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Business Segments | 6 Months Ended
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Jun. 30, 2017
Business Segments [Abstract] |
Business Segments | Note 9. Business Segments Our operations are reported under four business segments: (i) NGL Pipelines & Services, (ii) Crude Oil Pipelines & Services, (iii) Natural Gas Pipelines & Services and (iv) 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. Financial information regarding these segments is evaluated regularly by our chief operating decision makers in deciding how to allocate resources and in assessing operating and financial performance. Segment Gross Operating Margin We evaluate segment performance based on our financial measure of gross operating margin. Gross operating margin is an important performance measure of the core profitability of our operations and forms the basis of our internal financial reporting. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results. 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. The following table presents our measurement of total segment gross operating margin for the periods presented. The GAAP financial measure most directly comparable to total segment gross operating margin is operating income.
|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Income before income taxes |  | $ | 674.7 |  |  | $ | 569.9 |  |  | $ | 1,451.7 |  |  | $ | 1,248.5 |
Add total other expense, net |  |  | 264.0 |  |  |  | 267.0 |  |  |  | 518.6 |  |  |  | 504.0 |
Operating income |  |  | 938.7 |  |  |  | 836.9 |  |  |  | 1,970.3 |  |  |  | 1,752.5 |
Adjustments to reconcile operating income to total gross operating margin: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Add depreciation, amortization and accretion expense in operating costs and expenses |  |  | 379.2 |  |  |  | 360.3 |  |  |  | 755.4 |  |  |  | 718.5 |
Add asset impairment and related charges in operating costs and expenses |  |  | 14.0 |  |  |  | 20.2 |  |  |  | 25.2 |  |  |  | 21.9 |
Add net losses attributable to asset sales in operating costs and expenses |  |  | 0.3 |  |  |  | 1.7 |  |  |  | -- |  |  |  | 6.6 |
Add general and administrative costs |  |  | 45.7 |  |  |  | 35.1 |  |  |  | 96.1 |  |  |  | 79.0 |
Adjustments for make-up rights on certain new pipeline projects: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Add non-refundable payments received from shippers attributable to make-up rights (1) |  |  | 8.3 |  |  |  | 1.8 |  |  |  | 21.6 |  |  |  | 8.9 |
Subtract the subsequent recognition of revenues attributable to make-up rights (2) |  |  | (6.8 | ) |  |  | (6.6 | ) |  |  | (15.9 | ) |  |  | (19.5 | )
Total segment gross operating margin |  | $ | 1,379.4 |  |  | $ | 1,249.4 |  |  | $ | 2,852.7 |  |  | $ | 2,567.9 |
(1)Since make-up rights entail a future performance obligation by the pipeline to the shipper, these receipts are recorded as deferred revenue for GAAP purposes; however, these receipts are included in gross operating margin in the period of receipt since they are nonrefundable to the shipper. (2)As deferred revenues attributable to make-up rights are subsequently recognized as revenue under GAAP, gross operating margin must be adjusted to remove such amounts to prevent duplication since the associated non-refundable payments were previously included in gross operating margin. |
Gross operating margin by segment is calculated by subtracting segment operating costs and expenses from segment revenues, with both segment totals reflecting the adjustments noted in the preceding table, as applicable, and before the elimination of intercompany transactions. The following table presents gross operating margin by segment for the periods indicated:
|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Gross operating margin by segment: |  |  |  |  |  |  |  |  |  |  |  |
NGL Pipelines & Services |  | $ | 759.9 |  |  | $ | 719.1 |  |  | $ | 1,615.9 |  |  | $ | 1,502.8 |
Crude Oil Pipelines & Services |  |  | 236.7 |  |  |  | 177.4 |  |  |  | 501.3 |  |  |  | 379.7 |
Natural Gas Pipelines & Services |  |  | 194.4 |  |  |  | 177.4 |  |  |  | 365.3 |  |  |  | 355.1 |
Petrochemical & Refined Products Services |  |  | 188.4 |  |  |  | 175.5 |  |  |  | 370.2 |  |  |  | 330.3 |
Total segment gross operating margin |  | $ | 1,379.4 |  |  | $ | 1,249.4 |  |  | $ | 2,852.7 |  |  | $ | 2,567.9 |
Summarized Segment Financial Information Information by business segment, together with reconciliations to amounts presented on our Unaudited Condensed Statements of Consolidated Operations, is presented in the following table:
|  | Reportable Business Segments |  |  |  |  |  |  |
|  | NGL Pipelines & Services |  |  | Crude Oil Pipelines & Services |  |  | Natural Gas Pipelines & Services |  |  | Petrochemical & Refined Products Services |  |  | Adjustments and Eliminations |  |  | Consolidated Total |
Revenues from third parties: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended June 30, 2017 |  | $ | 2,617.8 |  |  | $ | 1,895.8 |  |  | $ | 782.9 |  |  | $ | 1,301.2 |  |  | $ | -- |  |  | $ | 6,597.7 |
Three months ended June 30, 2016 |  |  | 2,512.7 |  |  |  | 1,651.4 |  |  |  | 533.9 |  |  |  | 906.6 |  |  |  | -- |  |  |  | 5,604.6 |
Six months ended June 30, 2017 |  |  | 5,960.8 |  |  |  | 3,698.4 |  |  |  | 1,540.7 |  |  |  | 2,707.4 |  |  |  | -- |  |  |  | 13,907.3 |
Six months ended June 30, 2016 |  |  | 4,914.7 |  |  |  | 2,928.9 |  |  |  | 1,081.2 |  |  |  | 1,669.5 |  |  |  | -- |  |  |  | 10,594.3 |
Revenues from related parties: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended June 30, 2017 |  |  | 2.8 |  |  |  | 3.8 |  |  |  | 3.3 |  |  |  | -- |  |  |  | -- |  |  |  | 9.9 |
Three months ended June 30, 2016 |  |  | 2.8 |  |  |  | 8.6 |  |  |  | 1.8 |  |  |  | -- |  |  |  | -- |  |  |  | 13.2 |
Six months ended June 30, 2017 |  |  | 5.6 |  |  |  | 8.4 |  |  |  | 6.7 |  |  |  | -- |  |  |  | -- |  |  |  | 20.7 |
Six months ended June 30, 2016 |  |  | 4.6 |  |  |  | 19.7 |  |  |  | 4.5 |  |  |  | -- |  |  |  | -- |  |  |  | 28.8 |
Intersegment and intrasegment revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended June 30, 2017 |  |  | 5,642.1 |  |  |  | 3,383.7 |  |  |  | 220.6 |  |  |  | 389.7 |  |  |  | (9,636.1 | ) |  |  | -- |
Three months ended June 30, 2016 |  |  | 4,880.8 |  |  |  | 2,445.7 |  |  |  | 146.9 |  |  |  | 307.7 |  |  |  | (7,781.1 | ) |  |  | -- |
Six months ended June 30, 2017 |  |  | 14,516.9 |  |  |  | 6,857.7 |  |  |  | 415.1 |  |  |  | 804.4 |  |  |  | (22,594.1 | ) |  |  | -- |
Six months ended June 30, 2016 |  |  | 8,055.6 |  |  |  | 3,945.1 |  |  |  | 271.6 |  |  |  | 550.4 |  |  |  | (12,822.7 | ) |  |  | -- |
Total revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended June 30, 2017 |  |  | 8,262.7 |  |  |  | 5,283.3 |  |  |  | 1,006.8 |  |  |  | 1,690.9 |  |  |  | (9,636.1 | ) |  |  | 6,607.6 |
Three months ended June 30, 2016 |  |  | 7,396.3 |  |  |  | 4,105.7 |  |  |  | 682.6 |  |  |  | 1,214.3 |  |  |  | (7,781.1 | ) |  |  | 5,617.8 |
Six months ended June 30, 2017 |  |  | 20,483.3 |  |  |  | 10,564.5 |  |  |  | 1,962.5 |  |  |  | 3,511.8 |  |  |  | (22,594.1 | ) |  |  | 13,928.0 |
Six months ended June 30, 2016 |  |  | 12,974.9 |  |  |  | 6,893.7 |  |  |  | 1,357.3 |  |  |  | 2,219.9 |  |  |  | (12,822.7 | ) |  |  | 10,623.1 |
Equity in income (loss) of unconsolidated affiliates: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended June 30, 2017 |  |  | 19.0 |  |  |  | 89.2 |  |  |  | 0.9 |  |  |  | (2.1 | ) |  |  | -- |  |  |  | 107.0 |
Three months ended June 30, 2016 |  |  | 14.0 |  |  |  | 65.8 |  |  |  | 0.9 |  |  |  | (4.3 | ) |  |  | -- |  |  |  | 76.4 |
Six months ended June 30, 2017 |  |  | 34.5 |  |  |  | 170.4 |  |  |  | 1.9 |  |  |  | (5.0 | ) |  |  | -- |  |  |  | 201.8 |
Six months ended June 30, 2016 |  |  | 29.1 |  |  |  | 155.9 |  |  |  | 1.9 |  |  |  | (9.4 | ) |  |  | -- |  |  |  | 177.5 |
Segment revenues include intersegment and intrasegment transactions, which are generally based on transactions made at market-based rates. Our consolidated revenues reflect the elimination of intercompany transactions. Substantially all of our consolidated revenues are earned in the U.S. and derived from a wide customer base. Information by business segment, together with reconciliations to our Unaudited Condensed Consolidated Balance Sheet totals, is presented in the following table:
|  | Reportable Business Segments |  |  |  |  |  |  |
|  | NGL Pipelines & Services |  |  | Crude Oil Pipelines & Services |  |  | Natural Gas Pipelines & Services |  |  | Petrochemical & Refined Products Services |  |  | Adjustments and Eliminations |  |  | Consolidated Total |
Property, plant and equipment, net: (see Note 4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At June 30, 2017 |  | $ | 14,125.8 |  |  | $ | 4,355.1 |  |  | $ | 8,297.2 |  |  | $ | 3,340.7 |  |  | $ | 4,101.9 |  |  | $ | 34,220.7 |
At December 31, 2016 |  |  | 14,091.5 |  |  |  | 4,216.1 |  |  |  | 8,403.0 |  |  |  | 3,261.2 |  |  |  | 3,320.7 |  |  |  | 33,292.5 |
Investments in unconsolidated affiliates: (see Note 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At June 30, 2017 |  |  | 751.8 |  |  |  | 1,822.8 |  |  |  | 21.3 |  |  |  | 65.4 |  |  |  | -- |  |  |  | 2,661.3 |
At December 31, 2016 |  |  | 750.4 |  |  |  | 1,824.6 |  |  |  | 21.7 |  |  |  | 80.6 |  |  |  | -- |  |  |  | 2,677.3 |
Intangible assets, net: (see Note 6) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At June 30, 2017 |  |  | 335.6 |  |  |  | 2,233.6 |  |  |  | 1,037.5 |  |  |  | 175.7 |  |  |  | -- |  |  |  | 3,782.4 |
At December 31, 2016 |  |  | 350.2 |  |  |  | 2,279.0 |  |  |  | 1,054.5 |  |  |  | 180.4 |  |  |  | -- |  |  |  | 3,864.1 |
Goodwill: (see Note 6) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At June 30, 2017 |  |  | 2,651.7 |  |  |  | 1,841.0 |  |  |  | 296.3 |  |  |  | 956.2 |  |  |  | -- |  |  |  | 5,745.2 |
At December 31, 2016 |  |  | 2,651.7 |  |  |  | 1,841.0 |  |  |  | 296.3 |  |  |  | 956.2 |  |  |  | -- |  |  |  | 5,745.2 |
Segment assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At June 30, 2017 |  |  | 17,864.9 |  |  |  | 10,252.5 |  |  |  | 9,652.3 |  |  |  | 4,538.0 |  |  |  | 4,101.9 |  |  |  | 46,409.6 |
At December 31, 2016 |  |  | 17,843.8 |  |  |  | 10,160.7 |  |  |  | 9,775.5 |  |  |  | 4,478.4 |  |  |  | 3,320.7 |  |  |  | 45,579.1 |
Segment assets consist of property, plant and equipment, investments in unconsolidated affiliates, intangible assets and goodwill. The carrying values of such amounts are assigned to each segment based on each asset’s or investment’s principal operations and contribution to the gross operating margin of that particular segment. Since construction-in-progress amounts (a component of property, plant and equipment) generally do not contribute to segment gross operating margin, such amounts are excluded from segment asset totals until the underlying assets are placed in service. Intangible assets and goodwill are assigned to each segment based on the classification of the assets to which they relate. The remainder of our consolidated total assets, which consist primarily of working capital assets, are excluded from segment assets since these amounts are not attributable to one specific segment (e.g. cash). Other Revenue and Expense Information The following table presents additional information regarding our consolidated revenues and costs and expenses for the periods indicated:
|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
NGL Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |  |
Sales of NGLs and related products |  | $ | 2,158.0 |  |  | $ | 2,060.4 |  |  | $ | 5,045.2 |  |  | $ | 4,003.9 |
Midstream services |  |  | 462.6 |  |  |  | 455.1 |  |  |  | 921.2 |  |  |  | 915.4 |
Total |  |  | 2,620.6 |  |  |  | 2,515.5 |  |  |  | 5,966.4 |  |  |  | 4,919.3 |
Crude Oil Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of crude oil |  |  | 1,705.1 |  |  |  | 1,482.2 |  |  |  | 3,323.7 |  |  |  | 2,603.3 |
Midstream services |  |  | 194.5 |  |  |  | 177.8 |  |  |  | 383.1 |  |  |  | 345.3 |
Total |  |  | 1,899.6 |  |  |  | 1,660.0 |  |  |  | 3,706.8 |  |  |  | 2,948.6 |
Natural Gas Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of natural gas |  |  | 560.6 |  |  |  | 305.7 |  |  |  | 1,104.6 |  |  |  | 620.7 |
Midstream services |  |  | 225.6 |  |  |  | 230.0 |  |  |  | 442.8 |  |  |  | 465.0 |
Total |  |  | 786.2 |  |  |  | 535.7 |  |  |  | 1,547.4 |  |  |  | 1,085.7 |
Petrochemical & Refined Products Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of petrochemicals and refined products |  |  | 1,114.1 |  |  |  | 713.4 |  |  |  | 2,325.2 |  |  |  | 1,266.6 |
Midstream services |  |  | 187.1 |  |  |  | 193.2 |  |  |  | 382.2 |  |  |  | 402.9 |
Total |  |  | 1,301.2 |  |  |  | 906.6 |  |  |  | 2,707.4 |  |  |  | 1,669.5 |
Total consolidated revenues |  | $ | 6,607.6 |  |  | $ | 5,617.8 |  |  | $ | 13,928.0 |  |  | $ | 10,623.1 |
Consolidated costs and expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of sales |  | $ | 4,731.1 |  |  | $ | 3,838.7 |  |  | $ | 10,066.8 |  |  | $ | 7,047.0 |
Other operating costs and expenses (1) |  |  | 605.6 |  |  |  | 601.3 |  |  |  | 1,216.0 |  |  |  | 1,175.1 |
Depreciation, amortization and accretion |  |  | 379.2 |  |  |  | 360.3 |  |  |  | 755.4 |  |  |  | 718.5 |
Asset impairment and related charges |  |  | 14.0 |  |  |  | 20.2 |  |  |  | 25.2 |  |  |  | 21.9 |
Net losses attributable to asset sales |  |  | 0.3 |  |  |  | 1.7 |  |  |  | -- |  |  |  | 6.6 |
General and administrative costs |  |  | 45.7 |  |  |  | 35.1 |  |  |  | 96.1 |  |  |  | 79.0 |
Total consolidated costs and expenses |  | $ | 5,775.9 |  |  | $ | 4,857.3 |  |  | $ | 12,159.5 |  |  | $ | 9,048.1 |
(1)Represents the cost of operating our plants, pipelines and other fixed assets excluding: depreciation, amortization and accretion charges; asset impairment and related charges; and net losses (or gains) attributable to asset sales. |
Fluctuations in our product sales revenues and related cost of sales amounts are explained in part by changes in energy commodity prices. In general, higher energy commodity prices result in an increase in our revenues attributable to product sales; however, these higher commodity prices also increase the associated cost of sales as purchase costs rise. The same correlation would be true in the case of lower energy commodity sales prices and purchase costs.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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