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Agreement of Limited Partnership
12 Months Ended
Dec. 31, 2011
Agreement of Limited Partnership  
Agreement of Limited Partnership

4.     Agreement of Limited Partnership

        We make quarterly distributions to holders of our General Partner interests and Limited Partner interests based on Available Cash for the quarter as defined in our agreement of limited partnership. Available Cash is defined generally as all cash receipts less all cash disbursements, less certain reserves (including reserves for future operating and capital needs) established as the General Partner determines in its reasonable discretion to be necessary or appropriate. Changes in working capital impact Available Cash as changes in the amount of cash invested in working capital items (such as increases in inventory and decreases in accounts payable) reduce Available Cash, while declines in the amount of cash invested in working capital items increase Available Cash. Customer advances are cash deposits received from customers which do not increase Available Cash until such time as the customer's order has been shipped and the revenue is earned. Since January 1, 2011, when an affiliate of the General Partner became our sole customer, no customer advances have been received and none are expected in the future. We paid distributions of $448.7 million, $129.7 million and $264.3 million to our partners in 2011, 2010, and 2009, respectively.

        We receive 99 percent of the Available Cash from the Operating Partnership and 1 percent is distributed to its General Partner. Cash distributions from the Operating Partnership generally represent the Operating Partnership's Available Cash from operations. Our cash distributions are made 99.975 percent to common and Class B common unitholders and 0.025 percent to our General Partner except when cumulative distributions of Available Cash exceed specified target levels above the Minimum Quarterly Distributions (MQD) of $0.605 per unit. Under such circumstances, our General Partner is entitled to receive Incentive Distribution Rights.

        On February 10, 2012, we announced a $4.53 cash distribution per common limited partnership unit, payable on February 29, 2012 to holders of record as of February 21, 2012. In the fourth quarter, we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table:

 
  Income and Distribution Allocation  
 
  Target
Limit
  Target
Increment
  Common
Units
  Class B
Common
Units
  General
Partner
  Total  

Minimum Quarterly Distributions

  $ 0.605   $ 0.605     98.990 %   0.985 %   0.025 %   100.00 %

First Target

    0.715     0.110     98.990 %   0.985 %   0.025 %   100.00 %

Second Target

    0.825     0.110     85.859 %   0.985 %   13.156 %   100.00 %

Third Target

    1.045     0.220     75.758 %   0.985 %   23.257 %   100.00 %

Final Target and Beyond

    >1.045         50.505 %   0.985 %   48.510 %   100.00 %

        The General Partner is required to remit the majority of cash distributions it receives from the Partnership, in excess of its 1 percent Partnership equity interest, to an affiliated company.

        The quarterly cash distributions paid to the unitholders and the General Partner in 2011 and 2010 follow:

 
   
  Common Units   Class B Common Units   General Partner  
 
   
  Total   Per unit   Total   Per unit   Total  
 
   
  (in millions, except per unit amounts)
 
2011                                    
    First Quarter   $ 25.1   $ 1.36   $ 0.3   $ 1.79   $ 8.3  
    Second Quarter     89.5     4.84     1.6     8.61     71.5  
    Third Quarter     69.4     3.75     1.2     6.48     51.7  
    Fourth Quarter     73.3     3.96     1.3     6.89     55.5  

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    First Quarter   $   $   $   $   $  
    Second Quarter     22.9     1.25     0.2     1.25     0.5  
    Third Quarter     43.7     2.36     0.7     3.76     26.5  
    Fourth Quarter     25.9     1.40     0.3     1.88     9.0  

        At December 31, 2011, the General Partner and its affiliates owned 75.3% of our outstanding units. When not more than 25% of our issued and outstanding units are held by non-affiliates of the General Partner, we, at the General Partner's sole discretion, may call, or assign to the General Partner or its affiliates, our right to acquire all such outstanding units held by non-affiliated persons. If the General Partner elects to acquire all outstanding units, we are required to give at least 30 but not more than 60 days notice of our decision to purchase the outstanding units. The purchase price per unit will be the greater of (1) the average of the previous 20 trading days' closing prices as of the date five days before the purchase is announced or (2) the highest price paid by the General Partner or any of its affiliates for any unit within the 90 days preceding the date the purchase is announced.