Segment Information (Tables)

3 Months Ended

Mar. 31, 2013

Segment Information

Schedule of operating income and capital expenditures of geographical segments

The tables below present the Partnership’s segment profit measure, Operating income before items not allocated to segments, and capital expenditures for the three months ended March 31, 2013 and 2012 for the reported segments (in thousands).

Three months ended March 31, 2013:

	Southwest		Northeast		Liberty		Utica			Total
Segment revenue	$	211,446	$	57,336	$	108,497	$	623		$	377,902
Purchased product costs	114,102		19,662		18,793		—			152,557
Net operating margin	97,344		37,674		89,704		623			225,345
Facility expenses	29,123		6,524		22,636		3,962			62,245
Portion of operating income (loss) attributable to non-controlling interests	1,387		—		—		(1,339		)	48
Operating income (loss) before items not allocated to segments	$	66,834	$	31,150	$	67,068	$	(2,000	)	$	163,052
Capital expenditures	$	26,687	$	1,779	$	319,827	$	280,320		$	628,613
Capital expenditures not allocated to segments										2,945
Total capital expenditures										$	631,558

Three months ended March 31, 2012:

	Southwest		Northeast		Liberty		Total
Segment revenue	$	238,954	$	86,918	$	75,577	$	401,449
Purchased product costs	104,233		25,687		24,635		154,555
Net operating margin	134,721		61,231		50,942		246,894
Facility expenses	32,630		6,378		12,247		51,255
Portion of operating income attributable to non-controlling interests	1,446		—		—		1,446
Operating income before items not allocated to segments	$	100,645	$	54,853	$	38,695	$	194,193
Capital expenditures	$	50,583	$	23,302	$	178,689	$	252,574
Capital expenditures not allocated to segments							1,689
Total capital expenditures							$	254,263

Reconciliation of segment revenue total revenue and operating income to before items not allocated to segments to (loss) income before provision for income tax

The following is a reconciliation of segment revenue to total revenue and operating income before items not allocated to segments to income before provision for income tax for the three months ended March 31, 2013 and 2012 (in thousands):

	Three months ended March 31,
	2013			2012
Total segment revenue	$	377,902		$	401,449
Derivative loss not allocated to segments	(185		)	(48,715		)
Revenue deferral adjustment (1)	(1,765		)	(2,268		)
Total revenue	$	375,952		$	350,466
Operating income before items not allocated to segments	$	163,052		$	194,193
Portion of operating income attributable to non-controlling interests	48			1,446
Derivative gain (loss) not allocated to segments	10,851			(65,769		)
Revenue deferral adjustment (1)	(1,765		)	(2,268		)
Compensation expense included in facility expenses not allocated to segments	(387		)	(449		)
Facility expenses adjustments (2)	2,877			2,864
Selling, general and administrative expenses	(25,408		)	(25,224		)
Depreciation	(69,597		)	(41,145		)
Amortization of intangible assets	(14,830		)	(10,985		)
Loss on disposal of property, plant and equipment	(138		)	(986		)
Accretion of asset retirement obligations	(353		)	(238		)
Income from operations	64,350			51,439
Loss from unconsolidated affiliate	(85		)	(9		)
Interest income	149			72
Interest expense	(38,336		)	(29,472		)
Amortization of deferred financing costs and discount (a component of interest expense)	(1,830		)	(1,270		)
Loss on redemption of debt	(38,455		)	—
Miscellaneous income, net	—			58
(Loss) income before provision for income tax	$	(14,207	)	$	20,818

(1) Amount relates to certain contracts in which the cash consideration that the Partnership receives for providing service is greater during the initial years of the contract compared to the later years. In accordance with GAAP, the revenue is recognized evenly over the term of the contract as the Partnership will perform a similar level of service for the entire term. Therefore, the revenue recognized in the current reporting period is less than the cash received. However, the Partnership’s chief operating decision maker and management evaluate the segment performance based on the cash consideration received and therefore, the impact of the revenue deferrals is excluded for segment reporting purposes. For the three months ended March 31, 2013, approximately $0.2 million and $1.6 million of the revenue deferral adjustment is attributable to the Southwest segment and Northeast segment, respectively. In comparison, for the three months ended March 31, 2012, approximately $0.2 million and $2.1 million of the revenue deferral adjustment was attributable to the Southwest segment and Northeast segment, respectively. Beginning in 2015, the cash consideration received from these contracts will decline and the reported segment revenue will be less than the revenue recognized for GAAP purposes.

(2) Facility expenses adjustments consist of the reallocation of the MarkWest Pioneer field services fee and the reallocation of the interest expense related to the SMR, which is included in facility expenses for the purposes of evaluating the performance of the Southwest segment.

Schedule of assets by segment

The tables below present information about segment assets as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013		December 31, 2012
Southwest	$	2,236,099	$	2,225,838
Northeast	573,199		578,122
Liberty	3,454,768		3,172,144
Utica	873,493		439,987
Total segment assets	7,137,559		6,416,091
Assets not allocated to segments:
Certain cash and cash equivalents	431,086		261,473
Fair value of derivatives	26,995		30,382
Investment in unconsolidated affiliate	34,106		31,179
Other (1)	90,808		96,591
Total assets	$	7,720,554	$	6,835,716

(1) Includes corporate fixed assets, deferred financing costs, income tax receivable, receivables and other corporate assets not allocated to segments.