Sunoco 2010 Annual Report Download - page 56

would typically be sold to the steel customer, or electrical power, which could be sold to the steel customer or
into the local power market. SunCoke Energy’s ability to enter into additional arrangements is dependent upon
market conditions in the steel industry.
Corporate and Other
Corporate Expenses—Corporate administrative expenses increased $35 million in 2010 largely due to
higher accruals for performance-related incentive compensation resulting from the Company’s improved
financial performance compared to 2009 and start-up costs associated with outsourcing and other corporate
initiatives. In 2009, corporate administrative expenses decreased $8 million primarily due to lower payroll and
other employee-related costs.
Net Financing Expenses and Other—Net financing expenses and other increased $18 million in 2010
primarily due to higher interest expense ($4 million) and lower capitalized interest ($14 million). The increased
interest expense was largely driven by Sunoco’s share of interest incurred under new borrowings of Sunoco
Logistics Partners L.P. associated with its growth capital. In 2009, net financing expenses and other increased
$28 million primarily due to lower interest income ($8 million) and higher interest expense ($17 million).
Asset Write-Downs and Other Matters—In 2010, Sunoco recorded a $34 million after-tax provision
primarily for additional asset write-downs attributable to a decline in the fair market value of certain assets of the
Eagle Point refinery which was permanently shut down in the fourth quarter of 2009 and contract losses in
connection with excess barge capacity resulting from this shutdown; recorded a $40 million after-tax provision
primarily for pension settlement losses and accruals for employee terminations and related costs in connection
with ongoing business improvement initiatives; and recognized a $9 million after-tax gain on an insurance
settlement related to MTBE coverage. During 2009, Sunoco recorded a $284 million after-tax provision in
connection with the shutdown of all process units at the Eagle Point refinery; established a $100 million after-tax
accrual for employee terminations and related costs in connection with a business improvement initiative;
recorded a $24 million after-tax provision to write down to estimated fair value certain other assets primarily in
the Refining and Supply business, including $3 million after tax attributable to discontinued Tulsa operations;
established $7 million of after-tax accruals for costs associated with MTBE litigation; established $4 million of
after-tax accruals related to the shutdown of Chemicals’ polypropylene plant in Bayport, TX; and recognized a
$5 million net after-tax curtailment gain related to a freeze of pension benefits for most participants in the
Company’s defined benefit pension plans and a phasedown or elimination of postretirement medical benefits
effective June 30, 2010. During 2008, Sunoco recorded a $95 million after-tax provision to write down Refining
and Supply’s Tulsa refinery, which was sold on June 1, 2009; recorded a $35 million after-tax provision to write
down Chemicals’ Bayport, TX polypropylene plant; recorded a $19 million after-tax provision to write off the
goodwill pertaining to Chemicals’ polypropylene business; and recorded an $11 million after-tax gain on an
insurance recovery related to an MTBE litigation settlement (see Notes 2 and 14 to the Consolidated Financial
Statements under Item 8).
Gain on Remeasurement of Pipeline Equity Interests—During 2010, Sunoco Logistics Partners L.P.
recognized a $37 million after-tax gain attributable to Sunoco shareholders from the remeasurement of its
pre-acquisition equity interests to fair value (see Note 2 to the Consolidated Financial Statements under Item 8).
Sale of Discontinued Polypropylene Operations—During 2010, Sunoco recognized a $44 million net
after-tax loss related to the divestment of the discontinued polypropylene operations (see Note 2 to the
Consolidated Financial Statements under Item 8).
Income Tax Matters—During 2010, Sunoco recorded a $9 million charge related to an increase in deferred
state income taxes attributable to the transfer of assets related to its continuing phenol chemicals operations to a
different legal entity subsequent to the sale of the stock of the discontinued polypropylene business. During 2008,
Sunoco recognized a $16 million after-tax gain related primarily to tax credits claimed on amended federal
income tax returns filed for certain prior years and a $10 million after-tax gain related to the settlement of
economic nexus issues pertaining to certain prior-year state corporate income tax returns (see Note 4 to the
Consolidated Financial Statements under Item 8).
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