PHILADELPHIA, Jan. 28 /PRNewswire-FirstCall/ -- Sunoco, Inc. (NYSE: SUN)
today announced that it was reducing its previously published 2004 fourth
quarter and full year earnings by $10 million. As adjusted, net income for
the fourth quarter is $178 million ($2.48 per share diluted) and $605 million
($8.08 per share diluted) for the year. The adjustment had no impact on the
Company's cash flow.
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Subsequent to releasing its fourth quarter earnings on January 20, 2005,
Sunoco was informed by its independent auditors that the major public
accounting firms were reevaluating the appropriateness of the accounting by
many companies, including Sunoco, for certain insurance policies issued
through an energy industry mutual insurance consortium. After completing its
own review and discussions with its independent auditors, the Company has
concluded that current and future premiums under these insurance policies
reflect the impact of past claims experience and, therefore, should be
accounted for as retrospective premiums. Accordingly, a correction of the
prior accounting treatment utilized by Sunoco was deemed appropriate. Sunoco
recorded a $10 million after-tax charge in the 2004 fourth quarter for the
estimated liability attributable to retrospective premiums. Sunoco has not
yet filed its Annual Report on Form 10-K for the year ended December 31, 2004.
Sunoco's financial statements in the Annual Report will reflect the revised
accounting treatment. No restatement of prior periods was required as the
impact on such periods would not have been material.
Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer
and marketer of petroleum and petrochemical products. With 890,000 barrels
per day of refining capacity, over 4,800 retail sites selling gasoline and
convenience items, over 4,500 miles of crude oil and refined product owned and
operated pipelines and 38 product terminals, Sunoco is one of the largest
independent refiner-marketers in the United States. Sunoco is a significant
manufacturer of petrochemicals with annual sales of approximately five billion
pounds, largely chemical intermediates used to make fibers, plastics, film and
resins. Utilizing a unique, patented technology, Sunoco also manufactures
approximately two million tons annually of high-quality metallurgical-grade
coke for use in the steel industry.
Those statements made in this release that are not historical facts are
forward-looking statements intended to be covered by the safe harbor
provisions of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although Sunoco believes that the
assumptions underlying these statements are reasonable, investors are
cautioned that such forward-looking statements are inherently uncertain and
necessarily involve risks that may affect Sunoco's business prospects and
performance causing actual results to differ from those discussed in the
foregoing release. Such risks and uncertainties include, by way of example
and not of limitation: general business and economic conditions; competitive
products and pricing; effects of weather conditions and natural disasters on
product supply and demand; changes in refining, chemical and other product
margins; variation in petroleum-based commodity prices and availability of
crude oil supply or transportation; effects of transportation disruptions;
changes in the price differentials between light-sweet and heavy-sour crude
oils; fluctuations in supply of feedstocks and demand for products
manufactured; changes in product specifications; availability and pricing of
oxygenates; phase-outs or restrictions on the use of MTBE; changes in
operating conditions and costs; changes in the expected level of environmental
capital, operating or remediation expenditures; age of, and changes in, the
reliability and efficiency of the Company's or a third party's operating
facilities; potential equipment malfunction; potential labor relations
problems; the legislative and regulatory environment; ability to identify
acquisitions under favorable terms and integrate them into the Company's
existing businesses; ability to enter into joint ventures and other
arrangements with favorable terms; plant construction/repair delays;
nonperformance by major customers, suppliers or other business partners;
changes in financial markets impacting pension expense and funding
requirements; political and economic conditions, including the impact of
potential terrorist acts and international hostilities; and changes in the
status of, or initiation of new, litigation. These and other applicable risks
and uncertainties have been described more fully in Sunoco's Third Quarter
2004 Form 10-Q filed with the Securities and Exchange Commission on
November 4, 2004 and in other periodic reports filed with the Securities and
Exchange Commission. Sunoco undertakes no obligation to update any
forward-looking statements in this release, whether as a result of new
information or future events.
Sunoco, Inc.
2004 Fourth Quarter and Twelve-Month Financial Summary
(Unaudited)
Fourth Quarter 2004 2003
Revenues $7,429,000,000 $4,596,000,000*
Net Income $178,000,000 $36,000,000
Net Income Per Share of Common Stock:
Basic $2.50 $.47
Diluted $2.48 $.47
Weighted Average Number of Shares
Outstanding (In Millions):
Basic 71.2 76.3
Diluted 71.8 77.2
Twelve Months
Revenues $25,508,000,000 $18,016,000,000*
Net Income $605,000,000 $312,000,000
Net Income Per Share of Common Stock:
Basic $8.16 $4.07
Diluted $8.08 $4.03
Weighted Average Number of Shares
Outstanding (In Millions):
Basic 74.1 76.7
Diluted 74.9 77.5
* Restated to reflect the consolidation of the Epsilon Products
Company, LLC polypropylene joint venture, effective January 1, 2003,
in connection with the adoption of FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities," in the first quarter
of 2004.
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars)
(Unaudited)
Three Months Ended
December 31
2004 2003 Variance
Refining and Supply $135 $20 $115
Retail Marketing 30 25 5
Chemicals 40 26 14
Logistics 5 (3) 8
Coke 10 11 (1)
Corporate and Other:
Corporate expenses (27) (11) (16)
Net financing expenses and other (15) (24) 9
178 44 134
Special items -- (8) 8
Consolidated net income $178 $36 $142
Earnings (loss) per share
of common stock (diluted):
Income before special items $2.48 $.57 $1.91
Special items -- (.10) .10
Net income $2.48 $.47 $2.01
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars)
(Unaudited)
Twelve Months Ended
December 31
2004 2003 Variance
Refining and Supply $541 $261 $280
Retail Marketing 68 91 (23)
Chemicals 94 53 41
Logistics 31 26 5
Coke 40 43 (3)
Corporate and Other:
Corporate expenses (67) (40) (27)
Net financing expenses and other (78) (99) 21
629 335 294
Special items (24) (23) (1)
Consolidated net income $605 $312 $293
Earnings (loss) per share
of common stock (diluted):
Income before special items $8.40 $4.32 $4.08
Special items (.32) (.29) (.03)
Net income $8.08 $4.03 $4.05
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
Commencing in the first quarter of 2004, certain revisions have been made
to Sunoco's Financial and Operating Statistics presented below. In Refining
and Supply, operating data is now provided for MidContinent Refining
(previously, separate data had been provided for the Toledo and Tulsa
refineries). Also, the Chemicals margin and volume data as well as certain
other financial information reflect the impact of consolidating the Epsilon
Products Company, LLC polypropylene joint venture in connection with the
adoption of FASB Interpretation No. 46. The polypropylene margin information
also now includes the impact of a long-term supply contract entered into on
March 31, 2003 with Equistar Chemicals, L.P. and the cost of additives.
Prior-period amounts have been restated to conform to the 2004 presentation.
For the Three For the Twelve
Months Ended Months Ended
December 31 December 31
2004 2003 2004 2003
TOTAL REFINING AND SUPPLY
Income (Millions of Dollars) $135 $20 $541 $261
Realized Wholesale Margin*
(Per Barrel of Production
Available for Sale) $6.42 $4.01 $6.30 $4.76
Crude Inputs as Percent of
Crude Unit Rated Capacity** 99 93 97 97
Throughputs*** (Thousand
Barrels Daily):
Crude Oil 883.6 678.4 855.7 708.1
Other Feedstocks 55.2 54.0 58.8 53.2
Total Throughputs 938.8 732.4 914.5 761.3
Products Manufactured***
(Thousand Barrels Daily):
Gasoline 447.9 379.4 442.0 375.6
Middle Distillates 320.9 232.6 300.3 236.7
Residual Fuel 73.6 50.5 73.0 59.8
Petrochemicals 40.9 27.2 38.1 27.9
Lubricants 12.3 13.5 13.6 13.6
Other 78.7 59.3 82.0 77.6
Total Production 974.3 762.5 949.0 791.2
Less: Production Used as Fuel
in Refinery Operations 46.0 34.7 46.2 37.1
Total Production
Available for Sale 928.3 727.8 902.8 754.1
* Wholesale sales revenue less related cost of crude oil, other
feedstocks, product purchases and terminalling and transportation
divided by production available for sale.
** In January 2004, crude unit capacity increased from 730 to 890
thousands of barrels daily. This change reflects the acquisition of
the 150 thousand barrels-per-day Eagle Point refinery effective
January 13, 2004 and a 10 thousand barrels-per-day adjustment at the
Toledo refinery reflecting the increased reliability and enhanced
operations at this facility in recent years. The calculation of the
crude inputs as a percent of crude unit rated capacity for the twelve
months ended December 31, 2004 includes the Eagle Point refinery,
effective January 13, 2004.
*** Data pertaining to the Eagle Point refinery for the twelve months
ended December 31, 2004 are included based on the amounts
attributable to the 354-day ownership period (January 13, 2004 -
December 31, 2004) divided by 366 days.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three For the Twelve
Months Ended Months Ended
December 31 December 31
2004 2003 2004 2003
Northeast Refining*
Realized Wholesale Margin (Per
Barrel of Production
Available for Sale) $7.08 $3.56 $6.36 $4.63
Market Benchmark
6-3-2-1 (Per Barrel) $6.21 $4.52 $6.40 $5.63
Crude Inputs as Percent of
Crude Unit Rated Capacity** 99 89 97 95
Throughputs*** (Thousand
Barrels Daily):
Crude Oil 645.5 447.0 633.3 481.7
Other Feedstocks 49.2 47.9 52.9 46.8
Total Throughputs 694.7 494.9 686.2 528.5
Products Manufactured***
(Thousand Barrels Daily):
Gasoline 331.5 258.1 327.8 261.2
Middle Distillates 242.0 161.2 231.5 169.1
Residual Fuel 69.7 46.2 69.2 55.7
Petrochemicals 32.2 20.6 31.0 20.8
Other 45.0 28.8 51.7 42.1
Total Production 720.4 514.9 711.2 548.9
Less: Production Used as Fuel
in Refinery Operations 34.7 24.4 35.6 26.3
Total Production Available
for Sale 685.7 490.5 675.6 522.6
* Comprised of the Marcus Hook, Philadelphia and Eagle Point
refineries.
** On January 13, 2004, crude unit capacity increased from 505 to 655
thousands of barrels daily as a result of the Eagle Point refinery
acquisition. The calculation of the crude inputs as a percent of
crude unit rated capacity for the twelve months ended December 31,
2004 includes the Eagle Point refinery, effective January 13, 2004.
*** Data pertaining to the Eagle Point refinery for the twelve months
ended December 31, 2004 are included based on the amounts
attributable to the 354-day period subsequent to the acquisition
date divided by 366 days.
MidContinent Refining*
Realized Wholesale Margin
(Per Barrel of Production
Available for Sale) $4.53 $4.93 $6.12 $5.05
Market Benchmark 3-2-1
(Per Barrel) $4.52 $3.89 $7.04 $5.80
Crude Inputs as Percent of
Crude Unit Rated Capacity** 101 103 95 101
Throughputs (Thousand
Barrels Daily):
Crude Oil 238.1 231.4 222.4 226.4
Other Feedstocks 6.0 6.1 5.9 6.4
Total Throughputs 244.1 237.5 228.3 232.8
* Comprised of the Toledo and Tulsa refineries.
** Effective January 1, 2004, crude unit capacity increased from 225 to
235 thousands of barrels daily as a result of a 10 thousand
barrels-per-day adjustment at the Toledo refinery.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three For the Twelve
Months Ended Months Ended
December 31 December 31
2004 2003 2004 2003
MidContinent Refining (continued)
Products Manufactured (Thousand
Barrels Daily):
Gasoline 116.4 121.3 114.2 114.4
Middle Distillates 78.9 71.4 68.8 67.6
Residual Fuel 3.9 4.3 3.8 4.1
Petrochemicals 8.7 6.6 7.1 7.1
Lubricants 12.3 13.5 13.6 13.6
Other 33.7 30.5 30.3 35.5
Total Production 253.9 247.6 237.8 242.3
Less: Production Used as
Fuel in Refinery Operations 11.3 10.3 10.6 10.8
Total Production
Available for Sale 242.6 237.3 227.2 231.5
RETAIL MARKETING
Income (Millions of Dollars) $30 $25 $68 $91
Retail Margin* (Per Barrel):
Gasoline $4.99 $4.71 $4.13 $4.34
Middle Distillates $4.71 $4.42 $4.40 $4.73
Sales of Petroleum Products
(Thousand Barrels Daily):
Gasoline 296.0 280.8 296.3 276.5
Middle Distillates 45.9 41.6 42.7 40.3
341.9 322.4 339.0 316.8
Total Retail Gasoline Outlets,
End of Period 4,804 4,528 4,804 4,528
Gasoline and Diesel
Throughput per Company
Owned or Leased Outlet
(M Gal/Site/Month) 136 126 133 124
Convenience Stores:
Total Stores, End of Period 757 813 757 813
Merchandise Sales
(M$/Store/Month) 72 72 73 72
Merchandise Margin
(Company Operated)
(% of Sales) 27% 25% 26% 25%
* Retail sales price less related wholesale price and terminalling and
transportation costs per barrel. The retail sales price is the
weighted-average price received through the various branded marketing
distribution channels.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three For the Twelve
Months Ended Months Ended
December 31 December 31
2004 2003 2004 2003
CHEMICALS*
Income (Millions of Dollars) $40 $26 $94 $53
Margin** (Cents per Pound):
All Products*** 13.7 10.4 11.0 9.5
Phenol and Related Products 12.5 8.9 9.7 8.2
Polypropylene*** 16.2 13.0 13.4 11.5
Sales (Millions of Pounds):
Phenol and Related Products 669 695 2,615 2,629
Polypropylene# 556 588 2,239 2,248
Plasticizers## -- 145 28 591
Other 48 50 187 173
1,273 1,478 5,069 5,641
* Prior-period amounts have been restated to reflect the consolidation
of the Epsilon joint venture, effective January 1, 2003, in
connection with the adoption of FASB Interpretation No. 46 in the
first quarter of 2004.
** Wholesale sales revenue less cost of feedstocks, product purchases
and related terminalling and transportation divided by sales
volumes.
*** The polypropylene and all products margins include the impact of a
long-term supply contract entered into on March 31, 2003 with
Equistar Chemicals, L.P. which is priced on a cost-based formula
that includes a fixed discount.
# Includes amounts attributable to the Bayport facility subsequent to
its purchase, effective March 31, 2003.
## The plasticizer business was divested in January 2004.
COKE
Income (Millions of Dollars) $10 $11 $40 $43
Coke Production (Thousands of Tons) 486 513 1,965 2,024
Coke Sales (Thousands of Tons) 471 513 1,953 2,024
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three For the Twelve
Months Ended Months Ended
December 31 December 31
2004 2003 2004 2003
CAPITAL EXPENDITURES
(Millions of Dollars)
Refining and Supply $160 $82 $463* $245
Retail Marketing 39 45 103** 107***
Chemicals 27 12 56* 31#
Logistics 31 15 75* 39
Coke 47 2 135 5
$304 $156 $832 $427
* Excludes $250 million acquisition from El Paso Corporation ("El
Paso") of the Eagle Point refinery and related chemical and
logistics assets, which includes inventory. The purchase price is
comprised of $190, $40 and $20 million attributable to Refining and
Supply, Chemicals and Logistics, respectively.
** Excludes $181 million acquisition from ConocoPhillips of 340 retail
outlets located primarily in Delaware, Maryland, Virginia and
Washington, D.C., which includes inventory.
*** Excludes $162 million purchase from a subsidiary of Marathon Ashland
Petroleum LLC ("Marathon") of 193 retail gasoline sites located
primarily in Florida and South Carolina, which includes inventory.
# Excludes $198 million associated with the formation of a propylene
partnership with Equistar Chemicals, L.P. ("Equistar") and a related
supply contract and the acquisition of Equistar's Bayport
polypropylene facility, which includes inventory.
DEPRECIATION, DEPLETION AND
AMORTIZATION (Millions of Dollars)
Refining and Supply $49 $44 $188 $165
Retail Marketing 25 26 106 99
Chemicals 19 18 70 65
Logistics 10 7 32 27
Coke 3 3 13 13
$106 $98 $409 $369
BALANCE SHEET INFORMATION
(Millions of Dollars) At At
December 31 December 31
2004 2003
Cash and Cash Equivalents $405 $431
Total Borrowings (including Current Portion)* $1,482 $1,601
Shareholders' Equity $1,607 $1,556
* At December 31, 2004 and December 31, 2003, includes $126 and $148
million, respectively, attributable to the Epsilon joint venture,
which is now consolidated in connection with the adoption of FASB
Interpretation No. 46.
CAPITAL EXPENDITURES
(Millions of Dollars)
2005
Plan 2004 2003
Refining and Supply $587 $463* $245
Retail Marketing 130 103** 107***
Chemicals 74 56* 31#
Logistics 30 75* 39
Coke 25 135 5
$846 $832 $427
* Excludes $250 million acquisition from El Paso of the Eagle Point
refinery and related chemical and logistics assets, which includes
inventory. The purchase price is comprised of $190, $40 and $20
million attributable to Refining and Supply, Chemicals and
Logistics, respectively.
** Excludes $181 million acquisition from ConocoPhillips of 340 retail
gasoline sites located primarily in Delaware, Maryland, Virginia and
Washington, D.C., which includes inventory.
*** Excludes $162 million purchase from Marathon of 193 retail gasoline
sites located primarily in Florida and South Carolina, which
includes inventory.
# Excludes $198 million associated with the formation of a propylene
partnership with Equistar and a related supply contract and the
acquisition of Equistar's Bayport polypropylene facility, which
includes inventory.
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars)
(Unaudited)
2003
1st 2nd 3rd 4th Total
Refining and Supply $93 $50 $98 $20 $261
Retail Marketing 10 36 20 25 91
Chemicals (4) 10 21 26 53
Logistics 11 9 9 (3) 26
Coke 10 11 11 11 43
Corporate and Other:
Corporate expenses (9) (10) (10) (11) (40)
Net financing expenses
and other (25) (25) (25) (24) (99)
86 81 124 44 335
Special items -- -- (15) (8) (23)
Consolidated net income $86 $81 $109 $36 $312
Earnings (loss) per share
of common stock (diluted):
Income before special items $1.12 $1.04 $1.59 $.57 $4.32
Special items -- -- (.19) (.10) (.29)
Net income $1.12 $1.04 $1.40 $.47 $4.03
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars)
(Unaudited)
2004
1st 2nd 3rd 4th Total
Refining and Supply $100 $217 $89 $135 $541
Retail Marketing (4) 20 22 30 68
Chemicals 12 12 30 40 94
Logistics 8 9 9 5 31
Coke 9 9 12 10 40
Corporate and Other:
Corporate expenses (12) (13) (15) (27) (67)
Net financing expenses
and other (24) (20) (19) (15) (78)
89 234 128 178 629
Special items -- -- (24) -- (24)
Consolidated net income $ 89 $234 $104 $178 $605
Earnings (loss) per share of
common stock (diluted):
Income before special items $1.17 $3.07 $1.71 $2.48 $8.40
Special items -- -- (.32) -- (.32)
Net income $1.17 $3.07 $1.39 $2.48 $8.08
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2003*
1st 2nd 3rd 4th Total
REVENUES
Sales and other operating
revenue (including
consumer excise taxes) $4,589 $4,189 $4,630 $4,561 $17,969
Interest income 2 2 1 2 7
Other income (loss), net 5 13 (11) 33 40
4,596 4,204 4,620 4,596 18,016
COSTS AND EXPENSES
Cost of products sold
and operating expenses 3,722 3,261 3,536 3,635 14,154
Consumer excise taxes 437 490 556 516 1,999
Selling, general and
administrative expenses 163 180 202 207 752
Depreciation, depletion
and amortization 85 92 94 98 369
Payroll, property
and other taxes 27 24 30 24 105
Provision for write-down
of assets and other matters -- -- -- 28 28
Interest cost and debt expense 29 29 29 30 117
Interest capitalized (1) -- (1) (1) (3)
4,462 4,076 4,446 4,537 17,521
Income before income
tax expense 134 128 174 59 495
Income tax expense 48 47 65 23 183
Net income $86 $81 $109 $36 $312
* Restated to reflect the consolidation of the Epsilon joint venture,
effective January 1, 2003, in connection with the adoption of FASB
Interpretation No. 46 in the first quarter of 2004.
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2004
1st 2nd 3rd 4th Total
REVENUES
Sales and other operating
revenue (including
consumer excise taxes) $5,232 $6,265 $6,575 $7,396 $25,468
Interest income 2 1 4 3 10
Other income (loss), net 11 10 (21) 30 30
5,245 6,276 6,558 7,429 25,508
COSTS AND EXPENSES
Cost of products sold
and operating expenses 4,254 4,949 5,417 6,114 20,734
Consumer excise taxes 498 571 611 602 2,282
Selling, general and
administrative expenses 187 223 203 260 873
Depreciation, depletion
and amortization 100 100 103 106 409
Payroll, property
and other taxes 33 28 30 27 118
Interest cost and debt expense 29 28 28 23 108
Interest capitalized (1) (2) (3) (5) (11)
5,100 5,897 6,389 7,127 24,513
Income before income
tax expense 145 379 169 302 995
Income tax expense 56 145 65 124 390
Net income $89 $234 $104 $178 $605
SOURCE Sunoco, Inc.
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CONTACT:
Jerry Davis (media), +1-215-977-6298 or Terry
Delaney (investors), +1-215-977-6106, both of Sunoco
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