Sunoco 2012 Annual Report Download - page 49

(1) The effective date of the acquisition for accounting and reporting purposes was deemed to be October 1,
2012. The activity from October 1, 2012 through October 4, 2012 was not material in relation to the
Partnership’s financial position, results of operations or cash flows.
Analysis of Consolidated Operating Results
Net income attributable to the partnership interests was $139, $381, $313 and $346 million for the period
from October 5, 2012 to December 31, 2012, the period from January 1, 2012 to October 4, 2012, and the years
ended December 31, 2011 and 2010, respectively.
Net income attributable to partners was $139 million for the period from October 5, 2012 to December 31,
2012 compared to $76 million for the fourth quarter 2011. The $63 million increase was the result of improved
operating performance which benefited from strong demand for crude oil transportation services and the absence
of $42 million of impairment and related charges recognized in the fourth quarter 2011. Partially offsetting these
positive factors were additional depreciation and amortization expense attributable to the Partnership’s assets
being adjusted to fair value in connection with the acquisition of the general partner by ETP and higher selling,
general and administrative expenses attributable to increased employee costs and contract services associated
with growth in the business.
Net income attributable to partners was $381 million for the period from January 1, 2012 to October 4, 2012
compared to $237 million for the nine months ended September 30, 2011. The $144 million increase in 2012 was
due primarily to improved operating performance which benefited from strong demand for crude oil
transportation services, contributions from our 2011 acquisitions and organic projects. Included in current year
results were gains of $25 million due to the reversal of regulatory obligations that were recorded in 2011, a
contract settlement in connection with the sale of a refined products terminal and pipeline assets and an asset sale
by one of the Partnership’s joint venture interests. These positive factors were partially offset by increased
interest expense related primarily to the $600 million Senior Notes offering in July 2011 and higher selling,
general and administrative expenses attributable to increased employee costs, incentive compensation and
contract services associated with growth in the business.
Net income attributable to partners for 2011 decreased $33 million compared to the prior year period due
primarily to the absence of a $128 million non-cash gain on our acquisition of additional interests in Mid-Valley
and West Texas Gulf. The gain resulted from an adjustment to record our previous ownership interest at fair
value in accordance with acquisition accounting rules. Also contributing to the decrease was a $42 million charge
in 2011 for certain crude oil terminal assets which would have been negatively impacted if Sunoco’s Philadelphia
refinery was permanently idled. Excluding these items, net income increased $137 million compared to 2010.
Improved results from our operations were partially offset by higher interest expense related to debt offerings in
2011 and 2010. Proceeds from these offerings were used to fund growth initiatives and finance the IDR
repurchase and exchange transaction.
Analysis of Operating Segments
We manage our operations through four operating segments: Crude Oil Pipelines, Crude Oil Acquisition and
Marketing, Terminal Facilities and Refined Products Pipelines.
Crude Oil Pipelines
Our Crude Oil Pipelines segment consists of crude oil trunk and gathering pipelines in the southwest and
midwest United States. Revenues are generated from tariffs and the associated fees paid by shippers utilizing our
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