Energy Transfer 2010 Annual Report Download - page 57

Incentive Distribution Rights 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:
Oprovide for the proper conduct of our business;
Ocomply with applicable law and/or debt instrument or other agreement (including reserves for future
capital expenditures and for our future capital needs); or
Oprovide 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;
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