Note 13. 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. The following information summarizes the current assets and operations of each business segment (mileage and other statistics are unaudited):

Our NGL Pipelines & Services business segment includes our natural gas processing plants and related NGL marketing activities; approximately 19,400 miles of NGL pipelines; NGL and related product storage facilities; and 15 NGL fractionators. This segment also includes our NGL import and LPG export terminal operations.

Our Onshore Natural Gas Pipelines & Services business segment includes approximately 19,600 miles of onshore natural gas pipeline systems that provide for the gathering and transportation of natural gas in Colorado, Louisiana, New Mexico, Texas and Wyoming. We lease underground salt dome natural gas storage facilities located in Texas and Louisiana and own an underground salt dome storage cavern in Texas, all of which are important to our natural gas pipeline operations. This segment also includes our related natural gas marketing activities.

Our Onshore Crude Oil Pipelines & Services business segment includes approximately 4,600 miles of onshore crude oil pipelines, crude oil storage terminals located in Oklahoma and Texas, and our crude oil marketing activities. This business also includes a fleet of approximately 470 tractor-trailer tank trucks, the majority of which we lease and operate, used to transport crude oil for us and third parties.

Our Offshore Pipelines & Services business segment serves some of the most active drilling and development regions, including deepwater production fields, in the northern Gulf of Mexico offshore Texas, Louisiana, Mississippi and Alabama. This segment includes approximately 2,300 miles of offshore natural gas and crude oil pipelines and six offshore hub platforms.

Our Petrochemical & Refined Products Services business segment includes (i) propylene fractionation and related operations, including 680 miles of pipelines; (ii) a butane isomerization complex and related pipeline assets; (iii) octane enhancement and high purity isobutylene production facilities; (iv) refined products pipelines aggregating 4,200 miles and related marketing activities; and (v) marine transportation.

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 9 for information regarding the liquidation of our investment in Energy Transfer Equity.

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.

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 executive 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.

In total, gross operating margin represents operating income exclusive of (1) depreciation, amortization and accretion expenses, (2) impairment charges, (3) gains and losses attributable to asset sales and insurance recoveries and (4) general and administrative costs. As discussed below, gross operating margin includes equity in income of unconsolidated affiliates and non-refundable deferred transportation revenues relating to the make-up rights of committed shippers associated with certain pipelines. 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 consolidation. 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.

Our integrated midstream energy asset network (including the midstream energy assets owned by our equity method investees) provides services to producers and consumers of natural gas, NGLs, crude oil, refined products and certain petrochemicals. In general, hydrocarbons may enter our asset system in a number of ways, such as through an offshore natural gas or crude oil pipeline, an offshore platform, a natural gas processing plant, an onshore natural gas gathering pipeline, an onshore crude oil pipeline or terminal, an NGL fractionator, an NGL storage facility or an NGL gathering or transportation pipeline. Many of our equity investees are included within our integrated midstream asset network. For example, we have ownership interests in several offshore Gulf of Mexico natural gas and crude oil pipelines. Other examples include our use of the Promix NGL fractionator to process mixed NGLs extracted by our natural gas processing plants and our use of the Texas Express Pipeline to transport mixed NGLs to our Mont Belvieu complex. Given the integral nature of our equity method investees to our operations, we believe the presentation of equity earnings from such investees as a component of gross operating margin and operating income is meaningful and appropriate.

Management includes deferred transportation revenues relating to the make-up rights of committed shippers when reviewing the financial results of certain major new pipeline projects such as the Texas Express Pipeline and Seaway Pipeline. Certain shippers on these systems did not meet their minimum volume commitment beginning in the fourth quarter of 2013, thus revenues associated with each shipper's make-up rights were deferred in accordance with GAAP. From an internal (and segment) reporting standpoint, management considers the transportation fees paid by committed shippers on major new pipeline projects, including any non-refundable revenues that may be deferred under GAAP related to make-up rights, to be important in assessing the financial performance of these pipeline assets. From a GAAP perspective, the revenue streams associated with these make-up rights are deferred until the earlier of (i) the deficiency volumes are shipped, (ii) the contractual make-up period expires or (iii) the pipeline is otherwise released from its performance obligation. Since management includes these deferred revenues in non-GAAP gross operating margin, these amounts are deducted in determining GAAP-based operating income. Our consolidated revenues do not reflect any deferred revenues until the conditions for recognizing such revenues are met in accordance with GAAP.

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. Substantially all of our plants, pipelines and other fixed assets are located in the U.S.

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

	For the Year Ended December 31,
	2013			2012			2011
Revenues	$	47,727.0		$	42,583.1		$	44,313.0
Subtract operating costs and expenses		(44,238.7	)		(39,367.9	)		(41,318.5	)
Add equity in income of unconsolidated affiliates		167.3			64.3			46.4
Add depreciation, amortization and accretion expense amounts excluded from gross operating margin		1,148.9			1,061.7			958.7
Add impairment charges excluded from gross operating margin		92.6			63.4			27.8
Add operating lease expenses paid by EPCO excluded from gross operating margin		--			--			0.3
Subtract gains attributable to asset sales and insurance recoveries excluded from gross operating margin		(83.4	)		(17.6	)		(156.0	)
Add non-refundable deferred revenues attributable to shipper make-up rights on new pipeline projects included in gross operating margin		4.4			--			--
Total segment gross operating margin	$	4,818.1		$	4,387.0		$	3,871.7

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 Year Ended December 31,
	2013			2012			2011
Total segment gross operating margin	$	4,818.1		$	4,387.0		$	3,871.7
Adjustments to reconcile total segment gross operating margin to operating income:
Subtract depreciation, amortization and accretion expense amounts not reflected in gross operating margin		(1,148.9	)		(1,061.7	)		(958.7	)
Subtract impairment charges not reflected in gross operating margin		(92.6	)		(63.4	)		(27.8	)
Subtract operating lease expenses paid by EPCO not reflected in gross operating margin		--			--			(0.3	)
Add gains attributable to asset sales and insurance recoveries not reflected in gross operating margin		83.4			17.6			156.0
Subtract non-refundable deferred revenues included in gross operating margin attributable to shipper make-up rights on new pipeline projects		(4.4	)		--			--
Subtract general and administrative costs not reflected in gross operating margin		(188.3	)		(170.3	)		(181.8	)
Operating income		3,467.3			3,109.2			2,859.1
Other expense, net		(802.7	)		(698.4	)		(743.6	)
Income before income taxes	$	2,664.6		$	2,410.8		$	2,115.5

Information by business segment, together with reconciliations to our consolidated financial statement totals, is presented in the following table:

	Reportable Business Segments
	NGL Pipelines & Services		Onshore Natural Gas Pipelines & Services		Onshore Crude Oil Pipelines & Services			Offshore Pipelines & Services		Petrochemical & Refined Products Services			Other Investments		Adjustments and Eliminations			Consolidated Total
Revenues from third parties:
Year ended December 31, 2013	$	17,119.1	$	3,522.7	$	20,609.1		$	151.7	$	6,258.5		$	--	$	--		$	47,661.1
Year ended December 31, 2012		15,158.9		3,297.7		17,661.6			182.7		6,208.9			--		--			42,509.8
Year ended December 31, 2011		16,938.1		3,510.0		16,061.0			246.4		6,782.4			--		--			43,537.9
Revenues from related parties:
Year ended December 31, 2013		1.1		15.8		41.3			7.7		--			--		--			65.9
Year ended December 31, 2012		9.5		54.9		0.1			8.8		--			--		--			73.3
Year ended December 31, 2011		545.2		220.2		0.1			9.6		--			--		--			775.1
Intersegment and intrasegment revenues:
Year ended December 31, 2013		11,096.6		959.7		10,222.3			9.6		1,764.0			--		(24,052.2	)		--
Year ended December 31, 2012		12,500.6		871.6		6,906.9			10.4		1,758.9			--		(22,048.4	)		--
Year ended December 31, 2011		13,657.7		1,131.8		4,904.3			6.6		1,799.1			--		(21,499.5	)		--
Total revenues:
Year ended December 31, 2013		28,216.8		4,498.2		30,872.7			169.0		8,022.5			--		(24,052.2	)		47,727.0
Year ended December 31, 2012		27,669.0		4,224.2		24,568.6			201.9		7,967.8			--		(22,048.4	)		42,583.1
Year ended December 31, 2011		31,141.0		4,862.0		20,965.4			262.6		8,581.5			--		(21,499.5	)		44,313.0
Equity in income (loss) of unconsolidated affiliates:
Year ended December 31, 2013		15.7		3.8		140.3			29.8		(22.3	)		--		--			167.3
Year ended December 31, 2012		15.9		4.4		32.6			26.9		(17.9	)		2.4		--			64.3
Year ended December 31, 2011		21.8		5.5		(4.1	)		27.1		(18.7	)		14.8		--			46.4
Gross operating margin:
Year ended December 31, 2013		2,514.4		789.0		742.7			146.1		625.9			--		--			4,818.1
Year ended December 31, 2012		2,468.5		775.5		387.7			173.0		579.9			2.4		--			4,387.0
Year ended December 31, 2011		2,184.2		675.3		234.0			228.2		535.2			14.8		--			3,871.7
Property, plant and equipment, net: (see Note 8)
At December 31, 2013		9,957.8		8,917.3		1,479.9			1,223.7		2,712.4			--		2,655.5			26,946.6
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
At December 31, 2011		7,137.8		8,495.4		456.9			1,416.4		2,539.5			--		2,145.6			22,191.6
Investments in unconsolidated affiliates: (see Note 9)
At December 31, 2013		645.5		24.2		1,165.2			531.8		70.4			--		--			2,437.1
At December 31, 2012		324.6		24.9		493.8			479.0		72.3			--		--			1,394.6
At December 31, 2011		146.1		30.1		170.7			424.9		64.7			1,023.1		--			1,859.6
Intangible assets, net: (see Note 10)
At December 31, 2013		285.2		1,017.8		4.5			54.7		100.0			--		--			1,462.2
At December 31, 2012		320.6		1,067.9		5.9			66.2		106.2			--		--			1,566.8
At December 31, 2011		341.3		1,127.8		5.8			77.5		103.8			--		--			1,656.2
Goodwill: (see Note 10)
At December 31, 2013		341.2		296.3		305.1			82.1		1,055.3			--		--			2,080.0
At December 31, 2012		341.2		296.3		311.2			82.1		1,056.0			--		--			2,086.8
At December 31, 2011		341.2		296.3		311.2			82.1		1,061.5			--		--			2,092.3
Segment assets:
At December 31, 2013		11,229.7		10,255.6		2,954.7			1,892.3		3,938.1			--		2,655.5			32,925.9
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
At December 31, 2011		7,966.4		9,949.6		944.6			2,000.9		3,769.5			1,023.1		2,145.6			27,799.7

The following table presents additional information regarding our consolidated revenues and costs and expenses for the periods indicated:

	For the Year Ended December 31,
	2013			2012			2011
NGL Pipelines & Services:
Sales of NGLs and related products	$	15,916.0		$	14,218.5		$	16,724.6
Midstream services		1,204.2			949.9			758.7
Total		17,120.2			15,168.4			17,483.3
Onshore Natural Gas Pipelines & Services:
Sales of natural gas		2,571.6			2,395.4			2,866.5
Midstream services		966.9			957.2			863.7
Total		3,538.5			3,352.6			3,730.2
Onshore Crude Oil Pipelines & Services:
Sales of crude oil		20,371.3			17,548.7			15,962.6
Midstream services		279.1			113.0			98.5
Total		20,650.4			17,661.7			16,061.1
Offshore Pipelines & Services:
Sales of natural gas		0.5			0.4			1.1
Sales of crude oil		5.7			3.3			9.4
Midstream services		153.2			187.8			245.5
Total		159.4			191.5			256.0
Petrochemical & Refined Products Services:
Sales of petrochemicals and refined products		5,568.8			5,470.9			6,000.6
Midstream services		689.7			738.0			781.8
Total		6,258.5			6,208.9			6,782.4
Total consolidated revenues	$	47,727.0		$	42,583.1		$	44,313.0

Consolidated costs and expenses
Operating costs and expenses:
Cost of sales	$	40,770.2		$	36,015.5		$	38,292.6
Other operating costs and expenses (1)		2,310.4			2,244.9			2,195.4
Depreciation, amortization and accretion		1,148.9			1,061.7			958.7
Gains attributable to asset sales and insurance recoveries		(83.4	)		(17.6	)		(156.0	)
Non-cash asset impairment charges		92.6			63.4			27.8
General and administrative costs		188.3			170.3			181.8
Total consolidated costs and expenses	$	44,427.0		$	39,538.2		$	41,500.3

(1)	Represents cost of operating our plants, pipelines and other fixed assets, excluding depreciation, amortization and accretion charges.

Year-to-year 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. The same correlation would be true in the case of higher energy commodity sales prices and purchase costs.

Our largest non-affiliated customer for 2013 was BP p.l.c. and its affiliates (collectively, "BP"), which accounted for $4.3 billion, or 9.0%, of our consolidated revenues for the year. The following table presents our consolidated revenues from BP by business segment for the year ended December 31, 2013:

NGL Pipelines & Services	$	1,137.6
Onshore Natural Gas Pipelines & Services		164.3
Onshore Crude Oil Pipelines & Services		2,833.1
Petrochemical & Refined Products Services		176.7
Total consolidated revenues from BP	$	4,311.7

BP was also our largest non-affiliated customer for 2012, accounting for 9.5% of our consolidated revenues for the year ended December 31, 2012. Shell Oil Company and its affiliates was our largest non-affiliated customer in 2011, accounting for 10.6% of our consolidated revenues for the year ended December 31, 2011.