Energy Transfer 2010 Annual Report Download - page 145
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Please find page 145 of the 2010 Energy Transfer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
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Deposits or advances are received from our customers as prepayments for natural gas deliveries in the
following month and from our propane customers as security or prepayments for future propane deliveries.
Prepayments and security deposits may also be required when customers exceed their credit limits or do not
qualify for open credit.
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, 2010 was $7.21 billion and $6.44 billion, respectively. As of December 31, 2009, the
aggregate fair value and carrying amount of our debt obligations was $6.75 billion and $6.22 billion,
respectively.
We have marketable securities, 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 since we use a LIBOR curve
based on quotes from an active exchange of Eurodollar futures for the same period as the future interest
swap settlements and discount the future cash flows accordingly, including the effects of our credit risk.
Level 3 inputs are unobservable. We currently do not have any fair value measurements that are considered
Level 3 valuations.
F-19