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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,

2013     2012 2013     2012
(In thousands)
Net income attributable to Holly Energy Partners $ 21,885 $ 23,336 $ 60,451 $ 67,113
Add (subtract):
Depreciation and amortization 19,449 14,351 48,730 42,801
Predecessor depreciation and amortization (444 ) (7,903 )
Amortization of discount and deferred debt charges 527 528 1,590 1,403
Loss on early extinguishment of debt 2,979
Amortization of unrecognized loss attributable to terminated cash flow hedge 1,274 849 3,821
Increase (decrease) in deferred revenue attributable to shortfall billings 3,472 2,162 3,624 1,733
Billed crude revenue settlement 917 918 2,753
Maintenance capital expenditures* (2,045 ) (2,287 ) (6,557 ) (3,886 )
Other non-cash adjustments   577     594     2,711     692  
Distributable cash flow $ 43,865   $ 40,431   $ 112,316   $ 111,506  

* 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,
2013 2012
(In thousands)
Balance Sheet Data
Cash and cash equivalents $ 11,220 $ 5,237
Working capital $ 16,110 $ 11,826
Total assets $ 1,382,372 $ 1,394,110
Long-term debt $ 809,391 $ 864,674
Partners' equity (4) $ 387,510 $ 352,653

(4) 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 $305.3 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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