Sunoco 2008 Annual Report Download - page 77

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acquirer must recognize the assets acquired, the liabilities assumed and any noncontrolling interest in the
acquiree measured at their fair values as of the acquisition date. SFAS No. 141R also requires that contingent
consideration be recognized at fair value on the acquisition date and that any acquisition-related costs be
recognized separately from the acquisition and expensed as incurred.
In December 2007, Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS No. 160”), was issued. Among other things, SFAS No. 160 amends
Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to establish standards for the
accounting and reporting of noncontrolling (minority) interests in consolidated financial statements. The new
standard will require that minority interests be reported as a component of shareholders’ equity and that
consolidated net income include amounts attributable to the minority interests with such amounts separately
disclosed on the face of the income statement. SFAS No. 160 also will require that all changes in minority
interests that do not result in a loss of control of the subsidiary be accounted for as equity transactions.
In March 2008, Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative
Instruments and Hedging Activities” (“SFAS No. 161”), was issued. SFAS No. 161 amends and expands the
disclosure requirements for derivative instruments and hedging activities under Statement of Financial
Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS
No. 133”). It does not change the accounting treatment for derivatives. SFAS No. 161 will require a more
detailed discussion of how an entity uses derivative instruments and hedging activities and how such derivative
instruments and related hedged items affect the entity’s financial position, financial performance and cash flows.
Among other things, the expanded disclosures will also require presentation of the fair values of derivative
instruments and their gains and losses in tabular format and enhanced liquidity disclosures, including discussion
of credit-risk-related derivative features.
SFAS No. 141R, SFAS No. 160 and SFAS No. 161 must be implemented effective January 1, 2009. Sunoco
is evaluating the impact of these new accounting pronouncements on its financial statements.
2. Changes in Business and Other Matters
Acquisitions
Logistics Assets—In November 2008, Sunoco Logistics Partners L.P., the 43-percent owned consolidated
master limited partnership through which Sunoco conducts a substantial portion of its logistics operations,
purchased a refined products pipeline system, refined products terminal facilities and certain other related assets
located in Texas and Louisiana from affiliates of Exxon Mobil Corporation for $185 million.
In March 2006, the Partnership purchased two separate crude oil pipeline systems and related storage
facilities located in Texas, one from affiliates of Black Hills Energy, Inc. (“Black Hills”) for $41 million and the
other from affiliates of Alon USA Energy, Inc. for $68 million. The Black Hills acquisition also includes a lease
acquisition marketing business and related inventory. In August 2006, the Partnership purchased from Sunoco for
$65 million a company that has a 55 percent interest in Mid-Valley Pipeline Company (“Mid-Valley”), a joint
venture which owns a crude oil pipeline system in the Midwest.
Sunoco did not recognize any gain or loss on the Mid-Valley transaction. The purchase prices of the other
acquisitions have been included in properties, plants and equipment in the consolidated balance sheets (except for
$2 million allocated to inventories related to the 2006 Black Hills acquisition). No pro forma information has
been presented since the acquisitions were not material in relation to Sunoco’s consolidated results of operations.
Minority Interest in Jewell Cokemaking Operations—In December 2006, Sunoco completed the
purchase of a third party’s minority interest in the Jewell cokemaking operations for $155 million. In connection
with this transaction, Sunoco recognized a $5 million loss ($3 million after tax) in other income, net, in the 2006
consolidated statement of income as a result of the settlement of a preexisting financial relationship attributable
to the investor’s interest in the Partnership.
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