Energy Transfer 2010 Annual Report Download - page 58

• 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 will enable 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.
Distributions of Available Cash from Operating Surplus
We are required to make distributions of Available Cash from operating surplus for any quarter in the following
manner:
•First, 100% to all Common and Class E 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”);
•Second, 100% to all Common and Class E Unitholders and the General Partner, in accordance with their
percentage interests, until each Common Unit has received $0.275 per unit for such quarter (the “first target
cash distribution”);
•Third, 87% to all Common and Class E Unitholders and the General Partner, in accordance with their
percentage interests, and 13% to the holders of Incentive Distribution Rights, pro rata, until each Common
Unit has received at least $0.3175 per unit for such quarter (the “second target cash distribution”);
•Fourth, 77% to all Common and Class E Unitholders and the General Partner, in accordance with their
percentage interests, and 23% to the holders of Incentive Distribution Rights, pro rata, until each Common
Unit has received at least $0.4125 per unit for such quarter (the “third target cash distribution”); and
•Fifth, thereafter, 52% to all Common and Class E Unitholders and the General Partner, in accordance with
their percentage interests, and 48% to the holders of Incentive Distribution Rights, pro rata.
The allocation of distributions among the Common and Class E Unitholders and the General Partner is based on
their respective interests as of the record date for such distributions.
Notwithstanding the foregoing, any arrearage in the payment of the minimum quarterly distribution for all prior
quarters and the distributions on each Class E unit may not exceed $1.41 per year.
Distributions of Available Cash from Capital Surplus
We will make distributions of available cash from capital surplus, if any, in the following manner:
•First, to all of our Unitholders and to our General Partner, in accordance with their percentage interests, until
we distribute for each Common Unit, an amount of available cash from capital surplus equal to our initial
public offering price; and
•Thereafter, we will make all distributions of Available Cash from capital surplus as if they were from
operating surplus.
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