Sunoco 2012 Annual Report Download - page 87

Incentive Distribution Rights Exchange
In January 2010, the Partnership entered into a repurchase agreement with its general partner, whereby the
Partnership agreed to repurchase from the general partner the existing IDRs for $201 million and the issuance of
new IDRs. The Partnership initially financed this arrangement with a promissory note to the general partner that
was due December 31, 2010. Pursuant to this transaction, the Partnership executed the third amended and
restated agreement of limited partnership of the Partnership (the “new partnership agreement”). The new
partnership agreement reflects the cancellation of the original IDRs and the authorization and issuance of the new
IDRs (Note 13). Proceeds from the February 2010 issuance of $500 million of Senior Notes were used to repay
this promissory note in full (Note 10).
Promissory Note from Affiliate
In July 2010, the Partnership acquired a butane blending business from Texon. The acquisition was partially
funded by a three-year, subordinated $100 million note from Sunoco, with an interest rate at three-month LIBOR
plus 275 basis points per annum. The Partnership repaid the $100 million note during the fourth quarter of 2011.
Administrative Services
The Partnership has no employees, and reimburses the general partner and its affiliates for certain costs and
other direct expenses incurred on the Partnership’s behalf. These costs may be increased if the acquisition or
construction of new assets or businesses requires an increase in the level of general and administrative services
received by the Partnership.
Under the Omnibus Agreement, the Partnership pays Sunoco an annual administrative fee that includes
expenses incurred by Sunoco and its affiliates to perform certain centralized corporate functions, such as legal,
accounting, treasury, engineering, information technology, insurance, and other corporate services, including the
administration of employee benefit plans. This fee was $5, $13, $13, and $5 million for the periods from
October 5, 2012 to December 31, 2012, from January 1, 2012 to October 4, 2012, and for the years ended
December 31, 2011 and 2010, respectively. These fees do not include the costs of shared insurance programs
(which are allocated to the Partnership based upon its share of the cash premiums incurred), the salaries of
pipeline and terminal personnel or other employees of the general partner, or the cost of their employee benefits.
In addition to the fees for the centralized corporate functions, selling, general and administrative expenses in
the consolidated statements of comprehensive income include the allocation of shared insurance costs of $2, $5,
$4 and $4 million for the periods from October 5, 2012 to December 31, 2012, from January 1, 2012 to
October 4, 2012, and for the years ended December 31, 2011 and 2010, respectively. The Partnership’s share of
allocated Sunoco employee benefit plan expenses, including non-contributory defined benefit retirement plans,
defined contribution 401(k) plans, employee and retiree medical, dental and life insurance plans, incentive
compensation plans and other such benefits was $10, $28, $26 and $29 million for the periods from October 5,
2012 to December 31, 2012, from January 1, 2012 to October 4, 2012, and for the years ended December 31,
2011 and 2010, respectively. These expenses are reflected in cost of products sold and operating expenses and
selling, general and administrative expenses in the consolidated statements of comprehensive income.
Affiliated Revenues and Accounts Receivable, Affiliated Companies
The Partnership is party to various agreements with Sunoco (including its affiliated entities) to supply crude
oil and refined products, as well as to provide pipeline and terminalling services. Affiliated revenues in the
consolidated statements of comprehensive income consist of sales of crude oil and refined products, as well as
the related provision, and services including pipeline transportation, terminalling and storage and blending to
ETP and Sunoco (including their affiliated entities).
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