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Business Segment Information
 6 Months Ended
Jun. 30, 2012
Segment Reporting [Abstract]  
Business Segment Information
. Business Segment Information
Our operations consist of three operating segments:
(1)
Pipeline Transportation – interstate, intrastate and offshore crude oil, and to a lesser extent, CO2;
(2)
Refinery Services – processing high sulfur (or “sour”) gas streams as part of refining operations to remove the sulfur and sale of the related by-product, NaHS and;
(3)
Supply and Logistics – terminaling, blending, storing, marketing, and transporting crude oil and petroleum products (primarily fuel oil, asphalt, and other heavy refined products) and, on a smaller scale, CO2.
Substantially all of our revenues are derived from, and substantially all of our assets are located in the United States.
We define Segment Margin as revenues less product costs, operating expenses (excluding non-cash charges, such as depreciation and amortization), and segment general and administrative expenses, plus our equity in distributable cash generated by our equity investees. In addition, our Segment Margin definition excludes the non-cash effects of our stock appreciation rights plan and includes the non-income portion of payments received under direct financing leases.
Our chief operating decision maker (our Chief Executive Officer) evaluates segment performance based on a variety of measures including Segment Margin, segment volumes where relevant, and capital investment.
 
Segment information for the periods presented below was as follows:
 
Pipeline
Transportation
 
Refinery
Services
 
Supply &
Logistics
 
Total
Three Months Ended June 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
20,785

 
$
17,278

 
$
24,768

 
$
62,831

Capital expenditures (b)
$
31,901

 
$
360

 
$
22,173

 
$
54,434

Revenues:
 
 
 
 
 
 
 
External customers
$
13,398

 
$
50,575

 
$
858,695

 
$
922,668

Intersegment (c)
3,823

 
(2,255
)
 
(1,568
)
 
—

Total revenues of reportable segments
$
17,221

 
$
48,320

 
$
857,127

 
$
922,668

Three Months Ended June 30, 2011
 
 
 
 
 
 
 
Segment margin (a)
$
16,927

 
$
18,947

 
$
11,799

 
$
47,673

Capital expenditures (b)
$
1,234

 
$
189

 
$
1,819

 
$
3,242

Revenues:
 
 
 
 
 
 
 
External customers
$
12,051

 
$
51,334

 
$
699,405

 
$
762,790

Intersegment (c)
3,033

 
(1,971
)
 
(1,062
)
 
—

Total revenues of reportable segments
$
15,084

 
$
49,363

 
$
698,343

 
$
762,790

Six Months Ended June 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
46,132

 
$
34,527

 
$
42,424

 
$
123,083

Capital expenditures (b)
$
278,329

 
$
1,270

 
$
63,004

 
$
342,603

Revenues:
 
 
 
 
 
 
 
External customers
$
28,374

 
$
100,948

 
$
1,726,289

 
$
1,855,611

Intersegment (c)
8,256

 
(4,583
)
 
(3,673
)
 
—

Total revenues of reportable segments
$
36,630

 
$
96,365

 
$
1,722,616

 
$
1,855,611

Six Months Ended June 30, 2011
 
 
 
 
 
 
 
Segment margin (a)
$
34,609

 
$
36,895

 
$
25,324

 
$
96,828

Capital expenditures (b)
$
1,682

 
$
469

 
$
2,127

 
$
4,278

Revenues:
 
 
 
 
 
 
 
External customers
$
24,644

 
$
100,917

 
$
1,327,027

 
$
1,452,588

Intersegment (c)
4,895

 
(4,008
)
 
(887
)
 
—

Total revenues of reportable segments
$
29,539

 
$
96,909

 
$
1,326,140

 
$
1,452,588

Total assets by reportable segment were as follows:
 
June 30,
2012
 
December 31,
2011
Pipeline transportation
$
856,418

 
$
594,728

Refinery services
418,050

 
426,993

Supply and logistics
674,834

 
659,576

Other assets
51,048

 
49,547

Total consolidated assets
$
2,000,350

 
$
1,730,844

 
(a)
A reconciliation of Segment Margin to income before income taxes for the periods presented is as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2012
 
2011
 
2012
 
2011
Segment Margin
$
62,831

 
$
47,673

 
$
123,083

 
$
96,828

Corporate general and administrative expenses
(8,707
)
 
(7,689
)
 
(17,328
)
 
(15,073
)
Depreciation and amortization
(15,357
)
 
(14,253
)
 
(30,392
)
 
(28,156
)
Net loss on disposal of surplus assets
(473
)
 
(249
)
 
(217
)
 
(238
)
Interest expense
(10,228
)
 
(9,011
)
 
(20,824
)
 
(17,710
)
Distributable cash from equity investees in excess of equity in earnings
(6,752
)
 
(4,921
)
 
(13,485
)
 
(8,224
)
Non-cash items not included in segment margin
(1,577
)
 
7,103

 
(253
)
 
(331
)
Cash payments from direct financing leases in excess of earnings
(1,249
)
 
(1,141
)
 
(2,470
)
 
(2,254
)
Income before income taxes
$
18,488

 
$
17,512

 
$
38,114

 
$
24,842


 
(b)
Capital expenditures include maintenance and growth capital expenditures, such as fixed asset additions (including enhancements to existing facilities and construction of internal growth projects) as well as acquisitions of businesses and interests in equity investees. See Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for more information regarding our capital expenditures. Capital spending in our pipeline transportation segment included $17.9 million and $51.4 million during the three and six months ended June 30, 2012, respectively, representing capital contributions to our SEKCO equity investee to fund our share of the construction costs for its pipeline. For the six months ended June 30, 2012, capital spending in our pipeline transportation segment also included $205.6 million for the acquisition of interests in several Gulf of Mexico pipelines and pipeline equity investees. For the six months ended June 30, 2012, capital spending in our supply and logistics segment also included $30.6 million for the purchase of barge assets.
(c)
Intersegment sales were conducted under terms no more or less favorable than then-existing market conditions.