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Sunoco Inc. Reports Operating Results (10-Q)

November 04, 2010 | About:

10qk

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Sunoco Inc. (SUN) filed Quarterly Report for the period ended 2010-09-30.

Sunoco Inc. has a market cap of $4.5 billion; its shares were traded at around $37.64 with a P/E ratio of 42 and P/S ratio of 0.1. The dividend yield of Sunoco Inc. stocks is 1.6%. Sunoco Inc. had an annual average earning growth of 11.3% over the past 10 years.SUN is in the portfolios of Brian Rogers of T Rowe Price Equity Income Fund, David Tepper of APPALOOSA MANAGEMENT LP, Stanley Druckenmiller of Duquesne Capital Management, LLC, Eric Mindich of Eton Park Capital Management, L.P., Eric Mindich of Eton Park Capital Management, L.P., Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC, George Soros of Soros Fund Management LLC.
This is the annual revenues and earnings per share of SUN over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of SUN.


Highlight of Business Operations:

The $502 million increase in results attributable to Sunoco, Inc. shareholders in the first nine months of 2010 was primarily due to higher margins from continuing operations in Sunoco’s Refining and Supply business ($108 million), lower expenses ($127 million) and lower provision for asset write-downs and other matters ($356 million). Partially offsetting these positive factors were lower production of refined products ($41 million) and the loss on sale of the discontinued polypropylene operations ($44 million).

capacity utilization. Approximately 380 employees were terminated in connection with the shutdown. Sunoco recorded a $284 million after-tax provision in 2009 ($278 million in the third quarter and $6 million in the fourth quarter) to write down the affected assets to their estimated fair values and to establish accruals for employee terminations, pension and postretirement curtailment losses and other related costs. In the first quarter of 2010, Sunoco recorded an additional $20 million after-tax accrual primarily for contract losses attributable to the early terminations of certain marine transportation commitments largely resulting from the Eagle Point refinery shutdown. These charges 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 3 to the condensed consolidated financial statements).

In December 2008, Sunoco announced its intention to sell the Tulsa refinery or convert it to a terminal by the end of 2009 because it did not expect to achieve an acceptable return on investment on a capital project to comply with the new off-road diesel fuel requirements at this facility. On June 1, 2009, Sunoco completed the sale of its Tulsa refinery to Holly Corporation. The transaction also included the sale of inventory attributable to the refinery which was valued at market prices at closing. Sunoco recognized a $41 million net after-tax gain on divestment of this business in 2009 ($20 million in the second quarter and $21 million in the fourth quarter), which is reported separately in Corporate and Other in the Earnings Profile of Sunoco Businesses (see Note 2 to the condensed consolidated financial statements). Sunoco received a total of $157 million in cash proceeds from this divestment, comprised of $64 million from the sale of the refinery and $93 million from the sale of the related inventory.

Corporate Expenses – Corporate administrative expenses were $60 million after tax in the first nine months of 2010 versus $32 million after tax in the first nine months of 2009. The $28 million increase was primarily due to higher accruals for performance-related incentive compensation resulting from the Company’s improved financial performance versus 2009 and higher unfavorable income tax consolidation adjustments. Corporate expenses included income tax adjustments amounting to $9 and $— million in the first nine months of 2010 and 2009, respectively.

Net Financing Expenses and Other – Net financing expenses and other were $51 million after tax in the first nine months of 2010 versus $33 million after tax in the first nine months of 2009. The $18 million increase was primarily due to higher interest expense ($9 million) and lower capitalized interest ($14 million). The increased interest expense was largely driven by new borrowings of Sunoco Logistics associated with their growth capital.

Asset Write-Downs and Other Matters – During the first nine months of 2010, Sunoco recorded a $20 million after-tax provision primarily related to contract losses in connection with excess barge capacity resulting from the shutdown of the Eagle Point refining operations, recorded a $28 million after-tax provision primarily for pension settlement losses and accruals for employee terminations and related costs in connection with the business improvement initiative and recognized a $9 million after-tax gain on an insurance settlement related to MTBE coverage. In the first nine months of 2009, Sunoco recorded a $278 million after-tax provision in connection with the permanent shut down of all process units at the Eagle Point refinery during the fourth quarter of 2009, of which $254 million after tax represented noncash charges; a $92 million after-tax provision for employee terminations and related costs in connection with the business improvement initiative, of which $62 million after tax was attributable to a noncash provision for pension and postretirement settlement and curtailment losses; recorded a $21 million after-tax provision to write down to estimated fair value certain assets primarily in the Refining and Supply business, including $3 million after tax attributable to discontinued Tulsa operations; and established 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, TX polypropylene plant, which was part of the discontinued polypropylene operations (see Note 3 to the condensed consolidated financial statements).

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