Martin Midstream Partners 8K Results of Operations and Financial Condition

Martin Midstream Partners (MMLP) 8-KResults of Operations and Financial Condition

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (date of earliest event reported): March 2, 2011

MARTIN MIDSTREAM PARTNERS L.P.

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code: (903) 983-6200

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02		Results of Operations and Financial Condition.

On March 2, 2011, Martin Midstream Partners L.P. (the “Partnership”) issued a press release reporting its financial results for the quarter and year ended December 31, 2010.

A copy of the press release is furnished as Exhibit 99.1 to this Current Report and will be published on the Partnership’s website at www.martinmidstream.com. In accordance with General Instruction B.2 of Form 8-K, the information set forth herein and in the press release is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).

As previously reported, on March 3, 2011, at 8:00 a.m. Central Time, the Partnership will hold an investors’ conference call to discuss the Partnership’s financial results for the fourth quarter and year ended December 31, 2010. The supplemental financial data, including certain non-generally accepted accounting principle financial measures, that will be discussed during the investors’ conference call is included in the above referenced press release.


Item 9.01.		Financial Statements and Exhibits.

(d) Exhibits

In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of the Exchange Act.


Exhibit
Number		Description
	99.1	Press release dated March 2, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	MARTIN MIDSTREAM PARTNERS L.P. By: Martin Midstream GP LLC, Its General Partner
Date: March 2, 2011	By: /s/ Robert D. Bondurant
	Robert D. Bondurant,
	Executive Vice President and Chief Financial Officer

INDEX TO EXHIBITS


Exhibit
Number		Description
	99.1	Press release dated March 2, 2011.

Exhibit 99.1

MARTIN MIDSTREAM PARTNERS REPORTS

2010 FOURTH QUARTER

AND ANNUAL FINANCIAL RESULTS

KILGORE, Texas, March 2, 2011/GlobeNewswire/ -- Martin Midstream Partners L.P. (NASDAQ: MMLP) (the “Partnership”) announced today its financial results for the fourth quarter and year ended December 31, 2010.

The Partnership reported net income for the fourth quarter of 2010 of $6.5 million, or $0.30 per limited partner unit. This compared to net income for the fourth quarter of 2009 of $2.0 million, or $.15 per limited partner unit. Revenues for the fourth quarter of 2010 were $262.1 million compared to $200.9 million for the fourth quarter of 2009. Fourth quarter 2010 net income was negatively impacted by a $4.0 million, or $0.23 per limited partner unit, non-cash derivatives loss from certain commodity and interest rate swaps that are not accounted for using hedge accounting. Fourth quarter 2009 net income was negatively impacted by a $0.2 million, or $0.01 per limited partner unit, non-cash derivatives loss from certain commodity and interest rate swaps that a re not accounted for using hedge accounting.

The Partnership reported net income for the year ended December 31, 2010 of $16.0 million, or $0.63 per limited partner unit. This compared to net income for the year ended December 31, 2009 of $22.2 million, or $1.17 per limited partner unit. Revenues for the year ended December 31, 2010 were $912.1 million, compared to revenues of $662.3 million for the year ended December 31, 2009. Net income for the year ended December 31, 2010 was negatively impacted by $4.2 million, or $0.24 per limited partner unit, due to the payment of fees for the early extinguishment of interest rate swaps in the first quarter 2010 ($3.8 million) and of non-cash derivatives losses from certain commodity and interest rate swaps that are not accounted for using hedge accounting ($0. 4 million). Net income for the year ended December 31, 2009 was negatively impacted by $2.5 million, or $0.15 per limited partner unit, of non-cash derivatives losses from certain commodity and interest rate swaps that are not accounted for using hedge accounting. Net income for the year ended December 31, 2009 was positively impacted by $6.0 million, or $0.41 per limited partner unit, of gains from the sale of property, plant and equipment ($5.0 million) and on the involuntary conversion of property, plant and equipment ($1.0 million) resulting from Hurricanes Gustav and Ike.

The Partnership’s distributable cash flow for the three months ended December 31, 2010 was $22.2 million and for the year ended December 31, 2010 was $65.5 million. Distributable cash flow is a non-GAAP financial measure which is explained in greater detail below under “Use of Non-GAAP Financial Information.” The Partnership has also included below a table entitled “Distributable Cash Flow” in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measurement.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, said “I am pleased with the Partnership’s fourth quarter and year end 2010 performance. The fourth quarter 2010 was our best quarter during the year in terms of cash flow generation as we achieved a strong distribution coverage ratio of 1.53 times. That put us in a position to increase our most recent distribution to unitholders for the first time in nine quarters. Further, for the year ended 2010, all four of our operating segments met or exceeded planned performance giving us a solid distribution coverage ratio of 1.16 times.

During the fourth quarter, our sulfur services segment rebounded from the seasonal weakness we typically see in the third quarter. We saw sulfur experience a solid pricing recovery based on high demand across agricultural markets both foreign and domestic. We expect this demand for our sulfur and sulfur-based fertilizer products to remain strong into 2011. Our Marine Transportation segment was also strong during the fourth quarter. Our inland fleet continues to operate near full utilization; and day rate pricing for certain products we move has recently increased. Given the current condition of the oil refining business we feel good about our inland fleet for 2011. On the offshore side, our work on the Macondo disaster recovery is now complete and thus we have two offshore vessels that will seek opportunities in the spot market.

Looking forward, several organic growth initiatives combined with some additional contracting have us well positioned for 2011. Specifically, we expect that planned growth in our Natural Gas Services and our Sulfur Services segments will increase distributable cash flow this year. Also, we recently added incremental fee-based contracts for our prilling capacity within our Sulfur Services segment and renegotiated a contract with a significant sulfur buyer to reduce our exposure to price fluctuation as we continue to achieve our long-stated goal of becoming a more fee-based Partnership. Finally, as previously disclosed, low cost multiple growth projects are underway at our Cross lubricant processing facility that will be completed during calendar 2012.”

Due to FASB ASC 850, the Partnership is required to account for the Cross Oil asset contribution as a transfer of net assets between entities under common control. As such, the revenues, earnings and distributable cash flow data for periods prior to the November 2009 contribution date as set forth above and elsewhere herein require adjustment to be viewed on a comparable year over year basis. Before giving effect to the Cross transaction, revenue for the year ended December 31, 2009 would have been $633.8 million, compared to revenues of $1.2 billion for the year ended December 31, 2008. Additionally, net income for the year ended December 31, 2009 would have been $20.5 million compared to net income of $42.8 million for the year ended December 31, 2008. Finally, distributable cash flow for the year ended Dec ember 31, 2009 would have been $49.4 million. For a more detailed reconciliation of the Cross asset acquisition, please refer to Item 6. Selected Financial Data in our Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2011.

Included with this press release are the Partnership’s consolidated financial statements as of and for the quarter and year ended December 31, 2010 and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership’s Annual Report on Form 10-K, filed with the SEC on March 2, 2011.

Investors’ Conference Call

An investor’s conference call to review the fourth quarter and year end results will be held on Thursday, March 3, 2011, at 8:00 a.m. Central Time. The conference call can be accessed by calling (877) 878-2695. An audio replay of the conference call will be available by calling (800) 642-1687 from 11:00 a.m. Central Time on March 3, 2011 through 10:59 p.m. Central Time on March 17, 2011. The access codes for the conference call and the audio replay are as follows: Conference ID No. 39490604. The audio replay of the conference call will also be archived on the Partnership’s website at www.martinmidstream.com.

About Martin Midstream Partners LP

Martin Midstream Partners LP is a publicly traded limited partnership with a diverse set of operations focused primarily in the United States Gulf Coast region. The Partnership’s primary business lines include: terminalling and storage services for petroleum products and by-products; natural gas gathering, processing and NGL distribution; sulfur and sulfur-based products processing, manufacturing, and distribution; and marine transportation services for petroleum products and by-products.

Additional information concerning the Partnership is available on the Partnership’s website at www.martinmidstream.com.

Forward-Looking Statements

Statements about the Partnership’s outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all references to financial estimates rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside its control, which could cause actual results to differ materially from such statements. While the Partnership believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in anticipating or predicting certain important factors. A discussion of these factors, in cluding risks and uncertainties, is set forth in the Partnership’s annual and quarterly reports filed from time to time with the SEC. The Partnership disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Information

The Partnership reports its financial results in accordance with United States generally accepted accounting principles (GAAP). However, from time to time, the Partnership uses certain non-GAAP financial measures such as distributable cash flow because the Partnership’s management believes that this measure may provide users of this financial information with meaningful comparisons between current results and prior reported results and a meaningful measure of the Partnership’s cash available to pay distributions. Distributable cash flow should not be considered an alternative to cash flow from operating activities or any other measure of financial performance in accordance with GAAP. Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to income from continuing operations. Furthermore, it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. This information may constitute non-GAAP financial measures within the meaning of Regulation G adopted by the SEC. Accordingly, the Partnership has presented herein, and will present in other information it publishes that contains this non-GAAP financial measure, a reconciliation of this measure to the most directly comparable GAAP financial measure.

The Partnership has included below a table entitled “Distributable Cash Flow” in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measure. The Partnership calculates distributable cash flow as follows: net income (as reported in statements of operations), plus depreciation and amortization, amortization of debt discount, and amortization of deferred debt issue costs (as reported in statements of cash flows), plus (less) deferred income taxes (as reported in statements of cash flows), plus costs related to the early extinguishment of interest rate swaps (as reported under the caption “Long-Term Debt and Capital Leases” in the Partnership’s Annual Report on Form 10-K filed with the SEC on March 2, 2011), plus distribution equivalents from unconsolidated entities (as described below), plus (less) invested cash in unconsolidated entities (as described below), less equity in earnings of unconsolidated entities (as reported in statements of operations), plus non-cash mark-to-market on derivatives (as reported in statements of cash flows), less maintenance capital expenditures (as reported under the caption “Liquidity and Capital Resources” in the Partnership’s Annual Report on Form 10-K filed with the SEC on March 2, 2011), plus (less) gain/(loss) on disposition or sale of property, plant and equipment (as reported in statements of cash flows), less payments for plant turn around costs (as reported in statements of cash flows), plus unit-based compensation (as reported in statements of changes in capital).

The Partnership’s distribution equivalents from unconsolidated entities is calculated as distributions from unconsolidated entities (as reported in statements of cash flows), plus return of investments from unconsolidated entities (as reported in statements of cash flows), plus distributions in-kind from unconsolidated entities (as reported in statements of cash flows). For the quarter ended December 31, 2010, the Partnership’s distributions from unconsolidated entities, return of investments from unconsolidated entities and distributions in-kind from equity investments were $0.0 million, $0.1 million and $3.0 million, respectively. For the year ended December 31, 2010, the Partnership’s distrib utions from unconsolidated entities, return of investments from unconsolidated entities and distributions in-kind from equity investments were $0.0 million, $2.5 million and $10.5 million, respectively.

The Partnership’s invested cash in unconsolidated entities is calculated as distributions from (contributions to) unconsolidated entities for operations (as reported in statements of cash flows), plus expansion capital expenditures in unconsolidated entities (as reported under the caption “Liquidity and Capital Resources” in the Partnership’s Annual Report on Form 10-K filed with the SEC on March 2, 2011). For the quarter ended December 31, 2010, the Partnership’s distributions from (contributions to) unconsolidated entities for operations and capital expenditures in unconsolidated entities were $(1.4) million and $1.2 million, respectively. For the year ended December 31, 2010, the Partnership ’s distributions from (contributions to) unconsolidated entities for operations and capital expenditures in unconsolidated entities were $(0.7) million and $3.2 million, respectively.

Contact: Robert D. Bondurant, Executive Vice President and Chief Financial Officer of Martin Midstream GP LLC, the Partnership’s general partner at (903) 983-6200.

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2010			2009
	(Dollars in thousands)
Assets

Cash	$	11,380		$	5,956
Accounts and other receivables, less allowance for doubtful accounts of $2,528 and $481, respectively		95,276			77,413
Product exchange receivables		9,099			4,132
Inventories		52,616			35,510
Due from affiliates		6,437			3,051
Fair value of derivatives		2,142			1,872
Other current assets		2,784			1,340
Total current assets		179,734			129,274

Property, plant and equipment, at cost		632,456			584,036
Accumulated depreciation		(200,276	)		(162,121	)
Property, plant and equipment, net		432,180			421,915

Goodwill		37,268			37,268
Investment in unconsolidated entities		98,217			80,582
Debt issuance costs, net		13,497			10,780
Other assets		24,582			6,120
	$	785,478		$	685,939
Liabilities and Partners’ Capital

Current installments of long-term debt and capital lease obligations	$	1,121		$	111
Trade and other accounts payable		82,837			71,911
Product exchange payables		22,353			7,986
Due to affiliates		6,957			13,810
Income taxes payable		811			454
Fair value of derivatives		282			7,227
Other accrued liabilities		10,034			5,000
Total current liabilities		124,395			106,499

Long-term debt and capital leases, less current maturities		372,862			304,372
Deferred income taxes		8,213			8,628
Fair value of derivatives		4,100			—
Other long-term obligations		1,102			1,489
Total liabilities		510,672			420,988

Partners’ capital		273,387			267,027
Accumulated other comprehensive loss		1,419			(2,076	)
Total partners’ capital		274,806			264,951
Commitments and contingencies
	$	785,478		$	685,939

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Annual Report on Form 10-K filed with the SEC on March 2, 2011.

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2010			2009			2008
	(Dollars in thousands, except per unit amounts)
Revenues:
Terminalling and storage *	$	67,117		$	69,710		$	68,552
Marine transportation *		77,642			68,480			76,349
Product sales: *
Natural gas services		554,482			408,982			679,375
Sulfur services		165,078			79,629			371,949
Terminalling and storage		47,799			35,584			50,219
		767,359			524,195			1,101,543
Total revenues		912,118			662,385			1,246,444

Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services *		527,232			382,542			657,662
Sulfur services *		122,121			43,386			313,143
Terminalling and storage		44,549			31,331			42,721
		693,902			457,259			1,013,526
Expenses:
Operating expenses *		116,402			117,438			126,808
Selling, general and administrative *		21,118			19,775			19,062
Depreciation and amortization		40,656			39,506			34,893
Total costs and expenses		872,078			633,978			1,194,289
Other operating income		136			6,013			209
Operating income		40,176			34,420			52,364

Other income (expense):
Equity in earnings of unconsolidated entities		9,792			7,044			13,224
Interest expense		(33,716	)		(18,995	)		(21,433	)
Other, net		287			326			801
Total other income (expense)		(23,637	)		(11,625	)		(7,408	)
Net income before taxes		16,539			22,795			44,956
Income tax benefit (expense)		(517	)		(592	)		(1,398	)
Net income	$	16,022		$	22,203		$	43,558

General partner’s interest in net income¹	$	3,869		$	3,249		$	3,301
Limited partners’ interest in net income¹	$	11,045		$	17,179		$	39,509

Net income per limited partner unit - basic and diluted	$	0.63		$	1.17		$	2.72
Weighted average limited partner units - basic		17,525,089			14,680,807			14,529,826
Weighted average limited partner units - diluted		17,525,989			14,684,775			14,534,722

¹ General and limited partner’s interest in net income includes net income attributable to the Cross assets since the date of the acquisition noted above.

*Related Party Transactions Included Above

Revenues:
Terminalling and storage	$	46,823	$	19,998	$	18,362
Marine transportation		28,194		19,370		24,956
Product Sales		14,998		5,838		26,704
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services		79,321		56,914		92,322
Sulfur services		16,061		12,583		13,282
Expenses:
Operating expenses		49,286		37,284		37,661
Selling, general and administrative		10,918		7,162		6,284

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

For the years ended December 31, 2010, 2009 and 2008

	Partners’ Capital
	Parent Net			Common						Subordinated						General Partner			Accumulated Comprehensive Income
	Investment			Units			Amount			Units			Amount			Amount			Amount			Total
	(Dollars in thousands)

Balances – December 31, 2007	$	10,917			12,837,480		$	244,520			1,701,346		$	(6,022	)	$	4,112		$	(6,762	)	$	246,765

Net Income		748			—			34,978			—			4,531			3,301			—			43,558

Cash distributions ($2.91 per unit)		—			—			(37,357	)		—			(4,951	)		(3,409	)		—			(45,717	)

Conversion of subordinated units to common units		—			850,672			(2,754	)		(850,672	)		2,754			—			—			—

Unit-based compensation		—			3,000			39			—			—			—			—			39

Purchase of treasury units					(3,000	)		(93	)		—			—			—			—			(93	)

Adjustment in fair value of derivatives		—			—			—			—			—			—			1,827			1,827

Balances – December 31, 2008	$	11,665			13,688,152		$	239,333			850,674		$	(3,688	)	$	4,004		$	(4,935	)	$	246,379

Net Income		1,664			—			16,310			—			980			3,249			—			22,203

General partner contribution		—			—			—			—			—			1,324			—			1,324

Units issued in connection with Cross acquisition					804,721			16,523			889,444			16,434			—			—			32,957

Recognition of beneficial conversion feature		—			—			(111	)		—			111			—			—			—

Issuance of common units		—			714,285			20,000			—			—			—			—			20,000

Cash distributions ($3.00 per unit)		—			—			(41,064	)		—			(2,552	)		(3,846	)		—			(47,462	)

Conversion of subordinated units to common units		—			850,674			(5,328	)		(850,674	)		5,328			—			—			—

Unit-based compensation		—			3,000			98			—			—			—			—			98

Purchase of treasury units		—			(3,000	)		(78	)		—			—			—			—			(78	)

Contributions to parent		(13,329	)		—			—			—			—			—			—			(13,329	)

Adjustment in fair value of derivatives		—			—			—			—			—			—			2,859			2,859

Balances – December 31, 2009	$	—			16,057,832		$	245,683			889,444		$	16,613		$	4,731		$	(2,076	)	$	264,951

Net Income		—			—			12,151			—			—			3,871			—			16,022

Recognition of beneficial conversion feature		—			—			(1,108	)		—			1,108			—			—			—

Follow-on public offerings		—			2,650,000			78,600			—			—			—			—			78,600

Redemption of common units		—			(1,000,000	)		(28,070	)		—			—			—			—			(28,070	)

General partner contribution		—			—			—			—			—			1,089			—			1,089

Distributions to parent		—			—			(4,590	)		—			—			—			—			(4,590	)

Cash distributions ($3.00 per unit)		—			—			(51,886	)		—			—			(4,810	)		—			(56,696	)

Unit-based compensation		—			3,500			113			—			—			—			—			113

Purchase of treasury units		—			(3,500	)		(108	)		—			—			—			—			(108	)

Adjustment in fair value of derivatives		—			—			—			—			—			—			3,495			3,495

Balances – December 31, 2010	$	—			17,707,832		$	250,785			889,444		$	17,721		$	4,881		$	1,419		$	274,806

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

	Year Ended December 31,
	2010			2009			2008
	(Dollars in thousands)
Net income	$	16,022		$	22,203		$	43,558
Changes in fair values of commodity cash flow hedges		143			14			4,219
Commodity cash flow hedging (gains) losses reclassified to earnings		(617	)		(2,646	)		3,043
Changes in fair value of interest rate cash flow hedges		(241	)		(1,854	)		(5,435	)
Interest rate cash flow hedging losses reclassified to earnings		4,210			7,345			—

Comprehensive income	$	19,517		$	25,062		$	45,385

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2010			2009			2008
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	16,022		$	22,203		$	43,558

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		40,656			39,506			34,895
Amortization of deferred debt issue costs		4,814			1,689			1,120
Amortization of discount on notes payable		269			—			—
Deferred income taxes		(415	)		294			2,442
Gain on disposition or sale of property, plant, and equipment		(136	)		(4,996	)		(131	)
Gain on involuntary conversion of property, plant, and equipment		—			(1,017	)		(65	)
Equity in earnings of unconsolidated entities		(9,792	)		(7,044	)		(13,224	)
Distributions from unconsolidated entities		—			650			500
Distribution in-kind from unconsolidated entities		10,545			5,826			9,725
Non-cash mark-to-market on derivatives		380			2,526			(2,327	)
Other		113			98			39
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables		(17,863	)		(10,471	)		19,753
Product exchange receivables		(4,967	)		2,792			3,988
Inventories		(17,106	)		7,135			9,398
Due from affiliates		(3,386	)		1,560			1,770
Other current assets		(1,444	)		2,461			(992	)
Trade and other accounts payable		10,918			(15,874	)		(14,904	)
Product exchange payables		14,366			(2,938	)		(13,629	)
Due to affiliates		(6,853	)		4,133			5,966
Income taxes payable		357			569			(453	)
Other accrued liabilities		5,382			871			101
Change in other non-current assets and liabilities		(4,342	)		(2,381	)		(1,190	)
Net cash provided by operating activities		37,518			47,592			86,340

Cash flows from investing activities:
Payments for property, plant, and equipment		(17,907	)		(35,846	)		(101,450	)
Acquisitions, net of cash acquired		(46,352	)		(327	)		(5,983	)
Payments for plant turnaround costs		(1,090	)		—			—
Proceeds from sale of property, plant, and equipment		2,419			19,445			463
Insurance proceeds from involuntary conversion of property, plant and equipment		—			2,224			1,503
Investments in unconsolidated entities		(20,110	)		—			—
Return of investments from unconsolidated entities		2,470			877			1,225
(Contributions to) unconsolidated entities for operations		(748	)		(1,048	)		(2,379	)
Net cash used in investing activities		(81,318	)		(14,675	)		(106,621	)
Cash flows from financing activities:
Payments of long-term debt		(441,979	)		(431,982	)		(257,191	)
Proceeds from long-term debt		503,856			433,700			327,170
Net proceeds from follow on public offering		78,600			—			—
General partner contribution		1,089			1,324			—
Redemption of common units		(28,070	)		—			—
Contributions to parent		—			—			—
Purchase of treasury units		(108	)		(78	)		(93	)
Proceeds from issuance of common units		—			20,000			—
Payments of debt issuance costs		(7,468	)		(10,446	)		(18	)
Cash distributions paid		(56,696	)		(47,462	)		(45,717	)
Net cash provided by (used in) financing activities		49,224			(34,944	)		24,151

Net increase(decrease) in cash		5,424			(2,027	)		3,870
Cash at beginning of period		5,956			7,983			4,113
Cash at end of period	$	11,380		$	5,956		$	7,983

Supplemental schedule of non-cash investing and financing activities:
Purchase of assets under capital lease obligations	$	—		$	7,764		$	—
Issuance of common and subordinated units in connection with Cross acquisition	$	—		$	32,957		$	—
Purchase of assets under note payable	$	7,354		$	—		$	—

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

	4th Quarter			4th Quarter
	2010			2009
	(Dollars in thousands) (except per unit amounts) (Unaudited)
Revenues:
Terminalling and storage	$	17,055		$	16,039
Marine transportation		20,184			19,258
Product sales:
Natural gas services		156,627			140,233
Sulfur		51,133			18,600
Terminalling and storage		17,112			6,731
		224,872			165,564
Total revenues		262,111			200,861

Costs and expenses:
Cost of products sold:
Natural gas services		147,799			133,849
Sulfur		35,266			8,644
Terminalling and storage		15,778			5,773
		198,843			148,266
Expenses:
Operating expenses		30,088			32,790
Selling, general and administrative		6,468			6,023
Depreciation and amortization		10,590			10,250
Total costs and expenses		245,989			197,329
Other operating income (loss)		(314	)		962
Operating income		15,808			4,494

Other income (expense):
Equity in earnings of unconsolidated entities		2,323			1,817
Interest expense		(11,468	)		(5,408	)
Other, net		170			(19	)
Total other income (expense)		(8,975	)		(3,610	)

Income tax expense (benefit)		(293	)		(1,072	)

Net income	$	6,540		$	1,956

General partner’s interest in net income¹1	$	1,037		$	774
Limited partners’ interest in net income¹	$	5,226		$	2,342
Net income per limited partner unit — basic and diluted	$	0.30		$	0.15
Weighted average limited partner units		17,701,094			15,149,731

¹ General and limited partner’s interest in net income includes net income of the Cross assets since the date of the acquisition.

DISTRIBUTABLE CASH FLOW

(Dollars in thousands)

(Unaudited Non-GAAP Financial Measure)

	Three Months Ended December 31, 2010			Year Ended December 31, 2010

Net income	$	6,540		$	16,022
Adjustments to reconcile net income to distributable cash flow:
Depreciation and amortization		10,590			40,656
Amortization of deferred debt issue costs		1,139			4,814
Amortization of discount on notes payable		88			269
Deferred income taxes		59			(415	)
Early extinguishments of interest rate swaps		—			3,850
Distribution equivalents from unconsolidated entities¹		3,061			13,015
Invested cash in unconsolidated entities²		(154	)		2,469
Equity in earnings of unconsolidated entities		(2,323	)		(9,792	)
Non-cash mark-to-market on derivatives		3,973			380
Maintenance capital expenditures		(1,181	)		(4,653	)
Payments for plant turnaround costs		—			(1,090	)
Gain on disposition or sale of property, plant and equipment		314			(136	)
Unit based compensation		48			113
Distributable cash flow	$	22,154		$	65,502

	Three Months Ended December 31, 2010			Year Ended December 31, 2010
¹Distribution equivalents from unconsolidated entities:
Distributions from unconsolidated entities	$	—		$	—
Return of investments from unconsolidated entities		40			2,470
Distributions in-kind from unconsolidated entities		3,021			10,545
Distribution equivalents from unconsolidated entities	$	3,061		$	13,015
²Invested cash in unconsolidated entities::
Distributions from (contributions to) unconsolidated entities for operations	$	(1,377	)	$	(748	)
Expansion capital expenditures in unconsolidated entities		1,223			3,217
Invested cash in unconsolidated entities	$	(154	)	$	2,469

DELAWARE
(State of incorporation
or organization)

000-50056
(Commission file number)

05-0527861
(I.R.S. employer identification number)

4200 STONE ROAD

KILGORE, TEXAS
(Address of principal executive offices)

75662
(Zip code)