(1) Distributable cash flow represents net income plus depletion, depreciation and amortization, plus minimums to be received in excess of revenues of $22 million, plus principal payments received on Sugar Camp of $3 million, less other adjustments to cash for known differences between the income statement and cash of $2 million. NRP has historically reduced its distributable cash flow by the amount of cash it has reserved for principal payments due on its senior notes in the next calendar year. However, to present its distributable cash flow more in line with MLP practice and because it intends to refinance some or all of the principal payments that are due in 2013 and 2014, it is no longer going to reduce distributable cash flow by reserves for future principal payments. This change in NRP's reporting of distributable cash flow does not change its long-term intention to pay down its debt.
Distributable cash flow is a "non-GAAP financial measure" that is presented because management believes it is a useful adjunct to net cash provided by operating activities under GAAP. Distributable cash flow is a significant liquidity metric that is an indicator of NRP's ability to generate cash flows at a level that can sustain or support an increase in quarterly cash distributions paid to its partners. Distributable cash flow is also the quantitative standard used throughout the investment community with respect to publicly traded partnerships. Distributable cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. A reconciliation of distributable cash flow to net cash provided by operating activities is included in the tables attached to this release. Distributable cash flow may not be calculated the same for NRP as other companies.