Energy Transfer 2012 Annual Report Download - page 165

F - 20
Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following:
December 31,
2012 2011
Interest payable $ 256 $ 143
Customer advances and deposits 44 84
Accrued capital expenditures 356 197
Accrued wages and benefits 236 67
Taxes payable other than income taxes 203 77
Income taxes payable 40 14
Deferred income taxes 130 —
Other 297 48
Total accrued and other current liabilities $ 1,562 $ 630
Deposits or advances are received from our customers as prepayments for natural gas deliveries in the following month.
Prepayments and security deposits may also be required when customers exceed their credit limits or do not qualify for open
credit.
Environmental Remediation
We accrue environmental remediation costs for work at identified sites where an assessment has indicated that cleanup costs
are probable and reasonably estimable. Such accruals are undiscounted and are based on currently available information,
estimated timing of remedial actions and related inflation assumptions, existing technology and presently enacted laws and
regulations. If a range of probable environmental cleanup costs exists for an identified site, the minimum of the range is
accrued unless some other point in the range is more likely in which case the most likely amount in the range is accrued.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value.
Price risk management assets and liabilities are recorded at fair value.
Based on the estimated borrowing rates currently available to us and our subsidiaries for loans with similar terms and average
maturities, the aggregate fair value and carrying amount of our debt obligations as of December 31, 2012 was $17.84 billion
and $16.22 billion, respectively. As of December 31, 2011, the aggregate fair value and carrying amount of our debt obligations
was $8.39 billion and $7.81 billion, respectively. The fair value of our consolidated debt obligations is a Level 2 valuation
based on the observable inputs used for similar liabilities.
We have commodity derivatives and interest rate derivatives that are accounted for as assets and liabilities at fair value in our
consolidated balance sheets. We determine the fair value of our assets and liabilities subject to fair value measurement by
using the highest possible “level” of inputs. Level 1 inputs are observable quotes in an active market for identical assets and
liabilities. We consider the valuation of marketable securities and commodity derivatives transacted through a clearing broker
with a published price from the appropriate exchange as a Level 1 valuation. Level 2 inputs are inputs observable for similar
assets and liabilities. We consider over-the-counter (“OTC”) commodity derivatives entered into directly with third parties
as a Level 2 valuation since the values of these derivatives are quoted on an exchange for similar transactions. Additionally,
we consider our options transacted through our clearing broker as having Level 2 inputs due to the level of activity of these
contracts on the exchange in which they trade. We consider the valuation of our interest rate derivatives as Level 2 as the
primary input, the LIBOR curve, is based on quotes from an active exchange of Eurodollar futures for the same period as the
future interest swap settlements. Level 3 inputs are unobservable. We currently do not have any recurring fair value financial
instrument measurements that are considered Level 3 valuations. During the period ended December 31, 2012, no transfers
were made between any levels within the fair value hierarchy.
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