Recent Accounting Pronouncements
Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, 2011-11
“Balance Sheet (Topic 210) Disclosures about Offsetting Assets and Liabilities,”
or ASU 2011-11
— In
December 2011, the FASB issued ASU 2011-11, which amends Accounting Standards Codification, or ASC,
Topic 210 “Balance Sheet.” ASU 2011-11 will require entities to disclose information about offsetting and
related arrangements to enable financial statement users to understand the effect of such arrangements on the
statement of financial position. The provisions of ASU 2011-11 are effective for us in interim and annual
reporting periods beginning on or after January 1, 2013 and we are currently assessing the impact of adoption
on our consolidated results of operations, cash flows and financial position.
ASU 2011-08 “Intangibles – Goodwill and Other (Topic 350),”
or ASU 2011-08
— In September 2011,
the FASB issued ASU 2011-08, which amends Accounting Standards Codification, or ASC, Topic 350
“Intangibles — Goodwill and Other.” ASU 2011-08 provides additional guidance on the two-step test for
goodwill impairment as previously described in Topic 350 “Intangibles — Goodwill and Other.” Under the new
guidance, entities may elect to first assess qualitative factors instead of calculating the fair value of a reporting
unit unless the entity determines that it is more likely than not the fair value of the reporting unit is less than its
carrying value. This ASU is effective for interim and annual goodwill impairment tests performed for fiscal
years beginning after December 15, 2011, with early adoption permitted. We elected to adopt ASU 2011-08 for
our 2011 annual goodwill impairment test. There was no impact from the adoption of ASU 2011-08 on our
consolidated results of operations, cash flows and financial position.
ASU 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”,
or ASU 2011-04
— In May 2011,
the FASB issued ASU 2011-04 which amends ASC, Topic 820 “Fair Value Measurements and Disclosures” to
change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for
disclosing information about fair value measurements, clarify the FASB’s intent about the application of
existing fair value measurement requirements, and change a particular principle or requirement for measuring
fair value or for disclosing information about fair value measurements. The provisions of ASU 2011-04 are
effective for us for interim and annual periods beginning after December 15, 2011 and we are currently
assessing the impact of adoption on our consolidated results of operations, cash flows and financial position.
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of loss arising from adverse change in market prices and rates. We are exposed to
market risks, including changes in commodity prices and interest rates. We may use financial instruments such
as forward contracts, swaps and futures to mitigate a portion of the effects of identified risks. In general, we
attempt to mitigate a portion of the risks related to the variability of future earnings and cash flows resulting
from changes in applicable commodity prices or interest rates so that we can maintain cash flows sufficient to
meet debt service, required capital expenditures, distribution objectives and similar requirements.
Risk Management Policy
We have established a comprehensive risk management policy, or Risk Management Policy, and a risk
management committee, or the Risk Management Committee, to monitor and manage market risks associated
with commodity prices and counterparty credit. Our Risk Management Committee is composed of senior
executives who receive regular briefings on positions and exposures, credit exposures and overall risk
management in the context of market activities. The Risk Management Committee is responsible for the overall
management of credit risk and commodity price risk, including monitoring exposure limits.
See Note 12, Risk Management and Hedging Activities, of the Notes to Consolidated Financial Statements
in Item 8. “Financial Statements and Supplementary Data” for further discussion of the accounting for
derivative contracts.
Credit Risk
Our principal customers in the Natural Gas Services segment are large, natural gas marketers and
industrial end-users. Our principal customers in the Wholesale Propane Logistics segment are primarily retail
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