Series A Preferred Units

In July 2013, certain holders of Series A Preferred Units exercised their right to convert 2,459,017 Series A Preferred Units into common units. Concurrent with this transaction, the Partnership recognized a $26 million gain in other income and deductions, net, related to the embedded derivative and reclassified $41 million from the Series A Preferred Units into common units. As of September 30, 2013, the remaining Series A Preferred Units were convertible into 2,047,571 common units, and if outstanding, are mandatorily redeemable on September 2, 2029 for $35 million plus all accrued but unpaid distributions and interest thereon. The Series A Preferred Units receive fixed quarterly cash distributions of $0.445 per unit if outstanding on the record dates of the Partnership’s common unit distributions. Holders can elect to convert Series A Preferred Units into common units at any time in accordance with the partnership agreement.

The following table provides a reconciliation of the beginning and ending balances of the Series A Preferred Units for the nine months ended September 30, 2013:



	Units		Amount
Outstanding at beginning of period	4,371,586		$	73
Series A Preferred Units converted into common units	(2,459,017	)	(41		)
Accretion to redemption value	N/A		—
Outstanding at end of period	1,912,569		$	32		*

* This amount will be accreted to $35 million plus any accrued but unpaid distributions and interest by deducting amounts from

partners’ capital over the remaining periods until the mandatory redemption date of September 2, 2029.