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General Accounting Matters | 9 Months Ended
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Sep. 30, 2013
General Accounting Matters [Abstract] |
General Accounting Matters | Note 2. General Accounting Matters Our results of operations for the three and nine months ended September 30, 2013 are not necessarily indicative of results expected for the full year of 2013. In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements include all adjustments consisting of normal recurring accruals necessary for fair presentation. Although we believe the disclosures in these financial statements are adequate and make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). These Unaudited Condensed Consolidated Financial Statements and the Notes thereto should be read in conjunction with the Audited Consolidated Financial Statements and Notes thereto included in our annual report on Form 10-K for the year ended December 31, 2012 (the "2012 Form 10-K") filed with the SEC on March 1, 2013. Allowance for Doubtful Accounts Our allowance for doubtful accounts is determined based on specific identification and estimates of future uncollectible accounts. The following table presents our allowance for doubtful accounts activity for the periods indicated:
|  | For the Nine Months |
|  | Ended September 30, |
|  | 2013 |  |  | 2012 |
Balance at beginning of period |  | $ | 13.2 |  |  | $ | 13.4 |
Charged to costs and expenses |  |  | 1.2 |  |  |  | 0.2 |
Deductions |  |  | (7.7 | ) |  |  | (0.4 | )
Balance at end of period |  | $ | 6.7 |  |  | $ | 13.2 |
Contingencies Certain conditions may exist as of the date our consolidated financial statements are issued, which may result in a loss to us but which will only be resolved when one or more future events occur or fail to occur. Management has regular quarterly litigation reviews, including updates from legal counsel, to assess the need for accounting recognition or disclosure of these contingencies, and such assessment inherently involves an exercise in judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, our management and legal counsel evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. We accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not record a contingent liability when the likelihood of loss is probable but the amount cannot be reasonably estimated or when it is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and the impact would be material, we disclose the nature of the contingency and, if feasible, an estimate of the possible loss or range of loss. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. See Note 14 for additional information regarding our contingencies. Derivative Instruments We use derivative instruments such as futures, swaps, options, forward contracts and other arrangements to manage price risks associated with inventories, firm commitments, interest rates, foreign currencies and certain anticipated future commodity transactions. To qualify for hedge accounting, the hedged item must expose us to risk and the related derivative instrument must reduce the exposure to that risk and meet specific hedge documentation requirements related to designation dates, expectations for hedge effectiveness and the probability that hedged future transactions will occur as forecasted. We formally designate derivative instruments as hedges and document and assess their effectiveness at inception of the hedge and on a monthly basis thereafter. Forecasted transactions are evaluated for the probability of occurrence and are periodically back-tested once the forecasted period has passed to determine whether similarly forecasted transactions are probable of occurring in the future. For certain physical forward commodity derivative contracts, we apply the normal purchase/normal sale exception, whereby changes in the mark-to-market values of such contracts are not recognized in income. As a result, the revenues and expenses associated with such physical transactions are recognized during the period when volumes are physically delivered or received. Physical forward commodity contracts subject to this exception are evaluated for the probability of future delivery and are periodically back-tested once the forecasted period has passed to determine whether similar forward contracts are probable of physical delivery in the future. See Note 4 for additional information regarding our derivative instruments. Estimates Preparing our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates that affect amounts presented in the financial statements. Our most significant estimates relate to (i) the useful lives and depreciation/amortization methods used for fixed and identifiable intangible assets; (ii) measurement of fair value and projections used in impairment testing of fixed and intangible assets (including goodwill); (iii) contingencies; and (iv) revenue and expense accruals. Actual results could differ materially from our estimates. On an ongoing basis, we review our estimates based on currently available information. Any changes in the facts and circumstances underlying our estimates may require us to update such estimates, which could have a material impact on our consolidated financial statements. Provision for Income Taxes Provision for income taxes primarily reflects our state tax obligations under the Revised Texas Franchise Tax (the "Texas Margin Tax"). Deferred income tax assets and liabilities are recognized for temporary differences between the assets and liabilities of our tax paying entities for financial reporting and tax purposes. We recognized an overall net income tax benefit of $23.5 million for the nine months ended September 30, 2012 that was primarily due to a $46.5 million net income tax benefit related to the conversion of certain of our subsidiaries to limited liability companies during the first quarter of 2012, partially offset by accruals for the Texas Margin Tax. The $46.5 million net income tax benefit recorded in 2012 is attributable to the difference between deferred income taxes accrued by the applicable subsidiaries through the date of conversion and any current income tax due in connection with the conversions. After taking into account certain tax loss carryforward amounts, we paid $22.0 million in federal income taxes in connection with the conversions. We recognized a net income tax expense of $46.2 million for the nine months ended September 30, 2013, of which $19.6 million of expense was attributable to certain legislative changes to the Texas Margin Tax enacted during the second quarter of 2013. Our current provision for income taxes was $14.1 million and our deferred income tax expense was $32.1 million for the nine months ended September 30, 2013. Other Non-Operating Income (Expense) The following table presents the components of "Other, net" as presented on our Unaudited Condensed Statements of Consolidated Operations for the periods indicated:
|  | For the Three Months |  |  | For the Nine Months |
|  | Ended September 30, |  |  | Ended September 30, |
|  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
Gain on sales of available-for-sale securities of Energy Transfer Equity (1) |  | $ | -- |  |  | $ | -- |  |  | $ | -- |  |  | $ | 68.8 |
Distribution income from Energy Transfer Equity |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 4.1 |
Other |  |  | 0.4 |  |  |  | 1.2 |  |  |  | (0.5 | ) |  |  | (0.2 | )
Total |  | $ | 0.4 |  |  | $ | 1.2 |  |  | $ | (0.5 | ) |  | $ | 72.7 |
(1) See Note 7 for information regarding the liquidation of our investment in limited partnership units of Energy Transfer Equity. |
Restricted Cash Restricted cash represents amounts held in bank accounts as margin in support of our commodity derivative instruments portfolio and related physical natural gas, crude oil, refined products and NGL purchases and sales. Additional cash may be restricted to maintain this portfolio as commodity prices fluctuate or deposit requirements change. At September 30, 2013 and December 31, 2012, our restricted cash amounts were $35.9 million and $4.3 million, respectively. See Note 4 for information regarding our derivative instruments and hedging activities.

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