Sunoco 2007 Annual Report Download - page 68

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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 Franklin Furnace,
OH (Haverhill), and produces metallurgical coal from
mines in Virginia, primarily for use at the Jewell
cokemaking facility. Substantially all of the coke sales are
made under long-term contracts with a major steel com-
pany. Sunoco is also the operator of a cokemaking plant
in Vitória, Brazil which commenced operations in the
first quarter of 2007. During the fourth quarter of 2007,
Sunoco increased its investment in the project company
that owns the Vitória facility, as planned, by becoming its
sole subscriber of preferred shares for a total equity inter-
est of $41 million. In addition, the Indiana Harbor plant
produces heat as a by-product that is used by a third party
to produce electricity, the Haverhill plant produces steam
that is sold to the Chemicals business and the Vitória
plant produces steam that is sold to the majority common
shareholder of its project company. An additional coke-
making facility and associated cogeneration power plant
are currently under construction at the Haverhill site,
which are expected to be operational in the second half
of 2008.
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.
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