Sunoco 2010 Annual Report Download - page 53

related assets located in Texas and Louisiana from affiliates of Exxon Mobil Corporation for $185 million. The
Partnership intends to take advantage of additional growth opportunities in the future, both within its current
system and with third-party acquisitions.
Chemicals—Continuing Operations
The Chemicals business manufactures, distributes and markets phenol and related products at chemical
plants in Philadelphia, PA and Haverhill, OH. The financial and operating data presented in the table below
excludes amounts attributable to the polypropylene business.
2010 2009 2008
Income (millions of dollars) ........................................... $15 $(13) $23
Margin* (cents per pound) ............................................ 8.8¢ 8.0¢ 9.6¢
Sales (millions of pounds) ............................................ 2,152 1,774 2,274
*Wholesale sales revenue less the cost of feedstocks, product purchases and related terminalling and transportation divided by sales
volumes.
Chemicals segment income from continuing operations increased $28 million in 2010 primarily due to
higher sales volumes ($22 million) and margins ($9 million).
Chemicals segment income from continuing operations decreased $36 million in 2009 primarily due to
lower margins ($26 million) and sales volumes ($25 million), partially offset by lower expenses ($18 million).
The lower expenses were largely the result of lower costs for purchased fuel oil and utilities attributable to price
declines and lower production volumes.
Chemicals—Discontinued Polypropylene Operations
On March 31, 2010, Sunoco completed the sale of the common stock of its polypropylene business to
Braskem S.A. The assets sold as part of this transaction included the polypropylene manufacturing facilities in
LaPorte, TX, Neal, WV and Marcus Hook, PA, a propylene supply agreement and related inventory. Sunoco
recognized a $44 million after-tax loss on the divestment of this business, which is reported separately in
Corporate and Other in the Earnings Profile of Sunoco Businesses. Sunoco received $348 million in cash
proceeds from this divestment in the second quarter of 2010 (see Note 2 to the Consolidated Financial Statements
under Item 8). As a result of the sale, the polypropylene chemicals business has been classified as a discontinued
operation for all periods presented in the consolidated financial statements herein.
Income from discontinued polypropylene operations increased $7 million in 2010 primarily due to higher
margins, partially offset by the absence of operations after the sale on March 31, 2010. Margins in 2010 include
$6 million of after-tax LIFO inventory profits prior to the sale of the business. In 2009, earnings from
discontinued polypropylene operations increased $1 million.
During March 2009, the Bayport, TX polypropylene plant, which has been included in the discontinued
polypropylene business, was permanently shutdown because it had become uneconomic to operate and in 2008 it
was also determined that the goodwill related to its polypropylene business no longer had value. In connection
therewith, in 2009, the Company recorded a $4 million after-tax accrual for a take-or-pay contract loss, employee
terminations and other exit costs in connection with the shutdown of the Bayport facility and, in 2008, recorded a
$54 million after-tax provision to write down the affected Bayport assets to estimated fair value and to write off
the remaining polypropylene business goodwill. These items are reported as part of the Asset Write-Downs and
Other Matters shown separately in Corporate and Other in the Earnings Profile of Sunoco Businesses (see Note 2
to the Consolidated Financial Statements under Item 8).
45