<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-6841
SUNOCO, INC.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1743282
--------------------------------------------- ----------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
TEN PENN CENTER, 1801 MARKET STREET,
PHILADELPHIA, PA 19103-1699
------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(215) 977-3000
------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ____
---
At September 30, 2000, there were 85,019,739 shares of Common Stock, $1 par
value outstanding.
1
<PAGE>
SUNOCO, INC.
------------
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the Nine Months Ended September 30, 2000
and 1999 3
Condensed Consolidated Statements of Operations
for the Three Months Ended September 30, 2000
and 1999 4
Condensed Consolidated Balance Sheets at
September 30, 2000 and December 31, 1999 5
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended September 30,
2000 and 1999 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 6. Exhibits and Reports on Form 8-K 26
SIGNATURE 27
</TABLE>
2
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Sunoco, Inc. and Subsidiaries
(Millions of Dollars and Shares Except Per Share Amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30
-------------------------
2000 1999
---- ----
(UNAUDITED)
<S> <C> <C>
REVENUES
Sales and other operating revenue (including
consumer excise taxes) $10,370 $6,838
Interest income 8 3
Other income (Notes 2 and 3) 184 116
------- ------
10,562 6,957
------- ------
COSTS AND EXPENSES
Cost of products sold and operating expenses 7,998 4,965
Consumer excise taxes 1,222 1,175
Selling, general and administrative expenses 428 402
Depreciation, depletion and amortization 222 204
Payroll, property and other taxes 63 61
Provision for write-down of assets and other 187
matters (Note 4) --
Interest cost and debt expense 63 61
Interest capitalized (2) (1)
------- ------
10,181 6,867
------- ------
Income from continuing operations before 381
income tax expense 90
Income tax expense (Note 2) 124 31
------- ------
Income from continuing operations 257 59
Income from discontinued operations (Note 5) 11 --
------- ------
NET INCOME $ 268 $ 59
======= ======
Earnings per share of common stock (Note 6):
Basic:
Income from continuing operations $ 2.93 $ .65
Net income $ 3.06 $ .65
Diluted:
Income from continuing operations $ 2.92 $ .65
Net income $ 3.04 $ .65
Weighted average number of shares outstanding:
Basic 87.7 90.4
Diluted 88.1 91.2
Cash dividends paid per share of common stock $ .75 $ .75
</TABLE>
(See Accompanying Notes)
3
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Sunoco, Inc. and Subsidiaries
(Millions of Dollars and Shares Except Per Share Amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months
Ended September 30
------------------------
2000 1999
---- ----
(UNAUDITED)
<S> <C> <C>
REVENUES
Sales and other operating revenue (including
consumer excise taxes) $3,702 $2,628
Interest income 2 1
Other income (Note 3) 37 22
------ ------
3,741 2,651
------ ------
COSTS AND EXPENSES
Cost of products sold and operating expenses 2,877 1,964
Consumer excise taxes 433 418
Selling, general and administrative expenses 141 135
Depreciation, depletion and amortization 75 70
Payroll, property and other taxes 21 21
Provision for write-down of assets and other 194
matters (Note 4) --
Interest cost and debt expense 21 21
------ ------
3,762 2,629
------ ------
Income (loss) before income tax expense (21) 22
Income tax expense 4 8
------ ------
NET INCOME (LOSS) $ (25) $ 14
====== ======
Net income (loss) per share of common stock (Note 6):
Basic $ (.29) $ .15
Diluted $ (.29) $ .15
Weighted average number of shares outstanding:
Basic 86.1 90.4
Diluted 86.1 91.1
Cash dividends paid per share of common stock $ .25 $ .25
</TABLE>
(See Accompanying Notes)
4
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
Sunoco, Inc. and Subsidiaries
<TABLE>
<CAPTION>
At At
September 30 December 31
2000 1999
(Millions of Dollars) (UNAUDITED)
---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 34 $ 87
Accounts and notes receivable, net 1,000 833
Inventories:
Crude oil 201 158
Refined products 230 163
Materials, supplies and other 77 82
Deferred income taxes 96 133
------ ------
Total Current Assets 1,638 1,456
Investments and long-term receivables 189 118
Properties, plants and equipment 6,640 6,444
Less accumulated depreciation, depletion 3,335 3,029
and amortization ------ ------
Properties, plants and equipment, net 3,305 3,415
Deferred charges and other assets 201 207
------ ------
Total Assets $5,333 $5,196
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $1,163 $1,038
Accrued liabilities 341 437
Short-term borrowings -- 150
Current portion of long-term debt 2 1
Taxes payable 183 140
------ ------
Total Current Liabilities 1,689 1,766
Long-term debt 932 878
Retirement benefit liabilities 390 415
Deferred income taxes 212 237
Other deferred credits and liabilities (Note 7) 534 394
Commitments and contingent liabilities (Note 8)
Shareholders' equity (Note 10) 1,576 1,506
------ ------
Total Liabilities and Shareholders' Equity $5,333 $5,196
====== ======
</TABLE>
(See Accompanying Notes)
5
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Sunoco, Inc. and Subsidiaries
(Millions of Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30
----------------------
2000 1999
---- ----
(UNAUDITED)
<S> <C> <C>
INCREASES (DECREASES) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 268 $ 59
Adjustments to reconcile net income to net
cash provided by operating activities:
Income from discontinued operations (11) --
Gain on income tax settlement (90) --
Provision for write-down of assets and other
matters 187 --
Gain on divestments (2) (15)
Depreciation, depletion and amortization 222 204
Deferred income tax expense 21 29
Changes in working capital pertaining to
operating activities:
Accounts and notes receivable (167) (186)
Inventories (111) (25)
Accounts payable and accrued liabilities 99 259
Taxes payable 43 2
Other (78) (60)
----- -----
Net cash provided by operating activities 381 267
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (296) (222)
Proceeds from divestments 30 60
Other (15) (12)
----- -----
Net cash used in investing activities (281) (174)
----- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of short-term borrowings (150) (120)
Proceeds from issuance of long-term debt -- 200
Repayments of long-term debt -- (52)
Proceeds from transferred interest in cokemaking
operations 214 --
Cash dividend payments (66) (68)
Purchases of common stock for treasury (136) (10)
Other (15) 3
----- -----
Net cash used in financing activities (153) (47)
----- -----
Net increase (decrease) in cash and cash equivalents (53) 46
Cash and cash equivalents at beginning of period 87 38
----- -----
Cash and cash equivalents at end of period $ 34 $ 84
===== =====
</TABLE>
(See Accompanying Notes)
6
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------
1. General.
The accompanying condensed consolidated financial statements are presented
in accordance with the requirements of Form 10-Q and accounting principles
generally accepted in the United States for interim financial reporting.
They do not include all disclosures normally made in financial statements
contained in Form 10-K. In management's opinion, all adjustments necessary
for a fair presentation of the results of operations, financial position
and cash flows for the periods shown have been made. All such adjustments
are of a normal recurring nature except for the gain on income tax
settlement (Note 2), provision for write-down of assets and other matters
(Note 4) and income from discontinued operations (Note 5). Results for the
three and nine months ended September 30, 2000 are not necessarily
indicative of results for the full year 2000.
2. Income Tax Settlement.
In July 2000, the Company was notified that the Congressional Joint
Committee on Taxation approved the settlement of certain federal income tax
issues that had been in dispute. In connection with this settlement, Sunoco
recognized a $90 million pretax gain in other income ($79 million after
tax) in the second quarter of 2000 and expects to receive a net cash refund
of at least this amount by the end of the year. Certain additional elements
of the settlement must be resolved and, therefore, are uncertain. The
benefits of these unresolved matters have not yet been recognized in the
financial statements, but could result in an additional positive impact on
the Company's net income and cash flow in the fourth quarter of 2000.
3. Other Income.
During 2000 and 1999, Sunoco entered into several settlements which
resolved certain insurance claims. The claims related to certain
environmental matters of Sunoco, including its predecessor companies and
subsidiaries, arising from ownership and operation of its businesses (Note
8). The following is a summary of the gains recognized in the first nine
months of 2000 and 1999 by quarter from these settlements (in millions of
dollars):
<TABLE>
<CAPTION>
2000 1999
------------------------ ---------------------
Pretax After-Tax Pretax After-Tax
Gain Gain Gain Gain
------ --------- ------ ---------
<S> <C> <C> <C> <C>
First quarter $ -- $ -- $ 11 $ 7
Second quarter -- -- 25 16
Third quarter 7 5 2 1
---- ---- ---- ----
$ 7 $ 5 $ 38 $ 24
==== ==== ==== ====
</TABLE>
7
<PAGE>
In February 1999, Sunoco divested its Shamrock steam coal mining operation
located in Kentucky for $13 million in cash. The divestment resulted in the
recognition of an $11 million pretax gain ($7 million after tax) in the
1999 first quarter. With this divestment, the Company ceased steam coal
mining activities.
4. Write-Down of Assets and Other Matters.
The following table sets forth summary information regarding the provision
for write-down of assets and other matters for the nine months ended
September 30, 2000 (in millions of dollars):
Pretax After-Tax
Provisions Provisions
---------- ----------
Value Added and Eastern Lubricants $177 $123
operations
Employee terminations and related 11 7
costs
MTBE purchase commitment (7) (4)
Other 6 4
---- ----
$187 $130
==== ====
During the third quarter of 2000, Sunoco announced its intention to sell
its Puerto Rico refinery, lubricants blending and packaging facilities and
lubricants branded marketing assets (which include the Kendall(R) motor oil
brand and the customer lists for both the Sunoco(R) and Kendall(R)
lubricants brands) (collectively, "Value Added and Eastern Lubricants"). In
connection therewith, Sunoco recorded a $177 million charge ($123 million
after tax) to write-down the assets to be divested to their estimated
values. After-tax losses from these operations, which include allocated
overhead expenses, totalled $29 and $3 million for the nine months ended
September 30, 2000 and 1999, respectively. Negotiations concerning the sale
of these assets to several prospective purchasers are ongoing, with the
Company considering various alternatives, including the sale of the assets
separately as well as on a combined basis. Other strategic options are also
under consideration. As a result of these uncertainties, the actual loss
upon final disposition may differ from the estimated loss recorded in the
third quarter.
During the first nine months of 2000, Sunoco also established accruals
totalling $11 million ($7 million after tax) for employee terminations and
related costs. The employee reductions were comprised primarily of
administrative personnel. As of September 30, 2000, the amount of actual
termination benefits paid and charged against the accrual totalled $4
million. Benefits related to these terminations will continue to be paid
through 2001. In addition, in the second quarter of 2000, Sunoco reversed
into income the remaining $7 million loss accrual ($4 million after tax)
related to an MTBE purchase commitment (Note 8).
8
<PAGE>
5. Income from Discontinued Operations.
During the first quarter of 2000, Sunoco recorded an $11 million after-tax
favorable adjustment (including a $7 million tax benefit) to the gain
recognized in 1996 in connection with the divestment of the Company's
International Production business. The adjustment resulted from the
favorable resolution of certain United Kingdom income tax issues. At the
time of the sale, this business was treated as a discontinued operation;
therefore, this adjustment has been classified similarly in the condensed
consolidated statement of operations for the nine months ended September
30, 2000.
9
<PAGE>
6. Earnings Per Share.
The following table sets forth the computation of basic and diluted
earnings per share ("EPS") for the nine-month and three-month periods ended
September 30, 2000 and 1999 (in millions, except per share amounts):
<TABLE>
<CAPTION>
Nine Months Three Months
Ended Ended
September 30 September 30
-------------------- -------------------
2000 1999 2000* 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income (loss) from continuing
operations $ 257 $ 59 $ (25) $ 14
Income from discontinued operations 11 -- -- --
----- ----- ----- -----
Net income (loss) $ 268 $ 59 $ (25) $ 14
===== ===== ===== =====
Weighted average number of common
shares outstanding (basic EPS
denominator) 87.7 90.4 86.1 90.4
Add effect of dilutive stock
incentive awards .4 .8 -- .7
----- ----- ----- -----
Weighted average number of shares
(diluted EPS denominator) 88.1 91.2 86.1 91.1
===== ===== ===== =====
Basic EPS:
Income (loss) from continuing $2.93 $ .65 $(.29) $ .15
operations
Income from discountinued
operations .13 -- -- --
----- ----- ----- -----
Net income (loss) $3.06 $ .65 $(.29) $ .15
===== ===== ===== =====
Diluted EPS:
Income (loss) from continuing $2.92 $ .65 $(.29) $ .15
operations
Income from discontinued
operations .12 -- -- --
----- ----- ----- -----
Net income (loss) $3.04 $ .65 $(.29) $ .15
===== ===== ===== =====
</TABLE>
____________
*Since the assumed issuance of common stock related to stock incentive
awards would have resulted in a reduction in the loss per share, the
diluted per share amounts are equal to the basic per share amounts.
10
<PAGE>
7. Transferred Interests in Cokemaking Operations.
In the third quarter of 2000, Sunoco transferred an additional interest in
its Jewell cokemaking operation to a third party investor for $214 million
in cash. Third party investors in Sunoco's Indiana Harbor and Jewell
cokemaking operations are now entitled to 95 and 98 percent, respectively,
of the cash flows and tax benefits from the respective cokemaking
operations until certain cumulative return targets have been met. After
these preferential return periods, which are expected to end in 2002 and
2007, respectively, the investor in the Indiana Harbor operation will be
entitled to a variable minority interest in the cash flows and tax benefits
from Indiana Harbor ranging from 5 to 23 percent, while the investor in the
Jewell operation will be entitled to a minority interest in the cash flows
and tax benefits from Jewell amounting to 18 percent. The balance
attributable to the investors' interests in these operations totalled $335
and $175 million at September 30, 2000 and December 31, 1999, respectively,
and is reflected in other deferred credits and liabilities in the condensed
consolidated balance sheets.
8. Commitments and Contingent Liabilities.
A wholly owned subsidiary of the Company is a one-third partner in Belvieu
Environmental Fuels ("BEF"), a joint venture that owns and operates a
methyl tertiary butyl ether ("MTBE") production facility in Mont Belvieu,
Texas. At September 30, 2000, the Company had a $62 million investment in
this operation.
In order to obtain a secure supply of oxygenates for the manufacture of
reformulated gasoline, Sunoco entered into an off-take agreement with BEF
whereby Sunoco agreed to purchase all of the MTBE production from the
plant. During the fourth quarter of 1996, spot market prices for MTBE were
less than the prices paid by Sunoco under the off-take agreement with BEF.
At that time, the Company expected this adverse relationship to continue
into the future. Accordingly, a $130 million accrual ($85 million after
tax) was established at December 31, 1996 for the estimated purchase
commitment loss expected to be realized with respect to this agreement. An
additional $40 million provision ($26 million after tax) was added to the
accrual in December 1998 for incremental losses expected to be realized
with respect to this agreement.
During the first five months of 2000 and the full years 1999, 1998 and
1997, actual MTBE purchase costs in excess of spot market prices totalling
$12, $39, $47 and $65 million, respectively, were charged against the
accrual. Beginning in May 2000, Sunoco began paying BEF spot-market-related
prices for the last four years of the agreement. Accordingly, the remaining
$7 million accrual ($4 million after tax) was reversed into income in the
second quarter of 2000 as a credit to the provision for write-down of
assets and other matters.
In November 1998, the EPA convened an advisory Panel on Oxygenate Use in
Gasoline (the "Panel"). The purpose of the Panel was to review public
health and environmental issues that have been raised by the use of MTBE in
gasoline, and specifically by the discovery of MTBE in water supplies. The
Panel made its recommendations to the EPA on July 27, 1999. The
recommendations call for the improved protection of drinking water from
MTBE contamination, a substantial reduction in the
11
<PAGE>
use of MTBE, and action by Congress to remove the oxygenate requirements
for reformulated gasoline under the Clean Air Act. State and federal
environmental agencies could implement the majority of the recommendations;
however, some would require Congressional legislative action. While the
Panel recommended that certain public and private funding options be
explored for the clean up of contaminated sites, it made no specific
recommendations concerning such funding options. However, private parties
are seeking clean-up remedies primarily from gasoline marketers, including
Sunoco.
California has acted to ban MTBE use by December 31, 2002. In connection
with the MTBE ban, California has requested a waiver from the EPA of its
oxygenate requirements; however, the EPA has not yet acted on this request.
A number of other states are also reviewing the use of MTBE in gasoline.
New York and Connecticut are among those states that have enacted
legislation to ban MTBE usage, beginning in 2004 and 2003, respectively.
The validity of the New York legislation has been challenged in litigation
on the basis that there is federal preemption under the Clean Air Act. The
EPA has proposed a legislative framework for Congress that would
significantly reduce or eliminate the use of MTBE, remove the oxygenate
requirement and replace it with a renewable fuels (e.g. ethanol) average
annual content for all gasoline. The EPA has not yet developed the
specifics of this averaging process. The EPA has also initiated a
rulemaking process to consider a limit or ban on the use of MTBE under the
Toxic Substances Control Act. Several other Congressional approaches to
MTBE and renewable fuels are under consideration. MTBE is the primary
oxygenate used by Sunoco and throughout the industry to meet the
reformulated gasoline requirements under the Clean Air Act. While phase-
outs or restrictions on the use of MTBE or any required clean up of MTBE
could have a significant impact on Sunoco and its results of operations,
the ultimate impact cannot be determined at this time.
Sunoco is subject to numerous federal, state and local laws which regulate
the discharge of materials into the environment or that otherwise relate to
the protection of the environment. The Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") and the Solid Waste
Disposal Act as amended by the Resource Conservation and Recovery Act
("RCRA"), and related federal and state laws subject Sunoco to the
potential obligation to remove or mitigate the environmental effects of the
disposal or release of certain pollutants at Sunoco's facilities and at
third-party or formerly owned sites. Under CERCLA, Sunoco is subject to
potential joint and several liability for the costs of remediation at sites
at which it has been identified as a "potentially responsible party"
("PRP"). As of September 30, 2000, Sunoco had been named as a PRP at 52
sites identified or potentially identifiable as "Superfund" sites under
CERCLA. Sunoco has reviewed the nature and extent of its involvement at
each site and other relevant circumstances and, based upon the other
parties involved or Sunoco's negligible participation therein, believes
that its potential liability associated with such sites will not be
significant.
12
<PAGE>
Under various environmental laws, including RCRA, Sunoco has initiated
corrective remedial action at its facilities, formerly-owned facilities and
third-party sites and could be required to undertake similar actions at
various other sites. The cost of such remedial actions could be
significant but is expected to be incurred over an extended period of time.
Sunoco establishes accruals related to environmental remediation activities
for work at identified sites where an assessment has indicated that cleanup
costs are probable and reasonably estimable. The accrued liability for
environmental remediation is classified in the condensed consolidated
balance sheets as follows (in millions of dollars):
At At
September 30 December 31
2000 1999
------------ -----------
Accrued liabilities $ 37 $ 46
Other deferred credits and
liabilities 110 114
---- ----
$147 $160
==== ====
Pretax charges against income for environmental remediation amounted to $11
and $8 million for the nine months ended September 30, 2000 and 1999,
respectively. Claims for recovery of environmental liabilities that are
probable of realization totalled $4 million at September 30, 2000 and are
included in deferred charges and other assets in the condensed consolidated
balance sheets.
On October 4, 1996, Sunoco filed a complaint in Los Angeles County Superior
Court, Jalisco Corporation, Inc., et al. v. Argonaut Insurance Company, et
al. (Case No. BC 158441), naming more than 45 insurance companies as
defendants and seeking recovery under numerous insurance policies for
certain environmental matters of Sunoco, including its predecessor
companies and subsidiaries, arising from the ownership and operation of its
businesses. In the first nine months of 2000 and the years 1999 and 1998,
the Company entered into several settlements which resolved most of these
claims. As a result, the Company received net cash proceeds totalling $36
million in the first nine months of 2000, $96 million in 1999 and $4
million in 1998. Pretax gains of $7 million ($5 million after tax), $73
million ($47 million after tax) and $58 million ($38 million after tax)
were recognized in the first nine months of 2000 and the years 1999 and
1998, respectively, in connection with these settlements.
Total future costs for environmental remediation activities will depend
upon, among other things, the identification of any additional sites, the
determination of the extent of the contamination at each site, the timing
and nature of required remedial actions, the technology available and
needed to meet the various existing legal requirements, the nature and
extent of future environmental laws, inflation rates and the determination
of Sunoco's liability at multi-party sites, if any, in light of the number,
participation level and financial viability of other parties.
13
<PAGE>
Many other legal and administrative proceedings are pending against Sunoco.
The ultimate outcome of these proceedings and the matters discussed above
cannot be ascertained at this time; however, it is reasonably possible that
some of them could be resolved unfavorably to Sunoco. Management believes
that any expenditures attributable to these matters will be incurred over
an extended period of time and will be funded from Sunoco's net cash flows
from operating activities. Although the ultimate impact of these matters
could have a significant impact on results of operations or cash flows for
any future quarter or year, management of Sunoco believes that any
additional liabilities which may arise pertaining to such matters would not
be material in relation to the consolidated financial position of Sunoco at
September 30, 2000. Furthermore, management believes that the overall costs
for environmental activities will not have a material impact, over an
extended period of time, on Sunoco's cash flows or liquidity.
9. Chemicals Joint Venture.
Effective June 15, 2000, Sunoco entered into a joint venture which combined
Sunoco Chemicals' polymer-grade propylene operation at the Marcus Hook
refinery with its partner's adjacent polypropylene business. The following
is a summary of the effects of this transaction on Sunoco's consolidated
financial position as of the transaction date (in millions of dollars):
Increase (decrease) in:
Properties, plants and equipment, net $(49)
Investments and long-term receivables 64
----
Cash advances to the joint venture $ 15
====
In connection with this joint venture, Sunoco is contingently liable under
an arrangement which guarantees $120 million of the joint venture's
outstanding bridge financing.
10. Shareholders' Equity.
At At
September 30 December 31
2000 1999
------------ -----------
(Millions of Dollars)
Common stock, par value $1 per share $ 132 $ 132
Capital in excess of par value 1,401 1,397
Earnings employed in the business 1,817 1,615
------ ------
3,350 3,144
Less common stock held in treasury,
at cost 1,774 1,638
------ ------
Total $1,576 $1,506
====== ======
14
<PAGE>
11. Business Segment Information.
The following tables set forth information concerning Sunoco's business
segments for the nine-month and three-month periods ended September 30,
2000 and 1999 (in millions of dollars):
<TABLE>
<CAPTION>
Sales and Other
Operating Revenue Profit Contri-
------------------------
Nine Months Ended Unaffiliated Inter- bution (Loss)
September 30, 2000 Customers segment (after tax)
------------------ ------------ ------- -------------
<S> <C> <C> <C>
Northeast Refining $ 3,365 $2,104 $ 175
Northeast Marketing 3,331 -- 31
Chemicals 560 -- 43
Lubricants* 1,154 10 (22)
MidAmerica Marketing &
Refining 1,754 -- 57
Logistics 39 96 35
Coke 167 -- 44
------- -----
$10,370 363
=======
Gain on income tax
settlement 79
Gain on settlement of
insurance litigation 5
Provision for write-down
of assets and other matters (130)
Corporate expenses (18)
Net financing expenses
and other (42)
Income from discontinued
operations 11
-----
Net income $ 268
=====
<CAPTION>
Nine Months Ended
September 30, 1999
------------------
<S> <C> <C> <C>
Northeast Refining $ 2,038 $1,165 $ (26)
Northeast Marketing 2,337 -- 36
Chemicals 368 -- 23
Lubricants* 758 27 (12)
MidAmerica Marketing &
Refining 1,136 -- (9)
Logistics 41 85 40
Coke 160 -- 47
------- -----
$ 6,838 99
=======
Gain on settlement of
insurance litigation 24
Corporate expenses (18)
Net financing expenses
and other (46)
-----
Net income $ 59
=====
</TABLE>
____________
*Includes Value Added and Eastern Lubricants operations which are subject to a
divestment plan (Note 4).
15
<PAGE>
<TABLE>
<CAPTION>
Sales and Other
Operating Revenue Profit Contri-
------------------------
Three Months Ended Unaffiliated Inter- bution (Loss)
September 30, 2000 Customers segment (after tax)
------------------ ------------ ------- -------------
<S> <C> <C> <C>
Northeast Refining $1,157 $777 $ 62
Northeast Marketing 1,213 -- 18
Chemicals 190 -- 10
Lubricants* 412 7 (8)
MidAmerica Marketing &
Refining 660 -- 14
Logistics 15 33 12
Coke 55 -- 17
------ -----
$3,702 125
======
Gain on settlement of
insurance litigation 5
Provision for write-down
of assets and other matters (134)
Corporate expenses (6)
Net financing expenses
and other (15)
-----
Net loss $ (25)
=====
<CAPTION>
Three Months Ended
September 30, 1999
------------------
<S> <C> <C> <C>
Northeast Refining $ 760 $501 $ 1
Northeast Marketing 909 -- 5
Chemicals 129 -- 6
Lubricants* 296 11 (8)
MidAmerica Marketing &
Refining 463 -- 4
Logistics 14 29 13
Coke 57 -- 13
------ -----
$2,628 34
======
Gain on settlement of
insurance litigation 1
Corporate expenses (6)
Net financing expenses
and other (15)
-----
Net income $ 14
=====
</TABLE>
_________
*Includes Value Added and Eastern Lubricants operations which are subject to a
divestment plan (Note 4).
16
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS - NINE MONTHS
Earnings Profile of Sunoco Businesses (after tax)
-------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-----------------------
2000 1999 Variance
---- ---- --------
(Millions of Dollars)
<S> <C> <C> <C>
Sun Northeast Refining $ 175 $ (26) $ 201
Sunoco Northeast Marketing 31 36 (5)
Sunoco Chemicals 43 23 20
Sun Lubricants* (22) (12) (10)
Sunoco MidAmerica Marketing & Refining 57 (9) 66
Sunoco Logistics 35 40 (5)
Sun Coke 44 47 (3)
Corporate expenses (18) (18) --
Net financing expenses and other (42) (46) 4
----- ---- -----
303 35 268
Special items:
Gain on income tax settlement 79 -- 79
Gain on settlement of insurance
litigation 5 24 (19)
Provision for write-down of assets
and other matters (130) -- (130)
Income from discontinued operations 11 -- 11
----- ---- -----
Consolidated net income $ 268 $ 59 $ 209
===== ==== =====
</TABLE>
___________
*Includes after-tax losses (after allocated overhead expenses) of $29 and $3
million for the nine months ended September 30, 2000 and 1999, respectively,
attributable to the Value Added and Eastern Lubricants operations, which are
subject to a divestment plan (see Note 4 to the condensed consolidated
financial statements).
17
<PAGE>
Analysis of Earnings Profile of Sunoco Businesses
-------------------------------------------------
In the nine-month period ended September 30, 2000, Sunoco earned $268 million,
or $3.04 per share of common stock on a diluted basis, compared to net income of
$59 million, or $.65 per share, for the first nine months of 1999. Excluding the
special items shown separately in the Earnings Profile of Sunoco Businesses,
Sunoco earned $303 million in the first nine months of 2000 compared to $35
million in the first nine months of 1999.
Sun Northeast Refining -- The Sun Northeast Refining business earned $175
million in the first nine months of 2000 versus a loss of $26 million in the
first nine months of 1999. The increase in earnings was due to significantly
higher refining margins, which increased $2.74 per barrel versus the 1999 first
nine months. Higher expenses, particularly refinery fuel costs, partially offset
the margin improvement.
Sunoco Northeast Marketing -- The Sunoco Northeast Marketing business earned $31
million in the current nine-month period versus income of $36 million in the
first nine months of 1999. An increase in retail gasoline sales volumes, higher
distillate volumes and margins and higher average convenience store sales were
more than offset by higher planned marketing and administrative expenses,
including expenses related to Sunoco's service station reimaging program.
Sunoco Chemicals -- Sunoco Chemicals earned $43 million in the first nine months
of 2000 versus $23 million in last year's first nine months. The increase in
earnings was largely due to higher margins for propylene, increased income from
the BEF joint venture and increased production of cumene and phenol, partially
offset by higher expenses, particularly refinery fuel costs.
Sun Lubricants -- The Sun Lubricants business recorded a loss of $22 million in
the first nine months of 2000 versus a loss of $12 million in the 1999 first
nine months. The decrease in results was primarily due to lower specialty oil
margins (down $7.96 per barrel) caused by significantly higher crude oil costs
during the first nine months of 2000 and higher expenses due to an increase in
refinery fuel costs. Partially offsetting these negative factors were improved
margins on gasoline and distillates and higher base oil margins.
During the third quarter of 2000, Sunoco announced its intention to sell its
Value Added and Eastern Lubricants operations. In connection therewith, Sunoco
recorded a $177 million charge ($123 million after tax) to write-down the assets
to be divested to their estimated values. This charge is reported as part of the
Provision for Write-Down of Assets and Other Matters shown separately in the
Earnings Profile of Sunoco Businesses (see Note 4 to the condensed consolidated
financial statements). The operations of the Tulsa refinery are unaffected by
this decision and will continue to make fuels and base oil products which are
sold into process oil, wholesale base oil and wax markets.
Sunoco MidAmerica Marketing & Refining -- Sunoco MidAmerica Marketing & Refining
earned $57 million during the current nine-month period versus a loss of $9
million in the first nine months of 1999. The improvement was primarily due to
significantly higher realized wholesale fuels margins, which increased $3.07 per
barrel versus the first nine months of 1999. A six percent increase in retail
gasoline sales volumes also contributed to
18
<PAGE>
the improvement. Partially offsetting these increases were higher operating
expenses due to an increase in refinery fuel costs.
Sunoco Logistics -- Sunoco Logistics earned $35 million in the first nine months
of 2000 versus $40 million in the first nine months of 1999. The decrease in
earnings was primarily due to lower income from Sunoco's Nederland, TX, crude
oil terminal and higher expenses.
Sun Coke -- Sun Coke earned $44 million in the first nine months of 2000 versus
$47 million in the 1999 first nine months. The decrease in earnings was due to
the absence of a $7 million after-tax gain associated with the sale of the
Company's Shamrock steam coal mining operation, which was recognized in the
first quarter of 1999, partially offset by higher coke margins and an increase
in tax credits recognized.
Net Financing Expenses and Other -- Net financing expenses and other activities
totalled $42 million for the first nine months of 2000 versus $46 million for
the 1999 first nine months. The decrease was due in part to higher capitalized
interest and higher interest income.
Gain on Income Tax Settlement -- In the second quarter of 2000, Sunoco recorded
a $79 million after-tax gain from the settlement of certain federal income tax
issues (see Note 2 to the condensed consolidated financial statements).
Gain on Settlement of Insurance Litigation -- In the first nine months of 2000
and 1999, Sunoco recognized $5 and $24 million, respectively, of after-tax
gains in connection with the settlement of insurance claims related to certain
environmental matters (see Note 3 to the condensed consolidated financial
statements).
Provision for Write-Down of Assets and Other Matters -- During the first nine
months of 2000, Sunoco recorded a $123 million after-tax provision to write down
the assets in its Value Added and Eastern Lubricants operations that are subject
to a divestment plan to their estimated values. During this period, Sunoco also
established accruals totalling $11 million ($7 million after tax) for employee
terminations (primarily administrative personnel), reversed into income the
remaining $7 million ($4 million after tax) loss accrual related to an MTBE
purchase commitment and recorded a $4 million after-tax provision to write-down
to fair value certain assets in its refining and marketing business. (See Note 4
to the condensed consolidated financial statements.)
Income from Discontinued Operations -- In the first quarter of 2000, Sunoco
recorded an $11 million after-tax favorable adjustment to the gain on divestment
of Sunoco's International Production business which was sold in 1996 (see Note 5
to the condensed consolidated financial statements).
Analysis of Condensed Consolidated Statements of Operations
-----------------------------------------------------------
Revenues -- Total revenues were $10.56 billion in the first nine months of 2000
compared to $6.96 billion in the first nine months of 1999. The 52 percent
increase was due to significantly higher refined product sales prices.
19
<PAGE>
Costs and Expenses -- Total pretax costs and expenses were $10.18 billion in the
first nine months of 2000 compared to $6.87 billion in the 1999 nine-month
period. The 48 percent increase in the first nine months of 2000 was primarily
due to significantly higher crude oil and refined product acquisition costs
largely as a result of crude oil price increases. Also contributing to the
increase was the provision for write-down of assets and other matters recorded
in the third quarter of 2000.
RESULTS OF OPERATIONS - THREE MONTHS
Earnings Profile of Sunoco Businesses (after tax)
-------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
September 30
-----------------------
2000 1999 Variance
---- ---- --------
(Millions of Dollars)
<S> <C> <C> <C>
Sun Northeast Refining $ 62 $ 1 $ 61
Sunoco Northeast Marketing 18 5 13
Sunoco Chemicals 10 6 4
Sun Lubricants* (8) (8) --
Sunoco MidAmerica Marketing & Refining 14 4 10
Sunoco Logistics 12 13 (1)
Sun Coke 17 13 4
Corporate expenses (6) (6) --
Net financing expenses and other (15) (15) --
----- ----- -----
104 13 91
Special items:
Gain on settlement of insurance
litigation 5 1 4
Provision for write-down of assets
and other matters (134) -- (134)
----- ----- -----
Consolidated net income (loss) $ (25) $ 14 $ (39)
===== ===== =====
</TABLE>
_________
*Includes after-tax losses (after allocated overhead expenses) of $11 and $5
million for the three months ended September 30, 2000 and 1999, respectively,
attributable to the Value Added and Eastern Lubricants operations, which are
subject to a divestment plan (see Note 4 to the condensed consolidated
financial statements).
20
<PAGE>
Analysis of Earnings Profile of Sunoco Businesses
-------------------------------------------------
In the three-month period ended September 30, 2000, Sunoco had a net loss of $25
million, or $.29 per share of common stock on a diluted basis, compared to net
income of $14 million, or $.15 per share, for the third quarter of 1999.
Excluding the special items shown separately in the Earnings Profile of Sunoco
Businesses, Sunoco had income of $104 million in the third quarter of 2000
compared to $13 million in the third quarter of 1999.
Sun Northeast Refining -- The Sun Northeast Refining business earned $62 million
in the third quarter of 2000 versus $1 million in the third quarter of 1999. The
improvement was due to significantly higher wholesale fuels margins. Despite
increased crude oil and transportation costs, realized refining margins averaged
$5.69 per barrel for the quarter as most product margins, particularly
distillates and gasoline, were up sharply from 1999 levels. Sun Northeast
Refining results also benefited from excellent management of crude purchases and
wholesale marketing during the quarter. Higher expenses, largely related to
increased natural gas fuel costs, partially offset the margin improvement.
Sunoco Northeast Marketing -- The Sunoco Northeast Marketing business earned $18
million in the current quarter versus $5 million in the third quarter of 1999.
The improvement was primarily due to higher retail gasoline margins, which
increased over 3 cents per gallon versus third quarter 1999 levels. Higher
retail gasoline and distillate sales volumes, which increased three and six
percent, respectively, also contributed to the improved results.
Sunoco Chemicals -- Sunoco Chemicals earned $10 million in the third quarter of
2000 versus $6 million in the 1999 third quarter. Despite higher feedstock
costs, margins for cumene and phenol increased. Higher production volumes and
increased income from the BEF joint venture also contributed to the earnings
improvement.
Sun Lubricants -- The Sun Lubricants business recorded a loss of $8 million in
both third quarter periods. Increased margins for lubricant base oils and
transportation fuels produced at the Tulsa refinery were offset by lower
specialty oil margins and higher refinery fuel costs. During the third quarter
of 2000, Sunoco recorded a $177 million charge ($123 million after tax) to
write-down certain assets to be divested in its Lubricants operation to their
estimated values. This charge is reported as part of the Provision for Write-
Down of Assets and Other Matters shown separately in the Earnings Profile of
Sunoco Businesses (see Note 4 to the condensed consolidated financial
statements).
Sunoco MidAmerica Marketing & Refining -- Sunoco MidAmerica Marketing & Refining
earned $14 million during the current quarter versus $4 million in the 1999
third quarter. The increase was largely due to higher average wholesale fuels
and petrochemical margins and increased production at the Toledo refinery.
Fuels margins were seasonally strong at $4.13 per barrel and averaged over 50
cents per barrel more than the 1999 third quarter. Reliability at the Toledo
refinery has been excellent since the completion of major turnaround work in
mid-April. Average crude runs were up 13 percent from the 1999 third quarter.
21
<PAGE>
Sunoco Logistics -- Net income was $12 million in the third quarter of 2000
versus $13 million in the 1999 third quarter. Higher throughput revenue was more
than offset by an increase in expenses and lower income from joint venture
pipeline operations.
Sun Coke -- Sun Coke earned $17 million in the third quarter of 2000 versus $13
million for the third quarter of 1999. The increased earnings are due, in part,
to an increase in tax credits recognized by Sun Coke. Higher coke production at
Indiana Harbor also contributed to the improved results.
Gain on Settlement of Insurance Litigation -- In the third quarters of 2000 and
1999, Sunoco recognized $5 and $1 million, respectively, of after-tax gains
associated with the settlement of insurance claims related to certain
environmental matters (see Note 3 to the condensed consolidated financial
statements).
Provision for Write-Down of Assets and Other Matters -- For a discussion of the
provision for write-down of assets and other matters recorded in the third
quarter of 2000, see Note 4 to the condensed consolidated financial statements.
Analysis of Condensed Consolidated Statements of Operations
-----------------------------------------------------------
Revenues -- Total revenues were $3.74 billion in the third quarter of 2000
compared to $2.65 billion in the third quarter of 1999. The 41 percent increase
in the third quarter of 2000 was primarily due to significantly higher refined
product sales prices.
Costs and Expenses -- Total pretax costs and expenses were $3.76 billion in the
third quarter of 2000 compared to $2.63 billion in the third quarter of 1999.
The 43 percent increase in the third quarter of 2000 was primarily due to
significantly higher crude oil and refined product acquisition costs largely as
a result of crude oil price increases. Also contributing to the increase was the
provision for write-down of assets and other matters recorded in the third
quarter of 2000.
FINANCIAL CONDITION
Cash and Working Capital
------------------------
At September 30, 2000, Sunoco had cash and cash equivalents of $34 million
compared to $87 million at December 31, 1999, and had a working capital deficit
of $51 million compared to $310 million at December 31, 1999. Sunoco's working
capital position is considerably stronger than indicated because of the
relatively low historical costs assigned under the LIFO method of accounting for
most of the inventories reflected in the condensed consolidated balance sheets.
The current replacement cost of all such inventories exceeds their carrying
value at September 30, 2000 by $1,080 million. Inventories valued at LIFO, which
consist of crude oil and refined products, are readily marketable at their
current replacement values. Management believes that the current levels of
Sunoco's cash and working capital are adequate to support Sunoco's ongoing
operations.
22
<PAGE>
Cash Flows and Financial Capacity
---------------------------------
In the first nine months of 2000, Sunoco's net cash provided by operating
activities ("cash generation") was $381 million compared to $267 million in the
first nine months of 1999. This $114 million increase in cash generation was
primarily due to an increase in income before special items, partially offset by
an increase in working capital uses pertaining to operating activities.
In the third quarter of 2000, Sunoco transferred an additional interest in its
Jewell cokemaking operation to a third party investor in exchange for $214
million in cash. The investor is entitled to 98 percent of the cash flows and
tax benefits from this cokemaking operation until certain cumulative return
targets have been met. After this preferential return period, which is expected
to end in 2007, the third party will be entitled to a minority interest in the
cash flows and tax benefits from the Jewell cokemaking operation amounting to 18
percent. Sunoco did not recognize any gain or loss on this transaction.
Management believes that future cash generation will be sufficient to satisfy
Sunoco's capital requirements and to pay the current level of cash dividends on
Sunoco's common stock. However, from time to time, the Company's short-term
cash requirements may exceed its cash generation due to various factors
including volatility in crude oil and refined product markets and increases in
capital spending and working capital levels. During those periods, the Company
may supplement its cash generation with proceeds from financing activities.
The Company has a $500 million revolving credit agreement ("Agreement") with
commercial banks that provides access to short-term financing through September
2002. The Company can borrow directly from the participating banks under this
Agreement or use it to support the issuance of commercial paper.
The Company filed a shelf registration statement with the Securities and
Exchange Commission, which became effective in July 2000, to register $1,250
million of securities. This registration statement also relates to $250 million
of unsold securities previously registered. The new registration statement
provides the Company with financing flexibility to offer up to $1,500 million of
senior and subordinated debt, common and preferred stock, warrants and trust
preferred securities. The Company expects to use any net proceeds from the sale
of securities for general corporate purposes, which may include: repayment of
outstanding indebtedness; funding working capital, capital expenditures or
acquisitions; and the repurchase of shares of common stock. The amount and
timing of any sales will depend upon market conditions and the Company's funding
requirements.
23
<PAGE>
The following table sets forth amounts outstanding related to Sunoco's
borrowings (in millions of dollars):
At At
September 30 December 31
2000 1999
------------ -----------
Short-term borrowings - commercial paper $ -- $ 150
Current portion of long-term debt 2 1
Long-term debt 932 878
----- ------
Total borrowings $ 934 $1,029
===== ======
Sunoco's ratio of debt (net of available cash) to total capital was 36.4 percent
at September 30, 2000 compared to 38.5 percent at December 31, 1999. Management
believes there is sufficient borrowing capacity available to pursue strategic
investment opportunities as they arise. No commitments have been made with
respect to any investment opportunity which would require the use of a
significant portion of Sunoco's unused financial capacity. In addition, the
Company has the option of issuing additional common or preference stock as a
means of increasing its equity base; however, there are no current plans to do
so.
NEW ACCOUNTING STANDARD
In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" was issued and, in June 2000,
was amended by Statement of Financial Accounting Standards No. 138, "Accounting
for Certain Derivative Instruments and Certain Hedging Activities"
(collectively, "new derivative accounting"). Sunoco expects to adopt the new
derivative accounting effective January 1, 2001 when adoption is mandatory. The
Company is currently evaluating the potential impact of the new derivative
accounting. Based upon the results of this review to date and the level of its
derivative activity, the Company does not expect adoption of the new accounting
to have a significant impact on its results of operations or financial position.
SHARE REPURCHASES
During the first nine months of 2000, the Company repurchased 4,932,614 shares
of its common stock for $136 million, which completed the $150 million share
repurchase program initiated in December 1998. In September 2000, the Company
received authorization from its Board of Directors to repurchase an additional
$200 million of Company common stock in the open market or through privately
negotiated transactions from time to time depending on prevailing market
conditions. As of September 30, 2000, no repurchases had been made under the new
$200 million program.
FORWARD-LOOKING STATEMENTS
Those statements in the foregoing report that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such statements generally will
be accompanied by words such as "anticipate," "believe,"
24
<PAGE>
"estimate," "expect," "forecast," "intend," "possible," "potential," "predict,"
"project," or other similar words that convey the uncertainty of future events
or outcomes. Although Sunoco believes these forward-looking statements are
reasonable, they are based upon a number of assumptions concerning future
conditions, any or all of which may ultimately prove to be inaccurate. Forward-
looking statements involve a number of risks and uncertainties. Important
factors that could cause actual results to differ materially from the forward-
looking statements include, without limitation:
. Changes in industry-wide refining margins;
. Variation in commodity prices and crude oil supply;
. Volatility in the marketplace which may affect market supply and demand for
Sunoco's products;
. Increased competition;
. Changes in the reliability and efficiency of the Company's operating
facilities;
. Changes in the level of operating expenses and hazards common to operating
facilities (including equipment malfunction, explosions, fires, oil spills,
and the effects of severe weather conditions);
. Changes in the expected level of environmental remediation spending;
. Delays related to work on facilities and the issuance of applicable permits;
. Changes in product specifications;
. Availability and pricing of oxygenates such as MTBE;
. Phase-outs or restrictions on the use of MTBE;
. Political and economic conditions in international markets in which the
Company operates;
. Changes in the availability of debt and equity financing resulting in
increased costs or reduced liquidity;
. Risks related to labor relations;
. Nonperformance by major customers;
. General economic, financial and business conditions which could affect
Sunoco's financial condition and results of operations;
. Changes in applicable statutes and government regulations or their
interpretations;
. Claims of the Company's noncompliance with statutory and regulatory
requirements; and
25
<PAGE>
. Changes in the status of litigation to which the Company is a party.
The factors identified above are believed to be important factors (but not
necessarily all of the important factors) that could cause actual results to
differ materially from those expressed in any forward-looking statement made by
Sunoco. Unpredictable or unknown factors not discussed herein could also have
material adverse effects on forward-looking statements. All forward-looking
statements included in this Form 10-Q are expressly qualified in their entirety
by the foregoing cautionary statements. The Company undertakes no obligation to
update publicly any forward-looking statement (or its associated cautionary
language) whether as a result of new information or future events.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
On August 14, 2000, the Pennsylvania Department of Environmental Protection
("PADEP") presented Sunoco, Inc. (R&M) with a civil penalty demand in
excess of $100,000 relating to a November 23, 1998 Notice of Violation,
alleging various violations of PADEP air pollution rules and regulations at
Sunoco's Marcus Hook, PA refinery.
Many other legal and administrative proceedings are pending against Sunoco.
Although the ultimate outcome of these proceedings cannot be ascertained at
this time, it is reasonably possible that some of them could be resolved
unfavorably to Sunoco. Management of Sunoco believes that any liabilities
which may arise from such proceedings would not be material in relation to
the consolidated financial position of Sunoco at September 30, 2000.
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
12 - Statement re Sunoco, Inc. and Subsidiaries Computation of Ratio of
Earnings to Fixed Charges for the Nine-Month Period Ended September
30, 2000.
27 - Article 5 of Regulation S-X, Financial Data Schedule.
Reports on Form 8-K:
The Company has not filed any reports on Form 8-K during the quarter ended
September 30, 2000.
**********
We are pleased to furnish this Form 10-Q to shareholders who request it by
writing to:
Sunoco, Inc.
Investor Relations
Ten Penn Center
1801 Market Street
Philadelphia, PA 19103-1699
26
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report 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 November 2, 2000
27
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -----------------------------------------------------------------
12 Statement re Sunoco, Inc. and Subsidiaries Computation of Ratio
of Earnings to Fixed Charges for the Nine-Month Period Ended
September 30, 2000.
27 Article 5 of Regulation S-X, Financial Data Schedule.
28
