-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EviCKaJ/egtuZy/4T5ZvoWWm94TZzy0AIxYtOLkgkqRO8Q0zSZTEe0CIubQR0Urs M6FhMnSPrJDRDEnYdhO8bg== 0001022321-05-000048.txt : 20051103 0001022321-05-000048.hdr.sgml : 20051103 20051103104403 ACCESSION NUMBER: 0001022321-05-000048 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051103 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051103 DATE AS OF CHANGE: 20051103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENESIS ENERGY LP CENTRAL INDEX KEY: 0001022321 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM BULK STATIONS & TERMINALS [5171] IRS NUMBER: 760513049 STATE OF INCORPORATION: DE FISCAL YEAR END: 1205 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12295 FILM NUMBER: 051175485 BUSINESS ADDRESS: STREET 1: 500 DALLAS SUITE 2500 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7138602500 MAIL ADDRESS: STREET 1: 500 DALLAS SUITE 2500 CITY: HOUSTON STATE: TX ZIP: 77002 8-K 1 f8k110305.txt FORM 8-K FOR THE PERIOD NOVEMBER 3, 2005 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 3, 2005 GENESIS ENERGY, L.P. (Exact name of registrant as specified in its charter) Delaware 1-12295 76-0513049 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 500 Dallas, Suite 2500, Houston, Texas 77002 (Address of principal executive offices) (Zip Code) (713) 860-2500 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ___ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ___ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12) ___ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)) ___ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c) ================================================================================ Item 2.02. Results of Operations and Financial Condition Genesis Energy, L.P. ("GELP") issued a press release on November 3, 2005 regarding its financial results for the three and nine months ended Septembert 30, 2005, and will hold a webcast conference call discussing those results on November 3, 2005. A copy of this earnings press release is furnished as Exhibit 99.1 to this report. The webcast conference call will be available for replay on Genesis Energy, L.P.'s website at www.genesiscrudeoil.com. A summary of this conference call is archived on our website. As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02 and in Exhibit 99.1 hereto shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing with the Securities and Exchange Commission, except as shall be expressly provided by specific reference in such filing. Use of Non-GAAP Financial Measures Our earnings press release includes the non-generally accepted accounting principle ("non-GAAP") financial measure of Available Cash before Reserves. The press release provides a reconciliation of this non-GAAP financial measure to its most directly comparable financial measure calculation as presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Our non-GAAP measure should not be considered as an alternative to GAAP measure such as net income, operating income or cash flow from operating activities or any other GAAP measure of liquidity or financial performance. Available Cash before Reserves. The non-GAAP financial measure of Available Cash before Reserves is calculated in accordance with generally accepted accounting principles (GAAP), with the exception of maintenance capital expenditures as used in our calculation of Available Cash before Reserves. Maintenance capital expenditures are capital expenditures (as defined by GAAP) to replace or to enhance partially or fully depreciated assets in order to sustain the existing operating capacity or efficiency of our assets and to extend their useful lives. We believe that investors benefit from having access to the same financial measures being utilized by management. Available Cash before Reserves is a measure used by our management to compare cash flows generated by the Partnership to the cash distribution we pay to our limited partners and the general partner. This is an important financial measure to our public unitholders since it is an indicator of our ability to provide a cash return on their investment. Specifically, this financial measure tells investors whether or not the Partnership is generating cash flows at a level that can support a quarterly cash distribution to our partners. Lastly, Available Cash before Reserves (also referred to as distributable cash flow) is a quantitative standard used throughout the investment community with respect to publicly-traded partnerships. Several adjustments to net income are required to calculate Available Cash before Reserves. These adjustments include: (1) the addition of non-cash expenses such as depreciation and amortization expense; (2) miscellaneous non-cash adjustments such as the addition of decreases or the subtraction of increases in the value of financial instruments; and (3) the subtraction of maintenance capital expenditures. As part of our press release information, we have provided a reconciliation of this non-GAAP financial measure to Cash Flow from Operating Activities, the most comparable financial measure calculated and presented in accordance with GAAP. Item 9.01. Financial Statements and Exhibits (a) Financial statements of businesses acquired. Not applicable (b) Pro forma financial information. Not applicable. (c) Exhibits The following materials are filed as exhibits to this Current Report on Form 8-K. Exhibit. *99.1. Genesis Energy, L.P. press release, dated November 3, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENESIS ENERGY, L.P. (A Delaware Limited Partnership) By: GENESIS ENERGY, Inc., as General Partner Date: November 3, 2005 By: /s/ ROSS A. BENAVIDES ------------------------------ Ross A. Benavides Chief Financial Officer EX-99 2 pr110305.txt PRESS RELEASE DATED NOVEMBER 3, 2005 FOR IMMEDIATE RELEASE Contact: Ross A. Benavides Chief Financial Officer (713) 860-2528 GENESIS ENERGY, L.P. REPORTS THIRD QUARTER RESULTS November 3, 2005 - Genesis Energy, L.P. (AMEX:GEL) reported today a net loss for the third quarter of 2005 of $596,000, or $0.06 per unit. Net income for the nine months of 2005 was $2,917,000, or $0.31 per unit. Mark Gorman, President and CEO said "We are pleased with the results for the quarter. We expected a weaker than normal performance for the third and fourth quarters of 2005 due to the previously discussed initiative to make repairs and capital expenditures on the Mississippi pipeline system as a result of federally mandated pipeline integrity management programs (IMP). At this point we believe we are ahead of schedule and expect costs for the Mississippi IMP to be less than we previously expected. In addition to meeting these requirements, we have substantially completed our objective to place the Mississippi pipeline in condition to handle expected future throughput growth. Results for the third quarter of 2005 were modestly affected by the hurricanes that hit the Gulf Coast during the third quarter of 2005. We suffered minimal direct damage from the hurricanes. However, power outages and damage to third parties' facilities created brief disruptions to our crude oil gathering and pipeline operations, as well as our wholesale CO2 operations. We are on track for meeting our objectives for 2005. The Mississippi pipeline integrity management program work is substantially complete, on time, and under our expected cost. We have made $31 million in acquisitions year to date. The acquisition we made during the second quarter of a 50% interest in a syngas manufacturing facility has added $823,000 to Available Cash before Reserves so far in 2005. We also purchased a third volumetric production payment from Denbury Resources in October 2005 for $14.4 million that we expect will add $3.2 million annually to Available Cash in the future. During the third quarter, we generated Available Cash before Reserves, a non-GAAP measure, of $1.2 million or $0.12 per unit, and drew upon reserves established in prior periods to declare a distribution of $1.5 million or $0.16 per unit for the third quarter of 2005. This distribution is a $0.01 per unit, or 6.7 percent, increase over our second quarter distribution." Financial Results Genesis recorded a loss for the third quarter of 2005 of $0.6 million, or $0.06 per unit, compared to a third quarter 2004 loss of $0.4 million, or $0.04 per unit. For the nine month period, Genesis generated net income for 2005 of $2.9 million, or $0.31 per unit, with $2.6 million of income, or $0.28 per unit, from continuing operations and income of $0.3 million, or $0.03 per unit from discontinued operations. In the comparable period in 2004, Genesis's experienced a loss of $0.3 million, or $0.03 per unit, with continuing operations breaking even and discontinued operations generating the loss. The following table presents selected financial information by segment for the three month and nine month reporting periods for continuing operations:
Crude Oil Gathering and Pipeline CO2 Marketing Transportation Sales Total ------------- -------------- ---------- ------ (in thousands) Three Months Ended September 30, 2005 Revenues: External customers $ 291,074 $ 5,989 $ 2,523 $ 299,586 Intersegment - 991 - 991 --------- --------- -------- --------- Total revenues of reportable segments $ 291,074 $ 6,980 $ 2,523 $ 300,577 ========= ========= ======== ========= Segment margin excluding depreciation and amortization (a) $ 1,053 $ 1,885 $ 1,680 $ 4,618 Capital expenditures $ 38 $ 555 $ - $ 593 Maintenance capital expenditures $ 7 $ 407 $ - $ 414 Three Months Ended September 30, 2004 Revenues: External customers $ 244,377 $ 2,877 $ 2,295 $ 249,549 Intersegment - 1,187 - 1,187 --------- --------- ------- ---------- Total revenues of reportable segments $ 244,377 $ 4,064 $ 2,295 $ 250,736 ========= ========= ======= ========== Segment margin excluding depreciation and amortization (a) $ 948 $ 2,601 $ 1,543 $ 5,092 Capital expenditures $ 56 $ 4,173 $ 4,723 $ 8,952 Maintenance capital expenditures $ 56 $ 161 $ - $ 217 Nine Months Ended September 30, 2005 Revenues: External customers $ 785,774 $ 18,579 $ 7,371 $ 811,724 Intersegment - 2,597 - 2,597 --------- --------- ------- ---------- Total revenues of reportable segments $ 785,774 $ 21,176 $ 7,371 $ 814,321 ========= ========= ======= =========== Segment margin excluding depreciation and amortization (a) $ 2,391 $ 7,136 $ 4,962 $ 14,489 Capital expenditures $ 315 $ 5,157 $ - $ 5,472 Maintenance capital expenditures $ 55 $ 1,070 $ - $ 1,125 Nine Months Ended September 30, 2004 Revenues: External customers $ 663,245 $ 9,346 $ 6,275 $ 678,866 Intersegment - 2,889 - 2,889 --------- --------- ------- ---------- Total revenues of reportable segments $ 663,245 $ 12,235 $ 6,275 $ 681,755 ========= ========= ======= ========== Segment margin excluding depreciation and amortization (a) $ 3,898 $ 6,111 $ 4,244 $ 14,253 Capital expenditures $ 131 $ 5,577 $ 4,723 $ 10,431 Maintenance capital expenditures $ 131 $ 496 $ - $ 627
(a) Segment margin was calculated as revenues less cost of sales and operating expenses. A reconciliation of segment margin to income from continuing operations is presented for periods presented in the tables at the end of this release. Segment margin from continuing crude oil gathering and marketing activities was $1.1 million for the 2005 third quarter, an increase of $0.1 million from the 2004 period. The primary factor increasing segment margin between the two periods was increased margins between purchases and sales of crude oil. Increased field operating costs partially offset the higher margin. Higher field costs were due primarily to increases in fuel costs and personnel costs. For the nine month periods, segment margin from crude oil gathering and marketing decreased $1.5 million in 2005 as compared to the prior period. The reduced segment margin in the first nine months of 2005 was due primarily to an increase in field costs of $2.4 million. Higher fuel and personnel costs, a $0.4 million accrual for our share of the expected costs for the environmental remediation of a site we no longer operate, and the addition in the third quarter of 2004 of five more leased vehicles were responsible for the increase for the nine-month period. These increased costs were offset slightly by credit cost reductions and increased margins from purchasing and transporting crude oil. Pipeline transportation segment margin from continuing operations was $1.9 million for the third quarter of 2005, as compared to $2.6 million for the 2004 period. An increase in pipeline operating costs was responsible for the decrease. This cost increase was due primarily to expenditures related to pipeline integrity repairs. Partially offsetting the cost increases were greater revenues from the sale of crude oil from volumetric gains resulting from higher crude oil prices. Additionally, the 2005 quarter included segment margin from the CO2 pipeline segment constructed in 2004 and from natural gas gathering pipelines acquired during the first quarter of 2005. Segment margin from our pipeline operations increased $1.0 million between the nine month periods. Higher tariffs on the Mississippi System in the 2005 period and greater revenues from volumetric gains added $2.3 million to revenues, with an increase in pipeline operating costs of $1.3 million reducing the increase in segment margin to $1.0 million. Segment margin from CO2 sales activities in the 2005 three and nine month periods was $1.7 million and $5.0 million, respectively, as compared to $1.5 million and $4.2 million for the three and nine month periods in 2004, respectively. The additional volumetric production payment acquired in the third quarter of 2004 provided most of this margin increase. General and administrative expenses increased by $0.6 million during the 2005 third quarter as compared to the 2004 period. During the 2005 quarter, Genesis recorded a $0.8 million non-cash charge to account for its employee stock appreciation rights program that was implemented in 2003. This charge resulted from an increase in Genesis' unit price. In the second quarter of 2004, the unit price was the same as the unit price at the prior quarter end. Other general and administrative expenses decreased by $0.1 million. General and administrative expenses decreased by $1.3 million during the 2005 nine-month period as compared to the 2004 period principally due to the accrual related to the stock appreciation rights plan. In the 2004 period our unit market price increased, requiring us to record a charge of $0.6 million. In 2005, the decrease in our unit price resulted in a credit to general and administrative expenses of $0.5 million. In the first nine months of 2005, we disposed of idle assets for $1.6 million, generating $0.8 million of gain. The assets sold included pipelines that were idled in 2002 and 2003. $0.3 million of this gain is reflected as discontinued operations. On April 1, 2005, we acquired a 50% interest in T&P Syngas. Our equity in the earnings of T&P Syngas for the six months that we have owned our interest, net of the amortization of our purchase price over our share of the equity of T&P Syngas, was $0.3 million. Interest costs were $0.7 million more in the 2005 nine month period due to higher debt balances from borrowings to make acquisitions. Additionally market interest rates were higher in 2005. Genesis paid distributions of $0.15 per unit for both the first and second quarters of 2005. For the third quarter of 2005, Genesis has increased the regular quarterly distribution to $0.16 per unit, payable in November 2005. This distribution is a $0.01 per unit, or 6.7 percent increase over our second quarter distribution. Genesis generated Available Cash before reserves (a non-GAAP measure) of $1.2 million during the third quarter of 2005 and $7.1 million during the first nine months of 2005. For the first half of 2005, we generated Available Cash before Reserves of $5.9 million or $0.62 per unit, which exceeded our distributions of $2.9 million or $0.30 per unit by $3.0 million or $0.32 per unit. (Please see the accompanying schedules for a reconciliation of Available Cash, a non-GAAP measure, to net cash flow provided by operations, the GAAP measure.) Available Cash Several adjustments to net income are required to calculate Available Cash. The calculation of Available Cash before reserves for the quarter ended September 30, 2005 is as follows (in thousands): Net loss $ (596) Depreciation and amortization expense 1,601 Cash in excess of gain on asset sales 92 Cash from direct financing leases in excess of income recorded 125 Effect of cash distributions from T&P Syngas 502 Non-cash credit for incentive compensation plan and other non-cash items (145) Maintenance capital expenditures (414) ------------- Available Cash before reserves $ 1,165 ============= Available Cash (a non-GAAP liquidity measure) has been reconciled to cash flow from operating activities (the GAAP measure) for the three and nine months ended September 30, 2005 in the financial tables below. Earnings Conference Call Genesis Energy, L.P. will broadcast its Earnings Conference Call on Thursday, November 3, 2005, at 2:00 p.m. Central time. This call can be accessed at www.genesiscrudeoil.com. Choose the Investor Relations button. Listeners should go to this website at least fifteen minutes before this event to download and install any necessary audio software. For those unable to attend the live broadcast, a replay will be available beginning approximately one hour after the event and remain available on our website for 30 days. There is no charge to access the event. Genesis Energy, L.P. operates crude oil common carrier pipelines and is an independent gatherer and marketer of crude oil in North America, with operations concentrated in Texas, Louisiana, Alabama, Florida, and Mississippi. Genesis Energy, L.P. also operates a wholesale CO2 sales business. This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Genesis believes that its expectations are based upon reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include the timing and extent of changes in commodity prices for oil, ability to obtain adequate credit facilities, managing operating costs, completion of capital projects on schedule and within budget, consummation of accretive acquisitions, capital spending, environmental risks, government regulation, the ability of the Partnership to meet its stated business goals and other risks noted from time to time in the Partnership's Securities and Exchange Commission filings. Actual results may vary materially. We undertake no obligation to publicly update or revise any forward-looking statement. (tables to follow) Genesis Energy, L.P. Summary Consolidated Statements of Operations - Unaudited (in thousands except per unit amounts and volumes)
Three Months Ended Three Months Ended September 30, 2005 September 30, 2004 ------------------ ------------------ Revenues $ 300,577 $ 250,736 Cost of sales 295,959 245,644 General & administrative expenses 3,210 2,639 Depreciation and amortization expense 1,601 2,599 (Gain) loss from disposals of surplus assets (84) 10 -------------- ------------- OPERATING LOSS (109) (156) Equity in earnings of investment in T&P Syngas Supply Company 8 - Interest, net (540) (203) -------------- ------------- Loss from continuing operations (641) (359) Gain (loss) from discontinued operations 45 (35) -------------- ------------- NET LOSS $ (596) $ (394) ============== ============= NET LOSS PER COMMON UNIT - BASIC AND DILUTED Continuing operations $ (0.06) $ (0.04) Discontinued operations 0.00 0.00 -------------- ------------- Net Loss Per Common Unit - Basic and Diluted $ (0.06) $ (0.04) ============== ============= Continuing Operations Volumes: Crude oil wellhead barrels per day 37,213 46,676 Total gathering and marketing barrels per day 51,639 61,919 Crude oil pipeline barrels per day 60,164 57,544 CO2 sales Mcf per day 51,386 48,634
Genesis Energy, L.P. Summary Consolidated Statements of Operations - Unaudited (in thousands except per unit amounts and volumes)
Nine Months Ended Nine Months Ended September 30, 2005 September 30, 2004 ------------------ ------------------ Revenues $ 814,321 $ 681,755 Cost of sales 799,832 667,502 General & administrative expenses 6,536 7,825 Depreciation and amortization expense 4,695 5,773 Gains from disposals of surplus assets (482) (65) --------------- ------------- OPERATING INCOME 3,740 720 Equity in earnings of investment in T&P Syngas Supply Company 260 - Interest, net (1,401) (701) -------------- ------------- Income from continuing operations 2,599 19 Income (loss) from discontinued operations 318 (319) -------------- ------------- NET INCOME (LOSS) $ 2,917 $ (300) ============== ============= NET INCOME (LOSS) PER COMMON UNIT - BASIC AND DILUTED Continuing operations $ 0.28 $ 0.00 Discontinued operations 0.03 (0.03) -------------- ------------- Net Income (Loss) Per Common Unit - Basic and Diluted $ 0.31 $ (0.03) Continuing Operations Volumes: Crude oil wellhead barrels per day 39,818 48,078 Total gathering and marketing barrels per day 55,211 62,556 Crude oil pipeline barrels per day 61,690 64,402 CO2 sales Mcf per day 50,094 44,337
Genesis Energy, L.P. Summary Consolidated Balance Sheets - Unaudited (in thousands)
September 30, 2005 December 31, 2004 ------------------ ----------------- ASSETS Cash $ 2,149 $ 2,078 Accounts receivable 95,420 69,321 Inventories 4,825 1,866 Other current assets 5,062 4,131 -------------- ------------- Total Current Assets 107,456 77,396 Net property 34,064 33,786 CO2 contracts 24,327 26,344 Investment in T&P Syngas Supply Company 13,365 - Other assets 7,407 5,628 -------------- ------------- Total Assets $ 186,619 $ 143,154 ============== ============= LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 101,542 $ 75,415 Accrued liabilities 7,895 6,523 -------------- ------------- Total Current Liabilities 109,437 81,938 Long-term debt and other liabilities 32,786 15,460 Minority interest 517 517 Partners' capital 43,879 45,239 -------------- ------------- Total Liabilities and Partners' Capital $ 186,619 $ 143,154 ============== =============
Genesis Energy, L.P. Summary Consolidated Statements of Cash Flows - Unaudited (in thousands)
Nine Months Ended Nine Months Ended September 30, 2005 September 30, 2004 ------------------ ------------------ Net income (loss) $ 2,917 $ (300) Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 4,695 5,773 Amortization of credit facility issuance costs 279 289 Amortization of unearned income (521) - Cash received from direct financing leases 890 - Change in fair value of derivatives (1,101) (16) Gains on asset disposals (800) (65) Other non-cash items 23 564 Changes to components of working capital (2,139) (1,966) -------------- ------------- Net cash provided by operating activities 4,243 4,279 -------------- ------------- Additions to property and equipment and other assets (18,792) (9,208) Proceeds from sales of assets 1,581 82 Distributions from T&P Syngas Supply in excess of earnings 53 - Other, net (209) - -------------- ------------- Net cash used in investing activities (17,367) (9,126) -------------- ------------- Net borrowings (repayments) of debt 17,300 8,000 Distributions to partners (4,277) (4,278) Credit facility issuance fees - (839) Other, net 172 - -------------- ------------- Net cash provided by financing activities 13,195 2,883 -------------- ------------- Net increase (decrease) in cash and cash equivalents 71 (1,964) Cash and cash equivalents at beginning of period 2,078 2,869 -------------- ------------- Cash and cash equivalents at end of period $ 2,149 $ 905 ============== =============
Genesis Energy, L.P. Reconciliations SEGMENT MARGIN EXCLUDING DEPRECIATION AND AMORTIZATION RECONCILIATION TO OPERATING INCOME FROM CONTINUING OPERATIONS
Three Months Ended Three Months Ended September 30, 2005 September 30, 2004 ------------------ ------------------ (in thousands) Segment margin excluding depreciation and amortization $ 4,618 $ 5,092 General & administrative expenses 3,210 2,639 Depreciation and amortization expense 1,601 2,599 (Gain) loss from disposals of surplus assets (84) 10 -------------- ------------- Operating loss from continuing operations $ (109) $ (156) ============== =============
Nine Months Ended Nine Months Ended September 30, 2005 September 30, 2004 ------------------ ------------------ (in thousands) Segment margin excluding depreciation and amortization $ 14,489 $ 14,253 General & administrative expenses 6,536 7,825 Depreciation and amortization expense 4,695 5,773 Gains from disposals of surplus assets (482) (65) -------------- ------------- Operating income from continuing operations $ 3,740 $ 720 ============== =============
GAAP to Non-GAAP Financial Measure Reconciliation AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Three Months Ended Nine Months Ended September 30, 2005 September 30, 2005 ------------------ ------------------ (in thousands) Net cash flow provided by operating activities (GAAP measure) $ 5,098 $ 4,243 Adjustments to reconcile net cash flow provided by operating activities to Available Cash before reserves: Maintenance capital expenditures (414) (1,125) Proceeds from asset sales 221 1,581 Amortization of credit facility issuance costs (92) (279) Cash effects of stock appreciation rights plan (9) (59) Effect of cash distributions from T&P Syngas 250 563 Net effect of changes in operating accounts not included in calculation of Available Cash before reserves (3,889) 2,139 -------------- ------------- Available Cash before reserves (non-GAAP measure) $ 1,165 $ 7,063 ============== =============
Genesis believes that investors benefit from having access to the same financial measures being utilized by management. Segment margin forms the basis of our internal financial reporting and is used by senior management in deciding how to allocate capital resources among business segments. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results. The GAAP measure most directly comparable to total segment margin is operating income. We define segment margin as revenues less costs of sales and operating expenses, plus the adjustments for the effects of derivative instruments. This measure is exclusive of depreciation and amortization, general and administrative expenses, and any gains or losses on asset disposals. It also excludes the effects of minority interests and the cumulative effect of any accounting changes. Available Cash is a liquidity measure used by management to compare cash flows generated by the Partnership to the cash distribution paid to the limited partners and the general partner. This is an important financial measure to the public unitholders since it is an indicator of the Partnership's ability to provide a cash return on their investment. Specifically, this financial measure tells investors whether or not the Partnership is generating cash flows at a level that can support a quarterly cash distribution to the partners. Lastly, Available Cash (also referred to as distributable cash flow) is the quantitative standard used throughout the investment community with respect to publicly-traded partnerships. # # # -----END PRIVACY-ENHANCED MESSAGE-----