Segment Information

9 Months Ended

Sep. 30, 2012

Segment Information

8. Segment Information

We have three reportable operating segments: Refining & Marketing; Speedway; and Pipeline Transportation. Each of these segments is organized and managed based upon the nature of the products and services they offer.

• Refining & Marketing – refines crude oil and other feedstocks at our refineries in the Gulf Coast and Midwest regions of the United States, purchases ethanol and refined products for resale and distributes refined products through various means, including barges, terminals and trucks that we own or operate. We sell refined products to wholesale marketing customers domestically and internationally, to buyers on the spot market, to our Speedway segment and to dealers and jobbers who operate Marathon^® retail outlets;

• Speedway – sells transportation fuels and convenience products in retail markets in the Midwest, primarily through Speedway^® convenience stores; and

• Pipeline Transportation – transports crude oil and other feedstocks to our refineries and other locations, delivers refined products to wholesale and retail market areas and includes, among other transportation-related assets, a majority interest in LOOP, which is the owner and operator of the only U.S. deepwater oil port.

Segment income represents income from operations attributable to the operating segments. Corporate administrative expenses, including those allocated from the Marathon Oil Companies prior to the Spinoff, and costs related to certain non-operating assets are not allocated to the operating segments. In addition, certain items that affect comparability (as determined by the chief operating decision maker) are not allocated to the operating segments.

(In millions)	Refining & Marketing			Speedway			Pipeline Transportation			Total
Three Months Ended September 30, 2012
Revenues:
Customer	$	17,242		$	3,787		$	19		$	21,048
Intersegment(a)		2,387			1			97			2,485
Related parties		2			—			—			2
Segment revenues		19,631			3,788			116			23,535
Elimination of intersegment revenues		(2,387	)		(1	)		(97	)		(2,485	)
Total revenues	$	17,244		$	3,787		$	19		$	21,050
Segment income from operations	$	1,691		$	76		$	52		$	1,819
Income (loss) from equity method investments		(1	)		—			8			7
Depreciation and amortization(b)		198			29			13			240
Capital expenditures and investments(c)(d)		182			59			71			312

(In millions)	Refining     & Marketing			Speedway			Pipeline    Transportation			Total
Three Months Ended September 30, 2011
Revenues:
Customer	$	16,929		$	3,668		$	17		$	20,614
Intersegment(a)		2,313			—			90			2,403
Related parties		2			—			—			2
Segment revenues		19,244			3,668			107			23,019
Elimination of intersegment revenues		(2,313	)		—			(90	)		(2,403	)
Total revenues	$	16,931		$	3,668		$	17		$	20,616
Segment income from operations	$	1,711		$	85		$	56		$	1,852
Income from equity method investments		5			—			10			15
Depreciation and amortization(b)		179			28			12			219
Capital expenditures and investments(c)		224			19			31			274
(In millions)	Refining & Marketing			Speedway			Pipeline Transportation			Total
Nine Months Ended September 30, 2012
Revenues:
Customer	$	50,794		$	10,703		$	57		$	61,554
Intersegment(a)		6,560			3			266			6,829
Related parties		5			—			1			6
Segment revenues		57,359			10,706			324			68,389
Elimination of intersegment revenues		(6,560	)		(3	)		(266	)		(6,829	)
Total revenues	$	50,799		$	10,703		$	58		$	61,560
Segment income from operations	$	3,959		$	233		$	144		$	4,336
Income (loss) from equity method investments		(2	)		—			20			18
Depreciation and amortization(b)		574			84			37			695
Capital expenditures and investments(c)(d)(e)		513			257			169			939

(In millions)	Refining & Marketing			Speedway		Pipeline Transportation			Total
Nine Months Ended September 30, 2011
Revenues:
Customer	$	48,883		$	10,236	$	46		$	59,165
Intersegment(a)		6,327			—		254			6,581
Related parties		51			—		2			53
Segment revenues		55,261			10,236		302			65,799
Elimination of intersegment revenues		(6,327	)		—		(254	)		(6,581	)
Total revenues	$	48,934		$	10,236	$	48		$	59,218
Segment income from operations	$	3,773		$	198	$	161		$	4,132
Income from equity method investments		9			—		32			41
Depreciation and amortization(b)		534			82		34			650
Capital expenditures and investments(c)(f)		600			121		69			790

^(a)  Management believes intersegment transactions were conducted under terms comparable to those with unaffiliated parties.

^(b)  Differences between segment totals and MPC totals represent amounts related to unallocated items and are included in “Items not allocated to segments” in the reconciliation below.

^(c)  Capital expenditures include changes in capital accruals.

^(d)  Includes Speedway’s acquisition of 10 convenience stores in July 2012.

^(e)  Includes Speedway’s acquisition of 87 convenience stores in May 2012.

^(f)  Includes Speedway’s acquisition of 23 convenience stores in May 2011.

The following reconciles segment income from operations to income before income taxes as reported in the consolidated statements of income:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2012			2011			2012			2011
Segment income from operations	$	1,819		$	1,852		$	4,336		$	4,132
Items not allocated to segments:
Corporate and other unallocated items(a)		(74	)		(93	)		(245	)		(229	)
Minnesota Assets sale settlement gain(b)		183			—			183			—
Pension settlement expenses(c)		(33	)		—			(116	)		—
Net interest and other financial income (costs)		(25	)		(15	)		(64	)		(4	)
Income before income taxes	$	1,870		$	1,744		$	4,094		$	3,899

^(a)  Corporate and other unallocated items consists primarily of MPC’s corporate administrative expenses, including allocations from the Marathon Oil Companies for periods prior to the Spinoff and costs related to certain non-operating assets.

^(b)  See Note 5.

^(c)  See Note 18.

The following reconciles segment capital expenditures and investments to total capital expenditures:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2012		2011		2012		2011
Segment capital expenditures and investments	$	312	$	274	$	939	$	790
Less: Investments in equity method investees		5		—		12		7
Plus: Items not allocated to segments:
Capital expenditures not allocated to segments		19		3		47		18
Capitalized interest		29		28		95		86
Total capital expenditures(a)(b)	$	355	$	305	$	1,069	$	887

^(a)  Capital expenditures include changes in capital accruals.

^(b)  See Note 17 for a reconciliation of total capital expenditures to additions to property, plant and equipment as reported in the consolidated statements of cash flows.

The following reconciles total revenues to sales and other operating revenues (including consumer excise taxes) as reported in the consolidated statements of income:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions)	2012			2011		2012			2011
Total revenues (as reported above)	$	21,050		$	20,616	$	61,560		$	59,218
Plus: Corporate and other unallocated items		(1	)		—		(3	)		—
Less: Sales to related parties		2			2		6			53
Sales and other operating revenues (including consumer excise taxes)	$	21,047		$	20,614	$	61,551		$	59,165

Total assets by reportable segment were:

(In millions)	September 30, 2012		December 31, 2011
Refining & Marketing	$	16,808	$	17,294
Speedway		1,979		1,597
Pipeline Transportation		1,764		1,556
Corporate and Other		6,032		5,298
Total consolidated assets	$	26,583	$	25,745

9. Other Items

Net interest and other financial income (costs) was:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2012			2011			2012			2011
Interest:
Interest income	$	1		$	1		$	3		$	2
Interest expense(a)		(49	)		(45	)		(142	)		(118	)
Interest capitalized(a)		29			28			95			76
Total interest		(19	)		(16	)		(44	)		(40	)
Other:
Net foreign currency gains/(losses)		(1	)		6			(1	)		12
Bank service and other fees		(6	)		(5	)		(20	)		(11	)
Total other		(7	)		1			(21	)		1
Net interest and other financial income (costs)	$	(26	)	$	(15	)	$	(65	)	$	(39	)

^(a)  See Note 3 for information on related party interest expense and capitalized interest.