Energy Transfer 2012 Annual Report Download - page 98

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In January 2013, we issued senior notes to repay borrowings outstanding under our revolving credit facility and for general
partnership purposes.
We generally fund maintenance capital expenditures and distributions with cash flows from operating activities. We generally
fund growth capital expenditures with proceeds of borrowings under credit facilities, long-term debt, the issuance of additional
Common Units or a combination thereof.
As of December 31, 2012, in addition to $311 million of cash on hand, we had available capacity under our revolving credit
facilities of $1.03 billion. Based on our current estimates, we expect to utilize capacity under the ETP Credit Facility, along with
cash from operations, to fund our announced growth capital expenditures and working capital needs through the end of 2012;
however, we may issue debt or equity securities prior to that time as we deem prudent to provide liquidity for new capital projects,
to maintain investment grade credit metrics or other partnership purposes.
Sunoco Logistics' primary sources of liquidity consist of cash generated from operating activities and borrowings under its $585
million of credit facilities. At December 31, 2012, Sunoco Logistics had available borrowing capacity of $446 million under its
revolving credit facilities, which includes $15 million of available borrowing capacity from West Texas Gulf's revolving credit
facility. In January 2013, the balances outstanding under the Operating Partnership's credit facilities were repaid in connection
with a Senior Notes offering. Sunoco Logistics' capital position reflects crude oil and refined products inventories based on historical
costs under the last-in, first-out (“LIFO”) method of accounting. Sunoco Logistics periodically supplement its cash flows from
operations with proceeds from debt and equity financing activities.
In addition to the above capital resources, as of December 31, 2012 Southern Union had available capacity of $490 million under
its revolving credit facility.
Cash Flows
Our internally generated cash flows may change in the future due to a number of factors, some of which we cannot control. These
include regulatory changes, the price for our products and services, the demand for such products and services, margin requirements
resulting from significant changes in commodity prices, operational risks, the successful integration of our acquisitions, and other
factors.
Operating Activities
Changes in cash flows from operating activities between periods primarily result from changes in earnings (as discussed in “Results
of Operations” above), excluding the impacts of non-cash items and changes in operating assets and liabilities. Non-cash items
include recurring non-cash expenses, such as depreciation and amortization expense and non-cash compensation expense. The
increase in depreciation and amortization expense during the periods presented primarily resulted from construction and acquisitions
of assets, while changes in non-cash unit-based compensation expense result from changes in the number of units granted and
changes in the grant date fair value estimated for such grants. Cash flows from operating activities also differ from earnings as a
result of non-cash charges that may not be recurring such as impairment charges and allowance for equity funds used during
construction. The allowance for equity funds used during construction increases in periods when we have a significant amount of
interstate pipeline construction in progress. Changes in operating assets and liabilities between periods result from factors such
as the changes in the value of price risk management assets and liabilities, timing of accounts receivable collection, payments on
accounts payable, the timing of purchase and sales of propane and natural gas inventories, and the timing of advances and deposits
received from customers.
Following is a summary of operating activities by period:
Year Ended December 31, 2012
Cash provided by operating activities in 2012 was $1.20 billion and net income was $1.65 billion. The difference between net
income and cash provided by operating activities in 2012 primarily consisted of the gain on deconsolidation of our Propane
Business of $1.06 billion and net changes in operating assets and liabilities of $475 million offset by non-cash items totaling $1.10
billion. The non-cash activity in 2012 consisted primarily of depreciation and amortization, including amounts attributable to
discontinued operations, of $656 million, the write-down of assets included in loss from discontinued operations of $132 million
and non-cash compensation expense of $42 million.
Year Ended December 31, 2011
Cash provided by operating activities in 2011 was $1.34 billion and net income was $697 million. The difference between net
income and cash provided by operating activities in 2011 consisted of non-cash items totaling $486 million and changes in operating
assets and liabilities of $166 million. The non-cash activity in 2011 consisted primarily of depreciation and amortization, including
amounts attributable to discontinued operations, of $431 million and non-cash compensation expense of $37 million.
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