<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Section 12, 13, or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
SUNOCO, INC.
--------------------------------------------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items of its
Annual Report on Form 10-K for the fiscal year ended December 31, 1998 as
set forth in the pages attached hereto:
Part II. Item 8. Financial Statements and Supplementary Data
Part IV. Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by
the undersigned, thereunto duly authorized.
SUNOCO, INC.
BY s/Joseph P. Krott
------------------
Joseph P. Krott
Comptroller
(Principal Accounting Officer)
DATE June 28, 1999
<PAGE>
<PAGE> 2
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pursuant to General Instruction F to Form 10-K and Rule 15(d)-21 under the
Securities Exchange Act of 1934, the financial statements required by
Form 11-K with respect to the Sunoco, Inc. Capital Accumulation Plan are
furnished as part of the Sunoco, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1998. As permitted by the rules with
respect to Form 11-K, plan financial statements for the Sunoco, Inc.
Capital Accumulation Plan are furnished in accordance with the financial
reporting requirements of the Employee Retirement Income Security Act of
1974, as amended (ERISA).
<PAGE>
<PAGE> 3
REPORT OF INDEPENDENT AUDITORS
Plan Administrator
Sunoco, Inc. Capital Accumulation Plan
We have audited the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits of the Sunoco, Inc. Capital Accumulation Plan (Plan) as of and for
the years ended December 31, 1998 and 1997. These financial statements are
the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan
at December 31, 1998 and 1997 and the changes in its net assets available
for benefits for the years then ended, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The accompanying supplemental
schedule of Assets Held for Investment Purposes at December 31, 1998 is
presented for purposes of additional analysis and is not a required part of
the financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of management. The Fund
Information in the statements of net assets available for benefits and the
statements of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the net assets
available for benefits and changes in net assets available for benefits of
each fund. The supplemental schedule and Fund Information have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
- ---------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
June 11, 1999
<PAGE>
<PAGE> 4
<TABLE>
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AT DECEMBER 31, 1998
<CAPTION>
U.S. DIVERSIFIED CAPITAL
EQUITY INDEX EXTENDED MARKET INTERNATIONAL INVESTMENTS PRESERVATION
ASSETS FUND EQUITY FUND FUND FUND FUND
- ------ ------------- --------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Investment in Sunoco, Inc.
Defined Contribution Master
Trust (Notes 1 and 2) $230,458,968 $17,670,740 $11,825,780 $121,592,839 $246,309,810
Loans receivable from participants,
including accrued interest (Note 1) -- -- -- -- --
------------ ----------- ----------- ------------ ------------
Total assets 230,458,968 17,670,740 11,825,780 121,592,839 246,309,810
------------ ----------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS (Notes 3 and 5) $230,458,968 $17,670,740 $11,825,780 $121,592,839 $246,309,810
============ =========== =========== ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE> 5
<TABLE>
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION - Continued
AT DECEMBER 31, 1998
<CAPTION>
SUNOCO
COMMON STOCK
ASSETS FUND ESOP FUND PCRA FUND LOAN FUND TOTAL
- ------ ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment in Sunoco, Inc.
Defined Contribution Master
Trust (Notes 1 and 2) $54,482,898 $73,966,331 $4,173,174 $ -- $760,480,540
Loans receivable from participants,
including accrued interest (Note 1) -- -- -- 16,053,436 16,053,436
----------- ----------- ---------- ----------- ------------
Total assets 54,482,898 73,966,331 4,173,174 16,053,436 776,533,976
----------- ----------- ---------- ----------- ------------
NET ASSETS AVAILABLE FOR
BENEFITS (Notes 3 and 5) $54,482,898 $73,966,331 $4,173,174 $16,053,436 $776,533,976
=========== =========== ========== =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE> 6
<TABLE>
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
U.S. DIVERSIFIED CAPITAL
EQUITY INDEX EXTENDED MARKET INTERNATIONAL INVESTMENTS PRESERVATION
FUND EQUITY FUND FUND FUND FUND
------------ --------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Additions (deductions):
Employees' contributions $ 7,690,441 $ 1,071,256 $ 699,811 $ 4,161,179 $ 6,284,633
Employers' contributions 4,206,287 537,191 357,954 2,303,363 3,775,575
Transfers and rollovers from
tax-qualified plans (Note 1) 1,773,825 625,139 99,443 761,904 4,073,030
Interfund transfers (14,785,917) 262,621 (872,709) (5,358,611) 18,074,956
Interest income (Note 3) -- -- -- -- --
Increase (decrease) in value of
participation in Sunoco, Inc.
Defined Contribution Master Trust
(Notes 1 and 3) 53,236,669 1,214,894 1,086,880 26,768,405 15,100,720
Benefits paid to participants (Note 5) (19,648,681) (1,072,413) (804,121) (10,329,461) (30,753,018)
Administrative expenses (Note 2) (318,164) (77,402) (100,805) (501,782) (519,983)
------------ ----------- ----------- ------------ ------------
Net additions (deductions) 32,154,460 2,561,286 466,453 17,804,997 16,035,913
Net assets available for benefits,
January 1, 1998 198,304,508 15,109,454 11,359,327 103,787,842 230,273,897
------------ ----------- ----------- ------------ ------------
Net assets available for benefits,
December 31, 1998 $230,458,968 $17,670,740 $11,825,780 $121,592,839 $246,309,810
============ =========== =========== ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE> 7
<TABLE>
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION - Continued
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
SUNOCO
COMMON STOCK
FUND ESOP FUND PCRA FUND LOAN FUND TOTAL
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Additions (deductions):
Employees' contributions $ 2,814,513 $ -- $ -- $ -- $ 22,721,833
Employers' contributions 1,672,876 -- -- -- 12,853,246
Transfers and rollovers from
tax-qualified plans (Note 1) 730,671 -- -- -- 8,064,012
Interfund transfers 4,016,216 (6,284,042) 3,945,433 1,002,053 --
Interest income (Note 3) -- -- -- 1,282,479 1,282,479
Increase (decrease) in value of
participation in Sunoco, Inc.
Defined Contribution Master Trust
(Notes 1 and 3) (4,832,153) (10,262,203) 227,741 -- 82,540,953
Benefits paid to participants (Note 5) (713,088) (1,631,927) -- (1,413,191) (66,365,900)
Administrative expenses (Note 2) (57,955) (82,100) -- -- (1,658,191)
----------- ------------ ---------- ----------- ------------
Net additions (deductions) 3,631,080 (18,260,272) 4,173,174 871,341 59,438,432
Net assets available for benefits,
January 1, 1998 50,851,818 92,226,603 -- 15,182,095 717,095,544
----------- ------------ ---------- ----------- ------------
Net assets available for benefits,
December 31, 1998 $54,482,898 $ 73,966,331 $4,173,174 $16,053,436 $776,533,976
=========== ============ ========== =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE> 8
<TABLE>
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AT DECEMBER 31, 1997
<CAPTION>
U.S. DIVERSIFIED CAPITAL
EQUITY INDEX EXTENDED MARKET INTERNATIONAL INVESTMENTS PRESERVATION
ASSETS FUND EQUITY FUND FUND FUND FUND
- ------ ------------- --------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Investment in Sunoco, Inc.
Defined Contribution Master
Trust (Notes 1 and 2) $197,092,425 $14,010,708 $11,521,107 $104,101,360 $228,702,986
Loans receivable from participants,
including accrued interest (Note 1) -- -- -- -- --
Other receivables 3,524 -- -- 5,154 20,033
Interfund transfer receivable (payable) 1,208,559 1,098,746 (161,780) (318,672) 1,550,878
------------ ----------- ----------- ------------ ------------
Total assets 198,304,508 15,109,454 11,359,327 103,787,842 230,273,897
------------ ----------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS (Notes 3 and 5) $198,304,508 $15,109,454 $11,359,327 $103,787,842 $230,273,897
============ =========== =========== ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE> 9
<TABLE>
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION - Continued
AT DECEMBER 31, 1997
<CAPTION>
SUNOCO
COMMON STOCK
ASSETS FUND ESOP FUND LOAN FUND TOTAL
- ------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Investment in Sunoco, Inc.
Defined Contribution Master
Trust (Notes 1 and 2) $52,821,963 $93,634,159 $ -- $701,884,708
Loans receivable from participants,
including accrued interest (Note 1) -- -- 15,182,095 15,182,095
Other receivables 11 19 -- 28,741
Interfund transfer receivable (payable) (1,970,156) (1,407,575) -- --
----------- ----------- ----------- ------------
Total assets 50,851,818 92,226,603 15,182,095 717,095,544
----------- ----------- ----------- ------------
NET ASSETS AVAILABLE FOR
BENEFITS (Notes 3 and 5) $50,851,818 $92,226,603 $15,182,095 $717,095,544
=========== =========== =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE> 10
<TABLE>
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
U.S. DIVERSIFIED CAPITAL
EQUITY INDEX EXTENDED MARKET INTERNATIONAL INVESTMENTS PRESERVATION
FUND EQUITY FUND FUND FUND FUND
------------ --------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Additions (deductions):
Employees' contributions $ 6,974,064 $ 541,452 $ 405,338 $ 4,358,663 $ 7,618,710
Employers' contributions 4,039,971 313,730 234,904 2,524,403 4,412,342
Transfers and rollovers from
tax-qualified plans (Note 1) 2,161,493 659,184 474,302 1,219,391 4,462,623
Interfund transfers 12,567,635 8,354,673 8,484,974 (4,071,807) (1,253,037)
Interest income (Note 3) -- -- -- -- --
Increase in value of participation in
Sunoco, Inc. Defined Contribution
Master Trust (Notes 1 and 3) 47,468,111 1,856,386 102,413 20,261,576 15,951,023
Benefits paid to participants (Note 5) (17,327,709) (677,408) (895,497) (11,617,811) (42,793,158)
Administrative expenses (Note 2) (92,891) (5,767) (4,498) (161,288) (432,184)
------------ ----------- ----------- ------------ ------------
Net additions (deductions) 55,790,674 11,042,250 8,801,936 12,513,127 (12,033,681)
Net assets available for benefits,
January 1, 1997 142,513,834 4,067,204 2,557,391 91,274,715 242,307,578
------------ ----------- ----------- ------------ ------------
Net assets available for benefits,
December 31, 1997 $198,304,508 $15,109,454 $11,359,327 $103,787,842 $230,273,897
============ =========== =========== ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE> 11
<TABLE>
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION - Continued
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
SUNOCO
COMMON STOCK
FUND ESOP FUND LOAN FUND TOTAL
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Additions (deductions):
Employees' contributions $ 2,708,158 $ -- $ -- $ 22,606,385
Employers' contributions 1,570,139 -- -- 13,095,489
Transfers and rollovers from
tax-qualified plans (Note 1) 179,474 262 -- 9,156,729
Interfund transfers (3,787,466) (21,010,548) 715,576 --
Interest income (Note 3) -- -- 1,182,598 1,182,598
Increase in value of participation in
Sunoco, Inc. Defined Contribution
Master Trust (Notes 1 and 3) 23,321,263 47,677,820 -- 156,638,592
Benefits paid to participants (Note 5) (1,484,836) (2,765,207) (1,185,369) (78,746,995)
Administrative expenses (Note 2) (20,571) (38,615) -- (755,814)
----------- ------------ ----------- ------------
Net additions (deductions) 22,486,161 23,863,712 712,805 123,176,984
Net assets available for benefits,
January 1, 1997 28,365,657 68,362,891 14,469,290 593,918,560
----------- ------------ ----------- ------------
Net assets available for benefits,
December 31, 1997 $50,851,818 $ 92,226,603 $15,182,095 $717,095,544
=========== ============ =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE> 12
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS
1. GENERAL DESCRIPTION
-------------------
The Sunoco, Inc. Capital Accumulation Plan (Plan) is a combined
profit-sharing and employee stock ownership plan. The Plan provides
eligibility for membership for certain employees of Sunoco, Inc. and
its participating subsidiary companies (collectively, Sunoco) who have
completed at least 1,000 hours of service with Sunoco in a twelve-
month period. An eligible employee can join the Plan at any time
starting with the first payroll period which begins on or next
following the day after he or she gives written notice to the Plan
Administrator. The ESOP Fund is an employee stock ownership plan,
while the remaining funds form a profit-sharing plan.
The Plan provides an individual account for each participant. Amounts
disbursed to participants or transferred among funds are based solely
upon amounts contributed to each participant's account adjusted to
reflect any withdrawals and distributions, investment earnings
attributable to such account balances, and appreciation or
depreciation of the market value of the account balance.
Contributions:
-------------
In general, a participant may make Basic Contributions to the Plan of
up to 5% in whole percentages of base pay on a pre-tax basis (Basic
Pre-Tax Contributions) or on a post-tax basis (Basic Post-Tax
Contributions). The participant also may elect to make additional
contributions up to 10% of base pay provided, however, that Basic Pre-
Tax or Basic Post-Tax Contributions are at least 5% of base pay. The
additional 10% may be contributed either on a pre-tax basis
(Additional Pre-Tax Contributions), post-tax basis (Additional Post-
Tax Contributions) or any combination thereof. For certain
participants, limitations imposed by the Internal Revenue Code of
1986, as amended (Code), as described below, restrict their ability to
make Basic Pre-Tax Contributions or Additional Pre-Tax Contributions.
However, such participants may make Basic Post-Tax Contributions and
Additional Post-Tax Contributions such that the sum of their total and
employer contributions do not exceed other limits imposed by the Plan
or the Code.
For every dollar a participant contributes as Basic Contributions,
Sunoco contributes another full dollar (Matching Employer
Contributions).
Pre-tax contributions by each participant may not exceed an annual
limit which is subject to annual upward adjustment for increases in
the cost of living as determined under Internal Revenue Service (IRS)
regulations. This limit was $10,000 for 1998 and $9,500 for 1997.
<PAGE>
<PAGE> 13
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
The pre-tax contributions and combined Basic Post-Tax Contributions,
Additional Post-Tax Contributions and Matching Employer Contributions
of participants who come within the classification of "highly
compensated employees" as defined in the Code, may not exceed certain
technical limits under the Code. Generally, the allowable percentage
of such contributions for the highly compensated employees is
dependent upon the percentage of contributions made by all other
employees. These limitations may have the effect of reducing the
level of contributions initially selected by the highly compensated
employees. In addition, the total employer and employee contributions
which may be allocated to a participant's account may be limited by
Section 415 of the Code.
The Plan contains a special provision designed to permit the Plan to
borrow money to purchase a significant number of shares of Sunoco
Common Stock. Such borrowing could only occur upon the action of the
Board of Directors of Sunoco, Inc. If this should occur, the
securities purchased with the proceeds of such a loan will not be
allocated immediately to the accounts of Plan participants but will be
held by the Plan in an unallocated suspense account. Securities will
be released from the suspense account as the loan is repaid and will
be allocated to participants' accounts according to the ratio which
the participant's compensation bears to the compensation of all
participants in the Plan. No participant contributions will be
required or permitted in paying off the loan. Further, subject to
applicable limitations imposed by Section 415 of the Code and
limitations on allocations as set forth in the Plan, any securities
which are allocated to participants' accounts as a result of the
repayment of the loan may, in the discretion of the Plan
Administrator, be used to satisfy Sunoco's obligation with respect to
any Matching Employer Contributions. As of December 31, 1998, no
borrowings had been approved.
Effective April 1, 1998, a participant's account is credited daily
with units representing interests held in each of the funds described
below except for the Personal Choice Retirement Account (PCRA) Fund.
Prior to this date, such crediting occurred at the end of each month.
A participant's account balance is immediately 100% vested.
Investment Alternatives:
-----------------------
Bankers Trust Company is the Trustee for all investments. The
participant has the option of investing in any one or more of six core
investment funds (collectively, the Core Funds) (the Equity Index
Fund; the U.S. Extended Market Equity Fund; the International Fund;
the Diversified Investments Fund; the Capital Preservation Fund; and
the Sunoco Common Stock Fund) and the PCRA Fund. For all funds except
the PCRA Fund, participants' accounts earn a blended rate, or weighted
average, of all of the investments held in the respective funds.
These seven funds and the ESOP Fund are currently invested in
<PAGE>
<PAGE> 14
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
corresponding funds with the same investment objectives in the Sunoco,
Inc. Defined Contribution Master Trust (Master Trust). The Master
Trust also includes investments from other Sunoco tax-qualified
defined contribution plans. Except for the PCRA Fund, each plan's
relative interest in the individual Master Trust funds and the related
income and administrative expense is determined on a basis
proportionate to each plan's past contributions adjusted to reflect
distributions, transfers and prior investment earnings to such funds.
The PCRA investments are held in separate accounts for each
participant. If a participant wants to transfer an amount to the PCRA
Fund, a minimum of $1,000 or 10 percent of his account balance must
remain invested in the Core Funds. Actual income, losses and
investment expenses associated with PCRA investments are recorded
directly in the respective participants' accounts.
The following table sets forth each fund's respective share of the
total net assets of the corresponding Master Trust fund at
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Equity Index Fund 99.1326% 99.3226%
U.S. Extended Market Equity
Fund 100.0000% 100.0000%
International Fund 100.0000% 100.0000%
Diversified Investments Fund 98.1754% 98.4328%
Capital Preservation Fund 92.5907% 92.5522%
Sunoco Common Stock Fund 100.0000% 100.0000%
ESOP Fund 100.0000% 100.0000%
PCRA Fund* 100.0000% --
----------
*Established as an investment alternative in July 1998.
</TABLE>
Set forth below is a brief description of these funds:
Equity Index Fund - a fund to be invested by investment managers in
a broadly diversified portfolio of common stocks, other types of
equity investments and/or an index fund of large, established,
well-known corporations. The fund may not be invested in any
Sunoco, Inc. securities except that an index fund may contain
Sunoco, Inc. securities. Effective January 23, 1998, the Equity
Index Fund of the Master Trust is invested in an index fund
maintained by Bankers Trust Company which is designed to
approximate the performance of the Standard & Poor's 500 Composite
Stock Index; however, alternate stock market indices and/or an
<PAGE> 15
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
actively managed portfolio could be substituted at any time. Prior
to January 23, 1998, such index fund was maintained by Barclays
Global Investors or its predecessor, Wells Fargo Institutional
Trust Company.
U.S. Extended Market Equity Fund - a fund to be invested by
investment managers in a portfolio of common stocks, other types of
equity investments and/or an index fund of small and medium-sized
United States companies diversified across a broad range of
industry sectors. Effective January 23, 1998, the U.S. Extended
Market Equity Fund of the Master Trust is invested in an index fund
maintained by Bankers Trust Company which is designed to
approximate the performance of the Russell 2500 Index; however,
alternate stock market indices and/or an actively managed portfolio
could be substituted at any time. Prior to January 23, 1998, the
U.S. Extended Market Equity Fund was invested in an index fund
designed to approximate the Wilshire 4500 Index maintained by
Barclays Global Investors or its predecessor, Wells Fargo
Institutional Trust Company.
International Fund - a fund to be invested by investment managers
in a diversified portfolio of common stocks, other types of equity
investments and/or an index fund of companies based outside the
United States. This fund is subject to foreign currency exchange
rate risk and "single country" investment risk since it is invested
in the Japanese market, which comprises a significant portion of
the total international equity market. The International Fund of
the Master Trust is currently invested in an actively managed
portfolio which is managed by the Capital Guardian Trust Company.
Diversified Investments Fund - a fund to be invested by investment
managers in a combination of equity investments (diversified common
stocks, other types of equity investments and/or an index fund of
large, established, well-known corporations) and fixed income
securities, including U.S Treasury bonds and money market
instruments. The fund may not be invested in any Sunoco, Inc.
securities except that an index fund may contain Sunoco, Inc.
securities. The Diversified Investments Fund of the Master Trust
is currently invested in a tactical asset allocation fund
maintained by Barclays Global Investors.
Capital Preservation Fund - a fund to be invested in: (1) contracts
with insurance companies or other financial institutions backed by
the types of obligations described in (3) and (4) below (synthetic
investment contracts); (2) contracts with insurance companies or
other financial institutions where the repayment of principal and
payment of interest at a fixed rate for a fixed period of time are
backed by the financial strength of such financial institutions
(standard investment contracts); (3) U.S. government-backed and
<PAGE>
<PAGE> 16
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
agency obligations; or (4) fixed income securities of corporations
primarily rated "investment grade" and high-quality asset-backed
securities primarily rated "AAA". The Capital Preservation Fund of
the Master Trust is currently managed by Certus Asset Advisors.
Sunoco Common Stock Fund - a fund to be invested principally in
Sunoco Common Stock. Cash contributions directed for investment in
the Sunoco Common Stock Fund are used by the Trustee to purchase
Sunoco Common Stock on securities exchanges, from Sunoco, Inc., or
from any other bona fide offeror of such Sunoco Common Stock, at
the lowest price obtainable at the time.
ESOP Fund - a fund to be invested principally in Sunoco Common
Stock, which constitutes an employee stock ownership plan under
Section 4975(e)(7) of the Code. No contributions are invested
directly in the ESOP Fund.
Personal Choice Retirement Account (PCRA) Fund - a fund to be
invested by the participant in a wide range of investment choices
including common stocks listed on major U.S. exchanges, over-the-
counter stocks, bonds and eligible mutual funds. Investments are
made at the discretion of the participant and are purchased through
Charles Schwab & Co., Inc., a brokerage firm. Participants may not
invest in Sunoco common stock or debt securities.
Each of the above funds may invest in short-term investments for
purposes of administering the funds, including satisfying the
transfer and withdrawal requests of participants.
At December 31, 1998 and 1997, the Capital Preservation Fund of the
Master Trust is principally invested in both synthetic and standard
investment contracts.
The synthetic investment contracts are with Bankers Trust Company,
National Westminster Bank plc, People's Security Life Insurance
Company and Transamerica Life Companies. They are composed of
underlying assets and "wrappers", which are contracts that enable
withdrawals to be made at contract value, rather than at the market
value of the underlying assets. The contracts have underlying
assets invested either directly or through collective trust funds
in government agency-backed collateralized mortgage obligation
issues, government and corporate bonds and other asset-backed
securities. The contracts are presented below in two separate
portfolios based upon the investment strategy for the underlying
assets. The assets in the "Buy and Hold Portfolios" are expected
to be held until maturity, while the "Managed Portfolios" are
actively managed to reflect changing market conditions. Interest
crediting rates for these contracts are reset at least quarterly,
as specified in the respective contracts.
<PAGE>
<PAGE> 17
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
The following table details for each synthetic investment contract
respective interest crediting rates and percentage of the net
assets of the Capital Preservation Fund of the Master Trust at
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
% of Master Trust
Capital Preservation
Financial Institutions Average Interest Fund Net Assets
Providing Wrapper Crediting Rate at 12/31
---------------------- ---------------- -------------------
1998 1997 1998 1997
---- ---- ---- ----
Buy and Hold Portfolios:
-----------------------
<S> <C> <C> <C> <C>
National Westminster Bank plc 6.64% 6.64% 4 4
People's Security Life
Insurance Co. 5.90% 5.90% 4 7
Transamerica Life Companies 6.69% 6.69% 8 13
Managed Portfolios:
------------------
Bankers Trust Company 6.48% 6.98% 24 24
People's Security Life
Insurance Co. 6.56% 6.85% 20 20
Transamerica Life Companies 6.86% 8.53% 9 9
---- ----
69%* 77%*
==== ====
</TABLE>
----------
*The other 31% and 23% of net assets of the Capital Preservation
Fund of the Master Trust at December 31, 1998 and 1997,
respectively, are invested in standard investment contracts (21%
and 16%) and in collective trust funds (10% and 7%) maintained by
Barclays Global Investors. The collective trust funds are
comprised primarily of U.S. government-backed and agency
obligations and short-term investments.
Over time, the contracts will earn the rate of return of the
underlying assets.
<PAGE>
<PAGE> 18
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
Identified below are the insurance companies and other financial
institutions that have entered into standard investment contracts
as of December 31, 1998 and 1997 with the Master Trust to pay
interest on funds invested with them:
<TABLE>
<CAPTION>
% of Master
Trust Capital
Effective Preservation
Annual Fund Net Assets
Interest at 12/31 Last
Rate (Net --------------- Maturity
Financial Institution of Expenses) 1998 1997 Date
- --------------------- ------------ ------------- --------
<S> <C> <C> <C> <C>
Metropolitan Life Insurance
Company 7.41% 3 3 9/15/99
Monumental Life Insurance
Company 5.58% 2 - 12/16/02
New York Life Insurance Co. 7.97% 3 3 10/16/00
Ohio National Life Insurance
Company 5.96% 2 - 11/15/02
Pacific Life Insurance Company 4.98% 2 - 11/15/01
Protective Life Insurance Company 6.74% 2 2 6/15/01
Prudential Asset Management Co. 5.53% 2 2 1/13/99
Safeco Life Insurance Companies 7.05% 1 2 6/15/00
Safeco Life Insurance Companies 6.55% 2 2 12/15/01
Security Life of Denver 6.60% 2 2 9/16/02
--- ---
21% 16%
=== ===
</TABLE>
The Plan's relative interest in the standard investment contracts
with insurance companies or other financial institutions described
above represents the maximum potential credit losses from
concentrations of credit risk in the Capital Preservation Fund in
accordance with the provisions of Statement of Financial Accounting
Standards No. 105, "Disclosure of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial Instruments
with Concentrations of Credit Risk" (SFAS No. 105). SFAS No. 105
requires that such potential credit losses be determined assuming
(1) complete nonperformance by the counterparties to the
transactions and (2) any related collateral has no value. There is
no collateral associated with the standard investment contracts in
the Capital Preservation Fund. Plan management believes that
future credit losses of the Plan's investment in the Capital
Preservation Fund of the Master Trust, if any, would not be
material in relation to the Capital Preservation Fund's net assets
<PAGE>
<PAGE> 19
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
available for benefits at December 31, 1998. There are no other
significant concentrations of credit risk in other Plan assets.
The average interest crediting rates at December 31, 1998 and 1997
for all synthetic and standard investment contracts in the
aggregate were 6.53% and 6.95%, respectively. The average yields
for the years ended December 31, 1998 and 1997 for such contracts
in the aggregate were 6.74% and 6.90%, respectively.
Employers' Contributions:
------------------------
Employer contributions are invested in each of the funds in the
same proportion as the participant's contributions are invested in
such funds.
Investment Earnings Reinvestment/Distribution:
---------------------------------------------
Earnings from dividends and interest in all funds (except the ESOP
Fund and the PCRA Fund) are retained by the Trustee and reinvested
in the same fund. A participant who has funds in the ESOP Fund may
elect to receive a payment equal to the dividends due on all Sunoco
Common Stock attributable to his account in the ESOP Fund (dividend
equivalents) if they exceed $10. Dividends on Sunoco Common Stock
in the ESOP Fund for which a participant has not elected to receive
an equivalent distribution, or which are not eligible for payment,
are credited to his account in the ESOP Fund and are reinvested in
Sunoco Common Stock by the Trustee. Earnings from dividends and
interest in the PCRA Fund are invested in short-term investments
that are credited directly to the participant's account.
Rollovers, Withdrawals and Transfers:
------------------------------------
Certain employees of Sunoco may roll over the taxable portion of a
distribution from a tax-qualified plan of a previous employer into
the Plan, provided certain conditions imposed by the Plan
Administrator are met. Such transfers are separately reflected by
fund in the statements of changes in net assets available for
benefits.
Employees who terminate employment and elect to defer the
distribution of their Plan account may also directly roll over the
taxable portion of distributions from other Sunoco tax-qualified
plans into the Plan.
Upon retirement or other termination of employment, the balances
credited to a participant's account will be held in the Plan until
the participant reaches age 70 1/2, unless the participant elects
an earlier distribution. However, if the participant is still
employed at age 70 1/2, the balances will be distributed at
retirement. Alternatively, a participant who terminates service
<PAGE>
<PAGE> 20
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
may request that the account balance be transferred directly to an
individual retirement account or annuity or a defined contribution
plan maintained by a successor employer. Retirees or terminated
vested persons, regardless of age, may elect to take periodic
distributions either through withdrawals every six months in
varying amounts or in substantially equal payments every six months
over the participant's remaining life expectancy.
A participant, during employment, may withdraw up to 100% of
Matching Employer Contributions, including any earnings thereon,
and his ESOP sub-account under the ESOP Fund, if any, provided that
such contributions have been in the Plan for two years. In
addition, a participant may withdraw up to 100% of Additional Post-
Tax Contributions including any earnings thereon. Withdrawals are
permitted once every six months.
Withdrawals from the Equity Index Fund, U.S. Extended Market Equity
Fund, International Fund and Diversified Investments Fund are made
in cash only while those from the Capital Preservation Fund may be
made in cash or as an annuity. Withdrawals from the Sunoco Common
Stock Fund and the ESOP Fund are made in the form of Sunoco Common
Stock or cash at the participant's discretion. Effective April 1,
1998, withdrawals of Sunoco Common Stock are valued at the closing
market prices on the last business day of the week in which the
notice of withdrawal has been processed by the Plan. Prior to
April 1, 1998, withdrawals of Sunoco Common Stock were valued at
the closing market prices of the month in which the notice of
withdrawal had been processed. Withdrawals will be distributed
from participants accounts in the following order:
Capital Preservation Fund
Diversified Investments Fund
Equity Index Fund
U.S. Extended Market Equity Fund
International Fund
Sunoco Common Stock Fund
ESOP Fund
Account balances in the PCRA Fund cannot be withdrawn directly.
Participants must first liquidate investments held in the PCRA Fund
and transfer sufficient proceeds to one of the other investment
funds from which the withdrawal or a loan to the participant (see
below) can be made.
While actively employed, a participant generally is not entitled to
withdraw Basic Pre-Tax Contributions, Basic Post-Tax Contributions
or Additional Pre-Tax Contributions, including earnings thereon.
<PAGE>
<PAGE> 21
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
A participant may transfer investments among all funds (except the
Loan Fund), subject generally to the following rules. A
participant may elect to change the investment allocation
percentage for any fund (except the Loan Fund or PCRA Fund) or
elect to transfer a specified dollar amount from the Equity Index
Fund, U.S. Extended Market Equity Fund, International Fund,
Diversified Investments Fund, Capital Preservation Fund and PCRA
Fund or share equivalents from the Sunoco Common Stock and ESOP
Funds. Effective April 1, 1998, transfers or changes in fund
allocation percentages may be made daily. Prior to this date, such
transfers or changes in fund allocation percentages were permitted
on a monthly basis.
Should total withdrawals or transfers from a fund during a month cause
the Trustee to liquidate securities, resulting in a gain or loss to
the fund, such gain or loss will be allocated, pro rata, among the
participants who made such withdrawals or transfers during that month.
Notwithstanding the foregoing, benefit payments shall be made in
accordance with the Code and IRS regulations and shall be made to a
participant and/or his designated beneficiary not later than April 1
of the calendar year following the calendar year in which the
participant attains 70 1/2 years of age or, if employed at age 70 1/2,
at retirement.
Loans to Participants
---------------------
The Plan Administrator has the authority, in his sole discretion, to
direct the Trustee to lend a participant an amount not exceeding
certain portions of the participant's account balance in the Plan.
Participants are eligible to borrow if they are on the active payroll
of Sunoco and have a Plan account balance of at least $2,000. The
minimum loan amount is $1,000, while the maximum loan amount is the
lesser of (a) $50,000 adjusted downward by the highest outstanding
loan balance in the past twelve months or (b) one-half the value of
the participant's account balance. Participants are permitted to
borrow only once in a twelve-month period and to have no more than two
loans outstanding at any time. Loan proceeds are withdrawn from each
fund in which the participant has an account balance (except the PCRA
Fund) on a pro rata basis and are not taxable to the participant when
received. Any loan which is not repaid is in default and the
outstanding loan balance (including accrued interest thereon) is
treated as a distribution from the Plan. Loans may be prepaid in full
but only after they have been outstanding for at least six months.
Loans and related activity are reflected in the Loan Fund in the
accompanying financial statements. As loans receivable (including
interest thereon) are repaid, amounts are transferred into the funds
in the same proportion as the participant's current contributions.
<PAGE>
<PAGE> 22
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates:
----------------
Certain amounts included in the accompanying financial statements and
related footnotes reflect the use of estimates based on assumptions
made by the Plan's management. Actual amounts could differ from these
estimates.
Investments:
-----------
The valuation of the Plan's interests in collective trust funds or
its relative interest in such funds held by the Master Trust is based
on the closing market price on the last business day of the year of
the assets held in the funds; the Plan's relative interest in such
funds is determined by the Trustee on a unit-method basis. The
Plan's relative interest in investments in both synthetic and
standard investment contracts with insurance companies or other
financial institutions held by the Master Trust are stated at
contract value. Contract value represents contributions made under
the contract plus interest accrued at the contract rate less any
withdrawals. Synthetic investment contracts earn interest at rates
that are reset at least quarterly as specified in the respective
contract while standard investment contracts earn interest at fixed
rates. The Master Trust's management believes that the contract value
of all of its investment contracts approximates fair value. However,
since there is no significant secondary market for these investments,
contract value may not be indicative of amounts that could be
realized in a current market exchange. The valuation of Sunoco Common
Stock is based on the closing market price reported on the New York
Stock Exchange on the last business day of the Plan year. Investments
held in the PCRA Fund are valued at their closing market prices on
the last day of the Plan year.
Purchases and sales of securities are reflected on a trade-date basis.
Dividend income is reported on the ex-dividend date; interest income
is recorded as earned on an accrual basis. The net appreciation
(depreciation) in the fair value of investments, which consists of
realized gains (losses) and unrealized appreciation (depreciation), is
reported as a component of the increase in value of participation in
the Sunoco, Inc. Defined Contribution Master Trust for each respective
fund (Note 3).
Benefits Paid to Participants:
-----------------------------
Benefits paid to participants, which include withdrawals and
distributions, are recorded upon distribution.
<PAGE>
<PAGE> 23
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
-----------------------------------------------------
Administrative Expenses:
-----------------------
All brokerage fees, taxes and other expenses related to the purchase
and sale of securities in all funds are paid out of the respective
assets of such funds. All other costs and expenses (other than the
cost of services provided by Sunoco employees which are paid by
Sunoco) incurred in administering the Plan are generally charged, pro
rata, to each of the respective funds (except the PCRA Fund).
Participants with investments in the PCRA Fund are charged a separate
administrative fee which is deducted from their Core Fund investments.
3. SUPPLEMENTAL INFORMATION
------------------------
The net asset value per unit and the number of units in the Plan at
December 31, 1998 and 1997, respectively, are as follows:
<TABLE>
<CAPTION>
At December 31, 1998 At December 31, 1997
-------------------- --------------------
Net Asset Number Net Asset Number
Value of Value of
Per Unit Units Per Unit Units
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Equity Index Fund $11.864 19,425,065 $10.579 18,745,109
U.S. Extended Market
Equity Fund $10.267 1,721,120 $1.293 11,685,579
International Fund $10.140 1,166,250 $1.131 10,043,614
Diversified Investments
Fund $11.868 10,245,436 $5.727 18,122,550
Capital Preservation
Fund $10.544 23,360,187 $3.937 58,489,687
Sunoco Common Stock Fund $9.053 6,018,215 $1.132 44,922,101
ESOP Fund $9.053 8,170,367 $2.491 37,023,927
</TABLE>
Net asset value per unit is computed by dividing the value of all
members' accounts by the units outstanding. On April 1, 1998, the date
that daily valuation of participant accounts became effective, the net
asset value per unit was revalued to $10 per unit. The number of units
for each of the above funds was recalculated as of that date assuming
a net asset value of $10 per unit. Prior to April 1, 1998, the net
asset value per unit was computed on a monthly basis. Assets invested
in the PCRA Fund are not valued on a per unit basis.
<PAGE>
<PAGE> 24
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
3. SUPPLEMENTAL INFORMATION (Continued)
-----------------------------------
The increase (decrease) in value of participation in the Sunoco, Inc.
Defined Contribution Master Trust by fund for the years ended
December 31, 1998 and 1997 was composed of the following:
<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------------------
Equity U.S. Extended Diversified Capital
Index Market Equity International Investments Preservation
Fund Fund Fund Fund Fund
------------ -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Dividend income $ -- $ -- $ -- $ -- $ --
Interest income -- -- -- -- 13,812,497
Income from collective trust funds 36,176 23,152 2,077 2,662 --
Net appreciation (depreciation)
in fair value of investments 53,200,493 1,191,742 1,084,803 26,765,743 1,288,223
----------- ---------- ---------- ----------- -----------
$53,236,669 $1,214,894 $1,086,880 $26,768,405 $15,100,720
=========== ========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------
Sunoco Common
Stock Fund ESOP Fund PCRA FUND Total
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Dividend income $ 1,313,351 $ 2,083,425 $ 20,045 $ 3,416,821
Interest income -- -- -- 13,812,497
Income from collective trust funds 32,393 54,011 3,982 154,453
Net appreciation (depreciation)
in fair value of investments (6,177,897) (12,399,639) 203,714 65,157,182
----------- ------------ -------- -----------
$(4,832,153) $(10,262,203) $227,741 $82,540,953
=========== ============ ======== ===========
</TABLE>
<PAGE>
<PAGE> 25
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
3. SUPPLEMENTAL INFORMATION (Continued)
-----------------------------------
<TABLE>
<CAPTION>
1997
--------------------------------------------------------------------------------
Equity U.S. Extended Diversified Capital
Index Market Equity International Investments Preservation
Fund Fund Fund Fund Fund
------------ -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Dividend income $ -- $ -- $ -- $ -- $ --
Interest income -- -- -- -- 14,993,486
Income from collective trust funds 908,540 140,548 118,720 4,041,864 913,405
Net appreciation (depreciation)
in fair value of investments 46,559,571 1,715,838 (16,307) 16,219,712 44,132
----------- ---------- -------- ----------- -----------
$47,468,111 $1,856,386 $102,413 $20,261,576 $15,951,023
=========== ========== ======== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
1997
----------------------------------------------
Sunoco Common
Stock Fund ESOP Fund Total
-------------- ---------- -----------
<S> <C> <C> <C>
Dividend income $ 1,241,879 $ 2,562,420 $ 3,804,299
Interest income -- -- 14,993,486
Income from collective trust funds 23,251 38,475 6,184,803
Net appreciation (depreciation)
in fair value of investments 22,056,133 45,076,925 131,656,004
----------- ----------- ------------
$23,321,263 $47,677,820 $156,638,592
=========== =========== ============
</TABLE>
<PAGE>
<PAGE> 26
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
4. INCOME TAX STATUS
-----------------
The Plan has received a determination letter from the Internal Revenue
Service dated September 16, 1995, stating that the Plan is qualified
under Section 401(a) of the Internal Revenue Code and, therefore, the
related trust is exempt from taxation. Once qualified, the Plan is
required to operate in conformity with the Code to maintain its
qualification. The Plan Administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code
and, therefore, believes that the Plan is qualified and the related
trust is tax exempt.
<TABLE>
<CAPTION>
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
---------------------------------------------------
The following is a reconciliation of net assets available for benefits
per the financial statements to the Internal Revenue Service Form 5500
at December 31, 1998 and 1997:
1998 1997
------------ ------------
<S> <C> <C>
Net assets available for
benefits per the financial
statements $776,533,976 $717,095,544
Less: Benefit payments requested
by participants which have not
yet been paid at December 31 (378,138) (4,384,000)
------------ ------------
Net assets available for
benefits per the Form 5500 $776,155,838 $712,711,544
============ ============
</TABLE>
<PAGE>
<PAGE> 27
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 (Continued)
--------------------------------------------------------------
<TABLE>
<CAPTION>
The following is a reconciliation of benefits paid to participants per
the financial statements to the Internal Revenue Service Form 5500 for
the years ended December 31, 1998 and 1997:
1998 1997
------------ ------------
<S> <C> <C>
Benefits paid to participants per
the financial statements $66,365,900 $78,746,995
Add: Benefit payments requested by
participants which have not yet
been paid at December 31 378,138 4,384,000
Less: Benefit payments requested by
participants during the preceding
year which were paid during the
current year (4,384,000) (4,459,637)
----------- -----------
Benefits paid to participants per
the Form 5500 $62,360,038 $78,671,358
=========== ===========
Withdrawals requested by participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment
prior to December 31 but not yet paid as of that date.
</TABLE>
6. YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
-----------------------------------------
A program is underway to assess, remediate or replace, test and
implement computer systems and applications (which consist of
internally developed and purchased computer applications, hardware and
software) of Sunoco and the Plan so that such systems and related
processes will continue to operate and properly process information
dated after December 31, 1999.
The initial phase of these plans, an inventory and assessment of
potential problem areas and the remediation/replacement of Sunoco's
key applications that interface with the Plan is substantially
complete. Testing is an ongoing process and Sunoco anticipates that
the testing phase for all its computer applications will be completed
by August 31, 1999.
<PAGE>
<PAGE> 28
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
6. YEAR 2000 READINESS DISCLOSURE (UNAUDITED) (Continued)
-----------------------------------------------------
Sunoco has contacted the Plan's key vendors and is examining their
Year 2000 public disclosures in an attempt to ascertain their ability
to continue to meet their obligations to the Plan. These third party
service providers perform substantially all of the operating,
accounting and recordkeeping services for the Plan. Although Sunoco
has no reason to believe that the Plan's key vendors will not be Year
2000 compliant, Plan management cannot represent the Year 2000
readiness of any third party. This third-party readiness assessment
will continue throughout 1999.
The total cost of achieving Year 2000 compliant systems for the Plan
will be incurred by Sunoco or the Plan's vendors.
Sunoco is developing contingency plans for its operations in the event
Sunoco or the Plan are unable to correct a material Year 2000 problem
or any key vendor or a governmental agency does not make the necessary
computer changes on a timely basis. These plans will attempt to
mitigate the potential impact of failures of the systems or processes
that interface with the Plan. Sunoco's contingency plans are expected
to be completed by September 30, 1999. The Plan's key vendors are in
the process of developing their own contingency plans in the event
they encounter problems related to the Year 2000.
The failure by Sunoco or the Plan to correct a material Year 2000
problem or the inability of any key vendor or a governmental agency to
make the necessary computer system changes on a timely basis, could
result in interruptions to the Plan's activities. Such interruptions
could result in system failure or miscalculations causing disruptions
of operations, including, among other things, a temporary inability to
process transactions or engage in similar, normal business activities.
Due to the general uncertainty inherent in the Year 2000 Issue,
particularly as it relates to the readiness of the Plan's key vendors,
and of governmental agencies, it cannot be ascertained at this time
whether the consequences of Year 2000 failures will have a material
impact on the Plan's operations.
<PAGE>
<PAGE> 29
<TABLE>
SUNOCO, INC.
CAPITAL ACCUMULATION PLAN
PN 002
E.I. 23-1743282
SCHEDULE G
PART I - ASSETS HELD FOR INVESTMENT PURPOSES
FOR IRS FORM 5500 - ITEM 27(a)
AT DECEMBER 31, 1998
<CAPTION>
Description of Investment,
Including Maturity Date,
Identity of Issue, Borrower, Lessor Rate of Interest, Par Cost Current
or Similar Party or Maturity Value Value Value
----------------------------------- -------------------------- ----- -------
<S> <C> <C> <C>
LOANS RECEIVABLE FROM PARTICIPANTS 7.75% - 8.50% with various $ -- $ 16,053,436
maturity dates (last maturity ============ ============
date - 10/9/08)
</TABLE>
<PAGE>
<PAGE> 30
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following document is filed as part of this report:
3. Exhibits:
23.1 - Consent of Ernst & Young LLP for the Sunoco,
Inc. Capital Accumulation Plan.
<PAGE>
<PAGE> 1
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------
23.1 Consent of Ernst & Young LLP for the Sunoco, Inc. Capital
Accumulation Plan.
<PAGE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-9931) pertaining to the Sunoco, Inc. Capital Accumulation
Plan of our report dated June 11, 1999 with respect to the financial
statements and supplemental schedule of the Sunoco, Inc. Capital
Accumulation Plan included in this Form 10-K/A for the year ended December
31, 1998.
/s/ ERNST & YOUNG LLP
- ---------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
June 25, 1999
