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Business Segments
 3 Months Ended
Mar. 31, 2013
Business Segments [Abstract]  
Business Segments
Note 11.  Business Segments

We have five reportable business segments: (i) NGL Pipelines & Services; (ii) Onshore Natural Gas Pipelines & Services; (iii) Onshore Crude Oil Pipelines & Services; (iv) Offshore Pipelines & Services; and (v) Petrochemical & Refined Products Services.  Our business segments are generally organized and managed according to the types of services rendered (or technologies employed) and products produced and/or sold.

All activities included in our former sixth reportable business segment, Other Investments, ceased on January 18, 2012, which was the date we discontinued using the equity method to account for our previously held investment in Energy Transfer Equity.  See Note 7 for information regarding the liquidation of our investment in Energy Transfer Equity.

We evaluate segment performance based on the non-GAAP financial measure of gross operating margin.  Gross operating margin (either in total or by individual segment) is an important performance measure of the core profitability of our operations.  This measure forms the basis of our internal financial reporting and is used by our management in deciding how to allocate capital resources among business segments.  We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results.  The GAAP financial measure most directly comparable to total segment gross operating margin is operating income.  Our non-GAAP financial measure of total segment gross operating margin should not be considered an alternative to GAAP operating income.

We define total segment gross operating margin as operating income before: (i) depreciation, amortization and accretion expenses; (ii) non-cash asset impairment charges; (iii) gains and losses attributable to asset sales and insurance recoveries; and (iv) general and administrative costs.  Gross operating margin by segment is calculated by subtracting segment operating costs and expenses (net of the adjustments noted above) from segment revenues, with both segment totals before the elimination of intercompany transactions.  In accordance with GAAP, intercompany accounts and transactions are eliminated in the preparation of our consolidated financial statements.  Gross operating margin is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges.  Gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests.

We include equity in income of unconsolidated affiliates in our measurement of segment gross operating margin and operating income.  Equity investments with industry partners are a significant component of our business strategy.  They are a means by which we conduct our operations to align our interests with those of customers and/or suppliers.  This method of operation enables us to achieve favorable economies of scale relative to the level of investment and business risk assumed.  Many of these businesses perform supporting or complementary roles to our other midstream business operations.

The following table presents our measurement of total segment gross operating margin for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2013
 
 
2012
 
Revenues
 
$
11,383.1
 
 
$
11,252.5
 
Less:    Operating costs and expenses
 
 
(10,420.4
)
 
 
(10,467.2
)
Add:     Equity in income of unconsolidated affiliates
 
 
44.5
 
 
 
9.9
 
Depreciation, amortization and accretion recorded in operating costs and expenses
 
 
276.8
 
 
 
254.6
 
Non-cash asset impairment charges recorded in operating costs and expenses
 
 
11.0
 
 
 
5.4
 
Gains attributable to asset sales and insurance recoveries recorded in
   operating costs and expenses
 
 
(63.9
)
 
 
(2.5
)
Total segment gross operating margin
 
$
1,231.1
 
 
$
1,052.7
 

The following table presents a reconciliation of total segment gross operating margin to operating income and further to income before income taxes for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2013
 
 
2012
 
Total segment gross operating margin
 
$
1,231.1
 
 
$
1,052.7
 
Adjustments to reconcile total segment gross operating margin to operating income:
 
 
 
 
 
 
 
 
Amounts included in operating costs and expenses:
 
 
 
 
 
 
 
 
Depreciation, amortization and accretion
 
 
(276.8
)
 
 
(254.6
)
Non-cash asset impairment charges
 
 
(11.0
)
 
 
(5.4
)
Gains attributable to asset sales and insurance recoveries
 
 
63.9
 
 
 
2.5
 
General and administrative costs
 
 
(49.5
)
 
 
(46.3
)
Operating income
 
 
957.7
 
 
 
748.9
 
Other expense, net
 
 
(196.0
)
 
 
(127.8
)
Income before income taxes
 
$
761.7
 
 
$
621.1
 
 
Information by business segment, together with reconciliations to our consolidated financial statement totals, is presented in the following table:

 
 
Reportable Business Segments
 
 
 
 
 
 
 
 
 
Onshore
 
 
Onshore
 
 
 
 
Petrochemical
 
 
 
 
 
 
 
 
 
NGL
 
 
Natural Gas
 
 
Crude Oil
 
 
Offshore
 
 
& Refined
 
 
 
 
Adjustments
 
 
 
 
 
Pipelines
 
 
Pipelines
 
 
Pipelines
 
 
Pipelines
 
 
Products
 
 
Other
 
 
and
 
 
Consolidated
 
 
 
& Services
 
 
& Services
 
 
& Services
 
 
& Services
 
 
Services
 
 
Investments
 
 
Eliminations
 
 
Totals
 
Revenues from third parties:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Three months ended March 31, 2013
 
$
3,950.7
 
 
$
874.2
 
 
$
4,793.2
 
 
$
40.5
 
 
$
1,718.6
 
 
$
--
 
 
$
--
 
 
$
11,377.2
 
  Three months ended March 31, 2012
 
 
4,354.1
 
 
 
804.9
 
 
 
4,473.6
 
 
 
54.4
 
 
 
1,534.7
 
 
 
--
 
 
 
--
 
 
 
11,221.7
 
Revenues from related parties:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Three months ended March 31, 2013
 
 
0.3
 
 
 
3.5
 
 
 
--
 
 
 
2.1
 
 
 
--
 
 
 
--
 
 
 
--
 
 
 
5.9
 
  Three months ended March 31, 2012
 
 
0.4
 
 
 
28.7
 
 
 
--
 
 
 
1.7
 
 
 
--
 
 
 
--
 
 
 
--
 
 
 
30.8
 
Intersegment and intrasegment
   revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Three months ended March 31, 2013
 
 
2,709.0
 
 
 
256.2
 
 
 
2,024.7
 
 
 
2.0
 
 
 
422.1
 
 
 
--
 
 
 
(5,414.0
)
 
 
--
 
  Three months ended March 31, 2012
 
 
2,818.2
 
 
 
223.7
 
 
 
1,730.9
 
 
 
3.3
 
 
 
439.9
 
 
 
--
 
 
 
(5,216.0
)
 
 
--
 
Total revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Three months ended March 31, 2013
 
 
6,660.0
 
 
 
1,133.9
 
 
 
6,817.9
 
 
 
44.6
 
 
 
2,140.7
 
 
 
--
 
 
 
(5,414.0
)
 
 
11,383.1
 
  Three months ended March 31, 2012
 
 
7,172.7
 
 
 
1,057.3
 
 
 
6,204.5
 
 
 
59.4
 
 
 
1,974.6
 
 
 
--
 
 
 
(5,216.0
)
 
 
11,252.5
 
Equity in income (loss) of
   unconsolidated affiliates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Three months ended March 31, 2013
 
 
3.9
 
 
 
1.0
 
 
 
36.6
 
 
 
6.4
 
 
 
(3.4
)
 
 
--
 
 
 
--
 
 
 
44.5
 
  Three months ended March 31, 2012
 
 
5.2
 
 
 
1.4
 
 
 
0.5
 
 
 
6.9
 
 
 
(6.5
)
 
 
2.4
 
 
 
--
 
 
 
9.9
 
Gross operating margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Three months ended March 31, 2013
 
 
592.5
 
 
 
190.8
 
 
 
236.4
 
 
 
40.5
 
 
 
170.9
 
 
 
--
 
 
 
--
 
 
 
1,231.1
 
  Three months ended March 31, 2012
 
 
654.9
 
 
 
206.2
 
 
 
39.3
 
 
 
52.1
 
 
 
97.8
 
 
 
2.4
 
 
 
--
 
 
 
1,052.7
 
Property, plant and equipment, net:
   (see Note 6)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At March 31, 2013
 
 
9,059.1
 
 
 
8,942.0
 
 
 
1,359.0
 
 
 
1,323.5
 
 
 
2,548.4
 
 
 
--
 
 
 
1,990.5
 
 
 
25,222.5
 
At December 31, 2012
 
 
8,494.8
 
 
 
8,950.1
 
 
 
1,385.9
 
 
 
1,343.0
 
 
 
2,559.5
 
 
 
--
 
 
 
2,113.1
 
 
 
24,846.4
 
Investments in unconsolidated
   affiliates: (see Note 7)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At March 31, 2013
 
 
412.1
 
 
 
24.6
 
 
 
660.3
 
 
 
509.0
 
 
 
73.0
 
 
 
--
 
 
 
--
 
 
 
1,679.0
 
At December 31, 2012
 
 
324.6
 
 
 
24.9
 
 
 
493.8
 
 
 
479.0
 
 
 
72.3
 
 
 
--
 
 
 
--
 
 
 
1,394.6
 
Intangible assets, net: (see Note 8)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At March 31, 2013
 
 
311.0
 
 
 
1,055.5
 
 
 
5.6
 
 
 
63.1
 
 
 
104.6
 
 
 
--
 
 
 
--
 
 
 
1,539.8
 
At December 31, 2012
 
 
320.6
 
 
 
1,067.9
 
 
 
5.9
 
 
 
66.2
 
 
 
106.2
 
 
 
--
 
 
 
--
 
 
 
1,566.8
 
Goodwill: (see Note 8)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At March 31, 2013
 
 
341.2
 
 
 
296.3
 
 
 
311.2
 
 
 
82.1
 
 
 
1,055.3
 
 
 
--
 
 
 
--
 
 
 
2,086.1
 
At December 31, 2012
 
 
341.2
 
 
 
296.3
 
 
 
311.2
 
 
 
82.1
 
 
 
1,056.0
 
 
 
--
 
 
 
--
 
 
 
2,086.8
 
Segment assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At March 31, 2013
 
 
10,123.4
 
 
 
10,318.4
 
 
 
2,336.1
 
 
 
1,977.7
 
 
 
3,781.3
 
 
 
--
 
 
 
1,990.5
 
 
 
30,527.4
 
At December 31, 2012
 
 
9,481.2
 
 
 
10,339.2
 
 
 
2,196.8
 
 
 
1,970.3
 
 
 
3,794.0
 
 
 
--
 
 
 
2,113.1
 
 
 
29,894.6
 
 
The following table presents additional information regarding our consolidated revenues and costs and expenses for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2013
 
 
2012
 
NGL Pipelines & Services:
 
 
 
 
Sales of NGLs and related products
 
$
3,665.6
 
 
$
4,115.3
 
Midstream services
 
 
285.4
 
 
 
239.2
 
Total
 
 
3,951.0
 
 
 
4,354.5
 
Onshore Natural Gas Pipelines & Services:
 
 
 
 
 
 
 
 
Sales of natural gas
 
 
639.5
 
 
 
572.6
 
Midstream services
 
 
238.2
 
 
 
261.0
 
Total
 
 
877.7
 
 
 
833.6
 
Onshore Crude Oil Pipelines & Services:
 
 
 
 
 
 
 
 
Sales of crude oil
 
 
4,742.8
 
 
 
4,447.6
 
Midstream services
 
 
50.4
 
 
 
26.0
 
Total
 
 
4,793.2
 
 
 
4,473.6
 
Offshore Pipelines & Services:
 
 
 
 
 
 
 
 
Sales of natural gas
 
 
0.1
 
 
 
0.1
 
Sales of crude oil
 
 
2.3
 
 
 
1.4
 
Midstream services
 
 
40.2
 
 
 
54.6
 
Total
 
 
42.6
 
 
 
56.1
 
Petrochemical & Refined Products Services:
 
 
 
 
 
 
 
 
Sales of petrochemicals and refined products
 
 
1,547.2
 
 
 
1,351.2
 
Midstream services
 
 
171.4
 
 
 
183.5
 
Total
 
 
1,718.6
 
 
 
1,534.7
 
Total consolidated revenues
 
$
11,383.1
 
 
$
11,252.5
 
 
 
 
 
 
 
 
 
 
Consolidated costs and expenses
 
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of sales
 
$
9,692.5
 
 
$
9,665.8
 
Other operating costs and expenses (1)
 
 
504.0
 
 
 
543.9
 
Depreciation, amortization and accretion
 
 
276.8
 
 
 
254.6
 
Gains attributable to asset sales and insurance recoveries
 
 
(63.9
)
 
 
(2.5
)
Non-cash asset impairment charges
 
 
11.0
 
 
 
5.4
 
General and administrative costs
 
 
49.5
 
 
 
46.3
 
Total consolidated costs and expenses
 
$
10,469.9
 
 
$
10,513.5
 
 
 
 
 
 
 
 
 
 
(1)   Represents cost of operating our plants, pipelines and other fixed assets, excluding depreciation, amortization and accretion charges.
 

Quarter-to-quarter fluctuations in our product sales revenues and related cost of sales amounts are explained in part by changes in energy commodity prices.  In general, lower energy commodity prices result in a decrease in our revenues attributable to product sales; however, these lower commodity prices also decrease the associated cost of sales as purchase costs decline.