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Business Segment Information
 9 Months Ended
Sep. 30, 2012
Segment Reporting [Abstract]  
Business Segment Information
9. 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 selling 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 September 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
23,295

 
$
18,983

 
$
23,651

 
$
65,929

Capital expenditures (b)
$
21,764

 
$
1,025

 
$
14,410

 
$
37,199

Revenues:
 
 
 
 
 
 
 
External customers
$
16,190

 
$
50,378

 
$
875,766

 
$
942,334

Intersegment (c)
2,974

 
(2,401
)
 
(573
)
 
—

Total revenues of reportable segments
$
19,164

 
$
47,977

 
$
875,193

 
$
942,334

Three Months Ended September 30, 2011
 
 
 
 
 
 
 
Segment margin (a)
$
16,030

 
$
17,992

 
$
18,909

 
$
52,931

Capital expenditures (b)
$
1,582

 
$
852

 
$
146,999

 
$
149,433

Revenues:
 
 
 
 
 
 
 
External customers
$
12,658

 
$
50,982

 
$
766,560

 
$
830,200

Intersegment (c)
3,436

 
(2,590
)
 
(846
)
 
—

Total revenues of reportable segments
$
16,094

 
$
48,392

 
$
765,714

 
$
830,200

Nine Months Ended September 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
69,427

 
$
53,510

 
$
66,075

 
$
189,012

Capital expenditures (b)
$
300,093

 
$
2,295

 
$
77,414

 
$
379,802

Revenues:
 
 
 
 
 
 
 
External customers
$
44,564

 
$
151,326

 
$
2,602,055

 
$
2,797,945

Intersegment (c)
11,230

 
(6,984
)
 
(4,246
)
 
—

Total revenues of reportable segments
$
55,794

 
$
144,342

 
$
2,597,809

 
$
2,797,945

Nine Months Ended September 30, 2011
 
 
 
 
 
 
 
Segment margin (a)
$
50,639

 
$
54,887

 
$
44,233

 
$
149,759

Capital expenditures (b)
$
3,264

 
$
1,321

 
$
149,126

 
$
153,711

Revenues:
 
 
 
 
 
 
 
External customers
$
37,302

 
$
151,899

 
$
2,093,587

 
$
2,282,788

Intersegment (c)
8,331

 
(6,598
)
 
(1,733
)
 
—

Total revenues of reportable segments
$
45,633

 
$
145,301

 
$
2,091,854

 
$
2,282,788

Total assets by reportable segment were as follows:
 
September 30,
2012
 
December 31,
2011
Pipeline transportation
$
870,966

 
$
594,728

Refinery services
413,888

 
426,993

Supply and logistics
774,002

 
659,576

Other assets
48,299

 
49,547

Total consolidated assets
$
2,107,155

 
$
1,730,844

 
(a)
A reconciliation of Segment Margin to income before income taxes for the periods presented is as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Segment Margin
$
65,929

 
$
52,931

 
$
189,012

 
$
149,759

Corporate general and administrative expenses
(9,428
)
 
(8,194
)
 
(26,756
)
 
(23,267
)
Depreciation and amortization
(14,838
)
 
(14,706
)
 
(45,447
)
 
(43,100
)
Interest expense
(9,873
)
 
(8,960
)
 
(30,697
)
 
(26,670
)
Distributable cash from equity investees in excess of equity in earnings
(5,613
)
 
(3,701
)
 
(19,098
)
 
(11,925
)
Non-cash items not included in segment margin
(2,222
)
 
3,061

 
(2,475
)
 
2,729

Cash payments from direct financing leases in excess of earnings
(1,278
)
 
(1,171
)
 
(3,748
)
 
(3,424
)
Income before income taxes
$
22,677

 
$
19,260

 
$
60,791

 
$
44,102


 
(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. Capital spending in our pipeline transportation segment included $5.7 million and $57.1 million during the three and nine months ended September 30, 2012, respectively, representing capital contributions to our SEKCO equity investee to fund our share of the construction costs for its pipeline. For the nine months ended September 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. For the nine months ended September 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 that we believe were no more or less favorable than then-existing market conditions.