-----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, MZlh398SgsENoHUJKwVUdCfvxgNNq1axYrM7e1qj3mXtDHRq5MkM2qR4PfohMvKY 6UfoMHtc2iTC1W5eHHQFSA== 0001022321-07-000037.txt : 20071109 0001022321-07-000037.hdr.sgml : 20071109 20071108214328 ACCESSION NUMBER: 0001022321-07-000037 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071108 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071109 DATE AS OF CHANGE: 20071108 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: 071227951 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 form8k110807.htm FORM 8-K DATED NOVEMBER 8, 2007 form 8-K dated November 8, 2007
 

 
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 9, 2007 (November 8, 2007)
 
 
GENESIS ENERGY, L.P. 
 
 
(Exact name of registrant as specified in its charter) 
 
 
Delaware
 
 
1-12295
 
 
76-0513049
 
 
(State or other jurisdiction of incorporation or organization)
 
 
(Commission File Number)
 
 
(I.R.S. Employer 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 8, 2007 regarding its financial results for the quarter and nine months ended September 30, 2007, and held a webcast conference call discussing those results on November 8, 2007.  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, net cash flows from operating activities, 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.  Available Cash before Reserves is a liquidity measure used by management to compare cash flows generated by us to the cash distribution paid to our limited partners and general partner.  This is an important financial measure to the public unitholders since it is an indicator of our ability to provide a cash return on their investment.  Specifically, this financial measure aids investors in determining whether or not we are generating cash flows at a level that can support a quarterly cash distribution to the partners.  Lastly, Available Cash before Reserves (also referred to as distributable cash flow) is the quantitative standard used throughout the investment community with respect to publicly-traded partnerships.
 
We define available cash as net income or loss plus: (1) depreciation and amortization expense; (2) cash proceeds from the sale of certain assets; (3) the addition of losses or subtraction of gains relating to the sale of assets; (4) payments under direct financing leases in excess of the amount recognized as income; (5) the addition of losses or subtraction of gains on derivative financial instruments; (6) available cash generated by equity method investments in excess of earnings; (7) the subtraction of maintenance capital expenditures incurred to replace or enhance partially or fully depreciated assets so as to sustain the existing operating capacity or efficiency of our assets and extend their useful lives; and (8) the addition of losses or subtraction of gains relating to other non-cash amounts affecting net income for the period.
 
Item 9.01.  Financial Statements and Exhibits
 
(a)   Financial statements of businesses acquired.
 
Not applicable
 
(b)   Pro forma financial information.
       
Not applicable.

(d)  Exhibits
 
The following materials are filed as exhibits to this Current Report on Form 8-K.
 
Exhibits.
 
99.1      Genesis Energy, L.P. press release, dated November 8, 2007.
 
 
 
SIGNATURES
 
 
                                                                                                     
 
 
GENESIS ENERGY, L.P.
(A Delaware Limited Partnership)
 
By:
GENESIS ENERGY, INC., as General Partner
Date:  November 8, 2007
By:
                                                                                                      
 
Ross A. Benavides
Chief Financial Officer
EX-99 2 exhibit99.htm EXHIBIT 99.1 PRERSS RELEASE DATED NOVEMBER 8, 2007 Exhibit 99.1 Prerss Release dated November 8, 2007
 
 
 FOR IMMEDIATE RELEASE
                                                                                                                   Contact:          Ross A. Benavides
                                                                                                                                            Chief Financial Officer
                                                                                                                                            (713) 860-2528
 
GENESIS ENERGY, L.P. REPORTS THIRD QUARTER RESULTS
 
Houston, TX - November 8, 2007 – Genesis Energy, L.P. (AMEX:GEL) reported today earnings of $1.7 million, or $0.07 per unit for the third quarter of 2007.  This compares to net income in the 2006 third quarter period of $1.7 million, or $0.12 per unit. Earnings for the 2007 third quarter included a $1.2 million benefit related to our stock appreciation rights (SAR) plan, resulting predominately from a 20% decline in our common unit price from June 30 to September 30, 2007.  Without this benefit, net income would have been $0.5 million, or $0.02 per unit, for the quarter. For the third quarter of 2007, Available Cash before reserves was $7.3 million.  Available Cash before reserves is a non-GAAP measure that is defined and reconciled later in this press release to its most directly comparable GAAP financial measure, net cash provided by operating activities.  Net cash provided by operating activities was $22.6 million for the third quarter of 2007.
 
Net income for the first nine months of 2007 was $1.9 million, or $0.11 per unit.  Excluding the effects of the $3.1 million of expense for the SAR plan, net income would have been $5.0 million, or $0.28 per unit.  Net income was $7.7 million, or $0.55 per unit, for the first nine months of 2006.  Net income for the 2006 nine-month period included expense for our SAR plan totaling $0.9 million.  For the first nine months of 2007, Available Cash before reserves was $15.0 million.  Net cash provided by operating activities was $25.7 million for the nine months ended September 30, 2007.
On July 25, 2007, we completed a transaction to acquire the assets of five energy-related businesses focused on the transportation, storage, marketing and procurement of petroleum products and refinery services from several entities owned and controlled by the Davison family of Ruston, Louisiana.  The acquisition consideration was comprised of 13,459,209 common units and approximately $293 million in cash, which included the purchase of working capital.  The cash consideration was funded through our $500 million Revolving Credit Facility led by Fortis Capital Corp. and Deutsche Bank Securities, Inc.  Additionally, our general partner exercised its right to maintain its proportionate share of our outstanding common units by purchasing 1,074,882 common units from us for $22.4 million.  In addition, as required under Genesis’ partnership agreement, the Partnership’s general partner contributed approximately $6.2 million to maintain its capital account balance.
Grant Sims, CEO said “For the third quarter of 2007, we generated Available Cash before reserves, a non-GAAP measure, of $7.3 million.  Although the economic effective date of the Davison transaction was April 1, 2007, our results do not include the results of the Davison operations prior to the closing date of July 25, 2007.  If our results for the third quarter had included the results of the Davison operations for that entire quarter, our Available Cash would have been approximately $9.5 million, or $0.34 per unit, based on the number of units outstanding after the Davison acquisition, which was more than adequate to cover distributions to the common unitholders and general partner for the quarter totaling $7.9 million or $0.27 per unit.  During the third quarter of 2007, our maintenance capital expenditures were greater than normal, totaling $2.1 million, reducing Available Cash before reserves.  We replaced a segment of pipeline on our Jay pipeline system and we are replacing a tank in Texas.  Typically our maintenance capital expenditures would be less than $0.5 million for a quarterly period.” 
“Our existing operations continue to provide steady cash flows.  When we combine those operations with the operations we have acquired from the Davisons, we believe we have a solid base of diverse assets and businesses that should provide operating synergies and organic growth opportunities. Having completed that transaction, we are now positioned to move forward to negotiate several anticipated transactions with Denbury involving certain of their CO2 pipelines.  We currently expect those transactions to consist of property purchases combined with associated transportation or service arrangements, direct financing leases, or a combination of both.  We anticipate that during the fourth quarter of 2007, we will enter into transactions with Denbury for CO2 pipelines with a total currently estimated value of between $200 to $250 million, and anticipate similar transactions for a new CO2 pipeline that Denbury is constructing, forecasted to be completed in the second half of 2008,” added Mr. Sims.
On November 14, 2007, we will pay a distribution of $7.9 million, or $0.27 per unit, attributable to the third quarter of 2007.  This distribution represents an increase of approximately 17% over the August 2007 distribution of $0.23 and an increase of approximately 35% over the November 2006 distribution of $0.20.  Furthermore, this is the ninth consecutive increase in our quarterly distribution and the first to be more than $0.01 per unit.
Financial Results
Segment margin is defined and reconciled later in this press release to net income.  The following tables present selected financial information by segment for the three and nine month reporting periods (in thousands):

  
   
Pipeline 
   
Refinery
   
Industrial
   
Supply &
       
 
   
Transportation 
   
Services
   
Gases
   
Logistics
   
Total
 
Three Months Ended September 30, 2007
                               
Segment margin excluding
                               
depreciation and amortization (a)
 
$
3,763
 
$
8,545
 
$
3,232
 
$
4,960
 
$
20,500
 
                                 
Capital expenditures
 
$
1,812
 
$
553
 
$
-
 
$
441
 
$
2,806
 
Maintenance capital
                               
expenditures
 
$
1,624
 
$
269
 
$
-
 
$
255
 
$
2,148
 
                                 
Revenues:
                               
External customers
 
$
5,949
 
$
25,349
 
$
4,373
 
$
317,653
 
$
353,324
 
Intersegment
   
946
   
-
   
-
   
-
   
946
 
Total revenues of reportable segments
 
$
6,895
 
$
25,349
 
$
4,373
 
$
317,653
 
$
354,270
 
                                 
Three Months Ended September 30, 2006
                               
Segment margin excluding
                               
depreciation and amortization (a)
 
$
3,458
 
$
-
 
$
3,155
 
$
1,999
 
$
8,612
 
                                 
Capital expenditures
 
$
216
 
$
-
 
$
194
 
$
34
 
$
444
 
Maintenance capital
                               
expenditures
 
$
146
 
$
-
 
$
-
 
$
34
 
$
180
 
                                 
Revenues:
                               
External customers
 
$
6,232
 
$
-
 
$
4,262
 
$
218,141
 
$
228,635
 
Intersegment
   
916
   
-
   
-
   
-
   
916
 
Total revenues of reportable segments
 
$
7,148
 
$
-
 
$
4,262
 
$
218,141
 
$
229,551
 
                                 
 

   
Pipeline
 
Refinery
 
Industrial
 
Supply &
 
 
 
 
 
Transportation
 
Services
 
Gases
 
Logistics
 
Total
 
Nine Months Ended September 30, 2007
                     
Segment margin excluding
                               
depreciation and amortization (a)
 
$
8,858
 
$
8,545
 
$
8,804
 
$
7,986
 
$
34,193
 
                                 
Capital expenditures
 
$
2,365
 
$
553
 
$
-
 
$
582
 
$
3,500
 
Maintenance capital
                               
expenditures
 
$
2,177
 
$
269
 
$
-
 
$
396
 
$
2,842
 
Net fixed and other non-current
                               
assets
 
$
31,558
 
$
409,510
 
$
48,188
 
$
226,791
 
$
716,047
 
                                 
Revenues:
                               
External customers
 
$
16,956
 
$
25,349
 
$
11,816
 
$
681,667
 
$
735,788
 
Intersegment
   
3,062
   
-
   
-
   
-
   
3,062
 
Total revenues of reportable segments
 
$
20,018
 
$
25,349
 
$
11,816
 
$
681,667
 
$
738,850
 
                                 
Nine Months Ended September 30, 2006
                               
Segment margin excluding
                               
depreciation and amortization (a)
 
$
9,862
 
$
-
 
$
8,808
 
$
6,074
 
$
24,744
 
                                 
Capital expenditures
 
$
639
 
$
-
 
$
5,744
 
$
190
 
$
6,573
 
Maintenance capital
                               
expenditures
 
$
370
 
$
-
 
$
-
 
$
190
 
$
560
 
Net fixed and other non-current
                               
assets
 
$
32,516
 
$
-
 
$
52,704
 
$
5,469
 
$
90,689
 
                                 
Revenues:
                               
External customers
 
$
20,158
 
$
-
 
$
11,543
 
$
691,414
 
$
723,115
 
Intersegment
   
3,381
   
-
   
-
   
-
   
3,381
 
Total revenues of reportable segments
 
$
23,539
 
$
-
 
$
11,543
 
$
691,414
 
$
726,496
 
                                 
(a)  Segment margin was calculated as revenues less cost of sales and operating expenses, plus our share of the operating income of our investment in joint ventures.  A reconciliation of segment margin to income from continuing operations is presented for periods presented in the table at the end of this release.
Quarterly Comparison
Pipeline transportation segment margin for the third quarter period increased $0.3 million as compared to the prior year period.  Revenues from crude oil tariffs and related sources and sales of pipeline loss allowance volumes increased a total of $0.3 million.  Volume increases on the Mississippi System of 5,740 barrels per day and tariff increases on the Jay System offset the effects on segment margin of a decline in volume on our Texas System where the tariff per barrel is significantly less.  Volumes on the Jay System were similar to the prior year period.
We acquired our refinery services segment in the Davison transaction.  That segment primarily provides a service to refining operations – it processes sour hydrocarbon streams to remove the sulfur and returns the hydrocarbons for further refining or consumption within the refining location.  In most instances, we own, maintain and operate the facilities required to perform the services.  Typically we receive the by-product of the process, sodium hydrosulfide, or NaHS (commonly pronounced “nash”), as compensation for providing the sour gas processing services.  The largest cost component of providing the service is acquiring and delivering caustic soda to our operations.  Caustic soda is the scrubbing agent introduced to the sour gas stream to remove the sulfur and generate the by-product NaHS.
For the three and nine months ended September 30, 2007, we included two months of the activities of this operation in our results.  Combining the historical results of this operation for July 2007, with our results indicates that the contribution to total segment margin of the refinery services segment would have been approximately $12.3 million for the third quarter on a pro forma basis.
Our supply and logistics segment was previously known as our crude oil gathering and marketing segment. With the acquisition of the Davison businesses, we renamed the segment and have included the petroleum products, fuel logistics, terminaling and truck transportation activities we acquired.  These operations are similar to our crude oil gathering operations, with the focus on buying the product at an economical price and providing the blending, storage and transportation logistics to make the highest possible margin.  The portions of operations acquired in the Davison transaction contributed substantially all of the $3.0 million increase in segment margin for this segment for the three months ended September 30, 2007.  The contribution to segment margin by our crude oil operations was flat as compared to the prior year.
General and administrative expenses increased $0.2 million when comparing the third quarter periods.  Part of this increase results from the administrative personnel and costs at the Davison locations totaling $2.0 million.  This increase is offset partially by a credit to general and administrative expense for our stock appreciation rights plan of $1.2 million.  Additionally, we incurred transition costs in the 2006 period when we brought in a new management team totaling $1.3 million, which did not recur in the 2007 period.  The remaining increase resulted primarily from increased legal, audit and other consulting fees. 
Income tax expense related to a portion of the operations we acquired in the Davison transaction that are owned by wholly-owned corporate subsidiaries taxable as corporations were recorded in the amount of $1.0 million for the 2007 quarter.
Year-to-Date Comparison
Pipeline segment margin decreased $1.0 million, with higher pipeline operating costs accounting for $0.9 million of the decrease.  An increase of $0.5 million was due to our stock appreciation rights plan expense, while the remaining $0.4 million was related to integrity management testing, costs to tear down a tank on the Texas System to prepare the location for its replacement and other maintenance costs.  Revenues from crude oil tariffs and related sources and sales of pipeline allowance volumes increased $0.3 million.  Segment margin from natural gas activities was negatively impacted by $0.3 million primarily due to production difficulties of a producer connected to one of our systems.
Supply and logistics segment margin increased $1.9 million between the nine-month periods.  The operations acquired in the Davison acquisition added $3.0 million to segment margin for the two months after we completed the acquisition.  Our existing crude oil gathering and marketing operations segment margin decreased $1.1 million, of which $0.6 million was attributable to our stock appreciation rights plan expense and $2.0 million was due to increased fuel, truck maintenance, and personnel costs.  Offsetting this decrease was an increase in revenues from transporting crude oil of $1.9 million.
Distributions
Since the distribution paid in February 2006, we have increased the distribution rate on our common units by a total of $0.10 per unit, or 59%.
 
 
 
 
Per Unit
 
Distribution For
 
Date Paid
 
Amount
 
               
Third quarter 2007
   
November 2007
 
$
0.27
 
Second quarter 2007
   
August 2007
 
$
0.23
 
First quarter 2007
   
May 2007
 
$
0.22
 
Fourth quarter 2006
   
February 2007
 
$
0.21
 
Third quarter 2006
   
November 2006
 
$
0.20
 
Second quarter 2006
   
August 2006
 
$
0.19
 
First quarter 2006
   
May 2006
 
$
0.18
 
Fourth quarter 2005
   
February 2006
 
$
0.17
 
 
The third quarter 2007 distribution will be paid November 14, 2007 to unitholders of record on November 6, 2007.  We generated Available Cash before reserves (a non-GAAP measure) of $7.3 million during the third quarter of 2007.  Net cash flows provided by operating activities were $22.6 million for the third quarter period.  (Please see the accompanying schedules for a reconciliation of Available Cash before reserves, 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 before reserves.  The calculation of Available Cash before reserves is as follows (in thousands):
   
Three Months Ended
 
Nine Months Ended
 
   
September 30, 2007
 
September 30, 2007
 
               
Net income
 
$
1,699
 
$
1,912
 
Depreciation and amortization expense
   
8,372
   
12,346
 
Cash from direct financing leases in
             
excess of income recorded
   
143
   
422
 
Available cash generated by joint ventures in
             
excess of earnings
   
179
   
664
 
Non-cash (credits) charges for incentive compensation plan
             
and other non-cash items
   
(994
)
 
2,339
 
Proceeds from disposals of surplus assets
   
-
   
195
 
Maintenance capital expenditures
   
(2,148
)
 
(2,842
)
Available Cash before reserves
 
$
7,251
 
$
15,036
 
               
 

Maintenance capital expenditures of $2.1 million reduced our Available Cash before reserves.  These expenditures in the third quarter related to the construction of a new tank on our Texas Pipeline System and the replacement of a segment of the Jay System.
Earnings Conference Call
We will broadcast our Earnings Conference Call on Thursday, November 8, 2007, at 9:00 a.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. is a diversified midstream energy master limited partnership headquartered in Houston, Texas.  Genesis engages in four business segments.  The Pipeline Transportation Division is engaged in the pipeline transportation of crude oil and, to a lesser extent, natural gas and carbon dioxide.  The Refinery Services Division primarily processes sour gas streams to remove sulfur at refining operations, principally located in Texas, Louisiana, and Arkansas.  The Supply and Logistics Division is engaged in the transportation, storage and supply of energy products, including crude oil and refined products.  The Industrial Gases Division produces and supplies industrial gases such as carbon dioxide and syngas.  Genesis’ operations are primarily located in Texas, Louisiana, Arkansas, Mississippi, Alabama, and Florida.
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 we believe that our expectations are based upon reasonable assumptions, we can give no assurance that our 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, our ability to meet our stated business goals and other risks noted from time to time in our 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, 2007
 
September 30, 2006
 
           
Revenues
 
$
354,270
 
$
229,551
 
Cost of sales
   
334,131
   
221,206
 
General and administrative expenses
   
4,724
   
4,539
 
Depreciation and amortization expense
   
8,372
   
2,107
 
Losses from disposal of surplus assets
   
-
   
11
 
OPERATING INCOME
   
7,043
   
1,688
 
Equity in earnings of joint ventures
   
361
   
267
 
Interest expense, net
   
(4,701
)
 
(260
)
INCOME BEFORE INCOME TAXES
   
2,703
   
1,695
 
Income tax expense
   
(1,004
)
 
-
 
NET INCOME
 
$
1,699
 
$
1,695
 
               
NET INCOME PER COMMON UNIT -
             
BASIC AND DILUTED
 
$
0.07
 
$
0.12
 
               
Volume data:
             
Crude oil pipeline barrels per day (total)
   
60,311
   
62,610
 
Mississippi Pipeline System barrels per day
   
22,818
   
17,078
 
Jay Pipeline System barrels per day
   
14,596
   
14,785
 
Texas Pipeline System barrels per day
   
22,897
   
30,747
 
CO2 sales Mcf per day
   
85,705
   
82,244
 
               
               
Units Data:
             
Common units held by Public
   
12,765,000
   
12,765,000
 
Common units held by Davison family
   
13,459,209
   
-
 
Common units held by general partner
   
2,094,323
   
1,019,441
 
Total common units outstanding
   
28,318,532
   
13,784,441
 
               
 


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, 2007
 
September 30, 2006
 
           
Revenues
 
$
738,850
 
$
726,496
 
Cost of sales
   
705,572
   
702,671
 
General and administrative expenses
   
13,652
   
10,448
 
Depreciation and amortization expense
   
12,346
   
6,000
 
Gains from disposal of surplus assets
   
(24
)
 
(38
)
OPERATING INCOME
   
7,304
   
7,415
 
Equity in earnings of joint ventures
   
915
   
919
 
Interest expense, net
   
(5,248
)
 
(645
)
Income before income taxes and cumulative
             
effect adjustment
   
2,971
   
7,689
 
Income tax (expense) benefit
   
(1,059
)
 
11
 
Income before cumulative effect adjustment
   
1,912
   
7,700
 
Cumulative effect adjustment from adoption of new
             
accounting principle
   
-
   
30
 
NET INCOME
 
$
1,912
 
$
7,730
 
               
NET INCOME PER COMMON UNIT -
             
BASIC AND DILUTED
             
Income before cumulative effect adjustment
 
$
0.11
 
$
0.55
 
Cumulative effect adjustment
   
-
   
-
 
Net income per common unit - basic
             
and diluted
 
$
0.11
 
$
0.55
 
               
Volume data:
             
Crude oil pipeline barrels per day (total)
   
58,531
   
62,484
 
Mississippi Pipeline System barrels per day
   
20,938
   
16,828
 
Jay Pipeline System barrels per day
   
13,027
   
13,321
 
Texas Pipeline System barrels per day
   
24,566
   
32,335
 
CO2 sales Mcf per day
   
76,035
   
74,321
 
               
               
Units Data:
             
Common units held by Public
   
12,765,000
   
12,765,000
 
Common units held by Davison family
   
13,459,209
   
-
 
Common units held by general partner
   
2,094,323
   
1,019,441
 
Total common units outstanding
   
28,318,532
   
13,784,441
 
               
 
 
 

 
Genesis Energy, L.P.
 
Consolidated Balance Sheets - Unaudited
 
(in thousands)
 
           
           
   
September 30, 2007
 
December 31, 2006
 
           
ASSETS
         
Cash
 
$
7,767
 
$
2,318
 
Accounts receivable
   
154,622
   
89,106
 
Inventories
   
12,034
   
5,172
 
Other current assets
   
4,170
   
3,396
 
Total current assets
   
178,593
   
99,992
 
Net property
   
116,863
   
31,316
 
CO2 contracts
   
30,101
   
33,404
 
Joint ventures and other investments
   
18,087
   
18,226
 
Net intangible assets
   
221,138
   
-
 
Goodwill
   
318,915
   
-
 
Other assets
   
10,943
   
8,149
 
Total Assets
 
$
894,640
 
$
191,087
 
               
LIABILITIES AND PARTNERS' CAPITAL
             
Accounts payable
 
$
131,614
 
$
86,692
 
Accrued liabilities
   
16,084
   
9,220
 
Total current liabilities
   
147,698
   
95,912
 
Long-term debt
   
285,000
   
8,000
 
Deferred tax liabilities
   
23,305
   
-
 
Other liabilities
   
1,292
   
991
 
Minority interest
   
552
   
522
 
Partners' capital
   
436,793
   
85,662
 
Total Liabilities and Partners' Capital
 
$
894,640
 
$
191,087
 

 
 

 

Genesis Energy, L.P.
 
Summary Consolidated Statements of Cash Flows - Unaudited
 
(in thousands)
 
           
   
Nine Months Ended
 
Nine Months Ended
 
   
September 30, 2007
 
September 30, 2006
 
           
Net income
 
$
1,912
 
$
7,730
 
Adjustments to reconcile net income to cash
             
provided by operating activities:
             
Depreciation and amortization
   
12,346
   
6,000
 
Amortization of credit facility issuance costs
   
509
   
279
 
Amortization of unearned income
   
(468
)
 
(495
)
Cash received from direct financing leases
   
890
   
889
 
Equity in earnings of joint ventures
   
(915
)
 
(919
)
Distributions from joint ventures - return on investment
   
1,276
   
1,151
 
Gains on asset disposals
   
(24
)
 
(38
)
Cumulative effect adjustment for new accounting principle
   
-
   
(30
)
Non-cash effects of stock appreciation rights plan
   
1,696
   
915
 
Other non-cash items
   
667
   
26
 
Changes to components of operrating assets and liabilities
   
7,764
   
(8,786
)
Net cash provided by operating activities
   
25,653
   
6,722
 
               
Additions to property and equipment
   
(3,292
)
 
(830
)
Distributions from joint ventures that are a return
             
of investment
   
389
   
352
 
Investment in joint ventures and other investments
   
(552
)
 
(5,749
)
Proceeds from sales of assets
   
195
   
67
 
Acquisition of Davison assets, net of cash acquired
   
(301,360
)
 
-
 
Acquisition of Port Hudson assets
   
(8,103
)
 
-
 
Other, net
   
(1,300
)
 
(54
)
Net cash used in investing activities
   
(314,023
)
 
(6,214
)
               
Bank borrowings, net
   
355,800
   
6,000
 
Bank repayments
   
(78,800
)
     
Credit facility issuance fees
   
(2,297
)
     
Issuance of common units for cash
   
22,361
       
General partner contribution
   
6,171
       
Minority interest contributions, net
   
30
       
Distributions to partners
   
(9,283
)
 
(7,595
)
Other, net
   
(163
)
 
372
 
Net cash provided by (used in) financing activities
   
293,819
   
(1,223
)
               
Net increase (decrease) in cash and cash equivalents
   
5,449
   
(715
)
Cash and cash equivalents at beginning of period
   
2,318
   
3,099
 
Cash and cash equivalents at end of period
 
$
7,767
 
$
2,384
 


Genesis Energy, L.P.
 
Reconciliations
 
           
SEGMENT MARGIN EXCLUDING DEPRECIATION AND AMORTIZATION
         
RECONCILIATION TO INCOME BEFORE INCOME TAXES AND CUMULATIVE
         
EFFECT ADJUSTMENTS
         
           
   
Three Months Ended
 
Three Months Ended
 
   
September 30, 2007
 
September 30, 2006
 
   
(in thousands)
 
           
Segment margin excluding depreciation and
             
amortization
 
$
20,500
 
$
8,612
 
General and administrative expenses
   
(4,724
)
 
(4,539
)
Depreciation and amortization expense
   
(8,372
)
 
(2,107
)
Loss from disposal of surplus assets
   
-
   
(11
)
Interest expense, net
   
(4,701
)
 
(260
)
Income before income taxes and cumulative
             
effect adjustments
 
$
2,703
 
$
1,695
 
               
               
               
   
Nine Months Ended 
 
 
Nine Months Ended
 
 
   
September 30, 2007 
   
September 30, 2006
 
   
(in thousands) 
 
               
Segment margin excluding depreciation and
             
amortization
 
$
34,193
 
$
24,744
 
General and administrative expenses
   
(13,652
)
 
(10,448
)
Depreciation and amortization expense
   
(12,346
)
 
(6,000
)
Gain from disposal of surplus assets
   
24
   
38
 
Interest expense, net
   
(5,248
)
 
(645
)
Income before income taxes and cumulative
             
effect adjustments
 
$
2,971
 
$
7,689
 

GAAP to Non-GAAP Financial Measure Reconciliation
 
           
AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO
         
NET CASH FLOWS FROM OPERATING ACTIVITIES
         
           
   
Three Months Ended
 
Nine Months Ended
 
   
September 30, 2007
 
September 30, 2007
 
   
(in thousands)
 
           
Net cash flows from operating activities (GAAP measure)
 
$
22,598
 
$
25,653
 
Adjustments to reconcile net cash flow provided by operating
             
activities to Available Cash before reserves:
             
Maintenance capital expenditures
   
(2,148
)
 
(2,842
)
Amortization of credit facility issuance costs
   
(236
)
 
(509
)
Cash effects of stock appreciation rights plan
   
(452
)
 
(1,447
)
Available cash from joint ventures not included in
             
operating cash flows
   
97
   
303
 
Other items affecting available cash
   
(1,009
)
 
-
 
Proceeds from asset sales
   
-
   
195
 
Net effect of changes in components of working capital
   
(11,599
)
 
(6,317
)
Available Cash before reserves (Non-GAAP measure)
 
$
7,251
 
$
15,036
 
 
This press release and the accompanying schedules include a non-generally accepted accounting principle (“non-GAAP”) financial measure of Available Cash.  The accompanying schedule provides a reconciliation of this non-GAAP financial measure to its most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Our non-GAAP financial measure should not be considered as an alternative to GAAP measures of liquidity or financial performance.  We believe that investors benefit from having access to the same financial measures being utilized by management, lenders, analysts and other market participants.
Available Cash.  Available Cash before reserves is a liquidity measure used by management to compare cash flows generated by us to the cash distribution paid to our limited partners and general partner.  This is an important financial measure to the public unitholders since it is an indicator of our ability to provide a cash return on their investment.  Specifically, this financial measure aids investors in determining whether or not we are generating cash flows at a level that can support a quarterly cash distribution to the partners.  Lastly, Available Cash before reserves (also referred to as distributable cash flow) is the quantitative standard used throughout the investment community with respect to publicly-traded partnerships.
We define Available Cash as net income or loss plus: (1) depreciation and amortization expense; (2) cash proceeds from the sale of certain assets; (3) the addition of losses or subtraction of gains relating to the sale of assets; (4) payments under direct financing leases in excess of the amount recognized as income; (5) the addition of losses or subtraction of gains on derivative financial instruments; (6) available cash generated by equity method investments in excess of earnings; (7) the subtraction of maintenance capital expenditures incurred to replace or enhance partially or fully depreciated assets so as to sustain the existing operating capacity or efficiency of our assets and extend their useful lives; and (8) the addition of losses or subtraction of gains relating to other non-cash amounts affecting net income for the period.
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