Sunoco 2006 Annual Report Download - page 72

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also distributes and markets these products. In September
2004, Sunoco sold its one-third interest in the Mont Bel-
vieu, TX Belvieu Environmental Fuels MTBE production
facility to Enterprise Products Operating L.P. In January
2004, a facility in Pasadena, TX, which produces plasti-
cizers, was sold to BASF (Note 2).
The Logistics segment operates refined product and crude
oil pipelines and terminals and conducts crude oil acquis-
ition and marketing activities primarily in the Northeast,
Midwest and South Central regions of the United States.
In addition, the Logistics segment has ownership interests
in several refined product and crude oil pipeline joint
ventures. Substantially all logistics operations are con-
ducted through Sunoco Logistics Partners L.P. (Note 15).
The Coke segment makes high-quality, blast-furnace
coke at facilities located in East Chicago, IN (Indiana
Harbor), Vansant, VA (Jewell) and, commencing in
March 2005, Franklin Furnace, OH (Haverhill), and
produces metallurgical coal from mines in Virginia, pri-
marily for use at the Jewell cokemaking facility. Sub-
stantially all of the coke sales are made under long-term
contracts with subsidiaries of a major steel company. In
addition, the Indiana Harbor plant produces heat as a
by-product that is used by a third party to produce elec-
tricity and the Haverhill plant produces steam that is sold
to the Chemicals business. An additional cokemaking
facility in Vitória, Brazil is expected to commence limited
operations in the first quarter of 2007, with full pro-
duction expected in mid-2007. Sunoco will be the oper-
ator of the Vitória facility. Sunoco currently has a one
percent ownership interest in the Vitória facility and
expects to invest an additional $35 million in the venture
during 2007.
Income tax amounts give effect to the tax credits earned
by each segment. Overhead expenses that can be identi-
fied with a segment have been included as deductions in
determining pretax and after-tax segment income. The
remainder are included in Corporate and Other. Also in-
cluded in Corporate and Other are net financing ex-
penses and other, which consist principally of interest
expense, the preferential return of third-party investors in
the Company’s cokemaking operations (Note 15) and
debt and other financing expenses less interest income
and interest capitalized, and significant unusual and in-
frequently occurring items not allocated to a segment for
purposes of reporting to the chief operating decision
maker. Intersegment revenues are accounted for based on
the prices negotiated by the segments which approximate
market. Identifiable assets are those assets that are utilized
within a specific segment.
70