Energy Transfer 2013 Annual Report Download - page 63

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to 50.05% of the profits, losses, and other items allocated to ETP by Sunoco Partners with respect to the IDRs and general partner interest in Sunoco Logistics
held by Sunoco Partners, (ii) distributions from available cash at ETP for each quarter equal to 50.05% of the cash distributed to ETP by Sunoco Partners
with respect to the IDRs and general partner interest in Sunoco Logistics held by Sunoco Partners for such quarter and, to the extent not previously distributed
to holders of the Class H Units, for any previous quarters and (iii) incremental additional cash distributions in the aggregate amount of $329 million, to be
payable by ETP to ETE Holdings over 15 quarters, commencing with the quarter ended September 30, 2013 and ending with the quarter ending March 31,
2017. The incremental cash distributions referred to in clause (iii) of the previous sentence are intended to offset a portion of the IDR subsidies previously
granted by ETE to ETP in connection with the Citrus Merger, the Holdco Transaction and the Holdco Acquisition. In connection with the issuance of the
Class H Units, ETE and ETP also agreed to certain adjustments to the prior IDR subsidies in order to ensure that the IDR subsidies are fixed amounts for
each quarter to which the IDR subsidies are in effect.
As of December 31, 2013, our General Partner owned an approximate 0.7% general partner interest in us and the holders of Common Units, Class E, Class G
and Class H Units collectively owned a 99.3% limited partner interest in us.
IDRs represent the contractual right to receive a specified percentage of quarterly distributions of Available Cash from operating surplus after the minimum
quarterly distribution has been paid. Please read “Distributions of Available Cash from Operating Surplus” below.
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 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.
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