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Sunoco Announces First Quarter 2012 Results
PHILADELPHIA, May 02, 2012 (BUSINESS WIRE) -- Copyright Business Wire 2012

Sunoco, Inc. (NYSE: SUN) reported net income attributable to Sunoco, Inc. shareholders of $248 million ($2.32 per share diluted) for the first quarter of 2012 versus a net loss attributable to Sunoco, Inc. shareholders of $101 million ($0.84 per share diluted) for the first quarter of 2011. Excluding special items, Sunoco had a loss of $53 million ($0.49 per share diluted) for the first quarter of 2012 versus a loss of $121 million ($1.00 per share diluted) for the first quarter of 2011. Key first quarter details include:

-- Logistics contributed pretax income of $57 million, while Retail Marketing realized a $6 million pretax loss

-- Refining and Supply reported a pretax loss of $87 million

-- Pretax income from special items totaled $493 million including a $497 million LIFO inventory gain and a $104 million pretax gain related to the participation payment received in April 2012 in connection with the sale of the Toledo refinery in March 2011

-- Completed the separation of SunCoke Energy, Inc. in January 2012

-- Repurchased 1.26 million shares of Company stock for $50 million and contributed $200 million to trusts established for retiree medical benefits

"Sunoco's focus on the high-return logistics segment continues to bear fruit as Sunoco Logistics Partners L.P. had another excellent quarter and contributed $57 million in pretax income to Sunoco," said Brian P. MacDonald, Sunoco's president and chief executive officer. "Sharply rising crude prices pressured margins in Refining and Supply, as well as Retail Marketing, resulting in losses in both segments."

"We also continued to make progress on our strategic initiatives, spending approximately $380 million in the first quarter to reduce debt, fund our retiree medical trusts and repurchase shares. However, our cash position at the end of the quarter remains strong at $2 billion." Commenting on the Company's recently announced merger with Energy Transfer Partners, L.P. ("ETP"), MacDonald said, "The combination with ETP is a strategically and financially compelling combination that provides substantial value-creation opportunities for Sunoco shareholders and ETP unitholders and will improve the ability of Sunoco's logistics and retail businesses to deliver on their full potential. We believe our shareholders will receive an attractive premium. Because the consideration to be received by Sunoco shareholders consists of both cash and ETP units, our shareholders can also benefit from the potential upside of ETP's attractive yield and improving growth profile. In addition, under the merger agreement, Sunoco will continue its plans for exiting its refining business as previously announced, as well as continue its plans for the proposed refinery joint venture being discussed by Sunoco and The Carlyle Group."

DETAILS OF FIRST QUARTER RESULTS

Logistics

Logistics earned $57 million pretax in the first quarter of 2012 versus $31 million in the first quarter of 2011. The increase in earnings was primarily due to expanded crude oil volumes and margins resulting from market related opportunities in West Texas. Higher crude oil pipeline fees and earnings attributable to acquisitions completed during 2011 also contributed to the improved results.

Retail Marketing

Retail Marketing had a pretax loss of $6 million in the current quarter versus pretax income of $12 million in the first quarter of 2011. The decrease in earnings was primarily attributable to higher expenses largely associated with the increase in company-operated sites and lower retail gasoline margins which were negatively impacted by rising crude oil costs during the quarter.

Refining and Supply

Refining and Supply had a pretax loss of $87 million in the current quarter versus a $138 million loss in the first quarter of 2011. The increase in earnings was largely due to lower expenses attributable to the idling of the Marcus Hook refinery in December 2011 and lower depreciation expense resulting from significant asset write-downs during the second half of 2011. These positive factors were partially offset by lower realized margins and production volumes. Average crude throughputs were down 36 and 27 percent, respectively, versus the first and fourth quarters of 2011 as a result of the sale of the Toledo refinery in March 2011 and the idling of the Marcus Hook refinery.

Other

Corporate administrative expenses were $14 million pretax in the current quarter versus $22 million in the first quarter of 2011. The decrease was largely driven by lower staffing and incentive compensation costs.

Net financing expenses and other were $31 million pretax in the first quarter of 2012 compared to $28 million in the first quarter of 2011. The increase is primarily attributable to higher interest expense associated with borrowings of Sunoco Logistics Partners L.P.

Income Taxes

Excluding the impact of special items, the tax benefit on the $81 million pretax loss from continuing operations attributable to Sunoco, Inc. shareholders for the first quarter of 2012 was $28 million compared to a tax benefit of $24 million on a $145 million pretax loss from continuing operations attributable to Sunoco, Inc. shareholders during the first quarter of 2011. The increase in the tax benefit was primarily attributable to the absence of $6 million of unfavorable tax adjustments in the first quarter of 2011. The first quarter of 2012 included $3 million of favorable adjustments.

Special Items

During the first quarter of 2012, Sunoco recognized gains of $497 million ($302 million after tax) attributable to the reduction of crude oil and refined product LIFO inventories primarily attributable to the idling of the Marcus Hook refinery; recognized a $104 million gain ($61 million after tax) attributable to the participation payment received from PBF Energy, Inc. ("PBF") based on PBF's earnings of the Toledo refinery which Sunoco divested in March 2011; recorded a $35 million provision ($21 million after tax) for severance, contract terminations and idling expenses largely attributable to the Marcus Hook idling; recorded a $53 million provision ($31 million after tax) for additional environmental reserves attributable to current and prior refining operations; recorded a $21 million provision ($11 million after tax) primarily related to additional stock-based compensation expense related to the spin-off of SunCoke Energy and an insurance reserve adjustment; and recognized income from discontinued cokemaking and chemicals operations of $1 million ($1 million after tax). The total net impact of special items during the first quarter of 2012 was income of $493 million ($301 million after tax).

During the first quarter of 2011, Sunoco recognized a $15 million gain ($4 million after tax) related to the divestment of the Toledo refinery and related inventory; recognized a $42 million gain ($26 million after tax) resulting from the reduction of crude oil and refined product inventories at the Toledo refinery prior to its divestment; recorded a $6 million provision ($4 million after tax) primarily for pension settlement losses in connection with business improvement initiatives carried out over the past few years; recorded a $5 million increase to deferred income taxes in part due to apportionment changes as a result of the sale of the Toledo refinery; and recognized pretax income from discontinued cokemaking and chemicals operations of $4 million ($1 million loss after tax). The total net impact of special items during the first quarter of 2011 was a pretax gain of $55 million ($20 million after tax).

Sunoco is a leading logistics and retail company. The company owns the general partner interest of Sunoco Logistics Partners L.P. (NYSE: SXL), which consists of a 2-percent ownership interest and incentive distribution rights, and owns a 32-percent interest in the Partnership's limited partner units. Sunoco Logistics Partners L.P. is an owner and operator of complementary pipeline, terminal and crude oil acquisition and marketing assets. Sunoco also has a network of approximately 4,900 retail locations in 23 states.

Anyone interested in obtaining further insights into the first quarter's results can monitor the Company's quarterly teleconference call, which is scheduled for 5:00 p.m. ET on May 2, 2012. It can be accessed through Sunoco's website - www.SunocoInc.com. It is suggested that you visit the site prior to the teleconference to ensure that you have downloaded any necessary software.

Those statements made in this release that are not historical facts are forward-looking statements intended to be covered by the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based upon assumptions by the Company concerning future conditions, any or all of which ultimately may prove to be inaccurate, and upon the current knowledge, beliefs and expectations of Company management. These forward-looking statements are not guarantees of future performance. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements are inherently uncertain and involve significant known and unknown risks and uncertainties (many of which are beyond the control of the Company) that could cause actual results to differ materially from those discussed in this release.

Such risks and uncertainties include economic, business, competitive and/or regulatory factors affecting the Company's business, as well as uncertainties related to the outcomes of pending or future litigation, legislation, or regulatory actions. Among such risks are: changes in crude oil or natural gas prices, refining, marketing and chemicals margins, or other market conditions affecting the oil and gas industry; higher-than-expected costs of, or delays in, planned development or completion of repair projects, capital projects, acquisitions, or dispositions; operational interruptions, unforeseen technical difficulties and/or changes in technical or operating conditions; general domestic and international economic and political conditions, wars and acts of terrorism or sabotage; the outcome of commercial negotiations; the actions of competitors or regulators; the competitiveness of alternate-energy sources or product substitutes; technological developments; liability resulting from pending or future litigation; significant investment or product changes and/or liability for remedial actions or assessments under existing or future environmental regulations; gains and losses related to the acquisition, disposition or impairment of assets; recapitalizations; access to, or significantly higher costs of, capital; the effects of changes in accounting rules applicable to the Company; and changes in tax, environmental and other laws and regulations applicable to the Company's businesses. Unpredictable or unknown factors not discussed in this release also could have material adverse effects on forward-looking statements.

In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company has included in its Annual Report on Form 10-K for the year ended December 31, 2011 and in its subsequent Form 10-Q and Form 8-K filings, cautionary language identifying other important factors (though not necessarily all such factors) that could cause future outcomes to differ materially from those set forth in the forward-looking statements. For more information concerning these factors, see the Company's Securities and Exchange Commission filings, available on the Company's website at www.SunocoInc.com.

IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC

In connection with the proposed business combination transaction between Energy Transfer Partners, L.P. ("ETP") and Sunoco, Inc. ("Sunoco"), ETP plans to file with the U.S. Securities and Exchange Commission (the "SEC") a registration statement on Form S-4 that will contain a proxy statement/prospectus to be mailed to the Sunoco shareholders in connection with the proposed transaction. THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT ETP, SUNOCO, THE PROPOSED TRANSACTION AND RELATED MATTERS. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY/PROSPECTUS CAREFULLY WHEN THEY BECOME AVAILABLE. Investors and security holders will be able to obtain free copies of the registration statement and the proxy statement/prospectus and other documents filed with the SEC by ETP and Sunoco through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the registration statement and the proxy statement/prospectus by phone, e-mail or written request by contacting the investor relations department of ETP or Sunoco at the following:

PARTICIPANTS IN THE SOLICITATION

ETP and Sunoco, and their respective directors, executive officers and affiliates, may be deemed to be participants in the solicitation of proxies in respect of the proposed transactions contemplated by the merger agreement. Information regarding directors and executive officers of ETP's general partner is contained in ETP's Form 10-K for the year ended December 31, 2011, which has been filed with the SEC. Information regarding Sunoco's directors and executive officers is contained in Sunoco's definitive proxy statement dated March 16, 2012, which is filed with the SEC. A more complete description will be available in the registration statement and the proxy statement/prospectus.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Statements in this document regarding the proposed transaction between ETP and Sunoco, the expected timetable for completing the proposed transaction, future financial and operating results, benefits and synergies of the proposed transaction, future opportunities for the combined company, and any other statements about ETP, Energy Transfer Equity, L.P. ("ETE"), Sunoco Logistics Partners L.P. ("SXL") or Sunoco managements' future expectations, beliefs, goals, plans or prospects constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward looking statements, including: the ability to consummate the proposed transaction; the ability to obtain the requisite regulatory approvals, Sunoco shareholder approval and the satisfaction of other conditions to consummation of the transaction; the ability of ETP to successfully integrate Sunoco's operations and employees; the ability to realize anticipated synergies and cost savings; the potential impact of announcement of the transaction or consummation of the transaction on relationships, including with employees, suppliers, customers and competitors; the ability to achieve revenue growth; national, international, regional and local economic, competitive and regulatory conditions and developments; technological developments; capital and credit markets conditions; inflation rates; interest rates; the political and economic stability of oil producing nations; energy markets, including changes in the price of certain commodities; weather conditions; environmental conditions; business and regulatory or legal decisions; the pace of deregulation of retail natural gas and electricity and certain agricultural products; the timing and success of business development efforts; terrorism; and the other factors described in the Annual Reports on Form 10-K for the year ended December 31, 2011 filed with the SEC by ETP, ETE, SXL and Sunoco. ETP, ETE, SXL and Sunoco disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this document.

SOURCE: Sunoco, Inc.


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