Sunoco 2012 Annual Report Download - page 82

comprehensive income. The new guidance does not change the components that are recognized in net income
and the components that are recognized in other comprehensive income. The revised presentation has been
retroactively applied to all periods presented.
In February 2013, the FASB codified additional guidance related to the presentation and disclosure of
components reclassified out of accumulated other comprehensive income (loss). The provisions of this guidance
are effective for the Partnership beginning January 1, 2013. The Partnership does not expect the adoption of this
standard to have a material impact on its consolidated financial statements and disclosures.
Lease Accounting
The Partnership accounts for arrangements that convey the right to use property, plant or equipment for a
stated period of time as leases. Whether an arrangement contains a lease is determined at inception of the
arrangement based on all of the facts and circumstances. The Partnership reassesses whether the arrangement
contains a lease after the inception of the arrangement only if (a) there is a change in the contractual terms, (b) a
renewal option is exercised or an extension is agreed to by the parties to the arrangement, (c) there is a change in
the determination as to whether or not fulfillment is dependent on specified property, plant, or equipment, or
(d) there is a substantial physical change to the specified property, plant, or equipment. The Partnership
continually analyzes its new and existing arrangements to evaluate whether they contain leases. Revenue or
expense from arrangements where the Partnership is the lessor or lessee, respectively, is recognized ratably over
the term of the underlying arrangement.
Net Income Attributable to Sunoco Logistics Partners L.P. Per Limited Partner Unit
The Partnership uses the two-class method to determine basic and diluted earnings per unit. The two-class
method is an earnings allocation formula that determines the earnings for each class of equity ownership and
participating security according to distributions declared and participation rights in undistributed earnings. The
Partnership calculates basic and diluted net income attributable to Sunoco Logistics Partners L.P. per limited
partner unit (“net income attributable to SXL”) by dividing net income attributable to SXL, after deducting the
amount allocated to the general partner’s interest and incentive distribution rights (“IDRs”), by the weighted
average number of limited partner units and Class A units outstanding during the period. IDRs in a master
limited partnership are treated as participating securities for the purpose of computing net income attributable to
limited partner units. The general partner holds all of the IDRs. In addition, when earnings differ from cash
distributions, undistributed or over distributed earnings are to be allocated to the general partner, limited partners
and Class A unitholder based on the contractual terms of the partnership agreement.
3. Acquisitions
A key component of the Partnership’s primary business strategy is to pursue strategic and accretive
acquisitions that complement its existing asset base. The Partnership completed the following acquisitions during
the years ended December 31, 2011 and 2010:
2011 Acquisitions
• In August 2011, the Partnership acquired a refined products terminal, located in East Boston,
Massachusetts, from affiliates of ConocoPhillips for $56 million plus the fair value of inventory. The
terminal includes a 10-bay truck rack and approximately 1 million barrels of capacity and is the sole
service provider to Logan International Airport under a long-term contract to supply jet fuel. The
acquisition was included within the Terminal Facilities segment.
• In August 2011, the Partnership acquired a crude oil purchasing and marketing business from Texon
L.P. (“Texon”) for $205 million plus the fair value of its crude oil inventory at the acquisition date. The
purchase consisted of a crude oil acquisition and marketing business and gathering assets for
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