PHILADELPHIA, Sept. 23 /PRNewswire-FirstCall/ -- Sunoco, Inc. (NYSE: SUN)
announced that an arbitrator has found Sunoco liable for breaching a phenol
supply agreement in an arbitration filed by Honeywell International, Inc. The
arbitration concerns the prices charged to Honeywell for phenol produced at
Sunoco's Philadelphia chemical plant during the period July 2003 through the
end of 2004.
(Logo: http://www.newscom.com/cgi-bin/prnh/19981105/PHTH006 )
The arbitration decision assesses damages (including prejudgment interest)
of approximately $40 million (after tax) through December 31, 2004, which will
be reflected as a charge against Sunoco's earnings in the third quarter of
2005. Sunoco intends to contest the finding of liability and the
determination of damages. The award also includes additional damages for the
period January 1, 2005 through April 30, 2005 which have been suspended
pending the outcome of a challenge Sunoco has brought in federal district
court.
The phenol supply agreement provides for a reopener for pricing on and
after January 1, 2005 and sets forth specific standards for determining such
pricing.
The parties have been unsuccessful in negotiating the post-January 1, 2005
price, and a new price will be determined in a second arbitration to be held
before a different arbitrator. Hearings on the second arbitration are
scheduled to commence during the second quarter of 2006. Sunoco believes the
basis for the post-January 1, 2005 pricing is substantially different from the
basis of the award in the first arbitration. However, if the post-January 1,
2005 prices were set in accordance with the formula that was the basis of the
damage award in the first arbitration, the after-tax impact on Sunoco's net
income would be approximately $4 million per quarter.
Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer
and marketer of petroleum and petrochemical products. With 900,000 barrels
per day of refining capacity, approximately 4,800 retail sites selling
gasoline and convenience items, over 4,300 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 has the capacity to manufacture over 2.5 million tons annually of
high-quality metallurgical-grade coke for use in the steel industry. For
additional information visit Sunoco's Web site at http://www.SunocoInc.com.
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
the Company's operating facilities and on product supply and demand; changes
in refining, marketing and chemical margins; variation in petroleum-based
commodity prices and availability of crude oil and feedstock 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,
execute them under favorable terms and integrate them into the Company's
existing businesses; ability to enter into joint ventures and other similar
arrangements with favorable terms; plant construction/repair delays;
nonperformance by major customers, suppliers, dealers, distributors 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 Second Quarter
2005 Form 10-Q filed with the Securities and Exchange Commission on August 3,
2005 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.
SOURCE Sunoco, Inc.
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Related links:
http://www.SunocoInc.com
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/19981105/PHTH006
PRN Photo Desk, photodesk@prnewswire.com
Company News On-Call:
http://www.prnewswire.com/comp/829144.html
CONTACT:
Jerry Davis (media), +1-215-977-6298, or
Terry Delaney (investors), +1-215-977-6106, both of Sunoco
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