Energy Transfer 2010 Annual Report Download - page 89

producers of natural gas, and competition from other midstream companies, including major energy producers.
While we believe we have made reasonable assumptions to calculate the fair value, if future results are not
consistent with our estimates, we could be exposed to future impairment losses that could be material to our
results of operations.
Property, Plant and Equipment.Expenditures for maintenance and repairs that do not add capacity or extend
the useful life are expensed as incurred. Expenditures to refurbish assets that either extend the useful lives of the
asset or prevent environmental contamination are capitalized and depreciated over the remaining useful life of
the asset. Additionally, we capitalize certain costs directly related to the installation of company-owned propane
tanks and construction of assets including internal labor costs, interest and engineering costs. Upon disposition or
retirement of pipeline components or natural gas plant components, any gain or loss is recorded to accumulated
depreciation. When entire pipeline systems, gas plants or other property and equipment are retired or sold, any
gain or loss is included in the consolidated statement of operations. Depreciation of property, plant and
equipment is provided using the straight-line method based on their estimated useful lives ranging from 3 to 83
years. Changes in the estimated useful lives of the assets could have a material effect on our results of operation.
We do not anticipate future changes in the estimated useful lives of our property, plant and equipment.
Asset Retirement Obligation. We have determined that we are obligated by contractual or regulatory
requirements to remove facilities or perform other remediation upon retirement of certain assets. Determination
of the amounts to be recognized is based upon numerous estimates and assumptions, including expected
settlement dates, future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates.
However, management was not able to reasonably measure the fair value of the asset retirement obligations as of
December 31, 2010 or 2009 because the settlement dates were indeterminable. We will record an asset retirement
obligation in the periods in which management can reasonably determine the settlement dates.
Legal Matters.We are subject to litigation and regulatory proceedings as a result of our business operations and
transactions. We utilize both internal and external counsel in evaluating our potential exposure to adverse
outcomes from claims, orders, judgments or settlements. To the extent that actual outcomes differ from our
estimates, or additional facts and circumstances cause us to revise our estimates, our earnings will be affected.
We expense legal costs as incurred, and all recorded legal liabilities are revised, as required, as better information
becomes available to us. The factors we consider when recording an accrual for contingencies include, among
others: (i) the opinions and views of our legal counsel; (ii) our previous experience; and (iii) the decision of our
management as to how we intend to respond to the complaints.
For more information on our litigation and contingencies, see Note 9 to our consolidated financial statements
included in “Item 8. Financial Statements and Supplementary Data” in this report.
Forward-Looking Statements
This annual report contains various forward-looking statements and information that are based on our beliefs and
those of our General Partner, as well as assumptions made by and information currently available to us. These
forward-looking statements are identified as any statement that does not relate strictly to historical or current
facts. When used in this annual report, words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,”
“estimate,” “intend,” “could,” “believe,” “may,” “will” and similar expressions and statements regarding our
plans and objectives for future operations, are intended to identify forward-looking statements. Although we and
our General Partner believe that the expectations on which such forward-looking statements are based are
reasonable, neither we nor our General Partner can give assurances that such expectations will prove to be
correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions. If one or
more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results
may vary materially from those anticipated, estimated, projected or expected. Among the key risk factors that
may have a direct bearing on our results of operations and financial condition are:
• the amount of natural gas transported on our pipelines and gathering systems;
• the level of throughput in our natural gas processing and treating facilities;
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