<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, 1999 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 27, 2000
<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, 1999. 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>
3
REPORT OF INDEPENDENT AUDITORS
Plan Administrator
Sunoco, Inc. Capital Accumulation Plan
We have audited the accompanying statements of assets available for benefits of
the Sunoco, Inc. Capital Accumulation Plan (Plan) as of December 31, 1999 and
1998, and the related statements of changes in assets available for benefits for
the years then ended. 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 auditing standards generally accepted
in the United States. 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 assets available for benefits of the Plan at December
31, 1999 and 1998 and the changes in its assets available for benefits for the
years then ended, in conformity with accounting principles generally accepted in
the United States.
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 End of Year as of December 31, 1999 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 the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is 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 14, 2000
<PAGE>
4
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1999 AND 1998
1999 1998
---- ----
Investment in Sunoco, Inc. Defined
Contribution Master Trust (Notes 1
and 2) $800,903,321 $760,480,540
Loans receivable from participants,
including accrued interest (Note 1) 16,053,428 16,053,436
------------ ------------
Assets available for benefits (Note 5) $816,956,749 $776,533,976
============ ============
See accompanying notes to financial statements.
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5
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
---- ---
Additions (deductions):
Employees' contributions $ 24,890,064 $ 22,721,833
Employers' contributions 13,908,253 12,853,246
Transfers and rollovers from tax-
qualified plans (Note 1) 5,678,415 8,064,012
Interest income 1,306,790 1,282,479
Increase in value of participation in
Sunoco, Inc. Defined Contribution
Master Trust (Notes 1 and 3) 56,309,235 82,540,953
Benefits paid to participants (Note 5) (60,826,386) (66,365,900)
Administrative expenses (Note 2) (843,598) (1,658,191)
------------ ------------
Net additions 40,422,773 59,438,432
Assets available for benefits,
beginning of year 776,533,976 717,095,544
------------ ------------
Assets available for benefits,
end of year $816,956,749 $776,533,976
============ ============
See accompanying notes to financial statements.
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6
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 both 1999 and 1998.
<PAGE>
7
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, 1999, 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 Equity 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 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
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8
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
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, at a minimum,
the greater 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, 1999 and
1998:
1999 1998
---- ----
Equity Index Fund 98.5680% 99.1326%
U.S. Extended Market Equity Fund 98.8610% 100.0000%
International Equity Fund 99.3473% 100.0000%
Diversified Investments Fund 97.0640% 98.1754%
Capital Preservation Fund 92.9696% 92.5907%
Sunoco Common Stock Fund 100.0000% 100.0000%
ESOP Fund 100.0000% 100.0000%
PCRA Fund 100.0000% 100.0000%
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. The Equity
Index Fund of the Master Trust is currently invested in an index fund
maintained by Deutsche Asset Management which is designed to approximate
the performance of the Standard & Poor's 500 Composite Stock Index;
however, alternate stock market indices and/or an actively managed
portfolio could be substituted at any time.
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. The U.S. Extended
Market Equity Fund of the Master Trust is currently invested in an index
fund maintained by Deutsche Asset Management 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.
<PAGE>
9
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
International Equity 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. The International Equity 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 managed 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 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.
<PAGE>
10
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
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 as directed by the participant
and are purchased through Charles Schwab & Co., Inc., a brokerage firm.
Participants may not invest in common stock or debt securities of Sunoco
through this account.
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.
The following table details the above funds' investments in the net assets
of the corresponding Master Trust funds at December 31, 1999 and 1998:
1999 1998
---- ----
Equity Index Fund $264,098,373 $230,458,968
U.S. Extended Market Equity Fund 25,378,529 17,670,740
International Equity Fund 27,613,529 11,825,780
Diversified Investments Fund 124,488,355 121,592,839
Capital Preservation Fund 241,438,199 246,309,810
Sunoco Common Stock Fund 52,118,127 54,482,898
ESOP Fund 44,875,997 73,966,331
PCRA Fund 20,892,212 4,173,174
------------ ------------
Investment in Sunoco, Inc.
Defined Contribution Master Trust $800,903,321 $760,480,540
============ ============
At December 31, 1999 and 1998, the Capital Preservation Fund of the Master
Trust is principally invested in both synthetic and standard investment
contracts.
The synthetic investment contracts are currently with Bank of America,
National Westminster Bank plc, Monumental Life Insurance Co., Transamerica
Life Companies, Rabobank Nederland and Westdeutsche Landesbank Giroentrale.
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>
11
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, 1999 and
1998:
% of Master Trust
Capital Preservation
Financial Institutions Average Interest Fund Net Assets
Providing Wrapper Crediting Rate at 12/31
---------------------- ---------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
Buy and Hold Portfolios:
-----------------------
Monumental Life Insurance Co. 5.88% 5.90% 1 4
National Westminster Bank plc 6.64% 6.64% 4 4
Rabobank Nederland 5.78% -- 4 --
Transamerica Life Companies 6.61% 6.69% 3 8
Managed Portfolios:
------------------
Bank of America 6.70% -- 16 --
Bankers Trust Company -- 6.48% -- 24
Monumental Life Insurance Co. 6.74% 6.56% 22 20
Transamerica Life Companies -- 6.86% -- 9
Westdeutsche Landesbank
Giroentrale 6.73% -- 17 --
--- ---
67%* 69%*
=== ===
----------
*The other 33% and 31% of net assets of the Capital Preservation Fund of
the Master Trust at December 31, 1999 and 1998, respectively, are invested
in standard investment contracts (24% and 21%) and in cash and collective
trust funds (9% and 10%) maintained by Barclay's 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>
12
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, 1999 and 1998 with the Master Trust to pay interest on funds
invested in them:
<TABLE>
<CAPTION>
% of Master
Trust Capital
Effective Preservation
Annual Fund Net Assets
Financial Institution Interest at 12/31 Last
--------------------- Rate (Net --------------- Maturity
of Expenses) 1999 1998 Date
----------- ---- ---- ------------
<S> <C> <C> <C> <C>
Metropolitan Life Insurance Company 7.41% - 3 9/15/99
Monumental Life Insurance Company 5.58% 2 2 12/16/02
New York Life Insurance Co. 7.97% 2 3 10/16/00
Ohio National Life Insurance Company 5.96% 2 2 11/15/02
Pacific Life Insurance Company 4.98% 2 2 11/15/01
Protective Life Insurance Company 6.74% 2 2 6/15/01
CDC Financial Products, Inc. 6.58% 3 - 11/15/03
Prudential Asset Management Co. 5.53% - 2 1/13/99
Safeco Life Insurance Companies 7.05% 1 1 6/15/00
Safeco Life Insurance Companies 6.55% 2 2 12/15/01
Safeco Life Insurance Companies 6.00% 2 - 7/15/03
Security Life of Denver Insurance
Company 6.56% 2 2 9/16/02
SunAmerica Life Insurance Co. 6.68% 2 - 11/17/03
United of Omaha 7.09% 2 - 11/15/04
--- ---
24% 21%
=== ===
</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 substantially all of 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 available for benefits at December
31, 1999. There are no other significant concentrations of credit risk in
other Plan assets.
The average interest crediting rates at December 31, 1999 and 1998 for all
synthetic and standard investment contracts in the aggregate were 6.58% and
6.53%, respectively. The average yields for the years ended December 31,
1999 and 1998 for such contracts in the aggregate were 6.40% and 6.74%,
respectively.
<PAGE>
13
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
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
or her 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 or her 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 in the statements of changes
in 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 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.
<PAGE>
14
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
Withdrawals from the Equity Index Fund, U.S. Extended Market Equity Fund,
International Equity 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 Equity 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.
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 Equity
Fund, Diversified Investments Fund, Capital Preservation Fund and PCRA Fund
or share equivalents from the Sunoco Common Stock and ESOP Funds. Transfers
or changes in fund allocation percentages may be made daily.
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 or her 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, at 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
<PAGE>
15
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
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 for 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 are reflected in the
accompanying statements of assets available for benefits. As loans
receivable (including interest thereon) are repaid, amounts are transferred
into the funds in the same proportion as the participant's current
contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates:
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. 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 business day of the Plan year.
<PAGE>
16
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
-----------------------------------------------------
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 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 (Note 3).
Benefits Paid to Participants:
-----------------------------
Benefits paid to participants, which include withdrawals and distributions,
are recorded upon distribution.
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.
Reclassifications:
-----------------
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
3. SUPPLEMENTAL INFORMATION
------------------------
The increase in value of participation in the Sunoco, Inc. Defined
Contribution Master Trust for the years ended December 31, 1999 and 1998
was composed of the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net appreciation (depreciation) in fair value
of investments:
Equity Index Fund $ 47,476,658 $ 53,200,493
U.S. Extended Market Equity Fund 5,828,454 1,191,742
International Equity Fund 9,883,074 1,084,803
Diversified Investment Fund 12,347,837 26,765,743
Capital Preservation Fund -- 1,288,223
Sunoco Common Stock and ESOP Funds (42,558,306) (18,577,536)
PCRA Fund 4,542,970 203,714
----------- -----------
37,520,687 65,157,182
Dividend income 3,686,617 3,416,821
Interest income 15,052,148 13,812,497
Income from collective trust funds 49,783 154,453
----------- -----------
$ 56,309,235 $ 82,540,953
=========== ===========
</TABLE>
<PAGE>
17
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.
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
---------------------------------------------------
The following is a reconciliation of assets available for
benefits per the financial statements to the Internal Revenue Service Form
5500 at December 31,1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Assets available for benefits
per the financial statements $816,956,749 $776,533,976
Benefit payments requested
by participants which have not
yet been paid at December 31 (1,124,402) (378,138)
------------ ------------
Assets available for benefits
per the Form 5500 $815,832,347 $776,155,838
============ ============
</TABLE>
<PAGE>
18
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 (Continued)
-------------------------------------------------------------
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, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Benefits paid to participants per
the financial statements $60,826,386 $66,365,900
Benefit payments requested by
participants which have not yet
been paid at December 31 1,124,402 378,138
Benefit payments requested by
participants during the preceding
year which were paid during the (378,138) (4,384,000)
current year ---------- -----------
Benefits paid to participants per
the Form 5500 $61,572,650 $62,360,038
=========== ===========
</TABLE>
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.
<PAGE>
19
SUNOCO, INC.
CAPITAL ACCUMULATION PLAN
PN 002
E.I. 23-1743282
SCHEDULE H, Line 4:
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 1999
<TABLE>
<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 maturity
dates (last maturity date - 9/18/2009) $ -- $16,053,428
============ ===========
</TABLE>
<PAGE>
20
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>
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -------
23.1 Consent of Ernst & Young LLP for the Sunoco, Inc. Capital Accumulation
Plan.
