Sunoco 2013 Annual Report Download - page 44

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performance in the Crude Oil Pipelines segment and decreased selling, general and administrative expenses primarily
attributable to a non-cash accrued liability adjustment. Net interest expense increased due largely to the $700 million Senior
Notes offering in January 2013 and was partially offset by increased capitalized interest associated with our expansion capital
program.
Net income attributable to SXL was $361 and $381 million for the nine months ended September 30, 2013 and the period
from January 1, 2012 to October 4, 2012, respectively. Results for 2012 included $25 million of non-recurring gains recognized
in connection with the sale of the Big Sandy terminal and pipelines assets, the reversal of regulatory obligations that were
recorded in 2011 and an asset sale by one of our joint-venture interests. Excluding these items, net income attributable to SXL
increased $5 million compared to the prior period. Improved operating performance from the Crude Oil Pipelines and Crude
Oil Acquisition and Marketing segments was largely offset by higher depreciation and amortization expense attributable to the
acquisition of our general partner by ETP; higher selling, general and administrative expenses and decreased operating
performance from the Refined Products Pipelines segment. The decrease in net interest expense was primarily related to
increased capitalized interest associated with our expansion capital program. Additional interest expense related to the $700
million Senior Notes offering in January 2013 was largely offset by non-cash amortization related to fair value adjustments on
our long-term debt.
Net income attributable to SXL 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 our 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 SXL 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 and 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 our 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.
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, including those owned by our joint-venture interests. Revenues are generated from tariffs and the associated fees paid
by shippers utilizing our transportation services to deliver crude oil and other feedstocks to refineries within those regions.
Rates for shipments on these pipelines are regulated by the Federal Energy Commission ("FERC"), Oklahoma Corporation
Commission ("OCC") and the Railroad Commission of Texas ("Texas R.R.C.").