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Inergy, L.P.'s Common Units |
Inergy Holdings, L.P.'s
Common Units |
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| Distributions |
Inergy, L.P.’s primary objective is to increase distributable cash flow to its unitholders, while maintaining the highest level of commitment and service to its customers. Inergy, L.P. has engaged and will continue to engage in objectives of further growth through acquisitions both in its propane and midstream operations, internally generated expansion, and measures aimed at increasing the profitability of existing operations. Under Inergy, L.P.’s partnership agreement, it must distribute all of its cash on hand at the end of each quarter, less reserves established by its managing general partner in its discretion. This cash is referred to as “available cash,” and its meaning is defined in the partnership agreement. Inergy Holdings, L.P. owns all of our incentive distribution rights. |
Inergy Holdings, L.P.’s cash-generating assets consist of its partnership interests, including incentive distribution rights, in Inergy, L.P. Inergy Holdings, L.P.’s primary objective is to increase distributable cash flow to its unitholders through its ownership of partnership interests in Inergy. The incentive distribution rights entitle it to receive an increasing percentage of total cash distributions made by Inergy, L.P. as it reaches certain target distribution levels and have resulted in significantly increasing cash distributions to Inergy Holdings, L.P. |
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| Taxation of Entity and Entity Owners |
Inergy, L.P. is a flow-through entity that is not subject to an entity-level
federal income tax.
Inergy, L.P. expects that holders of its common units will benefit for
a period of time from tax basis adjustments and remedial allocations of
deductions so that they will be allocated a relatively small amount of
federal taxable income compared to the cash distributed to them.
Inergy, L.P. common unitholders will receive Schedule K-1's from Inergy,
L.P. reflecting the unitholders' share of items of income, gain, loss
and deduction at the end of each fiscal year.
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Similarly, Inergy Holdings, L.P. is a flow-through entity that is not
subject to an entity-level federal income tax.
Inergy Holdings, L.P. expect that holders of its common units will benefit
for a period of time from tax basis adjustments and remedial allocations
of deductions; however, the ratio of taxable income to cash distributions
will be much greater than the ratio applicable to holders of common units
in Inergy, L.P., as remedial allocations of deductions will be very limited.
Moreover, the ownership of incentive distribution rights will cause more
taxable income to be allocated to Inergy Holdings, L.P. If Inergy, L.P.
is successful in increasing distributable cash flow over time, the income
allocations from incentive distribution rights will increase and, therefore,
the ratio of federal taxable income to cash distributions will increase.
Inergy Holdings, L.P. common unitholders also will also receive Schedule
K-1's reflecting the unitholders' share of Inergy Holdings, L.P. items
of income, gain, loss and deduction at the end of each fiscal year.
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| Competition |
Inergy, L.P. is the operating subsidiary of Inergy Holdings,
L.P. and may, generally, engage in acquisition and development activities
that expand its business and operations. |
Inergy Holdings, L.P. cash-generating assets consist of its
partnership interests in Inergy, L.P., and it currently has no independent
operations. Accordingly, the financial performance and the ability to pay
cash distributions to Inergy Holdings, L.P. unitholders is directly dependent
upon the performance of Inergy, L.P. |
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