Sunoco 2011 Annual Report Download - page 46

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Analysis of Earnings Profile of Sunoco Businesses
In 2011, the net loss attributable to Sunoco, Inc. shareholders was $1,684 million, or $14.55 per share of
common stock on a diluted basis, compared to net income attributable to Sunoco, Inc. shareholders of $234
million, or $1.95 per share, in 2010 and a net loss attributable to Sunoco, Inc. shareholders of $329 million, or
$2.81 per share, in 2009.
The $3,102 million decrease in pretax results attributable to Sunoco, Inc. shareholders in 2011 was primarily
due to higher provisions for asset write-downs and other matters ($2,767 million), lower refining margins ($386
million) and production volumes ($205 million), lower results attributable to Sunoco’s Coke and discontinued
chemicals businesses ($169 million), lower gains from the liquidation of LIFO inventories ($105 million) and lower
gains related to the remeasurement of pipeline equity interests ($50 million). Partially offsetting these negative
factors were lower expenses ($282 million), the absence of the 2010 loss on the divestment of discontinued
polypropylene operations ($169 million) and higher results in Sunoco’s Logistics business ($72 million). The
increase in the income tax benefit in 2011 was primarily attributable to higher provisions for asset write-downs.
The $913 million increase in pretax results attributable to Sunoco, Inc. shareholders in 2010 was primarily
due to higher margins from continuing operations in Sunoco’s Refining and Supply business ($347 million),
lower expenses ($228 million), lower provisions for asset write-downs and other matters ($590 million), higher
LIFO gains from the liquidation of crude oil and refined product inventories ($76 million) and the gain from the
remeasurement of pipeline equity interests to fair value in 2010 ($59 million). Partially offsetting these positive
factors were lower production of refined products ($87 million), the 2010 loss on the sale of the discontinued
polypropylene operations ($169 million) and the absence of gains associated with divestments of the Tulsa
refinery and retail heating oil business during 2009 ($114 million). The increase in income tax expense in 2010
was primarily attributable to improved operating results and lower provisions for asset write-downs.
Logistics
The Logistics business operates refined product and crude oil pipelines and terminals and conducts crude oil
and refined product acquisition and marketing activities primarily in the northeast, midwest and southwest
regions of the United States. In addition, the Logistics business has an ownership interest in several refined
product pipeline joint ventures. Substantially all logistics operations are conducted through Sunoco Logistics
Partners L.P. (the “Partnership”), a consolidated master limited partnership. Sunoco is the general partner of the
Partnership, which consists of a 2-percent ownership interest and incentive distribution rights, and owns a
32-percent interest in the Partnership’s limited partner units (see “Capital Resources and Liquidity—Other Cash
Flow Information” below).
On December 2, 2011, the Partnership completed a three-for-one split of its limited partnership units. The
unit split resulted in the issuance of two additional limited partnership units for every one limited partnership unit
owned. All limited partnership unit information included in this report is presented on a post-split basis.
2011 2010 2009
Pretax income (millions of dollars) ........................................ $ 204 $ 132 $ 152
Pipeline and terminal throughputs* (thousands of barrels daily):
Unaffiliated customers ................................................ 2,758 2,037 1,436
Affiliated customer ................................................... 1,041 1,296 1,449
3,799 3,333 2,885
*Excludes joint-venture operations which are not consolidated.
Logistics pretax segment income increased $72 million in 2011 primarily due to expanded crude oil margins
which benefitted from market-related opportunities and increased sales volumes. Pipeline earnings increased due
to regulated tariff increases and strong demand for West Texas crude oil. Higher earnings attributable to recent
acquisitions and organic growth projects also contributed to the improved results.
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