US Salt Acquisition - Additional Information US Salt Acquisition (Notes)

12 Months Ended

Sep. 30, 2012

US Salt Acquisition [Abstract]

Business Acquisitions

Acquisitions

Seneca Lake Natural Gas Storage acquisition

On July 13, 2011, the Company acquired the Seneca Lake natural gas storage facility in Schuyler County, New York, and two related pipelines for approximately $66.8 million from New York State Electric & Gas Corporation (“NYSEG”). The natural gas storage facility and its west storage lateral were acquired by Arlington and are subject to jurisdiction by the Federal Energy Regulatory Commission (“FERC”). The other pipeline, the East Pipeline (formerly known as the Seneca Lake east lateral), was acquired by Inergy Pipeline East, LLC and is subject to regulation by the New York State Public Service Commission. This acquisition was funded by an equity contribution from Inergy. This acquisition of assets collectively constitutes a business and has been accounted for under FASB Accounting Standards Codification 805.

The primary purpose of this acquisition was to acquire natural gas storage and transportation equipment. In addition to the equipment, the Company assumed a storage contract with one customer (Dominion) and entered into new long-term storage and transportation contracts with NYSEG. The Company believes these contracts are reflective of market conditions at the time of acquisition and, given the terms of the contracts, including the remaining tenure, no amounts have been reflected in the opening balance sheet for acquired intangible assets. The Company has determined that the fair value of the acquired property, plant and equipment is consistent with, and approximates, the total purchase price. Therefore, there are no amounts for acquired intangible assets or goodwill.

The following table summarizes the fair value of the assets acquired at the acquisition date (in millions):

	July 13, 2011
Plant equipment	$	66.3
Prepaid expenses	0.5
Net assets acquired	$	66.8

The following represents the unaudited pro forma consolidated statements of operations as if Seneca Lake had been included in the consolidated results of the Company for the years ended September 30, 2011 and 2010 (in millions).

	Pro Forma Consolidated Statements of Operations
	Year Ended		Year Ended
	September 30, 2011		September 30, 2010
Revenue	$	169.9	$	155.4
Net income	$	55.0	$	44.6

These amounts have been calculated after applying the Company's accounting policies and adjusting the results of Seneca Lake to reflect the depreciation that would have been charged assuming the preliminary fair value adjustments to property, plant and equipment had been made at the beginning of the respective period.

US Salt Acquisition

On May 14, 2012, the Company completed the US Salt Acquisition. The Company paid $182.5 million in cash and issued 473,707 common units directly to Inergy for the acquisition of US Salt. Additionally, all intercompany balances between US Salt and Inergy were extinguished in conjunction with the US Salt Acquisition.

The US Salt Acquisition is reflected in the Company's consolidated financial statements based on the historical values and periods prior to the acquisition have been retrospectively adjusted to include the historical balances of US Salt. This accounting treatment is similar to the pooling of interests and is required as the transaction is amongst entities under common control. The effect of recasting the Company's financial statements to account for this common control transaction increased net income $7.8 million, $11.9 million and $11.8 million for the years ended September 30, 2012, 2011 and 2010, respectively.

In connection with the US Salt Acquisition, (i) US Salt's guarantee of Inergy's senior notes, as well as the lien granted to the lenders of Inergy's credit agreement on US Salt's membership interest and substantially all of its assets, were released; and (ii) US Salt's membership interests and substantially all of its assets were pledged as collateral under the Company's Credit Facility.