Energy Transfer 2012 Annual Report Download - page 156

F - 11
• ETC FEP, a Delaware limited liability company that directly owns a 50% interest in FEP, which owns 100% of
the Fayetteville Express interstate natural gas pipeline.
• ETC Tiger, a Delaware limited liability company engaged in interstate transportation of natural gas.
• CrossCountry, a Delaware limited liability company that indirectly owns a 50% interest in Citrus Corp., which
owns 100% of the FGT interstate natural gas pipeline.
• ETC Compression, a Delaware limited liability company engaged in natural gas compression services and related
equipment sales.
• Sunoco Logistics is a publicly traded Delaware limited partnership that owns and operates a logistics business, consisting
of refined products and crude oil pipelines, terminalling and storage assets, and refined products and crude oil acquisition
and marketing assets.
• Holdco is a Delaware limited liability company that is owned 40% and 60% by ETP and ETE, respectively. Holdco
directly owns Southern Union and Sunoco. Pursuant to a stockholders agreement between ETE and ETP, ETP controls
Holdco. As such, ETP consolidates Holdco (including Sunoco and Southern Union) in its financial statements which
their operations are described as follows:
• Southern Union owns and operates assets in the regulated and unregulated natural gas industry and is primarily
engaged in the gathering, processing, transportation, storage and distribution of natural gas in the United States.
• Sunoco owns and operates retail marketing assets , which sell gasoline and middle distillates at retail and operates
convenience stores in 25 states, primarily on the east coast and in the midwest region of the United States.
On January 12, 2012, we contributed HOLP and Titan, our subsidiaries that formerly operated our propane operations, to
AmeriGas. See Note 4.
On October 5, 2012, we completed the Sunoco Merger and Holdco Transaction, as described below in Note 3.
Our financial statements reflect the following reportable business segments: intrastate natural gas transportation and storage;
interstate natural gas transportation and storage; midstream; NGL transportation and services; investment in Sunoco Logistics;
and retail marketing.
2. ESTIMATES, SIGNIFICANT ACCOUNTING POLICIES AND BALANCE SHEET DETAIL:
Certain of our significant accounting policies have been impacted by current year transactions. See Note 3 for a discussion
of these transactions.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the accrual for and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The natural gas industry conducts its business by processing actual transactions at the end of the month following the month
of delivery. Consequently, the most current month’s financial results for the midstream, NGL and intrastate transportation
and storage operations are estimated using volume estimates and market prices. Any differences between estimated results
and actual results are recognized in the following month’s financial statements. Management believes that the estimated
operating results represent the actual results in all material respects.
Some of the other significant estimates made by management include, but are not limited to, the timing of certain forecasted
transactions that are hedged, the fair value of derivative instruments, useful lives for depreciation and amortization, purchase
accounting allocations and subsequent realizability of intangible assets, fair value measurements used in the goodwill
impairment test, market value of inventory, assets and liabilities resulting from the regulated ratemaking process, contingency
reserves and environmental reserves. Actual results could differ from those estimates.
Revenue Recognition
Revenues for sales of natural gas and NGLs are recognized at the later of the time of delivery of the product to the customer
or the time of sale or installation. Revenues from service labor, transportation, treating, compression and gas processing are
recognized upon completion of the service. Transportation capacity payments are recognized when earned in the period the
capacity is made available.
Table of Contents