Energy Transfer 2015 Annual Report Download - page 70

Table of Contents
• 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.
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
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 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.
Distributions of Available Cash from Operating Surplus
The terms of our partnership agreement require that we make cash distributions with respect to each calendar quarter within 45 days following the end of each
calendar quarter. For any quarter, we are required to make distributions of Available Cash from operating surplus initially to the Class H Unitholders in an
amount equal to 90.05% of all distributions to ETP by Sunoco Partners LLC with respect to the incentive distribution rights and general partner interest in
Sunoco Logistics, calculated on a cumulative basis beginning October 31, 2013. We are also required to make incremental cash distributions to the Class H
Unitholders in the aggregate amount of $329 million, subject to adjustment, over 15 quarters, commencing with the quarter ended September 30, 2013 and
ending with the quarter ending March 31, 2017. We are required to make distributions of any remaining Available Cash from operating surplus for any
quarter in the following manner:
•First, 100% to all Common Unitholders, Class E Unitholders, Class G Unitholders and the general partner, in accordance with their percentage interests,
until each Common Unit has received $0.25 per unit for such quarter (the “minimum quarterly distribution”);
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