Energy Transfer 2012 Annual Report Download - page 89

81
Year Ended December 31, 2011 Compared to the Year Ended December 31, 2010 (tabular dollar amounts are expressed
in millions)
Consolidated Results
Years ended December 31,
2011 2010 Change
Segment Adjusted EBITDA
Intrastate natural gas transportation and storage $ 667 $ 716 $ (49)
Interstate natural gas transportation and storage 373 220 153
Midstream 389 329 60
NGL transportation and services 127 — 127
All other 225 276 (51)
Total Segment Adjusted EBITDA 1,781 1,541 240
Depreciation and amortization (405)(317)(88)
Interest expense, net of interest capitalized (474)(413)(61)
Gains on non-hedged interest rate derivatives (77) 5 (82)
Non-cash compensation expense (37)(28)(9)
Unrealized gains (losses) on commodity risk management activities (11)(78) 67
Impairment of investments in affiliates (5)(53) 48
Adjusted EBITDA attributable to discontinued operations (23)(19)(4)
Adjusted EBITDA related to unconsolidated affiliates (56)(35)(21)
Equity in earnings of unconsolidated affiliates 26 12 14
Other, net — 24 (24)
Income from continuing operations before income tax expense $ 719 $ 639 $ 80
Income tax expense $ (19) $ (16) $ (3)
Income from continuing operations $ 700 $ 623 $ 77
Income from discontinued operations $ (3) $ (6) $ 3
Net income $ 697 $ 617 $ 80
See the detailed discussion of Segment Adjusted EBITDA below.
Depreciation and Amortization. Depreciation and amortization increased due to acquisitions and assets placed in service since
2010. Depreciation and amortization increased by $28 million for our interstate transportation and storage segment primarily due
to the Tiger pipeline which was placed in service in December 2010. Depreciation and amortization increased by $25 million for
midstream segment primarily due to incremental depreciation from the continued expansion of our Louisiana and South Texas
assets. Depreciation and amortization for our NGL transportation and services segment was $33 million from its inception in May
2011 through December 31, 2011.
Interest Expense. Interest expense increased primarily due to the issuance of $1.5 billion of senior notes in May 2011, the proceeds
from which were used to repay borrowings on our revolving credit facility, to fund growth projects and for general partnership
purposes. Interest expense was presented net of capitalized interest and allowance for debt funds used during construction, which
totaled $13 million and $16 million during 2011 and 2010, respectively.
Gains (Losses) on Non-Hedged Interest Rate Derivatives. The year ended December 31, 2011 reflected losses on non-hedged
interest rate swaps for which we had total notional amounts outstanding of $1.65 billion as of December 31, 2011, which included
$1.15 billion of forward-starting floating-to-fixed swaps used to hedge interest rates associated with anticipated note issuances
and $500 million of fixed-to-floating swaps used to swap a portion of our fixed rate debt to floating. During the second half of
2011, forward rates decreased significantly due to global economic uncertainty which resulted in unrealized non-cash losses on
our forward-starting floating-to-fixed swaps.
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