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(Graphic: Business Wire)

Stocks in this article: WES WGP

Distributable Cash Flow

The Partnership defines Distributable cash flow as Adjusted EBITDA, plus interest income, less net cash paid for interest expense (including amortization of deferred debt issuance costs originally paid in cash, offset by non-cash capitalized interest), maintenance capital expenditures and income taxes.

  Three Months Ended   Year Ended
December 31, December 31,
thousands except Coverage ratio

2012

 

2011

2012

  2011

Reconciliation of Net income (loss) attributable to Western Gas Partners, LP to Distributable cash flow and calculation of the Coverage ratio

Net income (loss) attributable to
Western Gas Partners, LP $ (16,971) $ 40,014 $ 106,986 $ 174,243
Add:
Distributions from equity investees 5,057 4,011 20,660 15,999
Non-cash equity-based compensation expense (1) 57,101 7,519 73,508 13,754
Interest expense, net (non-cash settled) 82 326
Income tax expense 559 3,454 1,258 19,018
Depreciation, amortization and impairments (2) 35,418 32,869 114,932 109,151
Other expense (2) 1,665 3,683
Less:
Equity income, net 5,359 3,579 16,111 11,261
Cash paid for maintenance capital expenditures (2) (3) 6,187 7,709 31,730 28,293
Capitalized interest 2,369 286 6,196 420
Cash paid for income taxes 495 190
Other income (2) (4) 181 288 368 2,049
  Interest income, net (non-cash settled)       5,343       11,660
Distributable cash flow $ 67,150   $ 70,662 $ 264,435   $ 281,975
 
Distributions declared (5)
Limited partners $ 54,424 $ 190,123
  General partner   11,233         30,358  
  Total $ 65,657       $ 220,481  
Coverage ratio   1.02 x       1.20 x

(1) Includes $56.2 million and $69.8 million of equity-based compensation associated with the Western Gas Holdings, LLC Equity Incentive Plan, as amended and restated, paid and contributed by Anadarko during the three months and year ended December 31, 2012, respectively.

(2) Includes the Partnership’s 51% share prior to August 1, 2012, and 75% share after August 1, 2012, of depreciation, amortization and impairments; other expense; cash paid for maintenance capital expenditures; and other income attributable to Chipeta.

(3) Net of a prior period adjustment reclassifying approximately $0.7 million from capital expenditures to operating expenses for the year ended December 31, 2012.

(4) Excludes income of $0.4 million and $0.6 million for the three months ended December 31, 2012 and 2011, respectively, and $1.6 million for each of the years ended December 31, 2012 and 2011, related to a component of a gas processing agreement accounted for as a capital lease.

(5) Reflects distributions of $0.52 and $1.96 per unit declared for the three months and year ended December 31, 2012, respectively.

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted EBITDA

The Partnership defines Adjusted EBITDA as net income (loss) attributable to Western Gas Partners, LP, plus distributions from equity investees, non-cash equity-based compensation expense, expense in excess of the expense reimbursement cap provided in the omnibus agreement (which cap is no longer effective), interest expense, income tax expense, depreciation, amortization and impairments, and other expense, less income from equity investments, interest income, income tax benefit, and other income.

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