Sunoco 2007 Annual Report Download - page 12

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Results of Operations
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars) 2007 2006 2005
Refining and Supply $772 $881 $947
Retail Marketing 69 76 30
Chemicals 26 43 94
Logistics 45 36 22
Coke 29 50 48
Corporate and Other:
Corporate expenses (67) (58) (84)
Net financing expenses and other (41) (49) (45)
Issuance of Sunoco Logistics Partners L.P. limited
partnership units 90 ——
Asset write-downs and other matters (32) ——
Income tax matters ——18
Phenol supply contract dispute —— (56)
Consolidated net income $891 $979 $974
Analysis of Earnings Profile of Sunoco Businesses
In 2007, Sunoco earned $891 million, or $7.43 per share of common stock on a diluted
basis, compared to $979 million, or $7.59 per share, in 2006 and $974 million, or $7.08 per
share, in 2005.
The $88 million decrease in net income in 2007 was primarily due to higher expenses
($116 million), a provision for asset write-downs and other matters recognized in 2007
($32 million), lower margins in Sunoco’s Refining and Supply ($44 million) and Retail
Marketing ($12 million) businesses and lower income attributable to the Coke business
($21 million) primarily due to lower tax benefits. Partially offsetting these negative factors
were a gain recognized in 2007 related to the prior issuance of Sunoco Logistics Partners
L.P. limited partnership units ($90 million), higher gains on asset divestments ($11
million), higher earnings from the Logistics business ($9 million), lower net financing ex-
penses ($8 million) and a lower effective income tax rate ($14 million).
In 2006, the $5 million increase in net income was primarily due to higher margins in
Sunoco’s Refining and Supply ($73 million) and Retail Marketing ($50 million) busi-
nesses, a benefit attributable to LIFO inventory profits in Sunoco’s Refining and Supply
business ($16 million) and the absence of a loss associated with a phenol supply contract
dispute ($56 million). Partially offsetting these positive factors were higher expenses ($75
million), including fuel charges and refinery operating expenses; lower margins from
Sunoco’s Chemicals business ($67 million); and lower production of refined products ($48
million).
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