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Partners' Capital and Distributions | 12 Months Ended
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Dec. 31, 2014
Partners' Capital and Distributions |
Partners' Capital and Distributions | Note 11—Partners’ Capital and Distributions Units Outstanding Partners’ capital at December 31, 2014 consisted of 375,107,793 common units outstanding, representing a 98% effective aggregate ownership interest in the Partnership and its subsidiaries after giving effect to the 2% general partner interest. Distributions We distribute 100% of our available cash within 45 days following the end of each quarter to unitholders of record and to our general partner. Available cash is generally defined as all of our cash and cash equivalents on hand at the end of each quarter, less reserves established in the discretion of our general partner for future requirements. General Partner Distributions. Our general partner is entitled to receive (i) distributions representing its 2% general partner interest and (ii) incentive distributions if the amount we distribute with respect to any quarter exceeds levels specified in our partnership agreement. Under the quarterly distribution provisions, the general partner is entitled, without duplication, to 2% of amounts we distribute up to $0.2250 per unit, referred to as our MQD, 15% of amounts we distribute in excess of $0.2250 per unit, 25% of the amounts we distribute in excess of $0.2475 per unit and 50% of amounts we distribute in excess of $0.3375 per unit. Per unit cash distributions on our outstanding limited partner units and the portion of the distributions representing an excess over the MQD were as follows for the periods indicated:
|  | Year |
|  | 2014 |  | 2013 |  | 2012 |
|  |  |  | Excess |  |  |  | Excess |  |  |  | Excess |
|  | Distribution (1) |  | over MQD |  | Distribution (1) |  | over MQD |  | Distribution (1) |  | over MQD |
First Quarter |  | $ | 0.6150 |  | $ | 0.3900 |  | $ | 0.5625 |  | $ | 0.3375 |  | $ | 0.5125 |  | $ | 0.2875 |
Second Quarter |  | $ | 0.6300 |  | $ | 0.4050 |  | $ | 0.5750 |  | $ | 0.3500 |  | $ | 0.5225 |  | $ | 0.2975 |
Third Quarter |  | $ | 0.6450 |  | $ | 0.4200 |  | $ | 0.5875 |  | $ | 0.3625 |  | $ | 0.5325 |  | $ | 0.3075 |
Fourth Quarter |  | $ | 0.6600 |  | $ | 0.4350 |  | $ | 0.6000 |  | $ | 0.3750 |  | $ | 0.5425 |  | $ | 0.3175 |
| (1) |  | Distributions represent those declared and paid in the applicable period shown.
During the years ended December 31, 2014, 2013 and 2012, our general partner’s incentive distributions were reduced by approximately $23 million, $15 million and $11 million, respectively. These reductions were agreed to in connection with the BP NGL Acquisition and the PNG Merger. In addition, our general partner has agreed to reduce the amount of its incentive distribution by $5.5 million per quarter during 2015, $5.0 million per quarter in 2016 and $3.75 million per quarter thereafter. See Note 3 for further discussion of the BP NGL Acquisition. Total cash distributions, net of reductions in our general partner’s incentive distributions, paid during the years ended December 31, 2014, 2013 and 2012 were as follows (in millions, except per unit data):
|  | Distributions Paid |  |  | Distributions |
|  | Common |  | General Partner |  |  |  |  | per limited |
Year |  | Units |  | 2% |  | Incentive |  | Total |  |  | partner unit |
2014 |  | $ | 934 |  | $ | 19 |  | $ | 454 |  | $ | 1,407 |  |  | $ | 2.55 |
2013 |  | $ | 791 |  | $ | 16 |  | $ | 353 |  | $ | 1,160 |  |  | $ | 2.33 |
2012 |  | $ | 684 |  | $ | 14 |  | $ | 271 |  | $ | 969 |  |  | $ | 2.11 |
On January 8, 2015, we declared a cash distribution of $0.6750 per unit on our outstanding common units. The distribution was paid on February 13, 2015 to unitholders of record on January 30, 2015, for the period October 1, 2014 through December 31, 2014. The total distribution paid was $390 million, with $254 million paid to our common unitholders and $5 million and $131 million paid to our general partner for its 2% general partner and incentive distribution interests, respectively. PAA Equity Offerings During 2014, 2013 and 2012, we entered into several equity distribution agreements under our Continuous Offering Program, pursuant to which we may offer and sell, through sales agents, common units representing limited partner interests having aggregate offering prices ranging from $300 million to up to $900 million. Sales of such common units are made by means of ordinary brokers’ transactions on the NYSE at market prices, in block transactions or as otherwise agreed upon by our sales agent and us. In addition to our Continuous Offering Program, we may sell common units through overnight or marketed offerings. The following table summarizes our issuance of common units in connection with marketed offerings and our Continuous Offering Program during the three years ended December 31, 2014 (net proceeds in millions):
Year |  | Type of Offering |  | Units Issued |  | Net Proceeds (1) (2) |
2014 Total |  | Continuous Offering Program |  | 15,375,810 |  | $ | 866 | (3)
2013 Total |  | Continuous Offering Program |  | 8,644,807 |  | $ | 477 | (3)
2012 |  | Continuous Offering Program |  | 12,063,707 |  | $ | 524 | (3)
2012 |  | Marketed Offering |  | 11,500,000 |  | 455 | (4)
2012 Total |  |  |  | 23,563,707 |  | $ | 979 |
| (1) |  | Amounts are net of costs associated with the offerings.
| (2) |  | Amounts include our general partner’s proportionate capital contributions of $18 million, $9 million and $20 million during 2014, 2013 and 2012, respectively.
| (3) |  | We pay commissions to our sales agents in connection with common unit issuances under our Continuous Offering Program. We paid $9 million, $5 million and $6 million of such commissions during 2014, 2013 and 2012, respectively.
| (4) |  | Offering was an underwritten transaction that required us to pay a gross spread. The net proceeds from such offering were used to fund a portion of the BP NGL Acquisition.
Noncontrolling Interests in Subsidiaries As of December 31, 2014, noncontrolling interests in our subsidiaries consisted of a 25% interest in SLC Pipeline LLC. PNG Merger Prior to the PNG Merger, which was completed on December 31, 2013, we owned 100% of the outstanding subordinated units of PNG and approximately 46% of the 61.2 million outstanding common units of PNG. Under the terms of the PNG Merger Agreement, we issued 0.445 PAA common units for each outstanding PNG common unit (the “Merger Exchange Ratio”) held by unitholders other than us, plus cash in lieu of any fractional PAA common units otherwise issuable in the PNG Merger. Also in conjunction with the PNG Merger, our general partner agreed to reduce the amount of its incentive distributions. See the subsection “Distributions” above. As a result of the PNG Merger, we purchased the noncontrolling interests in PNG for consideration of approximately 14.7 million PAA common units valued at $760 million. Such purchase resulted in an equity-classified loss of $290 million, which we recorded as a decrease to our partners’ capital. In addition, in conjunction with the PNG Merger, our general partner made a proportional contribution of $16 million associated with our issuance of PAA common units and we incurred transaction costs of $4 million resulting in a net increase in partners’ capital associated with the PNG Merger of $12 million. Issuance of PNG Common Units PNG issued approximately 1.9 million common units during the year ended December 31, 2013. As a result of PNG’s common unit issuances, we recorded an increase in noncontrolling interest of $32 million and an increase to our partners’ capital of $8 million in 2013. These increases represent the portion of the proceeds attributable to the respective ownership interests in PNG, adjusted for the impact of the dilution of our ownership interest. PNG did not issue any common units during the year ended December 31, 2012. The following table as required by GAAP sets forth the impact on net income attributable to PAA giving effect to the changes in our ownership interest in PNG during 2013 discussed above, which was recognized in partners’ capital (in millions):
|  | Year Ended |
|  | December 31, 2013 |
Net income attributable to PAA |  | $ | 1,361 |
Transfers to/from noncontrolling interests: |  |  |
Increase in capital from sale of PNG common units |  | 8 |
Decrease in capital from purchase of PNG common units in conjunction with the PNG Merger |  | (290 | )
Net transfers to/from noncontrolling interests |  | (282 | )
Change from net income attributable to PAA and transfers to/from noncontrolling interests |  | $ | 1,079 |

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- Definition The entire disclosure for 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 Accounting Standards Codification -Topic 272 -SubTopic 10 -Section 50 -Paragraph 3 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6373374&loc=d3e70478-108055 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 272 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6373374&loc=d3e70434-108055 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 5 -Subparagraph (SAB TOPIC 4.F) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187171-122770 + Details
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