Partnership Capital Subject to Mandatory Redemption

12 Months Ended

Dec. 31, 2012

Partnership Capital Subject to Mandatory Redemption [Abstract]

PARTNERSHIP CAPITAL SUBJECT TO MANDATORY REDEMPTION

NOTE 10 – PARTNERSHIP CAPITAL SUBJECT TO MANDATORY REDEMPTION

The following table shows the Partnership’s capital subject to mandatory redemption as of December 31, 2012 and 2011:

	2012			2011
Partner capital issued:
Limited partnership capital	$	650,735		$	662,226
Subordinated limited partnership capital		283,709			255,414
General partnership capital issued		1,048,067			927,578
Total partner capital issued		1,982,511			1,845,218
Partnership loans outstanding:
General partnership loans outstanding at beginning of period		(86,853	)		—
General partnership loans issued during the period		(94,170	)		(91,693	)
Repayment of general partnership loans during the period		10,759			4,840
Total partnership loans outstanding		(170,264	)		(86,853	)
Partnership capital subject to mandatory redemption, net of reserve for anticipated withdrawals		1,812,247			1,758,365
Reserve for anticipated withdrawals		170,646			147,412
Partnership capital subject to mandatory redemption	$	1,982,893		$	1,905,777

Net income, as defined in the Partnership Agreement, is equivalent to income before allocations to partners on the Consolidated Statements of Income. Such income, if any, for each calendar year is allocated to the Partnership’s three classes of capital in accordance with the formulas prescribed in the Partnership Agreement. Income allocations are based upon partner capital contributions including capital contributions financed with loans from the Partnership, as indicated in the previous table. First, limited partners are allocated net income (as defined in the Partnership Agreement) in accordance with the prescribed formula for their share of net income. Limited partners do not share in the net loss in any year in which there is a net loss and the Partnership is not dissolved or liquidated. Thereafter, subordinated limited partners and general partners are allocated any remaining net income or net loss based on formulas as defined in the Partnership Agreement.

The Partnership makes loans available to those general partners (other than members of the Executive Committee, which consists of the Managing Partner and the executive officers of the Partnership) that require financing for some or all of their partnership capital contributions. Loans made by the Partnership to general partners are generally for a period of one year but are expected to be renewed and bear interest at the prime rate, as defined in the loan documents. The Partnership recognizes interest income for the interest paid by general partners in connection with such loans. The outstanding amount of general partner loans financed through the Partnership is reflected as a reduction to total general partnership capital in the Partnership’s Consolidated Statements of Changes in Partnership Capital Subject to Mandatory Redemption. As of December 31, 2012 and 2011, the outstanding amount of general partner loans financed through the Partnership amounted to $170,264 and $86,853, respectively. Interest income from these loans, which is included in interest and dividends in the Partnership’s Consolidated Statements of Income, was $5,717 and $2,888 for the years ended December 31, 2012 and 2011, respectively.

The limited partnership capital subject to mandatory redemption is held by current and former employees and general partners of the Partnership. Limited partners participate in the Partnership’s profits and are paid a minimum 7.5% annual return on the face amount of their capital, in accordance with the Partnership Agreement. The minimum 7.5% annual return totaled $49,181, $50,137 and $34,225 for the years ended December 31, 2012, 2011 and 2010, respectively. These amounts are included as a component of interest expense in the Partnership’s Consolidated Statements of Income.

The subordinated limited partnership capital subject to mandatory redemption is held by current and former general partners of the Partnership. Subordinated limited partners receive a percentage of the net income of the Partnership determined in accordance with the Partnership Agreement. The subordinated limited partnership capital subject to mandatory redemption is subordinated to the limited partnership capital.

The general partnership capital subject to mandatory redemption is held by current general partners of the Partnership. General partners receive a percentage of the net income of the Partnership determined in accordance with the Partnership Agreement. The general partnership capital subject to mandatory redemption is subordinated to the limited partnership capital and the subordinated limited partnership capital.