EQUITY

ETE

The changes in ETE common units and ETE Series A Convertible Preferred Units during the nine months ended September 30, 2018 were as follows:



	Number of ETE Series A Convertible Preferred Units		Number of Common Units
Outstanding at December 31, 2017	329.3		1,079.1
Conversion of ETE Series A Convertible Preferred Units to common units	(329.3	)	79.1
Outstanding at September 30, 2018	—		1,158.2

In October 2018, ETE issued 1.46 billion ETE Common Units in connection with the ETE-ETP Merger.

ETE Equity Distribution Program

In March 2017, the Partnership entered into an equity distribution agreement relating to at-the-market offerings of its common units with an aggregate offering price up to $1 billion. As of September 30, 2018, there have been no sales of common units under the equity distribution agreement.

ETE Series A Convertible Preferred Units

In May 2018, the Partnership converted its 329.3 million Series A Convertible Preferred Units into approximately 79.1 million common units in accordance with the terms of our partnership agreement.

ETE Class A Units

In connection with the ETE-ETP Merger, the Partnership issued 647,745,099 Class A units (“ETE Class A Units”) representing limited partner interests in the Partnership to LE GP, LLC (“LE GP”), the general partner of ETE. The number of ETE Class A Units issued allows LE GP and its affiliates to retain a voting interest in the Partnership that is identical to their voting interest in the Partnership prior to the completion of the Merger. The ETE Class A Units are entitled to vote together with the Partnership’s common units, as a single class, except as required by law. Additionally, ETE’s partnership agreement provides that, under certain circumstances, upon the issuance by the Partnership of additional common units or any securities that have voting rights that are pari passu with the Partnership common units, the Partnership will issue to any holder of ETE Class A Units additional ETE Class A Units such that the holder maintains a voting interest in the Partnership that is identical to its voting interest in the Partnership prior to such issuance. The ETE Class A Units are not entitled to distributions and otherwise have no economic attributes.

Repurchase Program

During the nine months ended September 30, 2018, ETE did not repurchase any ETE common units under its current buyback program. As of September 30, 2018, $936 million remained available to repurchase under the current program.

Subsidiary Equity Transactions

The Parent Company accounts for the difference between the carrying amount of its investment in ETP, Sunoco LP, and USAC and the underlying book value arising from the issuance or redemption of units by ETP, Sunoco LP, and USAC (excluding transactions with the Parent Company) as capital transactions. As a result of these transactions, during the nine months ended September 30, 2018, we recognized a decrease in partners’ capital of $125 million.

ETP Equity Distribution Program

During the nine months ended September 30, 2018, there were no ETP common units issued under ETP’s equity distribution agreements. In connection with the ETE-ETP Merger, the equity distribution program was terminated in October 2018.

ETP Distribution Reinvestment Program

In July 2017, ETP initiated a new distribution reinvestment plan. During the nine months ended September 30, 2018, distributions of $57 million were reinvested under ETP’s distribution reinvestment plan. In connection with the ETE-ETP Merger, the distribution reinvestment program was terminated in October 2018.

ETP Preferred Units

ETP issued 950,000 ETP Series A Preferred Units and 550,000 ETP Series B Preferred Units in November 2017 and has issued additional preferred units in 2018, as discussed below. Subsequent to the ETE-ETP Merger, all of ETP’s Series A, Series B, Series C and Series D Preferred Units remain outstanding.

ETP Series C Preferred Units Issuance

In April 2018, ETP issued 18 million of its 7.375% ETP Series C Preferred Units at a price of $25 per unit, resulting in total gross proceeds of $450 million. The proceeds were used to repay amounts outstanding under ETP’s revolving credit facility and for general partnership purposes.

Distributions on the ETP Series C Preferred Units will accrue and be cumulative from and including the date of original issue to, but excluding, May 15, 2023, at a rate of 7.375% per annum of the stated liquidation preference of $25. On and after May 15, 2023, distributions on the ETP Series C Preferred Units will accumulate at a percentage of the $25 liquidation preference equal to an annual floating rate of the three-month LIBOR, determined quarterly, plus a spread of 4.530% per annum. The ETP Series C Preferred Units are redeemable at ETP’s option on or after May 15, 2023 at a redemption price of $25 per ETP Series C Preferred Unit, plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption.

ETP Series D Preferred Units Issuance

In July 2018, ETP issued 17.8 million of its 7.625% ETP Series D Preferred Units at a price of $25 per unit, resulting in total gross proceeds of $445 million. The proceeds were used to repay amounts outstanding under ETP’s revolving credit facility and for general partnership purposes.

Distributions on the ETP Series D Preferred Units will accrue and be cumulative from and including the date of original issue to, but excluding, August 15, 2023, at a rate of 7.625% per annum of the stated liquidation preference of $25. On and after August 15, 2023, distributions on the ETP Series D Preferred Units will accumulate at a percentage of the $25 liquidation preference equal to an annual floating rate of the three-month LIBOR, determined quarterly, plus a spread of 4.378% per annum. The ETP Series D Preferred Units are redeemable at ETP’s option on or after August 15, 2023 at a redemption price of $25 per ETP Series D Preferred Unit, plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption.

Sunoco LP Common Unit Transactions

On February 7, 2018, subsequent to the record date for Sunoco LP’s fourth quarter 2017 cash distributions, Sunoco LP repurchased 17,286,859 Sunoco LP common units owned by ETP for aggregate cash consideration of approximately $540 million. ETP used the proceeds from the sale of the Sunoco LP common units to repay amounts outstanding under its revolving credit facility.

Sunoco LP Series A Preferred Units

On January 25, 2018, Sunoco LP redeemed all outstanding Sunoco LP Series A Preferred Units held by ETE for an aggregate redemption amount of approximately $313 million. The redemption amount includes the original consideration of $300 million and a 1% call premium plus accrued and unpaid quarterly distributions.

USAC Warrant Private Placement

On April 2, 2018, USAC issued two tranches of warrants to purchase USAC common units (the “USAC Warrants”), which included USAC Warrants to purchase 5,000,000 common units with a strike price of $17.03 per unit and USAC Warrants to purchase 10,000,000 common units with a strike price of $19.59 per unit. The USAC Warrants may be exercised by the holders thereof at any time beginning on the one year anniversary of the closing date and before the tenth anniversary of the closing date. Upon exercise of the USAC Warrants, USAC may, at its option, elect to settle the USAC Warrants in common units on a net basis.

USAC Class B Units

The USAC Class B Units, all of which are owned by ETP, are a new class of partnership interests of USAC that have substantially all of the rights and obligations of a USAC common unit, except the USAC Class B Units will not participate in distributions for the first four quarters following the closing date of the USAC Transaction on April 2, 2018. Each USAC Class B Unit will automatically convert into one USAC common unit on the first business day following the record date attributable to the quarter ending June 30, 2019.

USAC Distribution Reinvestment Program

During the six months ended September 30, 2018, distributions of $0.4 million were reinvested under the USAC distribution reinvestment program resulting in the issuance of approximately 24,261 USAC common units.

Parent Company Cash Distributions

Distributions declared and/or paid subsequent to December 31, 2017 were as follows:



Quarter Ended	Record Date	Payment Date	Rate
December 31, 2017⁽¹⁾	February 8, 2018	February 20, 2018	$	0.3050
March 31, 2018⁽¹⁾	May 7, 2018	May 21, 2018	0.3050
June 30, 2018	August 6, 2018	August 20, 2018	0.3050
September 30, 2018	November 8, 2018	November 19, 2018	0.3050

⁽¹⁾

Certain common unitholders elected to participate in a plan pursuant to which those unitholders elected to forgo their cash distributions on all or a portion of their common units, and in lieu of receiving cash distributions on these common units for each such quarter, such unitholder received Series A Convertible Preferred Units, and (on a one-for-one basis for each common unit as to which the participating unitholder elected be subject to this plan) that entitled them to receive a cash distribution of up to $0.11 per Series A Convertible Preferred Unit. The quarter ended March 31, 2018 was the final quarter of participation in the plan.

Distributions declared and/or paid with respect to our Series A Convertible Preferred Units subsequent to December 31, 2017 were as follows:



Quarter Ended	Record Date	Payment Date	Rate
December 31, 2017	February 8, 2018	February 20, 2018	$	0.1100
March 31, 2018	May 7, 2018	May 21, 2018	0.1100

ETP Cash Distributions

Distributions declared and/or paid by ETP subsequent to December 31, 2017 but prior to the closing of the ETE-ETP Merger as discussed in Note 1 were as follows:



Quarter Ended	Record Date	Payment Date	Rate
December 31, 2017	February 8, 2018	February 14, 2018	$	0.5650
March 31, 2018	May 7, 2018	May 15, 2018	0.5650
June 30, 2018	August 6, 2018	August 14, 2018	0.5650

Distributions on ETP’s preferred units declared and paid by ETP subsequent to December 31, 2017 were as follows:



Period Ended	Record Date	Payment Date	Rate
ETP Series A Preferred Units
December 31, 2017	February 1, 2018	February 15, 2018	$	15.451
June 30, 2018	August 1, 2018	August 15, 2018	31.250
ETP Series B Preferred Units
December 31, 2017	February 1, 2018	February 15, 2018	16.378
June 30, 2018	August 1, 2018	August 15, 2018	33.125
ETP Series C Preferred Units
June 30, 2018	August 1, 2018	August 15, 2018	0.5634
September 30, 2018	November 1, 2018	November 15, 2018	0.4609
ETP Series D Preferred Units
September 30, 2018	November 1, 2018	November 15, 2018	0.5931

Sunoco LP Cash Distributions

The following are distributions declared and/or paid by Sunoco LP subsequent to December 31, 2017:



Quarter Ended	Record Date	Payment Date	Rate
December 31, 2017	February 6, 2018	February 14, 2018	$	0.8255
March 31, 2018	May 7, 2018	May 15, 2018	0.8255
June 30, 2018	August 7, 2018	August 15, 2018	0.8255
September 30, 2018	November 6, 2018	November 14, 2018	0.8255

USAC Cash Distributions

Subsequent to the USAC Transactions described in Note 2, ETE and its wholly-owned subsidiaries own an aggregate 20,466,912 USAC common units, and ETP owns 19,191,351 USAC common units and 6,397,965 USAC Class B units. As of September 30, 2018, USAC had 89,966,676 common units outstanding. USAC currently has a non-economic general partner interest and no outstanding incentive distribution rights.

The following are distributions declared and/or paid by USAC subsequent to the USAC transaction on April 2, 2018:



Quarter Ended	Record Date	Payment Date	Rate
March 31, 2018	May 1, 2018	May 11, 2018	$	0.5250
June 30, 2018	July 30, 2018	August 10, 2018	0.5250
September 30, 2018	October 29, 2018	November 09, 2018	0.5250

Accumulated Other Comprehensive Income

The following table presents the components of AOCI, net of tax:



	September 30, 2018			December 31, 2017
Available-for-sale securities ⁽¹⁾	$	6		$	8
Foreign currency translation adjustment	(5		)	(5		)
Actuarial loss related to pensions and other postretirement benefits	(7		)	(5		)
Investments in unconsolidated affiliates, net	14			5
Subtotal	8			3
Amounts attributable to noncontrolling interest	(8		)	(3		)
Total AOCI, net of tax	$	—		$	—

⁽¹⁾

Effective January 1, 2018, the Partnership adopted Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which resulted in the reclassification of $2 million from ETP’s accumulated other comprehensive income related to available-for-sale securities to ETP’s common unitholders. The amount is reflected as a change in noncontrolling interest in the Partnership’s consolidated financial statements.