Energy Transfer 2012 Annual Report Download - page 87

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Gross Margin. The components of our NGL transportation and services segment gross margin were as follows:
Years Ended December 31
2012 2011 Change
Storage revenues $ 129 $ 93 36
Transportation revenues 80 33 47
Processing and fractionation revenues 81 53 28
Other revenues (1) — (1)
Total gross margin $ 289 $ 179 $ 110
For the year ended December 31, 2012 compared to the same period in the prior year, NGL transportation and services segment
gross margin reflected twelve months of activity compared to only eight months of activity in 2011. Additionally, gross margin
for the year ended December 31, 2012 was impacted by the following items which did not have a comparable impact in the prior
period:
• Incurred a $2 million lower-of-cost or market write down on inventory held as of June 30, 2012 in our storage facility
and pipelines;
• Hurricane Isaac resulted in an approximate $4 million decrease to our processing and fractionation margin; and
• The Freedom Pipeline and Liberty Pipeline, which were placed in service in 2012, and Justice Pipeline, which began
interim service in 2012, contributed $12 million in the aggregate for the year ended December, 31, 2012.
The Lone Star West Texas Gateway pipeline and the Lone Star Fractionator I were both placed in service in December 2012;
therefore, the gross margin impact in 2012 was not significant.
Operating Expenses, Excluding Non-Cash Compensation Expense. Operating expenses increased due to operations of Lone Star
for twelve months in 2012 compared to eight months in 2011. The Lone Star West Texas Gateway pipeline and the Lone Star
Fractionator I were both placed in service in December 2012; therefore, the operating expense impact in 2012 was not significant.
Selling, General and Administrative Expenses, Excluding Non-Cash Compensation Expense. NGL Transportation and Storage
selling, general and administrative expenses increased due to operations of Lone Star for twelve months in 2012 compared to eight
months in 2011.
Investment in Sunoco Logistics
Years Ended December 31
2012 2011 Change
Revenue $ 3,194 $ — $ 3,194
Cost of products sold 2,843 — 2,843
Gross margin 351 — 351
Unrealized losses on commodity risk management activities (15) — (15)
Operating expenses, excluding non-cash compensation expense (95) — (95)
Selling, general and administrative, excluding non-cash compensation
expense (32) — (32)
Adjusted EBITDA related to unconsolidated affiliates 10 — 10
Segment Adjusted EBITDA $ 219 $ — $ 219
We obtained control of Sunoco Logistics on October 5, 2012 in connection with our acquisition of Sunoco; therefore, no comparative
results were reflected in our financial statements.
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