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Business Segment Information
 9 Months Ended
Sep. 30, 2013
Segment Reporting [Abstract]  
Business Segment Information
9. Business Segment Information
Our operations consist of three operating segments:
•
Pipeline Transportation – interstate, intrastate and offshore crude oil, and to a lesser extent, CO2;
•
Refinery Services – processing high sulfur (or “sour”) gas streams as part of refining operations to remove the sulfur and selling the related by-product, NaHS and;
•
Supply and Logistics – terminaling, blending, storing, marketing, and transporting crude oil and petroleum products (primarily fuel oil, asphalt, and other heavy refined products) and, on a smaller scale, CO2.
Substantially all of our revenues are derived from, and substantially all of our assets are located in, the United States.
We define Segment Margin as revenues less product costs, operating expenses (excluding non-cash charges, such as depreciation and amortization), and segment general and administrative expenses, plus our equity in distributable cash generated by our equity investees. In addition, our Segment Margin definition excludes the non-cash effects of our stock appreciation rights plan and includes the non-income portion of payments received under direct financing leases.
Our chief operating decision maker (our Chief Executive Officer) evaluates segment performance based on a variety of measures including Segment Margin, segment volumes, where relevant, and capital investment.
 
Segment information for the periods presented below was as follows:
 
Pipeline
Transportation
 
Refinery
Services
 
Supply &
Logistics
 
Total
Three Months Ended September 30, 2013
 
 
 
 
 
 
 
Segment margin (a)
$
29,860

 
$
19,163

 
$
15,801

 
$
64,824

Capital expenditures (b)
$
38,514

 
$
632

 
$
290,942

 
$
330,088

Revenues:
 
 
 
 
 
 
 
External customers
$
16,636

 
$
55,025

 
$
1,188,157

 
$
1,259,818

Intersegment (c)
6,581

 
(2,615
)
 
(3,966
)
 
—

Total revenues of reportable segments
$
23,217

 
$
52,410

 
$
1,184,191

 
$
1,259,818

Three Months Ended September 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
23,295

 
$
18,983

 
$
23,651

 
$
65,929

Capital expenditures (b)
$
21,764

 
$
1,025

 
$
14,410

 
$
37,199

Revenues:
 
 
 
 
 
 
 
External customers
$
16,190

 
$
50,378

 
$
975,269

 
$
1,041,837

Intersegment (c)
2,974

 
(2,401
)
 
(573
)
 
—

Total revenues of reportable segments
$
19,164

 
$
47,977

 
$
974,696

 
$
1,041,837

Nine Months Ended September 30, 2013
 
 
 
 
 
 
 
Segment margin (a)
$
81,512

 
$
55,824

 
$
69,995

 
$
207,331

Capital expenditures (b)
$
159,922

 
$
2,296

 
$
347,001

 
$
509,219

Revenues:
 
 
 
 
 
 
 
External customers
$
53,121

 
$
161,492

 
$
3,406,076

 
$
3,620,689

Intersegment (c)
13,412

 
(8,122
)
 
(5,290
)
 
—

Total revenues of reportable segments
$
66,533

 
$
153,370

 
$
3,400,786

 
$
3,620,689

Nine Months Ended September 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
69,427

 
$
53,510

 
$
66,075

 
$
189,012

Capital expenditures (b)
$
300,093

 
$
2,295

 
$
77,414

 
$
379,802

Revenues:
 
 
 
 
 
 
 
External customers
$
44,564

 
$
151,326

 
$
2,820,095

 
$
3,015,985

Intersegment (c)
11,230

 
(6,984
)
 
(4,246
)
 
—

Total revenues of reportable segments
$
55,794

 
$
144,342

 
$
2,815,849

 
$
3,015,985

Total assets by reportable segment were as follows:
 
September 30,
2013
 
December 31,
2012
Pipeline transportation
$
1,024,367

 
$
890,652

Refinery services
414,102

 
414,170

Supply and logistics
1,179,791

 
750,347

Other assets
61,310

 
54,495

Total consolidated assets
$
2,679,570

 
$
2,109,664


 
(a)
A reconciliation of Segment Margin to income before income taxes for the periods presented is as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Segment Margin
$
64,824

 
$
65,929

 
$
207,331

 
$
189,012

Corporate general and administrative expenses
(11,113
)
 
(9,428
)
 
(32,255
)
 
(26,756
)
Depreciation and amortization
(16,066
)
 
(14,838
)
 
(46,789
)
 
(45,447
)
Interest expense
(12,587
)
 
(9,873
)
 
(36,282
)
 
(30,697
)
Distributable cash from equity investees in excess of equity in earnings
(5,204
)
 
(5,613
)
 
(16,659
)
 
(19,098
)
Non-cash items not included in segment margin
507

 
(2,222
)
 
(2,828
)
 
(2,475
)
Cash payments from direct financing leases in excess of earnings
(1,291
)
 
(1,278
)
 
(3,786
)
 
(3,748
)
Income before income taxes
$
19,070

 
$
22,677

 
$
68,732

 
$
60,791


 
(b)
Capital expenditures include maintenance and growth capital expenditures, such as fixed asset additions (including enhancements to existing facilities and construction of internal growth projects) as well as acquisitions of businesses and interests in equity investees. In addition to construction of internal growth projects, capital spending in our pipeline transportation segment included $5.2 million and $71.4 million during the three and nine months ended September 30, 2013 and $5.7 million and $57.1 million during the three and nine months ended September 30, 2012 representing capital contributions to our SEKCO equity investee to fund our share of the construction costs for its pipeline. For the three and nine months ended September 30, 2013, capital spending in our supply and logistics segment also included $230.9 million for the acquisition of our offshore marine transportation assets. For the nine months ended September 30, 2012, capital spending in our pipeline transportation segment also included $205.6 million for the acquisition of interests in several Gulf of Mexico pipelines.
(c)
Intersegment sales were conducted under terms that we believe were no more or less favorable than then-existing market conditions.