Energy Transfer 2010 Annual Report Download - page 72

Gains (Losses) on Non-Hedged Interest Rate Derivatives. We had interest rate swaps with a notional amount of
$625.0 million outstanding as of December 31, 2008, all of which were settled or terminated during 2009. As of
December 31, 2009, we did not have any interest rate swaps outstanding. The losses during 2008 primarily
related to changes in the fair value of forward starting interest rate swaps as a result of a sharp decline in the
10-year LIBOR swap rate, while the gains in 2009 resulted from increases in the index rate prior to settlement.
Allowance for Equity Funds Used During Construction. The decrease in AFUDC was due to the completion of
the Phoenix project in February 2009.
Other Income, Net. The decrease between the periods was primarily due to contributions in aid of construction
which exceeded our project costs during 2008.
Income Tax Expense. As a partnership, we are generally not subject to income taxes. However, certain wholly-
owned subsidiaries are corporations that are subject to income taxes. Income tax expense was higher in 2009
principally due to a tax benefit that resulted from trading losses incurred by one of our corporate subsidiaries in
2008.
Segment Operating Results
Operating income (loss) by segment is as follows:
Years Ended December 31,
2009 2008 Change
Intrastate transportation and storage $ 626,779 $ 718,348 $ (91,569)
Interstate transportation 138,233 124,676 13,557
Midstream 140,732 166,414 (25,682)
Retail propane and other retail propane
related 229,229 114,564 114,665
All other (8,658) (1,531) (7,127)
Selling, general and administrative
expenses not allocated to segments 1,292 (4,892) 6,184
Operating income $ 1,127,607 $ 1,117,579 $ 10,028
Selling, General and Administrative Expenses Not Allocated to Segments. Selling, general and administrative
expenses are allocated monthly to the Operating Companies using MMFC. The expenses subject to allocation are
based on estimated amounts and take into consideration our actual expenses from previous months and known
trends. The difference between the allocation and actual costs is adjusted in the following month, which results in
over or under allocation of these costs due to timing differences.
Intrastate Transportation and Storage
Years Ended December 31,
2009 2008 Change
Natural gas MMBtu/d — transported 12,254,168 11,187,327 1,066,841
Revenues $ 2,391,544 $ 5,634,604 $ (3,243,060)
Cost of products sold 1,393,295 4,467,552 (3,074,257)
Gross margin 998,249 1,167,052 (168,803)
Operating expenses 199,806 287,515 (87,709)
Depreciation and amortization 107,605 84,701 22,904
Selling, general and administrative 64,059 76,488 (12,429)
Segment operating income $ 626,779 $ 718,348 $ (91,569)
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