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Partners' Capital and Distributions | 6 Months Ended
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Jun. 30, 2011
Partners' Capital and Distributions |
Partners' Capital and Distributions |
Note 10—Partners’ Capital and Distributions Noncontrolling Interests in a Subsidiary As of June 30, 2011, noncontrolling interests consisted of the following: (i) an approximate 36% interest in PNG and (ii) a 25% interest in SLC Pipeline LLC. During February 2011, in connection with the Southern Pines Acquisition, PNG completed a private placement of approximately 17.4 million PNG common units to third-party purchasers for net proceeds of approximately $370 million. In addition, we purchased approximately 10.2 million PNG common units for approximately $230 million, including our proportionate general partner contribution of $12 million (collectively, “the PNG offering”). Also, during May 2011, a portion of the PNG Transaction Grants vested and were settled with 58,672 PNG units, which were owned by us. See Note 10 to our Consolidated Financial Statements included in Part IV of our 2010 Annual Report on Form 10-K for further detail regarding the “PNG Transaction Grants.” As a result of these transactions, our aggregate ownership interest in PNG decreased from approximately 77% to approximately 64%. The following table sets forth our ownership changes in the limited partner units of PNG from December 31, 2010 to June 30, 2011 (units in millions):
|  | December 31, 2010 |  | February 2011 PNG Issuance |  | Transaction Grants |  | June 30, 2011 |
PNG Units Owned by PAA: |  |  |  |  |  |  |  |  |
Common Units |  | 18.1 |  | 10.2 |  | (0.1 | ) | 28.2 |
Series A Subordinated Units |  | 11.9 |  | — |  | — |  | 11.9 |
Series B Subordinated Units |  | 13.5 |  | — |  | — |  | 13.5 |
Total PNG Units Owned by PAA |  | 43.5 |  | 10.2 |  | (0.1 | ) | 53.6 |
In addition to our limited partner interest, we also own the general partner’s 2% interest and the incentive distribution rights in PNG. In conjunction with the PNG offering, we recorded an increase in noncontrolling interest of $306 million and an increase to our partners’ capital of approximately $64 million. The increases result from the portion of the proceeds attributable to the respective ownership interests in PNG, adjusted for the impact of the dilution of our ownership interest resulting from this transaction. The following table sets forth the impact of the changes in our ownership interest in PNG on our capital (in millions):
|  | For the Six Months Ended |
|  | June 30, |
|  | 2011 |  | 2010 |
Net income attributable to Plains |  | $ | 408 |  | $ | 282 |
Transfers to the noncontrolling interests: |  |  |  |  |
Increase in capital from sale of PNG units |  | 64 |  | 101 |
Change from net income attributable to Plains and net transfers to the noncontrolling interest |  | $ | 472 |  | $ | 383 |
The following table reflects the changes in the noncontrolling interests in partners’ capital (in millions):
|  | For the Six Months Ended |
|  | June 30, |
|  | 2011 |  | 2010 |
Beginning balance |  | $ | 231 |  | $ | 63 |
Sale of noncontrolling interests in a subsidiary |  | 306 |  | 167 |
Net income attributable to noncontrolling interests |  | 10 |  | 2 |
Distributions to noncontrolling interests |  | (16 | ) | (1 | )
Equity compensation expense |  | 2 |  | — |
Ending Balance |  | $ | 533 |  | $ | 231 |
PAA Distributions The following table details the distributions paid during or pertaining to the first six months of 2011, net of reductions to the general partner’s incentive distributions (in millions, except per unit amounts):
|  |  |  | Distributions Paid |  | Distributions |
|  |  |  | Common |  | General Partner |  |  |  | per limited |
Date Declared |  | Date Paid or To Be Paid |  | Units |  | Incentive |  | 2% |  | Total |  | partner unit |
July 11, 2011 |  | August 12, 2011 (1) |  | $ | 147 |  | $ | 52 |  | $ | 3 |  | $ | 202 |  | $ | 0.9825 |
April 11, 2011 |  | May 13, 2011 |  | $ | 145 |  | $ | 50 |  | $ | 3 |  | $ | 198 |  | $ | 0.9700 |
January 12, 2011 |  | February 14, 2011 |  | $ | 135 |  | $ | 46 |  | $ | 3 |  | $ | 184 |  | $ | 0.9575 |
(1) Payable to unitholders of record at the close of business on August 2, 2011, for the period April 1, 2011 through June 30, 2011. In conjunction with the closing of certain acquisitions, our general partner agreed to temporarily reduce the amounts due it as incentive distributions. Following the distribution in August 2011, the aggregate incentive distribution reductions remaining will be approximately $1 million. See Note 5 to our Consolidated Financial Statements included in Part IV of our 2010 Annual Report on Form 10-K for further detail regarding our “General Partner Incentive Distributions.” PAA Equity Offerings During the six months ended June 30, 2011, we completed an equity offering of our common units as shown in the table below (in millions, except per unit data):
|  |  |  |  |  |  |  | General |  |  |  |  |
|  |  |  | Gross |  | Proceeds |  | Partner |  |  |  | Net |
Date |  | Units Issued |  | Unit Price |  | from Sale |  | Contribution |  | Costs |  | Proceeds |
March 2011 (1) |  | 7,935,000 |  | $ | 64.00 |  | $ | 508 |  | $ | 10 |  | $ | (15 | ) | $ | 503 |
(1) This offering of common units was an underwritten transaction that required us to pay a gross spread. The net proceeds from this offering were used to reduce outstanding borrowings under our credit facilities and for general partnership purposes.

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- Definition Describes the formation, structure, control and ownership of the partnership. Disclosures related to accounts comprising partners' capital. Includes balances of general partners' capital account, limited partners' capital account, preferred partners' capital account and total partners' capital account and units outstanding; accumulated other comprehensive income; amount and nature of changes to amount of partner's capital and units outstanding by class, rights and privileges for each class of units; distribution policies and distributions paid by unit class; impact of and correction of an error in previously issued financial statements; limitations of partners' liability; redemption, conversion and distribution policies; and deferred compensation related to the issuance of units. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 87-21 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Practice Bulletin (PB) -Number 14 -Paragraph 10, 15 + Details
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