Discontinued Operations

Pursuant to the Purchase Agreement described in Note 1, Sellers have agreed to sell a portfolio of 1,030 company-operated retail outlets in 19 geographic regions, together with ancillary businesses and related assets, including the Laredo Taco Company (the “Business”), for an aggregate purchase price of $3.3 billion, payable in cash, plus the value of inventory at the closing of the transactions contemplated by the Purchase Agreement (the “Closing”) and the assumption of certain liabilities related to the Business by Buyers. The purchase price is subject to certain adjustments, including (i) those relating to specified items that arise during post-signing due diligence and inspections and (ii) individual properties not ultimately being acquired by Buyers due to the failure to obtain necessary third party consents or waivers or because either Buyers or Sellers exercise their respective rights, under certain circumstances, to cause a specific property to be excluded from the transaction. In addition, both the Partnership and Sunoco LLC have guaranteed Sellers’ obligations under the Purchase Agreement and related ancillary agreements pursuant to a guarantee agreement (the “Guarantee Agreement”) entered into in connection with the Purchase Agreement. In connection with the Closing, Sellers and Buyers and their respective affiliates will enter into a number of ancillary agreements, including a 15-year “take-or-pay” fuel supply agreement.

On January 23, 2018, we completed the disposition of assets pursuant to the Amended and Restated Asset Purchase Agreement entered by and among Sellers, Buyers and certain other named parties for the limited purposes set forth therein, pursuant to which the parties agreed to amend and restate the Purchase Agreement to reflect commercial agreements and updates made by the parties in connection with consummation of the transactions contemplated by the Purchase Agreement. As a result of the Purchase Agreement and subsequent closing, previously eliminated wholesale motor fuel sales to the Partnership's retail locations will be reported as wholesale motor fuel sales to third parties. Also, the related accounts receivable from such sales will cease to be eliminated from the consolidated balance sheets and will be reported as accounts receivable.

On January 18, 2017, with the assistance of a third-party brokerage firm, we launched a portfolio optimization plan to market and

sell 97 real estate assets. Real estate assets included in this process are company-owned locations, undeveloped greenfield sites and other excess real estate. Properties are located in Florida, Louisiana, Massachusetts, Michigan, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Texas and Virginia. The properties will be sold through a sealed-bid sale. Of the 97 properties, 40 have been sold, 5 are under contract to be sold and 11 continue to be marketed by the third-party brokerage firm. Additionally, 32 were sold to 7-Eleven and 9 are part of the approximately 207 retail sites located in certain West Texas, Oklahoma and New Mexico markets which will be operated by a commission agent.

The Partnership has concluded that it meets the accounting requirements for reporting the financial position, results of operations and cash flows of the Retail Divestment as discontinued operations. See Note 1 for further information regarding the Retail Divestment.

The following tables present the aggregate carrying amounts of assets and liabilities classified as held for sale in the Consolidated Balance Sheets:



	December 31, 2017		December 31, 2016
	(in millions)
Carrying amount of assets held for sale:
Cash	$	21	$	16
Inventories	149		150
Other current assets	16		11
Property and equipment, net	1,851		1,860
Goodwill	796		1,068
Intangible assets, net	477		480
Other noncurrent assets	3		3
Total assets held for sale	$	3,313	$	3,588

Carrying amount of liabilities associated with assets held for sale:
Long term debt	$	21	$	—
Other current and noncurrent liabilities	54		48
Total liabilities associated with assets held for sale	$	75	$	48

Upon the classification of assets and related liabilities as held for sale, Sunoco LP’s management applied the measurement guidance in ASC 360, Property, Plant and Equipment, to calculate the fair value less cost to sell of the disposal group. In accordance with ASC 360-10-35-39, management first tested the goodwill included within the disposal group for impairment prior to measuring the disposal group’s fair value less the cost to sell. In the determination of the classification of assets held for sale and the related liabilities, management allocated a portion of the goodwill balance previously included in the Sunoco LP retail and Stripes reporting units to assets held for sale based on the relative fair values of the business to be disposed of and the portion of the respective reporting unit that will be retained in accordance with ASC 350-20-40-3. The amount of goodwill allocated to assets held for sale was approximately $796 million and $1.1 billion as of December 31, 2017 and 2016, respectively. The remainder of the goodwill was allocated to the retained portion of the retail and Stripes reporting units, which is comprised of Sunoco LP’s ethanol plant, credit card processing services, franchise royalties and retail stores the Partnership continues to operate in the continental United States. This amount, inclusive of the portion of the Aloha reporting unit that represents retail activities, was approximately $678 million and $780 million as of December 31, 2017 and 2016, respectively.

During 2017 management performed goodwill impairment testing on its reporting units included in assets held for sale resulting in impairment charges of $387 million. Of this amount, $102 million was allocated to the sites reclassified to continuing operations in the fourth quarter within the retail and Stripes reporting units. Once allocated, management performed goodwill impairment tests on both reporting units to which the goodwill balances were allocated. No goodwill impairment was identified for the retail or Stripes reporting units as a result of these tests.

The Partnership recorded transaction costs of $37 million and unit-based compensation of $6 million during 2017, as a result of the 7-Eleven Transaction.

The Partnership recorded a $4 million impairment charge to property and equipment during 2017, as a result of the effects of Hurricane Harvey on the Partnership’s retail operations within discontinued operations.

The results of operations associated with discontinued operations are presented in the following table:



	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
	(in millions)
Revenues:
Motor fuel sales	$	5,137		$	3,923		$	4,351
Merchandise	1,762			1,731			1,634
Rental income	3			2			—
Other	62			56			45
Total revenues	6,964			5,712			6,030
Cost of sales:
Motor fuel cost of sales	4,590			3,458			3,893
Merchandise cost of sales	1,210			1,193			1,133
Other	6			(2		)	—
Total cost of sales	5,806			4,649			5,026
Gross profit	1,158			1,063			1,004
Operating expenses:
General and administrative	168			114			91
Other operating	707			685			644
Rent	56			59			61
Loss on disposal of assets and impairment charge	286			455			(2		)
Depreciation, amortization and accretion expense	34			143			128
Total operating expenses	1,251			1,456			922
Operating income (loss)	(93		)	(393		)	82
Interest expense, net	36			28			21
Income (loss) from discontinued operations before income taxes	(129		)	(421		)	61
Income tax expense	48			41			23
Net income (loss) from discontinued operations	$	(177	)	$	(462	)	$	38