Crosstex Energy Reports Third-Quarter 2006 Results.DALLAS -- The Crosstex Energy companies, Crosstex Energy, L.P. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :XTEX) (the Partnership) and Crosstex Energy, Inc. (NASDAQ:XTXI) (the Corporation) today reported earnings for the third quarter of 2006. Crosstex Energy, L.P. Financial Results The Partnership reported net income of $0.9 million in the third quarter of 2006, compared with net income of $1.1 million in the third quarter of 2005. The net loss per limited partner unit in the third quarter of 2006 was $0.12 per unit versus a net loss of $0.05 per unit in the corresponding quarter of 2005. The loss per limited partner unit was impacted by the preferential pref·er·en·tial adj. 1. Of, relating to, or giving advantage or preference: preferential treatment. 2. allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of net income to the general partner of $4.1 million in the third quarter of 2006, which represented the general partner's incentive distribution rights less certain stock-based compensation costs. This allocation reduced the limited partners' share of net income to a net loss of $3.2 million in the quarter. The Partnership's Distributable Cash Flow in the third quarter of 2006 was $21.1 million, or 3.11 times the amount required to cover its Minimum Quarterly Distribution of $0.25 per unit and 1.04 times the amount required to cover its current distribution of $0.55 per unit. Distributable Cash Flow was $17.9 million in the third quarter of 2005. Distributable Cash Flow is a non-GAAP financial measure and is explained in greater detail under "Non-GAAP Financial Information." There is a reconciliation of this non-GAAP measure to net income in the tables at the end of this news release. "We are pleased that our quarterly operating results allow us to continue our strong track record of distribution and dividend increases," said Barry E. Davis, Crosstex President and Chief Executive Officer. "The outstanding performance of our Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. Intrastate in·tra·state adj. Relating to or existing within the boundaries of a state. Adj. 1. intrastate - relating to or existing within the boundaries of a state; "intrastate as well as interstate commerce" Gas System and Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by assets continued to offset the shortfalls of our South Louisiana processing plants due to the 2005 hurricanes. We have developed a plan and mobilized a team to enhance our focus on innovative strategies designed to provide these plants with new gas supplies during the coming year. "As previously communicated, we look forward to significant improvement in the North Texas Pipeline as firm transport commitments will double by the end of the fourth quarter," Davis added. The Partnership's gross margin increased 90 percent to $74.8 million in the third quarter of 2006 from $39.4 million in the corresponding 2005 period. Gross margin from the Midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. business segment rose $31.2 million, or 107 percent, to $60.3 million. The increase was due to improved processing economics and growth in processed volumes of 356 percent. This volume growth was the result of the November 2005 acquisition of South Louisiana processing assets from El Paso El Paso (ĕl pă`sō), city (1990 pop. 515,342), seat of El Paso co., extreme W Tex., on the Rio Grande opposite Juárez, Mex.; inc. 1873. Corporation and significantly higher throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. in our Louisiana Intrastate Gas processing plants. Additionally, the Partnership completed construction of its North Texas Pipeline and began transporting gas from the Barnett Shale The Barnett Shale is a geological formation of economic significance. It consists of sedimentary rocks of Mississippian age in the U.S. State of Texas. The formation is estimated to stretch from the city of Dallas to west of the city of Fort Worth and south, covering 5,000 square in April 2006. Gross margin from the Treating business segment rose $4.2 million, or 40 percent, to $14.5 million in the third quarter of 2006. The increase was attributable to dramatic growth in the number of treating plants in service. There were 154 treating plants in service at the end of the third quarter of 2006 versus 111 at the end of the third quarter of 2005. Crosstex Energy, Inc. Financial Results The Corporation reported net income of $1.5 million for the third quarter of 2006, compared with net income of $0.8 million for the comparable period in 2005. The Corporation's net loss before income taxes and interest of non-controlling partners in the net income of the Partnership was $0.3 million in the third quarter of 2006, compared with income of $0.9 million in the third quarter of 2005. The Corporation's share of Partnership distributions, including distributions on the Corporation's 10 million participating limited partner units, its two percent general partner interest and the incentive distribution rights, was $11.1 million in the third quarter of 2006. Its share of Partnership distributions in the third quarter of 2005 was $7.7 million. The recently announced increase in the Partnership's distribution of $0.01 per unit raised the Corporation's share of distributions by $0.3 million from $10.8 million in the second quarter of 2006 to $11.1 million in the third quarter of 2006. Earnings Call The Partnership and the Corporation will hold their quarterly conference call to discuss third quarter results today, November 8, at 10:00 a.m. Central Time (11:00 p.m. Eastern Time). The dial-in number for the call is 800-299-7635, and the passcode is "Crosstex." A live Webcast of the call can be accessed on the investor relations Investor relations The process by which the corporation communicates with its investors. page of Crosstex Energy's Web site at www.crosstexenergy.com. The call will also be available for replay for 30 days by dialing 888-286-8010, passcode 18461086, or by going to the investor relations events page of Crosstex Energy's Web site. About the Crosstex Energy Companies Crosstex Energy, L.P., a midstream natural gas company headquartered in Dallas, operates over 5,000 miles of pipeline, 12 processing plants, four fractionators, and approximately 160 natural gas amine-treating plants in service and approximately 35 dew point dew point: see dew. control plants. Crosstex currently provides services for over 3.0 Bcf/day of natural gas, or approximately 6.0 percent of marketed U.S. daily production based on August 2006 Department of Energy data. Crosstex Energy, Inc. owns the two percent general partner interest, a 42 percent limited partner interest, and the incentive distribution rights of Crosstex Energy, L.P. Additional information about the Crosstex companies can be found at www.crosstexenergy.com. Non-GAAP Financial Information This press release contains a non-generally accepted accounting principle financial measure that we refer to as Distributable Cash Flow. Distributable Cash Flow includes earnings before non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , less maintenance capital expenditures and amortization of costs of certain derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. (puts) plus proceeds from the sale of idle equipment. The amounts included in the calculation of these measures are computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), with the exception of maintenance capital expenditures and the amortization of put premiums. Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated Fully depreciated An asset that has already been charged with the maximum amount of depreciation allowed by the IRS for accounting purposes. fully depreciated Of or relating to a fixed asset that has been depreciated to a book value of zero. assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. The puts were acquired to hedge the future price of certain natural gas liquids. The net cost of the puts is being amortized against Distributable Cash Flow over their life. We believe this measure is useful to investors because it may provide users of this financial information with meaningful comparisons between current results and prior reported results and a meaningful measure of the Partnership's cash flow after it has satisfied the capital and related requirements of its operations. Distributable Cash Flow is not a measure of financial performance or liquidity under GAAP. It should not be considered in isolation or as an indicator of the Partnership's performance. Furthermore, it should not be seen as a measure of liquidity or a substitute for metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. prepared in accordance with GAAP. Our reconciliation of this measure to net income is included among the following tables. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. identified by the use of words such as "forecast," "anticipate" and "estimate." These statements are based on currently available information and assumptions and expectations that the Partnership and the Corporation believe are reasonable. However, the Partnership's and the Corporation's assumptions and expectations are subject to a wide range of business risks, so they can give no assurance that actual performance will fall within the forecast ranges. Among the key risks that may bear directly on the Partnership's and the Corporation's results of operations and financial condition are: (1) the amount of natural gas transported in the Partnership's gathering and transmission lines may decline as a result of competition for supplies, reserve declines and reduction in demand from key customers and markets; (2) the level of the Partnership's processing and treating operations may decline for similar reasons; (3) fluctuations in natural gas and NGL NGL - A dialect of IGL. prices may occur due to weather and other natural and economic forces; (4) there may be a failure to successfully integrate new acquisitions; (5) the Partnership's credit risk management efforts may fail to adequately protect against customer nonpayment; (6) the Partnership may not adequately address construction and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. and (7) other factors discussed in the Partnership's and the Corporation's Form 10-K's for the year ended December 31, 2005, Form 10-Q's for the quarter ended June 30, 2006, and other filings with the Securities and Exchange Commission. The Partnership and the Corporation have no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. (Tables follow) [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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