Sunoco Inc. Reports Operating Results (10-K)

Author's Avatar
Feb 28, 2011
Sunoco Inc. (SUN, Financial) filed Annual Report for the period ended 2010-12-31.

Sunoco Inc. has a market cap of $5.09 billion; its shares were traded at around $42.18 with a P/E ratio of 23.7 and P/S ratio of 0.14. The dividend yield of Sunoco Inc. stocks is 1.42%. Sunoco Inc. had an annual average earning growth of 11.3% over the past 10 years.Hedge Fund Gurus that owns SUN: Daniel Loeb of Third Point, LLC, Eric Mindich of Eton Park Capital Management, L.P., Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns SUN: Brian Rogers of T Rowe Price Equity Income Fund, Jeremy Grantham of GMO LLC, Mario Gabelli of GAMCO Investors.

Highlight of Business Operations:

In December 2010, Sunoco entered into an agreement to sell its Toledo refinery and related crude and refined product inventories. The purchase price for the refinery is $400 million consisting of $200 million in cash and a $200 million note due two years after closing. The purchase price of the inventory will be based upon market prices near the time of closing. The purchase agreement also includes a participation payment of up to $125 million based on the future profitability of the refinery. The transaction is subject to customary closing conditions, and is expected to be completed in the first quarter of 2011. The sale of the refinery is expected to permit the Company to direct resources and management focus toward growing Sunocos retail marketing and logistics businesses. Sunoco does not expect a material impact on its 2011 net income as a result of the closing of this transaction. At December 31, 2010, the Toledo refinery and its related assets have been classified as held for sale in the consolidated balance sheet. The results of operations for the Toledo refinery have not been classified as discontinued operations due to Sunocos expected continuing involvement with the Toledo refinery through a three-year agreement for the purchase of gasoline and distillate to supply Sunoco retail sites in this area.

In the fourth quarter of 2009, Sunoco permanently shut down all process units at the Eagle Point refinery due to weak demand and increased global refining capacity. As part of this decision, the Company shifted production from the Eagle Point refinery to the Marcus Hook and Philadelphia refineries which are now operating at higher capacity utilization. Approximately 380 employees were terminated in connection with the shutdown. All processing units ceased production in early November 2009. In connection with this decision, Sunoco recorded a $284 million after-tax provision in the second half of 2009 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 2010, Sunoco recorded an additional $34 million after-tax provision primarily for additional asset write-downs and contract losses in connection with excess barge capacity resulting from the shutdown of the Eagle Point refining operations. 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.

In December 2008, Sunoco announced its intention to sell its Tulsa refinery or convert it to a terminal. In connection with this decision, during 2008, Sunoco recorded a $95 million after-tax provision to write down the affected assets to their estimated fair values. 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 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. Sunoco recognized a $41 million net after-tax gain on divestment of this business. The charge recorded in 2008 and the gain on divestment are reported separately in Corporate and Other in the Earnings Profile of Sunoco Businesses. As a result of the sale, the Tulsa refinery has been classified as a discontinued operation for all periods presented in the Consolidated Financial Statements included in Item 8.

Read the The complete Report