The decrease in operating margin reflects a flat gross margin, more than offset by higher operating expenses. Gross margin was flat as lower revenues were offset by lower product purchase costs due to the weaker commodity price environment. The increase in the Partnership's operating costs was primarily due to its expansion and acquisition activities. See "Targa Resources Partners – Review of Segment Performance" for additional information regarding changes in the components of operating margin on a disaggregated basis.
The increase in depreciation and amortization expenses is attributable to the impact of new assets placed in service as well as assets associated with business acquisitions.
General and administrative expenses increased due to higher compensation and benefits.
The increase in interest expense was the result of higher borrowings ($8.7 million) offset by a lower effective interest rate ($3.2 million) and higher capitalized interest ($3.8 million) attributable to major expansion capital projects.Operations at the Partnership's non-operated equity investment, Gulf Coast Fractionators ("GCF"), were affected by operational issues which resulted in a decrease in earnings from this equity investment for the fourth quarter. Losses on a debt redemption and an early debt extinguishment during 2012 are largely attributable to premiums and a write-off of debt issue costs in connection with the redemption of the Partnership's 8¼% Notes due 2016 (the "8¼% Notes") and the amendment to the TRP Revolver. The increase in other expenses is attributable to fees and expenses related to the Badlands acquisition. The decrease in net income attributable to noncontrolling interests reflects the impact of the weaker price environment on our Versado and VESCO joint ventures. Year Ended December 31, 2012 Compared to Year Ended December 31, 2011 Revenues, including the impacts of hedging, decreased due to the impact of lower realized prices on commodities ($1,962.9 million), partially offset by higher commodity sales volumes ($769.6 million) and higher fee-based and other revenues ($89.8 million).
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts