Exhibit 99.1
News Release
Sunoco, Inc.
1735 Market Street
Philadelphia, Pa. 19103-7583
| | |
For further information contact | | For release: IMMEDIATELY |
Jerry Davis (media) 215-977-6298 | | |
Terry Delaney (investors) 215-977-6106 | | |
No. 3-06
SUNOCO REPORTS FOURTH QUARTER RESULTS
PHILADELPHIA, February 1, 2006 — Sunoco, Inc. (NYSE: SUN) today reported net income of $287 million ($2.12 per share diluted) for the fourth quarter of 2005 versus $178 million ($1.24 per share diluted) for the 2004 fourth quarter. Excluding a special item, income for the current quarter was $297 million ($2.19 per share diluted). There were no special items in the 2004 fourth quarter.
For the full year 2005, Sunoco reported net income of $974 million ($7.08 per share diluted) versus net income of $605 million ($4.04 per share diluted) for the full year 2004. Excluding special items, Sunoco’s income was $1,012 million ($7.36 per share diluted) versus $629 million ($4.20 per share diluted) for the comparable 2004 period.
All per-share amounts reflect the two-for-one stock split effected on August 1, 2005.
“Strong fourth-quarter results completed an outstanding year for Sunoco,” said John G. Drosdick, Sunoco Chairman and Chief Executive Officer. “In a very strong refining environment, we achieved best-ever operating and safety performance in 2005. We had record operating earnings of over $1 billion and a return on capital employed of over 32 percent. We increased our dividend by 33 percent, reduced our shares outstanding by four percent and significantly strengthened our balance sheet. Our share price increased 92 percent for the year.”
Commenting on the fourth-quarter results, Drosdick said, “Refining and Supply results continued to lead the way, with earnings of $286 million in the quarter. Refining conditions were strong throughout most of the quarter, although margins did moderate some as refineries impacted by Hurricanes Katrina and Rita returned to operations over the quarter. Operationally, we had our best quarter ever, with crude unit utilization at 99 percent and overall system (UEDC) utilization rates of almost 91 percent.
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SUNOCO 4Q05 EARNINGS, PAGE 2
“Retail Marketing earned $25 million, its best quarter of 2005, as retail gasoline margins benefited from crude oil and wholesale gasoline prices that were on a declining trend over much of the quarter. Chemicals earnings, however, declined to $8 million as year-end sales volumes fell off and high natural gas costs negatively impacted the business. While early 2006 demand is showing some recovery, feedstock volatility and high energy costs continue.
“In our other businesses, Logistics and Coke earned $3 million and $10 million, respectively. Logistics results for the current quarter included charges of approximately $4 million after tax related to asset write-offs and insurance and environmental remediation accruals. Results for the quarter also included $8 million in unusual after-tax charges to Corporate expenses and a $10 million after-tax charge across the businesses for increased performance bonus payouts related to enhancements to a non-executive bonus plan.
“During the quarter, we continued our share repurchase activity, repurchasing approximately 3.6 million shares ($269 million). For the year, over 6.7 million shares ($435 million) were repurchased. Over the past five years, we have reduced our shares outstanding by 22 percent.”
Drosdick concluded, “Despite some recent downward pressure on refining margins caused by the unseasonably warm weather in the Northeast, we believe the longer term market fundamentals are still very good for our refining business. In addition, we enter 2006 with a strong balance sheet, with a net debt-to-capital ratio (as defined in our revolving credit agreement) of 17 percent – down from 37 percent at year-end 2004. This financial strength will serve us well as we execute our capital program to improve and expand our existing refining base while continuing to consider other opportunities to grow our asset portfolio and return cash to our shareholders.”
DETAILS OF FOURTH QUARTER RESULTS
REFINING AND SUPPLY
Refining and Supply earned $286 million in the current quarter versus $135 million in the fourth quarter of 2004. The increase in earnings was due to higher realized margins and higher production volumes. The higher realized margins were, in part, due to continued fourth-quarter impacts from the Gulf Coast hurricanes. Value-added product margins, particularly for premium gasoline, jet fuel and low-sulfur diesel fuel were also strong during the quarter. Partially offsetting these factors were higher expenses, including fuel and employee-related charges.
Total crude unit throughput averaged 892.6 thousand barrels daily (99 percent utilization) for the quarter, with total production available for sale approximating 87 million barrels.
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SUNOCO 4Q05 EARNINGS, PAGE 3
RETAIL MARKETING
Retail Marketing earned $25 million in the fourth quarter of 2005 versus $30 million in the fourth quarter of 2004. The decrease in results was due to lower gains from asset divestments associated with the Retail Portfolio Management program. Lower retail gasoline margins (down 1 cpg) and sales volumes (down 2.6 percent) were essentially offset by lower expenses and higher margins on distillate products.
CHEMICALS
Chemicals earned $8 million in the fourth quarter of 2005 versus $40 million in the prior-year period. Margins and volumes for both polypropylene and phenol declined – with average margins down 2.3 cents per pound and total sales volumes 9 percent less than the 2004 fourth quarter. Higher expenses, in part due to natural gas prices which averaged almost $13 per decatherm and were over $5 per decatherm higher than the prior-year quarter, also contributed to the decline.
LOGISTICS
Earnings for the Logistics segment were $3 million in the fourth quarter of 2005 versus $5 million in the prior-year period. Higher income from terminalling and Western crude oil pipeline operations was more than offset by Sunoco’s reduced ownership interest in Sunoco Logistics Partners L.P. (NYSE: SXL) and by $4 million of after-tax charges for environmental remediation activities, asset impairments and insurance assessments.
COKE
The Coke business earned $10 million in both fourth-quarter periods. An eight-day steam system outage at the Haverhill, OH plant reduced current quarter results by approximately $2 million.
CORPORATE AND OTHER
Corporate administrative expenses were $27 million after tax in both fourth-quarter periods. The current quarter results included a $6 million after-tax charge for the adoption of a new accounting interpretation related to asset retirement obligations and a $2 million after-tax accrual for retrospective insurance premiums associated with an energy industry mutual insurance consortium. The 2004 fourth quarter results included a $10 million after-tax accrual for retrospective premiums.
Net financing expenses were $8 million after tax in the fourth quarter of 2005 versus $15 million in the prior-year quarter. The decrease was primarily due to higher interest income.
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SUNOCO 4Q05 EARNINGS, PAGE 4
SPECIAL ITEM
During the fourth quarter of 2005, Sunoco recognized an additional $10 million after-tax loss associated with an arbitration decision related to a phenol pricing dispute. In the 2005 third quarter, a $46 million after-tax charge was recorded for estimated damages for the period from June 2003 to April 2005. In January 2006, the arbitrator further ruled that the revised pricing formula should apply until a second arbitration, scheduled for the second quarter of 2006, finalizes pricing for 2005 and beyond. The additional charge relates to the period May 2005 through December 2005.
TWELVE MONTH RESULTS
Sunoco had net income of $974 million for the full year 2005 versus $605 million for the full year 2004. The increase was primarily due to higher margins in Sunoco’s Refining and Supply business. Also contributing to the improvement in earnings were higher margins from Sunoco’s Chemicals business, higher production of refined products, increased use of high-acid discounted crude oils and lower net financing expenses. Partially offsetting these positive factors were higher expenses, primarily fuel and employee-related charges, lower margins in Retail Marketing and lower Chemicals sales volumes.
Full-year results for 2005 include an $18 million after-tax net gain related to income tax matters and the $56 million after-tax loss associated with the phenol supply contract dispute. The loss covers estimated damages for the period from June 2003 to December 2005.
Results for the full year 2004 included an $8 million after-tax loss related to the sale of Sunoco’s one-third interest in the BEF MTBE joint venture chemical operations and a $34 million after-tax loss from the early extinguishment of outstanding debt. Sunoco also recognized an $18 million after-tax gain from the 2004 settlement of certain federal income tax issues.
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, approximately 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 has the capacity to manufacture over 2.5 million tons annually of high-quality metallurgical-grade coke for use in the steel industry.
Anyone interested in obtaining further insights into the fourth quarter’s results can monitor the Company’s quarterly teleconference call, which is scheduled for 3:00 p.m. ET on February 2, 2006. It
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SUNOCO 4Q05 EARNINGS, PAGE 5
can be accessed through Sunoco’s Web site—www.SunocoInc.com. It is suggested that you visit the site prior to the teleconference to ensure that you have downloaded any necessary software.
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 materially 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, efficiency and capacity 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 under favorable terms; delays and/or costs related to plant construction, improvements or repairs and the issuance of applicable permits; nonperformance by or disputes with 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 and/or arbitration proceedings. These and other applicable risks and uncertainties have been described more fully in Sunoco’s Form 10-Q filed with the Securities and Exchange Commission on November 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.
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SUNOCO 4Q05 EARNINGS, PAGE 6
Sunoco, Inc.
2005 Fourth Quarter and Twelve-Month Financial Summary
(Unaudited)
| | | | | | |
| | | 2005
| | 2004
|
Fourth Quarter | | | | | | |
| | |
Revenues | | $ | 9,270,000,000 | | $ | 7,429,000,000 |
Net Income | | $ | 287,000,000 | | $ | 178,000,000 |
Net Income Per Share of Common Stock*: | | | | | | |
Basic | | $ | 2.13 | | $ | 1.25 |
Diluted | | $ | 2.12 | | $ | 1.24 |
Weighted-Average Number of Shares Outstanding* (In Millions): | | | | | | |
Basic | | | 134.6 | | | 142.5 |
Diluted | | | 135.6 | | | 143.7 |
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Twelve Months | | | | | | |
| | |
Revenues | | $ | 33,764,000,000 | | $ | 25,508,000,000 |
Net Income | | $ | 974,000,000 | | $ | 605,000,000 |
Net Income Per Share of Common Stock*: | | | | | | |
Basic | | $ | 7.13 | | $ | 4.08 |
Diluted | | $ | 7.08 | | $ | 4.04 |
Weighted-Average Number of Shares Outstanding* (In Millions): | | | | | | |
Basic | | | 136.6 | | | 148.2 |
Diluted | | | 137.5 | | | 149.8 |
| * | Share and per-share data presented for all periods reflect the effect of a two-for-one stock split, which was effected in the form of a common stock dividend distributed on August 1, 2005. |
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SUNOCO 4Q05 EARNINGS, PAGE 7
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
| | | | | | | | | | | | |
| | | Three Months Ended
December 31
| | | | |
| | | 2005
| | | 2004
| | | Variance
| |
Refining and Supply | | $ | 286 | | | $ | 135 | | | $ | 151 | |
Retail Marketing | | | 25 | | | | 30 | | | | (5 | ) |
Chemicals | | | 8 | | | | 40 | | | | (32 | ) |
Logistics | | | 3 | | | | 5 | | | | (2 | ) |
Coke | | | 10 | | | | 10 | | | | — | |
Corporate and Other: | | | | | | | | | | | | |
Corporate expenses | | | (27 | ) | | | (27 | ) | | | — | |
Net financing expenses and other | | | (8 | ) | | | (15 | ) | | | 7 | |
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| | | | 297 | | | | 178 | | | | 119 | |
Special Items | | | (10 | ) | | | — | | | | (10 | ) |
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Consolidated net income | | $ | 287 | | | $ | 178 | | | $ | 109 | |
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Earnings (loss) per share of common stock (diluted): | | | | | | | | | | | | |
Income before special items | | $ | 2.19 | | | $ | 1.24 | | | $ | .95 | |
Special items | | | (.07 | ) | | | — | | | | (.07 | ) |
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Net income | | $ | 2.12 | | | $ | 1.24 | | | $ | .88 | |
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SUNOCO 4Q05 EARNINGS, PAGE 8
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
| | | | | | | | | | | | |
| | | Twelve Months Ended December 31
| | | | |
| | | 2005
| | | 2004
| | | Variance
| |
Refining and Supply | | $ | 947 | | | $ | 541 | | | $ | 406 | |
Retail Marketing | | | 30 | | | | 68 | | | | (38 | ) |
Chemicals | | | 94 | | | | 94 | | | | — | |
Logistics | | | 22 | | | | 31 | | | | (9 | ) |
Coke | | | 48 | | | | 40 | | | | 8 | |
Corporate and Other: | | | | | | | | | | | | |
Corporate expenses | | | (84 | ) | | | (67 | ) | | | (17 | ) |
Net financing expenses and other | | | (45 | ) | | | (78 | ) | | | 33 | |
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| | | | 1,012 | | | | 629 | | | | 383 | |
Special Items | | | (38 | ) | | | (24 | ) | | | (14 | ) |
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Consolidated net income | | $ | 974 | | | $ | 605 | | | $ | 369 | |
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Earnings (loss) per share of common stock (diluted): | | | | | | | | | | | | |
Income before special items | | $ | 7.36 | | | $ | 4.20 | | | $ | 3.16 | |
Special items | | | (.28 | ) | | | (.16 | ) | | | (.12 | ) |
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Net income | | $ | 7.08 | | | $ | 4.04 | | | $ | 3.04 | |
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SUNOCO 4Q05 EARNINGS, PAGE 9
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
| | | | | | | | | | | | |
| | | For the Three
Months Ended
December 31
| | For the Twelve
Months Ended
December 31
|
| | | 2005
| | 2004
| | 2005
| | 2004
|
TOTAL REFINING AND SUPPLY | | | | | | | | | | | | |
Income (Millions of Dollars) | | $ | 286 | | $ | 135 | | $ | 947 | | $ | 541 |
Realized Wholesale Margin* (Per Barrel of Production Available for Sale) | | $ | 9.96 | | $ | 6.42 | | $ | 8.65 | | $ | 6.30 |
Crude Inputs as Percent of Crude Unit Rated Capacity** | | | 99 | | | 99 | | | 98 | | | 97 |
Throughputs*** (Thousand Barrels Daily): | | | | | | | | | | | | |
Crude Oil | | | 892.6 | | | 883.6 | | | 881.0 | | | 855.7 |
Other Feedstocks | | | 64.8 | | | 55.2 | | | 59.4 | | | 58.8 |
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Total Throughputs | | | 957.4 | | | 938.8 | | | 940.4 | | | 914.5 |
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Products Manufactured*** (Thousand Barrels Daily): | | | | | | | | | | | | |
Gasoline | | | 459.7 | | | 447.9 | | | 443.4 | | | 442.0 |
Middle Distillates | | | 330.7 | | | 320.9 | | | 319.5 | | | 300.3 |
Residual Fuel | | | 74.9 | | | 73.6 | | | 76.2 | | | 73.0 |
Petrochemicals | | | 35.8 | | | 40.9 | | | 36.8 | | | 38.1 |
Lubricants | | | 13.8 | | | 12.3 | | | 13.2 | | | 13.6 |
Other | | | 78.7 | | | 78.7 | | | 86.6 | | | 82.0 |
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Total Production | | | 993.6 | | | 974.3 | | | 975.7 | | | 949.0 |
Less: Production Used as Fuel in Refinery Operations | | | 50.3 | | | 46.0 | | | 48.6 | | | 46.2 |
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Total Production Available for Sale | | | 943.3 | | | 928.3 | | | 927.1 | | | 902.8 |
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| * | Wholesale sales revenue less related cost of crude oil, other feedstocks, product purchases and terminalling and transportation divided by production available for sale. |
| ** | Effective January 1, 2005, crude unit capacity increased from 890 to 900 thousands of barrels daily due to a 10 thousand barrels-per-day adjustment in MidContinent Refining. |
| *** | Data pertaining to the Eagle Point refinery for the twelve months ended December 31, 2004 are based on the amounts attributable to the 354-day ownership period (January 13, 2004 – December 31, 2004) divided by 366, the number of days in the year. |
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SUNOCO 4Q05 EARNINGS, PAGE 10
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
| | | | | | | | | | | | |
| | | For the Three Months Ended December 31
| | For the Twelve Months Ended December 31
|
| | | 2005
| | 2004
| | 2005
| | 2004
|
Northeast Refining* | | | | | | | | | | | | |
| | | | |
Realized Wholesale Margin (Per Barrel of Production Available for Sale) | | $ | 9.18 | | $ | 7.08 | | $ | 8.35 | | $ | 6.36 |
Market Benchmark 6-3-2-1 (Per Barrel) | | $ | 9.23 | | $ | 6.21 | | $ | 7.76 | | $ | 6.40 |
Crude Inputs as Percent of Crude Unit Rated Capacity | | | 101 | | | 99 | | | 99 | | | 97 |
Throughputs** (Thousand Barrels Daily): | | | | | | | | | | | | |
Crude Oil | | | 658.9 | | | 645.5 | | | 650.6 | | | 633.3 |
Other Feedstocks | | | 57.3 | | | 49.2 | | | 52.8 | | | 52.9 |
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Total Throughputs | | | 716.2 | | | 694.7 | | | 703.4 | | | 686.2 |
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Products Manufactured** (Thousand Barrels Daily): | | | | | | | | | | | | |
Gasoline | | | 348.4 | | | 331.5 | | | 330.5 | | | 327.8 |
Middle Distillates | | | 249.0 | | | 242.0 | | | 242.1 | | | 231.5 |
Residual Fuel | | | 70.1 | | | 69.7 | | | 71.7 | | | 69.2 |
Petrochemicals | | | 28.2 | | | 32.2 | | | 28.6 | | | 31.0 |
Other | | | 46.9 | | | 45.0 | | | 55.8 | | | 51.7 |
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Total Production | | | 742.6 | | | 720.4 | | | 728.7 | | | 711.2 |
Less: Production Used as Fuel in Refinery Operations | | | 37.9 | | | 34.7 | | | 36.7 | | | 35.6 |
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Total Production Available for Sale | | | 704.7 | | | 685.7 | | | 692.0 | | | 675.6 |
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| * | Comprised of the Marcus Hook, Philadelphia and Eagle Point refineries. |
| ** | Data pertaining to the Eagle Point refinery for the twelve months ended December 31, 2004 are based on the amounts attributable to the 354-day period subsequent to the January 13, 2004 acquisition date divided by 366, the number of days in the year. |
| | | | | | | | | | | | |
| | | | |
MidContinent Refining* | | | | | | | | | | | | |
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Realized Wholesale Margin (Per Barrel of Production Available for Sale) | | $ | 12.25 | | $ | 4.53 | | $ | 9.54 | | $ | 6.12 |
Market Benchmark 3-2-1 (Per Barrel) | | $ | 11.95 | | $ | 4.52 | | $ | 11.04 | | $ | 7.04 |
Crude Inputs as Percent of Crude Unit Rated Capacity** | | | 95 | | | 101 | | | 94 | | | 95 |
Throughputs (Thousand Barrels Daily): | | | | | | | | | | | | |
Crude Oil | | | 233.7 | | | 238.1 | | | 230.4 | | | 222.4 |
Other Feedstocks | | | 7.5 | | | 6.0 | | | 6.6 | | | 5.9 |
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Total Throughputs | | | 241.2 | | | 244.1 | | | 237.0 | | | 228.3 |
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| * | Comprised of the Toledo and Tulsa refineries. |
| ** | Effective January 1, 2005, crude unit capacity increased from 235 to 245 thousands of barrels daily as a result of a 10 thousand barrels-per-day adjustment. |
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SUNOCO 4Q05 EARNINGS, PAGE 11
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
| | | | | | | | | | | | | | | | |
| | | For the Three Months Ended December 31
| | | For the Twelve Months Ended December 31
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
MidContinent Refining (continued) | | | | | | | | | | | | | | | | |
| | | | |
Products Manufactured (Thousand Barrels Daily): | | | | | | | | | | | | | | | | |
Gasoline | | | 111.3 | | | | 116.4 | | | | 112.9 | | | | 114.2 | |
Middle Distillates | | | 81.7 | | | | 78.9 | | | | 77.4 | | | | 68.8 | |
Residual Fuel | | | 4.8 | | | | 3.9 | | | | 4.5 | | | | 3.8 | |
Petrochemicals | | | 7.6 | | | | 8.7 | | | | 8.2 | | | | 7.1 | |
Lubricants | | | 13.8 | | | | 12.3 | | | | 13.2 | | | | 13.6 | |
Other | | | 31.8 | | | | 33.7 | | | | 30.8 | | | | 30.3 | |
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Total Production | | | 251.0 | | | | 253.9 | | | | 247.0 | | | | 237.8 | |
Less: Production Used as Fuel in Refinery Operations | | | 12.4 | | | | 11.3 | | | | 11.9 | | | | 10.6 | |
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Total Production Available for Sale | | | 238.6 | | | | 242.6 | | | | 235.1 | | | | 227.2 | |
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RETAIL MARKETING | | | | | | | | | | | | | | | | |
| | | | |
Income (Millions of Dollars) | | $ | 25 | | | $ | 30 | | | $ | 30 | | | $ | 68 | |
Retail Margin* (Per Barrel): | | | | | | | | | | | | | | | | |
Gasoline | | $ | 4.60 | | | $ | 4.99 | | | $ | 3.39 | | | $ | 4.13 | |
Middle Distillates | | $ | 5.66 | | | $ | 4.71 | | | $ | 4.49 | | | $ | 4.40 | |
Sales of Petroleum Products (Thousand Barrels Daily): | | | | | | | | | | | | | | | | |
Gasoline | | | 288.4 | | | | 296.0 | | | | 298.3 | | | | 296.3 | |
Middle Distillates | | | 46.9 | | | | 45.9 | | | | 45.3 | | | | 42.7 | |
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| | | | 335.3 | | | | 341.9 | | | | 343.6 | | | | 339.0 | |
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Total Retail Gasoline Outlets, End of Period | | | 4,763 | | | | 4,804 | | | | 4,763 | | | | 4,804 | |
Gasoline and Diesel Throughput per Company Owned or Leased Outlet (M Gal/Site/Month) | | | 131 | | | | 136 | | | | 136 | | | | 133 | |
Convenience Stores: | | | | | | | | | | | | | | | | |
Total Stores, End of Period | | | 746 | | | | 757 | | | | 746 | | | | 757 | |
Merchandise Sales (M$/Store/Month) | | $ | 76 | | | $ | 72 | | | $ | 78 | | | $ | 73 | |
Merchandise Margin (Company Operated) (% of Sales) | | | 28 | % | | | 27 | % | | | 28 | % | | | 26 | % |
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| * | 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. |
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SUNOCO 4Q05 EARNINGS, PAGE 12
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
| | | | | | | | | | | | | | |
| | | For the Three Months Ended December 31
| | For the Twelve Months Ended December 31
|
| | | 2005
| | | 2004
| | 2005
| | | 2004
|
CHEMICALS | | | | | | | | | | | | | | |
| | | | |
Income (Millions of Dollars) | | $ | 8 | * | | $ | 40 | | $ | 94 | * | | $ | 94 |
Margin** (Cents per Pound): | | | | | | | | | | | | | | |
All Products*** | | | 11.4 | | | | 13.7 | | | 12.1 | | | | 11.0 |
Phenol and Related Products | | | 9.3 | | | | 12.5 | | | 10.9 | | | | 9.7 |
Polypropylene*** | | | 14.3 | | | | 16.2 | | | 13.9 | | | | 13.4 |
Sales (Millions of Pounds): | | | | | | | | | | | | | | |
Phenol and Related Products | | | 619 | | | | 669 | | | 2,579 | | | | 2,615 |
Polypropylene | | | 512 | | | | 556 | | | 2,218 | | | | 2,239 |
Plasticizers# | | | — | | | | — | | | — | | | | 28 |
Other | | | 22 | | | | 48 | | | 91 | | | | 187 |
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| | | | 1,153 | | | | 1,273 | | | 4,888 | | | | 5,069 |
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| * | Excludes a $10 million after-tax loss recognized in the fourth quarter of 2005 and a $56 million after-tax loss recognized in the full-year 2005 associated with a phenol supply contract dispute. |
| ** | Wholesale sales revenue less related cost of feedstocks, product purchases and 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. |
| # | The plasticizer business was divested in January 2004. |
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COKE | | | | | | | | | | | | |
| | | | |
Income (Millions of Dollars) | | $ | 10 | | $ | 10 | | $ | 48 | | $ | 40 |
Coke Production (Thousands of Tons) | | | 634 | | | 486 | | | 2,405 | | | 1,965 |
Coke Sales (Thousands of Tons) | | | 610 | | | 471 | | | 2,375 | | | 1,953 |
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SUNOCO 4Q05 EARNINGS, PAGE 13
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
| | | | | | | | | | | | |
| | | For the Three Months Ended December 31
| | For the Twelve Months Ended December 31
|
| | | 2005
| | 2004
| | 2005
| | 2004
|
DEPRECIATION, DEPLETION AND AMORTIZATION (Millions of Dollars) | | | | | | | | | | | | |
Refining and Supply | | $ | 54 | | $ | 49 | | $ | 201 | | $ | 188 |
Retail Marketing | | | 26 | | | 25 | | | 105 | | | 106 |
Chemicals | | | 18 | | | 19 | | | 71 | | | 70 |
Logistics | | | 11 | | | 10 | | | 36 | | | 32 |
Coke | | | 4 | | | 3 | | | 16 | | | 13 |
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| | | $ | 113 | | $ | 106 | | $ | 429 | | $ | 409 |
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| | | | | | | | | | | | | | | |
| | | For the Three Months Ended
December 31
| | For the Twelve Months Ended
December 31
| |
| | | 2005
| | | 2004
| | 2005
| | | 2004
| |
CAPITAL EXPENDITURES (Millions of Dollars) | | | | | | | | | | | | | | | |
Refining and Supply | | $ | 177 | | | $ | 160 | | $ | 687 | | | $ | 463 | * |
Retail Marketing | | | 45 | | | | 39 | | | 117 | | | | 103 | ** |
Chemicals | | | 19 | | | | 27 | | | 55 | | | | 56 | * |
Logistics | | | 43 | *** | | | 31 | | | 79 | ***# | | | 75 | * |
Coke | | | 4 | | | | 47 | | | 32 | | | | 135 | |
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| | | $ | 288 | | | $ | 304 | | $ | 970 | | | $ | 832 | |
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| * | Excludes $250 million acquisition from El Paso Corporation 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 $5 million acquisition from Chevron of an ownership interest in the Mesa Pipeline. |
| # | Excludes $100 million acquisition from ExxonMobil of a crude oil pipeline system and related storage facilities located in Texas. |
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SUNOCO 4Q05 EARNINGS, PAGE 14
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(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 | ) |
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| | | | 89 | | | | 234 | | | | 128 | | | | 178 | | | | 629 | |
Special items | | | — | | | | — | | | | (24 | ) | | | — | | | | (24 | ) |
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Consolidated net income | | $ | 89 | | | $ | 234 | | | $ | 104 | | | $ | 178 | | | $ | 605 | |
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Earnings (loss) per share of common stock (diluted): | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Income before special items | | $ | .58 | | | $ | 1.53 | | | $ | .85 | | | $ | 1.24 | | | $ | 4.20 | |
Special items | | | — | | | | — | | | | (.16 | ) | | | — | | | | (.16 | ) |
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Net income | | $ | .58 | | | $ | 1.53 | | | $ | .69 | | | $ | 1.24 | | | $ | 4.04 | |
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SUNOCO 4Q05 EARNINGS, PAGE 15
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | 2005
| |
| | | 1st
| | | 2nd
| | | 3rd
| | | 4th
| | | Total
| |
Refining and Supply | | $ | 108 | | | $ | 212 | | | $ | 341 | | | $ | 286 | | | $ | 947 | |
Retail Marketing | | | (8 | ) | | | 7 | | | | 6 | | | | 25 | | | | 30 | |
Chemicals | | | 33 | | | | 30 | | | | 23 | | | | 8 | | | | 94 | |
Logistics | | | 3 | | | | 9 | | | | 7 | | | | 3 | | | | 22 | |
Coke | | | 10 | | | | 13 | | | | 15 | | | | 10 | | | | 48 | |
Corporate and Other: | | | | | | | | | | | | | | | | | | | | |
Corporate expenses | | | (16 | ) | | | (16 | ) | | | (25 | ) | | | (27 | ) | | | (84 | ) |
Net financing expenses and other | | | (14 | ) | | | (13 | ) | | | (10 | ) | | | (8 | ) | | | (45 | ) |
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| | | | 116 | | | | 242 | | | | 357 | | | | 297 | | | | 1,012 | |
Special items | | | — | | | | — | | | | (28 | ) | | | (10 | ) | | | (38 | ) |
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Consolidated net income | | $ | 116 | | | $ | 242 | | | $ | 329 | | | $ | 287 | | | $ | 974 | |
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Earnings (loss) per share of common stock (diluted): | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Income before special items | | $ | .83 | | | $ | 1.75 | | | $ | 2.60 | | | $ | 2.19 | | | $ | 7.36 | |
Special items | | | — | | | | — | | | | (.21 | ) | | | (.07 | ) | | | (.28 | ) |
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Net income | | $ | .83 | | | $ | 1.75 | | | $ | 2.39 | | | $ | 2.12 | | | $ | 7.08 | |
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SUNOCO 4Q05 EARNINGS, PAGE 16
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 | |
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| | | | 5,245 | | | | 6,276 | | | | 6,558 | | | | 7,429 | | | | 25,508 | |
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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 | ) |
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| | | | 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 | |
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Net income | | $ | 89 | | | $ | 234 | | | $ | 104 | | | $ | 178 | | | $ | 605 | |
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SUNOCO 4Q05 EARNINGS, PAGE 17
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | 2005
| |
| | | 1st
| | | 2nd
| | | 3rd
| | | 4th
| | | Total
| |
REVENUES | | | | | | | | | | | | | | | | | | | | |
Sales and other operating revenue (including consumer excise taxes) | | $ | 7,191 | | | $ | 7,970 | | | $ | 9,345 | | | $ | 9,248 | | | $ | 33,754 | |
Interest income | | | 3 | | | | 3 | | | | 6 | | | | 11 | | | | 23 | |
Other income (loss), net | | | 15 | | | | 17 | | | | (56 | ) | | | 11 | | | | (13 | ) |
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| | | | 7,209 | | | | 7,990 | | | | 9,295 | | | | 9,270 | | | | 33,764 | |
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COSTS AND EXPENSES | | | | | | | | | | | | | | | | | | | | |
Cost of products sold and operating expenses | | | 6,059 | | | | 6,581 | | | | 7,702 | | | | 7,686 | | | | 28,028 | |
Consumer excise taxes | | | 585 | | | | 640 | | | | 675 | | | | 688 | | | | 2,588 | |
Selling, general and administrative expenses | | | 209 | | | | 225 | | | | 242 | | | | 270 | | | | 946 | |
Depreciation, depletion and amortization | | | 105 | | | | 102 | | | | 109 | | | | 113 | | | | 429 | |
Payroll, property and other taxes | | | 36 | | | | 28 | | | | 33 | | | | 27 | | | | 124 | |
Interest cost and debt expense | | | 23 | | | | 23 | | | | 25 | | | | 23 | | | | 94 | |
Interest capitalized | | | (6 | ) | | | (6 | ) | | | (8 | ) | | | (5 | ) | | | (25 | ) |
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| | | | 7,011 | | | | 7,593 | | | | 8,778 | | | | 8,802 | | | | 32,184 | |
Income before income tax expense | | | 198 | | | | 397 | | | | 517 | | | | 468 | | | | 1,580 | |
Income tax expense | | | 82 | | | | 155 | | | | 188 | | | | 181 | | | | 606 | |
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Net income | | $ | 116 | | | $ | 242 | | | $ | 329 | | | $ | 287 | | | $ | 974 | |
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SUNOCO 4Q05 EARNINGS, PAGE 18
Sunoco, Inc.
Consolidated Balance Sheets
(Millions of Dollars)
| | | | | | |
| | | At December 31 2005
| | At December 31 2004
|
| | | (Unaudited) | | |
ASSETS | | | | | | |
Current Assets | | | | | | |
Cash and cash equivalents | | $ | 919 | | $ | 405 |
Accounts and notes receivable, net | | | 1,754 | | | 1,271 |
Inventories | | | 799 | | | 765 |
Deferred income taxes | | | 215 | | | 110 |
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Total Current Assets | | | 3,687 | | | 2,551 |
Investments and long-term receivables | | | 143 | | | 115 |
Properties, plants and equipment, net | | | 5,658 | | | 4,966 |
Prepaid retirement costs | | | 12 | | | 11 |
Deferred charges and other assets | | | 431 | | | 436 |
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Total Assets | | $ | 9,931 | | $ | 8,079 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
Current Liabilities | | | | | | |
Accounts payable and accrued liabilities | | $ | 3,695 | | $ | 2,570 |
Short-term borrowings and current portion of long-term debt | | | 177 | | | 103 |
Taxes payable | | | 338 | | | 349 |
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Total Current Liabilities | | | 4,210 | | | 3,022 |
Long-term debt | | | 1,234 | | | 1,379 |
Retirement benefit liabilities | | | 563 | | | 539 |
Deferred income taxes | | | 817 | | | 755 |
Other deferred credits and liabilities | | | 409 | | | 247 |
Minority interests | | | 647 | | | 530 |
Shareholders’ equity | | | 2,051 | | | 1,607 |
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Total Liabilities and Shareholders’ Equity | | $ | 9,931 | | $ | 8,079 |
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SUNOCO 4Q05 EARNINGS, PAGE 19
Sunoco, Inc.
Consolidated Statements of Cash Flows
(Millions of Dollars)
| | | | | | | | |
| | | For the Twelve Months
Ended December 31
| |
| | | 2005
| | | 2004
| |
| | | (Unaudited) | | | | |
INCREASES (DECREASES) IN CASH AND CASH EQUIVALENTS | | | | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
Net income | | $ | 974 | | | $ | 605 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Loss on phenol supply contract dispute | | | 95 | | | | — | |
Provision for asset write-downs and other matters | | | — | | | | 13 | |
Loss on early extinguishment of debt | | | — | | | | 53 | |
Depreciation, depletion and amortization | | | 429 | | | | 409 | |
Deferred income tax expense | | | 3 | | | | 123 | |
Proceeds from power contract restructuring | | | 48 | | | | — | |
Payments in excess of expense for retirement plans | | | (39 | ) | | | (28 | ) |
Changes in working capital pertaining to operating activities, net of effect of acquisitions | | | 494 | | | | 559 | |
Other | | | 65 | | | | 13 | |
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Net cash provided by operating activities | | | 2,069 | | | | 1,747 | |
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CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
Capital expenditures | | | (970 | ) | | | (832 | ) |
Acquisitions | | | (105 | ) | | | (431 | ) |
Proceeds from divestments | | | 55 | | | | 200 | |
Other | | | (15 | ) | | | 3 | |
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Net cash used in investing activities | | | (1,035 | ) | | | (1,060 | ) |
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CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Net proceeds from (repayments of) short-term borrowings | | | (100 | ) | | | 100 | |
Net proceeds from issuance of long-term debt | | | 99 | | | | 416 | |
Repayments of long-term debt | | | (70 | ) | | | (642 | ) |
Premiums paid on early extinguishment of debt | | | — | | | | (50 | ) |
Net proceeds from issuance of Sunoco Logistics Partners L.P. limited partnership units | | | 160 | | | | 129 | |
Cash distributions to investors in cokemaking operations | | | (38 | ) | | | (36 | ) |
Cash distributions to investors in Sunoco Logistics Partners L.P. | | | (28 | ) | | | (20 | ) |
Cash dividend payments | | | (103 | ) | | | (86 | ) |
Purchases of common stock for treasury | | | (435 | ) | | | (568 | ) |
Proceeds from issuance of common stock under management incentive and employee option plans | | | 14 | | | | 52 | |
Other | | | (19 | ) | | | (8 | ) |
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Net cash used in financing activities | | | (520 | ) | | | (713 | ) |
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Net increase (decrease) in cash and cash equivalents | | | 514 | | | | (26 | ) |
Cash and cash equivalents at beginning of period | | | 405 | | | | 431 | |
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Cash and cash equivalents at end of period | | $ | 919 | | | $ | 405 | |
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-END OF SUNOCO 4Q05 EARNINGS REPORT-
