Energy Transfer 2012 Annual Report Download - page 69

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Cash Distribution Policy
General. We will distribute all of our “Available Cash” to our Unitholders and our General Partner within 45 days following the
end of each fiscal quarter.
Definition of Available Cash. Available Cash is defined in our Partnership Agreement and generally means, with respect to any
calendar quarter, all cash on hand at the end of such quarter:
• Less the amount of cash reserves that are necessary or appropriate in the reasonable discretion of the General Partner to
provide for the proper conduct of our business;
comply with applicable law and/or debt instrument or other agreement (including reserves for future capital expenditures
and for our future capital needs); or
provide funds for distributions to Unitholders and our General Partner in respect of any one or more of the next four
quarters.
• Plus all cash on hand on the date of determination of Available Cash for the quarter resulting from working capital borrowings
made after the end of the quarter. Working capital borrowings are generally borrowings that are made under our credit facilities
and in all cases used solely for working capital purposes or to pay distributions to partners.
Available Cash is more fully defined in our Partnership Agreement, which is an exhibit to this report.
Operating Surplus and Capital Surplus
General. All cash distributed to our Unitholders is characterized as either “operating surplus” or “capital surplus.” We distribute
available cash from operating surplus differently than available cash from capital surplus.
Definition of Operating Surplus. Our operating surplus for any period generally means:
• our cash balance on the closing date of our initial public offering in 1996; plus
• $10.0 million (as described below); plus
• all of our cash receipts since the closing of our initial public offering, excluding cash from interim capital transactions such
as borrowings that are not working capital borrowings, sales of equity and debt securities and sales or other dispositions of
assets outside the ordinary course of business; plus
• our working capital borrowings made after the end of a quarter but before the date of determination of operating surplus for
the quarter; less
• all of our operating expenditures after the closing of our initial public offering, including the repayment of working capital
borrowings, but not the repayment of other borrowings, and including maintenance capital expenditures; less
• the amount of our cash reserves that our General Partner deems necessary or advisable to provide funds for future operating
expenditures.
Definition of Capital Surplus. Generally, our capital surplus will be generated only by:
• borrowings other than working capital borrowings;
• sales of our debt and equity securities; and
• sales or other disposition of assets for cash, other than inventory, accounts receivable and other current assets sold in the
ordinary course of business or as part of normal retirements or replacements of assets.
Characterization of Cash Distributions. We will treat all Available Cash distributed as coming from operating surplus until the
sum of all Available Cash distributed since we began operations equals the operating surplus as of the most recent date of
determination of Available Cash. We will treat any amount distributed in excess of operating surplus, regardless of its source, as
capital surplus. As defined in our Partnership Agreement, operating surplus includes $10.0 million in addition to our cash balance
on the closing date of our initial public offering, cash receipts from our operations and cash from working capital borrowings.
This amount does not reflect actual cash on hand that is available for distribution to our Unitholders. Rather, it is a provision that
enables us, if we choose, to distribute as operating surplus up to $10.0 million of cash we receive in the future from non-operating
sources, such as asset sales, issuances of securities, and long-term borrowings, that would otherwise be distributed as capital
surplus. We have not made, and we anticipate that we will not make, any distributions from capital surplus.
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