Sunoco 2013 Annual Report Download - page 83

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Management believes that any liabilities that may arise from these legal proceedings will not be material in relation to the
Partnership's financial position, results of operations or cash flows at December 31, 2013.
12. Equity Offerings
In July 2011, the Partnership issued 3.9 million Class A units to Sunoco in connection with the acquisition of the Eagle
Point tank farm and related assets. These deferred distribution units represented a new class of units that were converted to
common units in July 2012. Prior to their conversion, the Class A units participated in the allocation of net income on a pro-rata
basis with the common units. In accordance with applicable 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.
Subsequent to its filing of the 2013 Form 10-K in February 2014, the Partnership filed a registration statement with the
intention of establishing an at-the-market equity offering program. The program is subject to regulatory approval and would
allow the Partnership to issue common units directly to the public and raise capital in a timely and efficient manner to support
its growth capital program, while supporting the Partnership's investment-grade credit ratings.
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.
The following table shows the target distribution levels and distribution "splits" between the general partner and the
holders of the Partnership's common units:
Total Quarterly
Distribution Target
Amount
Marginal Percentage
Interest in Distributions
General Partner Unitholders
Minimum Quarterly Distribution $0.1500 2% 98%
First Target Distribution up to $0.1667 2% 98%
Second Target Distribution above $0.1667 up to $0.1917 15% (1) 85%
Third Target Distribution above $0.1917 up to $0.5275 37% (1) 63%
Thereafter above $0.5275 50% (1) 50%
(1) Includes two percent general partner interest.