWe are responsible for establishing and maintaining adequate internal control over financial reporting (as defined inRules 13a‑15(f) or 15d‑15(f) of the Exchange Act). Our internal control over financial reporting is the process designed toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with GAAP. There are inherent limitations in the effectiveness of internal control overfinancial reporting, including the possibility that misstatements may not be prevented or detected. Accordingly, eveneffective internal controls over financial reporting can provide only reasonable assurance with respect to financial statementpreparation.Under the supervision and with the participation of our principal executive officer and principal financial officer,management conducted an evaluation of the effectiveness of our internal control over financial reporting based on theframework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (2013 framework). Based on that evaluation, management concluded that our internal control overfinancial reporting was effective as of December 31, 2017.The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited byErnst & Young LLP, our independent registered public accounting firm, as stated in their report. See “Report of IndependentRegistered Public Accounting Firm” on Page F-3 of our consolidated financial statements. Changes in Internal Control Over Financial ReportingOn August 1, 2017, we completed the implementation of new trade capture and transaction processing systems toreplace certain of our legacy computer systems used within our Wholesale and Commercial segments. We will continue tomake appropriate changes to internal controls and procedures to conform to these new systems. The new systems haveautomated certain manual processes and standardized business reporting. Management will continue to91 Table of Contentsevaluate and monitor our internal controls as each of the affected areas evolves. Other than as described above, there were no changes in our internal control over financial reporting that occurredduring the quarter ended December 31, 2017 that has materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting. Item 9B. Other Information.None.92 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance.Global GP LLC, our general partner, manages our operations and activities on our behalf. Our general partner is notelected by our unitholders and is not subject to re‑election in the future. Affiliates of the Slifka family own 100% of theownership interests in our general partner. Our general partner is controlled by Richard Slifka and the Alfred A. Slifka 1990Trust Under Article II-A (the “AS Article II-A Trust”) directly and through their beneficial ownership of entities that ownownership interests in our general partner. Eric Slifka and Andrew Slifka beneficially own interests in our general partner.Unitholders are not entitled to elect the directors of our general partner or directly or indirectly participate in ourmanagement or operation. Our general partner is liable, as general partner, for all of our debts (to the extent not paid from ourassets), except for indebtedness or other obligations that are made specifically nonrecourse to it. Whenever possible, ourgeneral partner intends to incur indebtedness or other obligations that are nonrecourse.Alfred A. Slifka, former chairman of the board of our general partner, passed away on March 9, 2014. Mr. Slifka’sestate closed effective February 28, 2017 and his interest in our general partner and his beneficially owned interests in GlobalPartners LP and its affiliates were transferred to the AS Article II-A Trust on that date. Eric Slifka, our President and ChiefExecutive Officer, and his two siblings are the trustees of the AS Article II-A Trust.Three members of the board of directors of our general partner serve on a conflicts committee to review specificmatters that the board believes may involve conflicts of interest. The conflicts committee determines if the resolution of theconflict of interest is fair and reasonable to us. Members of the conflicts committee may not be officers or employees of ourgeneral partner or directors, officers or employees of its affiliates and must meet the independence and experience standardsestablished by the NYSE and the Securities Exchange Act of 1934. Any matters approved by the conflicts committee will beconclusively deemed to be fair and reasonable to us, approved by all of our partners and not a breach by our general partnerof any duties it may owe us or our unitholders. In addition, we have a separately‑designated standing audit committeeestablished in accordance with the Securities Exchange Act of 1934 and a compensation committee. The three independentmembers of the board of directors of our general partner, Messrs. McCool, McKown and Watchmaker, serve as the solemembers of the conflicts, audit and compensation committees.Even though most companies listed on the NYSE are required to have a majority of independent directors servingon the board of directors of the listed company and establish and maintain an audit committee, a compensation committeeand a nominating/corporate governance committee, each consisting solely of independent directors, the NYSE does notrequire a listed limited partnership like us to have a majority of independent directors on the board of directors of our generalpartner or to establish a compensation committee or a nominating/corporate governance committee.No member of the audit committee is an officer or employee of our general partner or director, officer or employee ofany affiliate of our general partner. Furthermore, each member of the audit committee is independent as defined in the listingstandards of the NYSE. The board of directors of our general partner has determined that a member of the audit committee,namely Kenneth Watchmaker, is an “audit committee financial expert” as defined by the SEC.Among other things, the audit committee is responsible for reviewing our external financial reporting, includingreports filed with the SEC, engaging and reviewing our independent auditors and reviewing procedures for internal auditingand the adequacy of our internal accounting controls.We are managed and operated by the directors and executive officers of our general partner. Our operating personnelare employees of our general partner or certain of our operating subsidiaries.All of our executive officers devote substantially all of their time to managing our business and affairs, but fromtime to time perform services for our affiliate, Global Petroleum Corp. Please read Part III, Item 13, “Certain Relationships andRelated Transactions, and Director Independence—Relationship of Management with Global Petroleum Corp.” Ournon‑management directors devote as much time as is necessary to prepare for and attend board of directors and committeemeetings.93 Table of ContentsSet forth below are the names, ages (as of March 6, 2018) and titles of persons currently serving as directors andexecutive officers of our general partner:Name Age Position with Global GP LLC Richard Slifka 77 Chairman Eric Slifka 52 President, Chief Executive Officer andDirector Andrew Slifka 49 Executive Vice President and Director Mark A. Romaine 49 Chief Operating Officer Daphne H. Foster 60 Chief Financial Officer and Director Edward J. Faneuil 65 Executive Vice President, GeneralCounsel and Secretary Matthew Spencer 39 Chief Accounting Officer David K. McKown 80 Director Robert J. McCool 79 Director Kenneth I. Watchmaker 75 Director Richard Slifka was elected Vice Chairman of the Board of our general partner in March 2005 and became Chairmanin March 2014. He had been employed with Global Companies LLC or its predecessors since 1963. Mr. Slifka served asTreasurer and a director of Global Companies LLC since its formation in December 1998. Mr. Slifka also is a shareholder, adirector and the President of Global Petroleum Corp., a privately held affiliated company that had owned, operated andleased to us our petroleum products storage terminal located in Revere, Massachusetts until we acquired the terminal inJanuary 2015. Mr. Slifka is a past director of the New England Fuel Institute and currently serves as president of theIndependent Fuel Terminal Operators Association. He also currently serves on the board of directors of St. Francis House andthe board of trustees of Boston Medical Center. He has been a director of the National Multiple Sclerosis Society since 1988.Mr. Slifka’s extensive knowledge of the oil industry in general and of our history, customers and suppliers make himuniquely qualified to serve as our Chairman of the Board. Richard Slifka is the brother of the late Alfred A. Slifka. Eric Slifka was elected President, Chief Executive Officer and director of Global GP LLC, the general partner ofGlobal Partners LP, in March 2005. He has been employed with Global Companies LLC or its predecessors since 1987. Mr.Slifka served as President and Chief Executive Officer and a director of Global Companies LLC since July 2004 and as ChiefOperating Officer and a director of Global Companies LLC from its formation in December 1998 to July 2004. Prior to 1998,Mr. Slifka held various senior positions in the accounting, supply, distribution and marketing departments of thepredecessors to Global Companies LLC. He is a member of the National Petroleum Council and serves on the board ofdirectors of the Energy Policy Research Foundation, Inc., the Massachusetts Youth Committed to Winning andMassachusetts General Hospital President’s Council. Mr. Slifka is the son of the late Alfred A. Slifka and the nephew ofRichard Slifka. Andrew Slifka was elected to serve as a director of our general partner in April 2012 and has been serving asExecutive Vice President of Global Partners LP since March 2012 and President of Alliance Energy LLC and its predecessorAlliance Energy Corp. since November 2007. He has been employed with Alliance since 1999. Mr. Slifka served as VicePresident and General Manager for the Northeast region (RI, MA, NH, and ME) of Alliance Energy Corp. from 1999 to 2003and as Executive Vice President from 2003 to November 2007. From 1991 to 1999 Mr. Slifka held various positions in thesupply, distribution, and marketing departments with the predecessor of Global Companies LLC, Global Petroleum Corp. Heserves on the boards of directors of NECSEMA (New England Convenience Store & Energy Marketers Association), theNational Multiple Sclerosis Society, the CF & MS Fund Foundation Inc. and is on the board of trustees of The Rivers School.Additionally, Mr. Slifka is a Member of the ExxonMobil National Council. Mr. Slifka is the son of Richard Slifka and thenephew of the late Alfred A. Slifka.Mark A. Romaine has been Chief Operating Officer of Global Partners LP since July 2013. Mr. Romaine servedas the Senior Vice President of Light Oil Supply and Distribution for Global Partners LP from 2006 until June 2013. Hejoined a predecessor companyto Global in 1998 as Premium Fuels Marketing Manager. His experience in the petroleum products industry includes operations andmarketing positions with Plymouth, MA-based Volta Oil. Mr. Romaine received a bachelor’s degree from Providence College andan MBA from the University of Massachusetts.94 Table of ContentsDaphne H. Foster was elected to serve as a director of our general partner in May 2016 and has been Chief FinancialOfficer of Global Partners LP since July 2013. Ms. Foster served as Treasurer of Global Partners LP from 2010 until June2013. She joined Global in 2007. Her experience in the petroleum products industry includes several years as a VicePresident in the Energy and Utilities Division of Bank of Boston. She started her banking career in 1982 at Bank of Bostonand later joined Citizens Financial Group, where she oversaw the Loan Officer Development Program. Ms. Foster received abachelor's degree and an MBA from Boston University.Edward J. Faneuil was elected Executive Vice President, General Counsel and Secretary of our general partner inMarch 2005. He has been employed with Global Companies LLC or its predecessors since 1991. Mr. Faneuil served asGeneral Counsel and Secretary of Global Companies LLC since its formation in December 1998. He previously served asExecutive Vice President, Secretary, and General Counsel of Alliance Energy LLC (now a wholly owned subsidiary of GlobalPartners LP). He currently serves as Executive Vice President, General Counsel and Secretary of Global PetroleumCorporation. Mr. Faneuil received a bachelor’s degree from Trinity College and a J.D. from Suffolk University Law School.Matthew Spencer was appointed by the Board of Directors of the general partner to serve as the Chief AccountingOfficer of Global Partners LP commencing January 1, 2018. Mr. Spencer served as Controller of the general partner fromSeptember 2012 through December 2017. Mr. Spencer joined Global from SharkNinja Operating LLC (formerly Euro-ProOperating LLC), where he served as Assistant Controller. Prior to that, he was a Senior Manager at Ernst & Young.David K. McKown was elected to serve as a director of our general partner and as a member of the conflictscommittee, the compensation committee and the audit committee of the board of directors of our general partner inOctober 2005. He has been a Senior Advisor to the Bank Loan Fund of Eaton Vance Management, whose principal businessis creating, marketing and managing investment funds and providing investment management services to institutions andindividuals, since 2000. In this capacity he serves as a credit analyst and a research source for many of the changes in theaccounting area, such as marked to market valuations, changes in bank lending rules and understanding of new financialproducts and derivatives. Mr. McKown retired in March 2000 having served as a Group Executive with BankBoston since1993. Mr. McKown has been in the banking industry for over 40 years, where he acquired extensive accounting, financialstructuring and negotiation skills, having worked at BankBoston for over 33 years as a Senior Credit Officer, the head of aworkout unit, the head of BankBoston’s energy lending group and the head of BankBoston’s real estate and corporatefinance departments. He also was a managing director of BankBoston’s private equity unit. Mr. McKown has served on theboards of four public companies and four private companies in a variety of industries. He currently serves as a director ofSafety Insurance Group and several private companies. Mr. McKown previously served as a member of the board of directorsof Equity Office Properties. Mr. McKown’s extensive financial expertise and longstanding work in BankBoston’s energypractice make him well qualified to serve as a director of our general partner.Robert J. McCool was elected to serve as a director of our general partner, the chair of the conflicts committee of theboard of directors of our general partner, and a member of the compensation and audit committees of the board of directors ofour general partner in October 2005. He had served as an Advisor to Tetco Inc., a privately held company in the energyindustry, for 15 years and has been in the refined petroleum industry for over 40 years. He worked for Mobil Oil for 33 yearsin various positions including manager, planning and financial analysis, controller, manager U.S. lubricants operations andmanager, budget and controls for U.S. acquisitions. Mr. McCool retired in 1998 having served as Executive Vice Presidentresponsible for Mobil Oil’s North and South America marketing and refining business. Mr. McCool’s extensive experiencewith the financial, accounting and managerial aspects of the refined petroleum products industry make him well qualified toserve as a director of our general partner.Kenneth I. Watchmaker was elected to serve as a director of our general partner, a member of the conflicts andcompensation committees of the board of directors of our general partner, and chair of the audit committee of the board ofdirectors of our general partner in October 2005. He subsequently became chair of our general partner's compensationcommittee as well. He served as Executive Vice President and Chief Financial Officer of Reebok International Ltd. from 1995until March 2006. Mr. Watchmaker joined Reebok International Ltd. in July 1992 as Executive Vice President, Operationsand Finance, of the Reebok Brand. Prior to joining Reebok International Ltd., he was an audit partner at95 Table of ContentsErnst & Young LLP, where he had various responsibilities including regional partner in charge of merger and acquisitionservices, regional partner in charge of bankruptcy and insolvency services, regional partner in charge of audit services andregional partner in charge of retail industry services. Mr. Watchmaker also serves as a director and the chair of the auditcommittee of American Biltrite Inc. Mr. Watchmaker's broad audit and accounting experience, as well as his significantcorporate and financial experience, make him a valuable member of our board of directors.Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Securities Exchange Act of 1934 requires directors and executive officers of our general partnerand persons who beneficially own more than 10% of a class of our equity securities registered pursuant to Section 12 of theSecurities Exchange Act of 1934 (“Reporting Persons”) to file certain reports with the SEC and the NYSE concerning theirbeneficial ownership of such securities. Based solely upon a review of the copies of reports on Forms 3, 4 and 5 andamendments thereto furnished to us, or written representations that no reports on Form 5 were required, we believe that allReporting Persons complied with all Section 16(a) filing requirements in the year ended December 31, 2017.Executive SessionsThe board of directors of our general partner holds executive sessions for the non‑management directors on a regularbasis without management present. Since the non‑management directors include directors who are not independent directors,the independent directors also meet in separate executive sessions without the other directors or management at least onceeach year to discuss such matters as the independent directors consider appropriate. In addition, any director may call for anexecutive session of non‑management or independent directors at any board meeting. A majority of the independentdirectors selects a presiding director for any such executive session.Communications with Unitholders, Employees and OthersUnitholders, employees and other interested persons who wish to communicate with the board of directors of ourgeneral partner, non‑management or independent directors as a group, a committee of the board or a specific director may doso by transmitting correspondence addressed to the Board of Directors, Name of Director, Group or Committee, c/o CorporateSecretary, Global Partners LP, P.O. Box 9161, 800 South Street, Suite 500, Waltham, MA 02454‑9161, Fax: 781‑398‑9211.Letters addressed to the board of directors of our general partner in general will be reviewed by the corporatesecretary and relayed to the chairman of the board or the chair of the appropriate committee. Letters addressed to thenon‑management or independent directors in general will be relayed unopened to the chair of the audit committee. Lettersaddressed to a committee of the board of directors or a specific director will be relayed unopened to the chair of thecommittee or the specific director to whom they are addressed. All letters regarding accounting, accounting policies, internalaccounting controls and procedures, auditing matters, financial reporting processes or disclosure controls and procedures areto be forwarded by the recipient director to the chair of the audit committee.Code of EthicsOur general partner has adopted a code of business conduct and ethics that applies to all officers, directors andemployees of our general partner, including the principal executive officer, principal financial officer and principalaccounting officer, and to our subsidiaries and their officers, directors and employees.A copy of the code of business conduct and ethics is available on our website at www.globalp.com or may beobtained without charge upon written request to the General Counsel at: Global Partners LP, P.O. Box 9161, 800 SouthStreet, Suite 500, Waltham, MA 02454‑9161.96 Table of ContentsCorporate Governance MattersThe NYSE requires the Chief Executive Officer of each listed company to certify annually that he is not aware ofany violation by the company of the NYSE corporate governance listing standards as of the date of the certification,qualifying the certification to the extent necessary. The Chief Executive Officer of our general partner provided suchcertification to the NYSE in 2017.The certifications of our general partner’s Chief Executive Officer and Chief Financial Officer required by theSecurities Exchange Act of 1934 are included as exhibits to this Annual Report on Form 10‑K. Item 11. Executive Compensation.All of our executive officers and substantially all of our employees are employed by our general partner, except forour gasoline station and convenience store employees who are employed by Global Montello Group Corp. (“GMG”), andcertain union personnel. Our general partner does not receive any management fee or other compensation for its managementof Global Partners LP. Our general partner and its affiliates are reimbursed for expenses incurred on our behalf. Theseexpenses include the costs of employee, executive officer and director compensation and benefits properly allocable toGlobal Partners LP. Our partnership agreement provides that our general partner will determine the expenses that areallocable to Global Partners LP.Compensation Discussion and AnalysisWe are managed and operated by the executive officers of our general partner. Executive officers of our generalpartner receive compensation in the form of base salaries, short-term incentive awards (contractual and/or discretionary) andlong-term incentive awards. They also are eligible to participate in employee benefit plans and arrangements sponsored byour general partner or its affiliates, including plans that may be established by our general partner or its affiliates in thefuture. Our named executive officers (defined below) serve as executive officers of our general partner and each of ourwholly-owned subsidiaries. The compensation described herein reflects their total compensation for services to us, ourgeneral partner and our subsidiaries.Our “named executive officers” include Mr. Eric Slifka, our Chief Executive Officer (“CEO”), Ms. Daphne H. Foster,our Chief Financial Officer (“CFO”), Mr. Mark A. Romaine, our Chief Operating Officer (“COO”), and the three most highlycompensated executive officers of our general partner other than our CEO, CFO and COO during 2017, who were Mr. AndrewSlifka, our Executive Vice President and President of our Gasoline Distribution and Station Operations Division (“GDSO”),Mr. Edward J. Faneuil, our Executive Vice President, General Counsel and Secretary, and Mr. Charles A. Rudinsky, whoserved as our Executive Vice President and Chief Accounting Officer through December 31, 2017. Each of Messrs. EricSlifka, Andrew Slifka, Faneuil and Romaine and Ms. Foster had an employment agreement with our general partner during2017. Prior to his resignation as our Executive Vice President and Chief Accounting Officer on December 31, 2017,Mr. Rudinsky was an employee at will and did not have an employment agreement with our general partner. AlthoughMr. Rudinsky is no longer an executive officer, he remains employed by our general partner and is currently serving as aSenior Advisor to our CFO.The compensation committee of the board of directors of our general partner (the “Compensation Committee”) hasdirect responsibility for the compensation of our CEO based upon (i) contractual obligations pursuant to any employmentagreement or arrangement between our CEO and our general partner, and (ii) compensation parameters established by theCompensation Committee with respect to salary adjustments, incentive plans and discretionary bonuses, if any. TheCompensation Committee also has oversight and approval authority for the compensation of our named executive officersother than our CEO based upon our CEO's recommendations, including awards under any incentive plans in which thenamed executive officers participate, and our general partner's contractual obligations pursuant to any employmentagreements or arrangements with our named executive officers.97 Table of ContentsCompensation ObjectivesThe objectives of our compensation program with respect to our named executive officers are to attract, engage andretain individuals with the requisite knowledge, experience and skill sets required for our future success. Our compensationprogram is intended to motivate and inspire employee behavior that fosters high performance, and to support our overallbusiness objectives. To achieve these objectives, we aim to provide each named executive officer with a competitive totalcompensation program. We currently utilize the following compensation components:·Base salaries and benefits designed to attract and retain high caliber employees;·Short-term, performance-based incentives and discretionary bonus awards designed to focus employees on keybusiness objectives for a particular year, and·Long-term, equity-based and/or performance-based cash incentive awards designed to support the achievementof our long-term business objectives and the retention of key personnel.Compensation MethodologyOur general partner uses a third-party compensation consultant to study and supply market compensation data andto assist our management and the Compensation Committee in formulating competitive compensation plans andarrangements. The Compensation Committee retained BDO USA, LLP (“BDO”) as its outside compensation consultantduring 2017.Under our executive compensation structure, our goal is for our named executive officers’ total compensation to fallbetween the median (50 percentile) and 75 percentile of competitive total compensation levels, as identified by ourcompensation consultant's benchmarking results, following any adjustments made to marketplace pay levels in order toaccount for significant responsibilities that are assigned to our named executive officers and that exceed the scope ofresponsibilities generally associated with the external benchmark positions to which they are compared, specifically:·Our Executive Vice President, General Counsel and Secretary plays a critical role in our major transactions andstrategic business initiatives, serves as a trusted business advisor to our executive officers, and is responsible forall of our environmental compliance functions, as well as serving as our top legal executive;·Our 2017 Executive Vice President and Chief Accounting Officer, who also served as co-director of our mergersand acquisitions activities, was responsible for our financial analyses in connection with our acquisition duediligence; and ·Our Executive Vice President who also serves as President of our GDSO Division has executive responsibilitiesas well as primary oversight of our gasoline and convenience store business.Overall Partnership performance and individual performance may cause the targeted compensation levels to be adjusted upor down accordingly.BDO worked with the Compensation Committee in 2017 to review and update (i) our reference group of peercompanies for compensation benchmarking purposes; (ii) the methodology for measuring our short-term performance; and(iii) the performance targets and associated levels of payouts previously contained in our short-term incentive plan for ournamed executive officers (the “STIP”) for 2017. The plan design of our 2018 STIP is the same as that of our 2017 STIP,except for adjustments to the performance target levels thereunder.During 2016 and 2015, BDO worked with the Compensation Committee to develop and maintain a compensationdatabase and template for use in assessing and reporting long-term incentive plan awards for our named executive officersand directors; provide updated performance targets and related award levels for our general partner’s 2016 STIP and 2015STIP to ensure that such plans were fully aligned with our critical business objectives; to research and prepare a competitivecompensation assessment for our Chief Financial Officer position and a competitive assessment of methods and levels ofcompensation for independent board members; and to assist with compensation information related to the 2015 and 2016Forms 10-K.98 thth Table of ContentsHighlights of Compensation Program Policies for Named Executive Officers·A significant portion of total direct compensation for our named executive officers is variable, dependent uponthe Partnership’s actual performance (e.g., short-term, performance-based incentives and long-term, equity-basedincentives);·Repricing of options and unit appreciation rights is prohibited unless approved by unitholders;·The Compensation Committee engages the assistance of an independent compensation consultant.Elements of CompensationOur executive compensation structure utilizes complementary components to align our compensation with theneeds of our business and to provide for desired levels of pay that competitively compensate our executive managementpersonnel. We administer the program on the basis of total compensation. As described above, our goal is to target totalcompensation levels (i.e., base salary plus short- and long-term incentives) for our named executive officers to fall betweenthe median (50th percentile) and 75th percentile compensation levels in our competitive marketplace. When we performabove or below our performance goals, we expect that result will be reflected in our compensation levels.The elements of the 2017 executive officer compensation of our general partner were base salaries, short-termincentive awards, discretionary bonuses, long-term equity incentive awards, retirement, deferred compensation and healthbenefits, and perquisites consistent with those provided to executive officers generally and as may be approved by theCompensation Committee from time to time.A description of the components of the compensation program and principles used to guide their administrationappears below:Base SalariesEach named executive officer’s base salary is a fixed component of compensation for each year. Base salary isdesigned to compensate executives for the responsibility of the level of the position they hold and sustained individualperformance (including experience, scope of responsibility, results achieved and future potential). Historically, the basesalaries for our named executive officers with employment agreements have been set by the terms of their respectiveemployment agreements in effect from time to time while the base salary for the named executive officer without anemployment agreement has been set in accordance with our CEO’s recommendation, using salary range information fromBDO, and as approved by the Compensation Committee. Other than an increase to Ms. Foster’s base salary (from $400,000 to$450,000, effective as of January 1, 2017), annualized base salaries for our named executive officers did not change in 2017.The annualized base salaries in effect as of the end of 2017 for our named executive officers were as follows: $800,000 forMr. Eric Slifka, $500,000 for Mr. Romaine; $450,000 for Mr. Faneuil; $425,000 for Mr. Andrew Slifka; $450,000 forMs. Foster; and $273,000 for Mr. Rudinsky.Short-Term Incentive PlansOur general partner established a cash bonus pool for 2017 to fund short-term incentive awards for each of ournamed executive officers. Target awards under our general partner’s 2017 STIP included a performance-based component, forwhich 50% of the cash bonus pool was available (the “STIP Performance Component”), and a discretionary component, forwhich the other 50% of the cash bonus pool was available (the “STIP Discretionary Component”). Incentive awards earnedunder the 2017 STIP were based on the Partnership’s actual performance in relation to a specified objective for distributablecash flow established by the Compensation Committee in March 2017 (the “DCF objective”). Under the 2017 STIP, forpurposes of determining whether a specified target was achieved, “distributable cash flow” (a non-GAAP financial measureused by management) means our net income plus depreciation and amortization, less our maintenance capital expenditures(“DCF”). DCF is discussed under “Results of Operations—Evaluating Our Results of Operations” and reconciled to its mostdirectly comparable GAAP financial measures under “Results of Operations—Key Performance Indicators” in Part II, Item 7,“Management's Discussion and Analysis of Financial Conditions and Results of Operations.”99 Table of ContentsUnder the 2017 STIP, each of our named executive officers was assigned an incentive target value expressed as apercentage of his or her base salary. The 2017 incentive target values were: 100% (or $800,000) for Mr. Eric Slifka; 100% (or$500,000) for Mr. Romaine; 100% (or $450,000) for Mr. Faneuil; 100% (or $450,000) for Ms. Foster; 71% (or $300,000) forMr. Andrew Slifka; and 48% (or $130,000) for Mr. Rudinsky. 50% of the incentive target value for each named executiveofficer was allocated to his or her STIP Performance Component and 50% was allocated to his or her STIP DiscretionaryComponent.STIP Performance Component (50% of the incentive target value).—Under the terms of the 2017 STIP, 100% of theSTIP Performance Component is earned when the DCF objective is achieved. However, the 2017 STIP also provides for anincreased payout under the STIP Performance Component when the DCF objective is exceeded, a reduced payout under theSTIP Performance Component when the DCF objective is not achieved but exceeds a certain DCF minimum threshold, andno payout if the STIP Performance Component minimum threshold is not achieved. Such increases and reductions in payoutsare determined in accordance with an award payout grid adopted by the Compensation Committee at the time that the 2017STIP was established. In general, a minimum of 81.1% of the DCF objective must have been achieved before participantsearn any portion of the STIP Performance Component. Under the 2017 STIP, a participant’s incentive opportunity increasesto a maximum of 200% of the STIP Performance Component at 119.8% of the DCF objective, and is determined on aquantitative basis solely based on the Partnership’s actual DCF for 2017. In 2017, the Partnership achieved DCF as adjusted,said adjustment having been approved by the Compensation Committee, of $124.5 million, or 127% of the DCF objectiveset by the Compensation Committee for 2017. Accordingly, our named executive officers were entitled to receive 200% oftheir respective STIP Performance Components, specifically as follows: $800,000 for Mr. Eric Slifka; $500,000 forMr. Romaine; $450,000 for Mr. Faneuil; $450,000 for Ms. Foster; $300,000 for Mr. Andrew Slifka; and $130,000 forMr. Rudinsky.STIP Discretionary Component (50% of the incentive target value).—The STIP Discretionary Component isintended to be used as a discretionary award, allowing the Compensation Committee to analyze other factors that it may electto use for determining the STIP Discretionary Component. Such factors may include, without limitation, market factors andsignificant acquisitions, developments and ventures accomplished by us, management of our business in the face of adversemarket conditions and, as may be applicable, the contributions of any or all of the named executive officers. Mr. Eric Slifka’sevaluation of our named executive officers’ performance in 2017 included the recognition that both their individual andcollective performance were outstanding, and that they supported each other as a team as they undertook initiatives to ensureample liquidity, generate sufficient cash flow to cover our distributions, and increase flexibility to invest in assetsfundamental to our growth objectives.In considering whether to grant the 2017 STIP Discretionary Component awards, the Compensation Committeerecognized that our business performance in 2017 exceeded our full-year expectations. Our full-year results were driven bysolid overall performance which was highlighted by our GDSO segment and improved product margin and refined productthroughput in our Wholesale segment. The following initiatives were undertaken by us under the leadership of Mr. EricSlifka and executed by our named executive officers to strategically position us by strengthening our balance sheet andenhancing our liquidity in order to be able to invest in opportunities fundamental to our growth strategy, including theacquisition of retail sites that leverage our integrated network of terminals and expand our footprint and enable us to benefitfrom economies of scale in the purchase of fuel and convenience store merchandise. These strategic initiatives included:·On February 1, 2017, we completed the sale of our natural gas marketing and electricity brokerage businessesfor a purchase price of approximately $17.3 million, subject to customary closing adjustments. Proceeds fromthe sale amounted to approximately $16.3 million, and we realized a gain on the sale of $14.2 million. The saleof the natural gas marketing and electricity brokerage businesses reflects our ongoing program to monetize non-strategic assets not fundamental to our growth strategy.·In order to properly resize our credit facilities to more adequately reflect our needs in the current environment,reduce our costs and provide adequate liquidity, we entered into an amended and restated credit agreement onApril 25, 2017 which, among other things, (i) reduce our working capital revolving credit facility from$900.0 million to $850.0 million and our revolving credit facility from $575.0 million to $450.0 million; and(ii) add (or increase as the case may be) certain baskets that were not included in the prior credit agreement,including: (a) a $25.0 million general secured indebtedness basket, (b) a100 Table of Contents$25.0 million general investment basket, (c) a $75.0 million secured indebtedness basket to permit theborrowers to enter into a Contango Facility (as defined in the credit agreement), (iv) an increase in the Sale-Leaseback Transaction (as defined in the credit agreement) basket from $75.0 million to $100.0 million, and(v) a basket of $50.0 million in an aggregate amount over the life of the credit agreement for the purchase ofcommon units of the Partnership, provided that no Event of Default (as defined in the credit agreement) exists orwould occur immediately following such purchase(s).·On October 17, 2017, we expanded our retail network in and around the greater Worcester, Massachusetts areaby acquiring retail gasoline and convenience store assets from Honey Farms, Inc. in a cash transaction. Theacquisition included 11 company-operated retail sites with fuel and convenience stores and 22 company-operated stand-alone convenience stores. The purchase price was approximately $38.5 million.·Ongoing divesture of non-strategic assets.Taking into account Mr. Slifka’s assessment, the Partnership’s results of operations for 2017, as well as theCompensation Committee’s review of the individual performance of each of our named executive officers in 2017, theCompensation Committee awarded our named executive officers under their respective STIP Discretionary Components for2017, specifically as follows: 150% or $600,000 for Mr. Eric Slifka; 160% or $400,000 for Mr. Romaine; 162% or $365,000for Mr. Faneuil; 162% or $365,000 for Ms. Foster; 163% or $245,000 for Mr. Andrew Slifka; and 154% or $100,000 forMr. Rudinsky.2018 Short-Term Incentive Plan.—In 2018, the Compensation Committee, with the assistance of its compensationconsultant, BDO, used our 2018 business plan as a basis for creating the 2018 Short-Term Incentive Plan. The 2018 STIPestablishes a target incentive percentage for each participant ranging from 71% to 100% of base salary representing the sametarget percentages used during 2017 for each of the named executive officers. Awards under the 2018 STIP may range from0% to 200% of each participant’s target incentive percentage. The weighting of the STIP Performance Component and STIPDiscretionary Component in the 2017 STIP remain 50% and 50%, respectively, the same as in the 2017 STIP.·The 2018 Performance Component (50% of the incentive target value)—The Compensation Committeedecreased the DCF objective for 2018, subject to adjustment by the Compensation Committee for certainacquisitions and events during 2018 that the Compensation Committee may, in its sole discretion, determine tohave caused unusual, one-time increases or decreases in DCF. Awards granted by the Compensation Committeemay range from 0% to 200% of a plan participant’s 2018 STIP Performance Component. A minimum of 81.1%of the 2018 DCF objective must be achieved before participants would earn any portion of the 2018 STIPPerformance Component. Under the 2018 STIP, a participant’s incentive opportunity increases to a maximum of200% of the 2018 STIP Performance Component at 119.8% of the 2018 DCF objective, and is determined on aquantitative basis solely based on our actual DCF for 2018.·The 2018 Discretionary Component (50% of the incentive target value)—The Compensation Committee hasdiscretion in determining the 2018 STIP Discretionary Component for any participant under the 2018 STIP,within a range of 0% to 200% of the 2018 STIP Discretionary Component, and based upon (i) theCompensation Committee’s consideration of management's performance over the course of the 2018 plan year;(ii) the CEO’s assessment of the other named executive officers; (iii) our overall financial results for the year inrelation to our business plan; and (iv) any significant mitigating factor(s) that may have influenced a planparticipant’s performance, positively or negatively. The objective of considering these factors is to arrive at adecision that best reflects the Compensation Committee’s overall assessment of management's performance onan individual basis. The Compensation Committee believes that when combined with the STIP PerformanceComponent, the results will more accurately reflect a plan participant's performance in light of the relevantfactors.101 Table of ContentsAnnual Bonuses—DiscretionaryOur compensation program for named executive officers contains a provision for the Compensation Committee toaward a discretionary bonus to recognize significant contributions made by an executive in the course of the year. These areone-time awards and not associated with any of our incentive plans. The Compensation Committee may make discretionarybonus awards to our CEO. Our CEO may also recommend discretionary bonus awards for all other named executive officersfor consideration and approval by the Compensation Committee for similar purposes.The Compensation Committee awarded Mr. Rudinsky a special one-time discretionary bonus in the amount of$300,000 in recognition of his years of service as Executive Vice President and Chief Accounting Officer. The CompensationCommittee did not award any other discretionary bonus payments under this program in respect of our named executiveofficers’ service during 2017, 2016 or 2015.Long-Term Incentive Plans2017 Phantom Unit Awards.—On August 16, 2017, the Compensation Committee approved the grant of phantomunit awards (collectively, the “2017 Phantom Unit Awards”) pursuant to phantom unit award agreements (each, a “PhantomUnit Agreement”) under the Global Partners LP Long-Term Incentive Plan (as amended from time to time, the “LTIP”) to eachof our named executive officers who had an employment agreement with us during 2017 (i.e., Messrs. Eric Slifka, AndrewSlifka, Romaine and Faneuil and Ms. Foster). Each 2017 Phantom Unit Award is subject to the following vesting schedule:25% of the phantom units subject to such award vests on August 1, 2020, 35% of the phantom units subject to such awardvests on August 1, 2021 and 40% of the phantom units subject to such award vests on August 1, 2022.If a named executive officer’s employment with our general partner is terminated (a) by our general partner for Cause(as defined in such named executive officer’s employment agreement), or (b) by the named executive officer voluntarily(other than due to retirement), all unvested phantom units subject to such named executive officer’s 2017 Phantom UnitAward will immediately be forfeited without payment. If a named executive officer’s employment with our general partner isterminated for any other reason, the Compensation Committee will generally have sole discretion to determine whether anyor all of the unvested phantom units subject to such named executive officer’s 2017 Phantom Unit Award will become vestedor forfeited. Upon the occurrence of a Change of Control (as defined in a named executive officer’s employment agreement),all unvested phantom units subject to such named executive officer’s 2017 Phantom Unit Award will immediately becomevested.Upon vesting of the 2017 Phantom Unit Awards, phantom units will be settled in our common units unless theCompensation Committee decides, in its sole discretion, to settle such phantom units in cash or a combination of commonunits and cash.2015 CEO Performance-Based Cash Incentive Plan.—Mr. Eric Slifka’s employment agreement with our generalpartner included a provision for a long-term performance-based cash incentive plan covering a three-year period, fromJanuary 1, 2015 through December 31, 2017. This plan was based on the achievement of growth in distributions to ourunitholders in respect of the three-year term of Mr. Slifka’s employment agreement. This award was calculated using (i) thesum of all distributions paid to our unitholders in respect of the three-year period from January 1, 2015 through December 31,2017 (which distributions were paid during the period from May 2015 through February 2018), inclusive, and (ii) anannualized $2.66 per unit (subject to adjustment by the Compensation Committee as set forth in Mr. Slifka’s employmentagreement) baseline against which Mr. Slifka’s performance was measured. The Partnership failed to achieve growth indistributions to our unitholders in respect of the three-year period from January 1, 2015 through December 31, 2017;therefore Mr. Slifka did not meet the growth target and no payout was earned under this incentive plan.102 Table of ContentsRetirement and Health Benefits; PerquisitesGlobal Partners 401(k) Savings and Profit Sharing PlanThe Global Partners LP 401(k) Savings and Profit Sharing Plan (the “Global 401(k) Plan”) permits all eligibleemployees to make voluntary pre-tax contributions to the plan, subject to applicable tax limitations. The Global 401(k) Planprovides for employer matching contributions equal to 100% of elective deferrals up to the first 3% of eligible compensationplus 50% of elective deferrals up to the next 2% of eligible compensation. In 2017, all employees were eligible to participatein the Global 401(k) Plan other than employees who were (1) not yet 21 years of age, (2) covered by a collective bargainingagreement that does not provide for employees to be covered by the Global 401(k) Plan or (3) nonresident aliens. Newemployees may begin to contribute to the Global 401(k) Plan on the first day of the month following their respective dates ofhire, although they are not eligible to receive matching payments under the Global 401(k) Plan until they have beenemployed by our general partner or one of our operating subsidiaries for six months. Eligible employees may elect tocontribute up to 100% of their compensation to the plan for each plan year. Employee contributions are subject to annualdollar limitations, which are adjusted periodically for changes in the cost of living. Participants in the plan are always fullyvested in any matching contributions under the plan; however, discretionary profit sharing contributions are subject to a six-year vesting schedule. The plan is intended to be tax-qualified under Section 401(a) of the Code so that contributions to theplan, and income earned on plan contributions, are not taxable to employees until withdrawn from the plan, and so that ourgeneral partner's contributions, if any, will be deductible when made.Pension BenefitsEach of our named executive officers is eligible to participate in our general partner's pension plan in accordancewith our general partner’s policies and on the same general basis as other employees of our general partner. Under our generalpartner’s pension plan, an employee becomes fully vested in his or her pension benefits after completing five years of serviceor, if earlier, upon termination due to death or disability. Please read “Other Benefits—Pension Benefits” for information withrespect to eligibility standards and calculations of estimated annual pension benefits payable upon retirement under thepension plan. Our general partner’s pension plan was frozen on December 31, 2009.Prior to March 1, 2012, Mr. Andrew Slifka was employed by Alliance Energy LLC (“Alliance”) and participates inthe Alliance Energy LLC Pension Plan in accordance with Alliance’s policies and on the same general basis as otheremployees of Alliance not excluded by the terms of the plan. On March 1, 2012, sponsorship of the Alliance Energy LLCPension Plan was transferred to GMG and the plan was renamed as the GMG Pension Plan (as defined and described belowunder “Other Benefits—Pension Benefits”). An employee is fully vested in benefits under the GMG Pension Plan aftercompleting five years of service or, if earlier, upon termination due to death or disability. Please read “Other Benefits—Pension Benefits” for information with respect to eligibility standards and calculations of estimated annual pension benefitspayable upon retirement under the GMG Pension Plan. The GMG Pension Plan was frozen on May 15, 2012.Other BenefitsEach of our named executive officers is eligible to participate in our general partner's health insurance plans andother employee benefit plans in accordance with our general partner’s policies and on the same general basis as otheremployees of our general partner.Additional perquisites for our named executive officers may include payment of premiums for supplemental lifeand/or long-term disability insurance, automobile fringe benefits, club membership dues and payment of fees for professionalfinancial planning, tax and/or legal advice.103 Table of ContentsEmployment AgreementsEach of Messrs. Eric Slifka, Andrew Slifka, Faneuil and Romaine and Ms. Foster had an employment agreement withour general partner during 2017. We believe that the post-termination and change in control payments in the employmentagreements allowed our named executive officers to focus on making business decisions that maximized our interests and theinterests of our unitholders without allowing personal considerations to influence the decision-making process. Please read“Potential Payments upon Termination or Change of Control” for a discussion of the provisions in each employmentagreement relating to termination, change in control and related payment obligations.Relationship of Compensation Elements to Compensation ObjectivesWe use base salaries to provide financial stability and to compensate our executive officers for fulfillment of theirrespective job duties.We use a short-term incentive plan with performance-based and discretionary components to align a significantportion of our executive officers' compensation with annual business performance and success, and to provide rewards andrecognition for key business outcomes such as achieving increased quarterly distributions in line with our financial results,expanding our distribution, marketing and sales of petroleum products, expanding our gasoline station and conveniencestore assets and the geographic markets that we serve, and diversifying our product mix to enhance profitability andeffectively managing our business. Short-term performance-based incentives also allow flexibility to reward performance andindividual success consistent with such criteria as may be established from time to time by our CEO and the CompensationCommittee.Our long-term incentive plans (the LTIP and the performance-based cash incentive plans applicable to Mr. EricSlifka) provide incentives and reward eligible participants for the achievement of long-term objectives, facilitate theretention of key employees by aligning their incentives with our long-term performance, continue to make our compensationmix more competitive, and align the interests of management with those of our unitholders.We offer a mix of traditional perquisites such as automobile fringe benefits and country/golf club memberships, andadditional benefits, such as payment of professional financial planning and tax advice fees, that are tailored to address ourexecutive officers’ individual needs, to facilitate the performance of their job duties and to be competitive with the totalcompensation packages available to executive officers generally.Tax Deductibility of CompensationWith respect to the deduction limitations imposed under Section 162(m) of the Internal Revenue Code of 1986, asamended (the “Code”), we are a limited partnership and do not meet the definition of a “corporation” under Section 162(m).Accordingly, such limitations do not apply to compensation paid to our named executive officers.Compensation Committee ReportThe Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required byItem 402(b) of Regulation S-K with management. Based upon such review, the related discussions and such other mattersdeemed relevant and appropriate by the Compensation Committee, the Compensation Committee has recommended to theboard of directors that the Compensation Discussion and Analysis be included in this Form 10-K.Kenneth I. Watchmaker (Chairman)Robert J. McCoolDavid McKownMarch 7, 2018104 Table of ContentsCompensation Committee Interlocks and Insider ParticipationSince the formation of Global GP LLC and throughout the fiscal year ended December 31, 2017, the CompensationCommittee of Global GP LLC’s board of directors has comprised of Robert J. McCool, David K. McKown and Kenneth I.Watchmaker, none of whom are officers or employees of our general partner or any of its affiliates. Mr. Alfred A. Slifka servedas the Chairman of the board of directors of our general partner until his death on March 9, 2014. Mr. Richard Slifka, whoserved as Vice-Chairman of our general partner’s board of directors since its inception, became Chairman effective March 12,2014 and is an employee of Global Petroleum Corp., an entity which is owned by Mr. Richard Slifka and a trust for thebeneficiaries of Mr. Alfred A. Slifka. Mr. Eric Slifka serves as Vice-Chairman of our general partner’s board of directors.Compensation of Named Executive OfficersThe following table sets forth certain information with respect to compensation during 2017, 2016 and 2015 of ournamed executive officers.Summary Compensation Table Change in Pension Value and Deferred Non‑Equity Nonqualified Unit Incentive Plan Compensation All Other Name and Principal Salary Bonus Awards Compensation Earnings Compensation Total Position Year ($) (1) ($) (2) ($) (3) ($) (4) ($) (5) ($) (6) ($) Eric Slifka 2017 800,000 — 2,743,315 1,400,000 110,986 93,795 5,148,096 President and CEO 2016 800,000 — — 400,000 44,008 65,961 1,309,969 2015 800,000 — — — — 87,850 887,850 Mark A. Romaine 2017 500,000 — 1,062,201 900,000 45,722 45,399 2,553,322 Chief Operating Officer 2016 500,000 — — 250,000 17,988 40,109 808,097 2015 500,000 — — — — 36,016 536,016 Edward J. Faneuil 2017 450,000 — 850,012 815,000 — 51,951 2,166,963 EVP, General Counsel 2016 450,000 — — 225,000 — 47,466 722,466 and Secretary 2015 450,000 — — — — 44,762 494,762 Daphne H. Foster 2017 450,000 — 902,071 815,000 6,045 33,120 2,206,236 Chief Financial Officer 2016 400,000 — — 150,000 2,398 33,483 585,881 2015 400,000 — — — — 25,869 425,869 Andrew Slifka 2017 425,000 — 575,011 545,000 62,603 59,435 1,667,049 EVP and President of 2016 425,000 — — 132,500 22,695 61,645 641,840 GDSO Division 2015 425,000 — — — — 51,686 476,686 Charles A. Rudinsky 2017 273,000 300,000 — 230,000 — 38,928 841,928 EVP and Chief 2016 273,000 — — 56,250 — 37,810 367,060 Accounting Officer 2015 273,000 — — — — 34,298 307,298 (1)Amounts reported in this column reflect the base salary earned by our named executive officers for services performed during theapplicable fiscal year.(2)Mr. Rudinsky was awarded a special one-time discretionary bonus in recognition of his years of service as Executive Vice President andChief Accounting Officer. No other discretionary bonuses were paid to our named executive officers for services performed during 2017,2016 or 2015.(3)Amounts reported in this column reflect the aggregate grant date fair value of the phantom unit awards subject to time-based vestinggranted to our named executive officers under the LTIP during 2017, calculated in accordance with FASB ASC Topic 718. See thesection above titled “Elements of Compensation—Long-Term Incentive Plans—2017 Phantom Unit Awards” for more information.(4)Amounts reported in this column reflect the bonuses paid to each of the named executive officers for services performed during 2017,2016 and 2015, which were determined in accordance with our general partner’s Short-Term Incentive Plans described above under“Elements of Compensation—Short-Term Incentive Plans”.(5)In 2017, (a) the present value of Mr. Faneuil’s pension and deferred nonqualified compensation earnings decreased by $2,471 as105 Table of Contentsa result of payments paid to Mr. Faneuil pursuant to his deferred compensation plans, and (b) the present value of Mr. Rudinsky’spension decreased by $70,300 as a result of payments paid to Mr. Rudinsky from his pension plan account. (6)The amounts in this column for 2017 are described further in the All Other Compensation table below.All Other Compensation TableThe following table describes each component of the “All Other Compensation” column of the SummaryCompensation Table for the fiscal year ended December 31, 2017: ClubMembershipDues, Employer Legal Feesand Contributionsto Professional Personal Total All Global401(k) Plan FinancialPlanning and Benefits(1) OtherCompensation Name ($) Tax AdviceFees ($) ($) ($) Eric Slifka 2,667 30,900 60,228 93,795 Mark A. Romaine 10,800 — 34,599 45,399 Edward J. Faneuil 10,800 14,937 26,214 51,951 Daphne H. Foster 10,800 — 22,320 33,120 Andrew Slifka 9,550 26,000 23,885 59,435 Charles A. Rudinsky 10,800 — 28,128 38,928 (1)The amounts in this column include the estimated incremental cost of an automobile provided by us for the named executive officer’s use;medical and dental premiums paid by us; and life insurance, long-term disability, supplemental life insurance and supplemental disabilitypremiums paid by us.Grants of Plan-Based AwardsThe following table sets forth information concerning short-term cash incentive awards granted to our namedexecutive officers under the STIP (including the minimum threshold, target and maximum possible payout amounts,depending upon our financial performance in 2017) during 2017 and phantom unit awards granted to our named executiveofficers under the LTIP during 2017. Estimated Possible Payouts Under Non—Equity Incentive Plan Awards(1) Grant Date Minimum All Other Fair Valueof Threshold Maximum UnitAwards: UnitAwards Name ($) Target ($) ($) Number ofUnits (2) ($) (3) Eric Slifka 40,000 800,000 1,600,000 163,780 2,743,315 Mark A. Romaine 25,000 500,000 1,000,000 63,415 1,062,201 Edward J. Faneuil 22,500 450,000 900,000 50,747 850,012 Daphne H. Foster 20,000 450,000 800,000 53,855 902,071 Andrew Slifka 15,000 300,000 600,000 34,329 575,011 Charles A. Rudinsky 6,500 130,000 260,000 — — (1)For calendar year 2017, each named executive officer’s 2017 STIP award consisted of the STIP Performance Component (weighed50%) and the STIP Discretionary Component (weighted 50%). Amounts shown represent the “threshold,” “target” and “maximum”amounts payable under the STIP awards. During 2018, the Compensation Committee determined that the maximum amount (200%) ofthe STIP Performance Component and 150%-163% of the STIP Discretionary Component were earned by the named executive officersfor calendar year 2017. Actual payout of the STIP awards (the Performance Component and the Discretionary Component) for calendaryear 2017 is shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.(2)For each named executive officer who was granted a phantom unit award during 2017, the phantom units subject to such award vest asto 25% on August 1, 2020, another 35% on August 1, 2021 and the final 40% on August 1, 2022.(3)The amounts in this column reflect the aggregate grant date fair value of the phantom unit awards, calculated in accordance with FASBASC Topic 718 and based on the closing price of $16.75 per common unit on August 15, 2017.106 Table of ContentsOutstanding Equity Awards at Fiscal Year EndThe following table presents the full amount of the equity awards held by our named executive officers as ofDecember 31, 2017, which consist solely of phantom units granted under the LTIP. The awards shown on the table belowwere the only equity awards held by the named executive officers at the end of the last fiscal year: Unit Awards Number of Market Value of UnitsThat Have Units That Have Grant Date Not Vested (#) Not Vested ($) (3) Eric Slifka June 27, 2013 (1) 84,839 1,416,811 August 16, 2017 (2) 163,780 2,735,126 Mark A. Romaine June 27, 2013 (1) 38,008 634,734 August 16, 2017 (2) 63,415 1,059,031 Edward J. Faneuil June 27, 2013 (1) 50,904 850,097 August 16, 2017 (2) 50,747 847,475 Daphne H. Foster June 27, 2013 (1) 14,592 243,686 August 16, 2017 (2) 53,855 899,379 Andrew Slifka June 27, 2013 (1) 19,691 328,840 August 16, 2017 (2) 34,329 573,294 Charles A. Rudinsky — — — (1)The phantom units granted on June 27, 2013 vest over a six-year period, with one-third of the units having vested on July 1, 2017,another one-third of the units scheduled to vest on July 1, 2018 and the final one-third of the units scheduled to vest on July 1, 2019.(2)The phantom units granted on August 16, 2017 vest as to 25% of the award on August 1, 2020, another 35% of the award on August 1,2021 and the final 40% of the award on August 1, 2022.(3)The market values of the phantom unit awards shown in the table above were calculated based on the closing price of $16.70 per commonunit on December 29, 2017, which was the last day that the market was open in 2017.Units Vested in the 2017 Fiscal YearThe following table presents phantom units awarded to the named executive officers that vested during the yearended December 31, 2017. Unit Awards Number of Vested Market Value of Vested Phantom Units Phantom Units (#) ($) (1) Eric Slifka 42,420 765,681 Mark A. Romaine 19,004 343,022 Edward J. Faneuil 25,452 459,409 Daphne H. Foster 7,297 131,711 Andrew Slifka 9,846 177,720 Charles A. Rudinsky — — (1)These units vested on July 1, 2017. The market values of the equity awards shown in the table above were calculatedbased on the closing price of $18.05 per common unit on June 30, 2017, which was the last day on which the marketwas open immediately prior to the vesting date.Nonqualified Deferred CompensationOn December 31, 2008, our general partner and Edward J. Faneuil entered into a deferred compensation agreementpursuant to which Mr. Faneuil will be subject to terms and conditions relating to confidential information, non-solicitationand non-competition, as provided therein (the “Global Deferred Compensation Agreement”). Please read107 Table of Contents“Potential Payments upon Termination or Change of Control” for a discussion of the provisions in Mr. Faneuil's deferredcompensation agreement relating to termination, change of control and related payment obligations.On September 23, 2009, Alliance and Mr. Faneuil entered into a deferred compensation agreement pursuant towhich Mr. Faneuil will be subject to terms and conditions relating to confidential information, non-solicitation and non-competition, as provided therein (the “Alliance Deferred Compensation Agreement”). Please read “Potential Payments uponTermination or Change of Control” for a discussion of the provisions in Mr. Faneuil’s deferred compensation agreementrelating to termination, change of control and related payment obligations.Potential Payments upon a Change of Control or TerminationThe following tables show potential payments to each of our named executive officers under existing contracts,agreements, plans or arrangements, whether written or unwritten (including the employment agreements with Messrs. EricSlifka, Andrew Slifka, Faneuil and Romaine and Ms. Foster that were in effect during 2017), for various scenarios involving achange of control or termination of employment of each such named executive officer assuming a December 31, 2017termination date. Amounts reflected in the table below with respect to LTIP awards were calculated based on the closingprice of our common units of $16.70 per unit as of December 29, 2017 (which was the last day on which the market was openin 2017).LTIP Awards. On June 27, 2013, the Compensation Committee made grants of 127,259, 76,356, 57,012, 29,537 and21,889 phantom units under the LTIP, respectively, to Messrs. Eric Slifka, Faneuil, Romaine and Andrew Slifka andMs. Foster. One-third of the phantom units subject to each award granted in 2013 vested on July 1, 2017. On August 16,2017 the Compensation Committee made grants of 163,780, 50,747, 63,415, 34,329 and 53,855 phantom units under theLTIP, respectively, to Messrs. Eric Slifka, Faneuil, Romaine and Andrew Slifka and Ms. Foster. None of the phantom unitssubject to any award granted in 2017 have vested to date. Upon a change of control event, all outstanding phantom units thatwere granted in 2013 or 2017 to our named executive officers that have not otherwise vested automatically will become fullyvested, which is reflected appropriately in the tables below.Eric Slifka Termination by general partner without Cause / Constructive Termination / Breach by general partner Change in No Change With a Change Control Death Disability in Control in Control Nonrenewal Name ($) ($) ($) ($) ($) ($) Eric Slifka Severance Amount — 3,200,000 3,200,000 3,200,000 4,800,000 800,000 LTIP awards 4,151,937 — — — 4,151,937 — Fringe benefits — 38,973 38,973 38,973 38,973 — Life insurance benefits — 20,500,000 — — — — Total 4,151,937 23,738,973 3,238,973 3,238,973 8,990,910 800,000 If Mr. Slifka’s employment is terminated for any reason, he shall be paid (i) all amounts of his base salary due andowing up through the date of termination, (ii) any earned but unpaid bonus, (iii) all reimbursements of expensesappropriately and timely submitted, and (iv) any and all other amounts, including vacation pay, that may be due to him as ofthe date of termination (the “Eric Slifka Accrued Obligations”).If Mr. Slifka’s employment is terminated by death or “Disability” (as defined in the employment agreement), he (orhis estate) will be paid (i) the Eric Slifka Accrued Obligations, plus (ii) a lump sum payment equal to his then base salarymultiplied by 200%, plus (iii) an amount equal to the target incentive amount under the then applicable short-term incentiveplan multiplied by 200%, plus (iv) his interests in the long-term incentive plans, including (a) the pro-rated cash incentiveamount, if any, earned under the Long-Term Performance-Based Cash Incentive Plan and (b) the amounts of cash and/orsecurities due as a result of the automatic vesting of Mr. Slifka’s interests in the Long-Term Equity-Based Incentive Plan,plus (v) group health and similar insurance premiums on behalf of his spouse and dependents for 24108 Table of Contentsmonths following the date of termination.If Mr. Slifka’s employment is terminated by our general partner without “Cause” or by Mr. Slifka for reasonsconstituting “Constructive Termination,” each as defined in the employment agreement, he shall be paid (i) the Eric SlifkaAccrued Obligations, plus (ii) a lump sum payment equal to his then base salary multiplied by 200% (provided, however,that this multiplier shall be 300% if Mr. Slifka terminates his employment for reasons constituting Constructive Terminationand such termination occurs within 12 months following a “Change in Control” (as defined in the employment agreement)),plus (iii) an amount equal to the target incentive amount under the then applicable short-term incentive plan multiplied by200% (provided, however, that this multiplier shall be 300% if Mr. Slifka terminates his employment for reasons constitutingConstructive Termination and such termination occurs within 12 months following a Change in Control), plus (iv) hisinterests in the long-term incentive plans, including (a) the pro-rated cash incentive amount, if any, earned under the Long-Term Performance-Based Cash Incentive Plan and (b) the amounts of cash and/or securities due as a result of the automaticvesting of Mr. Slifka’s interests in the Long-Term Equity-Based Incentive Plan, plus (v) group health and similar insurancepremiums on behalf of his spouse and dependents for 24 months following the date of termination. If Mr. Slifka terminateshis employment for reasons of Constructive Termination but such termination does not occur within 12 months following aChange in Control and Mr. Slifka secures employment within 12 months of the date of termination, he shall repay to ourgeneral partner one-half of the cash received from our general partner pursuant to (ii) and (iii) above.If Mr. Slifka’s employment is terminated by our general partner for Cause, Mr. Slifka will be paid the Eric SlifkaAccrued Obligations. If Mr. Slifka’s employment agreement is not renewed by our general partner and he does not continueto serve as our general partner’s President and Chief Executive Officer following the expiration of his employmentagreement, he shall be paid the Eric Slifka Accrued Obligations plus a lump sum payment equal to 100% of his then basesalary.Mark A. Romaine Termination by general partner without Cause / Constructive Termination / Breach by general partner Change in No Change With a Change Control Death Disability in Control in Control Nonrenewal Name ($) ($) ($) ($) ($) ($) Mark A. Romaine Severance Amount — — — 1,000,000 2,000,000 — LTIP awards 1,693,764 — — — 1,693,764 — Fringe benefits — 45,399 — 70,891 70,891 — Life insurance benefits — 500,000 — — — — Total 1,693,764 545,399 — 1,070,891 3,764,655 — The employment agreement with Mr. Romaine may be terminated at any time by either party with proper notice. IfMr. Romaine’s employment is terminated for any reason, Mr. Romaine will receive payment through the date of terminationof (i) any earned, but unpaid, base salary as then in effect, (ii) all earned, but unpaid, bonuses, and (iii) all accrued vacation,expense reimbursements and other benefits (other than severance benefits, except as provided below) due in accordance withthe established plans and policies of our general partner or applicable law (the “Romaine Accrued Obligations”).If Mr. Romaine’s employment is terminated by our general partner without “Cause” or by Mr. Romaine for“Constructive Termination” (each quoted term as defined in the employment agreement), Mr. Romaine shall be entitled toreceive the Romaine Accrued Obligations plus a severance payment in an amount equal to the sum of (i) twice his then basesalary, plus (ii) if such termination occurs within 12 months following a “Change in Control” (as defined in the employmentagreement), an amount equal to twice the target incentive amount under the then applicable short-term incentive plan for thefiscal year in which the termination occurs. In addition, our general partner shall provide health care continuation coveragebenefits to Mr. Romaine and would continue to pay the applicable percentage of the medical insurance premiums that it paysfor active employees during the applicable coverage period (not to exceed 18 months).109 Table of ContentsFurther, if Mr. Romaine’s employment is terminated by our general partner without Cause or by Mr. Romaine forConstructive Termination at any time within three months before a Change in Control and 12 months following a Change inControl, then Mr. Romaine will receive the Romaine Accrued Obligations plus 100% accelerated vesting on any and alloutstanding options, restricted units, phantom units, unit appreciation rights, and other similar rights (under the LTIP orotherwise) held by him as in effect on the date of termination.If Mr. Romaine’s employment is terminated by our general partner for “Cause,” by Mr. Romaine voluntarily (forreasons other than Constructive Termination) or by reason of death, Mr. Romaine shall receive the Romaine AccruedObligations.Edward J. Faneuil Termination by general partner without Cause / Constructive Termination / Breach by general partner Change in No Change With a Change Control Death Disability in Control in Control Nonrenewal Name ($) ($) ($) ($) ($) ($) Edward J. Faneuil Severance Amount — — — 900,000 1,800,000 — Deferred Compensation 1,417,747 1,417,747 1,417,747 1,417,747 1,417,747 — LTIP awards 1,697,572 — — — 1,697,572 — Fringe benefits — — — 68,461 68,461 — Life insurance benefits — 1,735,000 — — — — Total 3,115,319 3,152,747 1,417,747 2,386,208 4,983,780 — The employment agreement with Mr. Faneuil may be terminated at any time by either party with proper notice. IfMr. Faneuil’s employment is terminated for any reason, Mr. Faneuil will receive payment through the date of termination ofhis employment of (i) any earned, but unpaid, base salary as then in effect, (ii) all earned, but unpaid, bonuses, and (iii) allaccrued vacation, expense reimbursements and other benefits (other than severance benefits, except as provided below) dueMr. Faneuil in accordance with the established plans and policies of our general partner or applicable law (the “FaneuilAccrued Obligations”).If Mr. Faneuil’s employment is terminated by our general partner without “Cause” or by Mr. Faneuil for“Constructive Termination,” each as defined in the employment agreement, he shall be entitled to receive the FaneuilAccrued Obligations plus a severance payment in an amount equal to the sum of (i) twice his then base salary, plus (ii) if suchtermination occurs within 12 months following a “Change in Control” (as defined in the employment agreement), anadditional amount equal to twice his target incentive amount under the then applicable short-term incentive plan for thefiscal year in which the termination occurs. In addition, our general partner would provide health care continuation coveragebenefits to Mr. Faneuil and would continue to pay the applicable percentage of the medical insurance premiums that it paysfor active employees during the applicable coverage period (not to exceed 18 months).If Mr. Faneuil’s employment is terminated by our general partner without Cause or by Mr. Faneuil for ConstructiveTermination at any time within three months before a Change in Control and 12 months following a Change in Control, thenMr. Faneuil will receive the Faneuil Accrued Obligations plus 100% accelerated vesting on any and all outstanding options,restricted units, phantom units, unit appreciation rights, and other similar rights (under the LTIP or otherwise) held by him asin effect on the date of termination.If Mr. Faneuil’s employment is terminated by our general partner for “Cause,” by Mr. Faneuil voluntarily (forreasons other than Constructive Termination) or by reason of death, Mr. Faneuil shall receive the Faneuil AccruedObligations.Our general partner and Mr. Faneuil also entered into the Global Deferred Compensation Plan, pursuant to whichMr. Faneuil is currently being paid the sum of $70,000 per year (the “Global Deferred Compensation”) in equal monthlyinstallments of $5,833.33 on the first business day of each month for 15 years (180 months). In the event of an110 Table of Contentsunforeseeable emergency as referenced in the deferred compensation agreement, our general partner will pay Mr. Faneuilwithin 15 days of the occurrence of the unforeseeable emergency the maximum amount allowable in a lump sum promptlyfollowing the occurrence of such unforeseeable emergency. The Global Deferred Compensation will be forfeited in itsentirety in the event that Mr. Faneuil terminates his employment for any reason other than death, disability or a Change inControl (as defined below). On and after the date on which Global Deferred Compensation payments commence, our generalpartner may terminate its obligations under the deferred compensation agreement for Cause or if our general partnersubsequently determines within 18 months of Mr. Faneuil’s termination that circumstances which would give rise to a forCause termination of Mr. Faneuil otherwise existed at the time of his earlier termination. In the event of Mr. Faneuil’s deathprior to his receiving any or all of the aggregate amount of the Global Deferred Compensation, our general partner will payMr. Faneuil’s beneficiary within 60 days of the date of his death a single lump sum payment in an amount equal to thepresent value of the remaining payments that would have been paid to Mr. Faneuil. If there is a Change in Control orMr. Faneuil is determined to have become disabled prior to his receiving any or all of the aggregate amount of the GlobalDeferred Compensation, our general partner will pay to Mr. Faneuil within 60 days of the effective date of the Change inControl or the determination that Mr. Faneuil became disabled a single lump sum payment in an amount equal to the presentvalue of the remaining payments that would have been paid to him had the Change in Control not occurred or hadMr. Faneuil not become disabled. For purposes of the Global Deferred Compensation Agreement, “Cause”, as defined in thedeferred compensation agreement, means (a) any uncured material breach by Mr. Faneuil of his obligations under the GlobalDeferred Compensation Agreement, (b) any breach by Mr. Faneuil of his confidentiality, non-competition and non-solicitation obligations set forth on Exhibit “A” to the Global Deferred Compensation Agreement or included in hisemployment agreement with our general partner, (c) engagement in gross negligence or willful misconduct in theperformance of his duties, (d) a conviction or plea of no contest to a crime involving fraud, dishonesty or moral turpitude orany felony, or (e) the commission of an act of embezzlement or willful breach of a fiduciary duty to our general partner, thePartnership or any of its Affiliates.Alliance and Mr. Faneuil also entered into the Alliance Deferred Compensation Agreement, the terms of which,including, without limitation, the payment terms thereunder, are on the same terms as those of the Global DeferredCompensation Agreement. Accordingly, the various scenarios involving a change of control or termination of employmentunder the Alliance Deferred Compensation Agreement are identical to those described above with respect to the GlobalDeferred Compensation Agreement.Our general partner is obligated to reimburse Mr. Faneuil for any and all federal excise taxes and penalties (otherthan penalties imposed as a result of Mr. Faneuil’s actions), and any taxes imposed upon such reimbursement amounts,including, but not limited to, any federal, state and local income taxes, employment taxes, and other taxes, if any, which maybecome due pursuant to the application of Sections 4999 and/or 409A of the Code on any payments to Mr. Faneuil inconnection the employment agreement. Mr. Faneuil and our general partner have agreed to reform any provision of thedeferred compensation agreement, as amended, between them in a manner mutually agreeable to avoid imposition of anyadditional tax under the provisions of Section 409A of the Code and related regulations and Treasury pronouncements.Daphne H. Foster Termination by general partner without Cause / Constructive Termination / Breach by general partner Change in No Change With a Change Control Death Disability in Control in Control Nonrenewal Name ($) ($) ($) ($) ($) ($) Daphne H. Foster Severance Amount — — — 900,000 1,800,000 — LTIP awards 1,143,065 — — — 1,143,065 — Fringe benefits — 33,120 — 34,470 34,470 — Life insurance benefits — 500,000 — — — — Total 1,143,065 533,120 — 934,470 2,977,535 — The employment agreement with Ms. Foster may be terminated at any time by either party with proper notice. If111 Table of ContentsMs. Foster’s employment is terminated for any reason, Ms. Foster will receive payment through the date of termination of(i) any earned, but unpaid, base salary as then in effect, (ii) all earned, but unpaid, bonuses, and (iii) all accrued vacation,expense reimbursements and other benefits (other than severance benefits, except as provided below) due in accordance withthe established plans and policies of our general partner or applicable law (the “Foster Accrued Obligations”).If Ms. Foster’s employment is terminated by our general partner without “Cause” or by Ms. Foster for “ConstructiveTermination” (each quoted term as defined in the employment agreement), Ms. Foster shall be entitled to receive the FosterAccrued Obligations plus a severance payment in an amount equal to the sum of (i) twice her then base salary, plus (ii) if suchtermination occurs within 12 months following a “Change in Control” (as defined in the employment agreement), an amountequal to twice the target incentive amount under the then applicable short-term incentive plan for the fiscal year in which thetermination occurs. In addition, our general partner shall provide health care continuation coverage benefits to Ms. Fosterand would continue to pay the applicable percentage of the medical insurance premiums that it pays for active employeesduring the applicable coverage period (not to exceed 18 months).Further, if Ms. Foster’s employment is terminated by our general partner without Cause or by Ms. Foster forConstructive Termination at any time within three months before a Change in Control and 12 months following a Change inControl, then Ms. Foster will receive the Foster Accrued Obligations plus 100% accelerated vesting on any and alloutstanding options, restricted units, phantom units, unit appreciation rights, and other similar rights (under the LTIP orotherwise) held by her as in effect on the date of termination.If Ms. Foster’s employment is terminated by our general partner for “Cause,” by Ms. Foster voluntarily (for reasonsother than Constructive Termination) or by reason of death, Ms. Foster shall receive the Foster Accrued Obligations.Andrew Slifka Termination by general partner without Cause / Constructive Termination / Breach by general partner Change in No Change With a Change Control Death Disability in Control in Control Nonrenewal Name ($) ($) ($) ($) ($) ($) Andrew Slifka Severance Amount — 425,000 843,125 843,125 843,125 576,572 LTIP awards 902,134 — — — 902,134 — Fringe benefits — 59,435 98,408 59,435 59,435 — Life insurance benefits — 2,500,000 — — — — Total 902,134 2,984,435 941,533 902,560 1,804,694 576,572 If Mr. Slifka’s employment is terminated for any reason, he shall be paid (i) all amounts of his base salary due andowing up through the date of termination, (ii) any earned but unpaid bonus and short-term cash incentive plan amounts,(iii) all reimbursements of expenses appropriately and timely submitted and (iv) any and all other amounts that may be due tohim as of the date of termination (the “Andrew Slifka Accrued Obligations”).If Mr. Slifka’s employment is terminated due to death or “Disability” (as defined in the employment agreement), he(or his estate) shall be paid the Andrew Slifka Accrued Obligations, and continued payment of Mr. Slifka’s base salary as wellas all fringe benefits through the end of the applicable term. Furthermore, if Mr. Slifka’s employment is terminated due to hisDisability, he shall receive (a) payment of all monthly amounts due for all health and welfare insurance premiums on behalfof Mr. Slifka, his spouse and dependents, if any, for 24 months following the date of termination and (b) payment, payable in24 equal monthly installments commencing on the last day of the month following the last day of the Term (as defined in theemployment agreement), of an amount equal to the product of 75% and the sum of (i) Mr. Slifka’s then base salary and (ii) theaverage of the aggregate discretionary bonuses and short-term cash incentive plan amounts awarded to Mr. Slifka pursuant tothe employment agreement, if any, for the two calendar years immediately preceding the termination of the employmentagreement.112 Table of ContentsIf Mr. Slifka’s employment is terminated by our general partner without “Cause” or by Mr. Slifka for reasonsconstituting “Constructive Termination,” each as defined in the employment agreement, he shall receive (1) the AndrewSlifka Accrued Obligations, (2) continuation of all compensation and benefits until the last day of the Term and (3) payment,payable in 24 equal monthly installments commencing on the first day of the month following the month in which the dateof termination occurs, of an amount equal to the product of 75% and the sum of (a) Mr. Slifka’s then base salary and (b) theaverage of the aggregate discretionary bonuses and short-term cash incentive plan amounts awarded to Mr. Slifka pursuant tothe employment agreement, if any, for the two calendar years immediately preceding the termination of the employmentagreement.If Mr. Slifka’s employment is terminated by our general partner for “Cause,” Mr. Slifka will be paid the AndrewSlifka Accrued Obligations.If Mr. Slifka’s employment agreement is not renewed by our general partner at the end of the applicable term andMr. Slifka does not continue to serve as Executive Vice President of the Company or President of the Partnership’s GasolineDistribution and Station Operations Division following the expiration of the employment agreement, Mr. Slifka shall beentitled to receive an amount, payable in 12 equal monthly installments, equal to the greater of: (1) the product of 75% andthe sum of (a) Mr. Slifka’s then base salary and (b) the average of the aggregate discretionary bonuses and short-term cashincentive plan amounts awarded to Mr. Slifka pursuant to the employment agreement, if any, for the two calendar yearsimmediately preceding the termination of the employment agreement and (2) 100% of Mr. Slifka’s then base salary. Mr.Slifka also shall be entitled to receive an additional amount equal to the sum of (x) 16.67% of his then base salary, and(y) 16.67% of his fringe benefits, to reflect the two months by which the term of his previous employment agreement wasshortened. Charles A. Rudinsky Termination by general partner without Cause / Constructive Termination / Breach by general partner Change in No Change With a Change Control Death Disability in Control in Control Nonrenewal Name ($) ($) ($) ($) ($) ($) Charles A. Rudinsky Fringe benefits — — — 38,928 38,928 — Life insurance benefits — 350,000 — — — — Total — 350,000 — 38,928 38,928 — Effective December 31, 2017, Mr. Rudinsky resigned as our Executive Vice President and Chief Accounting Officer.However, Mr. Rudinsky continues to be employed by our general partner as a Senior Advisor to our CFO. The change ofcontrol agreement between our general partner and Mr. Rudinsky (the “Change of Control Agreement”) provided that, upontermination of his employment (i) by our general partner “Without Cause” (defined below), (ii) by Mr. Rudinsky for “GoodReason” (defined below), or (iii) in the case of a termination occurring during the three (3) month period ending on theChange of Control, Mr. Rudinsky will receive payment of (a) any earned, but unpaid, base salary as then in effect, (b) allearned, but unpaid, bonuses, (c) all accrued vacation, expense reimbursements and other benefits (other than severance), and(d) any and all other amounts that as of the date of termination may be due Mr. Rudinsky in accordance with the establishedplans and policies of our general partner or applicable law. “Cause” is defined in the Change of Control Agreement as having(i) engaged in gross negligence or willful misconduct in the performance of duties, (ii) committed an act of fraud,embezzlement or willful breach of fiduciary duty to our general partner or any of its subsidiaries (including the unauthorizeddisclosure of any material secret, confidential and/or proprietary information, knowledge or data of our general partner or anyof its subsidiaries); (iii) been convicted of (or pleaded no contest to) a crime involving fraud, dishonesty or moral turpitude orany felony or (iv) any uncured breach of any material provision of the non-competition agreement between Mr. Rudinskyand our general partner, and “Good Reason” is defined as the occurrence of any material diminution, without Mr. Rudinsky’swritten consent, in Mr. Rudinsky working conditions consisting of (a) a material reduction in his duties and responsibilities,(b) a material change in his title, or (c) a relocation of his place of work further than forty (40) miles from Waltham,Massachusetts.113 Table of ContentsOther BenefitsPension BenefitsThe table below sets forth information regarding the present value as of December 31, 2017 of the accumulatedbenefits of our named executive officers under the Global Partners LP Pension Plan, and, with respect to Mr. Faneuil, theGlobal and Alliance Deferred Compensation Agreements. Amounts with respect to the Global and Alliance DeferredCompensation Agreements are reflected in the table below because they represent a fixed entitlement.Pension Benefits at December 31, 2017 Number of Years Present Value of Payments During Name Plan Name Credited Service(#) Accumulated Benefit($) Last Fiscal Year($) Eric Slifka (1) 23 588,660 — Mark A. Romaine (1) 11 209,550 — Edward J. Faneuil (1) 19 737,072 — Edward J. Faneuil (2) n/a 708,874 70,000 Edward J. Faneuil (3) n/a 708,874 70,000 Daphne H. Foster (1) 3 41,529 — Andrew P. Slifka (1) 7 27,738 — Andrew P. Slifka (4) 12 237,450 — Charles A. Rudinsky (5) (1) 26 717,248 77,846 (1)Global Partners LP Pension Plan(2) Global Deferred Compensation Agreement(3)Alliance Deferred Compensation Agreement(4) Global Montello Group Corp. Pension Plan (5)From 1984 through 1988, Mr. Rudinsky was employed by National Petroleum Corporation, Inc. In 1988, a predecessor of ours acquiredall of the outstanding capital stock of National Petroleum Corporation, Inc. and Mr. Rudinsky became an employee of said predecessor. Inconnection with this acquisition, and for purposes of the Global Partners LP Pension Plan, Mr. Rudinsky was credited with fouradditional years of service for the period from 1984 through 1988.Global Partners LP Pension PlanEffective December 31, 2009, the Global Partners LP Pension Plan (the “Global Pension Plan”) was amended tofreeze participation in and benefit accruals under the Global Pension Plan. Prior to the freeze, all employees who (1) were21 years of age or older, (2) were not covered by a collective bargaining agreement providing for union pension benefits, and(3) had been employed by our predecessor, our general partner or one of our operating subsidiaries for one year prior toenrollment in the Global Pension Plan were eligible to participate in the Global Pension Plan. An employee is fully vested inbenefits under the Global Pension Plan after completing five years of service or upon termination due to death or disability.Certain employees are entitled to a supplemental benefit that vested over five years with 20% vesting on each December 31beginning in 2010 and lasting through 2014. When an employee retires at age 65 or, if later, upon reaching five years'service, the employee can elect to receive a monthly annuity or an equivalent lump sum payment. An employee's benefitpayable at retirement is equal to (1) 23% of the employee's average monthly compensation for the five consecutive calendaryears during which the employee received the highest amount of pay (“Average Compensation”) plus (2) 19.5% of theemployee’s Average Compensation in excess of his monthly “covered compensation” for Social Security purposes, asprovided in the Global Pension Plan. However, if an employee has completed less than 30 years of service on his terminationat or after reaching age 65, the monthly benefit will be reduced by 1/30th for each year less than 30 years completed by theemployee. When an employee retires at an age other than 65, the employee retirement benefit will be the actuarial equivalentof the benefit he or she would have received if he or she had retired at age 65. An employee who terminates employment aftercompleting at least five years of service will be eligible for an early retirement benefit determined as described in thepreceding sentence at any time after attaining age 60.114 Table of ContentsBenefits under the formula are based upon the employee’s highest consecutive five-year average compensation andare not subject to offset for social security benefits. Compensation for such purposes means compensation includingovertime, but excluding bonuses, 50% of commissions, taxable fringe benefits, relocation allowances, transportationallowances, housing allowances, cash and DERs pursuant to any long-term incentive plan and any cash payable in lieu ofgroup healthcare coverage.GMG Pension PlanAs a result of the Alliance Acquisition, effective as of March 1, 2012, sponsorship of Alliance Energy LLC PensionPlan was transferred to GMG, which is a part of our controlled group, and the name of the plan was changed to the GlobalMontello Group Corp. Pension Plan (the “GMG Pension Plan”). Effective May 15, 2012, the GMG Pension Plan wasamended to freeze participation in and benefit accruals. Prior to the freeze, all employees who (1) were 21 years of age orolder, (2) were not covered by a collective bargaining agreement providing for union pension benefits, (3) had beenemployed by GMG or a predecessor employer for one year prior to enrollment in the Pension Plan, (4) were not nonresidentaliens, (5) had not become employees as a result of Code Section 410(b)(6)(C) transaction during the current or nextpreceding year and (6) were not non-exempt gas station/c-store employees hired on or after January 1, 2007 or employeeshired after September 30, 2009 were eligible to participate in the GMG Pension Plan. An employee is fully vested in benefitsunder the GMG Pension Plan after completing five years of service or, if earlier, upon termination due to death or disability.When an employee retires at age 65 with 5 years of service, the employee can elect to receive a monthly annuity or anequivalent lump sum payment. The employee's benefit payable at retirement is equal to (1) 23% of the employee’s averagemonthly compensation for the five consecutive calendar years during which the employee received the highest amount ofpay (“Average Compensation”) plus (2) 19.5% of the employee's Average Compensation in excess of his monthly “coveredcompensation” for Social Security purposes, as provided in the GMG Pension Plan. When an employee retires at an age otherthan 65, the employee retirement benefit will be the actuarial equivalent of the benefit he or she would have received if he orshe had retired at age 65. An employee who terminates employment after completing at least five years of service will beeligible for an early retirement benefit determined as described in the preceding sentence at any time after attaining age 60.Benefits under the GMG Pension Plan formula are based upon the employee’s highest consecutive five-year averagecompensation and are not subject to offset for social security benefits. Compensation for such purposes means compensationincluding overtime, but excluding bonuses, 50% of commissions, deferred compensation, employee benefits, movingexpenses, transportation allowance, salary continuation and non-cash remuneration.Supplemental Executive Retirement AgreementOn December 31, 2009, our general partner entered into a SERP agreement with Edward J. Faneuil. Mr. Faneuil'sSERP benefit became fully vested on December 31, 2014. The value of the SERP benefit to be provided under the agreement,expressed as a single lump sum payment, is $159,355 for Mr. Faneuil.Global and Alliance Deferred Compensation AgreementsFor a description of the deferred compensation arrangements provided to Mr. Faneuil pursuant to the GlobalDeferred Compensation Plan and the Alliance Deferred Compensation Plan, please read “Employment and RelatedAgreements—Deferred Compensation Agreements” and “Potential Payments upon a Change of Control or Termination.”115 Table of ContentsCompensation of DirectorsThe following table sets forth (i) certain information concerning the compensation earned by our directors in 2017,and (ii) the aggregate amounts of stock awards and option awards, if any, held by each director at the end of the last fiscalyear: Equity Incentive Plan Awards Fees Earned Grant Date Fair or Paid in Value of Unit Total Name Cash ($) Awards ($) (2) ($) Richard Slifka 74,500 — 74,500 Eric Slifka (1) — — — Andrew Slifka (1) — — — Kenneth I. Watchmaker 100,500 100,014 200,514 Robert J. McCool 85,500 90,015 175,515 David McKown 85,500 80,015 165,515 Daphne H. Foster (1) — — — (1)Messrs. Eric Slifka and Andrew Slifka and Ms. Foster, as executive officers of our general partner, are otherwise compensated for theirservices and therefore receive no separate compensation for their service as directors.(2)The amounts in this column reflect the aggregate grant date fair value of the phantom unit awards granted to Messrs. Watchmaker,McCool and McKown, calculated in accordance with FASB ASC Topic 718 and based on the closing price of $16.75 per common uniton August 15, 2017.(3)As of December 31, 2017, our non-employee directors held the following aggregate number of unvested phantom units: Mr. Watchmaker(9,524), Mr. McCool (8,927) and Mr. McKown (8,330).Employees of our general partner who also serve as directors do not receive additional compensation. In 2017,directors who are not employees of our general partner (1) received: (a) a $67,500 annual cash retainer; (b) $1,000 for eachmeeting of the board of directors attended; (c) $2,000 for each audit committee meeting attended (limited to payment for onecommittee meeting per day); and (d) $1,000 for each committee meeting other than the audit committee meeting attended(limited to payment for one committee meeting per day), and (2) are eligible to participate in the LTIP. In 2017, the chair ofthe audit committee received an additional $15,000. In August 2017, the board of directors voted to increase the annual(i) cash retainer from $60,000 to $67,500, and (ii) supplemental payment to the chair of the audit committee from $7,500 to$15,000; these increases in respect of services provided in 2017 were paid in January 2018.Each director also is reimbursed for out-of-pocket expenses in connection with attending meetings of the board ofdirectors or committees.On April 20, 2015, Messrs. Watchmaker and McCool each received an award of 10,659 phantom units, and onSeptember 18, 2015, Mr. McKown received an award of 10,659 phantom units (under a then new form of grant agreementwhich provides for cash settlement of the award). Under each of these awards, one-third of the units granted vested onJanuary 2, 2016, another one-third of the units vested on January 2, 2017 and the final one-third of the units vested onJanuary 2, 2018. Messrs. McCool and Watchmaker each received 3,553 common units of Global Partners LP on January 11,2018, and Mr. McKown’s award was settled in cash on January 11, 2018.On August 16, 2017, Mr. Watchmaker was granted an award of 5,971 phantom units, Mr. McCool was granted anaward of 5,374 phantom units and Mr. McKown was granted an award of 4,777 phantom units. Each of these awards cliff vestas to 100% of the phantom units on August 1, 2020. The awards granted to Messrs. Watchmaker and McCool will be settledin common units while the award granted to Mr. McKown will be settled in cash.Each director will be fully indemnified by us for actions associated with being a director to the extent permittedunder Delaware law.116 Table of ContentsPay Ratio DisclosureAs required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item402(u) of Regulation S-K, we are providing the following information about the relationship of the annual totalcompensation of our employees and the annual total compensation of Mr. Eric Slifka, our CEO.For 2017, our last completed fiscal year:·The median of the annual total compensation of our employees (other than the CEO) was $18,502; and·The annual total compensation of our CEO, as reported in the Summary Compensation Table above, was$5,148,096.·Based on this information, for 2017, the ratio of the annual total compensation of our CEO to the median ofthe annual total compensation of all employees was reasonably estimated to be 278 to 1.To put this into context, approximately 77% of our employee population consists of convenience storeemployees, approximately 51% of whom are employed on a part-time basis. Our part-time employees who work less thanthirty hours per week receive (i) wages, and (ii) if eligible, sick time and/or 401(k) benefits, but are not eligible for vacationor other fringe benefits. In comparison, if we were to only look at our non-convenience store employee population, themedian employee would be employed on a full-time basis, with a total annual compensation of $76,843 in 2017. The ratioof the annual total compensation of our CEO to this median employee was reasonably estimated to be 67 to 1.To identity the median of the annual total compensation of all of our employees, as well as to determine theannual total compensation of our median employee and our CEO, we took the following steps:·We determined that, as of December 31, 2017, our employee population consisted of approximately 3,289individuals with all of these individuals located in the United States. This population consisted of our full-time, part-time, and temporary (including seasonal) employees. We selected December 31, 2017 asidentification date for determining our median employee because it enabled us to make such identification ina reasonably efficient and economic manner.·We used a consistently applied compensation measure to identify our median employee by comparing theamount of salary or wages, bonuses and equity awards, if any, reflected in our payroll records as reported tothe Internal Revenue Service on Form W-2 for 2017.·We identified our median employee by consistently applying this compensation measure to all of ouremployees included in our analysis. Since all of our employees, including our CEO, are located in the UnitedStates, we did not make any cost of living adjustments in identifying the median employee.·After we identified our median employee, we combined all of the elements of such employee’s compensationfor the 2017 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting inannual total compensation of $18,502.·With respect to the annual total compensation of our CEO, we used the amount reported in the “Total”column of the Summary Compensation Table above. 117 Table of Contents Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The following table sets forth as of March 6, 2018 the beneficial ownership of units representing limited partnerinterests in Global Partners LP (“Units”) held by certain beneficial owners of more than five percent (5%) of the Units, byeach director and named executive officer of Global GP LLC during 2017 and 2018, by the general partner of Global PartnersLP (“General Partner”) and by all current directors and executive officers of our General Partner as a group: Percentage Common of Common Units Units Beneficially Beneficially Name of Beneficial Owner (1) Owned Owned Richard Slifka (2)(3)(4)(5)(6)(8) 5,376,919 15.8% Alfred A. Slifka 1990 Trust Under Article II-A (2)(3)(5)(6)(7) 4,531,431 13.3% OppenheimerFunds Inc. (9) 4,007,013 11.8% Montello Oil Corporation (2) 2,348,078 6.9% Kayne Anderson Capital Advisors L.P. (12) 2,166,610 6.4% Richard A. Kayne (12) 2,166,610 6.4% Global Petroleum Corp. (3) 1,725,463 5.1% Eric Slifka (5)(10)(11) 1,547,526 4.6% Larea Holdings LLC (10) 564,984 1.7% Andrew Slifka (8) 502,434 1.5% Global GP LLC (5) 343,365 1.0% Edward J. Faneuil 65,823 * Charles A. Rudinsky 26,085 * Mark Romaine 30,954 * Daphne H. Foster 7,331 * Robert J. McCool 31,235 * Kenneth I. Watchmaker 32,885 * David K. McKown 10,572 * Matthew Spencer 899 Larea Holdings II LLC (8) 282,492 * Chelsea Terminal Limited Partnership (4) 60,178 * All directors and executive officers as a group (10 persons) 7,263,213 21.4% *Less than 1%(1)The address for each person or entity listed other than (i) Kayne Anderson Capital Advisors, L.P., (ii) Richard A. Kayne, and(iii) OppenheimerFunds, Inc., is P.O. Box 9161, 800 South Street, Suite 500, Waltham, Massachusetts 02454‑9161.(2)Richard Slifka and the Alfred A. Slifka 1990 Trust Under Article II-A share voting and investment power with respect to and, therefore,may be deemed to beneficially own, the units owned by Montello Oil Corporation.(3)Richard Slifka and the Alfred A. Slifka 1990 Trust Under Article II-A share voting and investment power with respect to and, therefore,may be deemed to beneficially own, the units owned by Global Petroleum Corp.(4)Richard Slifka has sole voting and investment power with respect to and, therefore, may be deemed to beneficially own, the units ownedby Chelsea Terminal Limited Partnership.(5)Purchased by our general partner for the purpose of assisting us in meeting our anticipated obligations to deliver common units under ourLong-Term Incentive Plan to officers, directors and employees. Richard Slifka and the Alfred A. Slifka 1990 Trust Under Article II-Acontrol Global GP LLC, and thus may be deemed to beneficially own the units owned by Global GP LLC. The co-trustees of the AlfredA. Slifka 1990 Trust Under Article II-A have delegated the voting rights of the Alfred A. Slifka 1990 Trust Under Article II-A in GlobalGP LLC to Eric Slifka, and thus Eric Slifka may be deemed to beneficially own the units owned by Global GP LLC.(6)Beneficially owned unit amounts for each of Richard Slifka and the Alfred A. Slifka 1990 Trust Under Article II-A include the unitsowned by Montello Oil Corporation, Global Petroleum Corp., and Global GP LLC. Beneficially owned unit amounts for Richard Slifkaalso include the units owned by Chelsea Terminal Limited Partnership and Larea Holdings II LLC. Beneficially owned unit amounts forthe Alfred A. Slifka 1990 Trust Under Article II-A also include 50,110 units that are held by the Alfred A. Slifka 1990 Trust UnderArticle II-A. Richard Slifka and the late Alfred A. Slifka are brothers.118 Table of Contents(7)Alfred A. Slifka passed away on March 9, 2014. His estate closed effective February 28, 2017 and his beneficially owned interests setforth on the above table have accordingly been transferred to the Alfred A. Slifka 1990 Trust Under Article II-A on that date.(8)Richard Slifka is the trustee of a voting trust with sole voting and investment power with respect to units owned by LareaHoldings II LLC. Richard Slifka may, therefore, be deemed to beneficially own, the units held by Larea Holdings II LLC. RichardSlifka’s son, Andrew Slifka, is a one-third owner of Larea Holdings II LLC. Because Andrew Slifka does not share voting andinvestment power with respect to the units owned by Larea Holdings II LLC, he is not deemed to beneficially own such units.(9)According to a Schedule 13G/A filed on February 6, 2018, OppenheimerFunds, Inc. beneficially owned 4,007,013 common units,representing 11.79% of the common units then outstanding. The address for OppenheimerFunds, Inc. is 225 Liberty Street, New York,NY 10281.(10)Eric Slifka has sole voting and investment power with respect to units owned by Larea Holdings LLC. Eric Slifka may, therefore, bedeemed to beneficially own, the units held by Larea Holdings LLC. Eric Slifka is the son of the late Alfred A. Slifka.(11)Beneficially owned unit amounts for Eric Slifka include the units owned by Global GP LLC and Larea Holdings LLC.(12)According to a Schedule 13G/A filed on February 6, 2018, Kayne Anderson Capital Advisors, L.P. beneficially owned 2,166,610common units, representing 6.37% of the common units then outstanding and Richard A. Kayne beneficially owned 2,166,610 commonunits, representing 6.37% of the common units then outstanding. The address for Kayne Anderson Capital Advisors, L.P. and Richard A.Kayne is 1800 Avenue of the Stars, Third Floor, Los Angeles, California 90067.Equity Compensation Plan TableThe following table summarizes information about our equity compensation plans as of December 31, 2017: Number of securities Number of Securities remaining available for to be issued Weighted average future issuance under upon exercise of exercise price of equity compensation plans outstanding options, outstanding options, (excluding securities Plan Category warrants and rights warrants and rights reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 881,364 — 2,923,496 Equity compensation plans not approved by securityholders — — — Total 881,364 — 2,923,496 Item 13. Certain Relationships and Related Transactions, and Director Independence.As of March 6, 2018, affiliates of our general partner, including current directors and executive officers of ourgeneral partner, owned 7,263,213 common units representing 21.4% of the limited partner interests in us. In addition, ourgeneral partner owns a 0.67% general partner interest in us.Alfred A. Slifka, former Chairman of the board of our general partner, passed away on March 9, 2014. Mr. Slifka’sestate closed effective February 28, 2017 and his interests in our general partner and his beneficially owned interests inGlobal Partners LP and its affiliates were transferred to the Alfred A. Slifka 1990 Trust Under Article II-A on that date.Steven McCool, the son of Robert J. McCool, one of our independent directors, is an employee of Global GP LLC.During our fiscal year ended December 31, 2017, his total compensation earned was approximately $157,260.James Cook, the son-in-law of Richard Slifka, our Chairman, and the brother-in-law of Andrew Slifka, our ExecutiveVice President and director, is an employee of Global GP LLC. During our fiscal year ended December 31, 2017, his totalcompensation earned was approximately $250,000.119 Table of ContentsOperational StageDistributions of available cash to our general partner and itsaffiliatesWe will generally make cash distributions of 99.33% to theunitholders, including affiliates of our general partner(including directors and executive officers of our generalpartner), as the holders of an aggregate of 7,263,213common units and 0.67% to our general partner. In addition,if distributions exceed the minimum quarterly distributionand other higher target levels, our general partner will beentitled to increasing percentages of the distributions, up to48.67% of the distributions above the highest target level. Assuming we have sufficient available cash to pay the fullminimum quarterly distribution on all of our outstandingunits for four quarters, our general partner and its affiliates,including directors and executive officers of our generalpartner, would receive an annual distribution ofapproximately $13.4 million on their common units and$0.4 million on the 0.67% general partner interest.Payments to our general partner and its affiliatesOur general partner does not receive a management fee orother compensation for its management of GlobalPartners LP. Our general partner and its affiliates arereimbursed for expenses incurred on our behalf. Ourpartnership agreement provides that our general partnerdetermines the amount of these expenses.Withdrawal or removal of our general partnerIf our general partner withdraws or is removed, its generalpartner interest and its incentive distribution rights willeither be sold to the new general partner for cash orconverted into common units, in each case for an amountequal to the fair market value of those interests.Liquidation Stage LiquidationUpon our liquidation, the partners, including our generalpartner, will be entitled to receive liquidating distributionsaccording to their particular capital account balances.Omnibus Agreement and Business Opportunity AgreementWe are a party to an omnibus agreement with Mr. Richard Slifka and our general partner that addresses theagreement of Mr. Richard Slifka not to compete with us and to cause his affiliates not to compete with us under certaincircumstances. The omnibus agreement also addressed certain environmental indemnity obligations of Global PetroleumCorp. and certain of its affiliates, which indemnity obligations have expired. In connection with our acquisition of Alliance,Richard Slifka, Chairman of our general partner, entered into a business opportunity agreement with our general partnercontaining noncompetition provisions which are broader than those contained in the omnibus agreement in order toencompass our expanded lines of business since 2005.NoncompetitionPursuant to the omnibus agreement and the business opportunity agreement, Richard Slifka agreed, for himself andhis respective affiliates, not to engage in, acquire or invest in any of the following businesses: (1) the wholesale and/or retailmarketing, sale, distribution and transportation (other than transportation by truck) of refined petroleum products, crude oil,ethanol, propane and biofuels; (2) the storage of refined petroleum products and/or any of the other120 Table of Contentsproducts identified in (1) or asphalt in connection with any of the activities described in (1); (3) bunkering; and (4) suchother activities in which the Partnership, and its direct or indirect subsidiaries, or any of their businesses are engaged or, tothe knowledge of Richard Slifka, are planning to become engaged. These noncompetition obligations survive under theomnibus agreement for so long as Richard Slifka, Eric Slifka and/or any of their respective affiliates, individually or as part ofa group, control our general partner, and under the business opportunity agreement indefinitely.Pursuant to Eric Slifka’s and Andrew Slifka’s respective employment agreements with our general partner, each ofEric Slifka and Andrew Slifka agreed, for themselves and their respective affiliates, not to engage in, acquire or invest in anyof the following businesses: (1) the wholesale and/or retail marketing, sale, distribution and transportation of refinedpetroleum products, crude oil, renewable fuels (including ethanol and bio‑fuels), and natural gas liquids (including ethane,butane, propane and condensates); (2) the storage of refined petroleum products and/or any of the other products identified in(1) in connection with any of the activities described in (1); (3) the retail sale of convenience store items and sundries andrelated food service, whether or not related to the retail sale of refined petroleum products including, without limitation,gasoline; (4) bunkering; and (5) any other business in which the general partner or its affiliates (a) becomes engaged duringthe period during the period they are employed by the general partner or any of its affiliates, or (b) is preparing to becomeengaged as of the time of their employment with the general partner or any of its affiliates ends and, with respect to parts(a) and (b) of this clause (5), unless the conflicts committee of the general partner’s board of directors approve such activity.Eric Slifka’s and Andrew Slifka’s noncompetition obligations survive for two years following the termination of theirrespective employment.In addition, Eric Slifka’s and Andrew Slifka’s employment agreements include, and Eric Slifka and Andrew Slifkaboth agreed to, a confidentiality provision and a nonsolicitation provision, which generally will continue for two yearsfollowing Eric Slifka’s and Andrew Slifka’s termination of employment.Shared Services AgreementWe are party to a shared services agreement with Global Petroleum Corp. We believe the terms of this agreement areat least as favorable as could have been obtained from unaffiliated third parties. Under this agreement, we provide GlobalPetroleum Corp. with certain accounting, treasury, legal, information technology, human resources and financial operationssupport for which Global Petroleum Corp. pays or paid us an amount based upon the cost associated with the provision ofsuch services. In addition, until February 1, 2015 (in connection with our acquisition of our petroleum products storageterminal located in Revere, Massachusetts from Global Petroleum Corp. and others), Global Petroleum Corp. provided uswith certain terminal, environmental and operational support services, for which we paid a fee based on an agreed assessmentof the cost associated with the provision of such services. With respect to the shared services agreement, we paid to GlobalPetroleum Corp. a total of $0, $0 and $8,000 for the years ended December 31, 2017, 2016 and 2015, respectively. Theagreement with Global Petroleum Corp. was amended and restated on March 11, 2015 to remove the terminal, environmentaland operational support services that had been provided to us. Under the amended and restated agreement, we will continueto provide Global Petroleum Corp. with certain tax, accounting, treasury and legal services at an agreed assessment of thecost associated with the provision of such services for an indefinite term, and any party may terminate its receipt of some orall of the services thereunder upon 90 days’ prior written notice. As of December 31, 2017, no notice of termination had beengiven under the agreement with Global Petroleum Corp. as then in effect.Revere Terminal Acquisition from Global Petroleum Corp.On January 14, 2015, we acquired the Revere terminal from Global Petroleum Corp. for a purchase price ofapproximately $23.7 million. Global Petroleum Corp. is currently owned by the Alfred A. Slifka 1990 Trust Under Article II-A and Richard Slifka. Pursuant to the purchase agreement entered into by both parties, we assumed all liabilities andobligations of Global Petroleum Corp. related to the terminal and the underlying real property, except for certain liabilities asset forth in the purchase agreement. We released Global Petroleum Corp. from and agreed to indemnify Global PetroleumCorp. from all known and unknown environmental liabilities relating to the terminal and underlying real property, providedthat we will be responsible for the first remediation expenses arising from unknown conditions up to $1.5 million, in theaggregate, and then Global Petroleum Corp. will reimburse us for any remediation expenses in excess of $1.5 million up to$2.3 million, provided further that (i) Global Petroleum Corp. will have no121 Table of Contentsobligation to reimburse us for expenses in excess of $750,000 in the aggregate, and (ii) Global Petroleum Corp.’sreimbursement obligations will survive for a period of three years following the closing of the acquisition. Any and allremediation expenses in excess of $2.3 million or incurred after the expiration of the three‑year survival period will be ourresponsibility.In the event that we sell, within eight years of the closing of the acquisition, all or substantially all of the realproperty underlying the Revere terminal to a third party not affiliated with Global Petroleum Corp. or us and such third partydoes not intend to use the real property for petroleum‑related purposes, then we will pay Global Petroleum Corp. an amountequal to fifty percent of the net proceeds (as defined in the purchase agreement) received by us in connection with such sale.Global Petroleum Corp. continued to provide terminalling services to us, and we continued to pay all amounts owedto Global Petroleum Corp., pursuant to the terms of the existing terminal storage rental and throughput agreement betweenGlobal Petroleum Corp. and us, until February 1, 2015.Throughput Agreement with Global Petroleum Corp.We had an exclusive terminal storage rental and throughput agreement with Global Petroleum Corp. with respect tothe Revere terminal in Revere, Massachusetts. The terminal storage rental and throughput agreement terminated onFebruary 1, 2015 in connection with our acquisition of the Revere terminal from Global Petroleum Corp. We believe theterms of this agreement were at least as favorable as could have been obtained from unaffiliated third parties. We retained thetitle to all our products stored at this terminal.Relationship of Management with Global Petroleum Corp.Some members of our management team are also officers and/or directors of our affiliate, Global Petroleum Corp.Global Petroleum Corp. is wholly owned by ASRS Global General Partnership, an entity that is owned equally by RichardSlifka and by the Alfred A. Slifka 1990 Trust Under Article II-A. Messrs. Faneuil and Rudinsky spend a portion of their timeproviding services to Global Petroleum Corp. under a shared services agreement. Please read “—Shared Services Agreement.”Policies Relating to Conflicts of InterestConflicts of interest exist and may arise in the future as a result of the relationships between our general partner andits affiliates, on the one hand, and us and our unaffiliated limited partners, on the other hand. The directors and officers of ourgeneral partner have fiduciary duties to manage our general partner in a manner beneficial to its owners. At the same time, ourgeneral partner has a fiduciary duty to manage us in a manner beneficial to our unitholders and us. Our partnership agreementmodifies and limits our general partner’s fiduciary duties to unitholders. Our partnership agreement also restricts the remediesavailable to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary dutyunder applicable Delaware law. The Delaware Revised Uniform Limited Partnership Act provides that Delaware limitedpartnerships may, in their partnership agreements, expand, restrict or eliminate the fiduciary duties otherwise owed by ageneral partner to limited partners and the partnership.Under our partnership agreement, whenever a conflict arises between our general partner or its affiliates, on the onehand, and us or any other partner, on the other, our general partner will resolve that conflict. Our general partner will not be inbreach of its obligations under our partnership agreement or its duties to us or our unitholders if the resolution of the conflictis:·approved by the conflicts committee of our general partner, although our general partner is not obligated toseek such approval;·approved by the vote of a majority of the outstanding common units, excluding any common units owned byour general partner or any of its affiliates;122 Table of Contents·on terms no less favorable to us than those generally being provided to or available from unaffiliated thirdparties; or·fair and reasonable to us, taking into account the totality of the relationships between the parties involved,including other transactions that may be particularly favorable or advantageous to us.Our general partner may, but is not required to, seek the approval of such resolution from the conflicts committee ofthe board of directors of our general partner. If our general partner does not seek approval from the conflicts committee andits board of directors determines that the resolution or course of action taken with respect to the conflict of interest satisfieseither of the standards set forth in the third and fourth bullet points above, then it will be presumed that, in making itsdecision, the board acted in good faith, and in any proceeding brought by or on behalf of us or any limited partner of ours,the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. Unless theresolution of a conflict is specifically provided for in our partnership agreement, our general partner or the conflictscommittee may consider any factors it determines in good faith to consider when resolving a conflict. When our partnershipagreement requires someone to act in good faith, it requires that person to reasonably believe that he is acting in the bestinterests of the partnership, unless the context otherwise requires.Director IndependencePlease read Part III, Item 10, “Directors, Executive Officers and Corporate Governance” for information regardingdirector independence. Item 14. Principal Accounting Fees and Services.The audit committee of the board of directors of Global GP LLC selected Ernst & Young LLP, IndependentRegistered Public Accounting Firm, to audit the books, records and accounts of Global Partners LP for the 2017 and 2016calendar years. The audit committee’s charter, which is available on our website at www.globalp.com, requires the auditcommittee to approve in advance all audit and non‑audit services to be provided by our independent registered publicaccounting firm. All services reported in the audit, audit‑related, tax and all other fees categories below were approved by theaudit committee.Pre‑approved fees to Ernst & Young LLP for the fiscal year ended December 31, 2017 and 2016 were as follows (inthousands): 2017 2016 Audit Fees (1) $4,225 $4,208 Audit—Related Fees 112 123 Tax Fees (2) 1,870 1,795 Total $6,207 $6,126 (1)Represents fees for professional services provided primarily in connection with the audits of our annual financialstatements and reviews of our quarterly financial statements. Audit fees also included Ernst & Young’s audits of theeffectiveness of our internal control over financial reporting at December 31, 2017 and 2016.(2)Tax fees included tax planning and tax return preparation. 123 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules.(a)The following documents are included with the filing of this Annual Report:1.Financial statements—See “Index to Financial Statements” on page F‑1.2.Financial statement schedules—Schedule II—Valuation and Qualifying AccountsAll other schedules for which provision is made in the applicable accounting regulation of theSecurities and Exchange Commission are not required under the related instructions or areinapplicable and, therefore, have been omitted.3.Exhibits—The following is a list of exhibits required by Item 601 of Registration S-K to be filed as partof this Annual Report.ExhibitNumber Description 2.1** — Stock Purchase Agreement, dated as of October 3, 2014, by and among Warren Equities, Inc., as theCompany, The Warren Alpert Foundation, as the Seller, and Global Montello Group Corp., as Buyer, andSolely with Respect to Section 10.20 and the Other Provisions in Article 10 Related Thereto, GlobalPartners LP, as Buyer Guarantor (incorporated herein by reference to Exhibit 2.1 to the Current Report onForm 8‑K filed on October 9, 2014 (File No. 001‑32593)). 2.2 — First Amendment to Stock Purchase Agreement dated as of December 12, 2014 by and among WarrenEquities, Inc., as the Company, The Warren Alpert Foundation, as the Seller, and Global Montello GroupCorp., as Buyer, and Global Partners LP, as Buyer Guarantor (incorporated herein by reference toExhibit 2.2 to the Current Report on Form 8‑K filed on January 13, 2015 (File No. 001‑32593)). 2.3 — Second Amendment to Stock Purchase Agreement dated as of January 7, 2015 by and among WarrenEquities, Inc., as the Company, The Warren Alpert Foundation, as the Seller, and Global Montello GroupCorp., as Buyer, and Global Partners LP, as Buyer Guarantor (incorporated herein by reference toExhibit 2.3 to the Current Report on Form 8‑K filed on January 13, 2015 (File No. 001‑32593)). 2.4** — Agreement of Purchase and Sale dated as of January 14, 2015 between Global Revco Dock, L.L.C, GlobalRevco Terminal, L.L.C., Global South Terminal, L.L.C., Global Petroleum Corp. and GlobalCompanies LLC (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8‑K filedon January 21, 2015 (File No. 001‑32593)). 2.5** — Sale And Purchase Agreement, dated as of April 9, 2015, by and among Liberty Petroleum Realty, LLC,East River Petroleum Realty, LLC, Big Apple Petroleum Realty, LLC, White Oak Petroleum, LLC,Anacostia Realty, LLC, Mount Vernon Petroleum Realty, LLC and DAG Realty, LLC, as Seller andGlobal Partners LP, as Buyer (incorporated herein by reference to Exhibit 2.1 to the Current Report onForm 8-K filed on April 15, 2015). 3.1 — Certificate of Limited Partnership of Global Partners LP (incorporated by reference to Exhibit 3.1 to theRegistration Statement on Form S-1 filed on May 10, 2005). 3.2 — Third Amended and Restated Agreement of Limited Partnership of Global Partners LP dated as ofDecember 9, 2009 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8‑Kfiled on December 15, 2009). 3.3 — Amendment No. 1 to Third Amended and Restated Agreement of Limited Partnership of Global PartnersLP, dated December 27, 2017 (incorporated herein by reference to Exhibit 3.1 to the Current Report onForm 8‑K filed on December 28, 2017). 124 Table of Contents4.1 — Registration Rights Agreement, dated March 1, 2012, by and among Global Partners LP and AE HoldingsCorp. (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8‑K filed onMarch 7, 2012). 4.2 — Indenture, dated as of June 24, 2014, among the Issuers, the Guarantors, and Deutsche Bank TrustCompany Americas, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report onForm 8‑K filed on June 25, 2014). 4.3 — Indenture, dated as of June 4, 2015, among the Issuers, the Guarantors, and Deutsche Bank TrustCompany Americas, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report onForm 8-K filed on June 4, 2015). 10.1 — Omnibus Agreement, dated October 4, 2005, by and among Global Petroleum Corp., Montello OilCorporation, Global Revco Dock, L.L.C., Global Revco Terminal, L.L.C., Global South Terminal, L.L.C.,Sandwich Terminal, L.L.C., Chelsea Terminal Limited Partnership, Global GP LLC, Global Partners LP,Global Operating LLC, Alfred A. Slifka, Richard Slifka and Eric Slifka (incorporated herein by referenceto Exhibit 10.1 to the Current Report on Form 8‑K filed on October 11, 2005). 10.2 — Amended and Restated Services Agreement, dated October 4, 2005, by and among Global PetroleumCorp., Global Companies LLC, Global Montello Group LLC, and Chelsea Sandwich LLC (incorporatedherein by reference to Exhibit 10.3 to the Current Report on Form 8‑K filed on October 11, 2005). 10.3 — Terminals Sale and Purchase Agreement, dated March 16, 2007 by and between Global Partners LP andExxonMobil Oil Corporation (incorporated herein by reference to Exhibit 10.1 to the Quarterly Reporton Form 10‑Q filed on August 9, 2007). 10.4 — Terminals Sale and Purchase Agreement, dated July 9, 2007 by and between Global Partners LP andExxonMobil Oil Corporation (incorporated herein by reference to Exhibit 10.21 to the Annual Report onForm 10‑K filed on March 14, 2008). 10.5^ — Supplemental Executive Retirement Plan dated December 31, 2009, between Global GP LLC and EdwardJ. Faneuil (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8‑K filed onJanuary 7, 2010). 10.6 — Sale and Purchase Agreement, dated May 24, 2010 among ExxonMobil Oil Corporation and ExxonMobil Corporation, as sellers, and Global Companies LLC (incorporated herein by reference toExhibit 10.4 to the Quarterly Report on Form 10‑Q filed on August 6, 2010). 10.7 — First Amendment to Sale and Purchase Agreement, effective August 12, 2010 among ExxonMobil OilCorporation and Exxon Mobil Corporation, as sellers, and Global Companies LLC (incorporated hereinby reference to Exhibit 10.1 to the Current Report on Form 8‑K filed on August 31, 2010). 10.8 — Second Amendment to Sale and Purchase Agreement, dated September 7, 2010, among ExxonMobil OilCorporation and Exxon Mobil Corporation, as sellers, and Global Companies LLC, as buyer(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8‑K filed onSeptember 9, 2010). 10.9†† — Brand Fee Agreement, dated September 3, 2010, between ExxonMobil Oil Corporation and GlobalCompanies LLC (incorporated herein by reference to Exhibit 10.6 to the Quarterly Report onForm 10‑Q/A filed on January 20, 2011). 10.10 — Assignment of Branded Wholesaler PMPA Franchise Agreements, effective March 1, 2011 betweenGlobal Companies LLC, Alliance Energy LLC and ExxonMobil Oil Corporation (incorporated herein byreference to Exhibit 10.49 to the Annual Report on Form 10‑K filed on March 11, 2011). 10.11 — Business Opportunity Agreement dated March 1, 2012, by and among Alfred A. Slifka, Richard Slifkaand Global Partners LP (incorporated herein by reference to Exhibit 10.1 to the Current Report onForm 8‑K filed on March 7, 2012). 10.12^ — Deferred Compensation Agreement dated September 23, 2009, by and between Alliance Energy LLC andEdward J. Faneuil (incorporated herein by reference to Exhibit 10.53 to the Annual Report on Form 10‑Kfiled on March 12, 2012). 125 Table of Contents10.13 — First Amendment to Amended and Restated Services Agreement, dated as of July 24, 2006, by and amongGlobal Petroleum Corp., Global Companies LLC, Global Montello Group Corp. and ChelseaSandwich LLC (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8‑K filedon March 15, 2012). 10.14 — Second Amendment to Amended and Restated Services Agreement, dated March 9, 2012, by and amongGlobal Petroleum Corp., Global Companies LLC, Global Montello Group Corp., Chelsea Sandwich LLCand Alliance Energy LLC (incorporated herein by reference to Exhibit 10.2 to the Current Report onForm 8‑K filed on March 15, 2012). 10.15^ — Global Partners LP Long‑Term Incentive Plan (As Amended and Restated Effective June 22, 2012)(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8‑K filed on June 25,2012). 10.16^ — Form of Phantom Unit Award Agreement for Employees under Global Partners LP Long‑Term IncentivePlan (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8‑K filed on July 3,2013). 10.17^ — Form of Phantom Unit Award Agreement for Directors under Global Partners LP Long‑Term IncentivePlan (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8‑K filed on July 3,2013). 10.18^ — Form of Confidentiality, Non‑Solicitation, and Non‑Competition Agreement for Phantom Unit AwardRecipients (incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8‑K filed onJuly 3, 2013). 10.19^ — Form of Director Unit Award Letter (incorporated herein by reference to Exhibit 10.46 to the AnnualReport on Form 10‑K filed on March 13, 2015). 10.20 — Second Amended and Restated Services Agreement, dated as of March 11, 2015, by and among GlobalPetroleum Corp. and Global Companies LLC (incorporated herein by reference to Exhibit 10.49 to theAnnual Report on Form 10‑K filed on March 13, 2015). 10.21 — Purchase Agreement, dated June 1, 2015 among the Issuers, the Guarantors and the Initial Purchasers(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8‑K filed on June 4,2015). 10.22^ — Form of Restricted Unit Award Grant Letter (incorporated herein by reference to Exhibit 10.2 to theQuarterly Report on Form 10‑Q filed on August 7, 2015). 10.23^ — Form of Cash Award Grant Letter (incorporated herein by reference to Exhibit 10.3 to the QuarterlyReport on Form 10‑Q filed on August 7, 2015). 10.24^ — Form of Phantom Unit Agreement (Cash Settlement) (incorporated herein by reference to Exhibit 10.1 tothe Quarterly Report on Form 10‑Q filed on November 6, 2015). 10.25 — Third Amended and Restated Credit Agreement, dated as of April 25, 2017, among GlobalOperating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp., ChelseaSandwich LLC, GLP Finance Corp., Global Energy Marketing LLC, Global CNG LLC, AllianceEnergy LLC, Cascade Kelly Holdings LLC and Warren Equities, Inc. as borrowers, Bank ofAmerica, N.A., as Administrative Agent, Swing Line Lender, Alternative Currency Fronting Lender andL/C Issuer, JPMorgan Chase Bank, N.A. as an L/C Issuer, JPMorgan Chase Bank, N.A. and Wells FargoBank, N.A. as Co-Syndication Agents, Citizens Bank, N.A., Societe Generale, BNP Paribas and The Bankof Tokyo-Mitsubishi UFJ, Ltd. NY Branch as Co-Documentation Agents, and Merrill Lynch, Pierce,Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, CitizensBank N.A., Societe Generale, BNP Paribas, and The Bank of Tokyo-Mitsubishi UFJ, Ltd. NY Branch asJoint Lead Arrangers and Joint Book Managers (incorporated herein by reference to Exhibit 10.1 to theQuarterly Report on Form 10-Q‑Q filed on May 9, 2017). 10.26^ — Form of Phantom Unit Award Agreement for Executive Officers under Global Partners LP Long-TermIncentive Plan (incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8‑K filedon August 22, 2017). 21.1* — List of Subsidiaries of Global Partners LP. 23.1* — Consent of Ernst & Young LLP. 126 Table of Contents31.1* — Rule 13a‑14(a)/15d‑14(a) Certification of Principal Executive Officer of Global GP LLC, general partnerof Global Partners LP. 31.2* — Rule 13a‑14(a)/15d‑14(a) Certification of Principal Financial Officer of Global GP LLC, general partnerof Global Partners LP. 32.1† — Section 1350 Certification of Chief Executive Officer of Global GP LLC, general partner of GlobalPartners LP. 32.2† — Section 1350 Certification of Chief Financial Officer of Global GP LLC, general partner of GlobalPartners LP. 101.INS* — XBRL Instance Document. 101.SCH* — XBRL Taxonomy Extension Schema Document. 101.CAL* — XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB* — XBRL Taxonomy Extension Labels Linkbase Document. 101.PRE* — XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF* — XBRL Taxonomy Extension Definition Linkbase Document. *Filed herewith.^Management contract or compensatory plan or arrangement.**Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S‑K. The Partnershipundertakes to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the U.S.Securities and Exchange Commission.†Not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to theliability of that section.††Portions of this exhibit have been omitted pursuant to an order granting confidential treatment, dated May 9, 2014(SEC File No. 001-32593). 127 Table of Contents SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto duly authorized. Global Partners LP By:Global GP LLC, its general partnerDated: March 9, 2018 By:/s/ Eric Slifka Eric Slifka President and Chief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the registrant and in the capacities indicated on March 9, 2018.Signature Title /s/ Eric Slifka President, Chief Executive Officer and DirectorEric Slifka (Principal Executive Officer) /s/ Daphne H. Foster Chief Financial Officer and DirectorDaphne H. Foster (Principal Financial Officer) /s/ Matthew Spencer Chief Accounting OfficerMatthew Spencer (Principal Accounting Officer) /s/ Andrew Slifka Executive Vice President,Andrew Slifka President, Alliance Gasoline Division and Director /s/ Richard Slifka ChairmanRichard Slifka /s/ David K. McKown DirectorDavid K. McKown /s/ Robert J. McCool DirectorRobert J. McCool /s/ Kenneth I. Watchmaker DirectorKenneth I. Watchmaker 128 Table of Contents INDEX TO FINANCIAL STATEMENTSGLOBAL PARTNERS LP FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm F‑2Consolidated Balance Sheets as of December 31, 2017 and 2016 F‑4Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015 F‑5Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015 F‑6Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015 F‑7Consolidated Statements of Partners’ Equity for the years ended December 31, 2017, 2016 and 2015 F‑8Notes to Consolidated Financial Statements F‑9 F-1 Table of ContentsReport of Independent Registered Public Accounting Firm To the Board of Directors of Global GP LLC and Unitholders of Global Partners LPOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Global Partners LP (the Partnership) as of December 31, 2017 and 2016,and the related consolidated statements of operations, comprehensive income (loss), partners’ equity, and cash flows for each of the three yearsin the period ended December 31, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectivelyreferred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all materialrespects, the financial position of the Partnership at December 31, 2017 and 2016, and the results of its operations and its cash flows for eachof the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), thePartnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report datedMarch 9, 2018 expressed an unqualified opinion thereon.Basis for OpinionThese financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on thePartnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to beindependent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our auditsincluded performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts anddisclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis forour opinion. /s/ Ernst & Young LLP We have served as the Partnership’s auditor since 2004.Boston, MassachusettsMarch 9, 2018F-2 Table of ContentsReport of Independent Registered Public Accounting Firm To the Board of Directors of Global GP LLC and Unitholders of Global Partners LPOpinion on Internal Control over Financial ReportingWe have audited Global Partners LP's internal control over financial reporting as of December 31, 2017, based on criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013framework) (the COSO criteria). In our opinion, Global Partners LP (the Partnership) maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2017, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) theconsolidated balance sheets as of December 31, 2017 and 2016 and the related consolidated statements of operations, comprehensive income(loss), partners’ equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes of thePartnership and our report dated March 9, 2018 expressed an unqualified opinion thereon. Basis for Opinion The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting included in the accompanying Management's Annual Report. Our responsibility is toexpress an opinion on the Partnership's internal control over financial reporting based on our audit. We are a public accounting firm registeredwith the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such otherprocedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, ordisposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, orthat the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Boston, MassachusettsMarch 9, 2018 F-3 Table of ContentsGLOBAL PARTNERS LPCONSOLIDATED BALANCE SHEETS(In thousands, except unit data December 31, 2017 2016 Assets Current assets: Cash and cash equivalents $14,858 $10,028 Accounts receivable, net (less allowance of $4,605 and $5,549 as of December 31, 2017 and2016, respectively) 417,263 421,360 Accounts receivable—affiliates 3,773 3,143 Inventories 350,743 521,878 Brokerage margin deposits 9,681 27,653 Derivative assets 3,840 21,382 Prepaid expenses and other current assets 77,977 70,022 Total current assets 878,135 1,075,466 Property and equipment, net 1,036,667 1,099,899 Intangible assets, net 56,545 65,013 Goodwill 312,401 294,768 Other assets 36,421 28,874 Total assets $2,320,169 $2,564,020 Liabilities and partners’ equity Current liabilities: Accounts payable $313,412 $320,262 Working capital revolving credit facility—current portion 126,700 274,600 Environmental liabilities—current portion 5,009 5,341 Trustee taxes payable 110,321 101,166 Accrued expenses and other current liabilities 99,507 70,443 Derivative liabilities 13,708 27,413 Total current liabilities 668,657 799,225 Working capital revolving credit facility—less current portion 100,000 150,000 Revolving credit facility 196,000 216,700 Senior notes 661,774 659,150 Environmental liabilities—less current portion 52,968 57,724 Financing obligations 150,334 152,444 Deferred tax liabilities 40,105 66,054 Other long-term liabilities 56,013 64,882 Total liabilities 1,925,851 2,166,179 Commitments and contingencies (see Note 9) — — Partners’ equity Global Partners LP equity: Common unitholders 33,995,563 units issued and 33,645,092 outstanding at December 31,2017 and 33,995,563 units issued and 33,543,669 outstanding at December 31, 2016) 399,399 401,044 General partner interest (0.67% interest with 230,303 equivalent units outstanding atDecember 31, 2017 and 2016) (2,978) (2,948) Accumulated other comprehensive loss (5,468) (5,441) Total Global Partners LP equity 390,953 392,655 Noncontrolling interest 3,365 5,186 Total partners’ equity 394,318 397,841 Total liabilities and partners’ equity $2,320,169 $2,564,020 The accompanying notes are an integral part of these consolidated financial statements.F-4 Table of ContentsGLOBAL PARTNERS LPCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per unit data) Year Ended December 31, 2017 2016 2015 Sales $8,920,552 $8,239,639 $10,314,852 Cost of sales 8,337,500 7,693,149 9,717,183 Gross profit 583,052 546,490 597,669 Costs and operating expenses: Selling, general and administrative expenses 155,033 149,673 177,043 Operating expenses 283,650 288,547 290,307 Loss on trustee taxes 16,194 — — Lease exit and termination expenses — 80,665 — Amortization expense 9,206 9,389 13,499 Net (gain) loss on sale and disposition of assets (1,624) 20,495 2,097 Goodwill and long-lived asset impairment 809 149,972 — Total costs and operating expenses 463,268 698,741 482,946 Operating income (loss) 119,784 (152,251) 114,723 Interest expense (86,230) (86,319) (73,332) Income (loss) before income tax benefit (expense) 33,554 (238,570) 41,391 Income tax benefit (expense) 23,563 (53) 1,873 Net income (loss) 57,117 (238,623) 43,264 Net loss attributable to noncontrolling interest 1,635 39,211 299 Net income (loss) attributable to Global Partners LP 58,752 (199,412) 43,563 Less: General partner’s interest in net income (loss), including incentivedistribution rights 394 (1,336) 7,667 Limited partners’ interest in net income (loss) $58,358 $(198,076) $35,896 Basic net income (loss) per limited partner unit $1.74 $(5.91) $1.12 Diluted net income (loss) per limited partner unit $1.74 $(5.91) $1.11 Basic weighted average limited partner units outstanding 33,589 33,525 32,178 Diluted weighted average limited partner units outstanding 33,634 33,525 32,323 Distributions per limited partner unit $1.85 $1.85 $2.74 The accompanying notes are an integral part of these consolidated financial statements.F-5 Table of ContentsGLOBAL PARTNERS LPCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(In thousands) Year Ended December 31, 2017 2016 2015 Net income (loss) $57,117 $(238,623) $43,264 Other comprehensive (loss) income: Change in fair value of cash flow hedges 1,037 2,486 4,047 Change in pension liability (1,064) 167 1,111 Total other comprehensive (loss) income (27) 2,653 5,158 Comprehensive income (loss) 57,090 (235,970) 48,422 Comprehensive loss attributable to noncontrolling interest 1,635 39,211 299 Comprehensive income (loss) attributable to Global Partners LP $58,725 $(196,759) $48,721 The accompanying notes are an integral part of these consolidated financial statements.F-6 Table of ContentsGLOBAL PARTNERS LPCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Year Ended December 31, 2017 2016 2015 Cash flows from operating activities Net income (loss)$57,117 $(238,623) $43,264 Adjustments to reconcile net income (loss) to net cash provided by (used in)operating activities: Depreciation and amortization 105,652 111,942 115,851 Amortization of deferred financing fees 5,644 6,019 5,899 Amortization of leasehold interests 631 1,252 794 Amortization of senior notes discount 1,445 1,393 1,089 Bad debt expense 211 231 1,172 Unit-based compensation expense 2,755 4,145 4,208 Write-off of financing fees 573 1,828 — Net (gain) loss on sale and disposition of assets (1,624) 20,495 2,097 Goodwill and long-lived asset impairment 809 149,972 — Deferred income taxes (25,949) (18,782) (3,624) Changes in operating assets and liabilities, excluding net assets acquired: Accounts receivable 3,886 (110,237) 154,716 Accounts receivable-affiliate (630) (565) 1,325 Inventories 173,167 (135,888) (32,648) Broker margin deposits 17,972 3,674 (14,129) Prepaid expenses, all other current assets and other assets (13,674) 2,987 12,526 Accounts payable (6,850) 17,410 (172,318) Trustee taxes payable 9,155 5,902 (15,648) Change in derivatives 2,346 40,218 (8,869) Accrued expenses, all other current liabilities and other long-term liabilities 15,806 16,741 (33,199) Net cash provided by (used in) operating activities 348,442 (119,886) 62,506 Cash flows from investing activities Acquisitions (38,479) — (561,170) Capital expenditures (49,866) (71,279) (92,925) Seller note issuances (6,086) — — Proceeds from sale of property and equipment 32,787 77,726 4,331 Net cash (used in) provided by investing activities (61,644) 6,447 (649,764) Cash flows from financing activities Proceeds from issuance of common units, net — — 109,305 Net (payments on) borrowings from working capital revolving credit facility (197,900) 176,500 148,100 Net (payments on) borrowings from revolving credit facility (20,700) (52,300) 135,200 Proceeds from sale-leaseback, net — 62,469 — Proceeds from senior notes, net of discount — — 295,338 Payments on line of credit — — (700) Repurchase of common units — — (3,892) LTIP units withheld for tax obligations (522) — — Noncontrolling interest capital contribution 279 — 2,560 Distribution to noncontrolling interest (465) (1,798) (5,280) Distributions to partners (62,660) (62,520) (97,495) Net cash (used in) provided by financing activities (281,968) 122,351 583,136 Cash and cash equivalents Increase (decrease) in cash and cash equivalents 4,830 8,912 (4,122) Cash and cash equivalents at beginning of year 10,028 1,116 5,238 Cash and cash equivalents at end of year$14,858 $10,028 $1,116 Supplemental information Cash paid during the period for interest$62,512 $64,112 $59,764 Cash paid during the period for income taxes$7,356 $16,990 $2,772 The accompanying notes are an integral part of these consolidated financial statements.F-7 Table of ContentsGLOBAL PARTNERS LPCONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY(In thousands) Accumulated General Other Total Common Partner Comprehensive Noncontrolling Partners’ Unitholders Interest Loss Interest Equity Balance at December 31, 2014 $599,406 $788 $(13,252) $49,214 $636,156 Issuance of common units 109,305 — — — 109,305 Net income (loss) 35,896 7,667 — (299) 43,264 Noncontrolling interest capital contribution — — — 2,560 2,560 Distributions to partners (88,944) (9,643) — — (98,587) Distribution to noncontrolling interest — — — (5,280) (5,280) Unit-based compensation 4,208 — — — 4,208 Other comprehensive income — — 5,158 — 5,158 Repurchase of common units (3,892) — — — (3,892) Dividends on repurchased units 1,092 — — — 1,092 Balance at December 31, 2015 657,071 (1,188) (8,094) 46,195 693,984 Net loss (198,076) (1,336) — (39,211) (238,623) Distributions to partners (62,892) (424) — — (63,316) Distribution to noncontrolling interest — — — (1,798) (1,798) Unit-based compensation 4,145 — — — 4,145 Other comprehensive income — — 2,653 — 2,653 Dividends on repurchased units 796 — — — 796 Balance at December 31, 2016 401,044 (2,948) (5,441) 5,186 397,841 Net income (loss) 58,358 394 — (1,635) 57,117 Noncontrolling interest capital contribution — — — 279 279 Distributions to partners (62,892) (424) — — (63,316) Distribution to noncontrolling interest — — — (465) (465) Unit-based compensation 2,755 — — — 2,755 Other comprehensive loss — — (27) — (27) LTIP units withheld for tax obligations (522) — — — (522) Dividends on repurchased units 656 — — — 656 Balance at December 31, 2017 $399,399 $(2,978) $(5,468) $3,365 $394,318 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1. Organization and Basis of PresentationOrganizationGlobal Partners LP (the “Partnership”) is a midstream logistics and marketing master limited partnership formed inMarch 2005 engaged in the purchasing, selling, storing and logistics of transporting petroleum and related products,including gasoline and gasoline blendstocks (such as ethanol), distillates (such as home heating oil, diesel and kerosene),residual oil, renewable fuels, crude oil and propane. The Partnership owns, controls or has access to one of the largestterminal networks of refined petroleum products and renewable fuels in Massachusetts, Maine, Connecticut, Vermont, NewHampshire, Rhode Island, New York, New Jersey and Pennsylvania (collectively, the “Northeast”). The Partnership is one ofthe largest distributors of gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercialcustomers in the New England states and New York. The Partnership is also one of the largest independent owners, suppliersand operators of gasoline stations and convenience stores with locations throughout the New England states and New York.As of December 31, 2017, the Partnership had a portfolio of 1,455 owned, leased and/or supplied gasoline stations, including264 directly operated convenience stores, in the Northeast, Maryland and Virginia. The Partnership also receives revenuefrom convenience store sales, rental income and sundries. In addition, the Partnership owns transload and storage terminals inNorth Dakota and Oregon that extend its origin-to-destination capabilities from the mid-continent region of the United Statesand Canada.Global GP LLC, the Partnership’s general partner (the “General Partner”), manages the Partnership’s operations andactivities and employs its officers and substantially all of its personnel, except for most of its gasoline station andconvenience store employees who are employed by Global Montello Group Corp. (“GMG”), a wholly owned subsidiary ofthe Partnership. The General Partner, which holds a 0.67% general partner interest in the Partnership, is owned by affiliates of theSlifka family. As of December 31, 2017, affiliates of the General Partner, including its directors and executive officers andtheir affiliates, owned 7,402,924 common units, representing a 21.8% limited partner interest.2017 TransactionsAcquisition Gasoline Stations and Convenience Stores—On October 18, 2017, the Partnership completed theacquisition of retail gasoline and convenience store assets from Honey Farms, Inc. (“Honey Farms”) in a cash transaction. Theacquisition included 11 company-operated retail sites with gasoline and convenience stores and 22 company-operated stand-alone convenience stores. All of the sites are located in and around the greater Worcester, Massachusetts area. See Note 18.Amended and Restated Credit Agreement—On April 25, 2017, the Partnership and certain of its subsidiariesentered into a third amended and restated credit agreement with aggregate commitments of $1.3 billion and a maturity dateof April 30, 2020. See Note 6 for additional information on the credit agreement.Sale of Natural Gas and Electricity Brokerage Businesses—On February 1, 2017, the Partnership completed thesale of its natural gas marketing and electricity brokerage businesses for a purchase price of approximately $17.3 million,subject to customary closing adjustments. Proceeds from the sale amounted to approximately $16.3 million, and thePartnership realized a gain on the sale of $14.2 million. The sale of the natural gas marketing and electricity brokeragebusinesses reflects the Partnership’s ongoing program to monetize non-strategic assets not fundamental to its growth strategy.Prior to the sale, the results of the natural gas marketing and electricity brokerage businesses were included in theCommercial segment.F-9 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Note 2. Summary of Significant Accounting PoliciesBasis of Consolidation and PresentationOn October 18, 2017, the Partnership acquired retail gasoline and convenience store assets from Honey Farms. Thefinancial results of Honey Farms since the acquisition date are included in the accompanying statement of operations for theyear ended December 31, 2017. On January 7, 2015, the Partnership acquired, through one of its wholly owned subsidiaries, GMG, 100% of theequity interests in Warren Equities, Inc. (“Warren”) from The Warren Alpert Foundation. On January 14, 2015, thePartnership acquired the Revere terminal (the “Revere Terminal”) located in Boston Harbor in Revere, Massachusetts fromGlobal Petroleum Corp. (“GPC”) and related entities. On June 1, 2015, the Partnership acquired, through one of its whollyowned subsidiaries, Alliance Energy LLC (“Alliance”), retail gasoline stations and dealer supply contracts from CapitolPetroleum Group (“Capitol”). The financial results of Warren and the Revere Terminal for the year ended December 31, 2015and of Capitol for the seven months ended December 31, 2015 are included in the accompanying statements of operations forthe year ended December 31, 2015.See Note 18, “Business Combinations,” for additional information on the Partnership’s acquisitions. Theaccompanying consolidated financial statements as of December 31, 2017 and 2016 and for the years ended December 31,2017, 2016 and 2015 reflect the accounts of the Partnership. Upon consolidation, all intercompany balances and transactionshave been eliminated.Noncontrolling InterestThese financial statements reflect the application of Accounting Standards Codification (“ASC”) Topic 810,“Consolidations” (“ASC 810”) which establishes accounting and reporting standards that require: (i) the ownership interestin subsidiaries held by parties other than the parent to be clearly identified and presented in the consolidated balance sheetwithin shareholder’s equity, but separate from the parent’s equity; (ii) the amount of consolidated net income attributable tothe parent and the noncontrolling interest to be clearly identified and presented on the face of the consolidated statements ofoperations; and (iii) changes in a parent’s ownership interest while the parent retains its controlling financial interest in itssubsidiary to be accounted for consistently.The Partnership acquired a 60% interest in Basin Transload LLC (“Basin Transload”) on February 1, 2013. Afterevaluating ASC 810, the Partnership concluded it is appropriate to consolidate the balance sheet and statements ofoperations of Basin Transload based on an evaluation of the outstanding voting interests. Amounts pertaining to thenoncontrolling ownership interest held by third parties in the financial position and operating results of the Partnership arereported as a noncontrolling interest in the accompanying consolidated balance sheets and statements of operations.Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the UnitedStates requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities andthe disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Actual results may differ from those estimates under different assumptions orconditions. Among the estimates made by management are (i) estimated fair value of assets and liabilities acquired in abusiness combination and identification of associated goodwill and intangible assets, (ii) fair value of derivative instruments,(iii) accruals and contingent liabilities, (iv) allowance for doubtful accounts, (v) Level 3 valuations for crude oil and propaneforward purchase and sales contracts, and (vi) assumptions used to evaluate goodwill, property and equipment andintangibles for impairment; (vii) environmental and asset retirement obligationF-10 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)provisions; and (viii) cost of sales accrual. Although the Partnership believes these estimates are reasonable, actual resultscould differ from these estimates.Cash and Cash EquivalentsThe Partnership considers highly liquid investments with original maturities of three months or less at the time ofpurchase to be cash equivalents. The carrying value of cash and cash equivalents, including broker margin accounts,approximates fair value.Accounts ReceivableThe Partnership’s accounts receivable primarily results from sales of refined petroleum products, renewable fuels,crude oil and propane to its customers. The majority of the Partnership’s accounts receivable relates to its petroleummarketing and crude oil activities that can generally be described as high volume and low margin activities. The Partnershipmakes a determination of the amount, if any, of a line of credit it may extend to a customer based on the form and amount offinancial performance assurances the Partnership requires. Such financial assurances are commonly provided to thePartnership in the form of standby letters of credit, personal guarantees or corporate guarantees.The Partnership reviews all accounts receivable balances on a monthly basis and records a reserve for estimatedamounts it expects will not be fully recovered. At December 31, 2017 and 2016, substantially all of the Partnership’saccounts receivable classified as current assets were within payment terms.InventoriesThe Partnership hedges substantially all of its petroleum and ethanol inventory using a variety of instruments,primarily exchange-traded futures contracts. These futures contracts are entered into when inventory is purchased and areeither designated as fair value hedges against the inventory on a specific barrel basis for inventories qualifying for fair valuehedge accounting or not designated and maintained as economic hedges against certain inventory of the Partnership on aspecific barrel basis. Changes in fair value of these futures contracts, as well as the offsetting change in fair value on thehedged inventory, are recognized in earnings as an increase or decrease in cost of sales. All hedged inventory designated in afair value hedge relationship is valued using the lower of cost, as determined by specific identification, or net realizablevalue, as determined at the product level. All petroleum and ethanol inventory not designated in a fair value hedgingrelationship is carried at the lower of historical cost, on a first-in, first-out basis, or net realizable value.Convenience store inventory and Renewable Identification Numbers (“RINs”) inventory are carried at the lower ofhistorical cost or net realizable value.F-11 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Inventories consisted of the following at December 31 (in thousands): 2017 2016 Distillates: home heating oil, diesel and kerosene $183,059 $180,272 Gasoline 81,504 101,368 Gasoline blendstocks 26,789 54,582 Crude oil 10,809 136,113 Residual oil 28,442 29,536 Propane and other 1,659 3,167 Renewable identification numbers (RINs) 380 631 Convenience store inventory 18,101 16,209 Total $350,743 $521,878 In addition to its own inventory, the Partnership has exchange agreements for petroleum products and ethanol withunrelated third‑party suppliers, whereby it may draw inventory from these other suppliers (see Revenue Recognition) andsuppliers may draw inventory from the Partnership. Positive exchange balances are accounted for as accounts receivable andamounted to $9.5 million and $4.0 million at December 31, 2017 and 2016, respectively. Negative exchange balances areaccounted for as accounts payable and amounted to $8.4 million and $13.4 million at December 31, 2017 and 2016,respectively. Exchange transactions are valued using current carrying costs.Property and EquipmentProperty and equipment are stated at cost less accumulated depreciation. Minor expenditures for routinemaintenance, repairs and renewals are charged to expense as incurred, and major improvements that extend the useful lives ofthe related assets are capitalized. Depreciation related to the Partnership’s terminal assets and gasoline stations is charged tocost of sales and all other depreciation is charged to selling, general and administrative expenses. Depreciation is chargedover the estimated useful lives of the applicable assets using straight‑line methods, and accelerated methods are used forincome tax purposes. When applicable and based on policy, which considers the construction period and project cost, thePartnership capitalizes interest on qualified long‑term projects and depreciates it over the life of the related asset.The estimated useful lives are as follows:Gasoline station buildings, improvements and storage tanks 15-25years Buildings, docks, terminal facilities and improvements 5-25years Gasoline station equipment 7years Fixtures, equipment and capitalized internal use software 3-7years The Partnership capitalizes certain costs, including internal payroll and external direct project costs incurred inconnection with developing or obtaining software designated for internal use. These costs are included in property andequipment and are amortized over the estimated useful lives of the related software.IntangiblesIntangibles are carried at cost less accumulated amortization. For assets with determinable useful lives, amortizationis computed over the estimated economic useful lives of the respective intangible assets, ranging from 1 to 20 years.F-12 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Goodwill and Long-Lived Asset ImpairmentThe following table presents goodwill and long-lived asset impairment charges recognized during the years endedDecember 31 (in thousands): 2017 2016 2015 Goodwill impairment $ — $121,752 $ — Long-lived asset impairment 809 28,220 — Total $809 $149,972 $ — GoodwillGoodwill represents the future economic benefits arising from assets acquired in a business combination that are notindividually identified and separately recognized. The Partnership has concluded that its operating segments are also itsreporting units. Goodwill is tested for impairment annually as of October 1 or when events or changes in circumstancesindicate that the carrying amount of goodwill may not be recoverable. Derecognized goodwill associated with thePartnership’s disposition activities of Gasoline Distribution and Station Operation (“GDSO”) sites is included in the carryingvalue of assets sold in determining the gain or loss on disposal, to the extent the disposition of assets qualifies as adisposition of a business under ASC 805. GDSO reporting unit goodwill that was derecognized related to the disposition ofsites that met the definition of a business was $4.0 million and $17.9 million for the years ended December 31, 2017 and2016, respectively (see Note 5).Goodwill Impairment Test—2017On January 1, 2017, the Partnership early adopted Accounting Standards Update (“ASU”) 2017-04, “Intangibles-Goodwill and Other” (“ASU 2017-04”), which eliminates step two from the goodwill impairment test, and instead requires anentity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds thereporting unit’s fair value. See “—Accounting Standards or Updates Recently Adopted” for additional information.During 2017, the Partnership completed a quantitative assessment for the GDSO reporting unit. Factors included inthe assessment included both macro‑economic conditions and industry specific conditions, and the fair value of the GDSOreporting unit was estimated using a weighted average of a discounted cash flow approach and a market comparablesapproach. Based on the Partnership’s assessment, no impairment was identified.Goodwill Impairment Test—2016 and 2015As disclosed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015, the decliningcrude oil prices, changes in certain market conditions and decline in the Partnership’s common unit price, collectivelycaused the Partnership to reassess its goodwill allocated to the Wholesale reporting unit for impairment as of December 31,2015. The Partnership’s results in 2015 were negatively impacted by tighter crude oil differentials. Certain of the keyassumptions in the development of discounted cash flows used to evaluate the Wholesale reporting unit included theexpectation of a recovery from tight crude oil differentials and low crude oil prices within 2017. Based on the results of thisassessment, the Partnership concluded that step two of the quantitative assessment was not necessary and no impairment forthe year ended December 31, 2015.During the first quarter ended March 31, 2016 and second quarter ended June 30, 2016, the Partnership consideredwhether there were any change of circumstances or events which would more likely than not reduce the fair value of theWholesale reporting unit below its carrying amount. While the Partnership had then concluded that such events andcircumstances had not occurred, the Partnership disclosed the possibility that a continuation of low crude oilF-13 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)prices and tight crude oil differentials might cause the Partnership to conclude that the timing of a market recovery might bemore extended than estimated within the Partnership’s five-year forecast and estimate of terminal values.The Partnership further disclosed in its Annual Report on Form 10-K for the year ended December 31, 2015 and inits Quarterly Reports on Forms 10-Q as of March 31, 2016 and June 30, 2016, that a further sustained decline in commodityprices may cause the Partnership to reassess its long-lived assets and goodwill for impairment, and could result in future non-cash impairment charges as a result of such impairment assessments. If the Partnership is required to perform step two in thefuture for the Wholesale reporting unit, up to $121.7 million of goodwill assigned to this reporting unit could be written offin the period of such impairment assessment.During the third quarter ended September 30, 2016, the Partnership continued to monitor the extent and timing offuture demand. Crude oil prices had remained at lower levels but, more importantly, tight crude oil differentials continuedsuch that the Partnership might no longer reasonably include an assumption that the market for crude oil by rail to the coastsmight recover sometime within 2017 as previously expected. Factors contributing to the Partnership’s assumption included: ·Lack of logistics nominations by one particular customer and the expectations for limited, if any, nominationsfor the balance of 2016 by that customer;·A decline in spot crude oil volume indicating weakening demand for the Partnership’s services/assets;·Increased pipeline capacity out of the Bakken region; and·The lifting of the export ban, which provides another clearing mechanism for crude oil.These market conditions, in addition to declines noted during fiscal year 2015 as well as the first and secondquarters of 2016, negatively affected the Partnership’s then current period results and future projections sufficiently toconstitute triggering events for the Wholesale reporting unit. Based on its consideration of the factors above, the Partnershipconcluded it was necessary to perform an interim goodwill impairment test for the Wholesale reporting unit pursuant to theguidelines of ASC Topic 350, “Intangibles–Goodwill and Other” (“ASC 350”). The Partnership did not extend the interimtest for recoverability to the GDSO reporting unit, as the indicators described above were specific to the Wholesale reportingunit.The process of testing goodwill for impairment involves numerous judgments, assumptions and estimates made bymanagement which inherently reflect a high degree of uncertainty. Prior to the adoption of ASU 2017-04, the impairment testincluded either a qualitative assessment or a two-step quantitative assessment. The impairment test’s qualitative assessmentwas to be used in order to conclude if it was more likely than not that the reporting unit’s fair value exceeded its carryingvalue. Factors considered in the qualitative analysis included changes in the business and industry, as well as macro-economic conditions, that would have influenced the fair value of the reporting unit as well as changes in the carrying valuesof the reporting unit. In the impairment test’s two-step quantitative assessment, the fair value of each reporting unit was to bedetermined and compared to the book value of the reporting unit as determined under step one. If the fair value of thereporting unit was less than the book value, including goodwill, then step two was to be performed to compare the carryingamount of reporting unit goodwill to the implied fair value of that goodwill. If the carrying amount of reporting unitgoodwill exceeded the implied fair value of that goodwill, an impairment loss would have been recognized for that excesswith a charge to operations. The Partnership calculated the fair value of each reporting unit using a combination ofdiscounted cash flows and market comparables.F-14 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)In 2016, the key assumptions included in the development of the discounted cash flow value for each reporting unitincluded:Future commodity volumes and margins. The discounted cash flows were based on a five-year forecast with anestimate of terminal values. In general, the reporting units’ fair values were most sensitive to volume and gross marginassumptions. The Wholesale reporting unit’s cash flows were significantly influenced by the crude oil market, given thePartnership’s 2013 investment in transloading terminals in North Dakota and Oregon.Discount rate commensurate with the risks involved. The Partnership applied a discount rate to its expected cashflows based on a variety of factors, including market and economic conditions, operational risk, regulatory risk and politicalrisk. A higher discount rate decreases the net present value of cash flows.Future capital requirements. The Partnership’s estimates of future capital requirements were based upon acombination of authorized spending and internal forecasts.As of September 30, 2016, as a result of the impairment indicators discussed above, the Partnership completed apreliminary assessment of the impairment of the Wholesale reporting unit’s goodwill. As a result of the step one assessment,the Partnership concluded that the fair value of the Wholesale reporting unit no longer exceeded its carrying value and as aresult, performed a step two assessment to measure the impairment. In step two of the quantitative assessment, the implied fairvalue of goodwill is determined by assigning the fair value of a reporting unit to all the assets and liabilities of that unit(including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. If thecarrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss isrecognized for that excess. Upon applying step two of the impairment test, the Partnership preliminarily determined that theimplied fair value of the Wholesale reporting unit goodwill was $0, and accordingly the Partnership recorded an impairmentcharge of $121.7 million as of September 30, 2016, or all of the goodwill previously allocated to this reporting unit.The following procedures were, among others, the more significant analyses that the Partnership completed duringthe fourth quarter of 2016 to finalize its step one and step two impairment tests:·Final appraisals to determine the estimated fair value of Wholesale, Commercial and GDSO reporting units,including final calculation of discount rates;·Final appraisals, certain of which were determined by third-party valuation specialists, to determine theestimated fair value of intangible assets, leases, and property and equipment within the Wholesale reporting unit;and·Final analysis for the Wholesale reporting unit to determine the estimated fair value adjustments required tocertain other assets and liabilities of the reporting unit.As a result of finalizing the step one assessment, the Partnership concluded that no impairment was identified for theGDSO reporting unit and that there was no change to the conclusion that the fair value of the Wholesale reporting unit nolonger exceeded its carrying value.In connection with finalizing the step two impairment test, the Partnership made what it considered to be reasonableestimates of each of the above items in order to determine the goodwill impairment loss under the theoretical purchase priceallocation required for a step two impairment test. Based on finalizing its assessment, the impairment charges recognized inthe third quarter for goodwill and long-lived assets were appropriate and no additional charges were necessary.F-15 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Evaluation of Long-Lived Asset ImpairmentAccounting and reporting guidance for long‑lived assets requires that a long‑lived asset (group) be reviewed forimpairment when events or changes in circumstances indicate that the carrying amount might not be recoverable.Accordingly, the Partnership evaluates long-lived assets for impairment whenever indicators of impairment are identified. Ifindicators of impairment are present, the Partnership assesses impairment by comparing the undiscounted projected futurecash flows from the long‑lived assets to their carrying value. If the undiscounted cash flows are less than the carrying value,the long‑lived assets will be reduced to their fair value.In 2017, the Partnership recognized an impairment charge of $0.8 million relating to long-lived assets at certaingasoline stations and convenience stores. These assets are allocated to the GDSO segment, and the impairment is included ingoodwill and long-lived asset impairment in the accompanying statement of operations for the year ended December 31,2017. In 2016, the Partnership recognized an impairment charge of $23.2 million relating to long-lived assets used at itscrude oil transloading terminals in North Dakota. Additionally, the Partnership recognized an impairment charge ofapproximately $2.9 million associated with certain long-lived assets at its Albany, New York terminal and all developmentwork in Port Arthur, Texas associated with the initial investments related to expanding the Partnership’s ability to handlecrude oil at those locations. The long-term recoverability of these assets has been adversely impacted by a prolonged declinein crude oil prices and crude oil differentials. The method used for determining fair value of these assets relied on acombination of the cost and market approaches. These terminal assets are allocated to the Wholesale segment, and the totalimpairment charge of $26.1 million is included in goodwill and long-lived asset impairment in the accompanying statementof operations for the year ended December 31, 2016.Also in 2016, the Partnership recognized an impairment charge of $1.9 million associated with the long-lived assetsused in supplying compressed natural gas (“CNG”) which is viewed as an alternative fuel to oil. The long-term recoverabilityof these assets has been adversely impacted by the decline in commodity prices and the cost differential between natural gasand oil. As oil has remained an attractive alternative to CNG due to lower oil prices, the related impact on the CNG operatingand cash flows was determined to be an impairment indicator, resulting in the impairment of the CNG long-lived assetsduring the year ended December 31, 2016. The method used for determining fair value of the CNG assets relied on the marketapproach. The impairment charge is included in goodwill and long-lived asset impairment in the accompanying statement ofoperations for the year ended December 31, 2016. The CNG assets were allocated to the Commercial segment. OnNovember 1, 2016, the Partnership sold its CNG assets.Additionally in 2016, the Partnership recognized an impairment charge of $0.3 million associated with the long-lived assets of one discrete GDSO site in its GDSO segment. The method used for determining fair value of this site relied onthe market approach. The impairment charge is included in goodwill and long-lived asset impairment in the accompanyingstatement of operations for the year ended December 31, 2016. In 2015, no material impairment charges were recognized.Environmental and Other LiabilitiesThe Partnership accrues for all direct costs associated with the estimated resolution of contingencies at the earliestdate at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonablyestimated. Costs accrued are estimated based upon an analysis of potential results, assuming a combination of litigation andsettlement strategies and outcomes.F-16 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Estimated losses from environmental remediation obligations generally are recognized no later than completion ofthe remedial feasibility study. Loss accruals are adjusted as further information becomes available or circumstances change.Costs of future expenditures for environmental remediation obligations are not discounted to their present value.Recoveries of environmental remediation costs from other parties are recognized when related contingencies areresolved, generally upon cash receipt.The Partnership is subject to other contingencies, including legal proceedings and claims arising out of itsbusinesses that cover a wide range of matters, including environmental matters and contract and employment claims.Environmental and other legal proceedings may also include matters with respect to businesses previously owned. Further,due to the lack of adequate information and the potential impact of present regulations and any future regulations, there arecertain circumstances in which no range of potential exposure may be reasonably estimated. See Notes 12 and 21.Asset Retirement ObligationsThe Partnership is required to account for the legal obligations associated with the long‑lived assets that result fromthe acquisition, construction, development or operation of long‑lived assets. Such asset retirement obligations specificallypertain to the treatment of underground gasoline storage tanks (“USTs”) that exist in those states which statutorily requireremoval of the USTs at a certain point in time. Specifically, the Partnership’s retirement obligations consist of the estimatedcosts of removal and disposals of USTs. The liability for an asset retirement obligation is recognized on a discounted basis inthe year in which it is incurred, and the discount period applied is based on statutory requirements for UST removal or policy.The associated asset retirement costs are capitalized as part of the carrying cost of the asset. The Partnership hadapproximately $8.0 million and $8.3 million in total asset retirement obligations at December 31, 2017 and 2016,respectively, which are included in other long‑term liabilities in the accompanying balance sheets.LeasesThe Partnership has terminal and throughput lease arrangements with various oil terminals and third parties, certainof which arrangements have minimum usage requirements. In addition, the Partnership leases certain gasoline stations fromthird parties under long‑term arrangements with various expiration dates. The Partnership also has several long‑term leaseagreements with Getty Realty, which enables the Partnership to supply and operate certain Getty Realty gasoline stationsites, and with the Port of St. Helens in Clatskanie, Oregon for land and for access rights to a rail spur and dock located at itsOregon facility.The Partnership has future commitments, principally for office space and computer equipment, under the terms ofoperating lease arrangements. The Partnership also leases railcars and barges through various lease arrangements with variousexpiration dates. The Partnership has rental income from gasoline stations and cobranding arrangements and lease incomefrom space leased to several unrelated third parties at several of its terminals. Additionally, the Partnership has capital leasesfor other computer equipment and leasehold improvements.In addition, in June of 2016, the Partnership sold real property assets, including the buildings, improvements andappurtenances thereto, at 30 gasoline stations and convenience stores. In connection with this sale-leaseback transaction, thePartnership is party to a master unitary lease agreement with the buyer to lease back those real property assets sold withrespect to such sites (see Note 6).Accounting and reporting guidance for leases requires that leases be evaluated and classified as operating or capitalleases for financial reporting purposes. The lease term used for lease evaluation includes option periods only in instances inwhich the exercise of the option period can be reasonably assured and failure to exercise such options wouldF-17 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)result in an economic penalty. Lease rental expense and income is recognized on a straight‑line basis over the term of thelease.Early Termination of Railcar SubleaseOn December 21, 2016 (effective December 31, 2016), the Partnership voluntarily terminated early a sublease with acounterparty for 1,610 railcars that were underutilized due to unfavorable market conditions in the crude oil by rail market.Separately, the Partnership entered into a fleet management services agreement (effective January 1, 2017) with thecounterparty, pursuant to which the Partnership will provide future railcar storage, freight, cleaning, insurance and otherservices on behalf of the counterparty. As a result of the sublease termination, the Partnership recognized a lease exit expenseof $80.7 million consisting of (i) $61.7 million cash consideration in settlement of the remaining lease payments,(ii) $10.7 million of accrued incremental costs relating to the Partnership’s obligations under the sublease to return andmanage the railcars through lease expiration, and (iii) $8.3 million associated with derecognizing prepaid rent accumulatedfrom the recognition of lease rental expense on a straight‑line basis over the original term of the lease. The $10.7 million ofaccrued incremental costs include future railcar storage, freight, cleaning, insurance and other services, and were recognizedat present value based on the estimated timing of when the costs would be incurred using a discount rate of 10%. Theseincremental costs will be incurred through August of 2019 in conjunction with the services to be performed by thePartnership under the fleet management services agreement entered into with the counterparty contemporaneously with thesublease termination.Total cash paid by the Partnership to the counterparty at the time of the lease termination was $76.4 million,consisting of $61.7 million to settle the future lease payments and $14.7 million to cover the incremental costs (includingstorage, freight, cleaning and insurance) associated with 1,250 of the railcars for which the Partnership was alwaysresponsible. The balance of 360 railcars subleased were originally intended for the counterparty’s own commercial use, andthe counterparty is, and has always been, responsible for those incremental costs. Pursuant to the fleet management serviceagreement, in January 2017, the counterparty paid the Partnership $19.1 million to cover the incremental costs associatedwith all 1,610 railcars that, as of December 31, 2016, were under control of the counterparty as a result of the subleasetermination.The $61.7 million cash settlement of the contractual commitment represented a $10.2 million savings of thePartnership’s lease rental obligations remaining over the lease term through August of 2019. The termination of the subleaseeliminated lease payments related to these railcars of approximately $30.0 million in 2017 and future lease payments ofapproximately $29.0 million and $13.0 million in 2018 and 2019, respectively.In connection with the sublease termination, the Partnership amended its prior credit agreement to permit the use ofborrowings to make the early termination payment.Revenue RecognitionSales relate primarily to the sale of refined petroleum products, renewable fuels, crude oil and propane and arerecognized along with the related receivable upon delivery, net of applicable provisions for discounts and allowances. ThePartnership may also provide for shipping costs at the time of sale, which are included in cost of sales. In addition, thePartnership generates revenue from its logistics activities when it engages in the storage, transloading and shipment ofproducts owned by others. Revenue for logistics services is recognized as services are provided.The Partnership has certain logistics agreements that require counterparties to throughput a minimum volume overan agreed-upon period. These agreements may include make-up rights if the minimum volume is not met. The Partnershiprecognizes revenue associated with make-up rights at the earlier of when the make-up volume is shipped, the make-up rightexpires or when it is determined that the likelihood that the shipper will utilize the make-up right is remote.F-18 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The Partnership also recognizes convenience store sales of gasoline, grocery and other merchandise andcommissions on lottery at the time of the sale to the customer. Gasoline station rental income is recognized on a straight‑linebasis over the term of the lease.Product revenue is not recognized on exchange agreements, which are entered into primarily to acquire variousrefined petroleum products, renewable fuels and crude oil of a desired quality or to reduce transportation costs by takingdelivery of products closer to the Partnership’s end markets. The Partnership recognizes net exchange differentials due fromexchange partners in sales upon delivery of product to an exchange partner. The Partnership recognizes net exchangedifferentials due to exchange partners in cost of sales upon receipt of product from an exchange partner.The amounts recorded for bad debts are generally based upon a specific analysis of aged accounts while alsofactoring in any new business conditions that might impact the historical analysis, such as market conditions andbankruptcies of particular customers. Bad debt provisions are included in selling, general and administrative expenses.Trustee TaxesThe Partnership collects trustee taxes, which consist of various pass through taxes collected on behalf of taxingauthorities, and remits such taxes directly to those taxing authorities. Examples of trustee taxes include, among other things,motor fuel excise tax and sales and use tax. As such, it is the Partnership’s policy to exclude trustee taxes from revenues andcost of sales and account for them as current liabilities. See Note 10 for additional information.The Partnership may be subject to audits of its state and federal tax returns prepared for trustee taxes. Historically,any tax adjustments from such audits have been deemed immaterial by the Partnership and have been included in cost ofsales. In November of 2017, the Partnership received an assessment from a state taxing authority in connection with its auditof the Partnership’s fuel and sales tax returns for the periods from December 2008 through August 2013 (the “Audit”). InFebruary of 2018, the Partnership agreed to administratively close the Audit, and, as a result, recognized a loss on trusteetaxes of $16.2 million during the fourth quarter of 2017, which is included in the accompanying consolidated statement ofoperations for the year ended December 31, 2017. The loss on trustee taxes consists of both tax and interest, with no penaltiesbeing assessed. Although the Audit has been administratively closed, the Partnership has the right to seek recovery of thepayment of the trustee tax. While the Partnership believes it has meritorious arguments and defenses to recover a majority ofthe tax and interest assessed, the Partnership cannot be certain of such outcome.Income TaxesSection 7704 of the Internal Revenue Code provides that publicly‑traded partnerships are, as a general rule, taxed ascorporations. However, an exception, referred to as the “Qualifying Income Exception,” exists under Section 7704(c) withrespect to publicly‑traded partnerships of which 90% or more of the gross income for every taxable year consists of“qualifying income.” Qualifying income includes income and gains derived from the transportation, storage and marketingof refined petroleum products, crude oil and ethanol to resellers and refiners. Other types of qualifying income includeinterest (other than from a financial business), dividends, gains from the sale of real property and gains from the sale or otherdisposition of capital assets held for the production of income that otherwise constitutes qualifying income.Substantially all of the Partnership’s income is “qualifying income” for federal income tax purposes and, therefore,is not subject to federal income taxes at the partnership level. Accordingly, no provision has been made for income taxes onthe qualifying income in the Partnership’s financial statements. Net income for financial statement purposes may differsignificantly from taxable income reportable to unitholders as a result of differences between the tax basis and financialreporting basis of assets and liabilities and the taxable income allocation requirements under the Partnership’s agreement oflimited partnership. Individual unitholders have different investment basis depending upon the timing and price at whichthey acquired their common units. Further, each unitholder’s tax accounting, which isF-19 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)partially dependent upon the unitholder’s tax position, differs from the accounting followed in the Partnership’sconsolidated financial statements. Accordingly, the aggregate difference in the basis of the Partnership’s net assets forfinancial and tax reporting purposes cannot be readily determined because information regarding each unitholder’s taxattributes in the Partnership is not available to the Partnership.One of the Partnership’s wholly owned subsidiaries, GMG, is a taxable entity for federal and state income taxpurposes. Current and deferred income taxes are recognized on the separate earnings of GMG. The after‑tax earnings of GMGare included in the earnings of the Partnership. Deferred income taxes reflect the net tax effects of temporary differencesbetween the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income taxpurposes for GMG. Deferred tax assets and liabilities are recognized for the future tax consequences attributable todifferences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years inwhich those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of achange in tax rates is recognized in income in the period that includes the enactment date. The Partnership calculates itscurrent and deferred tax provision based on estimates and assumptions that could differ from actual results reflected inincome tax returns filed in subsequent years. Adjustments based on filed returns are recorded when identified. See Note 11.On July 1, 2015 the Partnership commenced business in Canada through its wholly owned Canadian subsidiary,Global Partners Energy Canada, ULC (“GPEC”). GPEC predominantly consists of sourcing crude oil and other petroleumbased products for sale to the Partnership and customers in Canada. GPEC is a taxable entity for Canadian corporate incomeand branch taxes. In its first year of operations, GPEC realized a pre-tax loss generating a net operating loss that might beused to offset future taxable income when GPEC operates at a profit. The Partnership recognizes deferred tax assets to theextent that the recoverability of these assets satisfies the “more likely than not” recognition criteria in accordance with theaccounting guidance regarding income taxes. Based upon projections of future taxable income, limited capital assets andmarket conditions, the Partnership has provided a full valuation allowance against the GPEC deferred tax asset. See Note 11.Foreign Currency TransactionsGains/(losses) realized from transactions denominated in foreign currencies are included in cost of sales in theconsolidated statements of operations and totaled $0, ($251,000) and ($714,000) for the years ended December 31, 2017,2016 and 2015, respectively.Concentration of RiskFinancial instruments that potentially subject the Partnership to concentration of credit risk consist primarily ofcash, cash equivalents, accounts receivable, firm commitments and, under certain circumstances, futures contracts, forwardfixed price contracts, options and swap agreements, all of which may be used to hedge commodity and interest rate risks. ThePartnership invests excess cash in investment‑grade securities. The Partnership provides credit in the normal course of itsbusiness. The Partnership performs ongoing credit evaluations of its customers and provides for credit losses based onspecific information and historical trends. Credit risk on trade receivables is minimized as a result of the Partnership’s largecustomer base. Losses have historically been within management’s expectations. See Note 7 for a discussion regarding risk ofcredit loss related to futures contracts, forward fixed price contracts, options and swap agreements. The Partnership’swholesale and commercial customers of refined petroleum products, renewable fuels, crude oil and propane are primarilylocated in the Northeast. The Partnership’s retail gasoline stations and directly operated convenience stores are located in theNortheast, Maryland and Virginia.Due to the nature of the Partnership’s business and its reliance, in part, on consumer travel and spending patterns,the Partnership may experience more demand for gasoline during the late spring and summer months thanF-20 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)during the fall and winter. Travel and recreational activities are typically higher in these months in the geographic areas inwhich the Partnership operates, increasing the demand for gasoline. Therefore, the Partnership’s volumes in gasoline aretypically higher in the second and third quarters of the calendar year. As demand for some of the Partnership’s refinedpetroleum products, specifically home heating oil and residual oil for space heating purposes, is generally greater during thewinter months, heating oil and residual oil volumes are generally higher during the first and fourth quarters of the calendaryear. These factors may result in fluctuations in the Partnership’s quarterly operating results.The following table presents the Partnership’s product sales and other revenues as a percentage of the consolidatedsales for the years ended December 31: 2017 2016 2015 Gasoline sales: gasoline and gasoline blendstocks (such as ethanol) 65% 64% 59% Crude oil sales and crude oil logistics revenue 5% 7% 12% Distillates (home heating oil, diesel and kerosene), residual oil, naturalgas and propane sales 26% 24% 25% Convenience store sales, rental income and sundries 4% 5% 4% Total 100% 100% 100% Prior to the February 2017 sale of the Partnership’s natural gas marketing and electricity brokerage businesses, thePartnership sold natural gas to industrial and commercial customers.The following table presents the Partnership’s product margin by segment as a percentage of the consolidatedproduct margin for the years ended December 31: 2017 2016 2015 Wholesale segment 23% 23% 30% Gasoline Distribution and Station Operations segment 74% 73% 66% Commercial segment 3% 4% 4% Total 100% 100% 100% Prior to the February 2017 sale of the Partnership’s natural gas marketing and electricity brokerage businesses,product margin from natural gas was included in the Commercial segment. See Note 19, “Segment Reporting,” for additional information on the Partnership’s operating segments.The Partnership is dependent on a number of suppliers of fuel‑related products, both domestically andinternationally. The Partnership is dependent on the suppliers being able to source product on a timely basis and at favorablepricing terms. The loss of certain principal suppliers or a significant reduction in product availability from principal supplierscould have a material adverse effect on the Partnership, at least in the near term. The Partnership believes that itsrelationships with its suppliers are satisfactory and that the loss of any principal supplier could be replaced by new orexisting suppliers.Derivative Financial InstrumentsThe Partnership principally uses derivative instruments, which include regulated exchange-traded futures andoptions contracts (collectively, “exchange-traded derivatives”) and physical and financial forwards and over-the counter(“OTC”) swaps (collectively, “OTC derivatives”), to reduce its exposure to unfavorable changes in commodity market pricesand interest rates. The Partnership uses these exchange-traded and OTC derivatives to hedge commodity price risk associatedwith its inventory and undelivered forward commodity purchases and sales (“physical forward contracts”) and uses interestrate swap instruments to reduce its exposure to fluctuations in interest rates associated with theF-21 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Partnership’s credit facilities. The Partnership accounts for derivative transactions in accordance with ASC Topic 815,“Derivatives and Hedging,” and recognizes derivatives instruments as either assets or liabilities in the consolidated balancesheet and measures those instruments at fair value. The changes in fair value of the derivative transactions are presentedcurrently in earnings, unless specific hedge accounting criteria are met.The fair value of exchange-traded derivative transactions reflects amounts that would be received from or paid to thePartnership’s brokers upon liquidation of these contracts. The fair value of these exchange-traded derivative transactions arepresented on a net basis, offset by the cash balances on deposit with the Partnership’s brokers, presented as brokerage margindeposits in the consolidated balance sheets. The fair value of OTC derivative transactions reflects amounts that would bereceived from or paid to a third party upon liquidation of these contracts under current market conditions. The fair value ofthese OTC derivative transactions is presented on a gross basis as derivative assets or derivative liabilities in theconsolidated balance sheets, unless a legal right of offset exists. The presentation of the change in fair value of thePartnership’s exchange-traded derivatives and OTC derivative transactions depends on the intended use of the derivative andthe resulting designation.Derivatives Accounted for as Hedges – The Partnership utilizes fair value hedges and cash flow hedges to hedge commodityprice risk and interest rate risk.Fair Value HedgesDerivatives designated as fair value hedges are used to hedge price risk in commodity inventories and principallyinclude exchange-traded futures contracts that are entered into in the ordinary course of business. For a derivative instrumentdesignated as a fair value hedge, the gain or loss is recognized in earnings in the period of change together with the offsettingchange in fair value on the hedged item of the risk being hedged. Gains and losses related to fair value hedges are recognizedin the consolidated statement of operations through cost of sales. These futures contracts are settled on a daily basis by thePartnership through brokerage margin accounts.Cash Flow HedgesDerivatives designated as cash flow hedges are used to hedge interest rate risk from fluctuations in interest rates andmay include various interest rate derivative instruments entered into with major financial institutions. For a derivativeinstrument being designated as a cash flow hedge, the effective portion of the derivative gain or loss is initially reported as acomponent of other comprehensive income (loss) and subsequently reclassified into the consolidated statement of operationsthrough interest expense in the same period that the hedged exposure affects earnings. The ineffective portion is recognizedin the consolidated statement of operations immediately.Derivatives Not Accounted for as Hedges – The Partnership utilizes petroleum and ethanol commodity contracts, foreigncurrency derivatives and, prior to the sale of the Partnership’s natural gas marketing and electricity brokerage businesses,natural gas commodity contracts to hedge price and currency risk in certain commodity inventories and physical forwardcontracts.Petroleum and Ethanol Commodity ContractsThe Partnership uses exchange-traded derivative contracts to hedge price risk in certain commodity inventorieswhich do not qualify for fair value hedge accounting or are not designated by the Partnership as fair value hedges.Additionally, the Partnership uses exchange-traded derivative contracts, and occasionally financial forward and OTC swapagreements, to hedge commodity price exposure associated with its physical forward contracts which are not designated bythe Partnership as cash flow hedges. These physical forward contracts, to the extent they meet the definition of a derivative,are considered OTC physical forwards and are reflected as derivative assets or derivative liabilities in the consolidatedbalance sheet. The related exchange-traded derivative contracts (and financial forward andF-22 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)OTC swaps, if applicable) are also reflected as brokerage margin deposits (and derivative assets or derivative liabilities, ifapplicable) in the consolidated balance sheet, thereby creating an economic hedge. Changes in fair value of these derivativeinstruments are recognized in the consolidated statement of operations through cost of sales. These exchange-tradedderivatives are settled on a daily basis by the Partnership through brokerage margin accounts.While the Partnership seeks to maintain a position that is substantially balanced within its commodity productpurchase and sale activities, it may experience net unbalanced positions for short periods of time as a result of variances indaily purchases and sales and transportation and delivery schedules as well as other logistical issues inherent in the business,such as weather conditions. In connection with managing these positions, the Partnership is aided by maintaining a constantpresence in the marketplace. The Partnership also engages in a controlled trading program for up to an aggregate of 250,000barrels of commodity products at any one point in time. Changes in fair value of these derivative instruments are recognizedin the consolidated statement of operations through cost of sales.Natural Gas Commodity ContractsPrior to the sale of the Partnership’s natural gas marketing and electricity brokerage businesses in February 2017, thePartnership used physical forward purchase contracts to hedge price risk associated with the marketing and selling of naturalgas to third‑party users. These physical forward purchase commitments for natural gas were typically executed when thePartnership entered into physical forward sale commitments of product for physical delivery. These physical forwardcontracts, to the extent they met the definition of a derivative, were reflected as derivative assets and derivative liabilities inthe consolidated balance sheet. Changes in fair value of the forward purchase and sale commitments were recognized in theconsolidated statement of operations through cost of sales.Foreign Currency ContractsThe Partnership may use forward foreign currency contracts to hedge certain foreign denominated (Canadian)commodity product purchases. These forward foreign currency contracts are not designated by the Partnership as hedges andare reflected as prepaid expenses and other current assets or accrued expenses and other current liabilities in the consolidatedbalance sheets. Changes in fair values of these forward foreign currency contracts are reflected in cost of sales.Margin DepositsAll of the Partnership’s exchange-traded derivative contracts (designated and not designated) are transacted throughclearing brokers. The Partnership deposits initial margin with the clearing brokers, along with variation margin, which is paidor received on a daily basis, based upon the changes in fair value of open futures contracts and settlement of closed futurescontracts. Cash balances on deposit with clearing brokers and open equity are presented on a net basis within brokeragemargin deposits in the consolidated balance sheets.See Note 7, “Derivative Financial Instruments,” for additional information.Fair Value MeasurementsFair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date (exit price). The Partnership utilizes market data orassumptions that market participants would use in pricing the asset or liability, including assumptions about risk and therisks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated orgenerally unobservable. The Partnership primarily applies the market approach for recurring fair value measurements andendeavors to utilize the best available information. Accordingly, the Partnership utilizes valuation techniques that maximizethe use of observable inputs and minimize the use of unobservable inputs. The Partnership is able to classifyF-23 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)fair value balances based on the observability of those inputs. The fair value hierarchy that prioritizes the inputs used tomeasure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities(Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). At each balance sheetreporting date, the Partnership categorizes its financial assets and liabilities using the three levels of the fair value hierarchydefined as follows:Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume toprovide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as thePartnership’s exchange-traded derivative instruments and pension plan assets.Level 2—Quoted prices in active markets are not available; however, pricing inputs are either directly or indirectlyobservable as of the reporting date. Level 2 includes those financial instruments that are valued using models orother valuation methodologies. These models are primarily industry-standard models that consider variousassumptions, including quoted forward prices for commodities, time value, volatility factors, and current market andcontractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all ofthese assumptions are observable in the marketplace throughout the full term of the instrument, can be derived fromobservable data or are supported by observable levels at which transactions are executed in the marketplace. Level 2primarily consists of non-exchange-traded derivatives such as OTC derivatives.Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. Theseinputs may be used with internally developed methodologies that result in management’s best estimate of fair value.Level 3 includes certain OTC forward derivative instruments related to crude oil and propane.Please see Note 8, “Fair Value Measurements,” for additional information.Net Income (Loss) Income Per Limited Partner UnitUnder the Partnership’s partnership agreement, for any quarterly period, the incentive distribution rights (“IDRs”)participate in net income only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRsfrom participating in the Partnership’s undistributed net income or losses. Accordingly, the Partnership’s undistributed netincome or losses is assumed to be allocated to the common unitholders, or limited partners’ interest, and to the GeneralPartner’s general partner interest.Common units outstanding as reported in the accompanying consolidated financial statements at December 31,2017 and 2016 excluded 350,471 and 451,894 common units, respectively, held on behalf of the Partnership pursuant to itsrepurchase program (see Note 15). The decrease in common units outstanding from December 31, 2016 is primarily due to along-term incentive plan award that vested during the year ended December 31, 2017. These units are not deemedoutstanding for purposes of calculating net income per limited partner unit (basic and diluted).F-24 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The following table provides a reconciliation of net income (loss) and the assumed allocation of net income (loss) tothe limited partners’ interest for purposes of computing net income (loss) per limited partner unit (in thousands, except perunit data): Year Ended December 31, 2017 Limited General Partner Partner Numerator: Total Interest Interest IDRs Net income attributable to Global Partners LP $58,752 $58,358 $394 $ — Declared distribution $63,316 $62,892 $424 $ — Assumed allocation of undistributed net loss (4,564) (4,534) (30) — Assumed allocation of net income $58,752 $58,358 $394 $ — Denominator: Basic weighted average limited partner units outstanding 33,589 Dilutive effect of phantom units 45 Diluted weighted average limited partner units outstanding 33,634 Basic net income per limited partner unit $1.74 Diluted net income per limited partner unit $1.74 Year Ended December 31, 2016 Limited General Partner Partner Numerator: Total Interest Interest IDRsNet loss attributable to Global Partners LP $(199,412) $(198,076) $(1,336) $—Declared distribution $63,316 $62,892 $424 $ —Assumed allocation of undistributed net loss (262,728) (260,968) (1,760) —Assumed allocation of net loss $(199,412) $(198,076) $(1,336) $ —Denominator: Basic weighted average limited partner units outstanding 33,525 Dilutive effect of phantom units — Diluted weighted average limited partner units outstanding 33,525 Basic net loss per limited partner unit $(5.91) Diluted net loss per limited partner unit (1) $(5.91) F-25 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended December 31, 2015 Limited General Partner Partner Numerator: Total Interest Interest IDRsNet income attributable to Global Partners LP (2) $43,563 $35,896 $7,667 $—Declared distribution $92,059 $84,055 $582 $7,422Assumed allocation of undistributed net loss (48,496) (48,159) (337) —Assumed allocation of net income $43,563 $35,896 $245 $7,422Denominator: Basic weighted average limited partner units outstanding 32,178 Dilutive effect of phantom units 145 Diluted weighted average limited partner units outstanding 32,323 Basic net income per limited partner unit $1.12 Diluted net income per limited partner unit $1.11 (1)Basic units were used to calculate diluted net loss per limited partner unit for the year ended December 31, 2016, asusing the effects of phantom units would have an anti-dilutive effect on net loss per limited partner unit.(2)As a result of the June 2015 issuance of 3,000,000 common units (see Note 17), the general partner interest was reducedto 0.67% from 0.74% and was, based on a weighted average, approximately 0.70% for the year ended December 31,2015. The board of directors of the General Partner declared the following quarterly cash distributions for the four quartersended December 31, 2017: Per Unit Cash Distribution Declared for the Cash Distribution Declaration Date Distribution Declared Quarterly Period Ended April 28, 2017 $0.4625 March 31, 2017 July 28, 2017 $0.4625 June 30, 2017 October 27, 2017 $0.4625 September 30, 2017 January 29, 2018 $0.4625 December 31, 2017 See Note 16, “Partners’ Equity, Allocations and Cash Distributions” for further information.Accounting Standards or Updates Recently AdoptedIn January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04, “Intangibles-Goodwilland Other.” This standard eliminates step two from the goodwill impairment test, and instead requires an entity to recognize agoodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value.This standard is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019,and early adoption is permitted. This standard must be applied on a prospective basis. The Partnership adopted this standardon January 1, 2017. The adoption of this standard did not have a material impact on the Partnership’s consolidated financialstatements.In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation: Improvements to EmployeeShare-Based Payment Accounting” (“ASU 2016-09”) This standard simplifies several aspects of the accounting for share-based payment award transactions, including accounting for income taxes and classification of excess tax benefits on thestatement of cash flows, forfeitures and minimum statutory tax withholding requirements. This standard is effective forannual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption ispermitted for any interim or annual period. The Partnership adopted this standard onF-26 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)January 1, 2017. The adoption of this standard did not have a material impact on the Partnership’s consolidated financialstatements.In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging: Effect of Derivative Contract Novationson Existing Hedge Accounting Relationships.” This standard clarifies that a change in the counterparty to a derivativeinstrument that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedgingrelationship provided that all other hedge accounting criteria continue to be met. This standard is effective for fiscal yearsbeginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted, includingadoption in an interim period. The Partnership adopted this standard on January 1, 2017. The adoption of this standard didnot have a material impact on the Partnership’s consolidated financial statements.In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires an entityto measure inventory within the scope of the amendment at the lower of cost and net realizable value. Net realizable value isthe estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, andtransportation. This standard is effective for fiscal years beginning after December 15, 2016, including interim periods withinthose fiscal years. The Partnership adopted this standard on January 1, 2017. The adoption of this standard did not have amaterial impact on the Partnership’s consolidated financial statements.Accounting Standards or Updates Not Yet EffectiveIn August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accountingfor Hedging Activities.” This standard expands and refines hedge accounting for both financial and non-financial riskcomponents, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financialstatements, and includes certain targeted improvements to ease the application of current guidance related to the assessmentof hedge effectiveness. This standard is effective for annual periods beginning after December 15, 2018 and interim periodswithin those annual periods, and early adoption is permitted. The Partnership is assessing the impact this standard will haveon its consolidated financial statements.In May 2017, the FASB issued ASU 2017-09, “Compensation–Stock Compensation: Scope of ModificationAccounting.” This standard clarifies that modification accounting for share-based payment awards should not be applied ifthe fair value, vesting conditions, and the classification of the modified award as an equity instrument or as a liabilityinstrument are the same before and immediately after the modification. This standard is effective for annual periodsbeginning after December 15, 2017 and interim periods within those annual periods. Adoption will be applied prospectivelyto awards modified on or after the adoption date. The Partnership is assessing the impact this standard will have on itsconsolidated financial statements.In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business.”This standard clarifies the definition of a business with the objective of adding guidance to assist entities with evaluatingwhether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This standard is effectivefor annual periods beginning after December 15, 2017 and interim periods within those annual periods. The Partnership isassessing the impact this standard will have on its consolidated financial statements.In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receiptsand Cash Payments.” This standard reduces diversity in practice in how certain transactions are classified in the statement ofcash flows by addressing eight specific cash receipt and cash payment issues. This standard is effective for annual periodsbeginning after December 15, 2017 and interim periods within those annual periods, with early adoption permitted. ThePartnership is assessing the impact this standard will have on its consolidated financial statements.In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” Thisstandard requires that for most financial assets, losses be based on an expected loss approach which includes estimates ofF-27 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)losses over the life of exposure that considers historical, current and forecasted information. Expanded disclosures related tothe methods used to estimate the losses as well as a specific disaggregation of balances for financial assets are also required.This standard is effective for annual periods beginning after December 15, 2019 and interim periods within those annualperiods, with early adoption permitted for annual periods beginning after December 15, 2018. The Partnership is assessingthe impact this standard will have on its consolidated financial statements.In February 2016, the FASB issued ASU 2016-02, “Leases,” and has modified the standard thereafter. This standard,as amended, amends the existing accounting standards for lease accounting, including requiring lessees to recognize mostleases on their balance sheets and making targeted changes to lessor accounting. This standard is effective beginning in thefirst quarter of 2019. Early adoption of this standard is permitted. The standard requires a modified retrospective transitionapproach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transitionrelief. The Partnership is assessing the impact this standard will have on its consolidated financial statements.In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Recognition and Measurement ofFinancial Assets and Financial Liabilities.” This standard revises the classification and measurement of investments incertain equity investments and the presentation of certain fair value changes for certain financial liabilities measured at fairvalue. This standard also requires the change in fair value of many equity investments to be recognized in net income. Thisstandard is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Theadoption of this standard is not expected to have a material impact on the Partnership’s consolidated financial statements.In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) and hasmodified the standard thereafter. This standard, as amended, replaces existing revenue recognition rules with acomprehensive revenue measurement and recognition standard and expanded disclosure requirements. ASU 2014-09, asamended, becomes effective for annual reporting periods beginning after December 15, 2017, at which point the Partnershipplans to adopt the standard. The Partnership believes that the adoption of this standard will not have a material impact on therecognition of revenue on the Partnership’s consolidated financial statements. The Partnership continues to evaluate what theimpact this standard may have in the financial statement disclosures. To perform the evaluation, the Partnership established across-functional implementation team consisting of representatives from across all of the Partnership’s operating segments.Based on evaluation efforts performed, the Partnership concluded that a portion of its current and prospective revenue will beoutside the scope of the standard. Of the Partnership’s revenue recognized for the year ended December 31, 2017,approximately 40% originated as forward physical contracts (within the Wholesale and Commercial segments) which areaccounted for as derivatives and approximately 1% is rental income (within the GDSO segment) which is accounted for asleases and are both outside the scope of ASU 2014-09. The Partnership’s implementation team has substantially completedits review of customer contracts and believes that the adoption of this standard will not materially impact the timing ormeasurement of the Partnership’s revenue recognition. The Partnership expects to finalize its review and conclusions duringthe first quarter ending March 31, 2018, including the evaluation of any changes to internal controls and financial statementdisclosures.The FASB allows two adoption methods under ASU 2014-09. Under one method, an entity will apply the rules tocontracts in all reporting periods presented, subject to certain allowable exceptions. Under the other method, an entity willapply the rules to all contracts existing as of January 1, 2018, recognizing in beginning retained earnings an adjustment forthe cumulative effect of the change and providing additional disclosures comparing results to previous rules (“modifiedretrospective method”). The Partnership will adopt the modified retrospective method..F-28 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Note 3. Goodwill and Intangible AssetsThe following table presents changes in goodwill by segment (in thousands): Goodwill Allocated to Wholesale GDSO Reporting Reporting Unit Unit Total Balance at December 31, 2015 $121,752 $313,617 $435,369 Impairment (1) (121,752) — (121,752) Disposals (2) — (17,920) (17,920) Other activity (3) — (929) (929) Balance at December 31, 2016 — 294,768 $294,768 Acquisition of Honey Farms — 21,630 21,630 Disposals (2) — (3,997) (3,997) Balance at December 31, 2017 $ — $312,401 $312,401 (1)See Note 2 for a description of the facts and circumstances related to the impairment charges recognized in 2016.(2)Disposals represent derecognition of goodwill associated with the sale and disposition of certain assets (see Note 5).(3)Other activity represents changes to goodwill as a result of finalizing the acquisition accounting related to theacquisition of Warren Equities, Inc. (see Note 18).Intangible assets consisted of the following (in thousands): Gross Net Carrying Accumulated Intangible Amortization Amount Amortization Assets Period At December 31, 2017 Intangible assets subject to amortization: Terminalling services $26,365 $(13,758) $12,607 20 years Customer relationships 43,986 (40,760) 3,226 2-15 years Supply contracts 77,771 (38,800) 38,971 5-15 years Favorable leasehold interests 3,380 (2,717) 663 2-5 years Brand incentive program 1,445 (1,421) 24 5 years Other intangible assets 1,729 (675) 1,054 1-20 years Total intangible assets $154,676 $(98,131) $56,545 At December 31, 2016 Intangible assets subject to amortization: Terminalling services $26,365 $(12,423) $13,942 20 years Customer relationships 43,986 (40,323) 3,663 2-15 years Supply contracts 77,771 (31,674) 46,097 5-15 years Favorable leasehold interests 2,960 (2,086) 874 2-5 years Brand incentive program 1,445 (1,276) 169 5 years Other intangible assets 779 (511) 268 20 years Total intangible assets $153,306 $(88,293) $65,013 The aggregate amortization expense was approximately $9.2 million, $9.4 million and $13.5 million for the yearsended December 31, 2017, 2016 and 2015, respectively. In addition, in connection with the 2015 acquisitions of Warren andCapitol, the Partnership recognized amortization expense related to leasehold interests of $0.6 million,F-29 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)$1.3 million and $0.8 million in 2017, 2016 and 2015, respectively. The decrease in amortization expense in 2017 comparedto 2016 was due to intangible assets that became fully amortized during 2017.The estimated annual intangible asset amortization expense for future years ending December 31 is as follows (inthousands):2018 $9,912 2019 9,254 2020 8,997 2021 8,809 2022 5,831 Thereafter 13,742 Total intangible assets $56,545 Note 4. Property and EquipmentProperty and equipment consisted of the following at December 31 (in thousands): 2017 2016 Buildings and improvements $1,015,386 $984,373 Land 409,146 418,025 Fixtures and equipment 42,959 40,354 Idle plant assets 30,500 30,500 Construction in process 22,403 42,069 Capitalized internal use software 30,626 20,097 Total property and equipment 1,551,020 1,535,418 Less accumulated depreciation 514,353 435,519 Total $1,036,667 $1,099,899 Property and equipment includes assets held for sale of $12.4 million and $17.5 million at December 31, 2017 and2016, respectively (see Note 5).At December 31, 2017, the Partnership had a $57.2 million remaining net book value of long-lived assets at its WestCoast facility, including $30.5 million related to the Partnership’s ethanol plant acquired in 2013. In 2016, the Partnershipshifted the facility from crude oil to ethanol transloading and began transloading ethanol. The Partnership would need totake certain measures to prepare the facility for ethanol production in order to place the plant into service. Therefore, the$30.5 million related to the ethanol plant was included in property and equipment and classified as idle plant assets atDecember 31, 2017 and 2016.If the Partnership is unable to generate cash flows to support the recoverability of the plant and facility assets, thismay become an indicator of potential impairment of the West Coast facility. Associated with the fair value appraisalsdetermined by third-party valuation specialists in support of the Partnership’s 2016 step two goodwill impairment test, thePartnership received an estimated fair value for the West Coast facility significantly in excess of the $57.2 million remainingnet book value. The estimated fair value obtained was based on market comparable transactions for sale of ethanol plantassets, both active and idle, at the time of sale. While the fair value analysis was not prepared or obtained to support therecoverability of the West Coast facility or idle plant assets, the Partnership does not believe that changes in assumptionswould impact the estimated fair value such that it might result in a fair value estimate of the West Coast facility that would beless than the $57.2 million net book value at December 31, 2017. The Partnership willF-30 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)continue to monitor the market for ethanol, the continued business development of this facility for either ethanol or crude oiltransloading, and the related impact this may have on the facility’s operating cash flows and whether this would constitute animpairment indicator.Construction in process in 2017 included $11.7 million in costs associated with the Partnership’s terminals and$10.7 million in costs related to the Partnership’s gasoline stations.Construction in process in 2016 included $20.0 million in costs associated with the Partnership’s terminals, whichprimarily included investments in information technology and tank construction projects and $22.1 million in costs relatedto the Partnership’s gasoline stations.DepreciationDepreciation expense allocated to cost of sales was approximately $88.5 million, $95.6 million and $94.8 millionfor the years ended December 31, 2017, 2016 and 2015, respectively. The decrease in 2017 compared to 2016 and 2015 wasprimarily due to the 2016 impairment of long-lived assets used at the Partnership’s crude oil transloading terminals in NorthDakota.Depreciation expense allocated to selling, general and administrative expenses was approximately $7.9 million,$7.0 million and $7.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.Note 5. Sale and Disposition of AssetsThe following table provides the Partnership’s (gain) loss on sale and dispositions of assets for the years endedDecember 31 (in thousands): 2017 2016 2015 Sale of natural gas brokerage and electricity businesses $(14,172) $ — $ — Periodic divestiture of gasoline stations 818 396 1,095 Strategic asset divestiture program - Mirabito disposition — 3,868 — Strategic asset divestiture program - Real estate firm coordinated sale 1,603 1,115 — Loss on assets held for sale 9,988 14,952 234 Other 139 164 768 Total $(1,624) $20,495 $2,097 Sale of Natural Gas and Electricity Brokerage BusinessesOn February 1, 2017, the Partnership completed the sale of its natural gas marketing and electricity brokeragebusinesses for a purchase price of approximately $17.3 million, subject to customary closing adjustments. Proceeds from thesale amounted to approximately $16.3 million, and the Partnership realized a gain on the sale of $14.2 million for the yearended December 31, 2017. See Note 1.Periodic Divestiture of Gasoline StationsAs part of the routine course of operations in the GDSO segment, the Partnership may periodically divest certaingasoline stations. The gain or loss on the sale, representing cash proceeds less net book value of assets and recognizedliabilities at disposition, net of settlement and dispositions costs, is recorded in net (gain) loss on sale and disposition ofassets in the accompanying consolidated statements of operations and amounted to losses of $0.8 million, $0.4 million and$1.1 million for the years ended December 31, 2017, 2016 and 2015, respectively.F-31 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Strategic Asset Divestiture ProgramThe Partnership identified certain non-strategic GDSO sites that are part of its Strategic Asset Divestiture Program(the “Divestiture Program”). Mirabito Disposition—On August 22, 2016, Drake Petroleum Company, Inc., an indirect wholly owned subsidiaryof the Partnership, completed its sale to Mirabito Holdings, Inc. (“Mirabito”) of 30 gasoline stations and convenience storeslocated in New York and Pennsylvania (the “Drake Sites”) for an aggregate total cash purchase price of approximately$40.0 million (the “Mirabito Disposition”). The Drake Sites were a portion of the sites that were acquired by the Partnershipin connection with the acquisition of Warren on January 7, 2015 (see Note 18). The gain or loss on the sale, representing cash proceeds less net book value of assets and recognized liabilities atdisposition, net of settlement and disposition costs, is recorded in net (gain) loss on sale and disposition of assets in theaccompanying consolidated statements of operations and amounted to a $3.9 million loss for the year ended December 31,2016, including the derecognition of $12.8 million of GDSO goodwill.Real Estate Firm Coordinated Sale—The Partnership has retained a real estate firm to coordinate the continuingsale of non-strategic GDSO sites. As of December 31, 2017 and since the Divesture Program was implemented, the Partnershiphas completed the sale of 66 of these sites, of which 37 sites were sold during the year ended December 31, 2017. The gain orloss on the sale, representing cash proceeds less net book value of assets and recognized liabilities at disposition, net ofsettlement and dispositions costs, is recorded in net (gain) loss on sale and disposition of assets in the accompanyingconsolidated statements of operations and amounted to losses of $1.6 million and $1.1 million for the years endedDecember 31, 2017 and 2016, respectively, including the derecognition of $4.0 million and $5.1 million of GDSO goodwillfor the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, the criteria to be presented as heldfor sale was met for 18 of the remaining sites.Loss on Assets Held for SaleIn conjunction with the periodic divestiture of gasoline stations and the sale of sites within the Divestiture Program,the Partnership may classify certain gasoline station assets as held for sale.The Partnership classified 8 sites and 17 sites as held for sale at December 31, 2017 and 2016, respectively, whichare periodic divestiture gasoline station sites. The Partnership recorded impairment charges related to these assets held forsale in the amount of $0.9 million, $5.6 million and $0.2 million for the years ended December 31, 2017, 2016 and 2015,respectively, which are included in net (gain) loss on sale and disposition of assets in the accompanying consolidatedstatements of operations. Additionally, the Partnership classified 18 sites associated with the real estate firm coordinated sale discussed aboveas held for sale at December 31, 2017. The Partnership recorded impairment charges related to these assets held for sale in theamount of $9.1 million for the year ended December 31, 2017, which are included in net (gain) loss on sale and dispositionof assets in the accompanying consolidated statements of operations. The Partnership recorded impairment charges related toassets held for sale at December 31, 2016 of $9.4 million for the year ended December 31, 2016.Assets held for sale of $12.4 million and $17.5 million at December 31, 2017 and 2016, respectively, are included inproperty and equipment in the accompanying balance sheets. Assets held for sale are expected to be sold within the next 12months.F-32 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)OtherThe Partnership recognizes gains and losses on the sale and disposition of other assets, including vehicles, fixturesand equipment, and the gain or loss on such other assets are included in other in the aforementioned table.Note 6. Debt and Financing ObligationsCredit AgreementCertain subsidiaries of the Partnership, as borrowers, and the Partnership and certain of its subsidiaries, as guarantors,have a $1.3 billion senior secured credit facility (the “Credit Agreement”). The Credit Agreement will mature on April 30,2020.There are two facilities under the Credit Agreement:·a working capital revolving credit facility to be used for working capital purposes and letters of credit in theprincipal amount equal to the lesser of the Partnership’s borrowing base and $850.0 million; and·a $450.0 million revolving credit facility to be used for acquisitions, joint ventures, capital expenditures, lettersof credit and general corporate purposes.In addition, the Credit Agreement has an accordion feature whereby the Partnership may request on the same termsand conditions then applicable to the Credit Agreement, provided no Event of Default (as defined in the Credit Agreement)then exists, an increase to the working capital revolving credit facility, the revolving credit facility, or both, by up to another$300.0 million, in the aggregate, for a total credit facility of up to $1.6 billion. Any such request for an increase must be in aminimum amount of $25.0 million. The Partnership cannot provide assurance, however, that its lending group will agree tofund any request by the Partnership for additional amounts in excess of the total available commitments of $1.3 billion.In addition, the Credit Agreement includes a swing line pursuant to which Bank of America, N.A., as the swing linelender, may make swing line loans in U.S. dollars in an aggregate amount equal to the lesser of (a) $75.0 million and (b) theAggregate WC Commitments (as defined in the Credit Agreement). Swing line loans will bear interest at the Base Rate (asdefined in the Credit Agreement). The swing line is a sub-portion of the working capital revolving credit facility and is notan addition to the total available commitments of $1.3 billion.Pursuant to the Credit Agreement, and in connection with any agreement by and between a Loan Party and a Lender(as such terms are defined in the Credit Agreement) or affiliate thereof (an “AR Buyer”), a Loan Party may sell certain of itsaccounts receivables to an AR Buyer. The Loan Parties are permitted to sell or transfer any account receivable to an ARBuyer only pursuant to the provisions provided in the Credit Agreement. To date, the level of receivables sold has not beensignificant, and the Partnership has accounted for such transfers as sales pursuant to ASC 860, “Transfers and Servicing.” Dueto the short term nature of the receivables sold to date, no servicing obligation has been recorded because it would have beende minimis.Borrowings under the Credit Agreement are available in U.S. dollars and Canadian dollars. The aggregate amount ofloans made under the Credit Agreement denominated in Canadian dollars cannot exceed $200.0 million.Availability under the working capital revolving credit facility is subject to a borrowing base which is redeterminedfrom time to time and based on specific advance rates on eligible current assets. Under the Credit Agreement, borrowingsunder the working capital revolving credit facility cannot exceed the then current borrowing base. Availability under theborrowing base may be affected by events beyond the Partnership’s control, such as changesF-33 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)in petroleum product prices, collection cycles, counterparty performance, advance rates and limits and general economicconditions. These and other events could require the Partnership to seek waivers or amendments of covenants or alternativesources of financing or to reduce expenditures. The Partnership can provide no assurance that such waivers, amendments oralternative financing could be obtained or, if obtained, would be on terms acceptable to the Partnership.Borrowings under the working capital revolving credit facility bear interest at (1) the Eurocurrency rate plus 2.00%to 2.50%, (2) the cost of funds rate plus 2.00% to 2.50%, or (3) the base rate plus 1.00% to 1.50%, each depending on theUtilization Amount (as defined in the Credit Agreement). Borrowings under the revolving credit facility bear interest at(1) the Eurocurrency rate plus 2.00% to 3.00%, (2) the cost of funds rate plus 2.00% to 3.00%, or (3) the base rate plus 1.00%to 2.00%, each depending on the Combined Total Leverage Ratio (as defined in the Credit Agreement). The average interest rates for the Credit Agreement were 3.7%, 3.5% and 3.6% for the years ended December 31,2017, 2016 and 2015, respectively. The increase for 2017 compared to 2016 is due to increases in market interest rates. Thedecline in the average interest rates in 2016 compared to 2015 is due to the May 2016 expiration of an interest rate swap. As of December 31, 2017, the Partnership had one interest rate swap which was used to hedge the variability ininterest payments under the Credit Agreement due to changes in LIBOR rates. See Note 2 and Note 7 for additionalinformation.The Credit Agreement provides for a letter of credit fee equal to the then applicable working capital rate or thenapplicable revolver rate (each such rate as defined in the Credit Agreement) per annum for each letter of credit issued. Inaddition, the Partnership incurs a commitment fee on the unused portion of each facility under the Credit Agreement, rangingfrom 0.35% to 0.50% per annum.The Partnership classifies a portion of its working capital revolving credit facility as a current liability and a portionas a long-term liability. The portion classified as a long-term liability represents the amounts expected to be outstandingduring the entire year based on an analysis of historical daily borrowings under the working capital revolving credit facility,the seasonality of borrowings, forecasted future working capital requirements and forward product curves, and because thePartnership has a multi-year, long-term commitment from its bank group. Accordingly, at December 31, 2017, the Partnershipestimated working capital revolving credit facility borrowings will equal or exceed $100.0 million over the next twelvemonths and, therefore, classified $126.7 million as the current portion at December 31, 2017, representing the amount thePartnership expects to pay down over the next twelve months. The long-term portion of the working capital revolving creditfacility was $100.0 million and $150.0 million at December 31, 2017 and 2016, respectively, and the current portion was$126.7 million and $274.6 million at December 31, 2017 and 2016, respectively. The decrease in total borrowings under theworking capital revolving credit facility of $197.9 million from December 31, 2016 was due in part to reduced inventoryvolume due to a change in market structure. As of December 31, 2017, the Partnership had total borrowings outstanding under the Credit Agreement of$422.7 million, including $196.0 million outstanding on the revolving credit facility. In addition, the Partnership hadoutstanding letters of credit of $67.0 million. Subject to borrowing base limitations, the total remaining availability forborrowings and letters of credit was $810.3 million and $764.8 million at December 31, 2017 and 2016, respectively.The Credit Agreement is secured by substantially all of the assets of the Partnership and the Partnership’s wholly-owned subsidiaries and is guaranteed by the Partnership and its subsidiaries, Bursaw Oil LLC, Global Partners EnergyCanada ULC, Warex Terminals Corporation, Drake Petroleum Company, Inc., Puritan Oil Company, Inc. and Maryland OilCompany, Inc.F-34 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The Credit Agreement imposes certain requirements on the borrowers including, for example, a prohibition againstdistributions if any potential default or Event of Default (as defined in the Credit Agreement) would occur as a result thereof,and certain limitations on the Partnership’s ability to grant liens, make certain loans or investments, incur additionalindebtedness or guarantee other indebtedness, make any material change to the nature of the Partnership’s business orundergo a fundamental change, make any material dispositions, acquire another company, enter into a merger, consolidation,sale-leaseback transaction or purchase of assets, or make capital expenditures in excess of specified levels.The Credit Agreement also includes certain baskets that were not included in the prior credit agreement, including:(i) a $25.0 million general secured indebtedness basket, (ii) a $25.0 million general investment basket, (iii) a $75.0 millionsecured indebtedness basket to permit the borrowers to enter into a Contango Facility (as defined in the Credit Agreement),(iv) a Sale/Leaseback Transaction (as defined in the Credit Agreement) basket of $100.0 million, and (v) a basket of$50.0 million in an aggregate amount over the life of the Credit Agreement for the purchase of common units of thePartnership, provided that no Event of Default exists or would occur immediately following such purchase(s).In addition, the Credit Agreement provides the ability for the borrowers to repay certain junior indebtedness, subjectto a $100.0 million cap, so long as no Event of Default has occurred or will exist immediately after making such repayment.The Credit Agreement imposes financial covenants that require the Partnership to maintain certain minimumworking capital amounts, a minimum combined interest coverage ratio, a maximum senior secured leverage ratio and amaximum total leverage ratio. The Partnership was in compliance with the foregoing covenants at December 31, 2017. TheCredit Agreement also contains a representation whereby there can be no event or circumstance, either individually or in theaggregate, that has had or could reasonably be expected to have a Material Adverse Effect (as defined in the CreditAgreement). In addition, the Credit Agreement limits distributions by the Partnership to its unitholders to the amount ofAvailable Cash (as defined in the Partnership’s partnership agreement).6.25% Senior NotesOn June 19, 2014, the Partnership and GLP Finance Corp. (“GLP Finance” and, together with the Partnership, the“Issuers”) entered into a Purchase Agreement (the “Purchase Agreement”) with the Initial Purchasers (as defined therein) (the“Initial Purchasers”) pursuant to which the Issuers agreed to sell $375.0 million aggregate principal amount of the Issuers’6.25% senior notes due 2022 (the “6.25% Notes”) to the Initial Purchasers in a private placement exempt from theregistration requirements under the Securities Act of 1933, as amended (the “Securities Act”). The 6.25% Notes were resoldby the Initial Purchasers to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to personsoutside the United States pursuant to Regulation S under the Securities Act.The Purchase Agreement contained customary representations and warranties of the parties and indemnification andcontribution provisions under which the Issuers and the subsidiary guarantors, on one hand, and the Initial Purchasers, on theother, agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. In addition, thePurchase Agreement required the execution of a registration rights agreement, described below, relating to the 6.25% Notes.Closing of the offering occurred on June 24, 2014.IndentureIn connection with the private placement of the 6.25% Notes on June 24, 2014, the Issuers and the subsidiaryguarantors and Deutsche Bank Trust Company Americas, as trustee, entered into an indenture (the “Indenture”).F-35 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The 6.25% Notes mature on July 15, 2022 with interest accruing at a rate of 6.25% per annum and payable semi-annually in arrears on January 15 and July 15 of each year, commencing January 15, 2015. The 6.25% Notes are guaranteedon a joint and several senior unsecured basis by each of the Issuers and the subsidiary guarantors to the extent set forth in theIndenture. Upon a continuing event of default, the trustee or the holders of at least 25% in principal amount of the 6.25%Notes may declare the 6.25% Notes immediately due and payable, except that an event of default resulting from entry into abankruptcy, insolvency or reorganization with respect to the Partnership, any restricted subsidiary of the Partnership that is asignificant subsidiary or any group of its restricted subsidiaries that, taken together, would constitute a significant subsidiaryof the Partnership, will automatically cause the 6.25% Notes to become due and payable.The Issuers have the option to redeem up to 35% of the 6.25% Notes prior to July 15, 2017 at a redemption price(expressed as a percentage of principal amount) of 106.25% plus accrued and unpaid interest, if any. The Issuers have theoption to redeem the 6.25% Notes, in whole or in part, at any time on or after July 15, 2017, at the redemption prices of104.688% for the twelve-month period beginning on July 15, 2017, 103.125% for the twelve-month period beginningJuly 15, 2018, 101.563% for the twelve-month period beginning July 15, 2019, and 100.0% beginning on July 15, 2020 andat any time thereafter, together with any accrued and unpaid interest to the date of redemption. In addition, before July 15,2017, the Issuers may redeem all or any part of the 6.25% Notes at a redemption price equal to the sum of the principalamount thereof, plus a make whole premium at the redemption date, plus accrued and unpaid interest, if any, to theredemption date. The holders of the notes may require the Issuers to repurchase the 6.25% Notes following certain asset salesor a Change of Control (as defined in the Indenture) at the prices and on the terms specified in the Indenture.The Indenture contains covenants that will limit the Partnership’s ability to, among other things, incur additionalindebtedness and issue preferred securities, make certain dividends and distributions, make certain investments and otherrestricted payments, restrict distributions by its subsidiaries, create liens, enter into sale-leaseback transactions, sell assets ormerge with other entities. Events of default under the Indenture include (i) a default in payment of principal of, or interest orpremium, if any, on, the 6.25% Notes, (ii) breach of the Partnership’s covenants under the Indenture, (iii) certain events ofbankruptcy and insolvency, (iv) any payment default or acceleration of indebtedness of the Partnership or certainsubsidiaries if the total amount of such indebtedness unpaid or accelerated exceeds $15.0 million and (v) failure to paywithin 60 days uninsured final judgments exceeding $15.0 million.Registration Rights AgreementOn June 24, 2014, the Issuers and the subsidiary guarantors entered into a registration rights agreement (the“Registration Rights Agreement”) with the Initial Purchasers in connection with the Issuers’ private placement of the 6.25%Notes. Under the Registration Rights Agreement, the Issuers and the subsidiary guarantors agreed to file and usecommercially reasonable efforts to cause to become effective a registration statement relating to an offer to exchange the6.25% Notes for an issue of SEC-registered notes with terms identical to the 6.25% Notes (except that the exchange notes arenot subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with the RegistrationRights Agreement) that are registered under the Securities Act so as to permit the exchange offer to be consummated by the360th day after June 24, 2014. The exchange offer was completed on April 21, 2015, and 100% of the 6.25% Notes wereexchanged for SEC-registered notes.F-36 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)7.00% Senior NotesOn June 1, 2015, the Issuers entered into a Purchase Agreement (the “7.00% Notes Purchase Agreement”) with theInitial Purchasers (as defined therein) (the “7.00% Notes Initial Purchasers”) pursuant to which the Issuers agreed to sell$300.0 million aggregate principal amount of the Issuers’ 7.00% senior notes due 2023 (the “7.00% Notes”) to the 7.00%Notes Initial Purchasers in a private placement exempt from the registration requirements under the Securities Act. The 7.00%Notes were resold by the 7.00% Notes Initial Purchasers to qualified institutional buyers pursuant to Rule 144A under theSecurities Act and to persons outside the United States pursuant to Regulation S under the Securities Act.The 7.00% Notes Purchase Agreement contained customary representations and warranties of the parties andindemnification and contribution provisions under which the Issuers and the subsidiary guarantors, on one hand, and the7.00% Notes Initial Purchasers, on the other, agreed to indemnify each other against certain liabilities, including liabilitiesunder the Securities Act. In addition, the 7.00% Notes Purchase Agreement required the execution of a registration rightsagreement, described below, relating to the 7.00% Notes. Closing of the offering occurred on June 4, 2015.IndentureIn connection with the private placement of the 7.00% Notes on June 4, 2015 the Issuers and the subsidiaryguarantors and Deutsche Bank Trust Company Americas, as trustee, entered into an indenture (the “7.00% Notes Indenture”).The 7.00% Notes will mature on June 15, 2023 with interest accruing at a rate of 7.00% per annum and payablesemi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2015. The 7.00% Notes areguaranteed on a joint and several senior unsecured basis by each of the Issuers and the subsidiary guarantors to the extent setforth in the 7.00% Notes Indenture. Upon a continuing event of default, the trustee or the holders of at least 25% in principalamount of the 7.00% Notes may declare the 7.00% Notes immediately due and payable, except that an event of defaultresulting from entry into a bankruptcy, insolvency or reorganization with respect to the Partnership, any restricted subsidiaryof the Partnership that is a significant subsidiary or any group of its restricted subsidiaries that, taken together, wouldconstitute a significant subsidiary of the Partnership, will automatically cause the 7.00% Notes to become due and payable.The Issuers will have the option to redeem up to 35% of the 7.00% Notes prior to June 15, 2018 at a redemptionprice (expressed as a percentage of principal amount) of 107.00% plus accrued and unpaid interest, if any. The Issuers havethe option to redeem the 7.00% Notes, in whole or in part, at any time on or after June 15, 2018, at the redemption prices of105.250% for the twelve-month period beginning June 15, 2018, 103.500% for the twelve-month period beginning June 15,2019, 101.750% for the twelve-month period beginning June 15, 2020, and 100.0% beginning June 15, 2021 and at anytime thereafter, together with any accrued and unpaid interest to the date of redemption. In addition, before June 15, 2018,the Issuers may redeem all or any part of the 7.00% Notes at a redemption price equal to the sum of the principal amountthereof, plus a make whole premium, plus accrued and unpaid interest, if any, to the redemption date. The holders of the7.00% Notes may require the Issuers to repurchase the 7.00% Notes following certain asset sales or a Change of Control (asdefined in the 7.00% Notes Indenture) at the prices and on the terms specified in the 7.00% Notes Indenture.The 7.00% Notes Indenture contains covenants that will limit the Partnership’s ability to, among other things, incuradditional indebtedness and issue preferred securities, make certain dividends and distributions, make certain investmentsand other restricted payments, restrict distributions by its subsidiaries, create liens, enter into sale-leaseback transactions, sellassets or merge with other entities. Events of default under the 7.00% Notes Indenture include (i) a default in payment ofprincipal of, or interest or premium, if any, on, the 7.00% Notes, (ii) breach of the Partnership’sF-37 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)covenants under the 7.00% Notes Indenture, (iii) certain events of bankruptcy and insolvency, (iv) any payment default oracceleration of indebtedness of the Partnership or certain subsidiaries if the total amount of such indebtedness unpaid oraccelerated exceeds $50.0 million and (v) failure to pay within 60 days uninsured final judgments exceeding $50.0 million.Registration Rights AgreementOn June 4, 2015, the Issuers and the subsidiary guarantors entered into a registration rights agreement (the “7.00%Notes Registration Rights Agreement”) with the 7.00% Notes Initial Purchasers in connection with the Issuers’ privateplacement of the 7.00% Notes. Under the 7.00% Notes Registration Rights Agreement, the Issuers and the subsidiaryguarantors agreed to file and use commercially reasonable efforts to cause to become effective a registration statementrelating to an offer to exchange the 7.00% Notes for an issue of SEC-registered notes with terms identical to the 7.00% Notes(except that the exchange notes are not subject to restrictions on transfer or to any increase in annual interest rate for failureto comply with the 7.00% Notes Registration Rights Agreement) that are registered under the Securities Act so as to permitthe exchange offer to be consummated by the 420th day after June 4, 2015. The exchange offer was completed on October 22,2015, and 100% of the 7.00% Notes were exchanged for SEC-registered notes. Financing ObligationsCapitol AcquisitionIn connection with the Capitol acquisition on June 1, 2015, the Partnership assumed a financing obligation of$89.6 million associated with two sale-leaseback transactions by Capitol for 53 leased sites that did not meet the criteria forsale accounting. During the terms of these leases, which expire in May 2028 and September 2029, in lieu of recognizinglease expense for the lease rental payments, the Partnership incurs interest expense associated with the financing obligation.Interest expense of approximately $9.6 million, $9.6 million and $5.6 million was recorded for the years ended December 31,2017, 2016 and 2015, respectively, and is included in interest expense in the accompanying statements of operations. Thefinancing obligation will amortize through expiration of the leases based upon the lease rental payments which were$9.7 million, $9.5 million, and $5.4 million for the years ended December 31, 2017, 2016 and 2015, respectively. Thefinancing obligation balance outstanding at December 31, 2017 was $87.8 million associated with the Capitol acquisition.Sale-Leaseback Transaction On June 29, 2016, the Partnership sold to a premier institutional real estate investor (the “Buyer”) real propertyassets, including the buildings, improvements and appurtenances thereto, at 30 gasoline stations and convenience storeslocated in Connecticut, Maine, Massachusetts, New Hampshire and Rhode Island (the “Sale-Leaseback Sites”) for a purchaseprice of approximately $63.5 million. In connection with the sale, the Partnership entered into a Master Unitary LeaseAgreement with the Buyer to lease back the real property assets sold with respect to the Sale-Leaseback Sites (such MasterLease Agreement, together with the Sale-Leaseback Sites, the “Sale-Leaseback Transaction”). The Master Unitary LeaseAgreement provides for an initial term of fifteen years that expires in 2031. The Partnership has one successive option torenew the lease for a ten-year period followed by two successive options to renew the lease for five-year periods on the sameterms, covenants, conditions and rental as the primary non-revocable lease term. The Partnership does not have any residualinterest nor the option to repurchase any of the sites at the end of the lease term. The proceeds from the Sale-LeasebackTransaction were used to reduce indebtedness outstanding under the Partnership’s revolving credit facility.The sale did not meet the criteria for sale accounting as of December 31, 2017 due to prohibited continuinginvolvement. Specifically, the sale is considered a partial-sale transaction, which is a form of continuing involvement as thePartnership did not transfer to the Buyer the storage tank systems which are considered integral equipment of the Sale-Leaseback Sites. Additionally, a portion of the sold sites have material sub-lease arrangements, which is also a formF-38 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)of continuing involvement. As the sale of the Sale-Leaseback Sites did not meet the criteria for sale accounting, thePartnership did not recognize a gain or loss on the sale of the Sale-Leaseback Sites for the year ended December 31, 2017.As a result of not meeting the criteria for sale accounting for these sites, the Sale-Leaseback Transaction isaccounted for as a financing arrangement. As such, the property and equipment sold and leased back by the Partnership hasnot been derecognized and continues to be depreciated. The Partnership recognized a corresponding financing obligation of$62.5 million equal to the $63.5 million cash proceeds received for the sale of these sites, net of $1.0 million financing fees.During the term of the lease, which expires in June 2031, in lieu of recognizing lease expense for the lease rental payments,the Partnership incurs interest expense associated with the financing obligation. Lease rental payments are recognized asboth interest expense and a reduction of the principal balance associated with the financing obligation. Interest expense was$4.4 million and $2.2 million for the years ended December 31, 2017 and 2016, respectively, and lease rental payments were$4.5 million and $2.2 million for the years ended December 31, 2017 and 2016, respectively. The financing obligationbalance outstanding at December 31, 2017 was $62.5 million associated with the Sale-Leaseback Transaction.Deferred Financing FeesThe Partnership incurs bank fees related to its Credit Agreement and other financing arrangements. These deferredfinancing fees are capitalized and amortized over the life of the Credit Agreement or other financing arrangements. Inconnection with the amendment to the Credit Agreement in April 2017, the Partnership capitalized additional financing feesof $8.0 million for the year ended December 31, 2017. The Partnership had unamortized deferred financing fees of$15.9 million and $14.1 million at December 31, 2017 and 2016, respectively.Unamortized fees related to the Credit Agreement are included in other current assets and other long-term assets andamounted to $9.6 million and $6.5 million at December 31, 2017 and 2016, respectively. Unamortized fees related to thesenior notes are presented as a direct deduction from the carrying amount of that debt liability, consistent with debtdiscounts, and amounted to $5.4 million and $6.6 million at December 31, 2017 and 2016, respectively. Unamortized feesrelated to the Sale-Leaseback Transaction are presented as a direct deduction from the carrying amount of the financingobligation and amounted to $0.9 million and $1.0 million at December 31, 2017 and 2016, respectively.On April 25, 2017, the Partnership entered into the Credit Agreement, a new facility that extended the maturity dateand reduced the total commitment of the prior credit agreement. As a result, the Partnership incurred expenses ofapproximately $0.6 million associated with the write-off of a portion of the related deferred financing fees. These expensesare included in interest expense in the accompanying statement of operations for the year ended December 31, 2017.On February 24, 2016, under its prior credit agreement, the Partnership voluntarily elected to reduce its workingcapital revolving credit facility from $1.0 billion to $900.0 million and its revolving credit facility from $775.0 million to$575.0 million. As a result, the Partnership incurred expenses of approximately $1.8 million associated with the write-off of aportion of the related deferred financing fees. These expenses are included in interest expense in the accompanying statementof operations for the year ended December 31, 2016.Amortization expense of approximately $5.6 million, $6.0 million and $5.9 million for the years endedDecember 31, 2017, 2016 and 2015, respectively, is included in interest expense in the accompanying consolidatedstatements of operations.F-39 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Note 7. Derivative Financial InstrumentsThe following table summarizes the notional values related to the Partnership’s derivative instruments outstandingat December 31, 2017: Units (1) Unit of Measure Exchange-Traded Derivatives Long 58,842 Thousands of barrels Short (61,886) Thousands of barrels OTC Derivatives (Petroleum/Ethanol) Long 8,433 Thousands of barrels Short (3,309) Thousands of barrels Interest Rate Swap$100.0 Millions of U.S. dollars (1)Number of open positions and gross notional values do not measure the Partnership’s risk of loss, quantify risk or represent assets orliabilities of the Partnership, but rather indicate the relative size of the derivative instruments and are used in the calculation of the amountsto be exchanged between counterparties upon settlements.Derivatives Not Accounted for as HedgesFair Value HedgesThe Partnership’s fair value hedges include exchange-traded futures contracts and OTC derivative contracts that arehedges against inventory with specific futures contracts matched to specific barrels. The change in fair value of these futurescontracts and the change in fair value of the underlying inventory generally provide an offset to each other in theconsolidated statement of operations.The following table presents the gains and losses from the Partnership’s derivative instruments involved in fairvalue hedging relationships recognized in the consolidated statements of operations for the years ended December 31 (inthousands): Statement of Gain (Loss) Recognized in Income on Derivatives 2017 2016 2015 Derivatives in fair value hedging relationship Exchange-traded futures contracts and OTC derivative contracts forpetroleum commodity products Cost of sales $26,118 $(34,461) $151,344 Hedged items in fair value hedge relationship Physical inventory Cost of sales $(23,247) $41,860 $(158,987) F-40 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Cash Flow HedgesThe Partnership’s cash flow hedges for 2017, 2016 and 2015 primarily included interest rate swaps that were hedgesof variability in forecasted interest payments due to changes in the interest rate on LIBOR-based borrowings, a summary ofwhich includes the following designations:·In October 2009, the Partnership executed an interest rate swap with a major financial institution. The swap, whichbecame effective on May 16, 2011 and expired on May 16, 2016, was used to hedge the variability in interestpayments due to changes in the one month LIBOR swap curve with respect to $100.0 million of one month LIBORbased borrowings on the credit facility at a fixed rate of 3.93%.·In April 2011, the Partnership executed an interest rate cap with a major financial institution. The rate cap, whichbecame effective on April 13, 2011 and expired on April 13, 2016, was used to hedge the variability in interestpayments due to changes in the one month LIBOR rate above 5.5% with respect to $100.0 million of one monthLIBOR based borrowings on the credit facility.·In September 2013, the Partnership executed an interest rate swap with a major financial institution. The swap,which became effective on October 2, 2013 and expires on October 2, 2018, is used to hedge the variability in cashflows in monthly interest payments due to changes in the one month LIBOR swap curve with respect to$100.0 million of one month LIBOR based borrowings on the credit facility at a fixed rate of 1.819%.At December 31, 2017, the Partnership had in place one interest rate swap agreement which is hedging$100.0 million of variable rate debt and continues to be accounted for as a cash flow hedge.The following table presents the amount of gains and losses from the Partnership’s derivative instrumentsdesignated in cash flow hedging relationships recognized in the consolidated statements of operations and partners’ equityfor the years ended December 31 (in thousands): Location of Gain (Loss) Amount of Gain (Loss) Reclassified from Amount of Gain (Loss) Recognized in Accumulated Other Reclassified from Other Other Comprehensive Comprehensive Incomeinto Comprehensive Income into Derivatives Designated in Income on Derivatives (EffectivePortion) Income (Effective Portion) Income (Effective Portion) Cash Flow Hedging Relationship 2017 2016 2015 2017 2016 2015 Interest rate swaps $1,037 $2,173 $3,353 Interest expense $ — $ — $ — Interest rate cap (1) — — (17) Interest expense — — — Total $1,037 $2,173 $3,336 $ — $ — $ — (1)The interest rate cap was de-designated as a cash flow hedge in June 2014. Prepaid interest rate caplet amountsrecognized in accumulated other comprehensive income up until the date of de-designation have been frozen inpartner’s equity as of the de-designation date and were being amortized to income through the tenor of the interest ratecap instrument. The change in the fair value of the interest rate cap following de-designation is reflected in earnings andwas immaterial for the years ended December 31, 2016 and 2015. As of December 31, 2016, the interest rate caplets werefully amortized as the interest rate cap expired in April 2016.The amount of gain (loss) recognized in income as ineffectiveness for derivatives designated in cash flow hedgingrelationships was $0 for the years ended December 31, 2017, 2016 and 2015.F-41 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Derivatives Not Accounted for as HedgesThe following table presents the gains and losses from the Partnership’s derivative instruments not involved in ahedging relationship recognized in the consolidated statements of operations for the years ended December 31 (inthousands): Statement of Gain (Loss) Derivatives not designated as Recognized in hedging instruments Income on Derivatives 2017 2016 2015 Commodity contracts Cost of sales $9,502 $3,118 $5,930 Forward foreign currency contracts Cost of sales — 71 191 Total $9,502 $3,189 $6,121 Commodity Contracts and Other Derivative ActivityThe Partnership’s commodity contracts and other derivative activity include: (i) exchange-traded derivativecontracts that are hedges against inventory and either do not qualify for hedge accounting or are not designated in a hedgeaccounting relationship, (ii) exchange-traded derivative contracts used to economically hedge physical forward contracts,(iii) financial forward and OTC swap agreements used to economically hedge physical forward contracts and (iv) thederivative instruments under the Partnership’s controlled trading program. The Partnership does not take the normal purchaseand sale exemption available under ASC 815 for its physical forward contracts. The following table presents the fair value of each classification of the Partnership’s derivative instruments and itslocation in the consolidated balance sheets at December 31, 2017 and 2016 (in thousands): December 31, 2017 Derivatives Derivatives Not Designated as Designated as Hedging Hedging Balance Sheet Location Instruments Instruments Total Asset Derivatives: Exchange-traded derivative contracts Broker margin deposits $ — $32,483 $32,483 Forward derivative contracts (1) Derivative assets — 3,840 3,840 Total asset derivatives $ — $36,323 $36,323 Liability Derivatives: Exchange-traded derivative contracts Broker margin deposits $(7,214) $(63,869) $(71,083) Forward derivative contracts (1) Derivative liabilities — (13,708) (13,708) Interest rate swap contracts Other long-term liabilities — (134) (134) Total liability derivatives $(7,214) $(77,711) $(84,925) F-42 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) December 31, 2016 Derivatives Derivatives Not Designated as Designated as Hedging Hedging Balance Sheet Location Instruments Instruments Total Asset Derivatives: Exchange-traded derivative contracts Broker margin deposits $ — $60,018 $60,018 Forward derivative contracts (1) Derivative assets — 21,382 21,382 Total asset derivatives $ — $81,400 $81,400 Liability Derivatives: Exchange-traded derivative contracts Broker margin deposits $(33,877) $(96,831) $(130,708) Forward derivative contracts (1) Derivative liabilities — (27,413) (27,413) Interest rate swap contracts Other long-term liabilities — (1,170) (1,170) Total liability derivatives $(33,877) $(125,414) $(159,291) (1)Forward derivative contracts include the Partnership’s petroleum and ethanol physical and financial forwards and OTC swaps.Credit RiskThe Partnership’s derivative financial instruments do not contain credit risk related to other contingent features thatcould cause accelerated payments when these financial instruments are in net liability positions.The Partnership is exposed to credit loss in the event of nonperformance by counterparties to the Partnership’sexchange-traded and OTC derivative contracts, but the Partnership has no current reason to expect any materialnonperformance by any of these counterparties. Exchange-traded derivative contracts, the primary derivative instrumentutilized by the Partnership, are traded on regulated exchanges, greatly reducing potential credit risks. The Partnership utilizesprimarily three clearing brokers, all major financial institutions, for all New York Mercantile Exchange (“NYMEX”), ChicagoMercantile Exchange (“CME”) and IntercontinentalExchange (“ICE”) derivative transactions and the right of offset existswith these financial institutions under master netting agreements. Accordingly, the fair value of the Partnership’s exchange-traded derivative instruments is presented on a net basis in the consolidated balance sheets. Exposure on OTC derivatives islimited to the amount of the recorded fair value as of the balance sheet dates.F-43 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Note 8. Fair Value MeasurementsRecurring Fair Value Measures Assets and liabilities are classified in the entirety based on the lowest level of input that is significant to the fairvalue measurement. The Partnership’s assessment of the significance of a particular input to the fair value measurementrequires judgment and may affect the valuation of the fair value assets and liabilities and their placement within the fairvalue hierarchy levels. The following tables present, by level within the fair value hierarchy, the Partnership’s financial assetsand liabilities that were measured at fair value on a recurring basis as of December 31, 2017 and 2016 (in thousands): Fair Value at December 31, 2017 Cash Collateral Level 1 Level 2 Level 3 Netting Total Assets: Forward derivative contracts (1) $ — $3,207 $633 $ — $3,840 Exchange-traded/cleared derivative instruments (2) (38,599) — — 48,280 9,681 Pension plans 17,580 — — — 17,580 Total assets $(21,019) $3,207 $633 $48,280 $31,101 Liabilities: Forward derivative contracts (1) $ — $(12,671) $(1,037) $ — $(13,708) Interest rate swaps — (134) — — (134) Total liabilities $ — $(12,805) $(1,037) $ — $(13,842) Fair Value at December 31, 2016 Cash Collateral Level 1 Level 2 Level 3 Netting Total Assets: Forward derivative contracts (1) $ — $18,972 $1,683 $ — $20,655 Swap agreements and options — 727 — — 727 Exchange-traded/cleared derivative instruments (2) (70,690) — — 98,344 27,654 Pension plans 16,777 — — — 16,777 Total assets $(53,913) $19,699 $1,683 $98,344 $65,813 Liabilities: Forward derivative contracts (1) $ — $(25,097) $(2,054) $ — $(27,151) Swap agreements and options — (262) — — (262) Interest rate swaps — (1,170) — — (1,170) Total liabilities $ — $(26,529) $(2,054) $ — $(28,583) (1)Forward derivative contracts include the Partnership’s petroleum and ethanol physical and financial forwards and OTCswaps(2)Amount includes the effect of cash balances on deposit with clearing brokers. This table excludes cash on hand and assets and liabilities that are measured at historical cost or any basis other thanfair value. The carrying amounts of certain of the Partnership’s financial instruments, including cash equivalents, accountsreceivable, accounts payable and other accrued liabilities approximate fair value due to their short maturities. The carryingvalue of the credit facility approximates fair value due to the variable rate nature of these financial instruments.F-44 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The carrying value of the inventory qualifying for fair value hedge accounting approximates fair value due toadjustments for changes in fair value of the hedged item. The fair values of the derivatives used by the Partnership aredisclosed in Note 7. The determination of the fair values above incorporates factors including not only the credit standing of thecounterparties involved, but also the impact of the Partnership’s nonperformance risks on its liabilities.The values of the Level 1 exchange-traded/cleared derivative instruments and pension plan assets were determinedusing quoted prices in active markets for identical assets. Specifically, the fair values of the Level 1 exchange-traded/clearedderivative instruments were based on quoted process obtained from the NYMEX, CME and ICE. The fair values of theLevel 1 pension plan assets were based on quoted prices for identical assets which primarily consisted of fixed incomesecurities, equity securities and cash and cash equivalents.The values of the Level 2 derivative contracts were calculated using expected cash flow models and marketapproaches based on observable market inputs, including published and quoted commodity pricing data, which is verifiedagainst other available market data. Specifically, the fair values of the Level 2 derivative commodity contracts were derivedfrom published and quoted NYMEX, CME, ICE, New York Harbor and third-party pricing information for the underlyinginstruments using market approaches. The fair value of the Level 2 interest rate instruments were derived from the impliedforward LIBOR yield curve for the sale period as the future interest rate swap settlements using expected cash flow models.The Partnership has not changed its valuation techniques or Level 2 inputs during the years ended December 31, 2017 and2016.The Partnership estimates the fair values of its 6.25% senior notes and 7.00% senior notes using a combination ofquoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates,which are considered Level 2 inputs. The fair values of the 6.25% senior notes and 7.00% senior notes, estimated byobserving market trading prices of the 6.25% senior notes and 7.00% senior notes, respectively, were as follows atDecember 31 (in thousands): 2017 2016 Face Fair Face Fair Value Value Value Value 6.25% senior notes$375,000 $383,906 $375,000 $361,163 7.00% senior notes$300,000 $308,250 $300,000 $289,500 Level 3 InformationThe values of the Level 3 derivative contracts were calculated using market approaches based on a combination ofobservable and unobservable market inputs, including published and quoted NYMEX, CME, ICE, New York Harbor andthird-party pricing information for a component of the underlying instruments as well as internally developed assumptionswhere there is little, if any, published or quoted prices or market activity. The unobservable inputs used in the measurementof the Level 3 derivative contracts include estimates for location basis, transportation and throughput costs net of anestimated margin for current market participants. The estimates for these inputs for crude oil were ($8.50) to ($1.00) per barreland $4.05 to $6.50 per barrel as of December 31, 2017 and 2016, respectively. The estimates for these inputs for propanewere ($3.36) to $8.40 per barrel and $4.20 to $10.50 per barrel as of December 31, 2017 and 2016, respectively. Gains andlosses recognized in earnings (or changes in net assets) are disclosed in Note 7.F-45 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Sensitivity of the fair value measurement to changes in the significant unobservable inputs is as follows:Significant Impact on Fair Value Unobservable Input Position Change to Input Measurement Location basis Long Increase (decrease) Gain (loss) Location basis Short Increase (decrease) Loss (gain) Transportation Long Increase (decrease) Gain (loss) Transportation Short Increase (decrease) Loss (gain) Throughput costs Long Increase (decrease) Gain (loss) Throughput costs Short Increase (decrease) Loss (gain) The following table presents a reconciliation of changes in fair value of the Partnership’s derivative contractsclassified as Level 3 in the fair value hierarchy at December 31 (in thousands):Fair value at December 31, 2016 $(371) Derivatives entered into during the period (10) Derivatives sold during the period (350) Realized gains (losses) recorded in cost of sales 560 Unrealized gains (losses) recorded in cost of sales (233) Fair value at December 31, 2017 $(404) The Partnership’s policy is to recognize transfers between levels with the fair value hierarchy as of the beginning ofthe reporting period. The Partnership also excludes any activity for derivative instruments that were not classified as Level 3at either the beginning or end of the reporting period.Non-Recurring Fair Value MeasuresCertain nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fairvalue adjustments in certain circumstances, such as acquired assets and liabilities, losses related to firm non-cancellablepurchase commitments or long-lived assets subject to impairment. For assets and liabilities measured on a non-recurring basisduring the year, accounting guidance requires quantitative disclosures about the fair value measurements separately for eachmajor category. See Note 2 for a discussion of the Partnership’s losses on impairment of assets, Note 5 for assets held for saleand Note 18 for acquired assets and liabilities measured on a non-recurring basis during the year ended December 31, 2017. Note 9. Commitments and ContingenciesThe Partnership is subject to contingencies, including legal proceedings and claims arising out of the normal courseof business that cover a wide range of matters, including, among others, environmental matters and contract and employmentclaims.F-46 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Leases of Office Space and Computer EquipmentThe Partnership has future commitments, principally for office space and computer equipment, under the terms ofoperating lease arrangements. The following provides total future minimum payments under leases with non‑cancellableterms of one year or more at December 31, 2017 (in thousands):2018 $2,894 2019 2,687 2020 2,668 2021 2,732 2022 2,796 Thereafter 9,742 Total $23,519 Total rent expense under the operating lease arrangements amounted to approximately $2.9 million, $3.8 millionand $3.7 million for the years ended December 31, 2017, 2016 and 2015, respectively.Terminal and Throughput LeasesThe Partnership is a party to terminal and throughput lease arrangements with certain counterparties at variousunrelated oil terminals. Certain arrangements have minimum usage requirements. The following provides future minimumlease and throughput commitments under these arrangements with non‑cancellable terms of one year or more at December 31,2017 (in thousands): 2018 $9,163 2019 5,148 2020 4,434 2021 4,346 2022 2,350 Thereafter 89 Total $25,530 Total rent expense reflected in cost of sales related to terminal and throughput operating leases were approximately$17.3 million, $18.5 million and $22.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.F-47 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Leases of Gasoline StationsThe Partnership leases gasoline stations, primarily land and buildings, under operating leases with variousexpiration dates. The following provides future minimum lease commitments under these arrangements with non‑cancellableterms of one year or more at December 31, 2017 (in thousands):2018 $33,464 2019 30,359 2020 27,553 2021 24,732 2022 20,723 Thereafter 88,926 Total $225,757 Total expenses under these operating lease arrangements amounted to approximately $42.9 million, $41.5 millionand $36.7 million for the years ended December 31, 2017, 2016 and 2015, respectively.Sale-Leaseback TransactionThe Partnership is party to a master unitary lease agreement to lease back the real property assets sold with respect to30 gasoline stations and convenience stores (see Note 6). The following provides future minimum lease payments, which aresubject to annual adjustments based on a consumer price index based calculation, for the non-cancelable operating leaseterms of one year or more at December 31, 2017 (in thousands):2018 $4,492 2019 4,492 2020 4,492 2021 4,492 2022 4,492 Thereafter 38,159 Total $60,619 The following provides future minimum sublease rentals from third-party tenants of certain of the sold sites for eachof the next four years ending December 31:2018 $1,822 2019 1,328 2020 781 2021 55 Total $3,986 Total rental income from third-party tenants of the sold sites was $2.3 million and $1.2 million for the years endedDecember 31, 2017 and 2016, respectively. The increase is due to a full year of rental income in 2017 as compared to sixmonths in 2016.Leases of Gasoline Stations to Station OperatorsThe Partnership leases gasoline stations and certain equipment to gasoline station operators under operating leaseswith various expiration dates. The aggregate carrying value of the leased gasoline stations and equipment atF-48 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)December 31, 2017 was $483.0 million, net of accumulated depreciation of approximately $132.5 million. The followingprovides future minimum rental income under non‑cancellable operating leases associated with these properties atDecember 31, 2017 (in thousands):2018 $48,458 2019 28,999 2020 12,400 2021 2,015 2022 1,191 Thereafter 949 Total $94,012 Total rental income, which includes reimbursement of utilities and property taxes in certain cases, amounted toapproximately $68.8 million, $68.8 million and $61.1 million for the years ended December 31, 2017, 2016 and 2015,respectively.Leases of RailcarsThe Partnership leases railcars through various lease arrangements with various expiration dates. The followingprovides future minimum lease commitments under these arrangements with non‑cancellable terms of one year or more atDecember 31, 2017 (in thousands):2018 $15,653 2019 11,086 2020 2,140 2021 1,585 Total $30,464 Total expenses under these operating lease arrangements amounted to approximately $20.9 million, $56.8 millionand $57.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. On December 31, 2016, thePartnership voluntarily terminated a sublease for 1,610 railcars leased from a third party. The termination of the subleaseeliminated lease payments related to these railcars of approximately $30.0 million in 2017 and future lease payments ofapproximately $29.0 million and $13.0 million in 2018 and 2019, respectively.Leases of BargesThe Partnership leases barges through various time charter lease arrangements with various expiration dates. Thefollowing provides future minimum lease commitments under these arrangements with non-cancellable terms of one year ormore at December 31, 2017 (in thousands):2018 $36,687 2019 12,223 2020 1,983 Total $50,893 Total expenses under these operating lease arrangements amounted to approximately $54.9 million, $64.3 millionand $87.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. The decrease in 2017 compared to2016 and in 2016 compared to 2015 is due to the Partnership leasing fewer barges.F-49 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Purchase CommitmentsThe Partnership has minimum retail gasoline volume purchase requirements with various unrelated parties. Thesegallonage requirements are purchased at the fair market value of the product at the time of delivery. Should these gallonagerequirements not be achieved, the Partnership may be liable to pay penalties to the appropriate supplier. As of December 31,2017, the Partnership has fulfilled all gallonage commitments. The following provides minimum volume purchaserequirements at December 31, 2017 (in thousands of gallons):2018 496,964 2019 495,001 2020 376,207 2021 287,736 2022 172,236 Thereafter 368,289 Total 2,196,433 Brand Fee AgreementThe Partnership entered into a brand fee agreement with ExxonMobil Corporation (“ExxonMobil”) which entitlesthe Partnership to operate retail gasoline stations under the Mobil‑branded trade name and related trade logos. The fees,which are based upon an estimate of the volume of gasoline and diesel to be sold at the gasoline stations acquired fromExxonMobil in 2010, are due on a monthly basis. The following provides total future minimum payments under theagreement with non‑cancellable terms of one year or more at December 31, 2017 (in thousands):2018 $9,000 2019 9,000 2020 9,000 2021 9,000 2022 9,000 Thereafter 22,500 Total $67,500 Total expenses reflected in cost of sales related this agreement were approximately $9.0 million for each of the yearsended December 31, 2017, 2016 and 2015.F-50 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Port of St. Helens Agreements—Land and EquipmentThe Partnership leases mobile equipment under non‑cancellable operating lease arrangements and has a continuingoperating lease with the Port of St. Helens. The following provides total future minimum payments under these operatingleases with initial terms one year or more at December 31, 2017 (in thousands):2018 $230 2019 230 2020 230 2021 230 2022 230 Thereafter 10,012 Total $11,162 Total rental expense was approximately $0.2 million for each of the years ended December 31, 2017, 2016 and2015.Other CommitmentsIn June 2014, the Partnership entered into a pipeline connection agreement with Meadowlark MidstreamCompany, LLC (“Meadowlark”) whereby Meadowlark would construct, own, operate and maintain a crude oil pipeline fromits Divide County, North Dakota crude oil station to the Partnership’s Basin Transload crude oil storage facility in Columbus,North Dakota. In connection with the agreement, the Partnership is committed to a minimum take-or-pay throughputcommitment of approximately $55.0 million over a seven–year period beginning after the commissioning of the pipelinewhich occurred in December of 2015. At December 31, 2017, the remaining commitment on the take-or-pay commitment wasapproximately $40.0 million.In May 2014, the Partnership entered into a pipeline connection agreement with Tesoro High Plains PipelineCompany (“Tesoro High Plains”) whereby Tesoro High Plains would design, engineer, construct and place in serviceimprovements on its pipeline system that will expand its capacity to ship crude oil from points in Dunn and McKenzieCounties, North Dakota to Ramberg Station/Beaver Lodge destination point in Williams County, North Dakota. Inconnection with this agreement, the Partnership is committed to a minimum take-or-pay throughput commitment ofapproximately $36.4 million over a seven–year period beginning after the commissioning of the pipeline, which occurred inJanuary of 2015. At December 31, 2017, the remaining commitment on the take-or-pay commitment, including a quarterlytake-or-pay of $1.3 million, was approximately $20.0 million.In April 2014, Basin Transload, of which the Partnership owns a 60% membership interest, entered into a pipelineconnection agreement with Tesoro Logistics (“Tesoro”) whereby Tesoro would build, own and operate a four‑mile pipelinelateral from its existing block gate valve in Mercer Country, North Dakota to the Partnership’s Beulah Rail Facility nearBeulah, North Dakota. In connection with this agreement, Basin Transload was committed to a minimum take-or-paythroughput commitment of approximately $14.6 million over a five‑year period beginning after the commissioning of thepipeline, which occurred in January 2015. During the third quarter of 2017, this agreement was accelerated by Tesoro due toa lack of crude oil movement through the pipeline, and the Partnership recorded a $13.1 million expense. In October 2017,the Partnership paid the $13.1 million to Tesoro associated with the acceleration and corresponding termination of thisagreement. At December 31, 2017, the remaining commitment on the take-or-pay commitment was $0.In February 2013, the Partnership assumed natural gas transportation and reservation agreements, which havevarious expiration dates, with Northwest Natural Gas Company (“NW Natural Gas”) and the Northwest Pipeline system(“NW Pipeline”) whereby NW Natural Gas and NW Pipeline provide the Partnership with the transportation andF-51 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)reservation of firm natural gas delivered to the Partnership’s Oregon facility. At December 31, 2017, the remainingcommitment on the transportation and reservation agreements over the next five years was approximately $8.2 million.Environmental LiabilitiesPlease see Note 12 for a discussion of the Partnership’s environmental liabilities.Legal ProceedingsPlease see Note 21 for a discussion of the Partnership’s legal proceedings.Note 10. Trustee Taxes and Accrued Expenses and Other Current LiabilitiesAccrued expenses and other current liabilities consisted of the following at December 31 (in thousands): 2017 2016 Barging transportation, product storage and other ancillary cost accruals $31,243 $14,484 Employee compensation 26,988 20,167 Accrued interest 12,247 12,352 Other 29,029 23,440 Total $99,507 $70,443 Employee compensation consisted of bonuses, vacation and other salary accruals. Ancillary costs consisted of costaccruals related to product expediting and storage.In addition, the Partnership had trustee taxes payable of $110.3 million at December 31, 2017, which consisted of$55.4 million related to an ethanol credit and $54.9 million in various pass‑through taxes collected on behalf of taxingauthorities. Trustee taxes payable at December 31, 2016 of $101.2 million consisted of $55.4 million related to an ethanolcredit and $45.8 million in various pass‑through taxes collected on behalf of taxing authorities.The Partnership recognized a loss on trustee taxes of $16.2 million for the year ended December 31, 2017 related toan administratively closed New York State tax audit of the Partnership’s fuel and sales tax returns for the periods betweenDecember 2008 through August 2013. See Note 2 for additional information.In the first quarter of 2018, the Partnership will recognize a one-time income item of approximately $52.6 million asa result of the extinguishment of a contingent liability related to the Volumetric Ethanol Excise Tax Credit, which tax creditprogram expired in 2011. See Note 24 for additional information.Note 11. Income TaxesGMG, a wholly owned subsidiary of the Partnership, is a taxable entity for federal and state income tax purposes.Current and deferred income taxes are recognized on the separate earnings of GMG, and the after‑tax earnings of GMG areincluded in the consolidated earnings of the Partnership.F-52 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The following table presents a reconciliation of the difference between the statutory federal income tax rate and theeffective income tax rate for the years ended December 31: 2017 2016 2015 Federal statutory income tax rate 35.0% 35.0% 35.0% State income tax rate, net of federal tax benefit 1.2% (0.7)% 0.7% Foreign income tax —% —% 0.6% Impairment of goodwill 1.6% (2.2)% —% Federal deferred rate change (65.5)% —% —% Partnership income not subject to tax (42.5)% (32.1)% (40.8)% Effective income tax rate (70.2)% —% (4.5)% The following table presents the components of the provision for income taxes for the years ended December 31 (inthousands): 2017 2016 2015 Current: Federal $1,371 $14,499 $110 State 1,011 4,345 1,388 Foreign 4 (9) 253 Total current 2,386 18,835 1,751 Deferred: Federal (25,217) (13,480) (1,298) State (732) (5,302) (2,326) Total deferred (25,949) (18,782) (3,624) Total $(23,563) $53 $(1,873) Significant components of long‑term deferred taxes were as follows at December 31 (in thousands): 2017 2016 Deferred Income Tax Assets Accounts receivable allowances $989 $1,921 Environmental liability 9,152 15,478 Asset retirement obligation 2,179 3,313 Deferred financing obligation 11,410 16,912 UNICAP 42 225 Other 1,726 2,009 Federal net operating loss carryforwards 4,709 5,879 State net operating loss carryforwards 1,216 1,160 Tax credit carryforward 314 — Total deferred tax assets, gross 31,737 46,897 Valuation allowance (2,813) (2,707) Total deferred tax assets, net $28,924 $44,190 Deferred Income Tax Liabilities Property and equipment $(54,401) $(84,494) Land (9,369) (14,119) Intangible assets (5,259) (11,631) Total deferred tax liabilities $(69,029) $(110,244) Net deferred tax liabilities $(40,105) $(66,054) F-53 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted in the United States. The Act reduces theU.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certainforeign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. In December2017, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118, “Income TaxAccounting Implications of the Tax Cuts and Jobs Act,” directing taxpayers to consider the impact of the U.S. legislation as“provisional” when it does not have the necessary information available, prepared or analyzed (including computations) inreasonable detail to complete its accounting for the change in tax law. As of December 31, 2017, the Partnership had notcompleted its accounting for all of the tax effects of the enactment of the Act; however, the Partnership has made a reasonableestimate of the effects on its existing deferred tax balances and one-time transition tax. For the year ended December 31,2017, the Partnership recognized no transition tax. In all cases, the Partnership will continue to make and refine itscalculations as additional analysis is completed. In addition, the Partnership’s estimates may also be affected as thePartnership gains a more thorough understanding of the Act.The Partnership is still in the process of analyzing the impact of the Act. Where the Partnership has been able tomake reasonable estimates of the effects for which its analysis is not yet complete, the Partnership has recorded provisionalamounts. Where the Partnership has not yet been able to make reasonable estimates of the impact of certain elements, thePartnership has not recorded any amounts related to those elements and has continued accounting for them in accordancewith ASC Topic 740 on the basis of the tax laws in effect immediately prior to the enactment of the Act. As a result of the Act,the Partnership remeasured certain deferred tax assets and liabilities based on the rates at which they are anticipated toreverse in the future, which is generally 21%, resulting in a decrease to the Partnership’s net deferred tax liability of$22.2 million. The Partnership’s net deferred tax liabilities are primarily comprised of the differences in the historical tax basis andfair value book basis of property, equipment and land that were acquired in connection with the 2015 Warren acquisition.The decrease in net deferred tax liabilities during 2017 is primarily due to the reduction in the federal statutory tax rate.At December 31, 2017, GMG had federal and state net operating loss carryforwards of approximately $9.8 millionand $21.8 million, respectively, which will begin to expire in 2034 and 2019, respectively. Utilization of the net operatingloss carryforwards may be subject to annual limitations due to the ownership percentage change limitations provided by theInternal Revenue Code Section 382 and similar state provisions. In the event of a deemed change in control under InternalRevenue Code Section 382, an annual limitation imposed on the utilization of net operating losses may result in theexpiration of all or a portion of the net operating loss carryforwards.At December 31, 2017, the Partnership had $30.7 million of net deferred tax liabilities (consisting of the$40.1 million total net deferred tax liability less the $9.4 million deferred tax liability relating to land discussed below)relating to property and equipment, net operating loss carryforwards, tax credit carryforwards and other temporarydifferences, certain of which are available to reduce income taxes in future years. The Partnership recognizes deferred taxassets to the extent that the recoverability of these assets satisfy the “more likely than not” criteria in accordance with theFASB’s guidance regarding income taxes. A valuation allowance must be established when it is “more likely than not” thatall or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence needs to beconsidered, including a company’s performance, the market environment in which the company operates, length of carrybackand carryforward periods and projections of future operating results. The Partnership concluded, based on an evaluation offuture operating results and reversal of existing taxable temporary differences, that a portion of these assets will not berealized in a future period. The valuation allowance increased by approximately $0.1 million as of December 31, 2017.At December 31, 2017, the Partnership also had a $9.4 million deferred tax liability relating to land. Land is an assetwith an indefinite useful life and would not ordinarily serve as a source of income for the realization of deferred tax assets.This deferred tax liability will not reverse until some indefinite future period when the asset is either sold orF-54 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)written down due to impairment. Such taxable temporary differences generally cannot be used as a source of taxable incometo support the realization of deferred tax assets relating to reversing deductible temporary differences, including losscarryforwards with expiration periods.The following presents a reconciliation of the differences between income (loss) before income tax benefit (expense)and income subject to income tax expense for the years ended December 31 (in thousands): 2017 2016 2015 Income (loss) before income tax expense $33,554 $(238,570) $41,391 Non—taxable loss (income) (40,904) 224,609 (48,861) Income (loss) subject to income tax expense $(7,350) $(13,961) $(7,470) The Partnership made approximately $7.4 million, $17.0 million and $2.8 million in income tax payments during2017, 2016 and 2015, respectively. The increase in taxes paid in 2016 is largely due to the Mirabito Disposition (see Note 5)which resulted in significant gains recognized for tax purposes.GMG files income tax returns in the United States and various state jurisdictions. With few exceptions, thePartnership is subject to income tax examinations by tax authorities for all years dated back to 2014.The following presents the changes in gross unrealized tax benefits for the years ended December 31 (in thousands): 2017 2016 2015 Balance at beginning of year $1,433 $148 $ — Increases for tax positions taken in prior years 28 1,572 148 Decreases for tax positions taken during the current year — (148) — Settlements of tax positons taken in prior years (467) (139) — Income subject to income tax expense $994 $1,433 $148 Unrecognized tax benefits represent uncertain tax positions for which reserves have been established. ThePartnership had gross-tax effected unrecognized tax benefits of $1.0 million, $1.4 million and $0.1 million for 2017, 2016and 2015, respectively, of which $1.0 million, $1.4 million and $0, respectively, would favorably impact the effective taxrate if recognized.The FASB’s accounting guidance for income taxes clarifies the accounting for uncertainty in income taxesrecognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement of a taxposition taken or expected to be taken in a tax return. The Partnership performed an evaluation of all material tax positionsfor the tax years that remain subject to examination by major tax jurisdictions as of December 31, 2017 (tax years endedDecember 31, 2017, 2016 and 2015). Tax positions that do not meet the more-likely-than-not recognition threshold at thefinancial statement date may not be recognized or continue to be recognized under the accounting guidance for incometaxes. The Partnership classifies interest and penalties related to income taxes as components of its provision for incometaxes, and the amount of interest and penalties recorded in the accompanying balance sheet and statement of operations was$0 and $0.2 million as of and for the years ended December 31, 2017 and 2016, respectively. The Partnership does notanticipate the amount of unrecognized tax benefits to change over the next twelve months. F-55 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Note 12. Environmental Liabilities and Renewable Identification Numbers (RINs)Environmental LiabilitiesThe Partnership owns or leases properties where refined petroleum products, renewable fuels and crude oil are beingor may have been handled. These properties and the refined petroleum products, renewable fuels and crude oil handledthereon may be subject to federal and state environmental laws and regulations. Under such laws and regulations, thePartnership could be required to remove or remediate containerized hazardous liquids or associated generated wastes(including wastes disposed of or abandoned by prior owners or operators), to clean up contaminated property arising from therelease of liquids, pollutants or wastes into the environment, including contaminated groundwater, or to implement bestmanagement practices to prevent future contamination.The Partnership maintains insurance of various types with varying levels of coverage that it considers adequateunder the circumstances to cover its operations and properties. The insurance policies are subject to deductibles that thePartnership considers reasonable and not excessive. In addition, the Partnership has entered into indemnification agreementswith various sellers in conjunction with several of its acquisitions. Allocation of a known environmental liability is an issuenegotiated in connection with each of the Partnership’s acquisition transactions. In each case, the Partnership makes anassessment of potential environmental liability exposure based on available information. Based on that assessment andrelevant economic and risk factors, the Partnership determines whether to, and the extent to which it will, assume liability forexisting environmental conditions.In connection with the October 2017 acquisition of retail gasoline and convenience store assets from Honey Farms(see Note 18), the Partnership assumed certain environmental liabilities, including certain ongoing environmentalremediation efforts. As a result, the Partnership initially recorded, on an undiscounted basis, a total environmental liability ofapproximately $1.3 million.In connection with the June 2015 acquisition of retail gasoline stations from Capitol, the Partnership assumedcertain environmental liabilities, including future remediation activities required by applicable federal, state or local law orregulation at certain of the retail gasoline stations owned by Capitol. Certain environmental remediation obligations at mostof the acquired retail gasoline station assets from Capitol are being funded by third parties who assumed certain liabilities inconnection with Capitol’s acquisition of these assets from ExxonMobil in 2009 and 2010 and, therefore, cost estimates forsuch obligations at these stations are not included in this estimate of liability to the Partnership. As a result, the Partnershipinitially recorded, on an undiscounted basis, a total environmental liability of approximately $0.3 million for those locationsnot covered by third parties.In connection with the January 2015 acquisition of the Revere Terminal, the Partnership assumed certainenvironmental liabilities, including certain ongoing environmental remediation efforts. As a result, the Partnership initiallyrecorded, on an undiscounted basis, a total environmental liability of approximately $3.1 million.In connection with the January 2015 acquisition of Warren, the Partnership assumed certain environmentalliabilities, including certain ongoing environmental remediation efforts at certain of the retail gasoline stations owned orleased by Warren and future remediation activities required by applicable federal, state or local law or regulation. As a result,the Partnership initially recorded, on an undiscounted basis, a total environmental liability of approximately $36.5 million.In connection with the December 2012 acquisition of six New England retail gasoline stations from Mutual OilCompany, the Partnership assumed certain environmental liabilities, including certain ongoing remediation efforts. As aresult, the Partnership initially recorded, on an undiscounted basis, a total environmental liability of approximately$0.6 million.F-56 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)In connection with the March 2012 acquisition of Alliance, the Partnership assumed Alliance’s environmentalliabilities, including ongoing environmental remediation at certain of the retail gasoline stations owned by Alliance andfuture remediation activities required by applicable federal, state or local law or regulation. Remedial action plans are inplace, as may be applicable with the state agencies regulating such ongoing remediation. Based on reports fromenvironmental consultants, the Partnership’s estimated cost of the ongoing environmental remediation for which Alliancewas responsible and future remediation activities required by applicable federal, state or local law or regulation is estimatedto be approximately $16.1 million to be expended over an extended period of time. Certain environmental remediationobligations at the retail stations acquired by Alliance from ExxonMobil in 2011 are being funded by a third party whoassumed the liability in connection with the Alliance/ExxonMobil transaction in 2011 and, therefore, cost estimates for suchobligations at these stations are not included in this estimate. As a result, the Partnership initially recorded, on anundiscounted basis, total environmental liabilities of approximately $16.1 million.In connection with the September 2010 acquisition of retail gasoline stations from ExxonMobil, the Partnershipassumed certain environmental liabilities, including ongoing environmental remediation at and monitoring activities atcertain of the acquired sites and future remediation activities required by applicable federal, state or local law or regulation.Remedial action plans are in place with the applicable state regulatory agencies for the majority of these locations, includingplans for soil and groundwater treatment systems at certain sites. Based on consultations with environmental consultants, thePartnership’s estimated cost of the remediation is expected to be approximately $30.0 million to be expended over anextended period of time. As a result, the Partnership initially recorded, on an undiscounted basis, total environmentalliabilities of approximately $30.0 million.In connection with the June 2010 acquisition of three refined petroleum products terminals in Newburgh, New York,the Partnership assumed certain environmental liabilities, including certain ongoing remediation efforts. As a result, thePartnership initially recorded, on an undiscounted basis, a total environmental liability of approximately $1.5 million.In addition to the above-mentioned environmental liabilities related to the Partnership’s retail gasoline stations, thePartnership retains some of the environmental obligations associated with certain gasoline stations that the Partnership hassold.The following table presents a summary roll forward of the Partnership’s environmental liabilities at December 31,2017 (in thousands): Balance at Other Balance at December 31, Additions Payments Dispositions Adjustments December 31, Environmental Liability Related to: 2016 2017 2017 2017 2017 2017 Retail gasoline stations $58,456 $1,258 $(2,985) $(2,175) $(985) $53,569 Terminals 4,609 — (201) — — 4,408 Total environmental liabilities $63,065 $1,258 $(3,186) $(2,175) $(985) $57,977 Current portion $5,341 $5,009 Long-term portion 57,724 52,968 Total environmental liabilities $63,065 $57,977 The Partnership’s estimates used in these environmental liabilities are based on all known facts at the time and itsassessment of the ultimate remedial action outcomes. Among the many uncertainties that impact the Partnership’s estimatesare the necessary regulatory approvals for, and potential modification of, its remediation plans, the amount of data availableupon initial assessment of the impact of soil or water contamination, changes in costs associated with environmentalremediation services and equipment, relief of obligations through divestitures of sites and the possibility of existing legalclaims giving rise to additional claims. Dispositions generally represent relief of legal obligations through the sale of therelated property with no retained obligation. Other adjustments generally represent changes inF-57 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)estimates for existing obligations or obligations associated with new sites. Therefore, although the Partnership believes thatthese environmental liabilities are adequate, no assurances can be made that any costs incurred in excess of theseenvironmental liabilities or outside of indemnifications or not otherwise covered by insurance would not have a materialadverse effect on the Partnership’s financial condition, results of operations or cash flows.Renewable Identification Numbers (RINs)A RIN is a serial number assigned to a batch of renewable fuel for the purpose of tracking its production, use, andtrading as required by the U.S. Environmental Protection Agency’s (“EPA”) Renewable Fuel Standard that originated withthe Energy Policy Act of 2005 and modified by the Energy Independence and Security Act of 2007. To evidence that therequired volume of renewable fuel is blended with gasoline and diesel motor vehicle fuels, obligated parties must retiresufficient RINs to cover their Renewable Volume Obligation (“RVO”). The Partnership’s EPA obligations relative torenewable fuel reporting are largely limited to the foreign gasoline and diesel that the Partnership may choose to import anda small amount of blending operations at certain facilities. As a wholesaler of transportation fuels through its terminals, thePartnership separates RINs from renewable fuel through blending with gasoline and can use those separated RINs to settle itsRVO. While the annual compliance period for the RVO is a calendar year and the settlement of the RVO typically occurs byMarch 31 of the following year, the settlement of the RVO can occur, under certain EPA deferral actions, more than one yearafter the close of the compliance period.The Partnership’s Wholesale segment’s operating results may be sensitive to the timing associated with its RINposition relative to its RVO at a point in time, and the Partnership may recognize a mark‑to‑market liability for a shortfall inRINs at the end of each reporting period. To the extent that the Partnership does not have a sufficient number of RINs tosatisfy the RVO as of the balance sheet date, the Partnership charges cost of sales for such deficiency based on the marketprice of the RINs as of the balance sheet date and records a liability representing the Partnership’s obligation to purchaseRINs. The Partnership’s RVO deficiency was immaterial at December 31, 2017 and $0.2 million at December 31, 2017 and2016, respectively.The Partnership may enter into RIN forward purchase and sales commitments. Total losses at December 31, 2017 and2016 from firm non-cancellable commitments were immaterial.Note 13. Employee Benefit PlansThe Partnership sponsors and maintains the Global Partners LP 401(k) Savings and Profit Sharing Plan (the “Global401(k) Plan”), a qualified defined contribution plan. Eligible employees may elect to contribute up to 100% of their eligiblecompensation to the Global 401(k) Plan for each payroll period, subject to annual dollar limitations which are periodicallyadjusted by the IRS. The General Partner makes safe harbor matching contributions to the Global Partners 401(k) Plan equalto 100% of the participant’s elective contributions that do not exceed 3% of the participant’s eligible compensation and50% of the participant’s elective contributions that exceed 3% but do not exceed 5% of the participant’s eligiblecompensation. The General Partner also makes discretionary non‑matching contributions for certain groups of employees inamounts up to 2% of eligible compensation. Profit‑sharing contributions may also be made at the sole discretion of theGeneral Partner’s board of directors.GMG sponsors and maintains the Global Montello Group Corp. 401(k) Savings and Profit Sharing Plan (the “GMG401(k) Plan”), a qualified defined contribution plan. Eligible employees may elect to contribute up to 100% of their eligiblecompensation to the GMG 401(k) Savings and Profit Sharing Plan for each payroll period, subject to annual dollarlimitations which are periodically adjusted by the IRS. GMG makes safe harbor matching contributions to the 401(k) Savingsand Profit Sharing Plan equal to 100% of the participant’s elective contributions that do not exceed 3% of the participant’seligible compensation and 50% of the participant’s elective contributions that exceed 3% but do not exceed 5% of theparticipant’s eligible compensation. Profit‑sharing contributions may also be made at the sole discretion of GMG’s board ofdirectors.F-58 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The Global 401(k) Plan and the GMG 401(k) Plan collectively had expenses of approximately $3.0 million,$2.7 million and $2.4 million for the years ended December 31, 2017, 2016 and 2015, respectively, which are included inselling, general and administrative expenses in the accompanying statements of operations.In addition, the General Partner sponsors and maintains the Global Partners LP Pension Plan (the “Global PensionPlan),” a qualified defined benefit pension plan. Effective December 31, 2009, the Global Pension Plan was amended tofreeze participation and benefit accruals. In order to reduce the adverse effects of the pension freeze on employees withsubstantial service who may not have time to replace future pension accruals with retirement savings before reaching thenormal retirement age of 65, employees meeting certain age and service requirements received increased benefits, includingunder the Global 401(k) Plan, effective December 31, 2009.GMG sponsors and maintains the Global Montello Group Corp. Pension Plan (the “GMG Pension Plan”), a qualifieddefined benefit pension plan. On March 15, 2012, the GMG Pension Plan was amended to freeze participation and benefitaccruals. In order to reduce the adverse effects of the pension freeze on employees with substantial service who may not havetime to replace future pension accruals with retirement savings before reaching the normal retirement age of 65, employeesmeeting certain age and service requirements received increased benefits, including under the Global 401(k) Plan and theGMG 401(k) Plan, effective in 2012.The following table presents each plan’s funded status and the total amounts recognized in the consolidated balancesheets at December 31 (in thousands): December 31, 2017 Global GMG Pension Plan Pension Plan Total Projected benefit obligation $17,463 $4,754 $22,217 Fair value of plan assets 14,629 2,952 17,581 Net unfunded pension liability $2,834 $1,802 $4,636 December 31, 2016 Global GMG Pension Plan Pension Plan Total Projected benefit obligation $16,145 $4,486 $20,631 Fair value of plan assets 13,697 3,080 16,777 Net unfunded pension liability $2,448 $1,406 $3,854 Total actual return on plan assets was $1.9 million and $1.5 million in 2017 and 2016, respectively.F-59 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The following presents the components of the net periodic change in benefit obligation for the Pension Plans for theyears ended December 31 (in thousands): 2017 2016 2015 Benefit obligation at beginning of year $20,631 $20,931 $23,615 Interest cost 724 780 801 Actuarial loss (gain) 2,392 778 (1,925) Benefits paid (1,530) (1,858) (1,560) Benefit obligation at end of year $22,217 $20,631 $20,931 The following presents the weighted-average actuarial assumptions used in determining each plan’s annual pensionexpense for the years ended December 31: Global Pension Plan GMG Pension Plan 2017 2016 2015 2017 2016 2015 Discount rate 3.4% 3.8% 4.0% 3.6% 4.1% 4.3% Expected return on plan assets 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% The discount rates were selected by performing a cash flow/bond matching analysis based on the CitigroupAbove‑Median Pension Discount Curve. The discount rates for 2017 include updated mortality assumptions to reflect themost recently available mortality improvement scale released by the Society of Actuaries and the 2018 IRS ApplicableMortality Table for determining lump sum payments. The expected long-term rate of return on plan assets is determined byusing each plan’s respective target allocation and historical returns for each asset class.The fundamental investment objective of each of the Pension Plans is to provide a rate of return sufficient to fundthe retirement benefits under the applicable Pension Plan at a reasonable cost to the applicable plan sponsor. At a minimum,the rate of return should equal or exceed the discount rate assumed by the Pension Plan’s actuaries in projecting the fundingcost of the Pension Plan under the applicable Employee Retirement Income Security Act (“ERISA”) standards. To do so, theGeneral Partner’s Pension Committee may appoint one or more investment managers to invest all or portions of the assets ofthe Pension Plans in accordance with specific investment guidelines, objectives, standards and benchmarks.The following presents the Pension Plans’ benefits as of December 31, 2017 expected to be paid in each of the nextfive fiscal years and in the aggregate for the next five fiscal years thereafter (in thousands):2018 $4,735 2019 866 2020 1,391 2021 896 2022 1,072 2023—2027 5,802 Total $14,762 The cost of annual contributions to the Pension Plans is not significant to the General Partner, the Partnership or itssubsidiaries. Total contributions made by the General Partner, the Partnership and its subsidiaries to the Pension Plans were$0.4 million, $0.3 million and $0.6 million in 2017, 2016 and 2015, respectively.F-60 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Note 14. Related‑Party TransactionsThe Partnership was a party to an exclusive Second Amended and Restated Terminal Storage Rental andThroughput Agreement, as amended (the “Terminal Storage Rental and Throughput Agreement”), with GPC, an affiliate ofthe Partnership that is 100% owned by members of the Slifka family, with respect to the Revere Terminal in Revere,Massachusetts. On January 14, 2015, the Partnership acquired the Revere Terminal from GPC and related entities, and theTerminal Storage Rental and Throughput Agreement was terminated. Prior to the acquisition, the agreement was accountedfor as an operating lease. The expenses under this agreement totaled $0.8 million for the year ended December 31, 2015.The Partnership is a party to a Second Amended and Restated Services Agreement with GPC, an affiliate of thePartnership that is 100% owned by members of the Slifka family, pursuant to which the Partnership provides GPC withcertain tax, accounting, treasury, legal, information technology, human resources and financial operations support servicesfor which GPC pays the Partnership a monthly services fee at an agreed amount subject to the approval by the ConflictsCommittee of the board of directors of the General Partner. The Second Amended and Restated Services Agreement is for anindefinite term and any party may terminate some or all of the services upon ninety (90) days’ advanced written notice. As ofDecember 31, 2017, no such notice of termination was given by GPC.The General Partner employs substantially all of the Partnership’s employees, except for most of its gasoline stationand convenience store employees, who are employed by GMG. The Partnership reimburses the General Partner for expensesincurred in connection with these employees. These expenses, including bonus, payroll and payroll taxes, were$106.0 million, $101.6 million and $109.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. ThePartnership also reimburses the General Partner for its contributions under the General Partner’s 401(k) Savings and ProfitSharing Plans (see Note 13) and the General Partner’s qualified and non‑qualified pension plans.The table below presents receivables from GPC and the General Partner at December 31 (in thousands): 2017 2016 Receivables from GPC $ 7 $ 6 Receivables from the General Partner (1) 3,766 3,137 Total $3,773 $3,143 (1)Receivables from the General Partner reflect the Partnership’s prepayment of payroll taxes and payroll accruals to theGeneral Partner.In addition, for the year ended December 31, 2017, the Partnership incurred certain costs in connection with acompensation funding agreement with the General Partner. See Note 15, “Long-Term Incentive Plan–Repurchase Program.”Note 15. Long-Term Incentive PlanThe Partnership has a Long Term Incentive Plan, as amended (the “LTIP”), whereby a total of 4,300,000 commonunits were authorized for delivery with respect to awards under the LTIP. The LTIP provides for awards to employees,consultants and directors of the General Partner and employees and consultants of affiliates of the Partnership who performservices for the Partnership. The LTIP allows for the award of options, unit appreciation rights, restricted units, phantomunits, distribution equivalent rights, unit awards and substitute awards. Awards granted pursuant to the LTIP vest pursuant tothe terms of the grant agreements. A total of 2,923,496 units were available for issuance under the LTIP as of December 31,2017.F-61 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Awards granted under the LTIP are authorized by the Compensation Committee of the board of directors of theGeneral Partner (the “Committee”) from time to time. Additionally and in accordance with the LTIP, the Committeeestablished a “CEO Authorized LTIP” program pursuant to which the Chief Executive Officer (“CEO”) could grant awards ofphantom units without distribution equivalent rights to employees of the General Partner and the Partnership’s subsidiaries,other than named executive officers. The CEO Authorized LTIP program was approved for three consecutive calendar yearsand expired on December 31, 2017. During each calendar year of the program, the CEO was authorized to grant awards of upto an aggregate amount of $2.0 million of phantom units payable in common units upon vesting, with unused dollar amountscarrying over in the next year, and no individual grant could be made for an award valued at the time of grant of more than$550,000, unless otherwise previously approved by the Committee. Awards granted pursuant to the CEO Authorized LTIPgenerally were for a term of six years and vest in equal tranches at the end of each of the fourth, fifth and sixth anniversarydates of the particular award.The following table presents a summary of the non‑vested phantom units granted under the LTIP: Weighted Number of Average Non-vested Grant Date Units Fair Value ($) Outstanding non—vested units at December 31, 2015 595,720 38.85 Granted (1) 12,659 15.80 Vested (21,872) 37.34 Forfeited (14,953) 32.66 Outstanding non—vested phantom units at December 31, 2016 571,554 38.56 Granted (1) 579,588 16.75 Vested (119,929) 39.18 Forfeited (81,996) 34.91 Outstanding non—vested phantom units at December 31, 2017 949,217 25.48 (1)The Partnership currently intends and reasonably expects to issue and deliver the common units upon vesting.Accounting guidance for share‑based compensation requires that a non‑vested equity share unit awarded to anemployee is to be measured at its fair value as if it were vested and issued on the grant date. The fair value of the aboveawards at their respective grant dates approximated the fair value of the Partnership’s common unit at that date.Compensation cost for an award of share-based employee compensation classified as equity, as is the case of thePartnership’s awards, is recognized over the requisite service period. The requisite service period for the Partnership is fromthe grant date through the vesting dates described in the grant agreement. The Partnership recognizes as compensationexpense for the awards granted to employees and non-employee directors the value of the portion of the award that isultimately expected to vest over the requisite service period on a straight-line basis. Prior to the adoption of ASU 2016-09,the Partnership estimated forfeitures at the time of grant. Such estimates, which were based on the Partnership’s servicehistory, would have been revised, if necessary, in subsequent periods if actual forfeitures differ from estimates.The Partnership recorded total compensation expense related to the LTIP awards of $3.9 million, $4.2 million and$4.3 million for the years ended December 31, 2017, 2016 and 2015, respectively, which is included in selling, general andadministrative expenses in the accompanying consolidated statements of operations.During 2017 and 2016, a total of 81,996 phantom units and 14,953 phantom units, respectively, were forfeited, themajority of which were related to phantom unit awards granted in 2013. As the Partnership’s assumption for forfeitures at thetime of grant was zero based on service history, the Partnership reversed compensation expenses relatedF-62 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)to the forfeitures in the amount of $1.9 million and $0.1 million for the years ended December 31, 2017 and 2016,respectively, which is included in selling, general and administrative expenses in the accompanying consolidated statementsof operations.The total compensation cost related to the non-vested awards not yet recognized at December 31, 2017 wasapproximately $13.9 million and is expected to be recognized ratably over the remaining requisite service periods.Repurchase ProgramIn May 2009, the board of directors of the General Partner authorized the repurchase of the Partnership’s commonunits (the “Repurchase Program”) for the purpose of meeting the General Partner’s anticipated obligations to deliver commonunits under the LTIP and meeting the General Partner’s obligations under existing employment agreements and otheremployment related obligations of the General Partner (collectively, the “General Partner’s Obligations”). The GeneralPartner is authorized to acquire up to 1,242,427 of its common units in the aggregate over an extended period of time,consistent with the General Partner’s Obligations. Common units may be repurchased from time to time in open markettransactions, including block purchases, or in privately negotiated transactions. Such authorized unit repurchases may bemodified, suspended or terminated at any time and are subject to price and economic and market conditions, applicable legalrequirements and available liquidity. Since the Repurchase Program was implemented, the General Partner repurchased838,505 common units pursuant to the Repurchase Program for approximately $24.8 million, none of which wererepurchased in 2017.In June 2009, the Partnership and the General Partner entered into the Global GP LLC Compensation FundingAgreement (the “Agreement”) whereby the Partnership and the General Partner established obligations and protocol for(i) the funding, management and administration of a compensation funding account and underlying General Partner’sObligations, and (ii) the holding and disposition by the General Partner of common units acquired in accordance with theAgreement for such purposes as otherwise set forth in the Agreement. The Agreement requires the Partnership to fund coststhat the General Partner incurs in connection with performance of the Agreement. In accordance with the Agreement, thePartnership incurred approximately $1.1 million in the aggregate for certain costs incurred in connection with theAgreement, which is included in selling, general and administrative expenses in the accompanying consolidated statementsof operations for the year ended December 31, 2017. In June 2017, the Partnership paid members of the General Partnerapproximately $0.8 million of these costs.Note 16. Partners’ Equity, Allocations and Cash DistributionsPartners’ EquityPartners’ equity at December 31, 2017 consisted of 33,995,563 common units issued, including 7,402,924 commonunits held by affiliates of the General Partner, including directors and executive officers, collectively representing a 99.33%limited partner interest in the Partnership, and 230,303 general partner units representing a 0.67% general partner interest inthe Partnership.F-63 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The following table presents the changes in the Partnership’s outstanding units: LimitedPartnerUnits GeneralPartnerEquivalentUnits TotalBalance at December 31, 2014 30,995,563 230,303 31,225,866Public offering of common units in 2015 (see Note 17) 3,000,000 — 3,000,000Balance at December 31, 2015, 2016 and 2017 33,995,563 230,303 34,225,866Common UnitsThe common units have limited voting rights as set forth in the Partnership’s partnership agreement.General Partner UnitsThe Partnership’s general partner interest is represented by general partner units. The General Partner is entitled to apercentage (equal to the general partner interest) of all cash distributions of available cash on all common units. ThePartnership’s partnership agreement sets forth the calculation to be used to determine the amount and priority of cashdistributions that the common unitholders, holders of the incentive distribution rights and the General Partner will receive.The Partnership’s general partner interest has the management rights as set forth in the Partnership’s partnershipagreement.Incentive Distribution RightsIncentive distribution rights represent the right to receive an increasing percentage of quarterly distributions ofavailable cash from distributable cash flow after the target distribution levels have been achieved, as defined in thePartnership’s partnership agreement. The General Partner holds all of the incentive distribution rights, but may transfer theserights separately from its general partner interest, subject to restrictions in the Partnership’s partnership agreement.Allocations of Net IncomeNet income is allocated between the General Partner and the common unitholders in accordance with the provisionsof the Partnership’s partnership agreement. Net income is generally allocated first to the General Partner and the commonunitholders in an amount equal to the net losses allocated to the General Partner and the common unitholders in the currentand prior tax years under the Partnership’s partnership agreement. The remaining net income is allocated to the GeneralPartner and the common unitholders in accordance with their respective percentage interests of the general partner units andcommon units.Cash DistributionsThe Partnership intends to make cash distributions to unitholders on a quarterly basis, although there is noassurance as to the future cash distributions since they are dependent upon future earnings, capital requirements, financialcondition and other factors. The Credit Agreement prohibits the Partnership from making cash distributions if any potentialdefault or Event of Default, as defined in the Credit Agreement, occurs or would result from the cash distribution. Theindentures governing the Partnership’s outstanding senior notes also limit the Partnership’s ability to make distributions toits unitholders in certain circumstances.F-64 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Within 45 days after the end of each quarter, the Partnership will distribute all of its Available Cash (as defined in itspartnership agreement) to unitholders of record on the applicable record date. The amount of Available Cash is all cash onhand on the date of determination of Available Cash for the quarter; less the amount of cash reserves established by theGeneral Partner to provide for the proper conduct of the Partnership’s business, to comply with applicable law, any of thePartnership’s debt instruments or other agreements or to provide funds for distributions to unitholders and the General Partnerfor any one or more of the next four quarters.The Partnership will make distributions of Available Cash from distributable cash flow for any quarter in thefollowing manner: 99.33% to the common unitholders, pro rata, and 0.67% to the General Partner, until the Partnershipdistributes for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter; andthereafter, cash in excess of the minimum quarterly distribution is distributed to the unitholders and the General Partnerbased on the percentages as provided below.As holder of the IDRs, the General Partner is entitled to incentive distributions if the amount that the Partnershipdistributes with respect to any quarter exceeds specified target levels shown below: Marginal Percentage Total Quarterly Distribution Interest in Distributions Target Amount Unitholders General Partner First Target Distribution up to $0.4625 99.33% 0.67% Second Target Distribution above $0.4625 up to $0.5375 86.33% 13.67% Third Target Distribution above $0.5375 up to $0.6625 76.33% 23.67% Thereafter above $0.6625 51.33% 48.67% The Partnership paid the following cash distributions during 2017, 2016 and 2015 (in thousands, except per unitdata): Earned for the Per Unit Cash Distribution Quarter Cash Common General Incentive Total Cash Payment Date Ended Distribution Units Partner Distribution Distribution 2015 02/13/15 (1)(2) 12/31/14 $0.6650 $20,612 $154 $1,591 $22,357 05/15/15 (1)(2) 03/31/15 0.6800 21,076 157 2,027 23,260 08/14/15 (2) 06/30/15 0.6925 23,543 159 2,618 26,320 11/13/15 (2) 09/30/15 0.6975 23,713 160 2,777 26,650 2016 2/16/2016 12/31/15 $0.4625 $15,723 $106 $ — $15,829 5/16/2016 03/31/16 0.4625 15,723 106 — 15,829 8/12/2016 06/30/16 0.4625 15,723 106 — 15,829 11/14/2016 09/30/16 0.4625 15,723 106 — 15,829 2017 2/14/2017 12/31/16 $0.4625 $15,723 $106 $ — $15,829 5/15/2017 03/31/17 0.4625 15,723 106 — 15,829 8/14/2017 06/30/17 0.4625 15,723 106 — 15,829 11/14/2017 09/30/17 0.4625 15,723 106 — 15,829 (1)Prior to the Partnership’s public offering in June 2015 (see Note 17), the limited partner interest was 99.26% and thegeneral partner interest was 0.74%.(2)This distribution resulted in the Partnership exceeding its third target level distribution for the respective quarter. As aresult, the General Partner, as the holder of the IDRs, received an incentive distribution.F-65 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)In addition, on January 29, 2018, the board of directors of the General Partner declared a quarterly cash distributionof $0.4625 per unit ($1.85 per unit on an annualized basis) on all of its outstanding common units for the period fromOctober 1, 2017 through December 31, 2017 to the Partnership’s unitholders of record as of the close of business February 9,2018. On February 14, 2018, the Partnership paid the total cash distribution of approximately $15.8 million.Note 17. Unitholders’ EquityEquity OfferingOn June 11, 2015, the Partnership entered into an underwriting agreement relating to the public offering of3,000,000 common units at a price to the public of $38.12 per common unit. On June 16, 2015, the Partnership completedthe offering, and the net proceeds of approximately $109.3 million (after deducting underwriting discounts and estimatedexpenses) were used to reduce indebtedness outstanding under the Partnership’s revolving credit facility.At-the-Market Offering ProgramOn May 19, 2015, the Partnership entered into an equity distribution agreement pursuant to which the Partnershipmay sell from time to time through its sales agents, following a standard due diligence effort, the Partnership’s common unitshaving an aggregate offering price of up to $50.0 million. Sales of the common units, if any, will be made by any methodpermitted by law deemed to be an “at-the-market” offering, including ordinary brokers’ transactions through the facilities ofthe New York Stock Exchange, to or through a market maker, or directly on or through an electronic communicationnetwork, a “dark pool” or any similar market venue, at market prices, in block transactions, or as otherwise agreed upon bythe Partnership and one or more of its sales agents.The Partnership may also sell common units to one or more of its sales agents as principal for its own account at aprice to be agreed upon at the time of sale. Any sale of common units to a sales agent as principal would be pursuant to theterms of a separate agreement between the Partnership and such sales agent.The Partnership intends to use the net proceeds from any sales pursuant to the at-the-market offering program, afterdeducting the sales agents’ commissions and the Partnership’s offering expenses, for general partnership purposes, whichmay include, among other things, repayment of indebtedness, acquisitions and capital expenditures.The sales agents and/or affiliates of each of the sales agents have, from time to time, performed, and may in thefuture perform, various financial advisory and commercial and investment banking services for the Partnership and itsaffiliates, for which they have received and in the future will receive customary compensation and expense reimbursement.Affiliates of the sales agents are lenders under the Partnership’s credit facility and, accordingly, may receive a portion of thenet proceeds from this offering if and to the extent any proceeds are used to reduce outstanding borrowings under thePartnership’s credit facility.No common units have been sold by the Partnership pursuant to the at-the-market offering program since inception.Note 18. Business Combinations2017 AcquisitionHoney Farms, Inc.—On October 18, 2017, the Partnership completed the acquisition of retail gasoline andconvenience store assets from Honey Farms in a cash transaction. The acquisition included 11 company-operated retail siteswith gasoline and convenience stores and 22 company-operated stand-alone convenience stores. All of the sites areF-66 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)located in and around the greater Worcester, Massachusetts area. The purchase price was approximately $38.5 million,including inventory. The acquisition was financed with borrowings under the Partnership’s revolving credit facility.The acquisition was accounted for using the purchase method of accounting in accordance with the FASB’sguidance regarding business combinations. The Partnership’s financial statements include the results of operations of HoneyFarms subsequent to the acquisition date.The purchase price allocation is considered preliminary, and additional adjustments may be recorded during theallocation period in accordance with the FASB’s guidance regarding business combinations. The purchase price allocationwill be finalized as the Partnership receives additional information relevant to the acquisition, including the final valuationof the assets purchased, including tangible and intangible assets, and liabilities assumed.The following table presents the preliminary allocation of the purchase price to the estimated fair value of the assetsacquired and liabilities assumed at the date of acquisition (in thousands):Assets purchased: Inventory $2,999Property and equipment 14,087Intangibles 1,370Other non-current assets 3Total identifiable assets purchased 18,459Liabilities assumed: Environmental liabilities (1,258)Other non-current liabilities (352)Total liabilities assumed (1,610)Net identifiable assets acquired 16,849Goodwill 21,630Net assets acquired $38,479Management is in the process of evaluating the purchase price accounting. The Partnership engaged a third-partyvaluation firm to assist in the valuation of Honey Farms’ property and equipment, intangible assets consisting of in-placeleases, favorable leasehold interests, franchise rights and unfavorable leasehold interests. This valuation continues to be inprocess and, during the year ended December 31, 2017, the Partnership received preliminary fair values of these assets. Theestimated fair values of property and equipment of $14.1 million and intangibles assets of $1.4 million were developed bymanagement based on their estimates, assumptions and acquisition history including preliminary reports from the third-partyvaluation firm. The estimated fair values of the intangible assets were immaterial. The estimated fair values of the propertyand equipment, intangible assets and unfavorable leasehold interests will be supported by the valuations performed by thethird-party valuation firm. It is possible that once the Partnership receives the completed valuations on the property andequipment and intangible assets, the final purchase price accounting may be different than what is presented above.The fair value of $1.3 million assigned to the assumption of environmental liabilities was developed bymanagement based on their estimates, assumptions and acquisition history (see Note 12). The fair values of the remaining Honey Farms assets and liabilities noted above approximate their carrying values atOctober 18, 2017. The preliminary purchase price for the acquisition was allocated to assets acquired and liabilities assumed based ontheir estimated fair values. The Partnership then allocated the purchase price in excess of net tangible assets acquiredF-67 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)to identifiable intangible assets, based upon on their estimates and assumptions. Any excess purchase price over the fairvalue of the net tangible and intangible assets acquired was allocated to goodwill.The Partnership utilized accounting guidance related to intangible assets which lists the pertinent factors to beconsidered when estimating the useful life of an intangible asset. These factors include, in part, a review of the expected useby the Partnership of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquiredassets and legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset. The Partnershipamortizes these intangible assets over their estimated useful lives which is consistent with the estimated undiscounted futurecash flows of these assets.As part of the purchase price allocation, identifiable intangible assets include in-place leases, favorable leaseholdinterests and franchise rights that are being amortized over one, three and three years, respectively. Amortization expenserelated to the intangible assets was immaterial for the year ended December 31, 2017. The in-place leases, favorableleasehold interests and franchise rights have a weighted average term of approximately three, two and four years,respectively, prior to their next renewal.The $21.6 million of goodwill was assigned to the GDSO reporting unit as the transaction expanded thePartnership’s footprint and enables the Partnership to benefit from economies of scale in the purchase of gasoline andconvenience store merchandise. The goodwill is expected to be tax deductible. The operations of Honey Farms have beenintegrated into the GDSO reporting segment.In connection with the acquisition of Honey Farms, the Partnership incurred acquisition costs of approximately$0.7 million which are included in selling, general and administrative expenses in the accompanying consolidated statementof operations for the year ended December 31, 2017.Supplemental Pro Forma Information—Revenues and net income not included in the Partnership’s consolidatedoperating results for Honey Farms from January 1, 2016 through October 18, 2017, the acquisition date, were immaterial.Accordingly, the supplemental pro forma information for the years ended December 31, 2017 and 2016 is consistent with theamounts reported in the accompanying consolidated statement of operations for the years ended December 31, 2017 and2016.2015 AcquisitionsWarren Equities, Inc.—On January 7, 2015, the Partnership acquired, through GMG, 100% of the equity interests inWarren, one of the largest independent marketers of petroleum products in the Northeast, from The Warren AlpertFoundation. The acquisition included 147 company-owned Xtra Mart convenience stores and related fuel operations, 53commissioned agented locations and fuel supply rights for approximately 330 dealers. The acquired properties are located inthe Northeast, Maryland and Virginia. The purchase price, inclusive of post-closing adjustments, was approximately$381.8 million, including working capital. The acquisition was funded with borrowings under the Partnership’s creditfacility and with proceeds from its December 2014 public offering of 3,565,000 common units.The acquisition was accounted for using the purchase method of accounting in accordance with the FASB’sguidance regarding business combinations. The Partnership’s financial statements include the results of operations of Warrensubsequent to the acquisition date.In connection with the acquisition of Warren, the Partnership recorded acquisition costs of $5.4 million for the yearended December 31, 2015, which are included in selling, general and administrative expenses in the accompanyingconsolidated statements of operations. Additionally, in January 2015 and subsequent to the acquisition date, the Partnershiprecorded a restructuring charge of approximately $2.3 million, which is included in selling, general andF-68 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)administrative expenses in the accompanying consolidated statements of operations for the year ended December 31, 2015.This charge, which was principally for redundant and/or eliminated positions as a result of the acquisition, was not part of thepurchase price allocation. The $2.3 million restructuring charge was paid during the year ended December 31, 2015.Revere Terminal—On January 14, 2015, through the Partnership’s wholly owned subsidiary, Global Companies, thePartnership acquired the Revere Terminal located in Boston Harbor in Revere, Massachusetts from GPC, a privately heldaffiliate of the Partnership, and related entities for a purchase price of $23.7 million. The acquisition includes contingentconsideration which would be payable under specific circumstances involving a subsequent sale of the property during theeight years following the acquisition. The contingent consideration was estimated to be $0 as of the acquisition date as thePartnership concluded that the sale of the terminal for non-petroleum use within the eight years following the acquisition isnot probable. There have been no changes to this assessment since the acquisition date. The Partnership financed thetransaction with borrowings under its revolving credit facility. In connection with the Revere Terminal transaction, the pre-existing terminal storage rental and throughput agreement between the Partnership and GPC was terminated.The acquisition was accounted for using the purchase method of accounting in accordance with the FASB’sguidance regarding business combinations. As the acquisition transitioned the Revere Terminal from a formerly leasedfacility to an owned facility, the transaction did not have a material impact on the Partnership’s consolidated financialstatements.Capitol Petroleum Group—On June 1, 2015, the Partnership acquired 97 primarily Mobil and Exxon brandedowned or leased retail gasoline stations and seven dealer supply contracts in New York City and Prince George’s County,Maryland, along with certain related supply and franchise agreements and third-party leases and other assets associated withthe operations from Liberty Petroleum Realty, LLC, East River Petroleum Realty, LLC, Big Apple Petroleum Realty, LLC,White Oak Petroleum, LLC, Anacostia Realty, LLC, Mount Vernon Petroleum Realty, LLC and DAG Realty, LLC(collectively, “Capitol Petroleum Group”). The purchase price was approximately $155.7 million. The acquisition wasfinanced with borrowings under the Partnership’s revolving credit facility.The acquisition was accounted for using the purchase method of accounting in accordance with the FASB’sguidance regarding business combinations. The Partnership’s financial statements include the results of operations of Capitolsubsequent to the acquisition date.In connection with the acquisition of Capitol, the Partnership incurred acquisition costs of approximately$3.5 million which are included in selling, general and administrative expenses in the accompanying consolidatedstatements of operations for the year ended December 31, 2015.Note 19. Segment ReportingThe Partnership engages in the purchasing, selling, storing and logistics of transporting petroleum and relatedproducts, including gasoline and gasoline blendstocks (such as ethanol), distillates (such as home heating oil, diesel andkerosene), residual oil, renewable fuels, domestic and Canadian crude oil and propane. The Partnership also receives revenuefrom convenience store sales, rental income and sundries. The Partnership’s three operating segments are based upon therevenue sources for which discrete financial information is reviewed by the chief operating decision maker (the “CODM”) tomake key operating decisions and assess performance and include Wholesale, GDSO and Commercial.These operating segments are also the Partnership’s reporting segments. For the years ended December 31, 2017,2016 and 2015, the Commercial operating segment did not meet the quantitative metrics for disclosure as a reportablesegment on a stand‑alone basis as defined in accounting guidance related to segment reporting. However, the Partnership haselected to present segment disclosures for the Commercial operating segment as management believesF-69 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)such disclosures are helpful to the user of the Partnership’s financial information. The accounting policies of the segments arethe same as those described in Note 2, “Summary of Significant Accounting Policies.”In the Wholesale reporting segment, the Partnership sells branded and unbranded gasoline and gasoline blendstocksand diesel to wholesale distributors. The Partnership transports these products by railcars, barges and/or pipelines pursuant tospot or long‑term contracts. From time to time, the Partnership aggregates crude oil by truck or pipeline in the mid-continentregion of the United States and Canada, transports it by rail and ships it by barge to refiners. The Partnership sells homeheating oil, branded and unbranded gasoline and gasoline blendstocks, diesel, kerosene, residual oil and propane to homeheating oil and propane retailers and wholesale distributors. Generally, customers use their own vehicles or contract carriersto take delivery of the gasoline and distillates at bulk terminals and inland storage facilities that the Partnership owns orcontrols or at which it has throughput or exchange arrangements. Ethanol is shipped primarily by rail and by barge.In the GDSO reporting segment, gasoline distribution includes sales of branded and unbranded gasoline to gasolinestation operators and sub jobbers. Station operations include (i) convenience stores, (ii) rental income from gasoline stationsleased to dealers, from commissioned agents and from cobranding arrangements and (iii) sundries (such as car wash sales,lottery and ATM commissions).In the Commercial segment, the Partnership includes sales and deliveries to end user customers in the public sectorand to large commercial and industrial end users of unbranded gasoline, home heating oil, diesel, kerosene, residual oil andbunker fuel. In the case of public sector commercial and industrial end user customers, the Partnership sells productsprimarily either through a competitive bidding process or through contracts of various terms. The Partnership generallyarranges for the delivery of the product to the customer’s designated location, and the Partnership responds to publicly-issued requests for product proposals and quotes. The Commercial segment also includes sales of custom blended fuelsdelivered by barges or from a terminal dock to ships through bunkering activity.An important measure used by the Partnership and the CODM to evaluate segment performance is product margin,which the Partnership defines as product sales minus product costs. Based on the way the business is managed, componentsof indirect operating costs and corporate expenses are not allocated to the reportable segments. F-70 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Summarized financial information for the Partnership’s reportable segments for the years ended December 31 ispresented in the table below (in thousands): 2017 2016 2015 Wholesale Segment: Sales Gasoline and gasoline blendstocks$2,097,811 $2,026,315 $2,714,057 Crude oil (1) 464,234 546,541 1,190,560 Other oils and related products (2) 1,725,537 1,534,165 2,006,668 Total$4,287,582 $4,107,021 $5,911,285 Product margin Gasoline and gasoline blendstocks$82,124 $83,742 $66,031 Crude oil (1) 7,279 (13,098) 74,182 Other oils and related products (2) 62,799 74,271 67,709 Total$152,202 $144,915 $207,922 Gasoline Distribution and Station Operations Segment: Sales Gasoline$3,434,581 $3,071,517 $3,289,742 Station operations (3) 351,876 371,661 381,194 Total$3,786,457 $3,443,178 $3,670,936 Product margin Gasoline$326,536 $289,420 $276,848 Station operations (3) 174,986 183,708 178,487 Total$501,522 $473,128 $455,335 Commercial Segment: Sales$846,513 $689,440 $732,631 Product margin$17,858 $24,018 $29,201 Combined sales and Product margin: Sales$8,920,552 $8,239,639 $10,314,852 Product margin (4)$671,582 $642,061 $692,458 Depreciation allocated to cost of sales (88,530) (95,571) (94,789) Combined gross profit$583,052 $546,490 $597,669 (1)Crude oil consists of the Partnership’s crude oil sales and revenue from its logistics activities.(2)Other oils and related products primarily consist of distillates, residual oil and propane.(3)Station operations consist of convenience store sales, rental income and sundries.(4)Product margin is a non-GAAP financial measure used by management and external users of the Partnership’s consolidated financialstatements to assess its business. The table above includes a reconciliation of product margin on a combined basis to gross profit, adirectly comparable GAAP measure. Approximately 480 million gallons, 500 million gallons and 450 million gallons of the GDSO segment’s sales forthe years ended December 31, 2017, 2016 and 2015, respectively, were supplied from petroleum products and renewablefuels sourced by the Wholesale segment. Except for natural gas (prior to the sale of the Partnership’s natural gas marketingand electricity brokerage businesses in February 2017), predominantly all of the Commercial segment’s sales were sourcedby the Wholesale segment. These intra-segment sales are not reflected as sales in the Wholesale segment as they areeliminated.None of the Partnership’s customers accounted for greater than 10% of total sales for years ended December 31,2017, 2016 and 2015. F-71 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)A reconciliation of the totals reported for the reportable segments to the applicable line items in the consolidatedfinancial statements for the years ended December 31 is as follows (in thousands): 2017 2016 2015 Combined gross profit$583,052 $546,490 $597,669 Operating costs and expenses not allocated to operating segments: Selling, general and administrative expenses 155,033 149,673 177,043 Operating expenses 283,650 288,547 290,307 Loss on trustee taxes 16,194 — — Lease exit and termination expenses — 80,665 — Amortization expense 9,206 9,389 13,499 Net (gain) loss on sale and disposition of assets (1,624) 20,495 2,097 Goodwill and long-lived asset impairment 809 149,972 — Total operating costs and expenses 463,268 698,741 482,946 Operating income (loss) 119,784 (152,251) 114,723 Interest expense (86,230) (86,319) (73,332) Income tax benefit (expense) 23,563 (53) 1,873 Net income (loss) 57,117 (238,623) 43,264 Net loss attributable to noncontrolling interest 1,635 39,211 299 Net income (loss) attributable to Global Partners LP$58,752 $(199,412) $43,563 The Partnership’s foreign assets and foreign sales were immaterial as of and for the years ended December 31, 2017,2016 and 2015.Segment AssetsThe Partnership’s terminal assets are allocated to the Wholesale and Commercial segments, and its retail gasolinestations are allocated to the GDSO segment. Due to the commingled nature and uses of the remainder of the Partnership’sassets, it is not reasonably possible for the Partnership to allocate these assets among its reportable segments.The table below presents total assets by reportable segment at December 31, (in thousands): Wholesale Commercial GDSO Unallocated TotalDecember 31, 2017 $613,764 $100 $1,281,370 $424,935 $2,320,169December 31, 2016 $830,662 $134 $1,294,568 $438,656 $2,564,020 F-72 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Note 20. Changes in Accumulated Other Comprehensive LossThe following table presents the changes in accumulated other comprehensive loss by component (in thousands): Pension Plan Derivatives Total Balance at December 31, 2015 $(4,436) $(3,658) $(8,094) Other comprehensive income before reclassificationsof gain (loss) 149 2,486 2,635 Amount of gain (loss) reclassified from accumulatedother comprehensive (loss) income 18 — 18 Total comprehensive income 167 2,486 2,653 Balance at December 31, 2016 (4,269) (1,172) (5,441) Other comprehensive (loss) income beforereclassifications of gain (loss) (1,032) 1,037 5 Amount of gain (loss) reclassified from accumulatedother comprehensive (loss) income (32) — (32) Total comprehensive (loss) income (1,064) 1,037 (27) Balance at December 31, 2017 $(5,333) $(135) $(5,468) Amounts are presented prior to the income tax effect on other comprehensive income. Given the Partnership’s masterlimited partnership status, the effective tax rate is immaterial. Note 21. Legal ProceedingsGeneralAlthough the Partnership may, from time to time, be involved in litigation and claims arising out of its operations inthe normal course of business, the Partnership does not believe that it is a party to any litigation that will have a materialadverse impact on its financial condition or results of operations. Except as described below and in Note 12 included herein,the Partnership is not aware of any significant legal or governmental proceedings against it, or contemplated to be broughtagainst it. The Partnership maintains insurance policies with insurers in amounts and with coverage and deductibles as itsgeneral partner believes are reasonable and prudent. However, the Partnership can provide no assurance that this insurancewill be adequate to protect it from all material expenses related to potential future claims or that these levels of insurance willbe available in the future at economically acceptable prices.OtherDuring the second quarter ended June 30, 2016, the Partnership determined that gasoline loaded from certainloading bays at one of its terminals did not contain the necessary additives as a result of an IT-related configuration error.The error was corrected and all gasoline being sold at the terminal now contains the appropriate additives. Based uponcurrent information, the Partnership believes approximately 14 million gallons of gasoline were impacted. The Partnershiphas notified the EPA of this error. As a result of this error, the Partnership could be subject to fines, penalties and other relatedclaims, including customer claims.On August 2, 2016, the Partnership received a Notice of Violation (“NOV”) from the EPA, alleging that permits forthe Partnership’s petroleum product transloading facility in Albany, New York (the “Albany Terminal”), issued by the NewYork State Department of Environmental Conservation (“NYSDEC”) between August 9, 2011 and November 7, 2012,violated the Clean Air Act (the “CAA”) and the federally enforceable New York StateF-73 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Implementation Plan (“SIP”) by increasing throughput of crude oil at the Albany Terminal without complying with the NewSource Review (“NSR”) requirements of the SIP. The Albany Terminal is a 63-acre licensed, permitted and operationalstationary bulk petroleum storage and transfer terminal that currently consists of petroleum product storage tanks, along withtruck, rail and marine loading facilities, for the storage, blending and distribution of various petroleum and related products,including gasoline, ethanol, distillates, heating and crude oils. The applicable permits issued by the NYSDEC to thePartnership in 2011 and 2012 specifically authorize the Partnership to increase the throughput of crude oil at the AlbanyTerminal. According to the allegations in the NOV, the NYSDEC permit actions should have been treated as a majormodification under the NSR program, requiring additional emission control measures and compliance with other NSRrequirements. The NYSDEC has not alleged that the Partnership’s permits were subject to the NSR program. The CAAauthorizes the EPA to take enforcement action in response to violations of the New York SIP seeking compliance andpenalties. The Partnership believes that the permits issued by the NYSDEC comply with the CAA and applicable state airpermitting requirements and that no material violation of law has occurred. The Partnership disputes the claims alleged in theNOV and responded to the EPA in September 2016. The Partnership met with the EPA and provided additional informationat the agency’s request. On December 16, 2016, the EPA proposed a Settlement Agreement in a letter to the Partnershiprelating to the allegations in the NOV. On January 17, 2017, the Partnership responded to the EPA indicating that the EPAhad failed to explain or provide support for its allegations and that the EPA needed to better explain its positions and theevidence on which it was relying. The EPA did not respond with such evidence, but instead requested that the Partnershipenter into a further tolling agreement. The Partnership has signed a number of tolling agreements with respect to this matterand such agreements currently extend through June 29, 2018. To date, the EPA has not taken any further formal action withrespect to the NOV.On February 3, 2016, Earthjustice, an environmental advocacy organization, filed suit on behalf of the County ofAlbany, New York, a public housing development owned and operated by the Albany Housing Authority and certainenvironmental organizations against the Partnership in federal court in Albany under the citizen suit provisions of the CAA.In summary, this lawsuit alleged that certain of the Partnership’s operations at the Albany Terminal are in violation of theCAA. On February 26, 2016, the Partnership filed a motion to dismiss the CAA action. On September 26, 2017, the UnitedStates District Court granted the Partnership’s motion to dismiss the suit in its entirety. The plaintiffs filed a Notice of Appealwith the Second Circuit Court of Appeals, which was subsequently withdrawn in December 2017, thereby ending the lawsuit.By letter dated January 25, 2017, the Partnership received a notice of intent to sue (the “2017 NOI”) fromEarthjustice related to alleged violations of the CAA; specifically alleging that the Partnership was operating the AlbanyTerminal without a valid CAA Title V Permit. On February 9, 2017, the Partnership responded to Earthjustice advising thatthe 2017 NOI was without factual or legal merit and that the Partnership would move to dismiss any action commenced byEarthjustice. No action was taken by either the EPA or the NYSDEC with regard to the Earthjustice allegations. At this time,there has been no further action taken by Earthjustice. Neither the EPA nor the NYSDEC has followed up on the 2017 NOI.The Albany Terminal is currently operating pursuant to its Title V Permit. The Partnership believes that it has meritoriousdefenses against all allegations.On May 29, 2015 and in connection with a commercial dispute with Tethys Trading Company LLC (“Tethys”), thePartnership received a notice from Tethys alleging a default under, and purporting to terminate, the Partnership’s contractwith Tethys for crude oil services at the Partnership’s Oregon facility. However, the Partnership does not believe Tethys hadthe right to terminate the contract, and the Partnership will continue to investigate and determine the appropriate action totake to enforce its rights under the agreement. On March 26, 2015, the Partnership received a Notice of Non-Compliance (“NON”) from the MassachusettsDepartment of Environmental Protection (“DEP”) with respect to the Revere Terminal, alleging certain violations of theNational Pollutant Discharge Elimination System Permit (“NPDES Permit”) related to storm water discharges. The NONrequired the Partnership to submit a plan to remedy the reported violations of the NPDES Permit. The Partnership hasresponded to the NON with a plan and has implemented modifications to the storm water management system at theF-74 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Revere Terminal in accordance with the plan. The Partnership has requested that the DEP acknowledge completion of therequired modifications to the storm water management system in satisfaction of the NON. While no response has yet beenreceived, the Partnership believes that compliance with the NON has been achieved, and implementation of the plan willhave no material impact on its operations.The Partnership received letters from the EPA dated November 2, 2011 and March 29, 2012, containingrequirements and testing orders (collectively, the “Requests for Information”) for information under the CAA. The Requestsfor Information were part of an EPA investigation to determine whether the Partnership has violated sections of the CAA atcertain of its terminal locations in New England with respect to residual oil and asphalt. On June 6, 2014, a NOV wasreceived from the EPA, alleging certain violations of its Air Emissions License issued by the Maine Department ofEnvironmental Protection, based upon the test results at the South Portland, Maine terminal. The Partnership met with andprovided additional information to the EPA with respect to the alleged violations. On April 7, 2015, the EPA issued aSupplemental Notice of Violation (the “Supplemental NOV”) modifying the allegations of violations of the terminal’s AirEmissions License. The Partnership has responded to the Supplemental NOV and is engaged in further negotiations with theEPA. A tolling agreement was executed with the United States on December 1, 2015, which has currently been extendedthrough June 29, 2018. While the Partnership does not believe that a material violation has occurred, and it contests theallegations presented in the NOV and Supplemental NOV, the Partnership does not believe any adverse determination inconnection with the NOV would have a material impact on its operations.Note 22. Supplemental Cash Flow InformationThe following table presents cash flow supplemental information for the years ended December 31 (in thousands): 2017 2016 2015 Borrowings from working capital revolving credit facility $1,311,700 $1,675,100 $1,811,300 Payments on working capital revolving credit facility (1,509,600) (1,498,600) (1,663,200) Net (payments on) borrowings from working capital revolving credit facility $(197,900) $176,500 $148,100 Borrowings from revolving credit facility $36,300 $82,000 $544,900 Payments on revolving credit facility (57,000) (134,300) (409,700) Net (payments on) borrowings from revolving credit facility $(20,700) $(52,300) $135,200 Note 23. Quarterly Financial Data (Unaudited)Unaudited quarterly financial data is as follows (in thousands, except per unit amounts): First Second Third Fourth Total Year ended December 31, 2017 Sales $2,270,784 $2,089,530 $2,159,746 $2,400,492 $8,920,552 Gross profit $140,027 $135,362 $150,094 $157,569 $583,052 Net income (1)(2)(3)(4)(5) $22,505 $1,991 $14,460 $18,161 $57,117 Net income attributable to Global Partners LP $22,946 $2,374 $14,878 $18,554 $58,752 Limited partners’ interest in net income $22,792 $2,358 $14,778 $18,430 $58,358 Basic net income per limited partner unit $0.68 $0.07 $0.44 $0.55 $1.74 Diluted net income per limited partner unit $0.68 $0.07 $0.44 $0.55 $1.74 Cash distributions per limited partner unit (6) $0.4625 $0.4625 $0.4625 $0.4625 $1.85 (1)Includes a $14.2 million gain on the sale of the Partnership’s natural gas marketing and electricity brokerage businesses in the firstquarter of 2017.(2)Includes a net loss on sale and disposition of assets of $2.3 million, $2.4 million, $2.2 million and $5.6 million in the first, second, thirdand fourth quarters of 2017, respectively.F-75 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)(3)Includes a $13.1 million expense associated with the acceleration and corresponding termination of a contractual obligation under apipeline connection agreement in the third quarter.(4)Includes a $16.2 million loss on trustee taxes in the fourth quarter.(5)Includes a $22.2 million income tax benefit in the fourth quarter. See Note 11.(6)Cash distributions declared in one calendar quarter are paid in the following calendar quarter. First Second Third Fourth Total Year ended December 31, 2016 Sales $1,750,812 $2,146,199 $2,030,198 $2,312,430 $8,239,639 Gross profit (7) $130,059 $129,342 $132,611 $154,478 $546,490 Net loss (8)(9)(10) $(7,835) $(8,543) $(156,583) $(65,662) $(238,623) Net loss attributable to Global Partners LP (11) $(7,024) $(7,310) $(119,551) $(65,527) $(199,412) Limited partners’ interest in net loss $(6,977) $(7,261) $(118,750) $(65,088) $(198,076) Basic net loss per limited partner unit $(0.21) $(0.22) $(3.54) $(1.94) $(5.91) Diluted net loss per limited partner unit $(0.21) $(0.22) $(3.54) $(1.94) $(5.91) Cash distributions per limited partner unit (6) $0.4625 $0.4625 $0.4625 $0.4625 $1.85 (7)Includes $28.0 million in revenue in the fourth quarter related to the absence of logistics nominations from one particular contractcustomer, specifically in the second, third and fourth quarters, and logistics revenue related to this contract in the first quarter.(8)Includes a net loss on sale and disposition of assets of $6.1 million, $0.4 million, $7.5 million and $6.5 million in the first, second, thirdand fourth quarters of 2016, respectively.(9)Includes a goodwill and long-lived asset impairment of $147.8 million in the third quarter of 2016.(10)Includes lease exit and termination expenses of $80.7 million in the fourth quarter of 2016.(11)Includes a net goodwill and long-lived asset impairment of $112.0 million ($147.8 million attributed to the Partnership, offset by$35.8 million attributed to the noncontrolling interest) in the third quarter of 2016..Note 24. Subsequent EventsIn the first quarter of 2018, the Partnership will recognize a one-time income item of approximately $52.6 million asa result of the extinguishment of a contingent liability related to the Volumetric Ethanol Excise Tax Credit, which tax creditprogram expired in 2011. Based upon the significant passage of time from that 2011 expiration date, including underlyingstatutes of limitation, as of January 31, 2018 the Partnership determined that the liability was no longer required. Thisrecognition of one-time income will not impact cash flows from operations for the year ending December 31, 2018.Distribution—On February 14, 2018, the Partnership paid a cash distribution of approximately $15.8 million to itsunitholders of record as of the close of business on February 9, 2018.Note 25. Supplemental Guarantor Condensed Consolidating Financial StatementsThe Partnership’s wholly-owned subsidiaries, other than GLP Finance, are guarantors of senior notes issued by thePartnership and GLP Finance. As such, the Partnership is subject to the requirements of Rule 3-10 of Regulation S-X of theSEC regarding financial statements of guarantors and issuers of registered guaranteed securities. The Partnership presentscondensed consolidating financial information for its subsidiaries within the notes to consolidated financial statements inaccordance with the criteria established for parent companies in the SEC’s Regulation S-X, Rule 3-10(d). The followingcondensed consolidating financial information presents the Condensed Consolidating Balance Sheets as of December 31,2017 and 2016, the Condensed Consolidating Statements of Operations for the years ended December 31, 2017, 2016 and2015 and the Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015 ofthe Partnership’s 100% owned guarantor subsidiaries, the non-guarantor subsidiary and the eliminations necessary to arriveat the information for the Partnership on a consolidated basis. The principal elimination entries eliminate investments insubsidiaries and intercompany balances and transactions.F-76 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Condensed Consolidating Balance SheetDecember 31, 2017(In thousands) (Issuer) Non- Guarantor Guarantor Subsidiaries Subsidiary Eliminations Consolidated Assets Current assets: Cash and cash equivalents $13,035 $1,823 $ — $14,858 Accounts receivable, net 416,974 218 71 417,263 Accounts receivable - affiliates 3,773 71 (71) 3,773 Inventories 350,743 — — 350,743 Brokerage margin deposits 9,681 — — 9,681 Derivative assets 3,840 — — 3,840 Prepaid expenses and other current assets 77,889 88 — 77,977 Total current assets 875,935 2,200 — 878,135 Property and equipment, net 1,029,864 6,803 — 1,036,667 Intangible assets, net 56,545 — — 56,545 Goodwill 312,401 — — 312,401 Other assets 36,421 — — 36,421 Total assets $2,311,166 $9,003 $ — $2,320,169 Liabilities and partners' equity Current liabilities: Accounts payable $313,265 $147 $ — $313,412 Accounts payable - affiliates (148) 148 — — Working capital revolving credit facility - current portion 126,700 — — 126,700 Environmental liabilities - current portion 5,009 — — 5,009 Trustee taxes payable 110,321 — — 110,321 Accrued expenses and other current liabilities 99,288 219 — 99,507 Derivative liabilities 13,708 — — 13,708 Total current liabilities 668,143 514 — 668,657 Working capital revolving credit facility - less current portion 100,000 — — 100,000 Revolving credit facility 196,000 — — 196,000 Senior notes 661,774 — — 661,774 Environmental liabilities - less current portion 52,968 — — 52,968 Financing obligations 150,334 — — 150,334 Deferred tax liabilities 40,105 — — 40,105 Other long-term liabilities 56,013 — — 56,013 Total liabilities 1,925,337 514 — 1,925,851 Partners' equity Global Partners LP equity 385,829 5,124 — 390,953 Noncontrolling interest — 3,365 — 3,365 Total partners' equity 385,829 8,489 — 394,318 Total liabilities and partners' equity $2,311,166 $9,003 $ — $2,320,169 F-77 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Condensed Consolidating Balance SheetDecember 31, 2016(In thousands) (Issuer) Non- Guarantor Guarantor Subsidiaries Subsidiary Eliminations Consolidated Assets Current assets: Cash and cash equivalents $9,373 $655 $ — $10,028 Accounts receivable, net 420,897 213 250 421,360 Accounts receivable - affiliates 2,865 528 (250) 3,143 Inventories 521,878 — — 521,878 Brokerage margin deposits 27,653 — — 27,653 Derivative assets 21,382 — — 21,382 Prepaid expenses and other current assets 69,872 150 — 70,022 Total current assets 1,073,920 1,546 — 1,075,466 Property and equipment, net 1,087,964 11,935 — 1,099,899 Intangible assets, net 65,013 — — 65,013 Goodwill 294,768 — — 294,768 Other assets 28,874 — — 28,874 Total assets $2,550,539 $13,481 $ — $2,564,020 Liabilities and partners' equity Current liabilities: Accounts payable $320,003 $259 $ — $320,262 Working capital revolving credit facility - current portion 274,600 — — 274,600 Environmental liabilities - current portion 5,341 — — 5,341 Trustee taxes payable 101,166 — — 101,166 Accrued expenses and other current liabilities 70,262 181 — 70,443 Derivative liabilities 27,413 — — 27,413 Total current liabilities 798,785 440 — 799,225 Working capital revolving credit facility - less current portion 150,000 — — 150,000 Revolving credit facility 216,700 — — 216,700 Senior notes 659,150 — — 659,150 Environmental liabilities - less current portion 57,724 — — 57,724 Financing obligations 152,444 — — 152,444 Deferred tax liabilities 66,054 — — 66,054 Other long-term liabilities 64,882 — — 64,882 Total liabilities 2,165,739 440 — 2,166,179 Partners' equity Global Partners LP equity 384,800 7,855 — 392,655 Noncontrolling interest — 5,186 — 5,186 Total partners' equity 384,800 13,041 — 397,841 Total liabilities and partners' equity $2,550,539 $13,481 $ — $2,564,020 F-78 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Condensed Consolidating Statement of OperationsFor the Year Ended December 31, 2017(In thousands) (Issuer) Non- Guarantor Guarantor Subsidiaries Subsidiary Eliminations Consolidated Sales $8,917,997 $2,936 $(381) $8,920,552 Cost of sales 8,332,940 4,941 (381) 8,337,500 Gross profit 585,057 (2,005) — 583,052 Costs and operating expenses: Selling, general and administrative expenses 154,611 422 — 155,033 Operating expenses 281,973 1,677 — 283,650 Loss on trustee taxes 16,194 — — 16,194 Amortization expense 9,206 — — 9,206 Net gain on sale and disposition of assets (1,607) (17) — (1,624) Goodwill and long-lived asset impairment 809 — — 809 Total costs and operating expenses 461,186 2,082 — 463,268 Operating income (loss) 123,871 (4,087) — 119,784 Interest expense (86,230) — — (86,230) Income before income tax benefit 37,641 (4,087) — 33,554 Income tax benefit 23,563 — — 23,563 Net income (loss) 61,204 (4,087) — 57,117 Net loss attributable to noncontrolling interest — 1,635 — 1,635 Net income (loss) attributable to Global Partners LP 61,204 (2,452) — 58,752 Less: General partners' interest in net income, including incentivedistribution rights 394 — — 394 Limited partners' interest in net income (loss) $60,810 $(2,452) $ — $58,358 F-79 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Condensed Consolidating Statement of OperationsFor the Year Ended December 31, 2016(In thousands) (Issuer) Non- Guarantor Guarantor Subsidiaries Subsidiary Eliminations Consolidated Sales $8,236,847 $5,961 $(3,169) $8,239,639 Cost of sales 7,686,875 9,443 (3,169) 7,693,149 Gross profit (loss) 549,972 (3,482) — 546,490 Costs and operating expenses: Selling, general and administrative expenses 148,829 844 — 149,673 Operating expenses 284,430 4,117 — 288,547 Lease exit and termination expenses 80,665 — — 80,665 Amortization expense 9,389 — — 9,389 Net loss on sale and disposition of assets 20,495 — — 20,495 Goodwill and long-lived asset impairment 45,803 104,169 — 149,972 Total costs and operating expenses 589,611 109,130 — 698,741 Operating loss (39,639) (112,612) — (152,251) Interest expense (86,319) — — (86,319) Loss before income tax expense (125,958) (112,612) — (238,570) Income tax expense (53) — — (53) Net loss (126,011) (112,612) — (238,623) Net loss attributable to noncontrolling interest — 39,211 — 39,211 Net loss attributable to Global Partners LP (126,011) (73,401) — (199,412) Less: General partners' interest in net loss, including incentivedistribution rights (1,336) — — (1,336) Limited partners' interest in net loss $(124,675) $(73,401) $ — $(198,076) F-80 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Condensed Consolidating Statement of OperationsFor the Year Ended December 31, 2015(In thousands) (Issuer) Non- Guarantor Guarantor Subsidiaries Subsidiaries Eliminations Consolidated Sales $10,306,493 $23,549 $(15,190) $10,314,852 Cost of sales 9,722,340 10,033 (15,190) 9,717,183 Gross profit 584,153 13,516 — 597,669 Costs and operating expenses: Selling, general and administrative expenses 174,925 2,118 — 177,043 Operating expenses 281,201 9,106 — 290,307 Amortization expense 10,467 3,032 — 13,499 Net loss on sale and disposition of assets 2,097 — — 2,097 Total costs and operating expenses 468,690 14,256 — 482,946 Operating income (loss) 115,463 (740) — 114,723 Interest expense (73,324) (8) — (73,332) Income (loss) before income tax benefit 42,139 (748) — 41,391 Income tax benefit 1,873 — — 1,873 Net income (loss) 44,012 (748) — 43,264 Net loss attributable to noncontrolling interest — 299 — 299 Net income (loss) attributable to Global Partners LP 44,012 (449) — 43,563 Less: General partners' interest in net income, including incentivedistribution rights 7,667 — — 7,667 Limited partners' interest in net income (loss) $36,345 $(449) $ — $35,896 F-81 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Condensed Consolidating Statement of Cash FlowsFor the Year Ended December 31, 2017(In thousands) (Issuer) Non- Guarantor Guarantor Subsidiaries Subsidiary Consolidated Cash flows from operating activities Net cash provided by operating activities $346,829 $1,613 $348,442 Cash flows from investing activities Acquisitions (38,479) — (38,479) Capital expenditures (49,866) — (49,866) Seller note issuances (6,086) — (6,086) Proceeds from sale of property and equipment 32,767 20 32,787 Net cash (used in) provided by investing activities (61,664) 20 (61,644) Cash flows from financing activities Net payments on working capital revolving credit facility (197,900) — (197,900) Net payments on revolving credit facility (20,700) — (20,700) LTIP units withheld for tax obligations (522) — (522) Noncontrolling interest capital contribution 279 — 279 Distribution to noncontrolling interest — (465) (465) Distributions to partners (62,660) — (62,660) Net cash used in financing activities (281,503) (465) (281,968) Cash and cash equivalents Increase in cash and cash equivalents 3,662 1,168 4,830 Cash and cash equivalents at beginning of year 9,373 655 10,028 Cash and cash equivalents at end of year $13,035 $1,823 $14,858 F-82 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Condensed Consolidating Statement of Cash FlowsFor the Year Ended December 31, 2016(In thousands) (Issuer) Non- Guarantor Guarantor Subsidiaries Subsidiary Consolidated Cash flows from operating activities Net cash (used in) provided by operating activities $(120,338) $452 $(119,886) Cash flows from investing activities Capital expenditures (71,279) — (71,279) Proceeds from sale of property and equipment 77,718 8 77,726 Net cash provided by investing activities 6,439 8 6,447 Cash flows from financing activities Net borrowings from working capital revolving credit facility 176,500 — 176,500 Net payments on revolving credit facility (52,300) — (52,300) Proceeds from sale-leaseback, net 62,469 — 62,469 Distribution to noncontrolling interest 2,697 (4,495) (1,798) Distributions to partners (62,520) — (62,520) Net cash provided by (used in) financing activities 126,846 (4,495) 122,351 Cash and cash equivalents Increase (decrease) in cash and cash equivalents 12,947 (4,035) 8,912 Cash and cash equivalents at beginning of year (3,574) 4,690 1,116 Cash and cash equivalents at end of year $9,373 $655 $10,028 F-83 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Condensed Consolidating Statement of Cash FlowsFor the Year Ended December 31, 2015(In thousands) (Issuer) Non- Guarantor Guarantor Subsidiaries Subsidiary Consolidated Cash flows from operating activities Net cash provided by operating activities $50,309 $12,197 $62,506 Cash flows from investing activities Acquisitions (561,170) — (561,170) Capital expenditures (90,240) (2,685) (92,925) Proceeds from sale of property and equipment 4,331 — 4,331 Net cash used in investing activities (647,079) (2,685) (649,764) Cash flows from financing activities Proceeds from issuance of common units, net 109,305 — 109,305 Net borrowings from working capital revolving credit facility 148,100 — 148,100 Net borrowings from revolving credit facility 135,200 — 135,200 Proceeds from senior notes, net of discount 295,338 — 295,338 Payments on line of credit — (700) (700) Repurchase of common units (3,892) — (3,892) Noncontrolling interest capital contribution 9,360 (6,800) 2,560 Distribution to noncontrolling interest (5,280) — (5,280) Distributions to partners (97,495) — (97,495) Net cash provided by (used in) financing activities 590,636 (7,500) 583,136 Cash and cash equivalents (Decrease) increase in cash and cash equivalents (6,134) 2,012 (4,122) Cash and cash equivalents at beginning of year 2,560 2,678 5,238 Cash and cash equivalents at end of year $(3,574) $4,690 $1,116 F-84 Table of ContentsGLOBAL PARTNERS LPNOTES TO CONSOLIDATED FINANCIAL STATEMENTS Item 15(a)SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTSGLOBAL PARTNERS LPFOR THE YEARS ENDED DECEMBER 31, 2017, 2016 and 2015(In thousands) Balance at Charged to Balance Beginning Costs and Other at End Description of Period Expenses Recoveries Write Offs Adjustment of Period Year ended December 31, 2017 Allowance for doubtful accounts—accounts receivable $5,549 $211 $38 $(997) $(196) $4,605 Year ended December 31, 2016 Allowance for doubtful accounts—accounts receivable $5,942 $231 $23 $(785) $138 $5,549 Year ended December 31, 2015 Allowance for doubtful accounts—accounts receivable $4,818 $1,303 $42 $(1,297) $1,076 $5,942 F-85 Exhibit 21.1LIST OF SUBSIDIARIES OF GLOBAL PARTNERS LPEntityJurisdiction of FormationAlliance Energy LLCMassachusettsBasin Transload, LLCDelawareDrake Petroleum Company, Inc.MassachusettsGlobal Companies LLCDelawareGlobal Montello Group Corp.DelawareGlobal Operating LLCDelawareGLP Finance Corp.DelawareWarex Terminals CorporationDelawareWarren Equities, Inc.Delaware Exhibit 23.1Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the following Registration Statements: (1) Registration Statements and related prospectus (Form S-3 Nos. 333-222549, 333-208138 and 333-204233) of GlobalPartners LP; and(2) Registration Statement (Form S-8 Nos. 333-182346 and 333-145579), pertaining to the Global Partners LP Long TermIncentive Plan; of our reports dated March 9, 2018, with respect to the consolidated financial statements and schedule of Global Partners LPand the effectiveness of internal control over financial reporting of Global Partners LP, included in this Annual Report(Form 10-K) of Global Partners LP for the year ended December 31, 2017. /s/ Ernst & Young LLP Boston, MassachusettsMarch 9, 2018 Exhibit 31.1CERTIFICATIONI, Eric Slifka, President and Chief Executive Officer of Global GP LLC, the general partner of Global Partners LP, certify that:1.I have reviewed this annual report on Form 10‑K for the year ended December 31, 2017 of Global Partners LP;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of theperiod covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significantrole in the registrant’s internal control over financial reporting.Dated: March 9, 2018By:/s/ Eric Slifka Eric SlifkaPresident and Chief Executive Officerof Global GP LLC, general partnerof Global Partners LP Exhibit 31.2CERTIFICATIONI, Daphne H. Foster, Chief Financial Officer of Global GP LLC, the general partner of Global Partners LP, certify that:1.I have reviewed this annual report on Form 10‑K for the year ended December 31, 2017 of Global Partners LP;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of theperiod covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significantrole in the registrant’s internal control over financial reporting.Dated: March 9, 2018By:/s/ Daphne H. Foster Daphne H. FosterChief Financial Officerof Global GP LLC, general partnerof Global Partners LP Exhibit 32.1CERTIFICATION OF THECHIEF EXECUTIVE OFFICER OFGLOBAL PARTNERS LPPURSUANT TO 18 U.S.C. SECTION 1350In connection with the accompanying report on Form 10‑K for the year ended December 31, 2017 of GlobalPartners LP (the “Partnership”) and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,Eric Slifka, President and Chief Executive Officer of Global GP LLC, the general partner of the Partnership, hereby certify,pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Actof 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Partnership.Dated: March 9, 2018By:/s/ Eric Slifka Eric SlifkaPresident and Chief Executive Officerof Global GP LLC, general partnerof Global Partners LP Exhibit 32.2CERTIFICATION OF THECHIEF FINANCIAL OFFICER OFGLOBAL PARTNERS LPPURSUANT TO 18 U.S.C. SECTION 1350In connection with the accompanying report on Form 10‑K for the year ended December 31, 2017 of GlobalPartners LP (the “Partnership”) and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,Daphne H. Foster, Chief Financial Officer of Global GP LLC, the general partner of the Partnership, hereby certify, pursuantto Section 906 of the Sarbanes‑Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Actof 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Partnership.Dated: March 9, 2018By:/s/ Daphne H. Foster Daphne H. FosterChief Financial Officerof Global GP LLC, general partnerof Global Partners LP
Continue reading text version or see original annual report in PDF format above