Note 2. General Accounting Matters

Our results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of results expected for the full year. 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 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, 2010 (the “2010 Form 10-K”) filed on March 1, 2011.

Allowance for Doubtful Accounts

Our allowance for doubtful accounts is determined based on specific identification and estimates of future uncollectible accounts. Our procedure for determining the allowance for doubtful accounts is based on: (i) historical experience with customers, (ii) the perceived financial stability of customers based on our research and (iii) the levels of credit we grant to customers. In addition, we may increase the allowance account in response to the specific identification of customers involved in bankruptcy proceedings and similar financial difficulties. On a routine basis, we review estimates associated with the allowance for doubtful accounts to ensure that we have recorded sufficient reserves to cover potential losses. Our allowance also includes estimates for uncollectible natural gas imbalances based on specific identification of accounts.

The following table presents the activity of our allowance for doubtful accounts for the periods presented:

	For the Six Months
	Ended June 30,
	2011			2010
Balance at beginning of period	$	18.4		$	16.8
Charged to costs and expenses		0.6			0.7
Deductions (1)		(5.2	)		--
Balance at end of period	$	13.8		$	17.5

(1) Primarily due to our reassessment of the allowance for doubtful accounts as a result of improved credit ratings of a significant customer, which reduced our exposure to potential uncollectibility.

Contingencies

Certain conditions may exist as of the date our 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 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, where 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 swaps, forwards and other contracts to manage price risks associated with inventories, firm commitments, interest rates and certain anticipated transactions. To qualify for hedge accounting, the item to be hedged must expose us to risk and the related derivative instrument must reduce that exposure and meet specific documentation requirements. We formally designate a derivative instrument as a hedge and document and assess the effectiveness of the hedge at inception and thereafter on a quarterly basis.

We apply the normal purchases/normal sales exception for certain of our derivative instruments, which precludes the recognition of changes in mark-to-market values for these items on our balance sheet or income statement. Revenues and costs for these transactions are recognized when volumes are physically delivered or received.

See Note 4 for additional information regarding our derivative instruments and related hedging activities.

Earnings Per Unit

Earnings per unit is based on the amount of net income attributable to limited partners and the weighted-average number of units outstanding during the period. See Note 1 for information regarding the retroactive presentation of earnings per unit amounts for the three and six months ended June 30, 2010 in connection with the Holdings Merger.

Estimates

Preparing our financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts presented in the financial statements (i.e. assets, liabilities, revenue and expenses) and disclosures about contingent assets and liabilities. Our actual results could differ from these estimates. On an ongoing basis, management reviews its estimates based on currently available information. Any future changes in facts and circumstances may require updated estimates, which, in turn, could have a significant impact on our financial statements.

Fair Value Information

The carrying amounts of cash and cash equivalents (including restricted cash), accounts receivable and accounts payable approximate their fair value. See Note 4 for fair value information associated with our derivative instruments.

The estimated fair value of our fixed-rate debt obligations was approximately $14.09 billion and $12.91 billion at June 30, 2011 and December 31, 2010, respectively. These values are based on quoted market prices for such debt or debt of similar terms and maturities. The carrying amounts of our variable-rate debt obligations reasonably approximate their fair values due to their variable interest rates.

We do not have any long-term investments in debt or equity securities carried at fair value. See Note 7 for summarized financial information of our investments accounted for using the equity method.

Liquids Exchange Contracts

Our liquids exchange balances were net payables of $212.4 million and $144.1 million at June 30, 2011 and December 31, 2010, respectively. The most significant liquids exchange transactions recorded on our consolidated balance sheet relate to those involving petrochemical volumes. Petrochemical transactions accounted for approximately 62% and 85% of our liquids exchange transactions recorded at June 30, 2011 and December 31, 2010, respectively. Under these agreements, we physically receive volumes of propane/propylene mix (an unprocessed stream), including the risk of loss and legal title to such volumes, from the exchange counterparty. In turn, we deliver segregated polymer grade propylene and propane (processed streams) back to the customer and charge them a processing or similar fee. The intent of these exchange transactions is the earning of fee revenue for processing and transporting the propane/propylene mix using our assets. This arrangement satisfies the commercial, logistical and timing needs of our customer and allows us to operate our plants more effectively.

To the extent that the volumes we receive under such exchange agreements exceed those we deliver under the agreements (measured as of the end of each reporting period), we recognize a net exchange payable position with the counterparties. With respect to the petrochemical transactions discussed above, we are typically in a net exchange payable position with our counterparties. In those limited situations where the volumes we deliver exceed those we receive (measured as of the end of each reporting period), we recognize a net exchange receivable position with the counterparties. From an income statement perspective, the only revenue recognized from such exchange agreements is fee revenue. From a balance sheet perspective, net exchange payables arising from these transactions are valued at market-based prices. To the extent that we recognize net exchange receivables arising from liquids exchange transactions, such balances are valued at average cost.

Volumetric receivables and payables arising from exchange transactions are typically balanced with movements of products rather than with cash. When payment or receipt of monetary consideration is required for product differentials and service costs with a counterparty, such items are recognized in our consolidated financial statements on a net basis as either operating revenues or expense, as appropriate.

Recent Accounting Developments

Fair Value Measurements. In May 2011, the Financial Accounting Standards Board (or “FASB”) issued an accounting standard update that amended previous fair value measurement and disclosure guidance. These amendments generally involve clarifications on how to measure and disclose fair value amounts recognized in the financial statements. They also expand the disclosure requirements, particularly for Level 3 fair value measurements, to include a description of the valuation processes used and an analysis of the sensitivity of the fair value measurements to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any. We will adopt this guidance on January 1, 2012 and apply its requirements prospectively at that time. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements.

Presentation of Other Comprehensive Income. In June 2011, the FASB issued an accounting standard update that revised the financial statement presentation of other comprehensive income (“OCI”). The amended guidance requires entities to present components of comprehensive income in either (i) a single continuous statement of comprehensive income or (ii) two separate but consecutive statements (i.e., a statement of income and a statement of comprehensive income, which is our current format). Although the amended guidance does not change the items that must be reported in OCI, reclassification adjustments for each component of OCI will have to be displayed in both net income and OCI. We will adopt this guidance on January 1, 2012 and apply its presentation requirements retrospectively at that time. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements.

Restricted Cash

Restricted cash represents amounts held in connection with our commodity derivative instruments portfolio and related physical natural gas, crude oil and NGL purchases. Additional cash may be restricted to maintain this portfolio as commodity prices fluctuate or deposit requirements change. At June 30, 2011 and December 31, 2010, our restricted cash amounts were $116.2 million and $98.7 million, respectively. See Note 4 for information regarding derivative instruments and hedging activities.