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SECURITIES AND EXCHANGE COMMISSION
þ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the fiscal year ended December 31, 2009 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 05-0527861 | |
State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Title of each class | Name of each exchange on which registered | |
Common Units representing limited partnership interests | NASDAQ |
Large accelerated filero | Accelerated filerþ | Non-accelerated filero | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
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• | Terminalling and storage services for petroleum products and by-products; | ||
• | Natural gas services; | ||
• | Sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and | ||
• | Marine transportation services for petroleum products and by-products. |
• | Terminalling and Storage.We own or operate 12 marine shore based terminal facilities and 11 specialty terminal facilities located in the United States Gulf Coast region that provide storage, processing and handling services for producers and suppliers of petroleum products and by-products, lubricants and other liquids, including the refining of various grades and quantities of naphthenic lubricants and related products. Our facilities and resources provide us with the ability to handle various products that require specialized treatment, such as molten sulfur and asphalt. We also provide land rental to oil and gas companies along with storage and handling services for lubricants and fuel oil. We provide these terminalling and storage services on a fee basis primarily under long-term contracts. A significant portion of the contracts in this segment provide for minimum fee arrangements that are not based on the volumes handled. | ||
• | Natural Gas Services.Through our acquisitions of Prism Gas Systems I, L.P. (“Prism Gas”) and Woodlawn Pipeline Co., Inc. (“Woodlawn”), we have ownership interests in over 615 miles of gathering and transmission pipelines located in the natural gas producing regions of East Texas, Northwest Louisiana, the Texas Gulf Coast and offshore Texas and federal waters in the Gulf of Mexico, as well as a 285 MMcfd capacity natural gas processing plant located in East Texas. In |
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addition to our natural gas gathering and processing business, we distribute natural gas liquids or, “NGLs”. We purchase NGLs primarily from natural gas processors. We store NGLs in our supply and storage facilities for wholesale deliveries to propane retailers, refineries and industrial NGL users in Texas and the Southeastern United States. We own an NGL pipeline which spans approximately 200 miles running from Kilgore to Beaumont, Texas. We own three NGL supply and storage facilities with an aggregate above-ground storage capacity of approximately 3,000 barrels and we lease approximately 2.2 million barrels of underground storage capacity for NGLs. We believe we have a natural gas processing competitive advantage in East Texas with the only full fractionation facilities serving this area. The recent acquisition of natural gas gathering and processing assets from Crosstex Energy, L.P. and Crosstex Energy, Inc. by our Waskom Gas Processing Company (a joint venture in which we participate with Center Point Energy Gas Processing Company, an indirect, wholly-owned subsidiary of CenterPoint Energy, Inc.) further strengthens our East Texas infrastructure. | |||
• | Sulfur Services.We have developed an integrated system of transportation assets and facilities relating to sulfur services over the last 30 years. We process and distribute sulfur predominantly produced by oil refineries primarily located in the United States Gulf Coast region. We handle molten sulfur on contracts that are tied to sulfur indices and tend to provide stable margins. We process molten sulfur into prilled or pelletized sulfur on take or pay fee contracts at our facilities in Port of Stockton, California and Beaumont, Texas. The sulfur we process and handle is primarily used in the production of fertilizers and industrial chemicals. We own and operate six sulfur-based fertilizer production plants and one emulsified sulfur blending plant that manufacture primarily sulfur-based fertilizer products for wholesale distributors and industrial users. These plants are located in Illinois, Texas and Utah. In October 2007, we completed the construction of a sulfuric acid production plant in Plainview, Texas which processes molten sulfur into sulfuric acid. Demand for our sulfur products exists in both the domestic and foreign markets, and we believe our asset base provides us with additional opportunities to handle increases in U.S. supply and access to foreign demand. | ||
• | Marine Transportation.We own a fleet of 40 inland marine tank barges, 17 inland push boats and four offshore tug barge units that transport petroleum products and by-products largely in the United States Gulf Coast region. We provide these transportation services on a fee basis primarily under annual contracts and many of our customers have long standing contractual relationships with us. Over the past several years, we have focused on modernizing our fleet. As a result, the average age of our vessels has decreased from 33 years in 2006 to 22 years as of March 4, 2010 and we anticipate that the average age will be 19 years at the end of 2010. This modernized asset base is attractive both to our existing customers as well as potential new customers. In addition, our fleet contains several vessels that reflect our focus on specialty products. For example, we are one of a very limited number of companies that can transport molten sulfur. |
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• | Pursue Organic Growth Projects.We continually evaluate economically attractive organic expansion opportunities in new or existing areas of operation that will allow us to leverage our existing market position, increase the distributable cash flow from our existing assets through improved utilization and efficiency, and leverage our existing customer base. This ability to pursue organic growth opportunities which can be seen in the construction of our Beaumont, Texas sulfur prilling facility, which provides our customers with access to foreign markets. | ||
• | Pursue Internal Organic Growth by Attracting New Customers and Expanding Services Provided to Existing Customers. We seek to identify and pursue opportunities to expand our customer base across all of our business segments. We generally begin a relationship with a customer by transporting or marketing a limited range of products and services. We believe expanding our customer base and our product and service offerings to existing customers is the most efficient and cost-effective method of achieving organic growth. We believe significant opportunities exist to expand our customer base and provide additional services and products to existing customers. | ||
• | Pursue Strategic Acquisitions.We monitor the marketplace to identify and pursue accretive acquisitions that expand the services and products we offer or that expand our geographic presence. After acquiring other businesses, we will attempt to utilize our industry knowledge, network of customers and suppliers and strategic asset base to operate the acquired businesses more efficiently and competitively, thereby increasing revenues and cash flow. Our acquisitions have tended to focus on targets with which we are familiar through historical business relations (as suppliers or customers). This allows us to seek out operations that we believe will be strengthened by our management team and existing operations. An example of our strategy is the acquisition of our Prism subsidiary in 2005 which complemented and expanded our NGL distribution capabilities. We believe that our diversified base of operations provides multiple platforms for strategic growth through acquisitions. | ||
• | Pursue Strategic Alliances.Many of our larger customers are establishing strategic alliances with midstream service providers such as us to address logistical and transportation problems or achieve operational synergies. These strategic alliances are typically structured differently than our regular commercial relationships, with the goal that such alliances would expand our business relationships with our customers and suppliers. Due to our diversified portfolio of assets and the comprehensive solutions provided thereby, we believe we are an attractive partner for the pursuit of strategic alliances and we intend to pursue strategic alliances with customers in the future. | ||
• | Expand Geographically.We work to identify and assess other attractive geographic markets for our services and products based on the market dynamics and the cost associated with penetration of such markets. We typically enter a new market through an acquisition or by securing at least one major customer or supplier and then dedicating or purchasing assets for operation in the new market. Once in a new territory, we seek to expand our operations within this new territory both by targeting new customers and by selling additional services and products to our original customers in the territory. Our focus on geographic expansion can be seen in the 2005 acquisition of our Bay Sulfur assets in Stockton, California which allowed for us to establish our presence in the West Coast sulfur markets. |
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• | Maintain Financial Strength and Flexibility. We continue to seek additional long-term, fee-based contracts to further minimize our exposure to commodity price fluctuations and sustain our long-term customer relationships. We continue to hedge a significant portion of our remaining exposure to commodity price fluctuations. In addition, we intend to continue to maintain a strong balance sheet by financing growth through a combination of long-term debt and equity, with the goal of having flexibility to fund future organic growth and strategic acquisitions through opportunistically accessing the capital markets. |
• | Asset Base and Integrated Distribution Network.We operate a diversified asset base that, together with the services provided by Martin Resource Management, enables us to offer our customers an integrated distribution network consisting of transportation, terminalling and storage and midstream logistical services while minimizing our dependence on the availability and pricing of services provided by third parties. Our integrated distribution network enables us to provide customers with a complementary portfolio of transportation, terminalling, distribution and other midstream services for petroleum products and by-products. We believe our customers value the efficiency of using this complementary portfolio as opposed to contracting with a varying number of other service providers to obtain the same services. | ||
• | Strategically Located Assets.We believe we are one of the largest providers of shore bases and one of the largest lubricant distributors and marketers in the United States Gulf Coast region. In addition, we are one of the largest operators of marine service terminals in the United States Gulf Coast region providing broad geographic coverage and distribution capability of our products and comprehensive services to our customers. Our natural gas gathering and processing assets are focused in areas that have continued to experience high levels of drilling activity and natural gas production. In addition, our natural gas services business is well positioned in the East Texas area with the only full fractionation facilities serving this area. | ||
• | Specialized Transportation Equipment and Storage Facilities. We have the assets and expertise to handle and transport certain petroleum products and by-products with unique requirements for transportation and storage. For example, we own facilities and resources to transport molten sulfur and asphalt, which must be maintained at temperatures between approximately 275 and 350 degrees Fahrenheit to remain in liquid form. We believe these capabilities allow us to enhance relationships with our customers by offering them services to handle their unique product requirements. These specialized assets, and the comprehensive solutions provided thereby, provide us with the flexibility to require minimum fee contracts with certain of our customers that require these specialized services. | ||
• | Ability for Growth Across Multiple Segments. Our distinct lines of business allow us to allocate capital to the most promising growth opportunities based on current and anticipated market conditions. We believe that with our Prism Gas assets, we have opportunities for organic growth in our natural gas gathering and processing operations through increasing fractionation capacity, pipeline expansions, new pipeline construction and bolt-on acquisitions. We believe Prism Gas’ assets are well situated in the Haynesville Shale, which is one of the four largest U.S. shale deposits, and anticipate growth opportunities as these deposits are further developed. Additionally, we believe we could significantly increase our sulfur processing capacity with minimal capital investment. | ||
• | Experienced Management Team and Operational Expertise.Members of our executive management team and the heads of our principal business lines have, on average, more than 30 years of experience in the industries in which we operate. Further, these individuals have been employed by Martin Resource Management, on average, for more than 18 years. Our management team has a successful track record of creating internal growth and completing acquisitions. We believe our management team’s experience and familiarity with our industry and businesses are important assets that assist us in implementing our business strategies. | ||
• | Strong Industry Reputation and Established Relationships with Suppliers and Customers. We believe we have established a reputation in our industry as a reliable and cost-effective supplier of services to our customers and have a track record of safe, efficient operation of our facilities. Our management has |
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also established long-term relationships with many of our suppliers and customers. We believe we benefit from our management’s reputation and track record, and from these long-term relationships. | |||
• | Financial Strength and Flexibility. We have historically financed our operations with a combination of debt and equity while maintaining a modest leverage profile, even in challenging business environments. Since our initial public offering, we have accessed the public equity markets 4 times for $241.0 million in total net proceeds, including capital contributions from our general partner. We have also occasionally issued units to Martin Resource Management in exchange for cash or assets. | ||
• | Fee-Based Contracts and Active Commodity Risk Management. We generate a majority of our cash flow from fee-based contracts with our customers. In addition, a significant portion of these fee-based contracts consist of reservation charges or minimum fee arrangements, which reduce the volatility of a portion of cash flows to volume fluctuations. We seek to further minimize our exposure to commodity price fluctuations through swaps for crude oil, natural gas and natural gasoline. As of December 31, 2009, Prism Gas has hedged approximately 50% of its commodity risk by volume for 2010. |
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Terminal | Location | Acres | Tanks | Aggregate Capacity | ||||||||||||
Pelican Island | Galveston, Texas | 51.3 | 16 | 87,200 Bbls. | ||||||||||||
Harbor Island(1) | Harbor Island, Texas | 25.5 | 12 | 32,500 Bbls. | ||||||||||||
Freeport | Freeport, Texas | 17.8 | 1 | 8,300 Bbls. | ||||||||||||
Port O’Connor(2) | Port O’Connor, Texas | 22.8 | 8 | 7,000 Bbls. | ||||||||||||
Sabine Pass(3) | Sabine Pass, Texas | 23.1 | 11 | 17,000 Bbls. | ||||||||||||
Cameron “East”(4) | Cameron, Louisiana | 34.3 | 12 | 34,000 Bbls. | ||||||||||||
Cameron “West”(5) | Cameron, Louisiana | 16.9 | 5 | 16,500 Bbls. | ||||||||||||
Venice (6) | Venice, Louisiana | 2.8 | 2 | 15,000 Bbls. |
(1) | A portion of this terminal is located on land owned by a third party and leased under a lease that expires in January 2015. | |
(2) | This terminal is located on land owned by a third party and leased under a lease that expires in March 2014. | |
(3) | A portion of this terminal is located on land owned by a third party and leased under a lease that expires in September 2036. | |
(4) | This terminal is located on land owned by third parties and leased under a lease that expires in March 2012 and can be extended by us through March 2022. | |
(5) | This terminal is located on land owned by a third party and leased under a lease that expires in February 2013. | |
(6) | This terminal is located on land owned by a third party and leased under a sublease agreement that expires in August 2012. |
Terminal | Location | Tanks | Aggregate Capacity | |||||||||
Amelia | Amelia, Louisiana | 17 | 14,900 Bbls. | |||||||||
Berwick(1) | Berwick, Louisiana | 2 | 25,000 Bbls. | |||||||||
Intracoastal City(2)(3) | Intracoastal City, Louisiana | 16 | 39,000 Bbls. | |||||||||
Fourchon(4) | Fourchon, Louisiana | 11 | 80,000 Bbls. |
(1) | This terminal is located on land owned by third parties and leased under a lease that expires in September 2012 and can be extended by us through September 2017. | |
(2) | A portion of this terminal is located on land owned by a third party at which we throughput fuel oil pursuant to an agreement that expired in January 2010 and is automatically renewed on a monthly basis. | |
(3) | A portion of this terminal is located on land owned by third parties and leased under a lease that expires in April 2014. | |
(4) | This terminal is located on land owned by a third party at which we throughput lubricants and fuel oil pursuant to an agreement that expires in January 2017. |
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Aggregate | ||||||||||
Terminal | Location | Tanks | Capacity | Products | Description | |||||
Tampa(1) | Tampa, Florida | 8 | 779,000 Bbls. | Asphalt, sulfur and fuel oil | Marine terminal, loading/unloading for vessels, barges railcars and trucks | |||||
Stanolind | Beaumont, Texas | 8 | 555,000 Bbls. | Asphalt, crude oil, sulfur, sulfuric acid and fuel oil | Marine terminal, marine dock for loading/unloading of vessels, barges, railcars and trucks | |||||
Neches | Beaumont, Texas | 7 | 500,400 Bbls. | Ammonia, asphalt, fuel oil, crude oil and sulfur-based fertilizer | Marine terminal, loading/unloading for vessels, barges, railcars and trucks | |||||
Ouachita County | Ouachita County, Arkansas | 2 | 77,500 Bbls. | Crude oil | Marine terminal, loading/unloading for barges and trucks | |||||
Corpus Christi | Corpus Christi, Texas | 4 | 330,000 Bbls. | Fuel oil and diesel | Marine Terminal, loading/unloading barges and vessels and unloading trucks |
Terminal | Location | Aggregate Capacity | Products | Description | ||||
Channelview | Houston, Texas | 34,000 sq. ft. Warehouse/29,000 Bbls | Lubricants | Lubricants blending and truck loading/unloading | ||||
Cross Refining | Smackover, Arkansas | 7,500 Bbls per day | Naphthenic lubricants, Distillates, Asphalt | Crude refining facility | ||||
South Houston Asphalt | Houston, Texas | 71,000 Bbls | Asphalt | Asphalt Processing and storage | ||||
Port Neches Asphalt | Port Neches, Texas | 31,250 Bbls | Asphalt | Asphalt Processing and storage | ||||
Omaha Asphalt | Omaha, Nebraska | 114,225 Bbls | Asphalt | Asphalt Processing and storage | ||||
Spindletop | Beaumont, Texas | 90,000 Bbls | Natural Gasoline | Pipeline receipts and shipments |
(1) | This terminal is located on land owned by the Tampa Port Authority that was leased to us under a 10-year lease that expires in December 2016 with two five-year extension options. |
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• | storage of NGLs purchased in off-peak months; | ||
• | efficient use of the transportation fleet of vehicles owned by Martin Resource Management; and | ||
• | product management expertise to obtain supplies when needed. |
NGL Facility | Location | Capacity | Description | |||
Wholesale terminals | Arcadia, Louisiana(1) | 2,000,000 barrels | Underground storage | |||
Hattiesburg, Mississippi(2) | 100,000 barrels | Underground storage | ||||
Mt. Belvieu, Texas(3)(2) | 40,000 barrels | Underground storage | ||||
Retail terminals | Kilgore, Texas | 90,000 gallons | Retail propane distribution | |||
Longview, Texas | 30,000 gallons | Retail propane distribution | ||||
Henderson, Texas | 12,000 gallons | Retail propane distribution |
(1) | We lease our underground storage at Arcadia, Louisiana from Martin Resource Management under a three-year product storage agreement, which is renewable on a yearly basis thereafter subject to a re-determination of the lease rate for each subsequent year. | |
(2) | We lease our underground storage at Hattiesburg, Mississippi and Mont Belvieu, Texas from third parties under one-year lease agreements, which have been renewed annually for more than 20 years. | |
(3) | In addition, under a throughput agreement, we are entitled to the access and use of a truck loading and unloading and pipeline distribution terminal owned by Enterprise Products and located at Mont Belvieu, Texas. Effective |
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each January 1, this agreement automatically renews for consecutive one-year periods unless either party terminates the agreement by giving written notice to the other party at least 30 days prior to the expiration of the then-applicable term. This terminal facility has a storage capacity of 8,000 barrels. |
• | Waskom Processing Plant — The Waskom Processing Plant, located in Harrison County in East Texas, currently has 285 MMcfd of processing capacity with full fractionation facilities. Expansions to the processing plant were completed in March and June of 2007, July of 2008 and June of 2009 increasing the capacity from 150 MMcfd to 285 MMcfd. In June 2009, the Waskom fractionator was expanded to a capacity of 14,500 barrels per day (“bpd”). For the years ended December 31, 2009 and 2008, inlet throughput and NGL fractionation averaged approximately 243 and 257 MMcfd and 10,034 and 10,542 bpd, respectively. Prism Gas owns an unconsolidated 50% operating interest in the Waskom Processing Plant with CenterPoint Energy Gas Processing, Inc. owning the remaining 50% non-operating interest. We reflect the results of operations from this facility using the equity method of accounting. | ||
• | Harrison Pipeline System – In January of 2010, as 50% owner and operator of Waskom Gas Processing Company, through Waskom Gas Processing Company’s wholly owned subsidiaries Waskom Midstream LLC and Olin Gathering LLC, we acquired the Harrison Pipeline System, located in Harrison County in East Texas. The system consists of approximately 62 miles of gathering pipeline, two 35 MMcfd dew point control plants and various equipment. We will reflect the results of operations from this system using the equity method of accounting. |
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• | Woodlawn Plant and Gathering System — On May 2, 2007, we, through our subsidiary Prism Gas, acquired 100% of the outstanding stock of Woodlawn. The results of Woodlawn’s operations have been included in our consolidated financial statements beginning May 2, 2007. Woodlawn is a natural gas gathering and processing company which owns integrated gathering and processing assets in East Texas. Woodlawn’s system consists of approximately 142 miles of natural gas gathering pipe, approximately 33 miles of condensate transport pipe and a 30 MMcfd processing plant. Prism Gas acquired a nine-mile pipeline from a Woodlawn related party that delivers residue gas from the Woodlawn plant to the Texas Eastern Transmission pipeline system. | ||
• | McLeod Gathering System — The McLeod Gathering System, located in East Texas and Northwest Louisiana, is a low-pressure gathering system connected to the Waskom Processing Plant providing processing and blending services for natural gas, with high nitrogen and high liquids content gathered by the system. For the years ended December 31, 2009 and 2008, the McLeod Gathering System gathered approximately 4 and 5 MMcfd of natural gas, respectively. Prism Gas owns a consolidated 100% interest in this system. | ||
• | East Harrison Gathering System – In December of 2009, we acquired 6.45 miles of gathering pipeline referred to as the East Harrison Pipeline System. For December 2009, the system transported 514 Mcfd. Prism Gas owns a consolidated 100% interest in this system. | ||
• | Hallsville Gathering System — The Hallsville Gathering System, which Prism Gas constructed in 2006 in Harrison County, Texas, provides gathering and centralized compression for producers in the Oak Hill Field of East Texas. The system operates at low pressure and redelivers gas to two interstate and three intrastate markets via the Oakhill Gathering System. For the years ended December 31, 2009 and 2008, the Hallsville Gathering System gathered approximately 18 and 21 MMcfd of natural gas, respectively. Prism Gas owns a consolidated 100% interest in this system. | ||
• | The Marshall Line — The Marshall Line is a 10” gathering line that Prism Gas began leasing from Kinder Morgan Texas in 2006. It is located in Harrison County, Texas. The Marshall Line gathers gas at intermediate pressure and feeds the Waskom Processing Plant. Prism Gas owns a consolidated 100% interest in the lease. | ||
• | Bosque County Pipeline — The Bosque County Pipeline, gathers gas in four North Central Texas counties centered around Bosque County. Prism Gas owned an unconsolidated 20% non-operating interest in a partnership that owned the lease rights to the assets of the Bosque County Pipeline, with Panther Pipeline Ltd. owning a 42.5% operating interest and two unrelated parties owning the remaining 37.5% interest. The lease contract terminated in June 2009. | ||
• | East Texas Gathering System — The East Texas Gathering System, located in Panola County, Texas, is comprised of gathering systems built to gather gas produced in this area to market outlets. Prism Gas owns a consolidated 100% interest in these systems. |
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• | Fishhook Gathering System — The Fishhook Gathering System, located in Jefferson County, Texas offshore federal waters, gathers and transports gas in both offshore and onshore areas. In September 2008, Hurricane Ike caused extensive damage to an offshore platform on the system. Repairs were completed in February 2009. Prior to the hurricane damage approximately 15 MMcfd of natural gas was gathered and transported for the year ended December 31, 2008. For the year ended December 31, 2009 approximately 26 MMcfd of natural gas was gathered and transported on the system. Prism Gas owns an unconsolidated 50% non-operating interest in Panther Interstate Pipeline Energy, LLC (“PIPE”), the owner of the Fishhook Gathering System, with Panther Pipeline Ltd. owning the remaining 50% operating interest. We reflect the results of operations from this system using the equity method of accounting. | ||
• | Matagorda Offshore Gathering System — The Matagorda Offshore Gathering System, located in Matagorda County, Texas and offshore Texas State waters, gathers gas in both the offshore and onshore areas. For the years ended December 31, 2009 and 2008, the Matagorda Offshore Gathering System gathered approximately 10 and 15 MMcfd of natural gas, respectively. Prism Gas owns an unconsolidated 50% non-operating interest in the Matagorda Offshore Gathering System, with Panther Pipeline Ltd. owning the remaining 50% operating interest. We reflect the results of operations from this system using the equity method of accounting. |
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• | Plant nutrient sulfur products.We produce plant nutrient and agricultural ground sulfur products at our two facilities in Odessa, Texas. We also produce plant nutrient sulfur at our facility in Seneca, Illinois. Our plant nutrient sulfur product is a 90% degradable sulfur product marketed under the Disper-Sul® trade name and sold throughout the United States to direct application agricultural markets. Our agricultural ground sulfur products are used primarily in the western United States on grapes and vegetable crops. | ||
• | Ammonium sulfate products, NPK products and related blended products.We produce various grades of ammonium sulfate including coarse and standard grades, a 40% ammonium sulfate solution and a Kosher-approved food grade material. We also produce nitrogen-phosphorus-potassium products (commonly referred to as NPK products). Our NPK products are an ammoniated phosphate fertilizer containing nitrogen, phosphorus and potash that we manufacture so all particles have a uniform composition. These products primarily serve direct application agricultural markets within a 400-mile radius of our manufacturing plant in Plainview, Texas. We blend our ammonium sulfate to make custom grades of lawn and garden fertilizer at our facility in Salt Lake City, Utah. We package these custom grade products under both proprietary and private labels and sell them to major retail distributors, and other retail customers, of these products. | ||
• | Industrial sulfur products.We produce industrial sulfur products such as emulsified sulfur, elemental pastille sulfur, and industrial ground sulfur products. We produce emulsified sulfur at our Texarkana, Texas facility. Emulsified sulfur is primarily used to control the sulfur content in the pulp and paper manufacturing processes. We produce elemental pastille sulfur at our two Odessa, Texas facilities and at our Seneca, Illinois facility. Elemental pastille sulfur is used to increase the efficiency of the coal-fired precipitators in the power industry. These industrial ground sulfur products are also used in a variety of dusting and wettable sulfur applications such as rubber manufacturing, fungicides, sugar and animal feeds. | ||
• | Liquid sulfur products.We produce ammonium thiosulfate at our Neches terminal location in Beaumont, Texas. This agricultural sulfur product is a clear liquid containing 12% nitrogen and 26% sulfur. This product serves as a liquid plant nutrient used directly through spray rigs or irrigation systems. It is also blended with other NPK liquids or suspensions as well. Our market is predominantly the Mid South and Coastal Bend area of Texas. |
Asset | Class of Equipment | Capacity/Horsepower | Products Transported | |||
Margaret Sue | Offshore tank barge | 10,450 long tons | Molten sulfur | |||
M/V Martin Explorer | Offshore tugboat | 7,200 horsepower | N/A | |||
M/V Martin Express | Inland push boat | 1,200 horsepower | N/A | |||
MGM 101 | Inland tank barge | 2,450 long tons | Molten sulfur | |||
MGM 102 | Inland tank barge | 2,450 long tons | Molten sulfur |
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Terminal | Location | Daily Production Capacity | Products Stored | |||
Stockton | Stockton, California | 1,000 metric tons per day | Molten and prilled sulfur | |||
Neches | Beaumont, Texas | 4,000 metric tons per day | Molten and prilled sulfur |
Facility | Location | Capacity | Description | |||
Fertilizer plants (two) | Odessa, Texas | 70,000 tons/year | Dry sulfur fertilizer production | |||
Fertilizer plant | Seneca, Illinois | 36,000 tons/year | Dry sulfur fertilizer production | |||
Fertilizer plant | Plainview Texas | 180,000 tons/year | Fertilizer production | |||
Fertilizer plant | Salt Lake City, Utah | 25,000 tons/year | Blending and packaging | |||
Fertilizer plant strial sulfur plant | Beaumont, Texas | 70,000 tons/year | Liquid sulfur fertilizer production | |||
Industrial sulfur plant | Texarkana, Texas | 18,000 tons/year | Emulsified sulfur production | |||
Sulfuric acid plant | Plainview Texas | 150,000 tons/year | Sulfuric acid production |
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Class of Equipment | Number in Class | Capacity/Horsepower | Description of Products Carried | |||
Inland tank barges | 12 | 20,000 bbl and under | Asphalt, crude oil, fuel oil, | |||
gasoline and sulfur(1) | ||||||
Inland tank barges | 28 | 20,000 - 30,000 bbl | Asphalt, crude oil, fuel oil | |||
and gasoline(1) | ||||||
Inland push boats | 17 | 800 - 3,800 | N/A | |||
horsepower | ||||||
Offshore tank barges | 4 | 40,000 bbl and 95,000 | Asphalt, fuel oil and NGLs | |||
bbl | ||||||
Offshore tugboats | 4 | 3,200 - 7,200 | N/A | |||
horsepower |
(1) | One of our 12 inland tank barges with capacity of up to 20,000 bbl, and 15 of our 28 inland tank barges with capacity of 20,000 to 30,000 bbl, are specialized and equipped to transport asphalt. |
• | the increasing age of the domestic tank barge fleet, resulting in retirements; | ||
• | a reduction in tax incentives, which previously encouraged speculative construction of new equipment; | ||
• | stringent operating standards to adequately address safety and environmental risks; | ||
• | the elimination of government programs supporting small refineries; | ||
• | an increase in environmental regulations mandating expensive equipment modification; and | ||
• | more restrictive and expensive insurance. |
• | significant start-up capital requirements; | ||
• | the costs and operational difficulties of complying with stringent safety and environmental regulations; | ||
• | the cost and difficulty in obtaining insurance; and | ||
• | the number and expertise of personnel required to support marine fleet operations. |
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• | providing land transportation of various liquids using a fleet of trucks and road vehicles and road trailers; | ||
• | distributing fuel oil, asphalt, sulfuric acid, marine fuel and other liquids; | ||
• | providing marine bunkering and other shore-based marine services in Alabama, Louisiana, Mississippi and Texas; | ||
• | operating a small crude oil gathering business in Stephens, Arkansas; | ||
• | operating a lube oil packaging facility in Smackover, Arkansas; | ||
• | operating an underground NGL storage facility in Arcadia, Louisiana; | ||
• | building and marketing sulfur prillers; | ||
• | developing an underground natural gas storage facility in Arcadia, Louisiana; | ||
• | supplying employees and services for the operation of our business; | ||
• | operating, for its account and our account, the docks, roads, loading and unloading facilities and other common use facilities or access routes at our Stanolind terminal; and | ||
• | operating, solely for our account, the asphalt facilities in Omaha, Nebraska. |
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• | perform ongoing assessments of pipeline integrity; | ||
• | identify and characterize applicable threats to pipeline segments that could impact a high consequence area; | ||
• | improve data collection, integration and analysis; | ||
• | repair and remediate the pipeline as necessary; and | ||
• | implement preventive and mitigating actions. |
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• | the costs of acquisitions, if any; | ||
• | the prices of petroleum products and by-products; | ||
• | fluctuations in our working capital; | ||
• | the level of capital expenditures we make; | ||
• | restrictions contained in our debt instruments and our debt service requirements; | ||
• | our ability to make working capital borrowings under our credit facility; and | ||
• | the amount, if any, of cash reserves established by our general partner in its discretion. |
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• | one or more of our lenders may be unable or otherwise fail to meet its funding obligations; | ||
• | the lenders do not have to provide funding if there is a default under the credit facility or if any of the representations or warranties included in the credit facility are false in any material respect; and | ||
• | if any lender refuses to fund its commitment for any reason, whether or not valid, the other lenders are not required to provide additional funding to make up for the unfunded portion. |
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• | post-closing discovery of material undisclosed liabilities of the acquired business or assets; | ||
• | the unexpected loss of key employees or customers from the acquired businesses; | ||
• | difficulties resulting from our integration of the operations, systems and management of the acquired business; and | ||
• | an unexpected diversion of our management’s attention from other operations. |
• | accidents on rivers or at sea and other hazards that could result in releases, spills and other environmental damages, personal injuries, loss of life and suspension of operations; |
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• | leakage of NGLs and other petroleum products and by-products; | ||
• | fires and explosions; | ||
• | damage to transportation, terminalling and storage facilities, and surrounding properties caused by natural disasters; and | ||
• | terrorist attacks or sabotage. |
• | prevailing oil and natural gas prices and expectations about future prices and price volatility; | ||
• | the cost of offshore exploration for, and production and transportation of, oil and natural gas; | ||
• | worldwide demand for oil and natural gas; | ||
• | consolidation of oil and gas and oil service companies operating offshore; | ||
• | availability and rate of discovery of new oil and natural gas reserves in offshore areas; | ||
• | local and international political and economic conditions and policies; |
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• | technological advances affecting energy production and consumption; | ||
• | weather conditions; | ||
• | environmental regulation; and | ||
• | the ability of oil and gas companies to generate or otherwise obtain funds for exploration and production. |
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• | catastrophic events, including hurricanes; | ||
• | environmental remediation; | ||
• | labor difficulties; and | ||
• | disruptions in the supply of our products to our facilities or means of transportation. |
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• | the impact of weather on the demand for oil and natural gas; | ||
• | the level of domestic oil and natural gas production; | ||
• | the level of domestic industrial and manufacturing activity; | ||
• | the availability of imported oil and natural gas; | ||
• | actions taken by foreign oil and gas producing nations; | ||
• | the availability of local, intrastate and interstate transportation systems; | ||
• | the availability and marketing of competitive fuels; | ||
• | the impact of energy conservation efforts; and | ||
• | the extent of governmental regulation and taxation. |
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• | perform ongoing assessments of pipeline integrity; | ||
• | identify and characterize applicable threats to pipeline segments that could impact a high consequence area; | ||
• | improve data collection, integration and analysis; | ||
• | repair and remediate the pipeline as necessary; and | ||
• | implement preventive and mitigating actions. |
• | the issuance of common units in additional public offerings or in connection with acquisitions that increase cash flow from operations on a pro forma, per unit basis; | ||
• | the conversion of subordinated units into common units; | ||
• | the conversion of units of equal rank with the common units into common units under some circumstances; or | ||
• | the conversion of our general partner’s general partner interest in us and its incentive distribution rights into common units as a result of the withdrawal of our general partner. |
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• | we had been conducting business in any state without compliance with the applicable limited partnership statute; or | ||
• | the right or the exercise of the right by our unitholders as a group to remove or replace our general partner, to approve some amendments to our partnership agreement, or to take other action under our partnership agreement constituted participation in the “control” of our business. |
• | permits our general partner to make a number of decisions in its “sole discretion.” This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner; | ||
• | provides that our general partner is entitled to make other decisions in its “reasonable discretion” which may reduce the obligations to which our general partner would otherwise be held; | ||
• | generally provides that affiliated transactions and resolutions of conflicts of interest not involving a required vote of unitholders must be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the interests of all parties involved, including its own; and | ||
• | provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for errors of judgment or for any acts or omissions if our general partner and those other persons acted in good faith. |
• | the issuance of common units in additional public offerings or in connection with acquisitions that increase cash flow from operations on a pro forma, per unit basis; | ||
• | the conversion of subordinated units into common units; | ||
• | the conversion of units of equal rank with the common units into common units under some circumstances; or |
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• | the conversion of our general partner’s general partner interest in us and its incentive distribution rights into common units as a result of the withdrawal of our general partner. |
• | our unitholders’ proportionate ownership interest in us will decrease; | ||
• | the amount of cash available for distribution on a per unit basis may decrease; | ||
• | because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders will increase; | ||
• | the relative voting strength of each previously outstanding unit will diminish; | ||
• | the market price of the common units may decline; and | ||
• | the ratio of taxable income to distributions may increase. |
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• | Officers of Martin Resource Management who provide services to us also devote significant time to the businesses of Martin Resource Management and are compensated by Martin Resource Management for that time. | ||
• | Neither our partnership agreement nor any other agreement requires Martin Resource Management to pursue a business strategy that favors us or utilizes our assets or services. Martin Resource Management’s directors and officers have a fiduciary duty to make these decisions in the best interests of the shareholders of Martin Resource Management without regard to the best interests of the unitholders. | ||
• | Martin Resource Management may engage in limited competition with us. | ||
• | Our general partner is allowed to take into account the interests of parties other than us, such as Martin Resource Management, in resolving conflicts of interest, which has the effect of reducing its fiduciary duty to our unitholders. | ||
• | Under our partnership agreement, our general partner may limit its liability and reduce its fiduciary duties, while also restricting the remedies available to our unitholders for actions that, without the limitations and reductions, might constitute breaches of fiduciary duty. As a result of purchasing units, our unitholders will be treated as having consented to some actions and conflicts of interest that, without such consent, might otherwise constitute a breach of fiduciary or other duties under applicable state law. | ||
• | Our general partner determines which costs incurred by Martin Resource Management are reimbursable by us. | ||
• | Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered on terms that are fair and reasonable to us or from entering into additional contractual arrangements with any of these entities on our behalf. | ||
• | Our general partner controls the enforcement of obligations owed to us by Martin Resource Management. | ||
• | Our general partner decides whether to retain separate counsel, accountants or others to perform services for us. | ||
• | The audit committee of our general partner retains our independent auditors. | ||
• | In some instances, our general partner may cause us to borrow funds to permit us to pay cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions. | ||
• | Our general partner has broad discretion to establish financial reserves for the proper conduct of our business. These reserves also will affect the amount of cash available for distribution. |
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Common Units | Distributions Declared per Unit | |||||||||||||||
Quarters Ended | High | Low | Common | Subordinated1 | ||||||||||||
March 31, 2009 | $ | 21.00 | $ | 14.89 | $ | 0.750 | $ | 0.750 | ||||||||
June 30, 2009 | $ | 21.96 | $ | 17.33 | $ | 0.750 | $ | 0.750 | ||||||||
September 30, 2009 | $ | 28.50 | $ | 20.70 | $ | 0.750 | $ | 0.750 | ||||||||
December 31, 2009 | $ | 31.69 | $ | 26.02 | $ | 0.750 | $ | 0.750 |
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Common Units | Distributions Declared per Unit | |||||||||||||||
Quarters Ended | High | Low | Common | Subordinated1 | ||||||||||||
March 31, 2008 | $ | 37.20 | $ | 30.50 | $ | 0.720 | $ | 0.720 | ||||||||
June 30, 2008 | $ | 36.24 | $ | 31.50 | $ | 0.740 | $ | 0.740 | ||||||||
September 30, 2008 | $ | 32.76 | $ | 19.23 | $ | 0.750 | $ | 0.750 | ||||||||
December 31, 2008 | $ | 26.99 | $ | 13.60 | $ | 0.750 | $ | 0.750 |
1 | All of our original 4,253,362 subordinated units which were issued upon the formation of the Partnership and subsequently converted into common units on a one-for-one bases received distributions prior to their conversion. The 889,444 subordinated units issued in connection with the acquisition of the Cross assets will not receive cash distributions until February 2012, the first distribution paid after they automatically convert into common units in November 2011. |
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20091 | 20081 | 20071 | 2006 | 2005 | ||||||||||||||||
Income Statement Data: | ||||||||||||||||||||
Revenues | $ | 662,385 | $ | 1,246,444 | $ | 804,327 | $ | 576,384 | $ | 438,443 | ||||||||||
Cost of product sold | 457,259 | 1,013,526 | 618,689 | 459,170 | 351,820 | |||||||||||||||
Operating expenses | 117,438 | 126,808 | 104,165 | 65,387 | 46,888 | |||||||||||||||
Selling, general, and administrative | 19,775 | 19,062 | 13,918 | 10,977 | 8,133 | |||||||||||||||
Depreciation and amortization | 39,506 | 34,893 | 26,323 | 17,597 | 12,642 | |||||||||||||||
Total costs and expenses | 633,978 | 1,194,289 | 763,095 | 553,131 | 419,483 | |||||||||||||||
Other operating income | 6,013 | 209 | 703 | 3,356 | — | |||||||||||||||
Operating income | 34,420 | 52,364 | 41,935 | 26,609 | 18,960 | |||||||||||||||
Equity in earnings of unconsolidated entities | 7,044 | 13,224 | 10,941 | 8,547 | 1,591 | |||||||||||||||
Interest expense | (18,995 | ) | (21,433 | ) | (15,125 | ) | (12,466 | ) | (6,909 | ) | ||||||||||
Debt prepayment premium | — | — | — | (1,160 | ) | — | ||||||||||||||
Other, net | 326 | 801 | 405 | 713 | 238 | |||||||||||||||
Income before income taxes | 22,795 | 44,956 | 38,156 | 22,243 | 13,880 | |||||||||||||||
Income taxes | 592 | 1,398 | 5,595 | — | — | |||||||||||||||
Net income | $ | 22,203 | $ | 43,558 | $ | 32,561 | $ | 22,243 | $ | 13,880 | ||||||||||
Net income per limited partner unit | $ | 1.17 | $ | 2.72 | $ | 1.67 | $ | 1.69 | $ | 1.58 | ||||||||||
Weighted average limited partner units | 14,680,807 | 14,529,826 | 14,018,799 | 12,602,000 | 8,583,634 | |||||||||||||||
Balance Sheet Data (at Period End): | ||||||||||||||||||||
Total assets | $ | 685,939 | $ | 706,322 | $ | 656,604 | $ | 457,461 | $ | 389,044 | ||||||||||
Due to affiliates | 13,810 | 23,085 | 17,119 | 10,474 | 3,492 | |||||||||||||||
Long-term debt | 304,372 | 295,000 | 225,000 | 174,021 | 192,200 | |||||||||||||||
Partner’s capital (owner’s equity) | 264,951 | 246,379 | 246,765 | 198,525 | 95,565 | |||||||||||||||
Cash Flow Data: | ||||||||||||||||||||
Net cash flow provided by (used in): | ||||||||||||||||||||
Operating activities | 47,592 | 86,340 | 61,209 | 39,317 | 32,334 | |||||||||||||||
Investing activities | (14,675 | ) | (106,621 | ) | (130,295 | ) | (95,098 | ) | (138,742 | ) | ||||||||||
Financing activities | (34,944 | ) | 24,151 | 69,896 | 52,991 | 109,689 | ||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Maintenance capital expenditures | 7,601 | 17,998 | 11,955 | 12,391 | 5,100 | |||||||||||||||
Expansion capital expenditures | 28,572 | 89,435 | 109,474 | 78,267 | 74,110 | |||||||||||||||
Total capital expenditures | $ | 36,173 | $ | 107,433 | $ | 121,429 | $ | 90,658 | $ | 79,210 | ||||||||||
Cash dividends per common unit (in dollars) | $ | 3.00 | $ | 2.91 | $ | 2.60 | $ | 2.44 | $ | 2.19 | ||||||||||
1 | Financial information for 2007, 2008 and the period from January 1, 2009 through November 24, 2009 have been revised to include results attributable to the Cross assets. The acquisition of the Cross assets was considered a transfer of net assets between entities under common control. We are required to revise our historical financial statements to include the activities of the Cross assets as of the date of common control. Martin Resource Management acquired Cross in November 2006; however, the activity for the period Cross was owned by Martin Resource Management during 2006 was not considered significant to our consolidated financial statements and has been excluded from the 2006 consolidated financial statements. The acquisition of the Cross assets and increase in partners capital for the common and subordinated units issued in November 2009 are recorded at amounts based on the historical carrying value of the Cross assets at that date. |
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Year Ended December 31, 2009 | ||||||||||||
Historical | ||||||||||||
Martin Midstream | ||||||||||||
Partners LP | Cross Assets Results | Revised Total | ||||||||||
(Dollars in thousands, except per unit amounts) | ||||||||||||
Revenues | $ | 633,776 | $ | 28,609 | $ | 662,385 | ||||||
Costs and expenses: | ||||||||||||
Cost of products sold (excluding depreciation and amortization) | 457,259 | — | 457,259 | |||||||||
Operating expenses | 98,677 | 18,761 | 117,438 | |||||||||
Selling, general and administrative | 18,090 | 1,685 | 19,775 | |||||||||
Depreciation and amortization | 35,143 | 4,363 | 39,506 | |||||||||
Total costs and expenses | 609,169 | 24,809 | 633,978 | |||||||||
Other operating income | 6,160 | (147 | ) | 6,013 | ||||||||
Operating income | 30,767 | 3,653 | 34,420 | |||||||||
Equity in earnings of unconsolidated entities | 7,044 | — | 7,044 | |||||||||
Interest expense | (18,124 | ) | (871 | ) | (18,995 | ) | ||||||
Other, net | 303 | 23 | 326 | |||||||||
Net income before taxes | 19,990 | 2,805 | 22,795 | |||||||||
Income tax benefit (expense) | 549 | ( 1,141 | ) | ( 592 | ) | |||||||
Net income | $ | 20,539 | $ | 1,664 | $ | 22,203 | ||||||
Year Ended December 31, 2008 | ||||||||||||
Historical | ||||||||||||
Martin Midstream | ||||||||||||
Partners LP | Cross Assets Results | Revised Total | ||||||||||
(Dollars in thousands, except per unit amounts) | ||||||||||||
Revenues | $ | 1,213,958 | $ | 32,486 | $ | 1,246,444 | ||||||
Costs and expenses: | ||||||||||||
Cost of products sold (excluding depreciation and amortization) | 1,013,526 | — | 1,013,526 | |||||||||
Operating expenses | 102,894 | 23,914 | 126,808 | |||||||||
Selling, general and administrative | 16,939 | 2,123 | 19,062 | |||||||||
Depreciation and amortization | 31,218 | 3,675 | 34,893 | |||||||||
Total costs and expenses | 1,164,576 | 29,712 | 1,194289 | |||||||||
Other operating income | 209 | — | 209 | |||||||||
Operating income | 49,591 | 2,773 | 52,364 | |||||||||
Equity in earnings of unconsolidated entities | 13,224 | — | 13,224 | |||||||||
Interest expense | (19,777 | ) | (1,656 | ) | (21,433 | ) | ||||||
Other, net | 483 | 318 | 801 | |||||||||
Net income before taxes | 43,521 | 1,435 | 44,956 | |||||||||
Income tax benefit (expense) | ( 711 | ) | ( 687 | ) | (1,398 | ) | ||||||
Net income | $ | 42,810 | $ | 748 | $ | 43,558 | ||||||
Year Ended December 31, 2007 | ||||||||||||
Historical | ||||||||||||
Martin Midstream | ||||||||||||
Partners LP | Cross Assets Results | Revised Total | ||||||||||
(Dollars in thousands, except per unit amounts) | ||||||||||||
Revenues | $ | 765,822 | $ | 38,505 | $ | 804,327 | ||||||
Costs and expenses: | ||||||||||||
Cost of products sold (excluding depreciation and amortization) | 618,689 | — | 618,689 | |||||||||
Operating expenses | 83,533 | 20,632 | 104,165 | |||||||||
Selling, general and administrative | 11,985 | 1,933 | 13,918 | |||||||||
Depreciation and amortization | 23,442 | 2,881 | 26,323 | |||||||||
Total costs and expenses | 737,649 | 25,446 | 763,095 | |||||||||
Other operating income | 703 | — | 703 | |||||||||
Operating income | 28,876 | 13,059 | 41,935 | |||||||||
Equity in earnings of unconsolidated entities | 10,941 | — | 10,941 | |||||||||
Interest expense | (14,533 | ) | (592 | ) | (15,125 | ) | ||||||
Other, net | 299 | 106 | 405 | |||||||||
Net income before taxes | 25,583 | 12,573 | 38,156 | |||||||||
Income tax benefit (expense) | ( 644 | ) | ( 4,951 | ) | (5,595 | ) | ||||||
Net income | $ | 24,939 | $ | 7,622 | $ | 32,561 | ||||||
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• | Terminalling and storage services for petroleum and by-products; | ||
• | Natural gas services; | ||
• | Sulfur and sulfur-based products gathering, processing, marketing, manufacturing and distribution; and | ||
• | Marine transportation services for petroleum products and by-products. |
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• | Market prices of oil, natural gas, NGLs, and sulfur remained below the market prices realized throughout most of 2008. | ||
• | The decline in drilling activity by gas producers in our areas of operations that began during the fourth quarter of 2008 as a result of the global economic crisis has continued. Several gas producers in our areas of operation substantially reduced drilling activity during 2009 as compared to their drilling levels during 2008. | ||
• | The decline in the demand for marine transportation services based on decreased refinery production resulting in an oversupply of equipment. | ||
• | A modest shift in marine transportation contracts from term contracts to spot contracts. |
Despite the weaker commodity price environment and reduced drilling activity, we are positioning ourselves to benefit from a recovering economy. In particular: |
• | We adjusted our business strategy for 2009 to focus on maximizing our liquidity, maintaining a stable asset base and improving the profitability of our assets by increasing their utilization while controlling costs. We also reduced our capital expenditures. | ||
• | We continue to evaluate opportunities to enter into commodity hedging transactions to further reduce our commodity price risk. | ||
• | We completed the disposition of certain non-strategic assets including the April 2009 sale of the Mont Belvieu Railcar Unloading Facility for $19.6 million, and we may consider marketing certain other non-strategic assets in the future. | ||
• | We extended the maturity date of our existing credit facility and increased the aggregate commitments of the lenders thereunder through an amendment in order to have sufficient liquidity to fund our growth programs, while continuing the present distribution rate to our unitholders. The current economic crisis and the existing litigation at Martin Resource Management created a challenging operating environment for us to maintain our liquidity and operating cash flows at levels consistent with the recent past while maintaining the present distribution rate to our unitholders. | ||
• | We acquired certain assets of a subsidiary of Martin Resource Management in exchange for the issuance of new common and subordinated units to maintain appropriate financial ratios satisfactory to our lenders. See “Recent Acquisitions — Acquisition of Cross Assets”. |
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Operating | Operating | Operating | ||||||||||||||||||||||
Revenues | Revenues | Operating | Income | Income(loss) | ||||||||||||||||||||
Operating | Intersegment | after | Income | Intersegment | after | |||||||||||||||||||
Revenues | Eliminations | Eliminations | (loss) | Eliminations | Eliminations | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Year ended December 31, 2009: | ||||||||||||||||||||||||
Terminalling and storage | $ | 109,513 | $ | (4,219 | ) | $ | 105,294 | $ | 20,231 | $ | (2,332 | ) | $ | 17,899 | ||||||||||
Natural gas services | 408,989 | (7 | ) | 408,982 | 4,880 | 786 | 5,666 | |||||||||||||||||
Sulfur services | 79,631 | (2 | ) | 79,629 | 9,575 | 4,201 | 13,776 | |||||||||||||||||
Marine transportation | 72,103 | (3,623 | ) | 68,480 | 5,811 | (2,655 | ) | 3,156 | ||||||||||||||||
Indirect selling, general and administrative | — | — | — | (6,077 | ) | — | (6,077 | ) | ||||||||||||||||
Total | $ | 670,236 | $ | (7,851 | ) | $ | 662,385 | $ | 34,420 | $ | — | $ | 34,420 | |||||||||||
Year ended December 31, 2008: | ||||||||||||||||||||||||
Terminalling and storage | $ | 122,960 | $ | (4,189 | ) | $ | 118,771 | $ | 15,034 | $ | (3,635 | ) | $ | 11,399 | ||||||||||
Natural gas services | 679,375 | — | 679,375 | 2,780 | 945 | 3,725 | ||||||||||||||||||
Sulfur services | 372,987 | (1,038 | ) | 371,949 | 31,956 | 5,224 | 37,180 | |||||||||||||||||
Marine transportation | 80,059 | (3,710 | ) | 76,349 | 8,104 | (2,534 | ) | 5,570 | ||||||||||||||||
Indirect selling, general and administrative | — | — | — | (5,510 | ) | — | (5,510 | ) | ||||||||||||||||
Total | $ | 1,255,381 | $ | (8,937 | ) | $ | 1,246,444 | $ | 52,364 | $ | — | $ | 52,364 | |||||||||||
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Operating | Operating | Operating | ||||||||||||||||||||||
Revenues | Revenues | Operating | Income | Income(loss) | ||||||||||||||||||||
Operating | Intersegment | after | Income | Intersegment | after | |||||||||||||||||||
Revenues | Eliminations | Eliminations | (loss) | Eliminations | Eliminations | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Year ended December 31, 2007: | ||||||||||||||||||||||||
Terminalling and storage | $ | 98,295 | $ | (865 | ) | $ | 97,430 | $ | 23,804 | $ | (472 | ) | $ | 23,332 | ||||||||||
Natural gas services | 515,992 | — | 515,992 | 4,159 | 333 | 4,492 | ||||||||||||||||||
Sulfur services | 131,602 | (276 | ) | 131,326 | 9,222 | 3,818 | 13,040 | |||||||||||||||||
Marine transportation | 63,533 | (3,954 | ) | 59,579 | 7,949 | (3,679 | ) | 4,270 | ||||||||||||||||
Indirect selling, general and administrative | — | — | — | (3,199 | ) | — | (3,199 | ) | ||||||||||||||||
Total | $ | 809,422 | $ | (5,095 | ) | $ | 804,327 | $ | 41,935 | $ | — | $ | 41,935 | |||||||||||
Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
Services | $ | 73,885 | $ | 72,604 | ||||
Products | 35,628 | 50,356 | ||||||
Total Revenues | 109,513 | 122,960 | ||||||
Cost of products sold | 31,331 | 42,721 | ||||||
Operating expenses | 45,783 | 50,001 | ||||||
Selling, general and administrative expenses | 1,955 | 2,243 | ||||||
Depreciation and amortization | 15,717 | 12,947 | ||||||
14,727 | 15,048 | |||||||
Other operating income (loss) | 5,504 | (14 | ) | |||||
Operating income | $ | 20,231 | $ | 15,034 | ||||
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Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
NGLs | $ | 384,124 | $ | 615,966 | ||||
Natural gas | 20,334 | 59,346 | ||||||
Non-cash mark to market and impairment adjustments of commodity derivatives | (2,490 | ) | 4,930 | |||||
Gain (loss) on cash settlements of commodity derivatives | 3,273 | (3,932 | ) | |||||
Other operating fees | 3,748 | 3,065 | ||||||
Total revenues | 408,989 | 679,375 | ||||||
Cost of products sold: | ||||||||
NGLs | 364,350 | 599,835 | ||||||
Natural gas | 19,261 | 58,771 | ||||||
Total cost of products sold | 383,611 | 658,606 | ||||||
Operating expenses | 8,627 | 8,633 | ||||||
Selling, general and administrative expenses | 7,332 | 5,292 | ||||||
Depreciation and amortization | 4,527 | 4,067 | ||||||
4,892 | 2,777 | |||||||
Other operating income | (12 | ) | 3 | |||||
Operating income | $ | 4,880 | $ | 2,780 | ||||
NGLs Volumes (Bbls) | 9,880 | 8,794 | ||||||
Natural Gas Volumes (Mmbtu) | 6,155 | 7,267 | ||||||
Equity in Earnings of Unconsolidated Entities | $ | 7,044 | $ | 13,224 | ||||
Waskom: | ||||||||
Plant Inlet Volumes (MMcfd) | 243 | 257 | ||||||
Frac Volumes (Bbls/d) | 10,034 | 10,542 | ||||||
* | Information above does not include activities relating to Waskom, PIPE, Matagorda and BCP investments |
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Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Revenues | $ | 79,631 | $ | 372,987 | ||||
Cost of products sold | 43,748 | 314,001 | ||||||
Operating expenses | 17,113 | 17,963 | ||||||
Selling, general and administrative expenses | 3,449 | 3,382 | ||||||
Depreciation and amortization | 6,151 | 5,751 | ||||||
9,170 | 31,890 | |||||||
Other operating income | 405 | 66 | ||||||
Operating income | $ | 9,575 | $ | 31,956 | ||||
Sulfur (long tons) | 1,107.4 | 1,094.3 | ||||||
Fertilizer (long tons) | 238.0 | 227.6 | ||||||
Sulfur Services Volumes (long tons) | 1,345.4 | 1,321.9 | ||||||
Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Revenues | $ | 72,103 | $ | 80,059 | ||||
Operating expenses | 52,335 | 57,346 | ||||||
Selling, general and administrative expenses | 962 | 2,635 | ||||||
Depreciation and amortization | 13,111 | 12,128 | ||||||
5,695 | 7,950 | |||||||
Other operating income | 116 | 154 | ||||||
Operating income | $ | 5,811 | $ | 8,104 | ||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
Services | $ | 72,604 | $ | 67,905 | ||||
Products | 50,356 | 30,390 | ||||||
Total Revenues | 122,960 | 98,295 | ||||||
Cost of products sold | 42,721 | 26,298 | ||||||
Operating expenses | 50,001 | 36,871 | ||||||
Selling, general and administrative expenses | 2,243 | 2,071 | ||||||
Depreciation and amortization | 12,947 | 9,239 | ||||||
15,048 | 23,817 | |||||||
Other operating income (loss) | (14 | ) | (12 | ) | ||||
Operating income | $ | 15,034 | $ | 23,804 | ||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
NGLs | $ | 615,966 | $ | 481,018 | ||||
Natural gas | 59,346 | 35,983 | ||||||
Non-cash mark to market and impairment adjustments of commodity derivatives | 4,930 | (3,104 | ) | |||||
Loss on cash settlements of commodity derivatives | (3,932 | ) | (611 | ) | ||||
Other operating fees | 3,065 | 2,706 | ||||||
Total revenues | 679,375 | 515,992 | ||||||
Cost of products sold: | ||||||||
NGLs | 599,835 | 461,489 | ||||||
Natural gas | 58,771 | 34,485 | ||||||
Total cost of products sold | 658,606 | 495,974 | ||||||
Operating expenses | 8,633 | 7,082 | ||||||
Selling, general and administrative expenses | 5,292 | 5,524 | ||||||
Depreciation and amortization | 4,067 | 3,252 | ||||||
2,777 | 4,160 | |||||||
Other operating income | 3 | (1 | ) | |||||
Operating income | $ | 2,780 | $ | 4,159 | ||||
NGLs Volumes (Bbls) | 8,794 | 8,266 | ||||||
Natural Gas Volumes (Mmbtu) | 7,267 | 5,550 | ||||||
* | Information above does not include activities relating to Waskom, PIPE, Matagorda and BCP investments |
Equity in Earnings of Unconsolidated Entities | $ | 13,224 | $ | 10,941 | ||||
Waskom: | ||||||||
Plant Inlet Volumes (MMcfd) | 257 | 229 | ||||||
Frac Volumes (Bbls/d) | 10,542 | 8,725 | ||||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues | $ | 372,987 | $ | 131,602 | ||||
Cost of products sold | 314,001 | 97,747 | ||||||
Operating expenses | 17,963 | 17,033 | ||||||
Selling, general and administrative expenses | 3,382 | 2,587 | ||||||
Depreciation and amortization | 5,751 | 5,013 | ||||||
�� | 31,890 | 9,222 | ||||||
Other operating income | 66 | — | ||||||
Operating income | $ | 31,956 | $ | 9,222 | ||||
Sulfur (long tons) | 1,094.3 | 1,169.8 | ||||||
Fertilizer (long tons) | 227.6 | 251.1 | ||||||
Sulfur Services Volumes (long tons) | 1,321.9 | 1,420.9 | ||||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues | $ | 80,059 | $ | 63,533 | ||||
Operating expenses | 57,346 | 46,946 | ||||||
Selling, general and administrative expenses | 2,635 | 535 | ||||||
Depreciation and amortization | 12,128 | 8,819 | ||||||
7,950 | 7,233 | |||||||
Other operating income | 154 | 716 | ||||||
Operating income | $ | 8,104 | $ | 7,949 | ||||
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• | In 2009, we spent $36.5 million for expansion and $7.6 million for maintenance (including $0.9 million for maintenance in the fourth quarter of 2009). Our expansion capital expenditures were made in connection with marine vessel purchases and conversions, construction projects associated with our terminalling and sulfur services businesses. Our maintenance capital expenditures were primarily made in our marine transportation segment for routine dry dockings of our vessels pursuant to the United States Coast Guard requirements. | ||
• | In 2008, we spent $89.4 million for expansion and $18.0 million for maintenance (including $7.0 million for maintenance in the fourth quarter of 2008). Our expansion capital expenditures were made in connection with marine vessel purchases and conversions, construction projects associated with our terminalling business. Our maintenance capital expenditures were primarily made in our marine transportation segment for routine dry dockings of our vessels pursuant to the United States Coast Guard requirements and in our terminalling and sulfur services at our Neches facility, where $1.5 million in maintenance capital expenditures was spent in connection with restoration of assets destroyed in Hurricanes Gustav and Ike. | ||
• | In 2007, we spent $109.5 million for expansion and $11.9 million for maintenance (including $4.1 million for maintenance in the fourth quarter of 2007). Our expansion capital expenditures were made in connection with the Woodlawn and Mega Lube acquisitions, marine vessel purchases and conversions, construction projects associated with our terminalling business, and the sulfuric acid plant construction project at our facility in Plainview, Texas. Our maintenance capital expenditures were primarily made in our marine transportation segment for routine dry dockings of our vessels pursuant to the United States Coast Guard requirements and include $0.3 million spent in connection with the restoration of assets destroyed in hurricanes Rita and Katrina. |
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Payment due by period | ||||||||||||||||||||
Total | 1-3 | 3-5 | ||||||||||||||||||
Type of Obligation | Obligation | Less than One Year | Years | Years | Due Thereafter | |||||||||||||||
Long-Term Debt | ||||||||||||||||||||
Revolving credit facility | $ | 230,251 | $ | — | $ | 230,251 | $ | — | $ | — | ||||||||||
Term loan facility | 67,949 | — | 67,949 | — | — | |||||||||||||||
Capital leases including current maturities | 6,283 | 111 | 297 | 482 | 5,393 | |||||||||||||||
Non-competition agreements | 250 | 50 | 100 | 100 | — | |||||||||||||||
Purchase obligations | 23,280 | 7,760 | 15,520 | — | — | |||||||||||||||
Operating leases | 23,082 | 4,233 | 9,698 | 4,314 | 4,837 | |||||||||||||||
Interest expense(1) | ||||||||||||||||||||
Revolving credit facility | 53,205 | 18,614 | 34,591 | — | — | |||||||||||||||
Term loan facility | 9,190 | 3,215 | 5,975 | — | — | |||||||||||||||
Capital leases | 6,071 | 991 | 1,921 | 1,800 | 1,359 | |||||||||||||||
Total contractual cash obligations | $ | 419,561 | $ | 34,974 | $ | 366,302 | $ | 6,696 | $ | 11,589 | ||||||||||
(1) | Interest commitments are estimated using our current interest rates for the respective credit agreements over their remaining terms. |
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Eurodollar Rate | Letter of Credit | |||||||||||
Leverage Ratio | Base Rate Loans | Loans | Fees | |||||||||
Less than 2.75 to 1.00 | 2.50 | % | 3.50 | % | 3.50 | % | ||||||
Greater than or equal to 2.75 to 1.00 and less than 3.00 to 1.00 | 2.75 | % | 3.75 | % | 3.75 | % | ||||||
Greater than or equal to 3.00 to 1.00 and less than 3.50 to 1.00 | 3.00 | % | 4.00 | % | 4.00 | % | ||||||
Greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.00 | 3.50 | % | 4.50 | % | 4.50 | % | ||||||
Greater than or equal to 4.00 to 1.00 | 3.75 | % | 4.75 | % | 4.75 | % |
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• | grant or assume liens; | ||
• | make investments (including investments in our joint ventures) and acquisitions; | ||
• | enter into certain types of hedging agreements; | ||
• | incur or assume indebtedness; | ||
• | sell, transfer, assign or convey assets; | ||
• | repurchase our equity, make distributions and certain other restricted payments, but the credit facility permits us to make quarterly distributions to unitholders so long as no default or event of default exists under the credit facility; | ||
• | change the nature of our business; | ||
• | engage in transactions with affiliates. | ||
• | enter into certain burdensome agreements; | ||
• | make certain amendments to the omnibus agreement and our material agreements; | ||
• | make capital expenditures; and | ||
• | permit our joint ventures to incur indebtedness or grant certain liens. |
Each of the following will be an event of default under the credit facility: |
• | failure to pay any principal, interest, fees, expenses or other amounts when due; | ||
• | failure to meet the quarterly financial covenants; | ||
• | failure to observe any other agreement, obligation, or covenant in the credit facility or any related loan document, subject to cure periods for certain failures; | ||
• | the failure of any representation or warranty to be materially true and correct when made; | ||
• | our or any of our subsidiaries’ default under other indebtedness that exceeds a threshold amount; | ||
• | bankruptcy or other insolvency events involving us or any of our subsidiaries; | ||
• | judgments against us or any of our subsidiaries, in excess of a threshold amount; | ||
• | certain ERISA events involving us or any of our subsidiaries, in excess of a threshold amount; | ||
• | a change in control (as defined in the credit facility); | ||
• | the termination of any material agreement or certain other events with respect to material agreements; | ||
• | the invalidity of any of the loan documents or the failure of any of the collateral documents to create a lien on the collateral; | ||
• | any of our joint ventures incurs debt or liens in excess of a threshold amount. |
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1) | Percent-of-liquids contracts: Under these contracts, we receive a fee in the form of a percentage of the NGLs recovered, and the producer bears all of the cost of natural gas shrink. Therefore, margins increase during periods of high NGL prices and decrease during periods of low NGL prices. |
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2) | Percent-of-proceeds contracts: Under these contracts, we generally gather and process natural gas on behalf of certain producers, sell the resulting residue gas and NGLs at market prices and remit to producers an agreed upon percentage of the proceeds based on an index price. In other cases, instead of remitting cash payments to the producer, we deliver an agreed upon percentage of the residue gas and NGLs to the producer and sell the volumes kept to third parties at market prices. Under these types of contracts, revenues and gross margins increase as natural gas prices and NGL prices increase, and revenues and gross margins decrease as natural gas and NGL prices decease. |
• | Natural gas contracts — monthly posting for ANR Pipeline Co. — Louisiana as posted in Platts Inside FERC’s Gas Market Report; | ||
• | Crude oil contracts — WTI NYMEX average for the month of the daily closing prices; and | ||
• | Natural gasoline contracts — Mt. Belvieu Non-TET average monthly postings as reported by the Oil Price Information Service (OPIS). |
As of December 31, 2009
Commodity | Commodity | Fair Value | Fair Value | |||||||||||||||||||||
Price | Price | Asse | Liability | |||||||||||||||||||||
Period | Underlying | Notional Volume | We Receive | We Pay | (In Thousands) | (In Thousands) | ||||||||||||||||||
January 2010-December 2010 | Crude Oil | 24,000 (BBL) | Index | $69.15/bbl | $ | — | $ | 290 | ||||||||||||||||
January 2010-December 2010 | Crude Oil | 36,000 (BBL) | Index | $72.25/bbl | — | 326 | ||||||||||||||||||
January 2010-December 2010 | Crude Oil | 12,000 (BBL) | Index | $104.80/bbl | 275 | — | ||||||||||||||||||
January 2010-December 2010 | Natural Gasoline | 12,000 (BBL) | Index | $94.14/bbl | 241 | — | ||||||||||||||||||
January 2010-December 2010 | Natural Gas | 240,000 (MMBTU) | Index | $5.95/Mmbtu | 42 | — | ||||||||||||||||||
January 2010-December 2010 | Natural Gas | 120,000 (MMBTU) | Index | $6.005/Mmbtu | 28 | — | ||||||||||||||||||
$ | 586 | $ | 616 | |||||||||||||||||||||
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As of December 31, 2009
Fair Value | Fair Value | |||||||||||||||||||||||
Notional | Interest Rate | Interest Rate | Asset | Liability | ||||||||||||||||||||
Date of Swap | Maturity | Amount | We Pay | We Receive | (In Thousands) | (In Thousands) | ||||||||||||||||||
March 2006 | November 2010 | $ | 75,000 | 5.250 | % | 3 MO LIBOR | $ | — | $ | 3,448 | ||||||||||||||
November 2006 | March 2010 | $ | 30,000 | 4.765 | % | 3 MO LIBOR | — | 334 | ||||||||||||||||
September 2007 | September 2010 | $ | 25,000 | 4.605 | % | 3 MO LIBOR | — | 771 | ||||||||||||||||
January 2008 | January 2010 | $ | 25,000 | 3.400 | % | 3 MO LIBOR | — | 198 | ||||||||||||||||
October 2008 | October 2010 | $ | 40,000 | 2.820 | % | 3 MO LIBOR | — | 938 | ||||||||||||||||
February 2009 | November 2010 | $ | 75,000 | 1.295 | % | 1 MO LIBOR | — | 556 | ||||||||||||||||
March 2009 | September 2010 | $ | 25,000 | 1.290 | % | 1 MO LIBOR | — | 169 | ||||||||||||||||
April 2009 | January 2010 | $ | 25,000 | .720 | % | 1 MO LIBOR | — | 10 | ||||||||||||||||
April 2009 | October 2010 | $ | 40,000 | 1.000 | % | 1 MO LIBOR | — | 187 | ||||||||||||||||
February 2009 | November 2010 | $ | 75,000 | 3 MO LIBOR | 1.445 | % | 696 | — | ||||||||||||||||
March 2009 | September 2010 | $ | 25,000 | 3 MO LIBOR | 1.590 | % | 220 | — | ||||||||||||||||
April 2009 | January 2010 | $ | 25,000 | 3 MO LIBOR | �� | 1.070 | % | 50 | — | |||||||||||||||
April 2009 | October 2010 | $ | 40,000 | 3 MO LIBOR | 1.240 | % | 320 | — | ||||||||||||||||
— | ||||||||||||||||||||||||
$ | 1,286 | $ | 6,611 | |||||||||||||||||||||
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Martin Midstream GP LLC:
March 4, 2010
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Martin Midstream GP LLC:
March 4, 2010
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December 31, | ||||||||
2009 | 20081 | |||||||
(Dollars in thousands) | ||||||||
Assets | ||||||||
Cash | $ | 5,956 | $ | 7,983 | ||||
Accounts and other receivables, less allowance for doubtful accounts of $1,025 and $481, respectively | 77,413 | 68,168 | ||||||
Product exchange receivables | 4,132 | 6,924 | ||||||
Inventories | 35,510 | 42,754 | ||||||
Due from affiliates | 3,051 | 555 | ||||||
Fair value of derivatives | 1,872 | 3,623 | ||||||
Other current assets | 1,340 | 3,418 | ||||||
Total current assets | 129,274 | 133,425 | ||||||
Property, plant and equipment, at cost | 584,036 | 576,608 | ||||||
Accumulated depreciation | (162,121 | ) | (130,976 | ) | ||||
Property, plant and equipment, net | 421,915 | 445,632 | ||||||
Goodwill | 37,268 | 37,405 | ||||||
Investment in unconsolidated entities | 80,582 | 79,843 | ||||||
Fair value of derivatives | — | 1,469 | ||||||
Other assets, net | 16,900 | 8,548 | ||||||
$ | 685,939 | $ | 706,322 | |||||
Liabilities and Partners’ Capital | ||||||||
Current installments of lease obligations | $ | 111 | $ | — | ||||
Trade and other accounts payable | 71,911 | 94,146 | ||||||
Product exchange payables | 7,986 | 10,924 | ||||||
Due to affiliates | 13,810 | 23,085 | ||||||
Income taxes payable | 454 | 414 | ||||||
Fair value of derivatives | 7,227 | 6,478 | ||||||
Other accrued liabilities | 5,000 | 6,428 | ||||||
Total current liabilities | 106,499 | 141,475 | ||||||
Long-term debt and capital leases, less current maturities | 304,372 | 295,000 | ||||||
Deferred income taxes | 8,628 | 17,499 | ||||||
Fair value of derivatives | — | 4,302 | ||||||
Other long-term obligations | 1,489 | 1,667 | ||||||
Total liabilities | 420,988 | 459,943 | ||||||
Partners’ capital | 267,027 | 251,314 | ||||||
Accumulated other comprehensive loss | (2,076 | ) | (4,935 | ) | ||||
Total partners’ capital | 264,951 | 246,379 | ||||||
Commitments and contingencies | ||||||||
$ | 685,939 | $ | 706,322 | |||||
1 | Financial information for 2008 has been revised to include balances attributable to the Cross assets. See Note 2(a) — Principles of Presentation and Consolidation. |
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Year Ended December 31, | ||||||||||||
20091 | 20081 | 20071 | ||||||||||
(Dollars in thousands, except per unit amounts) | ||||||||||||
Revenues: | ||||||||||||
Terminalling and storage * | $ | 69,710 | $ | 68,552 | $ | 67,905 | ||||||
Marine transportation * | 68,480 | 76,349 | 59,579 | |||||||||
Product sales: * | ||||||||||||
Natural gas services | 408,982 | 679,375 | 515,992 | |||||||||
Sulfur services | 79,629 | 371,949 | 131,326 | |||||||||
Terminalling and storage | 35,584 | 50,219 | 29,525 | |||||||||
524,195 | 1,101,543 | 676,843 | ||||||||||
Total revenues | 662,385 | 1,246,444 | 804,327 | |||||||||
Costs and expenses: | ||||||||||||
Cost of products sold: (excluding depreciation and amortization) | ||||||||||||
Natural gas services * | 382,542 | 657,662 | 495,641 | |||||||||
Sulfur services * | 43,386 | 313,143 | 97,577 | |||||||||
Terminalling and storage | 31,331 | 42,721 | 25,471 | |||||||||
457,259 | 1,013,526 | 618,689 | ||||||||||
Expenses: | ||||||||||||
Operating expenses * | 117,438 | 126,808 | 104,165 | |||||||||
Selling, general and administrative * | 19,775 | 19,062 | 13,918 | |||||||||
Depreciation and amortization | 39,506 | 34,893 | 26,323 | |||||||||
Total costs and expenses | 633,978 | 1,194,289 | 763,095 | |||||||||
Other operating income | 6,013 | 209 | 703 | |||||||||
Operating income | 34,420 | 52,364 | 41,935 | |||||||||
Other income (expense): | ||||||||||||
Equity in earnings of unconsolidated entities | 7,044 | 13,224 | 10,941 | |||||||||
Interest expense | (18,995 | ) | (21,433 | ) | (15,125 | ) | ||||||
Other, net | 326 | 801 | 405 | |||||||||
Total other income (expense) | (11,625 | ) | (7,408 | ) | (3,779 | ) | ||||||
Net income before taxes | 22,795 | 44,956 | 38,156 | |||||||||
Income tax benefit (expense) | (592 | ) | (1,398 | ) | (5,595 | ) | ||||||
Net income | $ | 22,203 | $ | 43,558 | $ | 32,561 | ||||||
General partner’s interest in net income2 | $ | 3,249 | $ | 3,301 | $ | 1,564 | ||||||
Limited partners’ interest in net income2 | $ | 17,179 | $ | 39,509 | $ | 23,375 | ||||||
Net income per limited partner unit — basic and diluted | $ | 1.17 | $ | 2.72 | $ | 1.67 | ||||||
Weighted average limited partner units — basic | 14,680,807 | 14,529,826 | 14,018,799 | |||||||||
Weighted average limited partner units — diluted | 14,684,775 | 14,534,722 | 14,022,545 |
1 | Financial information for 2007, 2008 and for the period January 1, 2009 through November 24, 2009 has been revised to include results attributable to the Cross assets. See Note 2(a) — Principles of Presentation and Consolidation. | |
2 | General and limited partner’s interest in net income includes net income of the Cross assets since the date of the acquisition. | |
See accompanying notes to consolidated financial statements. | ||
* | Related Party Transactions Included Above |
Revenues: | ||||||||||||
Terminalling and storage | $ | 19,998 | $ | 18,362 | $ | 11,816 | ||||||
Marine transportation | 19,370 | 24,956 | 23,729 | |||||||||
Product Sales | 5,838 | 26,704 | 7,577 | |||||||||
Costs and expenses: | ||||||||||||
Cost of products sold: (excluding depreciation and amortization) | ||||||||||||
Natural gas services | 56,914 | 92,322 | 62,686 | |||||||||
Sulfur services | 12,583 | 13,282 | 13,992 | |||||||||
Expenses: | ||||||||||||
Operating expenses | 37,284 | 37,661 | 28,991 | |||||||||
Selling, general and administrative | 7,162 | 6,284 | 4,089 |
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CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
For the years ended December 31, 2009, 2008 and 2007
Partners’ Capital | Accumulated | |||||||||||||||||||||||||||||||
Subordinated | Comprehensive | |||||||||||||||||||||||||||||||
Parent Net | Common | Units | Amount | General Partner | Income | |||||||||||||||||||||||||||
Investment1 | Units | Amount | (Dollars in thousands) | Amount | Amount | Total | ||||||||||||||||||||||||||
Balances — December 31, 2006 | $ | 3,295 | 10,603,808 | $ | 201,426 | 2,552,018 | $ | (6,224 | ) | $ | 3,201 | $ | 122 | $ | 201,820 | |||||||||||||||||
Net Income | 7,622 | — | 19,781 | — | 3,594 | 1,564 | — | 32,561 | ||||||||||||||||||||||||
Follow-on public offering | — | 1,380,000 | 55,933 | — | — | — | — | 55,933 | ||||||||||||||||||||||||
General partner contribution | — | — | — | — | — | 1,192 | — | 1,192 | ||||||||||||||||||||||||
Conversion of subordinated units to common units | — | 850,672 | (3,243 | ) | (850,672 | ) | 3,243 | — | — | — | ||||||||||||||||||||||
Unit-based compensation | — | 3,000 | 46 | — | — | — | — | 46 | ||||||||||||||||||||||||
Cash distributions ($2.60 per unit) | — | — | (29,423 | ) | — | (6,635 | ) | (1,845 | ) | — | (37,903 | ) | ||||||||||||||||||||
Commodity hedging gains reclassified to earnings | — | — | — | — | — | — | 478 | 478 | ||||||||||||||||||||||||
Adjustment in fair value of derivatives | — | — | — | — | — | — | (7,362 | ) | (7,362 | ) | ||||||||||||||||||||||
Balances — December 31, 2007 | $ | 10,917 | 12,837,480 | $ | 244,520 | 1,701,346 | $ | (6,022 | ) | $ | 4,112 | $ | (6,762 | ) | $ | 246,765 | ||||||||||||||||
Net Income | 748 | — | 34,978 | — | 4,531 | 3,301 | — | 43,558 | ||||||||||||||||||||||||
Cash distributions ($2.91 per unit) | — | — | (37,357 | ) | — | (4,951 | ) | (3,409 | ) | — | (45,717 | ) | ||||||||||||||||||||
Conversion of subordinated units to common units | — | 850,672 | (2,754 | ) | (850,672 | ) | 2,754 | — | — | — | ||||||||||||||||||||||
Unit-based compensation | — | 3,000 | 39 | — | — | — | — | 39 | ||||||||||||||||||||||||
Purchase of treasury units | — | (3,000 | ) | (93 | ) | — | — | — | — | (93 | ) | |||||||||||||||||||||
Adjustment in fair value of derivatives | — | — | — | — | — | — | 1,827 | 1,827 | ||||||||||||||||||||||||
Balances — December 31, 2008 | $ | 11,665 | 13,688,152 | $ | 239,333 | 850,674 | $ | (3,688 | ) | $ | 4,004 | $ | (4,935 | ) | $ | 246,379 | ||||||||||||||||
Net Income | 1,664 | — | 16,310 | — | 980 | 3,249 | — | 22,203 | ||||||||||||||||||||||||
General partner contribution | — | — | — | — | — | 1,324 | — | 1,324 | ||||||||||||||||||||||||
Units issued in connection with Cross acquisition | 804,721 | 16,523 | 889,444 | 16,434 | — | — | 32,957 | |||||||||||||||||||||||||
Recognition of beneficial conversion feature | — | — | (111 | ) | — | 111 | — | — | — | |||||||||||||||||||||||
Issuance of common units | — | 714,285 | 20,000 | — | — | — | — | 20,000 | ||||||||||||||||||||||||
Cash distributions ($3.00 per unit) | — | — | (41,064 | ) | — | (2,552 | ) | (3,846 | ) | — | (47,462 | ) | ||||||||||||||||||||
Conversion of subordinated units to common units | — | 850,674 | (5,328 | ) | (850,674 | ) | 5,328 | — | — | — | ||||||||||||||||||||||
Unit-based compensation | — | 3,000 | 98 | — | — | — | — | 98 | ||||||||||||||||||||||||
Purchase of treasury units | — | (3,000 | ) | (78 | ) | — | — | — | — | (78 | ) | |||||||||||||||||||||
Distributions to parent | (13,329 | ) | — | — | — | — | — | — | (13,329 | ) | ||||||||||||||||||||||
Adjustment in fair value of derivatives | — | — | — | — | — | — | 2,859 | 2,859 | ||||||||||||||||||||||||
Balances — December 31, 2009 | $ | — | 16,057,832 | $ | 245,683 | 889,444 | $ | 16,613 | $ | 4,731 | $ | (2,076 | ) | $ | 264,951 | |||||||||||||||||
1 | Financial information for 2007, 2008 and for the period January 1, 2009 through November 24, 2009 has been revised to include results attributable to the Cross assets. See Note 2(a) — Principles of Presentation and Consolidation. |
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Year Ended December 31, | ||||||||||||
20091 | 20081 | 20071 | ||||||||||
(Dollars in thousands) | ||||||||||||
Net income | $ | 22,203 | $ | 43,558 | $ | 32,561 | ||||||
Changes in fair values of commodity cash flow hedges | 14 | 4,219 | (3,569 | ) | ||||||||
Commodity cash flow hedging (gains) losses reclassified to earnings | (2,646 | ) | 3,043 | 478 | ||||||||
Changes in fair value of interest rate cash flow hedges | (1,854 | ) | (5,435 | ) | (3,793 | ) | ||||||
Interest rate cash flow hedging losses reclassified to earnings | 7,345 | — | — | |||||||||
Comprehensive income | $ | 25,062 | $ | 45,385 | $ | 25,677 | ||||||
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Year Ended December 31, | ||||||||||||
20091 | 20081 | 20071 | ||||||||||
(Dollars in thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 22,203 | $ | 43,558 | $ | 32,561 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 39,506 | 34,895 | 26,322 | |||||||||
Amortization of deferred debt issue costs | 1,689 | 1,120 | 1,233 | |||||||||
Deferred income taxes | 294 | 2,442 | 680 | |||||||||
Gain on disposition or sale of property, plant, and equipment | (4,996 | ) | (131 | ) | (484 | ) | ||||||
Gain on involuntary conversion of property, plant, and equipment | (1,017 | ) | (65 | ) | — | |||||||
Equity in earnings of unconsolidated entities | (7,044 | ) | (13,224 | ) | (10,941 | ) | ||||||
Distributions from unconsolidated entities | 650 | 500 | 1,523 | |||||||||
Distribution in-kind from unconsolidated entities | 5,826 | 9,725 | 9,337 | |||||||||
Non-cash mark-to-market on derivatives | 2,526 | (2,327 | ) | 3,904 | ||||||||
Other | 98 | 39 | 47 | |||||||||
Change in current assets and liabilities, excluding effects of acquisitions and dispositions: | ||||||||||||
Accounts and other receivables | (10,471 | ) | 19,753 | (26,992 | ) | |||||||
Product exchange receivables | 2,792 | 3,988 | (3,422 | ) | ||||||||
Inventories | 7,135 | 9,398 | (18,651 | ) | ||||||||
Due from affiliates | 1,560 | 1,770 | (995 | ) | ||||||||
Other current assets | 2,461 | (992 | ) | (1,241 | ) | |||||||
Trade and other accounts payable | (15,874 | ) | (14,904 | ) | 46,119 | |||||||
Product exchange payables | (2,938 | ) | (13,629 | ) | 9,817 | |||||||
Due to affiliates | 4,133 | 5,966 | (5,583 | ) | ||||||||
Income taxes payable | 569 | (453 | ) | (1,225 | ) | |||||||
Other accrued liabilities | 871 | 101 | 793 | |||||||||
Change in other non-current assets and liabilities | (2,381 | ) | (1,190 | ) | (1,593 | ) | ||||||
Net cash provided by operating activities | 47,592 | 86,340 | 61,209 | |||||||||
Cash flows from investing activities: | ||||||||||||
Payments for property, plant, and equipment | (35,846 | ) | (101,450 | ) | (85,359 | ) | ||||||
Acquisitions, net of cash acquired | (327 | ) | (5,983 | ) | (41,271 | ) | ||||||
Proceeds from sale of property, plant, and equipment | 19,445 | 463 | 1,293 | |||||||||
Insurance proceeds from involuntary conversion of property, plant and equipment | 2,224 | 1,503 | — | |||||||||
Return of investments from unconsolidated entities | 877 | 1,225 | 1,952 | |||||||||
Distributions from (contributions to) unconsolidated entities for operations | (1,048 | ) | (2,379 | ) | (6,910 | ) | ||||||
Net cash used in investing activities | (14,675 | ) | (106,621 | ) | (130,295 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Payments of long-term debt | (431,982 | ) | (257,191 | ) | (169,024 | ) | ||||||
Proceeds from long-term debt | 433,700 | 327,170 | 219,950 | |||||||||
Net proceeds from follow on public offering | — | — | 55,933 | |||||||||
General partner contribution | 1,324 | — | 1,192 | |||||||||
Purchase of treasury units | (78 | ) | (93 | ) | — | |||||||
Proceeds from issuance of common units | 20,000 | — | — | |||||||||
Payments of debt issuance costs | (10,446 | ) | (18 | ) | (252 | ) | ||||||
Cash distributions paid | (47,462 | ) | (45,717 | ) | (37,903 | ) | ||||||
Net cash provided by (used in) financing activities | (34,944 | ) | 24,151 | 69,896 | ||||||||
Net increase(decrease) in cash | (2,027 | ) | 3,870 | 810 | ||||||||
Cash at beginning of period | 7,983 | 4,113 | 3,303 | |||||||||
Cash at end of period | $ | 5,956 | $ | 7,983 | $ | 4,113 | ||||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||||||
Purchase of assets under capital lease obligations | $ | 7,764 | $ | — | $ | — | ||||||
Issuance of common and subordinated units in connection with Cross acquisition | $ | 32,957 | $ | — | $ | — | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENT
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENT
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENT
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENT
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENT
(Dollars in Thousands)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Net income attributable to Martin Midstream Partners L. P | $ | 22,203 | $ | 43,558 | $ | 32,561 | ||||||
Less pre-acquisition income allocated to Parent | 1,664 | 748 | 7,622 | |||||||||
Less general partner’s interest in net income: | ||||||||||||
Distributions payable on behalf of IDRs | 2,896 | 2,495 | 1,087 | |||||||||
Distributions payable on behalf of general partner interest | 949 | 914 | 758 | |||||||||
Distributions payable to the general partner interest in excess of earnings allocable to the general partner interest | (596 | ) | (108 | ) | (281 | ) | ||||||
Less beneficial conversion feature | 111 | — | — | |||||||||
Limited partners’ interest in net income | $ | 17,179 | $ | 39,509 | $ | 23,375 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENT
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
Active Markets for | Significant Other | Unobservable | ||||||||||||||
Identical Assets | Observable Inputs | Inputs | ||||||||||||||
December 31, | ||||||||||||||||
Description | 2009 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets | ||||||||||||||||
Interest rate derivatives | $ | 1,286 | $ | — | $ | 1,286 | $ | — | ||||||||
Commodity derivatives | 586 | — | 586 | — | ||||||||||||
Total assets | $ | 1,872 | $ | — | $ | 1,872 | $ | — | ||||||||
Liabilities | ||||||||||||||||
Interest rate derivatives | $ | 6,611 | $ | — | $ | 6,611 | $ | — | ||||||||
Commodity derivatives | 616 | — | 616 | — | ||||||||||||
Total liabilities | $ | 7,227 | $ | — | $ | 7,227 | $ | — | ||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||
Quoted Prices in | Significant | |||||||||||||
Active Markets for | Significant Other | Unobservable | ||||||||||||
Identical Assets | Observable Inputs | Inputs | ||||||||||||
December 31, | ||||||||||||||
Description | 2008 | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets | ||||||||||||||
Commodity derivatives | $ | 5,092 | $ | — | $ | 5,092 | $ | — | ||||||
Liabilities | ||||||||||||||
Interest rate derivatives | $ | 10,780 | $ | — | $ | 10,780 | $ | — | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
• | Accounts and other receivables, trade and other accounts payable, other accrued liabilities, income taxes payable and due from/to affiliates — The carrying amounts approximate fair value because of the short maturity of these instruments. | ||
• | Long-term debt including current installments —The carrying amount of the revolving and term loan facilities approximates fair value due to the debt having a variable interest rate. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
2009 | 2008 | |||||||
Natural gas liquids | $ | 15,002 | $ | 10,530 | ||||
Sulfur | 2,540 | 6,522 | ||||||
Sulfur Based Products | 10,053 | 14,879 | ||||||
Lubricants | 4,684 | 8,110 | ||||||
Other | 3,231 | 2,713 | ||||||
$ | 35,510 | $ | 42,754 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Depreciable Lives | 2009 | 2008 | ||||||||||
Land | — | $ | 15,759 | $ | 16,899 | |||||||
Improvements to land and buildings | 10-25 years | 48,704 | 47,237 | |||||||||
Transportation equipment | 3-7 years | 1,786 | 2,443 | |||||||||
Storage equipment | 5-20 years | 59,597 | 52,296 | |||||||||
Marine vessels | 4-25 years | 210,593 | 200,473 | |||||||||
Operating equipment | 3-20 years | 238,956 | 211,934 | |||||||||
Furniture, fixtures and other equipment | 3-20 years | 1,646 | 2,168 | |||||||||
Construction in progress | 6,995 | 43,158 | ||||||||||
$ | 584,036 | $ | 576,608 | |||||||||
2009 | 2008 | |||||||
Carrying amount of goodwill: | ||||||||
Terminalling and storage | $ | 883 | $ | 1,020 | ||||
Natural gas services | 29,010 | 29,010 | ||||||
Sulfur services | 5,349 | 5,349 | ||||||
Marine transportation | 2,026 | 2,026 | ||||||
$ | 37,268 | $ | 37,405 | |||||
2009 | 2008 | |||||||
Covenants not-to-compete: | ||||||||
Terminalling and storage | $ | 1,928 | $ | 1,956 | ||||
Natural gas services | — | 40 | ||||||
Sulfur services | 100 | 790 | ||||||
2,028 | 2,786 | |||||||
Less accumulated amortization | 1,324 | 1,572 | ||||||
$ | 704 | $ | 1,214 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Capital | ||||||||
Fiscal year | Operating Leases | Leases | ||||||
2010 | $ | 4,233 | $ | 1,102 | ||||
2011 | 4,036 | 1,102 | ||||||
2012 | 3,205 | 1,117 | ||||||
2013 | 2,457 | 1,135 | ||||||
2014 | 2,176 | 1,147 | ||||||
Thereafter | 6,975 | 6,751 | ||||||
Total | 23,082 | 12,354 | ||||||
Less amounts representing interest costs | — | 6,071 | ||||||
Present value of net minimum capital lease payments | — | 6,283 | ||||||
Less current installments | — | 111 | ||||||
Present value of net minimum capital lease payments, excluding current installments | $ | — | $ | 6,172 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Waskom | PIPE | Matagorda | BCP | Total | ||||||||||||||||
Investment in unconsolidated entities, December 31, 2007 | $ | 70,237 | $ | 1,582 | $ | 3,693 | $ | 178 | $ | 75,690 | ||||||||||
Distributions in kind | (9,725 | ) | — | — | — | (9,725 | ) | |||||||||||||
Return on investments | (500 | ) | — | — | — | (500 | ) | |||||||||||||
Contributions to (distributions from) unconsolidated entities: | ||||||||||||||||||||
Cash contributions | 1,250 | 129 | — | 80 | 1,459 | |||||||||||||||
Contributions to (distributions from) unconsolidated entities for operations | 920 | — | — | — | 920 | |||||||||||||||
Return of investments | (300 | ) | (180 | ) | (745 | ) | — | (1,225 | ) | |||||||||||
Equity in earnings: | ||||||||||||||||||||
Equity in earnings from operations | 13,646 | (302 | ) | 640 | (166 | ) | 13,818 | |||||||||||||
Amortization of excess investment | (550 | ) | (15 | ) | (29 | ) | — | (594 | ) | |||||||||||
Investment in unconsolidated entities, December 31, 2008 | $ | 74,978 | $ | 1,214 | $ | 3,559 | $ | 92 | $ | 79,843 | ||||||||||
Waskom | PIPE | Matagorda | BCP | Total | ||||||||||||||||
Investment in unconsolidated entities, December 31, 2008 | $ | 74,978 | $ | 1,214 | $ | 3,559 | $ | 92 | $ | 79,843 | ||||||||||
Distributions in kind | (5,826 | ) | — | — | — | (5,826 | ) | |||||||||||||
Distributions from unconsolidated entities | (650 | ) | — | — | — | (650 | ) | |||||||||||||
Contributions to unconsolidated entities: | ||||||||||||||||||||
Cash contributions | — | 90 | — | — | 90 | |||||||||||||||
Contributions to unconsolidated entities for operations | 958 | — | — | — | 958 | |||||||||||||||
Return of investments | — | (490 | ) | (375 | ) | (12 | ) | (877 | ) | |||||||||||
Equity in earnings: | ||||||||||||||||||||
Equity in earnings (losses) from operations | 6,934 | 602 | 182 | (80 | ) | 7,638 | ||||||||||||||
Amortization of excess investment | (550 | ) | (15 | ) | (29 | ) | — | (594 | ) | |||||||||||
Investment in unconsolidated entities, December 31 2009 | $ | 75,844 | $ | 1,401 | $ | 3,337 | $ | — | $ | 80,582 | ||||||||||
As of December 31, | Years ended December 31, | |||||||||||||||
Partners’ | ||||||||||||||||
Total Assets | Capital | Revenues | Net Income | |||||||||||||
2009 | ||||||||||||||||
Waskom | $ | 79,604 | $ | 70,561 | $ | 71,044 | $ | 13,867 | ||||||||
2008 | ||||||||||||||||
Waskom | $ | 78,661 | $ | 67,730 | $ | 115,031 | $ | 27,292 | ||||||||
2007 | ||||||||||||||||
Waskom | $ | 66,772 | $ | 57,149 | $ | 81,797 | $ | 22,019 | ||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
** $267,722 (at December 31, 2008 - $195,000) Revolving loan facility at variable interest rate (8.08%* weighted average at December 31, 2009), due November 2012 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries and equity method investees | $ | 230,251 | $ | 165,000 | ||||
$67,949 (at December 31, 2008 - $130,000) Term loan facility at variable interest rate (4.73%* at December 31, 2009), converts to revolver loan on November 2010, secured by substantially all of the Partnership assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in Partnership’s operating subsidiaries | 67,949 | 130,000 | ||||||
Capital lease obligations | 6,283 | — | ||||||
Total long-term debt and capital lease obligations | 304,483 | 295,000 | ||||||
Less current installments of capital lease obligations | 111 | — | ||||||
Long-term debt and capital lease obligations, net of current installments | $ | 304,372 | $ | 295,000 | ||||
* | Interest rate fluctuates based on the LIBOR rate plus an applicable margin set on the date of each advance. The margin above LIBOR is set every three months. Indebtedness under the credit facility bears interest at LIBOR plus an applicable margin or the base prime rate plus an applicable margin. The applicable margin for revolving loans that are LIBOR loans ranges from 3.50% to 4.75% and the applicable margin for revolving loans that are base prime rate loans ranges from 2.50% to 3.75%. The applicable margin for term loans that are LIBOR loans ranges from 3.50% to 4.75% and the applicable margin for term loans that are base prime rate loans ranges from 2.50% to 3.75%. The applicable margin for existing LIBOR borrowings is 4.50%. Effective January 1, 2010, the applicable margin for existing LIBOR borrowings will remain at 4.50%. As a result of the Partnership’s leverage ratio test as of December 31, 2009, effective April 1, 2010, the applicable margin for existing LIBOR borrowings will remain at 4.50% under the current credit facility. | |
** | Effective October 2008, the Partnership entered into a cash flow hedge that swaps $40,000 of floating rate to fixed rate. The fixed rate cost is 2.820% plus the Partnership’s applicable LIBOR borrowing spread. Effective April 2009, the Partnership entered into two subsequent swaps to lower its effective fixed rate to 2.580% plus the Partnership’s applicable LIBOR borrowing spread. These cash flow hedges mature in October 2010. | |
** | Effective January 2008, the Partnership entered into a cash flow hedge that swaps $25,000 of floating rate to fixed rate. The fixed rate cost is 3.400% plus the Partnership’s applicable LIBOR borrowing spread. Effective April 2009, the Partnership entered into two subsequent swaps to lower its effective fixed rate to 3.050% plus the Partnership’s applicable LIBOR borrowing spread. These cash flow hedges mature in January 2010. | |
** | Effective September 2007, the Partnership entered into a cash flow hedge that swaps $25,000 of floating rate to fixed rate. The fixed rate cost is 4.605% plus the Partnership’s applicable LIBOR borrowing spread. Effective March 2009, the Partnership entered into two subsequent swaps to lower its effective fixed rate to 4.305% plus the Partnership’s applicable LIBOR borrowing spread. These cash flow hedges mature in September 2010. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
** | Effective November 2006, the Partnership entered into an interest rate swap that swaps $30,000 of floating rate to fixed rate. The fixed rate cost is 4.765% plus the Partnership’s applicable LIBOR borrowing spread. This cash flow hedge matures in March 2010. | |
** | Effective March 2006, the Partnership entered into a cash flow hedge that swaps $75,000 of floating rate to fixed rate. The fixed rate cost is 5.25% plus the Partnership’s applicable LIBOR borrowing spread. Effective February 2009, the Partnership entered into two subsequent swaps to lower its effective fixed rate to 5.10% plus the Partnership’s applicable LIBOR borrowing spread. These cash flow hedges mature in November 2010. |
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(Dollars in Thousands)
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(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Total | ||||||||||
Volume | Remaining Terms | |||||||||
Transaction Type | Per Month | Pricing Terms | of Contracts | Fair Value | ||||||
Mark to Market Derivatives:: | ||||||||||
Crude Oil Swap | 3,000 BBL | Fixed price of $72.25 settled against WTI NYMEX average monthly closings | January 2010 to December 2010 | (326 | ) | |||||
Crude Oil Swap | 2,000 BBL | Fixed price of $69.15 settled against WTI NYMEX average monthly closings | January 2010 to December 2010 | (290 | ) | |||||
Crude Oil Swap | 1,000 BBL | Fixed price of $104.80 settled against WTI NYMEX average monthly closings | January 2010 to December 2010 | 275 | ||||||
Total swaps not designated as cash flow hedges | $ | (341 | ) | |||||||
Cash Flow Hedges: | ||||||||||
Natural Gasoline Swap | 1,000 BBL | Fixed price of $94.14 settled against Mt. Belvieu Non-TET natural gasoline average monthly postings | January 2010 to December 2010 | 241 | ||||||
Natural Gas Swap | 20,000 Mmbtu | Fixed price of $5.95 settled against IF_ANR_LA first of the month posting | January 2010 to December 2010 | 42 | ||||||
Natural Gas Swap | 12,000 Mmbtu | Fixed price of $6.005 settled against IF_ANR_LA first of the month posting | January 2010 to December 2010 | 28 | ||||||
Total swaps designated as cash flow hedges | $ | 311 | ||||||||
Total net fair value of commodity derivatives | $ | (30 | ) | |||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Paying | Receiving | |||||||||||||||
Date of Hedge | Notional Amount | Fixed Rate | Floating Rate | Maturity Date | ||||||||||||
April 2009 | $ | 40,000 | 1.000 | % | 1 Month LIBOR | October 2010 | ||||||||||
April 2009 | $ | 25,000 | 0.720 | % | 1 Month LIBOR | January 2010 | ||||||||||
March 2009 | $ | 25,000 | 1.290 | % | 1 Month LIBOR | September 2010 | ||||||||||
February 2009 | $ | 75,000 | 1.295 | % | 1 Month LIBOR | November 2010 |
Paying | Receiving | |||||||||||||||
Date of Hedge | Notional Amount | Fixed Rate | Floating Rate | Maturity Date | ||||||||||||
September 2007 | $ | 25,000 | 4.605 | % | 3 Month LIBOR | September 2010 | ||||||||||
March 2006 | $ | 75,000 | 5.250 | % | 3 Month LIBOR | November 2010 | ||||||||||
October 2008 | $ | 40,000 | 2.820 | % | 3 Month LIBOR | October 2010 | ||||||||||
January 2008 | $ | 25,000 | 3.400 | % | 3 Month LIBOR | January 2010 |
Paying | Receiving | |||||||||||||||
Date of Hedge | Notional Amount | Fixed Rate | Floating Rate | Maturity Date | ||||||||||||
November 2006 | $ | 30,000 | 4.765 | % | 3 Month LIBOR | March 2010 |
Receiving | Paying | |||||||||||||||
Date of Hedge | Notional Amount | Fixed Rate | Floating Rate | Maturity Date | ||||||||||||
April 2009 | $ | 25,000 | 1.070 | % | 3 Month LIBOR | January 2010 | ||||||||||
April 2009 | $ | 40,000 | 1.240 | % | 3 Month LIBOR | October 2010 | ||||||||||
March 2009 | $ | 25,000 | 1.590 | % | 1 Month LIBOR | September 2010 | ||||||||||
February 2009 | $ | 75,000 | 1.445 | % | 1 Month LIBOR | November 2010 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Fair Values of Derivative Instruments in the Consolidated Balance Sheet | ||||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||||
Fair Values | Fair Values | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
Balance Sheet Location | 2009 | 2008 | Balance Sheet Location | 2009 | 2008 | |||||||||||||||
Derivatives designated as hedging instruments: | Current Assets: | Current Liabilities: | ||||||||||||||||||
Interest rate contracts | Fair value of derivatives | $ | — | $ | — | Fair value of derivatives | $ | 923 | $ | 5,427 | ||||||||||
Commodity contracts | Fair value of derivatives | 311 | 2,430 | Fair value of derivatives | — | — | ||||||||||||||
311 | 2,430 | 923 | 5,427 | |||||||||||||||||
Non-current Assets: | Non-current Liabilities: | |||||||||||||||||||
Interest rate contracts | Fair value of derivatives | — | — | Fair value of derivatives | — | 4,050 | ||||||||||||||
Commodity contracts | Fair value of derivatives | — | 716 | Fair value of derivatives | — | — | ||||||||||||||
— | 716 | — | 4,050 | |||||||||||||||||
Total derivatives designated as hedging instruments | $ | 311 | $ | 3,146 | $ | 923 | $ | 9,477 | ||||||||||||
Derivatives not designated as hedging instruments: | Current Assets: | Current Liabilities: | ||||||||||||||||||
Interest rate contracts | Fair value of derivatives | $ | 1,286 | $ | — | Fair value of derivatives | $ | 5,688 | $ | 1,051 | ||||||||||
Commodity contracts | Fair value of derivatives | 275 | 1,193 | Fair value of derivatives | 616 | — | ||||||||||||||
1,561 | 1,193 | 6,304 | 1,051 | |||||||||||||||||
Non-current Assets: | Non-current Liabilities: | |||||||||||||||||||
Interest rate contracts | Fair value of derivatives | — | — | Fair value of derivatives | — | 252 | ||||||||||||||
Commodity contracts | Fair value of derivatives | — | 753 | Fair value of derivatives | — | — | ||||||||||||||
— | 753 | — | 252 | |||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 1,561 | $ | 1,946 | $ | 6,304 | $ | 1,303 | ||||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
For the Years Ended December 31, 2009, 2008 and 2007
Ineffective Portion and Amount | ||||||||||||||||||||||||||||||||||||||||
Effective Portion | Location of Gain or | Excluded from Effectiveness Testing | ||||||||||||||||||||||||||||||||||||||
Location of Gain or | Amount of Gain or (Loss) | (Loss) Recognized | ||||||||||||||||||||||||||||||||||||||
(Loss) Reclassified | Reclassified from | in Income | Amount of Gain or (Loss) | |||||||||||||||||||||||||||||||||||||
Amount of Gain or (Loss) | from Accumulated | Accumulated OCI | on | Recognized in Income | ||||||||||||||||||||||||||||||||||||
Recognized in OCI on Derivatives | OCI into Income | into Income | Derivatives | on Derivatives | ||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | $ | (1,854 | ) | $ | (5,435 | ) | $ | (3,793 | ) | Interest Expense | $ | (7,345 | ) | $ | — | $ | — | Interest Expense | $ | — | $ | — | $ | — | ||||||||||||||||
Commodity contracts. | 14 | 4,219 | (3,569 | ) | Natural Gas Services Revenues | 2,667 | (2,819 | ) | 108 | Natural Gas Services Revenues | (21 | ) | (224 | ) | (586 | ) | ||||||||||||||||||||||||
Total derivatives designated as hedging instruments | $ | (1,840 | ) | $ | 1,216 | $ | (7,362 | ) | $ | (4,678 | ) | $ | (2,819 | ) | $ | 108 | $ | (21 | ) | $ | (224 | ) | $ | (586 | ) | |||||||||||||||
Location of Gain or (Loss) | Amount of Gain or (Loss) Recognized in | |||||||||||||
Recognized in Income on | Income on Derivatives | |||||||||||||
Derivatives | 2009 | 2008 | 2007 | |||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||
Interest rate contracts | Interest Expense | $ | (547 | ) | $ | (1,052 | ) | $ | (677 | ) | ||||
Commodity contracts | Natural Gas Services Revenues | (1,863 | ) | 4,041 | (3,237 | ) | ||||||||
Total derivatives not designated as hedging instruments | $ | (2,410 | ) | $ | 2,989 | $ | (3,914 | ) | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
2009 | 2008 | 2007 | ||||||||||
Revenues: | ||||||||||||
Terminalling and storage | $ | 19,998 | $ | 18,362 | $ | 11,816 | ||||||
Marine transportation | 19,370 | 24,956 | 23,729 | |||||||||
Product sales: | ||||||||||||
Natural gas services | 238 | 4,024 | 3,206 | |||||||||
Sulfur services | 5,445 | 22,631 | 4,326 | |||||||||
Terminalling and storage | 155 | 49 | 45 | |||||||||
5,838 | 26,704 | 7,577 | ||||||||||
$ | 45,206 | $ | 70,022 | $ | 43,122 | |||||||
Cost of products sold: | ||||||||||||
Natural gas services | $ | 56,914 | $ | 92,322 | $ | 62,686 | ||||||
Sulfur services | 12,583 | 13,282 | 13,992 | |||||||||
Terminalling and storage | 287 | 533 | — | |||||||||
$ | 69,784 | $ | 106,137 | $ | 76,678 | |||||||
Operating expenses | ||||||||||||
Marine transportation | $ | 20,464 | $ | 22,586 | $ | 20,891 | ||||||
Natural gas services | 1,491 | 1,625 | 1,538 | |||||||||
Sulfur services | 4,496 | 3,737 | 1,234 | |||||||||
Terminalling and storage | 10,833 | 9,713 | 5,328 | |||||||||
$ | 37,284 | $ | 37,661 | $ | 28,991 | |||||||
Selling, general and administrative: | ||||||||||||
Natural gas services | $ | 1,116 | 880 | 927 | ||||||||
Sulfur services | 2,504 | 2,508 | 1,770 | |||||||||
Terminalling and storage | — | — | 41 | |||||||||
Indirect overhead allocation, net of reimbursement | 3,542 | 2,896 | 1,351 | |||||||||
$ | 7,162 | $ | 6,284 | $ | 4,089 | |||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
2009 | 2008 | 2007 | ||||||||||
Current: | ||||||||||||
Federal | $ | (311 | ) | $ | (1,879 | ) | $ | 3,642 | ||||
State | 609 | 835 | 1,273 | |||||||||
298 | (1,044 | ) | 4,915 | |||||||||
Deferred: | ||||||||||||
Federal | 294 | 2,442 | 680 | |||||||||
$ | 592 | $ | 1,398 | $ | 5,595 | |||||||
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(Dollars in Thousands)
Operating Income | ||||||||||||||||||||||||
Operating | Intersegment | Operating Revenues | Depreciation and | (Loss) after | ||||||||||||||||||||
Revenues | Eliminations | After Eliminations | Amortization | Eliminations | Capital Expenditures | |||||||||||||||||||
Year ended December 31, 2009: | ||||||||||||||||||||||||
Terminalling and storage | $ | 109,513 | $ | (4,219 | ) | $ | 105,294 | $ | 15,717 | $ | 17,899 | $ | 18,404 | |||||||||||
Natural gas services | 408,989 | (7 | ) | 408,982 | 4,527 | 5,666 | 5,010 | |||||||||||||||||
Sulfur services | 79,631 | (2 | ) | 79,629 | 6,151 | 13,776 | 7,909 | |||||||||||||||||
Marine transportation | 72,103 | (3,623 | ) | 68,480 | 13,111 | 3,156 | 4,523 | |||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (6,077 | ) | — | |||||||||||||||||
Total | $ | 670,236 | $ | (7,851 | ) | $ | 662,385 | $ | 39,506 | $ | 34,420 | $ | 35,846 | |||||||||||
Year ended December 31, 2008: | ||||||||||||||||||||||||
Terminalling and storage | $ | 122,960 | $ | (4,189 | ) | $ | 118,771 | $ | 12,947 | $ | 11,399 | $ | 31,439 | |||||||||||
Natural gas services | 679,375 | — | 679,375 | 4,067 | 3,725 | 9,565 | ||||||||||||||||||
Sulfur services | 372,987 | (1,038 | ) | 371,949 | 5,751 | 37,180 | 6,884 | |||||||||||||||||
Marine transportation | 80,059 | (3,710 | ) | 76,349 | 12,128 | 5,570 | 53,562 | |||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (5,510 | ) | — | |||||||||||||||||
Total | $ | 1,255,381 | $ | (8,937 | ) | $ | 1,246,444 | $ | 34,893 | $ | 52,364 | $ | 101,450 | |||||||||||
Year ended December 31, 2007: | ||||||||||||||||||||||||
Terminalling and storage | $ | 98,295 | $ | (865 | ) | $ | 97,430 | $ | 9,239 | $ | 23,332 | $ | 29,218 | |||||||||||
Natural gas services | 515,992 | — | 515,992 | 3,252 | 4,492 | 4,090 | ||||||||||||||||||
Sulfur services | 131,602 | (276 | ) | 131,326 | 5,013 | 13,040 | 14,489 | |||||||||||||||||
Marine transportation | 63,533 | (3,954 | ) | 59,579 | 8,819 | 4,270 | 37,562 | |||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (3,199 | ) | — | |||||||||||||||||
Total | $ | 809,422 | $ | (5,095 | ) | $ | 804,327 | $ | 26,323 | $ | 41,935 | $ | 85,359 | |||||||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Operating income | $ | 34,420 | $ | 52,364 | $ | 41,935 | ||||||
Equity in earnings of unconsolidated entities | 7,044 | 13,224 | 10,941 | |||||||||
Interest expense | (18,995 | ) | (21,433 | ) | (15,125 | ) | ||||||
Other, net | 326 | 801 | 405 | |||||||||
Income taxes | (592 | ) | (1,398 | ) | (5,595 | ) | ||||||
Net income | $ | 22,203 | $ | 43,558 | $ | 32,561 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
2009 | 2008 | 2007 | ||||||||||
Total assets: | ||||||||||||
Terminalling and storage | $ | 178,941 | $ | 195,229 | $ | 159,681 | ||||||
Natural gas services | 256,397 | 232,059 | 268,187 | |||||||||
Sulfur services | 110,953 | 128,367 | 121,672 | |||||||||
Marine transportation | 139,648 | 150,667 | 107,064 | |||||||||
Total assets | $ | 685,939 | $ | 706,322 | $ | 656,604 | ||||||
First1 Quarter | Second1 Quarter | Third1 Quarter | Fourth1Quarter | |||||||||||||
(Dollar in thousands, except per unit amounts) | ||||||||||||||||
2009 | ||||||||||||||||
Revenues | $ | 163,051 | $ | 139,201 | $ | 159,272 | $ | 200,861 | ||||||||
Operating Income | 7,906 | 15,958 | 6,062 | 4,494 | ||||||||||||
Equity in earnings of unconsolidated entities | 2,059 | 1,028 | 2,139 | 1,818 | ||||||||||||
Net income | 5,213 | 10,760 | 4,274 | 1,956 | ||||||||||||
Net income per limited partner unit2 | $ | 0.28 | $ | 0.48 | $ | 0.26 | $ | 0.15 |
First1 Quarter | Second1 Quarter | Third1 Quarter | Fourth1Quarter | |||||||||||||
(Dollar in thousands, except per unit amounts) | ||||||||||||||||
2008 | ||||||||||||||||
Revenues | $ | 318,839 | $ | 318,649 | $ | 372,856 | $ | 236,100 | ||||||||
Operating Income | 7,553 | 6,513 | 16,707 | 21,591 | ||||||||||||
Equity in earnings of unconsolidated entities | 3,510 | 4,372 | 3,503 | 1,839 | ||||||||||||
Net income | 7,066 | 5,328 | 14,136 | 17,028 | ||||||||||||
Net income per limited partner unit2 | $ | 0.51 | $ | 0.25 | $ | 0.88 | $ | 1.08 |
First1 Quarter | Second1 Quarter | Third1 Quarter | Fourth1Quarter | |||||||||||||
(Dollar in thousands, except per unit amounts) | ||||||||||||||||
2007 | ||||||||||||||||
Revenues | $ | 170,376 | $ | 170,964 | $ | 195,338 | $ | 267,649 | ||||||||
Operating Income | 15,527 | 9,065 | 11,189 | 6,154 | ||||||||||||
Equity in earnings of unconsolidated entities | 2,050 | 2,418 | 2,736 | 3,737 | ||||||||||||
Net income | 10,585 | 7,532 | 8,157 | 6,287 | ||||||||||||
Net income per limited partner unit2 | $ | 0.42 | $ | 0.41 | $ | 0.35 | $ | 0.49 |
1 | Financial information for 2007, 2008 and for the period January 1, 2009 through November 24, 2009 has been revised to include results attributable to the Cross assets. See Note 2(a). | |
2 | Net income per limited partner unit is calculated as net income attributable to the limited partners, which excludes income attributable to the Cross assets. See Note 2(o). |
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Name | Age | Position with the General Partner | ||||
Ruben S. Martin | 58 | President, Chief Executive Officer and Director | ||||
Robert D. Bondurant | 51 | Executive Vice President and Chief Financial Officer | ||||
Donald R. Neumeyer | 62 | Executive Vice President and Chief Operating Officer | ||||
Wesley M. Skelton | 62 | Executive Vice President, Chief Administrative Officer and Controller | ||||
Randy Tauscher | 44 | Executive Vice President | ||||
Scott D. Martin | 44 | Executive Vice President | ||||
Chris Booth | 40 | Vice President, General Counsel and Secretary | ||||
John P. Gaylord | 49 | Director | ||||
C. Scott Massey | 57 | Director | ||||
Howard Hackney | 70 | Director |
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Name and | ||||||||||||||||
Principal Position | Year | Salary ($) | Bonus ($) | Total Compensation | ||||||||||||
Ruben S. Martin President and Chief Executive Officer | 2009 | $ | 91,579 | $ | — | $ | 91,579 | |||||||||
2008 | $ | 73,500 | $ | — | $ | 73,500 | ||||||||||
2007 | $ | 134,271 | $ | — | $ | 134,271 | ||||||||||
Robert D. Bondurant Executive Vice President and Chief Financial Officer | 2009 | $ | 40,972 | $ | — | $ | 40,972 | |||||||||
2008 | $ | 38,040 | $ | — | $ | 38,040 | ||||||||||
2007 | $ | 116,234 | $ | — | $ | 116,234 | ||||||||||
Donald R. Neumeyer Executive Vice President and Chief Operating Officer | 2009 | $ | 44,296 | $ | — | $ | 44,296 | |||||||||
2008 | $ | 37,283 | $ | — | $ | 37,283 | ||||||||||
2007 | $ | 116,170 | $ | — | $ | 116,170 | ||||||||||
Wesley M. Skelton Executive Vice President, Controller and Chief Administrative Officer | 2009 | $ | 118,544 | $ | — | $ | 118,544 | |||||||||
2008 | $ | 108,358 | $ | — | $ | 108,358 | ||||||||||
2007 | $ | 151,936 | $ | — | $ | 151,936 | ||||||||||
Randall L. Tauscher Executive Vice President | 2009 | $ | 242,282 | $ | 120,000 | $ | 363,282 | |||||||||
2008 | $ | 300,000 | $ | 300,000 | $ | 600,000 | ||||||||||
2007 | $ | — | $ | — | $ | — | ||||||||||
Chris H. Booth Vice President, General Counsel and Secretary | 2009 | $ | 82,225 | $ | — | $ | 82,225 | |||||||||
2008 | $ | 77,625 | $ | — | $ | 77,625 | ||||||||||
2007 | $ | 120,938 | $ | — | $ | 120,938 | ||||||||||
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Fees Earned Paid in | Stock | |||||||||||
Name | Cash ($) | Awards ($)(1) | Total ($) | |||||||||
Ruben S. Martin | N/A | N/A | N/A | |||||||||
John P. Gaylord | $ | 35,000 | $ | 27,850 | $ | 62,850 | ||||||
C. Scott Massey | $ | 35,000 | $ | 27,850 | $ | 62,850 | ||||||
Howard Hackney | $ | 35,000 | $ | 27,850 | $ | 62,850 |
(1) | On August 3, 2009, we issued 1,000 restricted common units to each of our three independent, non-employee, directors under our long-term incentive plan. These restricted common units vest in equal installments of 250 units on January 24, 2010, 2011, 2012 and 2013, respectively. In calculating the fair value of the award, we multiplied the closing price of our common units on the NASDAQ on the date of grant, August 3, 2009, by the number of restricted common units granted to each director. |
Howard Hackney, Committee Chair
John P. Gaylord
C. Scott Massey
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Percentage of | ||||||||||||||||||||
Common Units | Percentage of | Percentage of Total | ||||||||||||||||||
Common Units | Beneficially | Subordinated Units | Subordinated Units | Units Beneficially | ||||||||||||||||
Name of Beneficial Owner(1) | Beneficially Owned | Owned(2) | Beneficially Owned | Beneficially Owned | Owned(2) | |||||||||||||||
Martin Resource Management Corporation(3) | 6,703,823 | 37.9 | % | 889,444 | 100 | % | 40.8 | % | ||||||||||||
Martin Resource LLC(3) | 5,899,102 | 33.3 | % | — | 100 | % | 31.7 | % | ||||||||||||
Cross Refining & Marketing Inc.(3) | 804,721 | 4.5 | % | 889,444 | 100 | % | 9.1 | % | ||||||||||||
Ruben S. Martin(4) | 6,754,380 | 38.1 | % | 889,444 | 100 | % | 41.1 | % | ||||||||||||
Scott D. Martin(5) | 6,717,145 | 37.9 | % | 889,444 | 100 | % | 40.9 | % | ||||||||||||
Donald R. Neumeyer | 4,504 | — | — | — | — | |||||||||||||||
Wesley M. Skelton | 3,422 | — | — | — | — | |||||||||||||||
Robert D. Bondurant | 11,604 | — | — | — | — | |||||||||||||||
Chris Booth | 1,925 | — | — | — | — | |||||||||||||||
Randall Tauscher | 7,747 | — | — | — | — | |||||||||||||||
John P. Gaylord(6) | 34,000 | — | — | — | — | |||||||||||||||
C. Scott Massey(6)(7) | 8,250 | — | — | — | — | |||||||||||||||
Howard Hackney(6) | 4,000 | — | — | — | — | |||||||||||||||
Kayne Anderson Capital Advisors, L.P.(8) | 951,182 | 5.4 | % | — | — | 5.1 | % | |||||||||||||
All directors and executive officers as a group (10 persons)(9) | 6,843,154 | 38.6 | % | 889,444 | 100 | % | 41.6 | % |
(1) | The address for Martin Resource Management Corporation and all of the individuals listed in this table, unless otherwise indicated, is c/o Martin Midstream Partners L.P., 4200 Stone Road, Kilgore, Texas 75662. | |
(2) | The percent of class shown is less than one percent unless otherwise noted. | |
(3) | Martin Resource Management Corporation is the owner of Martin Resource LLC and Cross Refining & Marketing Inc., and as such may be deemed to beneficially own the common units held by Martin Resource LLC and the common and subordinated units held by Cross Refining & Marketing Inc. The 5,889,102 common units beneficially owned by Martin Resource Management Corporation through its ownership of Martin Resource LLC have been pledged as security to a third party to secure payment for a loan made by such third party. The 804,721 common units and 889,444 subordinated units beneficially owned by Martin Resource Management Corporation through its ownership of Cross Refining & Marketing Inc. have been pledged as security to a third party to secure payment for a loan made by such third party. | |
(4) | Includes 6,703,823 common units and 889,444 subordinated units beneficially owned by Martin Resource Management Corporation through its ownership of Martin Resource LLC and Cross Oil Refining & Marketing, Inc. Ruben S. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 41.6% of the voting stock thereof and serves as its Chairman of the Board and President. As a result, Ruben S. Martin may be deemed to be the beneficial owner of the common units and the subordinated units owned by Martin Resource Management Corporation. | |
(5) | Includes 6,703,823 common units and 889,444 subordinated units beneficially owned by Martin Resource Management Corporation through its ownership of Martin Resource LLC and Cross Oil Refining & Marketing, Inc. Scott D. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 47.5% of the voting stock thereof and serves on its Board of Directors. As a result, Scott D. Martin may be deemed to be the beneficial owner of the common units and the subordinated units owned by Martin Resource Management Corporation. | |
(6) | On August 3, 2009, we issued 1,000 restricted common units to each of our three independent directors. These restricted common units vest in equal installments of 250 units on January 24, 2010, 2011, 2012 and 2013, respectively. |
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On May 5, 2008, we issued 1,000 restricted common units to each of our three independent directors. These restricted common units vest in equal installments of 250 units on January 24, 2009, 2010, 2011 and 2012, respectively. | ||
On May 3, 2007, we issued 1,000 restricted common units to each of our three independent directors. These restricted common units vest in equal installments of 250 units on January 24, 2008, 2009, 2010 and 2011, respectively. | ||
On January 24, 2006, we issued 1,000 restricted common units to each of our three independent directors. These restricted common units vest in equal installments of 250 units on each of the four anniversaries following the grant date. | ||
(7) | Mr. Massey may be deemed to be the beneficial owner of 250 common units held by his wife. | |
(8) | Based on a Schedule 13G (Amendment No. 4), dated February 11, 2010 filed by Kayne Anderson Capital Advisors, L.P. with the United States Securities and Exchange Commission. The filing is made jointly with Richard A. Kayne. The filers report that they have shared voting power with respect to the 951,182 common units. The address of Kayne Anderson Capital Advisors, L.P. is 1800 Avenue of the Stars, Second Floor, Los Angeles, California 90067. | |
(9) | The total for all directors and executive officers as a group includes the common units directly owned by such directors and executive officers as well as the common units and subordinated units beneficially owned by Martin Resource Management Corporation as both Ruben S. Martin and Scott D. Martin may be deemed to be the beneficial owners thereof. |
Beneficial Ownership | ||||||||
of Common Stock | ||||||||
Number of | Percent of | |||||||
Name of Beneficial Owner(1) | Shares | Outstanding | ||||||
R.S. Martin Jr. Children’s Trust No. One f/b/o Angela Santi Jones (2) | 1,278.00 | 11.8 | % | |||||
Martin Resource Management Corporation Employee Stock Ownership Trust (3) | 1,922.00 | 17.7 | % | |||||
CNRT LLC (4) | 2,266.67 | 20.9 | % | |||||
RSM III Investments, Ltd. (5) | 2,266.67 | 20.9 | % | |||||
Ruben S. Martin III Dynasty Trust (6) | 635.00 | 5.8 | % | |||||
SKM Partnership, Ltd. (7) | 2,560.00 | 23.6 | % | |||||
Martin Transport, Inc. (8) | 40.00 | * | ||||||
Ruben S. Martin (3) (4) (8) (9) | 4,523.00 | 41.6 | % | |||||
Scott D. Martin (3) (7) (8) (10) | 5,156.00 | 47.5 | % | |||||
Donald R. Neumeyer (11) (12) (13) | 116.00 | 1.1 | % | |||||
Wesley M. Skelton (3) (11)(12) (13) | 2,030.00 | 18.7 | % | |||||
Robert D. Bondurant (11) (12) (13) | 200.00 | 1.8 | % | |||||
Executive officers and directors as a group (5 individuals) | 8,131.00 | 74.8 | % |
* | Represents less than 1.0% |
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(1) | The business address of each shareholder, director and executive officer of Martin Resource Management Corporation is c/o Martin Resource Management Corporation, 4200 Stone Road, Kilgore, Texas 75662. | |
(2) | Karen Yost is the sole investment trustee and the sole dispositive trustee of the R.S. Martin Jr. Children’s Trust No. One f/b/o Angela Santi Jones and exercises control over the voting of the securities owned by this trust and exercises sole control over the disposition of the securities owned by this trust. As a result, this person may be deemed to be the beneficial owners of the securities held by such trust. Karen Yost is an officer of Martin Resource Management. However, this trust terminated on February 17, 2010 and is in the winding-up process. Its remaining assets will ultimately be distributed to its beneficiary, Angela Alexander (formerly, Angela Santi Jones). | |
(3) | Ruben S. Martin, Scott D. Martin and Wesley M. Skelton are the co-trustees of the Martin Resource Management Corporation Employee Stock Ownership Trust and exercise shared control over the voting and disposition of the securities owned by this trust. As a result, these persons may be deemed to be the beneficial owners of the securities held by such trust; thus, the number of shares of common stock reported herein as beneficially owned by such individuals includes the 1,922 shares owned by such trust. Mr. Skelton disclaims beneficial ownership of these 1,922 shares. | |
(4) | Ruben S. Martin is the president of RSM III Management Corp., which is the general partner of RSM III Investments Ltd., which is the sole member of CNRT LLC. Courtney Stovall and Robin Martin, as managers of CNRT LLC exercise control over the voting of the securities owned by this entity. However, as a result of his position with the general partner of the sole member of this entity, Ruben S. Martin may be deemed to be the beneficial owner of the securities held by such entity; thus, the number of shares of common stock reported herein as beneficially owned by such individual includes the 2,266.67 shares owned by such entity. | |
(5) | RSM III Investments Ltd. is the sole member of CNRT LLC and, as such, may be deemed to be the beneficial owner of the securities owned by CNRT LLC. | |
(6) | Bill Bankston is the trustee of the Ruben S. Martin III Dynasty Trust and exercises control over the voting and disposition of the securities owned by the trust. As a result, he may be deemed to be the beneficial owner of the securities held by the trust. These 635 shares have been pledged as security to a third party to secure payment for a loan made by such third party. | |
(7) | Scott D. Martin is the beneficial owner of the general partner of SKM Partnership, Ltd. and exercises control over the voting and disposition of the securities owned by this entity. As a result, he may be deemed to be the beneficial owner of the securities held by such entity; thus, the number of shares of common stock reported herein as beneficially owned by such individual includes the 2,560 shares owned by such entity. | |
(8) | Ruben S. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 41.6% of the voting stock thereof and serves as its Chairman of the Board and President. Scott D. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 47.5% of the voting stock thereof and serves as a member of its Board of Directors. Martin Transport, Inc. is a wholly owned subsidiary of Martin Resource Management Corporation. As a result, each of Ruben S. Martin and Scott D. Martin may be deemed to be the beneficial owner of the securities held by Martin Transport, Inc.; thus, the number of shares of common stock reported herein as beneficially owned by such individuals includes the 40 shares owned by Martin Transport, Inc. | |
(9) | Ruben S. Martin directly owns 294.33 shares of common stock. | |
(10) | Scott D. Martin directly owns 634 shares of common stock. |
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(11) | Messrs. Neumeyer, Skelton and Bondurant each have the right to acquire 30, 30, and 50 shares, respectively, by virtue of options issued under Martin Resource Management Corporation’s nonqualified stock option plan. | |
(12) | Messrs. Neumeyer, Skelton and Bondurant own securities in Martin Resource Martin Corporation of 36, 28 and 100 shares of common stock, respectively, obtained by the exercise of options issued under Martin Resource Management Corporation’s nonqualified stock option plan. | |
(13) | Messrs. Neumeyer, Skelton and Bondurant each own securities in Martin Resource Martin Corporation of 50 restricted common shares representing shares by virtue of restricted stock issued under Martin Resource Management Corporation’s 2007 Long-Term Incentive Plan. |
Number of | ||||||||||||
securities | ||||||||||||
remaining available | ||||||||||||
Number of | for future issuance | |||||||||||
securities to be | under equity | |||||||||||
issued upon | Weighted-average | compensation plans | ||||||||||
exercise of | exercise price of | (excluding | ||||||||||
outstanding | outstanding | securities | ||||||||||
options, Warrants | options, warrants | reflected in column | ||||||||||
and rights | and rights | (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | N/A | N/A | N/A | |||||||||
Equity compensation plans not approved by security holders (1) | 0 | $ | 0 | 716,000 | ||||||||
Total | 0 | $ | 0 | 716,000 |
(1) | Our general partner has adopted and maintains the Martin Midstream Partners L.P. Long-Term Incentive Plan. For a description of the material features of this plan, please see “Item 11. Executive Compensation – Employee Benefit Plans – Martin Midstream Partners L.P. Long-Term Incentive Plan”. |
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Formation Stage | ||
The consideration received by our general partner and Martin Resource Management for the transfer of assets to us | • 4,253,362 subordinated units; (All of the original 4,253,362 subordinated units issued to Martin Resource Management have been converted into common units on a one-for-one basis since the formation of the Partnership. 850,672 subordinated units were converted on each of November 14, 2005, 2006, 2007 and 2008, respectively, and 850,674 subordinated units were converted on November 14, 2009) | |
• 2% general partner interest; and | ||
• the incentive distribution rights. | ||
Operational Stage | ||
Distributions of available cash to our general partner | We will generally make cash distributions 98% to our unitholders, including Martin Resource Management as holder of all of the subordinated units, and 2% to our general partner. In addition, if distributions exceed the minimum quarterly distribution and other higher target levels, our general partner will be entitled to increasing percentages of the distributions, up to 50% of the distributions above the highest target level as a result of its incentive distribution rights. | |
Assuming we have sufficient available cash to pay the full minimum quarterly distribution on all of our outstanding units for four quarters, our general partner would receive distributions of approximately $0.7 million on its 2.0% general partner interest and Martin Resource Management would receive an aggregate annual distribution of approximately $3.4 on its common units. | ||
Payments to our general partner and its affiliates | Martin Resource Management is entitled to reimbursement for all direct expenses it or our general partner incurs on our behalf. The direct expenses include the salaries and benefit costs employees of Martin Resource Management who provide services to us. Our general partner has sole discretion in determining the amount of these expenses. In addition to the direct expenses, Martin Resource Management is entitled to reimbursement for a portion of indirect general and administrative and corporate overhead expenses. Under the omnibus agreement, we are required to reimburse Martin Resource Management for indirect general and administrative and corporate overhead expenses. The amount of this reimbursement was capped at $2.0 million through November 1, 2007 when the cap expired. For the years ended December 31, 2009, 2008 and 2007, the Conflicts Committee of our general partner approved reimbursement amounts of $3.5, $2.9 and $1.5 million, respectively, reflecting our allocable share of such expenses. The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually. Please read “Agreements — Omnibus Agreement” below. | |
Withdrawal or removal of our general partner | If our general partner withdraws or is removed, its general partner interest and its incentive distribution rights will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests. |
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Liquidation Stage | ||
Liquidation | Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidating distributions according to their particular capital account balances. |
• | providing terminalling and storage services for hydrocarbon products and by-products; | ||
• | providing marine transportation of hydrocarbon products and by-products; | ||
• | distributing NGLs; and | ||
• | manufacturing and selling sulfur-based fertilizer products and other sulfur-related products. | ||
This restriction does not apply to: | |||
• | the operation on our behalf of any asset or group of assets owned by us or our affiliates; | ||
• | any business operated by Martin Resource Management, including the following: | ||
• | providing land transportation of various liquids, | ||
• | distributing fuel oil, asphalt, sulfuric acid, marine fuel and other liquids, | ||
• | providing marine bunkering and other shore-based marine services in Alabama, Louisiana, Mississippi and Texas, | ||
• | operating a small crude oil gathering business in Stephens, Arkansas, | ||
• | operating an underground NGL storage facility in Arcadia, Louisiana, | ||
• | building and marketing sulfur prillers, | ||
• | developing an underground natural gas storage facility in Arcadia, Louisiana, | ||
• | any business that Martin Resource Management acquires or constructs that has a fair market value of less than $5.0 million; |
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• | any business that Martin Resource Management acquires or constructs that has a fair market value of $5.0 million or more if we have been offered the opportunity to purchase the business for fair market value, and we decline to do so with the concurrence of our Conflicts Committee; and | ||
• | any business that Martin Resource Management acquires or constructs where a portion of such business includes a restricted business and the fair market value of the restricted business is $5.0 million or more and represents less than 20% of the aggregate value of the entire business to be acquired or constructed; provided that, following completion of the acquisition or construction, we are provided the opportunity to purchase the restricted business. |
• | certain potential environmental liabilities associated with the operation of the assets contributed to us, and assets retained, by Martin Resource Management that relate to events or conditions occurring or existing before November 1, 2002; and | ||
• | any payments we were required to make, as a successor in interest to affiliates of Martin Resource Management, under environmental indemnity provisions contained in the contribution agreement associated with the contribution of assets by Martin Resource Management to CF Martin Sulphur in November 2000. |
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• | we unload, transfer and store products received from vessels or trucks at the terminal; and | ||
• | we transfer products stored at the terminal to vessels or trucks. |
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2009 | 2008 | |||||||
Audit fees | $ | 795,000 | (1) | $ | 837,500 | (1) | ||
Audit related fees | — | 12,800 | (2) | |||||
Audit and audit related fees | 795,000 | 850,300 | ||||||
Tax fees | 105,765 | (3) | 80,725 | (3) | ||||
All other fees | — | — | ||||||
Total fees | $ | 900,765 | $ | 931,025 | ||||
(1) | 2009 and 2008 audit fees include fees for the annual integrated audit, the audit of Waskom Gas Processing Company, the audit of Martin Midstream GP LLC and fees related to services in connection with transactions. | |
(2) | Audit related fees include fees for accounting consultations on various transactions occurring in 2009 and 2008. | |
(3) | Tax fees are for services related to the review of our partnership K-1’s returns, and research and consultations on other tax related matters. |
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(a) | Financial Statements and Schedules | ||
(1) | The following financial statements of Martin Midstream Partners L.P. and are included in Part II, Item 8: | ||
Reports of Independent Registered Public Accounting Firm | |||
Consolidated Balance Sheets as of December 31, 2009 and 2008 | |||
Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 | |||
Consolidated Statements of Changes in Capital for the years ended December 31, 2009, 2008 and 2007 | |||
Consolidated Statements of Comprehensive Income for the years ended December 31, 2009 and 2008 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007 | |||
Notes to the Consolidated Financial Statements | |||
(2) | Financial Statements of Waskom Gas Processing Company for the year ended December 31, 2009, an affiliate accounted for by the equity method, which constituted a significant subsidiary. | ||
(b) | Exhibits | ||
Reference is made to the Index to Exhibits beginning on page 147 for a list of all exhibits filed as part of this report. |
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Martin Midstream Partners L.P. (Registrant) | ||||||
By: | Martin Midstream GP LLC | |||||
It’s General Partner |
Date: March 4, 2010 | By: | /s/ Ruben S. Martin | ||||
President and Chief Executive Officer |
Signature | Title | |
/s/ Ruben S. Martin | President, Chief Executive Officer and Director of Martin Midstream GP LLC (Principal Executive Officer) | |
/s/ Robert D. Bondurant | Executive Vice President and Chief Financial Officer of Martin Midstream GP LLC (Principal Financial Officer) | |
/s/ Wesley M. Skelton | Executive Vice President, Chief Administrative Officer, Secretary and Controller of Martin Midstream GP LLC (Principal Accounting Officer) | |
/s/ John P. Gaylord | Director of Martin Midstream GP LLC | |
/s/ C. Scott Massey | Director of Martin Midstream GP LLC | |
/s/ Howard Hackney | Director of Martin Midstream GP LLC |
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Exhibit | ||||
Number | Exhibit Name | |||
3.1 | Certificate of Limited Partnership of Martin Midstream Partners L.P. (the “Partnership”), dated June 21, 2002 (filed as Exhibit 3.1 to the Partnership’s Registration Statement on Form S-1 (SEC File No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |||
3.2 | First Amended and Restated Agreement of Limited Partnership of the Partnership, dated November 6, 2002 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
3.3 | Amendment No. 1 to First Amended and Restated Agreement of Limited Partnership of Martin Midstream Partners L.P., dated November 1, 2007 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed November 2, 2007, and incorporated herein by reference). | |||
3.4 | Amendment No. 2 to First Amended and Restated Agreement of Limited Partnership of the Partnership, dated effective January 1, 2007 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed April 7, 2008, and incorporated herein by reference). | |||
3.5 | Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of November 25, 2009 (filed as Exhibit 10.1 to the Partnership’s Amendment to Current Report on Form 8-K/A, filed January 19, 2010, and incorporated herein by reference). | |||
3.6 | Certificate of Limited Partnership of Martin Operating Partnership L.P. (the “Operating Partnership”), dated June 21, 2002 (filed as Exhibit 3.3 to the Partnership’s Registration Statement on Form S-1 (SEC File No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |||
3.7 | Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated November 6, 2002 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
3.8 | Certificate of Formation of Martin Midstream GP LLC (the “General Partner”), dated June 21, 2002 (filed as Exhibit 3.5 to the Partnership’s Registration Statement on Form S-1 (SEC File No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |||
3.9 | Limited Liability Company Agreement of the General Partner, dated June 21, 2002 (filed as Exhibit 3.6 to the Partnership’s Registration Statement on Form S-1 (SEC File No. 33-91706), filed July 1, 2002, and incorporated herein by reference). | |||
3.10 | Certificate of Formation of Martin Operating GP LLC (the “Operating General Partner”), dated June 21, 2002 (filed as Exhibit 3.7 to the Partnership’s Registration Statement on Form S-1 (SEC File No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |||
3.11 | Limited Liability Company Agreement of the Operating General Partner, dated June 21, 2002 (filed as Exhibit 3.8 to the Partnership’s Registration Statement on Form S-1 (SEC File No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |||
4.1 | Specimen Unit Certificate for Common Units (contained in Exhibit 3.2). | |||
4.2 | Specimen Unit Certificate for Subordinated Units (filed as Exhibit 4.2 to Amendment No. 4 to the Partnership’s Registration Statement on Form S-1 (SEC File No. 333-91706), filed October 25, 2002, and incorporated herein by reference). | |||
10.1 | Amended and Restated Credit Agreement, dated October 29, 2004, among the Partnership, the Operating Partnership, Royal Bank of Canada and the other Lenders set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 11, 2004, and incorporated herein by reference). | |||
10.2 | First Amendment to Credit Agreement, dated May 3, 2005, among the Partnership, the Operating Partnership, Royal Bank of Canada and the other Lenders set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed May 4, 2005, and incorporated herein by reference). | |||
10.3 | Second Amended and Restated Credit Agreement, dated November 10, 2005, among the Partnership, the Operating Partnership, Royal Bank of Canada and the other Lenders set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed November 14, 2005, and incorporated herein by reference). | |||
10.4 | Second Amendment to Second Amended and Restated Credit Agreement, dated as of December 28, 2007, among the Operating Partnership, the Partnership, the Operating General Partner, Prism Gas Systems I, L.P., |
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Exhibit | ||||
Number | Exhibit Name | |||
Prism Gas Systems GP, L.L.C., Prism Gulf Coast Systems, L.L.C., McLeod Gas Gathering and Processing Company, L.L.C., Woodlawn Pipeline Co., Inc., the financial institution parties to the Credit Agreement and Royal Bank of Canada, as administrative agent and collateral agent (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed January 2, 2008, and incorporated herein by reference). | ||||
10.5 | Omnibus Agreement dated November 1, 2002, by and among Martin Resource Management, the General Partner, the Partnership and the Operating Partnership (filed as Exhibit 10.3 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.6 | Motor Carrier Agreement dated November 1, 2002, by and between the Operating Partnership and Transport (filed as Exhibit 10.4 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.7 | Terminal Services Agreement dated November 1, 2002, by and between the Operating Partnership and Martin Gas Sales LLC (“MGSLLC”) (filed as Exhibit 10.5 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.8 | Throughput Agreement dated November 1, 2002, by and between MGSLLC and the Operating Partnership (filed as Exhibit 10.6 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.9 | Contract for Marine Transportation dated November 1, 2002, by and between the Operating Partnership and Martin Resource Management (filed as Exhibit 10.7 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.10 | Product Storage Agreement dated November 1, 2002, by and between Martin Underground Storage, Inc. and the Operating Partnership (filed as Exhibit 10.8 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.11 | Marine Fuel Agreement dated November 1, 2002, by and between Martin Fuel Service LLC and the Operating Partnership (filed as Exhibit 10.9 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.12 | Product Supply Agreement dated November 1, 2002, by and between MGSLLC and the Operating Partnership (filed as Exhibit 10.10 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.13† | Martin Midstream Partners L.P. Long-Term Incentive Plan (filed as Exhibit 10.11 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.14† | Martin Midstream Partners L.P. Amended and Restated Long-Term Incentive Plan (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed January 26, 2006, and incorporated herein by reference). | |||
10.15† | Form of Restricted Common Unit Award Notice (filed as Exhibit 10.2 to the Partnership’s Current Report on Form 8-K, filed January 26, 2006, and incorporated herein by reference). | |||
10.16 | Assignment and Assumption of Lease and Sublease dated November 1, 2002, by and between the Operating Partnership and MGSLLC (filed as Exhibit 10.12 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.17 | Purchaser Use Easement, Ingress-Egress Easement, and Utility Facilities Easement dated November 1, 2002, by and between MGSLLC and the Operating Partnership (filed as Exhibit 10.13 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference). | |||
10.18 | Marine Transportation Agreement, by and between the Operating Partnership and Cross Oil Refining & Marketing, Inc., dated October 27, 2003 (filed as Exhibit 10.14 to the Partnership’s Quarterly Report of Form 10-Q (SEC File No. 000-50056), filed November 10, 2003, and incorporated herein by reference). | |||
10.19 | Terminalling Agreement, by and between the Operating Partnership and Cross Oil Refining & Marketing, Inc., dated October 27, 2003 (filed as Exhibit 10.15 to the Partnership’s Quarterly Report of Form 10-Q (SEC File No. 000-50056), filed November 10, 2003, and incorporated herein by reference). | |||
10.20 | Asset Purchase Agreement by and among the Partnership, the Operating Partnership and Tesoro Marine Services, L.L.C., dated October 27, 2003 (filed as Exhibit 10.1 to the Partnership’s Amendment No. 1 to Current Report on Form 8-K (SEC File No. 000-50056), filed January 23, 2004, and incorporated herein by reference). |
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Exhibit | ||||
Number | Exhibit Name | |||
10.21 | Purchase Agreement by and among the Operating Partnership, Prism Gas Systems I, L.P., Natural Gas Partners V, L.P., Robert E. Dunn, William J. Diehnelt, Gene A. Adams, Philip D. Gettig, Sharon C. Taylor and Scott A. Southard, dated September 6, 2005 (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed September 6, 2005, and incorporated herein by reference). | |||
10.22 | Amended and Restated Terminal Services Agreement by and between the Operating Partnership and MFSLLC, dated October 27, 2004 (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed October 28, 2004, and incorporated herein by reference). | |||
10.23 | Transportation Services Agreement by and between the Operating Partnership and MFSLLC, dated December 23, 2003 (filed as Exhibit 10.3 to the Partnership’s Amendment No. 1 to Current Report on Form 8-K (SEC File No. 000-50056), filed January 23, 2004, and incorporated herein by reference). | |||
10.24 | Lubricants and Drilling Fluids Terminal Services Agreement by and between the Operating Partnership and MFSLLC, dated December 23, 2003 (filed as Exhibit 10.4 to the Partnership’s Amendment No. 1 to Current Report on Form 8-K (SEC File No. 000-50056), filed January 23, 2004, and incorporated herein by reference). | |||
10.25† | Martin Resource Management Corporation Purchase Plan for Units of Martin Midstream Partners L.P. (filed as Exhibit 10.1 to the Partnership’s registration statement on Form S-8 (SEC File No. 333-140152), filed January 23, 2007, and incorporated herein by reference). | |||
10.26 | Stock Purchase Agreement, dated April 27, 2007, by and among Woodlawn Pipeline Co., Inc., Lantern Resources, L.P., David P. Deison and Prism Gas Systems I, L.P. (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed May 2, 2007, and incorporated herein by reference). | |||
10.27 | Asset Purchase Agreement, dated April 27, 2007, by and among Peak Gas Gathering L.P. and Prism Gas Systems I, L.P. (filed as Exhibit 10.2 to the Partnership’s Current Report on Form 8-K, filed May 2, 2007, and incorporated herein by reference). | |||
10.28 | Form of Indemnification Agreement (filed as Exhibit 10.1 to the Partnership’s Quarterly Report of Form 10-Q, filed November 6, 2008, and incorporated herein by reference). | |||
10.29 | Third Amendment to Second Amended and Restated Credit Agreement, effective as of September 24, 2008, among the Operating Partnership, the Partnership, the Operating General Partner, Prism Gas Systems I, L.P., Prism Gas Systems GP, L.L.C., Prism Gulf Coast Systems, L.L.C., McLeod Gas Gathering and Processing Company, L.L.C., Woodlawn Pipeline Co., Inc., the financial institution parties to the Credit Agreement and Royal Bank of Canada, as administrative agent and collateral agent (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed September 30, 2008, and incorporated herein by reference). | |||
10.30 | Amended and Restated Contribution Agreement, dated as of November 25, 2009, by and among the Operating Partnership, Cross Oil Refining & Marketing, Inc., Martin Resource Management and the Partnership (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed December 1, 2009, and incorporated herein by reference). | |||
10.31 | Tolling Agreement, dated as of November 25, 2009, by and between the Operating Partnership and Cross Oil Refining & Marketing, Inc. (filed as Exhibit 10.2 to the Partnership’s Current Report on Form 8-K filed December 1, 2009, and incorporated herein by reference). | |||
10.32 | Amendment No. 1 to Omnibus Agreement, dated as of November 25, 2009, by and among Martin Resource Management, the General Partner, the Partnership and the Operating Partnership (filed as Exhibit 10.3 to the Partnership’s Current Report on Form 8-K filed December 1, 2009, and incorporated herein by reference). | |||
10.33 | Amended and Restated Common Unit Purchase Agreement, dated as of November 24, 2009, by and between the Partnership and Martin Resource Management (filed as Exhibit 10.4 to the Partnership’s Current Report on Form 8-K filed December 1, 2009, and incorporated herein by reference). | |||
10.34 | Fourth Amendment to Second Amended and Restated Credit Agreement, dated as of December 21, 2009, among the Operating Partnership, the Partnership, the Operating General Partner, Prism Gas Systems I, L.P., Prism Gas Systems GP, L.L.C., Prism Gulf Coast Systems, L.L.C., McLeod Gas Gathering and Processing Company, L.L.C., Woodlawn Pipeline Co., Inc., Prism Liquids Pipeline LLC, the financial institution parties to the Credit Agreement and Royal Bank of Canada, as administrative agent and collateral agent (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed December 23, 2009, and incorporated herein by reference). | |||
21.1* | List of Subsidiaries. |
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Exhibit | ||||
Number | Exhibit Name | |||
23.1* | Consent of KPMG LLP. | |||
23.2* | Consent of KPMG LLP. | |||
23.3* | Consent of KPMG LLP. | |||
31.1* | Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2* | Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.” | |||
32.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.” | |||
99.1* | Balance Sheets as of December 31, 2009 and 2008 (audited) of Martin Midstream GP LLC. |
* | Filed or furnished herewith. | |
† | As required by Item 15(a)(3) of Form 10-K, this exhibit is identified as a compensatory plan or arrangement. |
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Processing Company
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Waskom Gas Processing Company:
March 4, 2010
Table of Contents
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2009 AND 2008
2009 | 2008 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 23,160 | $ | 1,388,434 | ||||
Accounts receivable | 178,032 | 236,207 | ||||||
Accounts receivable—partners | 9,373,492 | 10,356,710 | ||||||
Accounts receivable—state grant | — | 1,114,314 | ||||||
Inventories | 468,372 | 463,575 | ||||||
Prepaid expenses | — | 3,989 | ||||||
Total current assets | 10,043,056 | 13,563,229 | ||||||
PROPERTY AND EQUIPMENT: | ||||||||
Gas plant asset and gas gathering equipment | 88,211,154 | 80,210,281 | ||||||
Other fixed assets | 746,743 | 734,871 | ||||||
Accumulated depreciation and amortization | (19,396,696 | ) | (15,847,301 | ) | ||||
Net property and equipment | 69,561,201 | 65,097,851 | ||||||
TOTAL | $ | 79,604,257 | $ | 78,661,080 | ||||
LIABILITIES AND PARTNERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable and accrued liabilities | $ | 6,505,267 | $ | 6,813,545 | ||||
Accounts payable—partners | 1,844,015 | 3,776,855 | ||||||
Total current liabilities | 8,349,282 | 10,590,400 | ||||||
LONG-TERM LIABILITIES—Asset retirement obligation | 694,177 | 340,893 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
PARTNERS’ CAPITAL | 70,560,798 | 67,729,787 | ||||||
TOTAL | $ | 79,604,257 | $ | 78,661,080 | ||||
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2009 | 2008 | 2007 | ||||||||||
OPERATING REVENUES: | ||||||||||||
Natural gas processing and other revenues | $ | 23,421,165 | $ | 35,868,029 | $ | 27,832,704 | ||||||
Natural gas liquid sales | 47,623,953 | 79,225,191 | 54,123,606 | |||||||||
Loss on disposal of assets | (847 | ) | (61,891 | ) | (159,724 | ) | ||||||
Total operating revenues | 71,044,271 | 115,031,329 | 81,796,586 | |||||||||
OPERATING COSTS AND EXPENSES: | ||||||||||||
Cost of sales — natural gas liquids | 46,645,393 | 78,008,310 | 53,014,173 | |||||||||
Operating costs | 6,420,633 | 6,414,677 | 4,595,878 | |||||||||
Depreciation and amortization | 4,000,412 | 3,129,246 | 1,925,840 | |||||||||
Total operating costs and expenses | 57,066,438 | 87,552,233 | 59,535,891 | |||||||||
OPERATING INCOME BEFORE TAXES | 13,977,833 | 27,479,096 | 22,260,695 | |||||||||
Income tax expense | 110,712 | 186,722 | 241,864 | |||||||||
NET INCOME | $ | 13,867,121 | $ | 27,292,374 | $ | 22,018,831 | ||||||
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Total | ||||
Partners’ | ||||
Capital | ||||
BALANCE—December 31, 2006 | $ | 45,449,916 | ||
Cash contributions for capital expenditures | 17,733,619 | |||
Cash distributions in excess of working capital | (4,128,057 | ) | ||
Cash distributions | (5,250,000 | ) | ||
Distributions in-kind | (18,674,997 | ) | ||
Net income | 22,018,831 | |||
BALANCE—December 31, 2007 | 57,149,312 | |||
Cash contributions for capital expenditures | 12,921,736 | |||
Cash distributions in excess of working capital | (8,583,683 | ) | ||
Cash distributions | (1,600,000 | ) | ||
Distributions in-kind | (19,449,952 | ) | ||
Net income | 27,292,374 | |||
BALANCE—December 31, 2008 | $ | 67,729,787 | ||
Cash contributions for capital expenditures | 8,310,458 | |||
Cash distributions in excess of working capital | (6,394,002 | ) | ||
Cash distributions | (1,300,000 | ) | ||
Distributions in-kind | (11,652,566 | ) | ||
Net income | 13,867,121 | |||
BALANCE—December 31, 2009 | $ | 70,560,798 | ||
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CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
2009 | 2008 | 2007 | ||||||||||
OPERATING ACTIVITIES: | ||||||||||||
Net income | $ | 13,867,121 | $ | 27,292,374 | $ | 22,018,831 | ||||||
Adjustments to reconcile net income to cash used in operating activities: | ||||||||||||
Depreciation and amortization | 4,000,412 | 3,129,246 | 1,925,840 | |||||||||
Distributions in-kind to partners | (11,652,566 | ) | (19,449,952 | ) | (18,674,997 | ) | ||||||
Loss/(Gain) on sale of asset | 847 | 61,891 | 159,724 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 1,172,489 | 377,441 | (286,895 | ) | ||||||||
Accounts receivable—partners | 983,218 | (581,029 | ) | 1,452,006 | ||||||||
Inventory | (4,798 | ) | (30,302 | ) | 3,146 | |||||||
Prepaid expenses | 3,989 | (3,989 | ) | — | ||||||||
Accounts payable and accrued liabilites | (354,716 | ) | (125,998 | ) | 1,023,403 | |||||||
Accounts payable—partners | (1,932,840 | ) | 1,291,569 | 778,741 | ||||||||
Net cash provided by operating activities | 6,083,157 | 11,961,251 | 8,399,799 | |||||||||
INVESTING ACTIVITIES: | ||||||||||||
Additions to property and equipment | (8,773,336 | ) | (13,592,311 | ) | (16,829,754 | ) | ||||||
Proceeds from sale/disposal of assets | 708,449 | 15,655 | 15,200 | |||||||||
Net cash used in investing activities | (8,064,887 | ) | (13,576,656 | ) | (16,814,554 | ) | ||||||
FINANCING ACTIVITIES: | ||||||||||||
Contributions from partners | 8,310,458 | 12,921,736 | 17,733,619 | |||||||||
Distributions to partners | (7,694,002 | ) | (10,183,683 | ) | (9,378,057 | ) | ||||||
Net cash provided by financing activities | 616,455 | 2,738,053 | 8,355,562 | |||||||||
NET INCREASE (DECREASE) IN CASH | (1,365,274 | ) | 1,122,648 | (59,193 | ) | |||||||
CASH—Beginning of year | 1,388,434 | 265,786 | 324,979 | |||||||||
CASH—End of year | $ | 23,160 | $ | 1,388,434 | $ | 265,786 | ||||||
SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||||||||||||
Interest paid | $ | — | $ | — | $ | — | ||||||
Taxes paid | $ | 221,201 | $ | 206,911 | $ | — | ||||||
NON-CASH: | ||||||||||||
State grant receivable | $ | — | $ | 1,114,314 | $ | — | ||||||
Addition to asset retirement obligation | $ | 122,777 | $ | 130,367 | $ | — | ||||||
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Years | ||||
Gas gathering equipment | 10 | |||
Gas plant | 20 | |||
Furniture and fixtures | 1 | |||
Computer equipment | 3 | |||
Computer software | 3 |
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