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Forward-Looking
Statements & Non-GAAP Financial Information This presentation contains
forward looking statements within the meaning of the federal securities laws.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results of Crosstex Energy,
L.P., Crosstex Energy, Inc. and their respective affiliates (collectively
known as Crosstex) may differ materially from those expressed in the
forward-looking statements contained throughout this presentation and in
documents filed with the Securities and Exchange Commission (SEC). Many of
the factors that will determine these results are beyond Crosstexs ability
to control or predict. These statements are necessarily based upon various
assumptions involving judgments with respect to the future, including, among
others, prices and market demand for natural gas, natural gas liquids (NGLs),
condensate and crude oil; drilling levels; the ability to achieve synergies
and revenue growth; failure to satisfy closing conditions with respect to the
announced combination with Devon Energy Corporation (Devon); failure to
successfully integrate, or integrate within the contemplated timeframe,
Crosstexs business with Devons business; failure to achieve, or achieve
within the contemplated timeframe, the anticipated synergies of the
combination with Devon; national, international, regional and local economic,
competitive and regulatory conditions and developments; technological
developments; capital markets conditions; inflation rates; interest rates;
the political and economic stability of oil producing nations; energy
markets; weather conditions; business and regulatory or legal decisions; the
pace of deregulation of retail natural gas and electricity; the timing and
success of business development efforts; and other factors discussed in
Crosstexs Annual Reports on Form 10-K for the year ended December 31, 2012
and Crosstexs Quarterly Reports on Form 10-Q for the quarters ended March
31, 2013, June 30, 2013 and September 30, 2013 and their other filings with
the SEC. You are cautioned not to put undue reliance on any forward-looking
statement. Crosstex has no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise. This presentation also contains non-generally accepted
accounting principle financial measures that Crosstex refers to as gross
operating margin, adjusted EBITDA and distributable cash flow. Gross
operating margin is defined as revenue less the cost of purchased gas, NGL
and crude oil. Adjusted EBITDA is defined as net income plus interest
expense, provision for income taxes, depreciation and amortization expense,
impairments, stock-based compensation, (gain) loss on non-cash derivatives,
distribution from a limited liability company and non-controlling interest;
less gain on sale of property and equity in income (loss) of a limited
liability company. Distributable cash flow is defined as earnings before
certain noncash charges and the (gain) loss on the sale of assets less
maintenance capital expenditures. The amounts included in the calculation of
these measures are computed in accordance with generally accepted accounting
principles (GAAP) with the exception of maintenance capital expenditures.
Maintenance capital expenditures are capital expenditures made to replace
partially or fully depreciated assets in order to maintain the existing
operating capacity of the assets and to extend their useful lives. Reconciliations
of these measures to their most directly comparable GAAP measures are in the
tables in the Appendix. Crosstex believes these measures are useful to
investors because they may provide users of this financial information with
meaningful comparisons between current results and prior-reported results and
a meaningful measure of Crosstexs cash flow after it has satisfied the
capital and related requirements of its operations. Gross operating margin,
adjusted EBITDA, distributable cash flow, growth capital expenditures and
maintenance capital expenditures, as defined above, are not measures of
financial performance or liquidity under GAAP. They should not be considered
in isolation or as an indicator of Crosstexs performance. Furthermore, they
should not be seen as measures of liquidity or a substitute for metrics
prepared in accordance with GAAP. 2
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