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Holly Energy Partners, L.P. Reports Third Quarter Results

Stocks in this article: HEP

Set forth below is our calculation of distributable cash flow.


Three Months Ended

September 30,

Nine Months Ended

September 30,

2012     2011 2012     2011
(In thousands)
Net income attributable to Holly Energy Partners $ 24,493 $ 16,744 $ 69,634 $ 50,926
Add (subtract):
Depreciation and amortization 13,044 8,916 39,899 24,627
Predecessor depreciation and amortization (444 ) (1,183 ) (7,903 ) (1,541 )
Amortization of discount and deferred debt charges 1,802 308 5,224 903
Loss on early extinguishment of debt 2,979
Billed crude revenue settlement 917 2,753
Increase (decrease) in deferred revenue 2,162 1,201 1,733 (3,917 )
Maintenance capital expenditures* (2,287 ) (453 ) (3,886 ) (3,586 )
Other non-cash adjustments 744   198   1,073   512  
Distributable cash flow $ 40,431   $ 25,731   $ 111,506   $ 67,924  

* Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, and safety and to address environmental regulations.

September 30, December 31,
2012 2011 (6)
(In thousands)
Balance Sheet Data
Cash and cash equivalents $ 1,993 $ 7,369
Working capital $ 18,520 $ 7,016
Total assets $ 1,379,773 $ 1,393,561
Long-term debt $ 874,434 $ 605,888
Partners' equity (5) $ 354,852 $ 643,537

(5) As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to Holly Energy Partners because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to Holly Energy Partners. Additionally, if the assets contributed and acquired from HollyFrontier while we were a consolidated variable interest entity of HollyFrontier had been acquired from third parties, our acquisition cost in excess of HollyFrontier’s basis in the transferred assets of $312.8 million would have been recorded as increases to our properties and equipment and intangible assets instead of decreases to partners’ equity.

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