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þ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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.) |
4200 Stone Road Kilgore, Texas (Address of principal executive offices) | 75662 (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 |
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List of Subsidiaries | ||||||||
Consent of KPMG LLP | ||||||||
Consent of KPMG LLP | ||||||||
Certification of CEO Pursuant to Section 302 | ||||||||
Certification of CFO Pursuant to Section 302 | ||||||||
Certification of CEO Pursuant to Section 906 | ||||||||
Certification of CFO Pursuant to Section 906 |
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• | Terminalling and storage services for petroleum products and by-products | ||
• | Natural gas services | ||
• | Marine transportation services for petroleum products and by-products | ||
• | Sulfur gathering, processing and distribution | ||
• | Fertilizer manufacturing and distribution |
• | Terminalling and Storage. We own or operate 17 marine terminal facilities and four inland terminal facilities located in the United States Gulf Coast region that provide storage and handling services for producers and suppliers of petroleum products and by-products, lubricants and other liquids. We also provide land rental to oil and gas companies along with storage and handling services for lubricants and fuel oil. | ||
• | Natural Gas Services. Through our acquisition of Prism Gas Systems I, L.P. (“Prism Gas”), we have ownership interests in over 440 miles of natural gas gathering pipelines located in the natural gas producing regions of Central and East Texas, Northwest Louisiana, the Texas Gulf Coast and offshore Texas and federal waters in the Gulf of Mexico as well as a 150 MMcfd capacity natural gas processing plant located in East Texas which is currently being expanded to 250 MMcfd. In addition to our newly acquired 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 |
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and storage facilities for resale to propane retailers, refineries and industrial NGL users in Texas and the Southeastern United States. We own three NGL supply and storage facilities with an aggregate above ground storage capacity of approximately 132,000 gallons and we lease approximately 72 million gallons of underground storage capacity for NGLs. | |||
• | Marine Transportation. We own a fleet of 37 inland marine tank barges, 16 inland push boats and four offshore tug barge units that transport petroleum products and by-products primarily in the United States Gulf Coast region. We provide these transportation services on a fee basis primarily under annual contracts. In addition, our marine segment manages our sulfur segment’s marine assets. | ||
• | Sulfur. We gather, process and distribute sulfur predominately produced by oil refineries primarily located in the United States Gulf Coast region. We process molten sulfur into prilled, or pelletized, sulfur under both fee-based volume contracts and buy/sell contracts at our facility in Port of Stockton, California. In December 2005, we completed the construction of an additional sulfur priller at our Neches terminal in Beaumont, Texas. In July 2005, we acquired the remaining interests in CF Martin Sulphur L.P. (“CF Martin Sulphur”) not previously owned by us. CF Martin Sulphur gathered, transported and stored molten sulfur supplied by oil refineries. | ||
• | Fertilizer. We own and operate six 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. |
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• | 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. We believe that our diversified base of operations provides multiple platforms for strategic growth through acquisitions. | ||
• | 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. | ||
• | 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 service and product offerings to existing customers is the most efficient and cost effective method of achieving organic growth in revenues and cash flow. We believe significant opportunities exist to expand our customer base and provide additional services and products to existing customers. | ||
• | 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. | ||
• | 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. We intend to pursue strategic alliances with customers in the future. |
• | 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 |
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integrated distribution network consisting of transportation, terminalling 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 a complementary portfolio of transportation, terminalling, distributions and other midstream services for petroleum products and by-products. | |||
• | 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 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. | ||
• | 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, such as molten sulfur and asphalt. 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 help us enhance relationships with our customers by offering them services to handle their unique product requirements. | ||
• | Ability to Grow Our Natural Gas Gathering and Processing Services. 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. | ||
• | 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 26 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 23 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 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 Flexibility. We believe the borrowings available under our credit facility and our ability to issue additional partnership units provide us with the financial flexibility necessary to enable us to pursue expansion and acquisition opportunities. |
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Terminal | Location | Acres | Tanks | Aggregate Capacity | ||||||||
Pelican Island | Galveston, Texas | 51.3 | 14 | 57,200 Bbls. | ||||||||
Harbor Island(1) | Harbor Island, Texas | 25.5 | 10 | 37,400 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 | 18,100 Bbls. | ||||||||
Cameron “East”(4) | Cameron, Louisiana | 34.3 | 7 | 33,000 Bbls. | ||||||||
Cameron “West”(5) | Cameron, Louisiana | 16.9 | 5 | 19,000 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 2010 and can be extended by us through January 2015. | |
(2) | This terminal is located on land owned by a third party and leased under a lease that expires in March 2009 and can be extended by us through 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 2016 and can be renewed by us through 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 2008 and can be extended by us through February 2013. | |
(6) | This terminal is located on land owned by a third party and leased under a sublease agreement that expires in August 2009 and can be extended by us through August 2024. |
Terminal | Location | Tanks | Aggregate Capacity | |||||
Amelia | Amelia, Louisiana | 17 | 14,900 Bbls. | |||||
Berwick(1) Intracoastal | Berwick, Louisiana | 4 | 24,900 Bbls. | |||||
City(2)(3) | Intracoastal City, Louisiana | 17 | 34,300 Bbls. | |||||
Fourchon(4) | Fourchon, Louisiana | 7 | 30,100 Bbls. |
(1) | This terminal is located on land owned by third parties and leased under a lease that expires in September 2007 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 expires in November 2007. | |
(3) | A portion of this terminal is located on land owned by third parties and leased under a lease that expires in April 2009 and can be extended by us through 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(3) | Capacity | Products | Description | |||||||
Tampa(1) | Tampa, Florida | 7 | 719,000 Bbls. | Asphalt and fuel oil | Marine terminal, loading/unloading for vessels, barges and trucks | |||||||
Stanolind(2) | Beaumont, Texas | 2 | 160,000 Bbls. | Asphalt and fuel oil | Marine terminal, loading/unloading for vessels, barges and trucks | |||||||
Neches | Beaumont, Texas | 7 | 500,400 Bbls. | Ammonia, asphalt, fuel oil, sulfuric acid and 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 vessels, barges and trucks | |||||||
Corpus Christi | Corpus Christi, Texas | 3 | 249,000Bbls. | Fuel oil and diesel | Marine Terminal, loading/unloading barges and vessels and unloading trucks |
(1) | This terminal is located on land owned by the Tampa Port Authority that was leased to us under a lease that expired in December 2006. We are currently leasing this facility on a month-to-month basis and have received a proposal for a new lease agreement that extends the term for 10 years with two additional five year extension options. | |
(2) | A portion of this terminal is located on land owned by Martin Resource Management and on land we own. We use marine terminal, loading and unloading, and other common use facilities owned by Martin Resource Management under a perpetual use, ingress-egress and utility facilities easement. | |
(3) | In addition to the tanks listed in the table we own one tank at our Tampa terminal and three tanks at the Stanolind terminal in connection with our sulfur business. Martin Resource Management owns two tanks at the Stanolind terminal. |
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Terminal | Location | Aggregate Capacity | Products | Description | ||||
Channelview(1) | Houston, Texas | 10,000 sq. ft. warehouse | Lubricants | Truck loading/unloading | ||||
Mont Belvieu South Houston | Mont Belvieu, Texas | 20 rail car spaces | Propane-propylene mix | Rail car unloading | ||||
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 |
(1) | This terminal is located on land owned by a third party and leased to us under a lease that expires in May 2009 and can be extended by us to May 2014. |
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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(1) | Location | Capacity | Description | |||
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 storage | ||||
Arcadia, Louisiana(2) | 65 million gallons | Underground storage | ||||
Hattiesburg, Mississippi(3) | 4.2 million gallons | Underground storage | ||||
Mt. Belvieu, Texas(3) | 2.8 million gallons | Underground storage |
(1) | In addition, under a throughput agreement, we are entitled to the sole access to and use of a truck loading and unloading and pipeline distribution terminal owned by Martin Resource Management and located at Mont Belvieu, Texas. Effective 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 330,000 gallons. | |
(2) | 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. | |
(3) | 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. |
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• | The North Central Texas and East Texas area assets consist of the Waskom Processing Plant, the McLeod Gathering System, the Hallsville Gathering System, the Marshall Line, Bosque County Pipeline and the East Texas Gathering System. | ||
• | Waskom Processing Plant — The Waskom Processing Plant, located in Harrison County in East Texas, currently has 150 MMcfd of processing capacity with full fractionation facilities. In January 2007, the Waskom fractionator was expanded to a capacity of 12,500 barrels per day. In addition, an increase in the processing capacity of the plant to 250 MMcfd is expected to be completed by the end of the second quarter of 2007. For the year ended December 31, 2006, inlet throughput and NGL fractionation averaged approximately 183 MMcfd and 7,677 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. | ||
• | 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 year ended December 31, 2006, the McLeod Gathering System gathered approximately 6 MMcfd of natural gas. Prism Gas owns a consolidated 100% interest in this system. | ||
• | Hallsville Gathering System — The Hallsville Gathering System, which Prism Gas constructed in 2006, is located 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. 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 owns an unconsolidated 20% non-operating |
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interest in a partnership that owns the lease rights to the assets of the Bosque County Pipeline, with Panther Pipeline Ltd. owning a 42.5% operating interest and Star of Texas, et al owning the remaining 37.5% interest. | |||
• | 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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• | The Gulf Coast area assets consist of the Fishhook Gathering System and the Matagorda Gathering System located offshore and onshore of the Texas Gulf Coast. | ||
• | Fishhook Gathering System — The Fishhook Gathering System, located in Jefferson County, Texas and offshore federal waters, gathers and transports gas in both offshore and onshore areas. For the year ended December 31, 2006, the Fishhook Pipeline gathered and transported approximately 32 MMcfd of natural gas. Prism Gas owns an unconsolidated 50% non-operating interest in Panther Interstate Pipeline Energy, LLC, 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 year ended December 31, 2006, the Matagorda Offshore Gathering System gathered approximately 10 MMcfd of natural gas. 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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Class of Equipment | Number in Class | Capacity/Horsepower | Description of Products Carried | |||||
Inland tank barges | 15 | 20,000 bbl and under | Asphalt, crude oil, fuel oil, gasoline and sulfur(1) | |||||
Inland tank barges | 22 | 20,000 — 30,000 bbl | Asphalt, crude oil, fuel oil and gasoline(1) | |||||
Inland push boats | 16 | 800 — 1,800 horsepower | N/A | |||||
Offshore tank barges | 4 | 40,000 bbl and 95,000 bbl | Asphalt, fuel oil and NGLs | |||||
Offshore tugboats | 4 | 3,200 — 7,200 horsepower | N/A |
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(1) | One of our 15 inland tank barges with capacity of up to 20,000 bbl, and nine of our 22 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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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 |
Terminal | Location | Tanks | Total Aggregate Capacity | Products Stored | ||||||
Tampa | Tampa, Florida | 1 | 16,000 long tons | Molten sulfur | ||||||
Stanolind | Beaumont, Texas | 3 | 46,500 long tons | Molten sulfur |
Terminal | Location | Daily Production Capacity | Products Stored | |||
Stockton | Stockton, California | 1,000 metric tons per day | Molten and prilled sulfur | |||
Neches | Beaumont, Texas | 2,000 metric tons per day | Molten and prilled sulfur |
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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. |
Facility | Location | Capacity | Description | |||
Two fertilizer plants | 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 | |||
Industrial sulfur plant | Texarkana, Texas | 18,000 tons/year | Emulsified sulfur production | |||
Fertilizer plant | Beaumont, Texas | 70,000 tons/year | Liquid sulfur fertilizer Production |
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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 processing facility in Smackover, Arkansas; | ||
• | operating an underground NGL 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, an NGL truck loading and unloading and pipeline distribution terminal in Mont Belvieu, Texas. |
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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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• | 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; | ||
• | 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. |
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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; |
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• | 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. |
• | 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; | ||
• | 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; |
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• | 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 |
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• | 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. |
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• | 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. |
• | 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 |
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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 a distribution on the subordinated units, to make incentive distributions or to accelerate the expiration of the subordination period. | ||
• | 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. Our general partner may establish reserves for distribution on the subordinated units, but only if those reserves will not prevent us from distributing the full minimum quarterly distribution, plus any arrearages, on the common units for the following four quarters. |
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Common Units | Distributions Declared per Unit | |||||||||||||||
Quarters Ended | High | Low | Common | Subordinated | ||||||||||||
March 31, 2006 | $ | 31.95 | $ | 28.84 | $ | 0.610 | $ | 0.610 | ||||||||
June 30, 2006 | $ | 32.03 | $ | 30.13 | $ | 0.610 | $ | 0.610 | ||||||||
September 30, 2006 | $ | 33.85 | $ | 30.53 | $ | 0.610 | $ | 0.610 | ||||||||
December 31, 2006 | $ | 35.60 | $ | 30.10 | $ | 0.620 | $ | 0.620 |
Common Units | Distributions Declared per Unit | |||||||||||||||
Quarters Ended | High | Low | Common | Subordinated | ||||||||||||
March 31, 2005 | $ | 34.20 | $ | 29.03 | $ | 0.535 | $ | 0.535 | ||||||||
June 30, 2005 | $ | 33.99 | $ | 30.03 | $ | 0.550 | $ | 0.550 | ||||||||
September 30, 2005 | $ | 34.25 | $ | 30.19 | $ | 0.570 | $ | 0.570 | ||||||||
December 31, 2005 | $ | 33.04 | $ | 29.70 | $ | 0.610 | $ | 0.610 |
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• | provide for the proper conduct of our business; | ||
• | comply with applicable law, any of our debt instruments, or other agreements; or | ||
• | provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters; |
• | distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date; | ||
• | the “adjusted operating surplus” as defined in the partnership agreement generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted basis and the related distribution on the 2% general partner interest during those periods; and | ||
• | there are no arrearages in payment of the minimum quarterly distribution on the common units. |
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Number of securities | ||||||||||||
Number of | remaining available for | |||||||||||
securities to be | future issuance under | |||||||||||
issued upon exercise | Weighted-average | equity compensation | ||||||||||
of outstanding | exercise price of | plans (excluding | ||||||||||
options, Warrants | outstanding options, | securities reflected in | ||||||||||
Plan Category | and rights | warrants and rights | column (a)) | |||||||||
(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 | 725,000 | ||||||||
Total | 0 | $ | 0 | 725,000 |
(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”. |
Partnership | Predecessor | |||||||||||||||||||||||
Period From | ||||||||||||||||||||||||
November 6, | Period From | |||||||||||||||||||||||
2002 | January 1, | |||||||||||||||||||||||
Year Ended | Through | 2002 Through | ||||||||||||||||||||||
December 31, | December 31, | November 5, | ||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | 2002 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||
Revenues | $ | 576,384 | $ | 438,443 | $ | 294,144 | $ | 192,731 | $ | 33,746 | $ | 116,160 | ||||||||||||
Cost of product sold | 459,170 | 351,820 | 229,976 | 150,892 | 26,504 | 84,442 | ||||||||||||||||||
Operating expenses | 65,387 | 46,888 | 34,475 | 21,590 | 3,189 | 17,389 | ||||||||||||||||||
Selling, general, and administrative | 10,977 | 8,133 | 6,198 | 4,986 | 656 | 4,662 | ||||||||||||||||||
Depreciation and amortization | 17,597 | 12,642 | 8,766 | 4,765 | 747 | 3,741 | ||||||||||||||||||
Total costs and expenses | 553,131 | 419,483 | 279,415 | 182,233 | 31,096 | 110,234 | ||||||||||||||||||
Other operating income | 3,356 | — | — | 589 | — | — | ||||||||||||||||||
Operating Income | 26,609 | 18,960 | 14,729 | 11,087 | 2,650 | 5,926 | ||||||||||||||||||
Equity in earnings of unconsolidated entities | 8,547 | 1,591 | 912 | 2,801 | 599 | 2,565 | ||||||||||||||||||
Interest expense | (12,466 | ) | (6,909 | ) | (3,326 | ) | (2,001 | ) | (345 | ) | (3,283 | ) | ||||||||||||
Debt prepayment premium | (1,160 | ) | — | — | — | — | — | |||||||||||||||||
Other, net | 713 | 238 | 11 | 94 | 5 | 42 | ||||||||||||||||||
Income before income taxes | 22,243 | 13,880 | 12,326 | 11,981 | 2,909 | 5,250 | ||||||||||||||||||
Income taxes | — | — | — | — | — | 1,959 | ||||||||||||||||||
Net Income | $ | 22,243 | $ | 13,880 | $ | 12,326 | $ | 11,981 | $ | 2,909 | $ | 3,291 | ||||||||||||
Net income per limited partner unit | $ | 1.69 | $ | 1.58 | $ | 1.45 | $ | 1.64 | $ | .40 | ||||||||||||||
Weighted average limited partner units | 12,602,000 | 8,583,634 | 8,349,551 | 7,153,362 | 7,153,362 |
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Partnership | Predecessor | |||||||||||||||||||||||
Period From | ||||||||||||||||||||||||
November 6, | Period From | |||||||||||||||||||||||
2002 | January 1, | |||||||||||||||||||||||
Year Ended | Through | 2002 Through | ||||||||||||||||||||||
December 31, | December 31, | November 5, | ||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | 2002 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Balance Sheet Data (at Period End): | ||||||||||||||||||||||||
Total assets | $ | 457,461 | $ | 389,044 | $ | 188,332 | $ | 139,685 | $ | 100,455 | ||||||||||||||
Due to affiliates | 10,474 | 3,492 | 429 | 560 | — | |||||||||||||||||||
Long-term debt | 174,021 | 192,200 | 73,000 | 67,000 | 35,000 | |||||||||||||||||||
Partner’s capital (owner’s equity) | 198,525 | 95,565 | 75,534 | 45,892 | 47,106 | |||||||||||||||||||
Cash Flow Data: | ||||||||||||||||||||||||
Net cash flow provided by (used in): | ||||||||||||||||||||||||
Operating activities | 39,317 | 32,334 | 12,812 | $ | 10,273 | $ | 4,824 | $ | 316 | |||||||||||||||
Investing activities | (95,098 | ) | (138,742 | ) | (34,322 | ) | (27,621 | ) | (2,116 | ) | (1,962 | ) | ||||||||||||
Financing activities | 52,991 | 109,689 | 22,424 | 17,884 | (6,287 | ) | 6,897 | |||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||
Maintenance capital expenditures | 12,391 | 5,100 | 5,182 | 2,773 | 157 | 394 | ||||||||||||||||||
Expansion capital expenditures | 78,267 | 74,110 | 30,234 | 29,159 | 2,850 | 1,909 | ||||||||||||||||||
Total capital expenditures | $ | 90,658 | $ | 79,210 | $ | 35,416 | $ | 31,932 | $ | 3,007 | $ | 2,303 | ||||||||||||
Cash dividends per common unit (in dollars) | $ | 0.620 | $ | 0.610 | $ | 0.535 | $ | 0.525 | $ | 0.308 | — | |||||||||||||
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• | Terminalling and storage services for petroleum products and by-products | ||
• | Natural gas services | ||
• | Marine transportation services for petroleum products and by-products | ||
• | Sulfur gathering, processing and distribution | ||
• | Fertilizer manufacturing and distribution |
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Terminalling | ||||||||||||||||||||||||
and Storage | NGL | Marine | Fertilizer | Sulfur | Total | |||||||||||||||||||
Cost of products sold (as previously reported) | $ | 6,775 | $ | 197,859 | $ | — | $ | 25,207 | $ | — | $ | 229,841 | ||||||||||||
Cost of products sold (as reclassified) | 6,775 | 197,859 | — | 25,342 | — | 229,976 | ||||||||||||||||||
Operating expenses (as previously reported) | 6,699 | 928 | 24,796 | — | — | 32,423 | ||||||||||||||||||
Operating expenses (as reclassified) | 8,494 | 1,185 | 24,796 | — | — | 34,475 | ||||||||||||||||||
Selling, general and administrative (as previously reported) | 2,194 | 1,457 | 175 | 1,793 | 2,766 | 8,385 | ||||||||||||||||||
Selling, general and administrative (as reclassified) | 399 | 1,200 | 175 | 1,658 | 2,766 | 6,198 |
Terminalling | ||||||||||||||||||||||||
and Storage | NGL | Marine | Fertilizer | Sulfur | Total | |||||||||||||||||||
Cost of products sold (as previously reported) | $ | 107 | $ | 128,055 | $ | — | $ | 22,605 | $ | — | $ | 150,767 | ||||||||||||
Cost of products sold (as reclassified) | 107 | 128,055 | — | 22,730 | — | 150,892 | ||||||||||||||||||
Operating expenses (as previously reported) | 1,413 | 1,052 | 18,135 | — | — | 20,600 | ||||||||||||||||||
Operating expenses (as reclassified) | 2,141 | 1,314 | 18,135 | — | — | 21,590 | ||||||||||||||||||
Selling, general and administrative (as previously reported) | 1,180 | 1,362 | 305 | 1,566 | 1,688 | 6,101 | ||||||||||||||||||
Selling, general and administrative (as reclassified) | 452 | 1,100 | 305 | 1,441 | 1,688 | 4,986 |
Terminalling | Consolidating | |||||||||||||||||||||||||||
and Storage | NGL | Marine | Fertilizer | Sulfur | Reclassification | Total | ||||||||||||||||||||||
Cost of products sold (as previously reported) | $ | — | $ | 87,189 | $ | — | $ | 23,324 | $ | — | $ | (5 | ) | $ | 110,508 | |||||||||||||
Cost of products sold (as reclassified) | — | 87,189 | — | 23,762 | — | (5 | ) | 110,946 | ||||||||||||||||||||
Operating expenses (as previously reported) | 1,181 | 1,307 | 17,201 | — | — | 21 | 19,710 | |||||||||||||||||||||
Operating expenses (as reclassified) | 1,724 | 1,632 | 17,201 | — | — | 21 | 20,578 | |||||||||||||||||||||
Selling, general and administrative (as previously reported) | 1,266 | 1,365 | 524 | 2,474 | 1,011 | (16 | ) | 6,624 | ||||||||||||||||||||
Selling, general and administrative (as reclassified) | 723 | 1,040 | 524 | 2,036 | 1,011 | (16 | ) | 5,318 |
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Revenues: | ||||||||||||
Terminalling and storage | $ | 24,182 | $ | 23,081 | $ | 17,919 | ||||||
Marine transportation | 47,835 | 35,451 | 34,780 | |||||||||
Product sales: | ||||||||||||
Natural gas services | 389,735 | 301,676 | 203,427 | |||||||||
Sulfur | 61,271 | 36,784 | — | |||||||||
Fertilizer | 41,326 | 31,634 | 29,780 | |||||||||
Terminalling and storage | 12,035 | 9,817 | 8,238 | |||||||||
Total revenues | 576,384 | 438,443 | 294,144 | |||||||||
Costs and expenses: | ||||||||||||
Cost of products sold: | ||||||||||||
Natural gas services | 374,218 | 291,109 | 197,859 |
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Sulfur | 38,898 | 25,657 | — | |||||||||
Fertilizer | 36,267 | 26,975 | 25,342 | |||||||||
Terminalling and storage | 9,787 | 8,079 | 6,775 | |||||||||
459,170 | 351,820 | 229,976 | ||||||||||
Expenses: | ||||||||||||
Operating expenses | 65,387 | 46,888 | 34,475 | |||||||||
Selling, general and administrative | 10,977 | 8,133 | 6,198 | |||||||||
Depreciation and amortization | 17,597 | 12,642 | 8,766 | |||||||||
Total costs and expenses | 553,131 | 419,483 | 279,415 | |||||||||
Other operating income | 3,356 | — | — | |||||||||
Operating income | 26,609 | 18,960 | 14,729 | |||||||||
Other income (expense): | ||||||||||||
Equity in earnings of unconsolidated entities | 8,547 | 1,591 | 912 | |||||||||
Interest expense | (12,466 | ) | (6,909 | ) | (3,326 | ) | ||||||
Debt prepayment premium | (1,160 | ) | — | — | ||||||||
Other, net | 713 | 238 | 11 | |||||||||
Total other income (expense) | (4,366 | ) | (5,080 | ) | (2,403 | ) | ||||||
Net income | $ | 22,243 | $ | 13,880 | $ | 12,326 | ||||||
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Operating income: | ||||||||||||
Terminalling and storage | $ | 12,504 | $ | 9,314 | $ | 6,749 | ||||||
Natural gas services | 4,239 | 6,003 | 3,080 | |||||||||
Marine transportation | 6,411 | 2,384 | 5,827 | |||||||||
Sulfur | 4,864 | 2,937 | — | |||||||||
Fertilizer | 1,844 | 1,785 | 1,839 | |||||||||
Indirect selling, general, and administrative expenses | (3,253 | ) | (3,463 | ) | (2,766 | ) | ||||||
Operating income | $ | 26,609 | $ | 18,960 | $ | 14,729 | ||||||
Equity in earnings of unconsolidated entities | $ | 8,547 | $ | 1,591 | $ | 912 | ||||||
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Years Ended December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
Services | $ | 24,182 | $ | 23,081 | ||||
Products | 12,035 | 9,817 | ||||||
Total Revenues | 36,217 | 32,898 | ||||||
Cost of products sold | 9,787 | 8,079 | ||||||
Operating expenses | 12,241 | 10,879 | ||||||
Selling, general and administrative expenses | 112 | 250 | ||||||
Depreciation and amortization | 4,700 | 4,376 | ||||||
9,377 | 9,314 | |||||||
Other operating income | 3,127 | — | ||||||
Operating income | $ | 12,504 | $ | 9,314 | ||||
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Years Ended December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Revenues | $ | 389,735 | $ | 301,676 | ||||
Cost of products sold | 374,218 | 291,109 | ||||||
Operating expenses | 5,240 | 2,455 | ||||||
Selling, general and administrative expenses | 4,373 | 1,753 | ||||||
Depreciation and amortization | 1,667 | 356 | ||||||
4,237 | 6,003 | |||||||
Other operating income | 2 | — | ||||||
Operating income | $ | 4,239 | $ | 6,003 | ||||
Equity in Earnings of Unconsolidated Entities | $ | 8,547 | $ | 1,369 | ||||
NGL Volumes (gallons) | 322,904 | 270,524 |
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Years Ended December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Revenues | $ | 47,835 | $ | 35,451 | ||||
Operating expenses | 34,454 | 27,768 | ||||||
Selling, general and administrative expenses | 587 | 357 | ||||||
Depreciation and amortization | 6,609 | 4,942 | ||||||
6,185 | 2,384 | |||||||
Other operating income | 226 | — | ||||||
Operating income | $ | 6,411 | $ | 2,384 | ||||
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Years Ended December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Revenues | $ | 61,271 | $ | 36,784 | ||||
Cost of products sold | 38,898 | 25,657 | ||||||
Operating expenses | 13,452 | 5,786 | ||||||
Selling, general and administrative expenses. | 1,060 | 614 | ||||||
Depreciation and amortization | 2,997 | 1,790 | ||||||
Operating income | $ | 4,864 | $ | 2,937 | ||||
Equity in Earnings of Unconsolidated Entities | $ | — | $ | 222 | ||||
Sulfur Volumes (long tons) | 836.3 | 533.5 | ||||||
Years Ended December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Revenues | $ | 41,326 | $ | 31,634 | ||||
Cost of products sold | 36,267 | 26,975 | ||||||
Selling, general and administrative expenses | 1,591 | 1,696 | ||||||
Depreciation and amortization | 1,624 | 1,178 | ||||||
Operating income | $ | 1,844 | $ | 1,785 | ||||
Fertilizer Volumes (tons) | 211.6 | 138.1 | ||||||
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Years Ended December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Revenues | 100 | % | 100 | % | ||||
Cost of products sold | 80 | % | 80 | % | ||||
Operating expenses | 11 | % | 11 | % | ||||
Selling, general and administrative expenses | 2 | % | 2 | % | ||||
Depreciation and amortization | 3 | % | 3 | % |
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Years Ended December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
Services | $ | 23,081 | $ | 17,919 | ||||
Products | 9,817 | 8,238 | ||||||
Total Revenues | 32,898 | 26,157 | ||||||
Cost of products sold | 8,079 | 6,775 | ||||||
Operating expenses | 10,879 | 8,494 | ||||||
Selling, general and administrative expenses | 250 | 399 | ||||||
Depreciation and amortization | 4,376 | 3,740 | ||||||
Operating income | $ | 9,314 | $ | 6,749 | ||||
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Years Ended December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Revenues | $ | 301,676 | $ | 203,427 | ||||
Cost of products sold | 291,109 | 197,859 | ||||||
Operating expenses | 2,455 | 1,185 | ||||||
Selling, general and administrative expenses | 1,753 | 1,200 | ||||||
Depreciation and amortization | 356 | 103 | ||||||
Operating income | $ | 6,003 | $ | 3,080 | ||||
Equity in Earnings of Unconsolidated Entities | $ | 1,369 | $ | — | ||||
NGL Volumes (gallons) | 270,524 | 226,565 |
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Years Ended December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Revenues | $ | 35,451 | $ | 34,780 | ||||
Operating expenses | 27,768 | 24,796 | ||||||
Selling, general and administrative expenses | 357 | 175 | ||||||
Depreciation and amortization | 4,942 | 3,982 | ||||||
Operating income | $ | 2,384 | $ | 5,827 | ||||
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Years Ended December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Revenues | $ | 36,784 | $ | — | ||||
Cost of products sold | 25,657 | — | ||||||
Operating expenses | 5,786 | — | ||||||
Selling, general and administrative expenses | 614 | — | ||||||
Depreciation and amortization | 1,790 | — | ||||||
Operating income | $ | 2,937 | $ | — | ||||
Equity in Earnings of Unconsolidated Entities | $ | 222 | $ | 912 | ||||
Sulfur Volumes (long tons) | 533.5 | — | ||||||
Years Ended December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Revenues | $ | 31,634 | $ | 29,780 | ||||
Cost of products sold | 26,975 | 25,342 | ||||||
Selling, general and administrative expenses | 1,696 | 1,658 | ||||||
Depreciation and amortization | 1,178 | 941 | ||||||
Operating income | $ | 1,785 | $ | 1,839 | ||||
Fertilizer Volumes (tons) | 138.1 | 146.2 |
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Years Ended December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Revenues | 100 | % | 100 | % | ||||
Cost of products sold | 80 | % | 78 | % | ||||
Operating expenses | 11 | % | 12 | % | ||||
Selling, general and administrative expenses | 2 | % | 2 | % | ||||
Depreciation and amortization | 3 | % | 3 | % |
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• | maintenance capital expenditures, which are capital expenditures made to replace assets to maintain our existing operations and to extend the useful lives of our assets; and | ||
• | expansion capital expenditures, which are capital expenditures made to grow our business, to expand and upgrade our existing marine transportation, terminalling, storage and manufacturing facilities, and to construct new plants, storage facilities, terminalling facilities and new marine transportation assets. |
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• | In 2006, we spent $78.3 million for expansion and $12.4 million for maintenance. Our expansion capital expenditures were made in connection with our marine vessel purchases, acquiring assets relating to the South Houston and Prime Asphalt terminal acquisitions, the Corpus Christi barge terminal, the sulfur priller construction project at our Neches facility in Beaumont, Texas, 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 in our terminal segment for terminal facilities where $4.7 million in maintenance capital expenditures was spent in connection with restoration of assets destroyed in Hurricanes Rita and Katrina. | ||
• | In 2005, we spent $74.1 million for expansion and $5.1 million for maintenance. Our expansion capital expenditures were primarily made in connection with the Prism Gas and CF Martin acquisitions, the Bay sulfur priller acquisition in Stockton, California, and the sulfur priller construction project at our Neches facility in Beaumont, Texas. Also, we are constructing a sulfuric acid plant at our facility in Plainview, Texas and we acquired A & A Fertilizer located in Beaumont, Texas. Our maintenance capital expenditures were primarily made in our marine transportation segment for routine dockings of our vessels pursuant to the United States Coast Guard requirements and in our terminal segment for terminal facilities. | ||
• | In 2004, we spent $30.2 million for expansion and $5.2 million for maintenance. Our expansion capital expenditures were primarily made in connection with the Neches and Freeport terminal acquisitions. Our maintenance capital expenditures were primarily made in our marine transportation business for routine dockings of our vessels pursuant to United States Coast Guard requirements and terminal and fertilizer facilities. |
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Payment due by period | ||||||||||||||||||||
Total | Less than | 1-3 | 3-5 | Due | ||||||||||||||||
Type of Obligation | Obligation | One Year | Years | Years | Thereafter | |||||||||||||||
Long-Term Debt | ||||||||||||||||||||
Revolving credit facility | $ | 44,000 | $ | — | $ | — | $ | 44,000 | $ | — | ||||||||||
Term loan facility | 130,000 | — | — | 130,000 | — | |||||||||||||||
Other | 95 | 74 | 21 | — | — | |||||||||||||||
Non-competition agreements | 1,000 | 250 | 500 | 100 | 150 | |||||||||||||||
Operating leases | 14,988 | 2,488 | 5,097 | 3,211 | 4,192 | |||||||||||||||
Interest expense(1) | ||||||||||||||||||||
Revolving Credit Facility | 11,988 | 3,098 | 6,196 | 2,694 | — | |||||||||||||||
Term loan facility | 36,929 | 9,544 | 19,088 | 8,297 | — | |||||||||||||||
Other | 5 | 5 | — | — | — | |||||||||||||||
Total contractual cash obligations | $ | 239,005 | $ | 15,459 | $ | 30,902 | $ | 188,302 | $ | 4,342 | ||||||||||
(1) | Interest commitments are estimated using our current interest rates for the respective credit agreements over their remaining terms. |
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• | certain potential environmental liabilities associated with the assets it contributed to us relating to events or conditions that occurred or existed before the closing of our initial public offering, and | ||
• | any payments we are 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, L.P. in November 2000. |
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Year | Commodity Hedged | Volume | Type of Derivative | Basis Reference | ||||
2007 | Condensate & Natural Gasoline | 5,000 BBL/Month | Crude Oil Swap ($65.95) | NYMEX | ||||
2007 | Natural Gas | 20,000 MMBTU/Month | Natural Gas Swap ($9.14) | Henry Hub | ||||
2007 | Natural Gas | 20,000 MMBTU/Month | Natural Gas Basis Swap (-$0.60) | Henry Hub to Centerpoint East | ||||
2007 | Ethane | 8,000 BBL/Month | Ethane Swap ($28.04) | Mt. Belvieu | ||||
2008 | Condensate & Natural Gasoline | 5,000 BBL/Month | Crude Oil Swap ($66.20) | NYMEX | ||||
2008 | Natural Gas | 30,000 MMBTU/Month | Natural Gas Swap ($8.12) | Houston Ship Channel | ||||
2009 | Condensate & Natural Gasoline | 3,000 BBL/Month | Crude Oil Swap ($69.08) | NYMEX |
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Martin Midstream GP LLC:
March 5, 2007
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Martin Midstream GP LLC:
March 5, 2007
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December 31, | ||||||||
2006 | 2005 | |||||||
(Dollars in thousands) | ||||||||
Assets | ||||||||
Cash | $ | 3,675 | $ | 6,465 | ||||
Accounts and other receivables, less allowance for doubtful accounts of $394 and $140 | 56,712 | 72,162 | ||||||
Product exchange receivables | 7,076 | 2,141 | ||||||
Inventories | 33,019 | 33,909 | ||||||
Due from affiliates | 1,330 | 1,475 | ||||||
Other current assets | 2,041 | 1,420 | ||||||
Total current assets | 103,853 | 117,572 | ||||||
Property, plant, and equipment, at cost | 323,967 | 235,218 | ||||||
Accumulated depreciation | (76,122 | ) | (59,505 | ) | ||||
Property, plant and equipment, net | 247,845 | 175,713 | ||||||
Goodwill | 27,600 | 27,600 | ||||||
Investment in unconsolidated entities | 70,651 | 59,879 | ||||||
Other assets, net | 7,512 | 8,280 | ||||||
$ | 457,461 | $ | 389,044 | |||||
Liabilities and Capital | ||||||||
Current installments of long-term debt | $ | 74 | $ | 9,104 | ||||
Trade and other accounts payable | 53,450 | 67,387 | ||||||
Product exchange payables | 14,737 | 9,624 | ||||||
Due to affiliates | 10,474 | 3,492 | ||||||
Income taxes payable | 86 | 6,345 | ||||||
Other accrued liabilities | 3,876 | 3,617 | ||||||
Total current liabilities | 82,697 | 99,569 | ||||||
Long-term debt | 174,021 | 192,200 | ||||||
Other long-term obligations | 2,218 | 1,710 | ||||||
Total liabilities | 258,936 | 293,479 | ||||||
Partners’ capital | 198,403 | 95,565 | ||||||
Accumulated other comprehensive income | 122 | — | ||||||
Total partners’ capital | 198,525 | 95,565 | ||||||
Commitments and contingencies | ||||||||
$ | 457,461 | $ | 389,044 | |||||
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in thousands, except per unit amounts) | ||||||||||||
Revenues: | ||||||||||||
Terminalling and storage | $ | 24,182 | $ | 23,081 | $ | 17,919 | ||||||
Marine transportation | 47,835 | 35,451 | 34,780 | |||||||||
Product sales: | ||||||||||||
Natural gas services | 389,735 | 301,676 | 203,427 | |||||||||
Sulfur | 61,271 | 36,784 | — | |||||||||
Fertilizer | 41,326 | 31,634 | 29,780 | |||||||||
Terminalling and storage | 12,035 | 9,817 | 8,238 | |||||||||
504,367 | 379,911 | 241,445 | ||||||||||
Total revenues | 576,384 | 438,443 | 294,144 | |||||||||
Costs and expenses: | ||||||||||||
Cost of products sold: | ||||||||||||
Natural gas services | 374,218 | 291,109 | 197,859 | |||||||||
Sulfur | 38,898 | 25,657 | — | |||||||||
Fertilizer | 36,267 | 26,975 | 25,342 | |||||||||
Terminalling and storage | 9,787 | 8,079 | 6,775 | |||||||||
459,170 | 351,820 | 229,976 | ||||||||||
Expenses: | ||||||||||||
Operating expenses | 65,387 | 46,888 | 34,475 | |||||||||
Selling, general and administrative | 10,977 | 8,133 | 6,198 | |||||||||
Depreciation and amortization | 17,597 | 12,642 | 8,766 | |||||||||
Total costs and expenses | 553,131 | 419,483 | 279,415 | |||||||||
Other operating income | 3,356 | — | — | |||||||||
Operating income | 26,609 | 18,960 | 14,729 | |||||||||
Other income (expense): | ||||||||||||
Equity in earnings of unconsolidated entities | 8,547 | 1,591 | 912 | |||||||||
Interest expense | (12,466 | ) | (6,909 | ) | (3,326 | ) | ||||||
Debt prepayment premium | (1,160 | ) | — | — | ||||||||
Other, net | 713 | 238 | 11 | |||||||||
Total other income (expense) | (4,366 | ) | (5,080 | ) | (2,403 | ) | ||||||
Net income | $ | 22,243 | $ | 13,880 | $ | 12,326 | ||||||
General partner’s interest in net income | $ | 1,001 | $ | 278 | $ | 247 | ||||||
Limited partners’ interest in net income | $ | 21,242 | $ | 13,602 | $ | 12,079 | ||||||
Net income per limited partner unit — basic and diluted | $ | 1.69 | $ | 1.58 | $ | 1.45 | ||||||
Weighted average limited partner units — basic | 12,602,000 | 8,583,634 | 8,349,551 | |||||||||
Weighted average limited partner units — diluted | 12,604,425 | 8,583,634 | 8,349,551 |
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Partners’ Capital | ||||||||||||||||||||||||||||
General | Accumulated | |||||||||||||||||||||||||||
Limited Partners | Partner | Comprehensive | ||||||||||||||||||||||||||
Common | Subordinated | Income | ||||||||||||||||||||||||||
Units | Amount | Units | Amount | Amount | Amount | Total | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Balances — December 31, 2003 | 2,900,000 | $ | 47,914 | 4,253,362 | $ | (1,996 | ) | $ | (26 | ) | — | $ | 45,892 | |||||||||||||||
Net income | — | 5,923 | — | 6,156 | 247 | — | 12,326 | |||||||||||||||||||||
Follow-on public offering | 1,322,500 | 34,016 | — | — | — | — | 34,016 | |||||||||||||||||||||
General partner contribution | — | — | — | — | 754 | — | 754 | |||||||||||||||||||||
Cash distributions ($2.10 per unit) | — | (8,173 | ) | — | (8,932 | ) | (349 | ) | — | (17,454 | ) | |||||||||||||||||
Balances — December 31, 2004 | 4,222,500 | 79,680 | 4,253,362 | (4,772 | ) | 626 | — | 75,534 | ||||||||||||||||||||
Net income | — | 6,756 | — | 6,846 | 278 | — | 13,880 | |||||||||||||||||||||
Units issued in connection with Prism Gas acquisition | 756,480 | 24,616 | — | — | — | — | 24,616 | |||||||||||||||||||||
Conversion of subordinated units to common units | 850,672 | (1,599 | ) | (850,672 | ) | 1,599 | — | — | — | |||||||||||||||||||
General partner contribution | — | — | — | — | 502 | — | 502 | |||||||||||||||||||||
Cash distributions ($2.19 per unit) | — | (9,247 | ) | — | (9,315 | ) | (405 | ) | — | (18,967 | ) | |||||||||||||||||
Balances — December 31, 2005 | 5,829,652 | 100,206 | 3,402,690 | (5,642 | ) | 1,001 | — | 95,565 | ||||||||||||||||||||
Net income | — | 16,030 | — | 5,212 | 1,001 | — | 22,243 | |||||||||||||||||||||
Follow-on public offering | 3,450,000 | 95,272 | — | — | — | — | 95,272 | |||||||||||||||||||||
Issuance of common units | 470,484 | 15,000 | — | — | — | — | 15,000 | |||||||||||||||||||||
General partner contribution | — | — | — | — | 2,358 | — | 2,358 | |||||||||||||||||||||
Conversion of subordinated units to common units | 850,672 | (2,495 | ) | (850,672 | ) | 2,495 | — | — | — | |||||||||||||||||||
Unit-based compensation | 3,000 | 24 | — | — | — | — | 24 | |||||||||||||||||||||
Cash distributions ($2.44 per unit) | — | (22,650 | ) | — | (8,302 | ) | (1,107 | ) | — | (32,059 | ) | |||||||||||||||||
Commodity hedging gains reclassified to earnings | — | — | — | — | — | 2 | 2 | |||||||||||||||||||||
Adjustment in fair value of derivatives | — | — | — | — | — | 120 | 120 | |||||||||||||||||||||
Balances — December 31, 2006 | 10,603,808 | $ | 201,387 | 2,552,018 | $ | (6,237 | ) | $ | 3,253 | $ | 122 | $ | 198,525 | |||||||||||||||
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in thousands) | ||||||||||||
Net income | $ | 22,243 | $ | 13,880 | $ | 12,326 | ||||||
Changes in fair values of commodity cash flow hedges | 370 | — | — | |||||||||
Commodity hedging gains reclassified to earnings | 2 | — | — | |||||||||
Changes in fair value of interest rate cash flow hedges | (250 | ) | — | — | ||||||||
Comprehensive income | $ | 22,365 | $ | 13,880 | $ | 12,326 | ||||||
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 22,243 | $ | 13,880 | $ | 12,326 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 17,597 | 12,642 | 8,766 | |||||||||
Amortization of deferred debt issue costs | 1,040 | 600 | 886 | |||||||||
(Gain) loss on disposition or sale of property, plant, and equipment | (231 | ) | (37 | ) | 48 | |||||||
(Gain) loss on involuntary conversion of property, plant, and equipment | (3,125 | ) | — | — | ||||||||
Equity in earnings of unconsolidated entities | (8,547 | ) | (1,591 | ) | (912 | ) | ||||||
Distributions from unconsolidated entities | 541 | 231 | — | |||||||||
Distribution in-kind from equity investments | 8,311 | 1,115 | — | |||||||||
Non-cash mark-to-market on derivatives | (389 | ) | (555 | ) | — | |||||||
Other | 24 | — | — | |||||||||
Change in current assets and liabilities, excluding effects of acquisitions and dispositions: | ||||||||||||
Accounts and other receivables | 13,763 | (10,565 | ) | (16,499 | ) | |||||||
Product exchange receivables | (4,935 | ) | (1,974 | ) | 1,733 | |||||||
Inventories | 890 | (4,474 | ) | (3,502 | ) | |||||||
Due from affiliates | 145 | 417 | (1,730 | ) | ||||||||
Other current assets | 115 | 36 | 32 | |||||||||
Trade and other accounts payable | (13,937 | ) | 27,669 | 9,171 | ||||||||
Product exchange payables | 5,113 | (8,238 | ) | 1,859 | ||||||||
Due to affiliates | 6,982 | 3,063 | (131 | ) | ||||||||
Other accrued liabilities | (5,912 | ) | (496 | ) | 765 | |||||||
Change in other non-current assets and liabilities, net | (371 | ) | 611 | — | ||||||||
Net cash provided by operating activities | 39,317 | 32,334 | 12,812 | |||||||||
Cash flows from investing activities: | ||||||||||||
Payments for property, plant, and equipment | (66,352 | ) | (24,814 | ) | (5,182 | ) | ||||||
Acquisitions, net of cash acquired | (24,306 | ) | (114,167 | ) | (31,234 | ) | ||||||
Proceeds from sale of property, plant, and equipment | 1,825 | 95 | 114 | |||||||||
Insurance proceeds from involuntary conversion of property, plant and equipment | 4,812 | — | — | |||||||||
Return of investments from unconsolidated entities | 433 | 466 | 1,980 | |||||||||
Investments in unconsolidated entities | (11,510 | ) | (322 | ) | — | |||||||
Net cash used in investing activities | (95,098 | ) | (138,742 | ) | (34,322 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Payments of long-term debt | (163,010 | ) | (134,091 | ) | (43,215 | ) | ||||||
Net proceeds from follow on public offering | 95,272 | — | 34,016 | |||||||||
General partner contribution | 2,358 | 502 | 754 | |||||||||
Proceeds from long-term debt | 135,801 | 250,900 | 49,215 | |||||||||
Payments of debt issuance costs | (371 | ) | (3,655 | ) | (892 | ) | ||||||
Cash distributions paid | (32,059 | ) | (18,967 | ) | (17,454 | ) | ||||||
Proceeds from issuance of common units | 15,000 | 15,000 | — | |||||||||
Net cash provided by financing activities | 52,991 | 109,689 | 22,424 | |||||||||
Net increase (decrease) in cash | (2,790 | ) | 3,281 | 914 | ||||||||
Cash at beginning of period | 6,465 | 3,184 | 2,270 | |||||||||
Cash at end of period | $ | 3,675 | $ | 6,465 | $ | 3,184 | ||||||
Non-cash: | ||||||||||||
Financed portion of non-compete agreement | $ | — | $ | 690 | $ | 398 | ||||||
Common units issued for acquisitions | $ | — | $ | 9,616 | $ | — | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Terminalling | ||||||||||||||||||||||||
and Storage | NGL | Marine | Fertilizer | SG&A | Total | |||||||||||||||||||
Year Ended December 31, 2004 | ||||||||||||||||||||||||
Cost of products sold (as previously reported) | $ | 6,775 | $ | 197,859 | $ | — | $ | 25,207 | $ | — | $ | 229,841 | ||||||||||||
Cost of products sold (as Reclassified) | 6,775 | 197,859 | — | 25,342 | — | 229,976 | ||||||||||||||||||
Operating expenses (as previously reported) | 6,699 | 928 | 24,796 | — | — | 32,423 | ||||||||||||||||||
Operating expenses (as reclassified) | 8,494 | 1,185 | 24,796 | — | — | 34,475 | ||||||||||||||||||
Selling, general and administrative (as previously reported) | 2,194 | 1,457 | 175 | 1,793 | 2,766 | 8,385 | ||||||||||||||||||
Selling, general and administrative (as Reclassified) | 399 | 1,200 | 175 | 1,658 | 2,766 | 6,198 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Current assets | $ | 955 | ||
Property, plant and equipment, net | 5,448 | |||
Other assets | 691 | |||
Current liabilities | (891 | ) | ||
Other liabilities | (536 | ) | ||
Total | $ | 5,667 | ||
Current assets | $ | 4,449 | ||
Other current assets | 10,772 | |||
Property, plant and equipment, net | 17,810 | |||
Investment in unconsolidated entities | 60,000 | |||
Other assets | 942 | |||
Goodwill | 20,145 | |||
Current liabilities | (19,901 | ) | ||
Other liabilities | (279 | ) | ||
Total | $ | 93,938 | ||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
2005 | 2004 | |||||||
Total revenues | $ | 512,970 | $ | 356,393 | ||||
Cost of products sold | 422,624 | 288,973 | ||||||
Operating expenses | 48,218 | 36,333 | ||||||
Selling, general and administrative | 13,953 | 9,022 | ||||||
Depreciation and amortization | 13,843 | 10,334 | ||||||
Operating income | 14,332 | 11,731 | ||||||
Net income before taxes | 13,615 | 14,821 | ||||||
Net income | 13,615 | 14,821 | ||||||
Net income per limited partner unit | $ | 1.22 | $ | 1.32 |
Current assets | $ | 11,283 | ||
Property, plant and equipment, net | 26,735 | |||
Other assets | 921 | |||
Current liabilities | (8,573 | ) | ||
Debt | (11,495 | ) | ||
Total use of proceeds | $ | 18,871 | ||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Proceeds received: | ||||
Sale of common units | $ | 100,464 | ||
General partner contribution | 2,050 | |||
Total proceeds received | $ | 102,514 | ||
Use of Proceeds: | ||||
Underwriter’s fees | $ | 4,521 | ||
Professional fees and other costs | 671 | |||
Repayment of debt under revolving credit facility | 62,000 | |||
Working capital | 35,322 | |||
Total use of proceeds | $ | 102,514 | ||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Proceeds received: | ||||
Sale of common units | $ | 36,951 | ||
General partner contribution | 754 | |||
Total proceeds received | $ | 37,705 | ||
Use of Proceeds: | ||||
Underwriter’s fees | $ | 1,940 | ||
Professional fees and other costs | 995 | |||
Repayment of debt under revolving credit facility | 30,000 | |||
Working capital | 4,770 | |||
Total use of proceeds | $ | 37,705 | ||
2006 | 2005 | |||||||
Natural gas liquids | $ | 17,061 | $ | 18,405 | ||||
Sulfur | 4,397 | 3,485 | ||||||
Fertilizer — raw materials and packaging | 2,412 | 2,617 | ||||||
Fertilizer — finished goods | 4,807 | 5,803 | ||||||
Lubricants | 2,592 | 2,035 | ||||||
Other | 1,750 | 1,564 | ||||||
$ | 33,019 | $ | 33,909 | |||||
Depreciable Lives | 2006 | 2005 | ||||||||||
Land | — | $ | 12,559 | $ | 9,163 | |||||||
Improvements to land and buildings | 10-39 years | 26,868 | 17,596 | |||||||||
Transportation equipment | 3- 7 years | 531 | 432 | |||||||||
Storage equipment | 5-20 years | 22,343 | 16,759 | |||||||||
Marine vessels | 4-30 years | 124,323 | 94,051 | |||||||||
Operating equipment | 3-30 years | 103,929 | 76,517 | |||||||||
Furniture, fixtures and other equipment | 3-20 years | 1,450 | 1,116 | |||||||||
Construction in progress | 31,964 | 19,584 | ||||||||||
$ | 323,967 | $ | 235,218 | |||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
Carrying amount of goodwill: | ||||||||
Marine transportation | $ | 2,026 | $ | 2,026 | ||||
Natural gas services | 20,225 | 20,225 | ||||||
Sulfur | 4,533 | 4,533 | ||||||
Fertilizer | 816 | 816 | ||||||
$ | 27,600 | $ | 27,600 | |||||
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
Covenants not-to-compete: | ||||||||
Terminalling and storage | $ | 1,561 | $ | 1,398 | ||||
Natural gas services | 600 | 600 | ||||||
Sulfur | 100 | 100 | ||||||
Fertilizer | 690 | 690 | ||||||
2,951 | 2,788 | |||||||
Less accumulated amortization | 877 | 235 | ||||||
$ | 2,074 | $ | 2,553 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Waskom | PIPE | Matagorda | BCP | Total | ||||||||||||||||
Investment in unconsolidated entities, December 31, 2004 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Acquisition of interests | 54,100 | 1,700 | 4,200 | — | 60,000 | |||||||||||||||
Distributions in kind | (1,115 | ) | — | — | — | (1,115 | ) | |||||||||||||
Cash contributions | 322 | — | — | — | 322 | |||||||||||||||
Cash distributions | (495 | ) | — | (202 | ) | — | (697 | ) | ||||||||||||
Equity in earnings: | ||||||||||||||||||||
Equity in earnings from operations | 1,275 | 23 | 71 | — | 1,369 | |||||||||||||||
Amortization of excess investment | — | — | — | — | — | |||||||||||||||
Investment in unconsolidated entities, December 31, 2005 | 54,087 | 1,723 | 4,069 | — | 59,879 | |||||||||||||||
Acquisition of interests | — | — | — | 196 | 196 | |||||||||||||||
Distributions in kind | (8,311 | ) | — | — | — | (8,311 | ) | |||||||||||||
Cash contributions | 11,238 | — | — | 76 | 11,314 | |||||||||||||||
Cash distributions | (150 | ) | (214 | ) | (610 | ) | — | (974 | ) | |||||||||||
Equity in earnings: | ||||||||||||||||||||
Equity in earnings from operations | 8,623 | 224 | 356 | (62 | ) | 9,141 | ||||||||||||||
Amortization of excess investment | (550 | ) | (15 | ) | (29 | ) | — | (594 | ) | |||||||||||
Investment in unconsolidated entities, December 31, 2006 | $ | 64,937 | $ | 1,718 | $ | 3,786 | $ | 210 | $ | 70,651 | ||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Total | Long- | Partner’s | Net Income | |||||||||||||||||
Assets | Term Debt | Capital | Revenues | (Loss) | ||||||||||||||||
2006 | ||||||||||||||||||||
Waskom | $ | 53,260 | $ | — | $ | 45,450 | $ | 65,600 | $ | 17,246 | ||||||||||
2005 | ||||||||||||||||||||
Waskom (November 10 – December 31) | $ | 28,369 | $ | — | $ | 22,650 | $ | 9,165 | $ | 2,559 | ||||||||||
CF Martin (January 1 – July 15) | — | — | — | 33,900 | (120 | ) | ||||||||||||||
$ | 28,369 | $ | — | $ | 22,650 | $ | 43,065 | $ | 2,439 | |||||||||||
2004 | ||||||||||||||||||||
CF Martin | $ | 48,921 | $ | 10,179 | $ | 26,769 | $ | 64,719 | $ | 783 | ||||||||||
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
*$120,000 Revolving loan facility at variable interest rate (7.04%* weighted average at December 31, 2006), due November 2010 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in its operating subsidiaries | $ | 44,000 | $ | 62,200 | ||||
**$130,000 Term loan facility at variable interest rate (7.34%* at December 31, 2006), due November 2010, secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in its operating subsidiaries | 130,000 | 130,000 | ||||||
***United States Government Guaranteed Ship Financing Bonds | — | 9,104 | ||||||
Other secured debt maturing in 2008, 7.25% | 95 | — | ||||||
Total long-term debt | 174,095 | 201,304 | ||||||
Less current installments | 74 | 9,104 | ||||||
Long-term debt, net of current installments | $ | 174,021 | $ | 192,200 | ||||
* | 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 either LIBOR plus an applicable margin or the base prime rate plus an applicable margin. The applicable margin is based on a debt leverage ratio requirement which changes quarterly. The applicable margin for revolving loans that are LIBOR loans ranges from 1.50% to 3.00% and the applicable margin for revolving loans that are base prime rate loans ranges from 0.50% to 2.00%. The applicable margin for term loans that are LIBOR loans ranges from 2.00% to 3.00% and the applicable margin for term loans that are base prime rate loans ranges from 1.00% to 2.00%. The applicable margin for existing borrowings through December 31, 2006 was 2.00%. Effective January 1, 2007, the applicable margin for existing borrowings increased to 2.5%. Effective April 1, 2007, the applicable margin for existing borrowings will decrease to 2.0%. The Partnership incurs a commitment fee on the unused portions of the credit facility. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
* | Effective December 13, 2006, the Partnership entered into a cash flow hedge that swaps $40,000 of floating rate to fixed rate. The fixed rate cost is 4.82% plus the Partnership’s applicable LIBOR borrowing spread. The cash flow hedge matures in December, 2009. | |
* | Effective December 13, 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 interest rate swap, which matures in March, 2010, is not accounted for as a cash flow hedge. | |
** | Effective April 13, 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. The cash flow hedge matures in November, 2010. | |
*** | The Partnership’s credit facility required it to redeem the U.S. Government Guaranteed Ship Financing Bonds by March 31, 2006. The Partnership redeemed these bonds on March 6, 2006 with available cash and borrowings from its credit facility. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
December 31, | ||||
2006 | ||||
Fair value of derivative assets — current | $ | 377 | ||
Fair value of derivative assets — long-term | 112 | |||
Fair value of derivative liabilities — long term | (572 | ) | ||
Net fair value of derivatives | $ | (83 | ) | |
2006 | 2005 | 2004 | ||||||||||
Revenues: | ||||||||||||
Terminalling and storage | $ | 8,926 | $ | 8,938 | $ | 5,739 | ||||||
Marine transportation | 15,319 | 11,606 | 14,326 | |||||||||
Product sales: | ||||||||||||
Natural gas services | 1,303 | 44 | 345 | |||||||||
Sulfur | — | — | — | |||||||||
Fertilizer | 24 | 229 | 1,654 | |||||||||
Terminalling and storage | 59 | 5 | 124 | |||||||||
1,386 | 278 | 2,123 | ||||||||||
$ | 25,631 | $ | 20,822 | $ | 22,188 | |||||||
Costs and expenses: | ||||||||||||
Cost of products sold: | ||||||||||||
Natural gas services | $ | 52,030 | $ | 15,827 | $ | 7,101 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
2006 | 2005 | 2004 | ||||||||||
Sulfur | 5,253 | 2,110 | — | |||||||||
Fertilizer | 6,660 | 7,733 | 6,378 | |||||||||
Terminalling and storage | 1 | 31 | — | |||||||||
$ | 63,944 | $ | 25,701 | $ | 13,479 | |||||||
Expenses: | ||||||||||||
Operating expenses | ||||||||||||
Marine Transportation | $ | 20,051 | $ | 15,746 | $ | 11,733 | ||||||
Natural gas services | 1,560 | 1,236 | 917 | |||||||||
Sulfur | 800 | 263 | — | |||||||||
Fertilizer | 128 | 32 | — | |||||||||
Terminalling and storage | 3,931 | 3,485 | $ | 2,825 | ||||||||
$ | 26,470 | $ | 20,762 | $ | 15,475 | |||||||
Selling, general and administrative: | ||||||||||||
Marine Transportation | $ | — | $ | — | $ | — | ||||||
Natural gas services | 773 | 833 | 748 | |||||||||
Sulfur | 494 | 212 | — | |||||||||
Fertilizer | 1,220 | 1,232 | 1,104 | |||||||||
Terminalling and storage | 74 | 76 | 76 | |||||||||
Indirect overhead allocation, net of reimbursement | 1,305 | 1,120 | 736 | |||||||||
$ | 3,866 | $ | 3,473 | $ | 2,664 | |||||||
• | 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)
December 31, | ||||||||
2006 | 2005 | |||||||
Change in fair value of derivatives that do not qualify for hedge accounting | $ | 1,117 | $ | 512 | ||||
Ineffective portion of derivatives qualifying for hedge accounting | (2 | ) | — | |||||
Change in fair value of derivatives in the Consolidated Statement of Operations | $ | 1,115 | $ | 512 | ||||
December 31, | ||||||||
2006 | 2005 | |||||||
Fair value of derivative assets — current | $ | 882 | $ | 523 | ||||
Fair value of derivative assets — long term | 221 | — | ||||||
Fair value of derivative liabilities — current | — | (88 | ) | |||||
Fair value of derivative liabilities — long term | (74 | ) | — | |||||
Net fair value of derivatives | $ | 1,029 | $ | 435 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
December 31, 2006 | ||||||||||
Total | ||||||||||
Volume | Remaining Terms | |||||||||
Transaction Type | Per Month | Pricing Terms | of Contracts | Fair Value | ||||||
Mark to Market Derivatives:: | ||||||||||
Crude Oil swap | 5,000 BBL | Fixed price of $65.95 settled against WTI NYMEX average monthly closings | January 2007 to December 2007 | 103 | ||||||
Natural Gas swap and Natural Gas basis swap | 20,000 MMBTU | Combined fixed price of $8.54 settled against IF Centerpoint Energy Gas Transmission Co. | January 2007 to December 2007 | 556 | ||||||
Total swaps not designated as cash flow hedges | $ | 659 | ||||||||
Cash Flow Hedges: | ||||||||||
Ethane Swap | 8,000 BBL | Fixed price of $28.04 settled against Mt. Belvieu Purity Ethane average monthly postings | January 2007 to December 2007 | 223 | ||||||
Crude Oil Swap | 5,000 BBL | Fixed price of $66.20 settled against WTI NYMEX average monthly closings | January 2008 to December 2008 | (74 | ) | |||||
Natural Gas swap | 30,000 MMBTU | Fixed price of $8.12 settled against IF Houston Ship Channel first of the month | January 2008 to December 2008 | 155 | ||||||
Crude Oil Swap | 3,000 BBL | Fixed price of $69.08 settled against WTI NYMEX average monthly closings | January 2009 to December 2009 | 66 | ||||||
Total swaps designated as cash flow hedges | $ | 370 | ||||||||
Total net fair value of derivatives | $ | 1,029 | ||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Year | Commodity Hedged | Volume | Type of Derivative | Basis Reference | ||||
2007 | Condensate & Natural Gasoline | 5,000 BBL/Month | Crude Oil Swap ($65.95) | NYMEX | ||||
2007 | Natural Gas | 20,000 MMBTU/Month | Natural Gas Swap ($9.14) | Henry Hub | ||||
2007 | Natural Gas | 20,000 MMBTU/Month | Natural Gas Basis Swap (-$0.60) | Henry Hub to Centerpoint East | ||||
2007 | Ethane | 8,000 BBL/Month | Ethane Swap ($28.04) | Mt. Belvieu | ||||
2008 | Condensate & Natural Gasoline | 5,000 BBL/Month | Crude Oil Swap ($66.20) | NYMEX | ||||
2008 | Natural Gas | 30,000 MMBTU/Month | Natural Gas Swap ($8.12) | Houston Ship Channel | ||||
2009 | Condensate & Natural Gasoline | 3,000 BBL/Month | Crude Oil Swap ($69.08) | NYMEX |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
• | September 30, 2005 with respect to 20% of the subordinated units; | ||
• | September 30, 2006 with respect to 20% of the subordinated units; | ||
• | September 30, 2007 with respect to 20% of the subordinated units; | ||
• | September 30, 2008 with respect to 20% of the subordinated units; |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Operating | ||||||||||||||||||||||||
Revenues | Depreciation | Operating | ||||||||||||||||||||||
Operating | Intersegment | After | and | Income | Capital | |||||||||||||||||||
Revenues | Eliminations | Eliminations | Amortization | (Loss) | Expenditures | |||||||||||||||||||
Year ended December 31, 2006: | ||||||||||||||||||||||||
Terminalling and storage | $ | 36,606 | $ | (389 | ) | $ | 36,217 | $ | 4,700 | $ | 12,504 | $ | 13,371 | |||||||||||
Natural gas services | 389,735 | — | 389,735 | 1,667 | 4,239 | 5,552 | ||||||||||||||||||
Marine transportation | 50,174 | (2,339 | ) | 47,835 | 6,609 | 6,411 | 18,840 | |||||||||||||||||
Sulfur | 62,467 | (1,196 | ) | 61,271 | 2,997 | 4,864 | 12,582 | |||||||||||||||||
Fertilizer | 41,842 | (516 | ) | 41,326 | 1,624 | 1,844 | 16,007 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Operating | ||||||||||||||||||||||||
Revenues | Depreciation | Operating | ||||||||||||||||||||||
Operating | Intersegment | After | and | Income | Capital | |||||||||||||||||||
Revenues | Eliminations | Eliminations | Amortization | (Loss) | Expenditures | |||||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (3,253 | ) | — | |||||||||||||||||
Total | $ | 580,824 | $ | (4,440 | ) | $ | 576,384 | $ | 17,597 | $ | 26,609 | $ | 66,352 | |||||||||||
Year ended December 31, 2005 | ||||||||||||||||||||||||
Terminalling and storage | $ | 32,962 | $ | (64 | ) | $ | 32,898 | $ | 4,376 | $ | 9,314 | $ | 4,708 | |||||||||||
Natural gas services | 301,676 | — | 301,676 | 356 | 6,003 | 1,669 | ||||||||||||||||||
Marine transportation | 37,724 | (2,273 | ) | 35,451 | 4,942 | 2,384 | 6,020 | |||||||||||||||||
Sulfur | 37,472 | (688 | ) | 36,784 | 1,790 | 2,937 | 9,514 | |||||||||||||||||
Fertilizer | 31,838 | (204 | ) | 31,634 | 1,178 | 1,785 | 2,903 | |||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (3,463 | ) | — | |||||||||||||||||
Total | $ | 441,672 | $ | (3,229 | ) | $ | 438,443 | $ | 12,642 | $ | 18,960 | $ | 24,814 | |||||||||||
Year ended December 31, 2004: | ||||||||||||||||||||||||
Terminalling and storage | $ | 26,283 | $ | (126 | ) | $ | 26,157 | $ | 3,740 | $ | 6,749 | $ | 204 | |||||||||||
Natural gas services | 203,427 | — | 203,427 | 103 | 3,080 | 11 | ||||||||||||||||||
Marine transportation | 35,261 | (481 | ) | 34,780 | 3,982 | 5,827 | 4,584 | |||||||||||||||||
Fertilizer | 29,780 | — | 29,780 | 941 | 1,839 | 383 | ||||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (2,766 | ) | — | |||||||||||||||||
Total | $ | 294,751 | $ | (607 | ) | $ | 294,144 | $ | 8,766 | $ | 14,729 | $ | 5,182 | |||||||||||
2006 | 2005 | 2004 | ||||||||||
Operating income | $ | 26,609 | $ | 18,960 | $ | 14,729 | ||||||
Equity in earnings of unconsolidated entities | 8,547 | 1,591 | 912 | |||||||||
Interest expense | (12,466 | ) | (6,909 | ) | (3,326 | ) | ||||||
Debt prepayment premium | (1,160 | ) | — | — | ||||||||
Other, net | 713 | 238 | 11 | |||||||||
Income before income taxes | $ | 22,243 | $ | 13,880 | $ | 12,326 | ||||||
2006 | 2005 | |||||||
Total assets: | ||||||||
Terminalling and storage | $ | 89,354 | $ | 68,429 | ||||
Natural gas services | 184,464 | 180,464 | ||||||
Marine transportation | 77,668 | 54,772 | ||||||
Sulfur | 62,210 | 55,367 | ||||||
Fertilizer | 43,765 | 30,012 | ||||||
Total assets | $ | 457,461 | $ | 389,044 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited) | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
(Dollar in thousands, except per unit amounts) | ||||||||||||||||
2006 | ||||||||||||||||
Revenues | $ | 146,822 | $ | 133,052 | $ | 147,505 | $ | 149,005 | ||||||||
Operating Income | 5,884 | 5,874 | 4,720 | 10,131 | (1) | |||||||||||
Equity in earnings of unconsolidated entities | 2,412 | 2,310 | 2,720 | 1,105 | (2) | |||||||||||
Net income | 4,287 | 5,248 | 4,329 | 8,378 | (1) | |||||||||||
Net income per limited partner unit | $ | 0.33 | $ | 0.40 | $ | 0.32 | $ | 0.63 |
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
(Dollar in thousands, except per unit amounts) | ||||||||||||||||
2005 | ||||||||||||||||
Revenues | $ | 96,140 | $ | 84,896 | $ | 112,780 | $ | 144,627 | (3) | |||||||
Operating Income | 4,495 | 3,877 | 6,433 | 4,155 | ||||||||||||
Equity in earnings of unconsolidated entities | 75 | 120 | 27 | 1,369 | (4) | |||||||||||
Net income | 3,531 | 2,943 | 4,846 | 2,560 | ||||||||||||
Net income per limited partner unit | $ | 0.41 | $ | 0.34 | $ | 0.56 | $ | 0.28 |
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
(Dollar in thousands, except unit amounts) | ||||||||||||||||
2004 | ||||||||||||||||
Revenues | $ | 69,068 | $ | 61,253 | $ | 72,190 | $ | 91,633 | ||||||||
Operating Income | 3,804 | 2,799 | 3,073 | 5,053 | ||||||||||||
Equity in earnings(loss) of unconsolidated entities | 529 | 362 | (359 | ) | 380 | |||||||||||
Net income | 3,638 | 2,422 | 1,862 | 4,404 | ||||||||||||
Net income per limited partner unit | $ | 0.45 | $ | 0.28 | $ | 0.22 | $ | 0.51 |
(1) | Includes recognition of gain on involuntary conversion of assets of $2,272. | |
(2) | Decrease in equity in earnings of unconsolidated entities due a shut down of the Waskom plant in the fourth quarter.. | |
(3) | Includes Prism Gas revenues of $17,459 since acquisition date on November 10, 2005. | |
(4) | Represents $1,369 in equity in earnings of unconsolidated entities and joint ventures of Prism Gas since its acquisition on November 10, 2005. |
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Name | Age | Position with the General Partner | ||||
Ruben S. Martin | 55 | President, Chief Executive Officer and Director | ||||
Robert D. Bondurant | 48 | Executive Vice President and Chief Financial Officer | ||||
Donald R. Neumeyer | 59 | Executive Vice President and Chief Operating Officer | ||||
Wesley M. Skelton | 59 | Executive Vice President, Chief Administrative Officer and Controller | ||||
Scott D. Martin | 41 | Executive Vice President and Director | ||||
Chris Booth | 37 | Vice President, General Counsel and Secretary | ||||
John P. Gaylord | 46 | Director | ||||
C. Scott Massey | 54 | Director | ||||
Howard Hackney | 67 | Director |
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• | Annual base salary; | ||
• | Discretionary annual cash awards; | ||
• | Awards pursuant to Martin Resource Management employee benefit plans; and | ||
• | Other compensation, including limited perquisites. |
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• | an equivalent number of shares of Martin Resource Management or | ||
• | cash based on the latest valuation of the shares of common stock of Martin Resource Management held by the ESOP. |
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Name and | ||||||||||||
Principal Position | Year | Salary ($) | Total Compensation | |||||||||
Ruben S. Martin | ||||||||||||
President and Chief Executive Officer | 2006 | $ | 137,718 | $ | 137,718 | |||||||
Robert D. Bondurant | ||||||||||||
Executive Vice President and Chief Financial Officer | 2006 | $ | 105.565 | $ | 105,565 | |||||||
Donarld R. Neumeyer | ||||||||||||
Executive Vice President and Chief Operating Officer | 2006 | $ | 108,065 | $ | 108,065 | |||||||
Wesley M. Skelton | ||||||||||||
Executive Vice President, Controller and Chief Administrative Officer | 2006 | $ | 117,780 | $ | 117,780 | |||||||
Scott D. Martin | ||||||||||||
Executive Vice President | 2006 | $ | 98,585 | $ | 98,585 |
Fees Earned Paid in | Stock | |||||||||||
Name | Cash ($) | Awards ($)(1) | Total ($) | |||||||||
Ruben S. Martin | N/A | N/A | N/A | |||||||||
Scott D. Martin | N/A | N/A | N/A | |||||||||
John P. Gaylord | $ | 35,000 | $ | 30,100 | $ | 65,100 | ||||||
C. Scott Massey | $ | 35,000 | $ | 30,100 | $ | 65,100 | ||||||
Howard Hackney | $ | 35,000 | $ | 30,100 | $ | 65,100 |
(1) | On January 24, 2006, we issued 1,000 restricted common units to each of our three independent directors under our long-term incentive plan. These restricted common units vest in equal installments of 250 units on each of the four anniversaries following the grant date. In calculating the fair value of the award, we |
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multiplied the closing price of our common units on the NASDAQ on the date of grant, January 24, 2006, by the number of restricted common units granted to each director. |
/s/ Howard Hackney | ||
/s/ John P. Gaylord | ||
/s/ C. Scott Massey |
Percentage | Percentage of | Percentage | ||||||||||||||||||
Common | of Common | Subordinated | Subordinated | of Total | ||||||||||||||||
Units to be | Units to be | Units to be | Units to be | Units to be | ||||||||||||||||
Beneficially | Beneficially | Beneficially | Beneficially | Beneficially | ||||||||||||||||
Name of Beneficial Owner(1) | Owned | Owned(2) | Owned | Owned | Owned(2) | |||||||||||||||
Martin Resource Management Corporation(3) | 2,632,799 | 24.8 | % | 2,552,018 | 100 | % | 39.4 | % | ||||||||||||
Martin Product Sales LLC | 1,548,973 | 14.6 | % | 926,279 | 36.3 | % | 18.8 | % | ||||||||||||
Midstream Fuel Service LLC | 248,258 | 2.3 | % | 372,386 | 14.6 | % | 4.7 | % | ||||||||||||
Martin Resource LLC | 835,568 | 7.9 | % | 1,253,353 | 49.1 | % | 15.9 | % | ||||||||||||
Ruben S. Martin(4) | 2,659,378 | 25.1 | % | 2,552,018 | 100 | % | 39.6 | % | ||||||||||||
Scott D. Martin(5) | 2,644,899 | 24.9 | % | 2,552,018 | 100 | % | 39.5 | % | ||||||||||||
Donald R. Neumeyer | 3,556 | — | — | — | — | |||||||||||||||
Wesley M. Skelton | 1,774 | — | — | — | — | |||||||||||||||
Robert D. Bondurant | 3,678 | — | — | — | — | |||||||||||||||
Chris Booth | 188 | — | — | — | — | |||||||||||||||
John P. Gaylord(6) | 11,000 | — | — | — | — | |||||||||||||||
C. Scott Massey(6)(7) | 3,750 | — | — | — | — | |||||||||||||||
Howard Hackney(6) | 1,000 | — | — | — | — | |||||||||||||||
Kayne Anderson Capital Advisors, L.P.(8) | 688,357 | 6.49 | % | — | — | 5.23 | % | |||||||||||||
All directors and executive officers as a group (8 persons)(9) | 2,696,424 | 25.4 | % | 2,552,018 | 100 | % | 39.9 | % |
(1) | The address Martin Resource Management Corporation and all of the individuals listed in this table is c/o Martin Midstream Partners L.P., 4200 Stone Road, Kilgore, Texas 75662. |
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(2) | The percent of class shown is less than one percent unless otherwise noted. | |
(3) | Martin Resource Management Corporation is the owner of Martin Product Sales LLC, Marine Fuel Service LLC and Martin Resource LLC, and as such may be deemed to beneficially own the common and subordinated units held by such entities. | |
(4) | Includes 2,632,799 common units and 2,552,018 subordinated units beneficially owned by Martin Resource Management through its ownership Martin Product Sales LLC, Marine Fuel Service LLC and Martin Resource LLC. Ruben S. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 61.7% of the voting power 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 2,632,799 common units and 2,552,018 subordinated units beneficially owned by Martin Resource Management through its ownership Martin Product Sales LLC, Marine Fuel Service LLC and Martin Resource LLC. Scott D. Martin beneficially owns securities in Martin Resource Management representing approximately 61.7% of the voting power 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. | |
(6) | 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. 2), dated February 2, 2007 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 688,357 common units. | |
(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 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 | 15.3 | % | |||||
Martin Resource Management Corporation Employee Stock Ownership Trust (3) | 638 | 7.6 | % | |||||
RSM, III Investments, Ltd.(4) | 2,267 | 27.2 | % | |||||
Ruben S. Martin III Dynasty Trust (5) | 635 | 7.6 | % | |||||
SKM Partnership, Ltd .(6) | 2,560 | 30.7 | % | |||||
Ruben S. Martin (2) (3) (4) (5) (7) | 5,152 | 61.7 | % | |||||
Scott D. Martin (2) (3) (6) (7) | 5,150 | 61.7 | % | |||||
Donald R. Neumeyer (8) | 56 | * | ||||||
Wesley M. Skelton (3) (8) | 696 | 8.3 | % | |||||
Robert D. Bondurant(8) | 130 | 1.6 | % | |||||
Executive officers and directors as a group (5 individuals) | 8,600 | 100.0 | % |
* | Represents less than 1.0% |
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(1) | The business address of each shareholder, director and executive officer of Martin Resource Management is c/o Martin Resource Management Corporation, 4200 Stone Road, Kilgore, Texas 75662. | |
(2) | Ruben S. Martin and Scott D. Martin are the co-trustees of the R.S. Martin Jr. Children’s Trust No. One f/b/o Angela Santi Jones 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 1,278 shares owned by such trust. | |
(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 638 shares owned by such trust. Mr. Skelton disclaims beneficial ownership of these 638 shares. | |
(4) | Ruben S. Martin is the beneficial owner of the general partner of RSM, III Investments, 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 preferred stock reported herein as beneficially owned by such individual includes the 2,267 shares owned by such entity. | |
(5) | Ruben S. Martin 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; thus, the number of shares of common stock reported herein as beneficially owned by Ruben S. Martin includes the 635 shares owned by such trust. These 635 shares have been pledged as security to a third party to secure payment for a loan made by such third party. | |
(6) | 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 preferred stock reported herein as beneficially owned by such individual includes the 2,560 shares owned by such entity. | |
(7) | Ruben S. Martin beneficially owns securities in Martin Resource Management representing approximately 61.7% of the voting power thereof and serves as its Chairman of the Board and President. Scott D. Martin beneficially owns securities in Martin Resource Management representing approximately 61.7% of the voting power thereof and serves on its Board of Directors. Martin Transport, Inc. is a wholly owned subsidiary of Martin Resource Management. 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 individual includes the 40 shares owned by Martin Transport, Inc. | |
(8) | Messrs. Neumeyer, Skelton and Bondurant have the right to acquire 66, 58 and 130 shares, respectively, by virtue of options issued under Martin Resource Management’s nonqualified stock option 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; (A total 1.701,344 of the original 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 November 14, 2005 and, 850,672 subordinated units were converted on November 14, 2006). | |
• 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 $1.2 million on its 2.0% general partner interest and Martin Resource Management would receive an aggregate annual distribution of approximately $6.3 million on its subordinated units. | |
Payments to our general partner and its affiliates. | Martin Resource Management is entitled to reimbursement for all direct and indirect expenses it or our general partner incurs on our behalf, including general and administrative expenses. 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. Under the omnibus agreement, the reimbursement amount with respect to indirect general and administrative and corporate overhead expenses was capped at $2.0 million for the period ending October 31, 2006. Subsequently, this amount may be increased by no more than the percentage increase in the consumer price index. In addition, Martin Resource Management and us can agree, subject to approval of the Conflicts Committee of our general partner, to adjust this amount for expansions of our operations and acquisitions. 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. | |
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. |
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• | 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 fertilizer products and other sulfur-related products. |
• | 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 a small lube oil processing business in Smackover, Arkansas, | ||
• | operating an underground NGL storage facility in Arcadia, Louisiana, and | ||
• | operating, solely for our account, a NGL truck loading and unloading and pipeline distribution terminal in Mont Belvieu, Texas. | ||
• | any business that Martin Resource Management acquires or constructs that has a fair market value of less than $5.0 million; | ||
• | 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 |
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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 are 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. |
• | legal actions currently against Martin Resource Management at the time of our formation; | ||
• | events and conditions associated with any assets retained by Martin Resource Management; | ||
• | certain defects in the title to the assets contributed to us by Martin Resource Management that arise within a four year period beginning on November 1, 2002 to the extent such defects materially and adversely affect our ownership and operation of such assets; | ||
• | our failure to obtain certain consents and permits necessary to conduct our business to the extent such liabilities arise within a three year period beginning on November 1, 2002; and | ||
• | certain income tax liabilities attributable to the operation of the assets contributed to us prior to the time that they were contributed. |
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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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2006 | 2005 | |||||||
Audit fees | $ | 728,200 | (1) | $ | 747,500 | (2) | ||
Audit related fees | 16,500 | (3) | 37,000 | (3) | ||||
Audit and audit related fees | 744,700 | 784,500 | ||||||
Tax fees | 189,000 | (4) | 138,000 | (4) | ||||
All other fees | — | — | ||||||
Total fees | $ | 933,700 | $ | 922,500 | ||||
(1) | 2006 audit fees include fees for the annual integrated audit, the audit of Waskom Gas Processing Company, the audit of Martin Midstream GP LLC and the review of registration statements and issuing related consents. | |
(2) | 2005 audit fees includes fees for the annual integrated audit, issuance of the comfort letter related to the January 2006 equity offering and reviews of acquiree financial statements as of September 30, 2005 related to the issuance of the comfort letter. | |
(3) | Audit related fees include fees for accounting consultations on various transactions occurring in 2006 and 2005. | |
(4) | Tax fees are for services related to 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 Financial Schedules | ||
(1) | The following financial statements of Martin Midstream Partners L.P. and are included in Part II, Item 8: | ||
Report of Independent Accountants | |||
Consolidated Balance Sheets as of December 31, 2006 and 2005 | |||
Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004 | |||
Consolidated Statements of Changes in Capital/Equity for the years ended December 31, 2006, 2005 and 2004 | |||
Consolidated Statements of Comprehensive Income for the years ended December 31, 2006 and 2005 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004 | |||
Notes to the Consolidated Financial Statements | |||
(2) | Financial Statements of Waskom Gas Processing Company for the year ended December 31, 2006, 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 129 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 5, 2007 | 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/ Scott D. Martin | Director of Martin Midstream GP LLC | |
/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 (Reg. 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, filed November 19, 2002, and incorporated herein by reference). | |
3.3 | 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 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.4 | 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, filed November 19, 2002, and incorporated herein by reference). | |
3.5 | 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 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.6 | 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 (Red. No. 33-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.7 | 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 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.8 | 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 (Reg. 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 (Reg. 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, 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, 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 | 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, filed November 19, 2002, and incorporated herein by reference). | |
10.5 | 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, filed November 19, 2002, and incorporated herein by reference). | |
10.6 | Terminal Services Agreement dated November 1, 2002, by and between the Operating Partnership and MGSLLC (filed as Exhibit 10.5 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.7 | 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, filed November 19, 2002, and incorporated herein by reference). | |
10.8 | 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, filed November 19, 2002, and incorporated herein by reference). |
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Exhibit | ||
Number | Exhibit Name | |
10.9 | 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, filed November 19, 2002, and incorporated herein by reference). | |
10.10 | Marine Fuel Agreement dated November 1, 2002, by and between MFSLLC and the Operating Partnership (filed as Exhibit 10.9 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.11 | 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, filed November 19, 2002, and incorporated herein by reference). | |
10.12† | Martin Midstream Partners L.P. Long-Term Incentive Plan (filed as Exhibit 10.11 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.13† | 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). | |
10.14† | 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). | |
10.15 | 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, filed November 19, 2002, and incorporated herein by reference). | |
10.16 | 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, filed November 19, 2002, and incorporated herein by reference). | |
10.17 | 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, filed November 10, 2003, and incorporated herein by reference). | |
10.18 | 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, filed November 10, 2003, and incorporated herein by reference). | |
10.19 | 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, filed January 23, 2004, and incorporated herein by reference). | |
10.20 | 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). | |
10.21 | 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, filed October 28, 2004, and incorporated herein by reference). | |
10.22 | 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, filed January 23, 2004, and incorporated herein by reference). | |
10.23 | 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, filed January 23, 2004, and incorporated herein by reference). | |
10.24† | 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 (Reg. No. 333-140152), filed January 23, 2007, and incorporated herein by reference). | |
21.1* | List of Subsidiaries. | |
23.1* | Consent of KPMG LLP. | |
23.2* | 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.” |
* | Filed 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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Pursuant to Item 15(a)(2)
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Waskom Gas Processing Company:
March 5, 2007
Table of Contents
AS OF DECEMBER 31, 2006
2006 | ||||
ASSETS | ||||
CURRENT ASSETS: | ||||
Cash | $ | 324,979 | ||
Accounts receivable | 326,753 | |||
Accounts receivable—partners | 11,227,687 | |||
Inventories | 436,419 | |||
Total current assets | 12,315,838 | |||
PROPERTY AND EQUIPMENT: | ||||
Gas plant asset and gas gathering equipment | 51,331,046 | |||
Other fixed assets | 564,736 | |||
Accumulated depreciation and amortization | (10,952,030 | ) | ||
Net property and equipment | 40,943,753 | |||
TOTAL | $ | 53,259,590 | ||
LIABILITIES AND PARTNERS’ EQUITY | ||||
CURRENT LIABILITIES: | ||||
Accounts payable and accrued liabilities | $ | 5,916,140 | ||
Accounts payable—partners | 1,706,545 | |||
Total current liabilities | 7,622,686 | |||
LONG-TERM LIABILITIES—Asset retirement obligation | 186,988 | |||
COMMITMENTS AND CONTINGENCIES | ||||
PARTNERS’ CAPITAL | 45,449,916 | |||
TOTAL | $ | 53,259,590 | ||
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FOR THE YEAR ENDED DECEMBER 31, 2006
2006 | ||||
OPERATING REVENUES: | ||||
Natural gas processing fees | $ | 18,506,096 | ||
Natural gas liquid sales | 47,093,925 | |||
Gain on sale of assets | 500 | |||
Total operating revenues | 65,600,521 | |||
OPERATING COSTS AND EXPENSES: | ||||
Cost of sales — natural gas liquids | 42,505,653 | |||
Operating costs | 4,355,646 | |||
Depreciation and amortization | 1,493,499 | |||
Total operating costs and expenses | 48,354,798 | |||
OPERATING INCOME | 17,245,723 | |||
NET INCOME | $ | 17,245,723 | ||
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FOR THE YEAR ENDED DECEMBER 31, 2006
Total | ||||
Partners’ | ||||
Capital | ||||
BALANCE—December 31, 2005 | $ | 22,649,871 | ||
Cash contributions for capital expenditures | 19,980,733 | |||
Cash contributions for working capital | 2,494,939 | |||
Cash distributions | (300,000 | ) | ||
Distributions in-kind | (16,621,349 | ) | ||
Net income | 17,245,723 | |||
BALANCE—December 31, 2006 | $ | 45,449,916 | ||
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FOR THE YEAR ENDED DECEMBER 31, 2006
2006 | ||||
OPERATING ACTIVITIES: | ||||
Net income | $ | 17,245,723 | ||
Adjustments to reconcile net income to cash used in operating activities: | ||||
Depreciation and amortization | 1,493,499 | |||
Distributions in-kind to partners | (16,621,349 | ) | ||
Gain on sale of asset | (500 | ) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (391,548 | ) | ||
Accounts receivable — partners | (5,560,870 | ) | ||
Inventory | (412,779 | ) | ||
Accounts payable and accrued liabilites | 805,280 | |||
Accounts payable — partners | 1,275,364 | |||
Net cash provided by operating activities | 22,771 | |||
INVESTING ACTIVITIES: | ||||
Additions to gas plant and gathering system assets | (20,834,411 | ) | ||
Proceeds from sale of an asset | 500 | |||
Net cash used in investing activities | (23,023,864 | ) | ||
FINANCING ACTIVITIES: | ||||
Contributions from partners | 22,475,672 | |||
Distrubutions to partners | (300,000 | ) | ||
Net cash provided by financing activities | 22,175,672 | |||
NET DECREASE IN CASH | (825,421 | ) | ||
CASH—Beginning of year | 1,150,399 | |||
CASH—End of year | $ | 324,979 | ||
SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||||
Interest paid | $ | — | ||
Taxes paid | $ | — | ||
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1. NATURE OF BUSINESS |
Waskom Gas Processing Company (the “Partnership”), a Texas general partnership, was formed on November 1, 1995 to construct and operate the Waskom Processing Plant (the “Plant”). As of December 31, 2006, the partners are CenterPoint Energy Gas Processing Company (50%) and Prism Gas Systems I, L.P. (50%). Prism Gas Systems I, L.P. serves as operator. The Partnership is engaged in the processing and marketing of natural gas and natural gas liquids (“NGL’s”), predominantly in Texas and northwest Louisiana. The Partnership owns a 150 MMcf/d cryogenic turboexpander gas plant located in Harrison County, Texas. The Plant has full NGL fractionation, treating and stabilization capabilities. Fractionation is a process used to separate the mixture of NGL’s into individual products for sale. In October 2006, construction began to expand the fractionator to 12,500 bpd, to provide additional capacity for increased trucked-in NGL volumes. This expansion was completed in late January 2007. | ||
The natural gas supply for the Plant is derived primarily from natural gas wells located in the Cotton Valley formation of East Texas and Northwest Louisiana. | ||
The primary suppliers of natural gas to the Plant include BP American Production Company, Centerpoint Energy Gas Transmission Company and Devon Energy Corporation, which collectively represented approximately 61% of the 183 MMcfd of natural gas supplied for the year ended December 31, 2006. The Partnership’s processing contracts are predominately percent-of-liquids (POL) contracts, in which the Partnership retains a portion of the NGL’s recovered as a processing fee. The Partnership also operates under percent-of-proceeds (POP) contracts in which it retains a portion of both the residue gas and the NGL’ s as payment for services. There are currently two minor contracts for processing on a keep-whole basis. The Partnership is not contractually required to process these keep-whole volumes and, therefore, only processes natural gas related to these contracts under profitable conditions. | ||
Sales of third party gas and fractionated NGL’s are predominately to the partners and occur at the tailgate of the Plant. |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Accounts Receivable—Accounts receivable include trade receivables, recorded at invoiced amounts. | ||
Property and Equipment—Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the classes of assets, as follows: |
Years | ||||
Gas gathering equipment | 10 | |||
Gas plant | 20 | |||
Furniture and fixtures | 1 | |||
Computer equipment | 3 | |||
Computer software | 3 |
Depreciation expense for 2006 was $1,483,332. Of this total, $1,348,003 related to operating assets. Repairs and maintenance are charged to operations as incurred. Renewals and betterments are capitalized. |
Inventories—Substantially all inventory at December 31, 2006 represents pipe used for future projects. Such pipe was valued at acquisition cost. | ||
Asset Retirement Obligations—Under SFAS No. 143, “Accounting for Asset Retirement Obligations” (“Statement No. 143) which provides accounting requirements for costs associated with legal obligations to retire tangible, long-lived assets, the Partnership records as an offset to the Asset Retirement Obligation (“ARO”), an asset at fair value in the period in which it is incurred by increasing the carrying amount of the |
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related long-lived asset. In each subsequent period, the liability is accreted over time towards the ultimate obligation amount and the capitalized costs are depreciated over the useful life of the related asset. The Partnership's asset retirement obligations include, purging, plugging and remediation costs. Accretion expense for 2006 was $10,167. | ||
On March 31, 2005, the Financial Accounting Standards Board issued Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”), an interpretation of SFAS 143. FIN 47, which was effective for fiscal years ending after December 15, 2005, clarifies that the recognition and measurement provisions of SFAS 143 apply to asset retirement obligations in which the timing or method of settlement may be conditional on a future event that may or may not be within the control of the entity. No conditional asset retirement obligations associated with the Partnership’s long-lived assets have been identified. | ||
Impairment of Long-Lived Assets—In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. | ||
Revenue Recognition—Revenues are recognized when title passes or service is performed. The Partnership’s business consists largely of the ownership and operation of physical assets. End sales from these businesses result in physical deliveries of commodities to the Partnership’s commercial, industrial and retail customers. | ||
Income Taxes—The Partnership is a Texas general partnership and as such has no liability for income taxes, except for the Texas margin tax as described in the following paragraph. Each partner is responsible for its share of federal income tax. | ||
On May 18, 2006, the Texas Governor signed into law a Texas margin tax (H.B. No. 3) which restructures the state business tax by replacing the taxable capital and earned surplus components of the current franchise tax with a new “taxable margin” component. Since the tax base on the Texas margin tax is derived from an income-based measure, the margin tax is construed as an income tax and, therefore, the provisions of SFAS 109 regarding the recognition of deferred taxes apply to the new margin tax. In accordance with SFAS 109, the effect on deferred tax assets of a change in tax law should be included in tax expense attributable to continuing operations in the period that includes the enactment date. Therefore, the Partnership has calculated its deferred tax assets and liabilities for Texas based on the new margin tax. The cumulative effect of the change was immaterial. The impact of the change in deferred tax assets does not have a material impact on tax expense. There was no income tax expense recorded for the year ended December 31, 2006. Beginning 2007, the Partnership anticipates it will incur tax expense related to this new Texas margin tax. | ||
Environmental Liabilities—The Partnership’s policy is to accrue for losses associated with environmental remediation obligations when such losses are probably and reasonably estimable. Accruals for estimated losses for environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. | ||
Use of Estimates—The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts at the date of the financial statements and the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||
Recently Issued Accounting Pronouncements— In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which will become effective for the Partnership on January 1, 2008. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 |
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does not require any new fair value measurements but would apply to assets and liabilities that are required to be recorded at fair value under other accounting standards. The impact, if any, to the Partnership from the adoption of SFAS No. 157 in 2008 will depend on the Partnership’s assets and liabilities at that time that are required to be measured at fair value. | ||
In September 2005, the FASB’s Emerging Issues Task Force (“EITF”) issued EITF No. 04-13, “Accounting for Purchases and Sales of Inventory with the Same Counterparty.” This pronouncement provides additional accounting guidance for situations involving inventory exchanges between parties, to that contained in APB Opinion No. 29, “Accounting for Nonmonetary Transactions” and SFAS 153, “Exchanges of Nonmonetary Assets.” The standard is effective for new arrangements entered into in reporting periods beginning after March 15, 2006. The adoption did not have a material impact on the Partnership’s financial statements. | ||
3. RELATED-PARTY TRANSACTIONS | ||
During 2006, the Partnership engaged in certain material transactions with its partners. The Partnership believes that the terms of these transactions were comparable to those that could have been negotiated with unrelated third parties. As of December 31, 2006, the Partnership had receivables of approximately $11.2 million, and payables of approximately $1.7 million, due from and due to the partners. | ||
Per the Partnership agreement, cash contributions are made by the partners for capital expenditures and working capital. Such contributions totaled $19,980,733 and $2,494,939 respectively, for 2006. The partnership agreement allows for cash distributions to be made to the partners of any cash available in excess of working capital requirements, generally equal to two months of historical operating expenses. Such distributions totaled $300,000 for 2006. | ||
The Partnership purchases gas from third party producers and processes this gas based on processing contracts, which are primarily percent-of-liquids (POL) contracts. The percentage of liquids retained by the Partnership is distributed to the partners as distributions of products-in-kind based on the partners’ equity interest. Distributions of products in-kind of $16,621,349 in 2006 were made to the partners. Distributions of products in-kind are valued at prevailing market prices at the time of distribution. | ||
In some instances, the fractionated NGL’s (less any retained portions) are returned to the third party producers, but in most cases, the third party producers enter into agreements with the partners to market their product. In such instances, the Partnership will sell the product to the partners. Such sales amounted to $43,678,571 and are included as NGL sales in the income statement. | ||
4. COMMITMENTS AND CONTINGENCIES | ||
The Partnership is subject to extensive federal, state and local environmental laws and regulations. These laws, which are constantly changing, regulate the discharge of materials into the environment and may require the Partnership to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. Liabilities for expenditures of a noncapital nature are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated. Management believes that any future costs should not have a material adverse effect on the Partnership’s liquidity or financial position. | ||
5. SUBSEQUENT EVENTS | ||
On January 31, 2007, the Partnership purchased transmission lines for $800,000 located in Harrison County, Texas and Caddo Parish, Louisiana from Centerpoint Energy Gas Transmission Company. These lines were purchased to serve as an inlet at the Plant. The inlet conversion will be completed later in 2007. In January of 2007, construction on the Waskom fractionator was completed, resulting in an increased capacity of 12,500 barrels per day. In addition the processing capacity of the Plant is expected to be increased to 250 MMcfd by the end of the second quarter of 2007. |
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