Sunoco 2010 Annual Report Download - page 109

2020 and $250 million of 6.85 percent notes due in 2040. In February 2010, Sunoco also sold 2.20 million of its
limited partnership units to the public, generating approximately $145 million of net proceeds, which further
reduced its interest in the Partnership to 33 percent. In August 2010, the Partnership issued 2.01 million limited
partnership units in a public offering, generating $144 million of net proceeds. Upon completion of this
transaction, Sunoco’s interest in the Partnership decreased to 31 percent. As a result of these transactions,
Sunoco’s share of Partnership distributions is expected to be approximately 46 percent at the Partnership’s
current quarterly cash distribution rate. The accounts of the Partnership continue to be included in Sunoco’s
consolidated financial statements.
Since the issuance/sale of the limited partnership units subsequent to January 1, 2009 and the modification
of the incentive distribution rights discussed above did not result in a loss of control of the Partnership, they have
been accounted for as equity transactions. As a result, the $110 million of cash proceeds in 2009 from the public
equity offering was reflected as an increase in noncontrolling interests ($88 million) and capital in excess of par
value within equity ($14 million, net of income taxes). The $145 and $144 million, respectively, of cash proceeds
from the February and August 2010 public equity offerings were reflected as increases in noncontrolling interests
($48 and $114 million, respectively) and capital in excess of par value ($58 and $18 million, respectively, net of
income taxes). The modification of the incentive distribution rights resulted in a $121 million decrease in
noncontrolling interests and a $75 million increase in capital in excess of par value, net of income taxes.
In the third quarter of 2010, the Partnership exercised its rights to acquire additional ownership interests in
Mid-Valley and WTG (see Note 2), increasing its ownership interests to 91 and 60 percent, respectively. As the
Partnership now has a controlling financial interest in both Mid-Valley and WTG, the joint ventures are now both
reflected as consolidated subsidiaries of Sunoco from the dates of their respective acquisitions. In connection
with these acquisitions, the Partnership recorded an $80 million increase in noncontrolling interests upon
consolidation of the joint ventures.
The Partnership distributes to its general and limited partners all available cash (generally cash on hand at
the end of each quarter less the amount of cash the general partner determines in its reasonable discretion is
necessary or appropriate to provide for the proper conduct of the Partnership’s business). During the 2008-2010
period, the Partnership increased its quarterly distribution per unit from $.87 to $1.18.
Sunoco has agreements with the Partnership which establish fees for administrative services provided by
Sunoco and provide indemnifications by Sunoco for certain environmental, toxic tort and other liabilities related
to operation of the Partnership’s assets prior to its initial public offering in February 2002. The Partnership also
participates in Sunoco’s centralized cash management program under which all of the Partnership’s cash receipts
and disbursements are processed together with those of Sunoco and its other subsidiaries through Sunoco’s cash
accounts with a corresponding intercompany receivable or payable. During 2010, the Partnership issued a three-
year, subordinated, $100 million note to Sunoco, Inc., which bears interest at three-month LIBOR plus 275 basis
points per year in connection with the funding for its purchase of the butane blending business from Texon L.P.
101