Sunoco 2012 Annual Report Download - page 95

allocation of net income on a pro-rata basis with the common units. Under accounting guidance, the Partnership
recorded the Class A units at $20 million, the difference between Sunoco’s historical carrying value of the assets
acquired and the cash paid by the Partnership. In connection with this transaction, the general partner contributed
$2 million to the Partnership to maintain its two percent general partner interest.
In August 2010, the Partnership completed a public offering of 6.0 million common units. Net proceeds of
$143 million were used to fund the acquisition of additional interests in three of the Partnership’s joint venture
pipelines and to reduce outstanding borrowings under the Operating Partnership’s prior credit facility. In
connection with this offering, the general partner contributed $3 million to the Partnership to maintain its two
percent general partner interest.
13. Cash Distributions
Within 45 days after the end of each quarter, the Partnership distributes all cash on hand at the end of the
quarter, less reserves established by the general partner in its discretion. This is defined as “available cash” in the
partnership agreement. The general partner has broad discretion to establish cash reserves that it determines are
necessary or appropriate to properly conduct the Partnership’s business. The Partnership will make quarterly
distributions to the extent there is sufficient cash from operations after establishment of cash reserves and
payment of fees and expenses, including payments to the general partner.
If cash distributions exceed $0.1667 per unit in a quarter, the general partner receives increasing
percentages, up to 50 percent, of the cash distributed in excess of that amount. These distributions are referred to
as “incentive distributions.” The percentage interests shown for the unitholders and the general partner for the
minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the
minimum quarterly distribution.
In January 2010, the Partnership repurchased, and its general partner transferred and assigned to the
Partnership for cancellation, the IDRs held by the general partner under the Second Amended and Restated
Agreement of Limited Partnership, as amended, in consideration for (i) the issuance to the general partner of new
IDRs issued under the Third Amended and Restated Agreement of Limited Partnership and (ii) the issuance to
the general partner of a promissory note in the principal amount of $201 million. In February 2010, the Operating
Partnership issued a total of $500 million of Senior Notes which mature in February 2020 and February 2040. A
portion of the net proceeds from this offering was used to repay in full this promissory note.
The following table compares the target distribution levels and distribution “splits” between the general
partner and the holders of the Partnership’s common units under the cancelled IDRs and under the new IDRs:
Cancelled IDRs New IDRs
Total Quarterly
Distribution Target
Amount
Marginal Percentage
Interest in Distributions Total Quarterly
Distribution Target
Amount
Marginal Percentage
Interest in Distributions
General
Partner Unitholders
General
Partner Unitholders
Minimum Quarterly
Distribution ........ $0.1500 2% 98%
First Target
Distribution ........ upto$0.1667 2% 98% No change
Second Target
Distribution ........
above $0.1667
up to $0.1917 15%* 85%
Third Target
Distribution ........
above $0.1917
up to $0.2333 25%* 75%
above $0.1917
up to $0.5275 37%* 63%
Thereafter ........... above $0.2333 50%* 50% above $0.5275 50%* 50%
* Includes two percent general partner interest.
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