1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
--------------- ---------------
Commission file number 1-6841
SUN COMPANY, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1743282
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
Ten Penn Center
1801 Market Street, Philadelphia, PA 19103-1699
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 977-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of each
Title of each class exchange on which registered
------------------- ----------------------------
Common Stock, $1 par value New York Stock Exchange
Philadelphia Stock Exchange
Convertible Subordinated New York Stock Exchange
Debentures 6 3/4%,
Due June 15, 2012
Sinking Fund Debentures 9 3/8%, New York Stock Exchange
Due June 1, 2016
Notes 7.95%, New York Stock Exchange
Due December 15, 2001
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Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendments of this Form 10-K. /X/
At February 28, 1995, the aggregate market value of voting stock held
by nonaffiliates was $2,605 million.
At February 28, 1995, there were 106,941,633 shares of Common Stock,
$1 par value, outstanding.
Selected portions of the Sun Company, Inc. Annual Report to
Shareholders for the Fiscal Year Ended December 31, 1994 are incorporated
by reference in Parts I, II and IV of this Form 10-K.
Selected portions of the Sun Company, Inc. definitive Proxy Statement,
which will be filed with the Securities and Exchange Commission within 120
days after December 31, 1994, are incorporated by reference in Part III of
this Form 10-K.
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PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
GENERAL
Sun Company, Inc.* was incorporated in Pennsylvania in 1971 and it or
its predecessors have been active in the petroleum industry since 1886.
Its principal executive offices are located at 1801 Market Street,
Philadelphia, PA 19103-1699. Its telephone number is (215) 977-3000.
The Company, through its subsidiaries, is principally a petroleum
refiner and marketer with interests in oil and gas exploration and
production and oil sands mining.
Sun's petroleum refining and marketing operations include the
manufacturing and marketing of a full range of petroleum products,
including fuels, lubricants and petrochemicals, and the transportation of
crude oil and refined products. These operations are conducted in the
United States and Canada. Sun's oil and gas exploration and production
operations consist of exploration for and development, production and
marketing of crude oil and condensate, natural gas and natural gas liquids.
Exploration activities are conducted in Canada while development,
production and marketing activities are conducted in Canada and the United
Kingdom sector of the North Sea. Oil sands mining operations, which
consist of production of synthetic crude oil by mining oil sands and
upgrading the bitumen extracted from the oil sands, are conducted in
western Canada.
Sun also has interests in coal, real estate and leasing operations in
the United States. Each of these businesses is subject to a plan of
disposition which management is actively pursuing.
During October 1992, the Company announced a new strategic plan for
Sun (the "Strategic Plan"). The Strategic Plan focuses on investing in
Sun's core domestic refining and marketing businesses. Sun will also
invest opportunistically in international oil and gas production activities
in the U.K. sector of the North Sea, if returns on such investments are
expected to exceed the Company's cost of capital for such projects. In
addition, Sun will continue to exit non-productive and non-strategic
businesses and improve productivity.
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*As used in this report, the term "Company" means Sun Company, Inc., and
the term "Sun" means Sun Company, Inc. and its subsidiaries. The use of
these terms is for convenience of discussion and is not intended to be a
precise description of corporate relationships. References in this Annual
Report on Form 10-K to material in the Company's 1994 Annual Report to
Shareholders and in the Company's definitive Proxy Statement, which will
be filed with the Securities and Exchange Commission within 120 days after
December 31, 1994, mean that such material is incorporated herein by
reference; other material in those documents is not deemed to be filed as
part of this Annual Report on Form 10-K.
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For information regarding certain initiatives implemented as part of
Sun's Strategic Plan, see Management's Discussion and Analysis of Financial
Condition and Results of Operations - Strategic Direction, and Note 2 to
the Consolidated Financial Statements in the Company's 1994 Annual Report
to Shareholders. Additional business segment and geographic information is
presented in Note 19 to the Consolidated Financial Statements in the
Company's 1994 Annual Report to Shareholders.
DOMESTIC REFINING AND MARKETING
The Company's domestic refining and marketing operations consist of
the manufacturing and marketing of fuels, lubricants and chemicals and the
transportation of crude oil and refined products. These operations are
managed by Sun Company, Inc. (R&M), a wholly owned subsidiary of the
Company, and are classified in the following business lines: Fuels,
Lubricants, Chemicals and Logistics.
Sun owns and operates five domestic refineries which had a total crude
unit processing capacity of 777 thousand barrels daily as of December 31,
1994. On August, 4, 1994, Sun completed the acquisition of a 177,000
barrel-per-day refinery in Philadelphia ("Girard Point") from Chevron
U.S.A. Inc. ("Chevron"). The Girard Point facility and Sun's adjacent
refining facility at Point Breeze comprise the Philadelphia Refinery, which
is operated as a single 307,000 barrel-per-day refinery complex under one
management team.
Sun's refineries in Marcus Hook, PA, Philadelphia, PA and Toledo, OH
produce fuels and chemicals while its refineries in Tulsa, OK and Yabucoa,
Puerto Rico emphasize lubricants production with fuels as a by-product.
The following table sets forth certain information concerning Sun's
domestic refining operations during 1994:
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Philadelphia, PA
---------------- Total Total Total
Marcus Girard Point Toledo, Fuels Tulsa, Puerto Lubes Domestic
Hook, PA Point Breeze OH Refineries OK Rico Refineries Refineries
-------- ------ ------ ----------------- ------ ------ ---------- ----------
Crude Unit
Capacity (MB/D) 175.0 177.0 130.0 125.0 607.0 85.0 85.0 170.0 777.0
===== ===== ===== ===== ===== ==== ==== ===== =====
Input to Crude
Units (MB/D) 141.0 78.9* 105.8 112.7 438.4 89.7 62.5 152.2 590.6
===== ===== ===== ===== ===== ==== ==== ===== =====
Products Manufactured:
(Percent)
Gasoline 50 40 46 62 50 17 19 18 43
Middle Distillates 20 29 12 10 17 16 17 17 17
Jet Fuel 8 -- 7 4 6 13 16 14 7
Residual Fuel 7 18 2 3 6 1 19 8 7
Petrochemicals 5 1 3 8 5 -- -- -- 4
Lubricants -- -- -- -- -- 11 18 14 3
Asphalt -- -- 18 3 5 -- -- -- 4
Propane 3 1 2 2 2 1 -- 1 2
Other 7 11 10 8 9 41** 11 28 13
--- --- --- --- --- --- --- --- ---
100 100 100 100 100 100 100 100 100
=== === === === === === === === ===
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*Reflects total input from August 4, 1994 through December 31, 1994 divided by 365 days. During this
150-day period, input to crude units at this facility actually totalled 191.9 thousand barrels daily.
**Includes approximately 30 thousand barrels daily of "lubes-extracted" intermediate streams which are
transported to the Toledo refinery for further processing.
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A critical element for Sun is its ability to obtain the proper mix and
quality of crude oil, feedstocks and refined products using both North
American and worldwide markets. Sun's crude oil requirements during 1994
were met largely through purchases from various foreign national oil
companies and traders. Despite periodic market disturbances, there is an
ample supply of crude oil available to meet worldwide refining needs, and
Sun has been able to readily supply its refineries with the proper mix and
quality of crude oils without disruption. Sun's domestic refineries process
approximately 85 percent light sweet crude oil and, in 1994, 81 percent of
Sun's domestic crude oil requirements were obtained from foreign sources.
The Company believes that ample supplies of light sweet crude oil will
continue to be available and that the price differential between sweet and
sour crude oils will remain relatively low. The Marcus Hook, Philadelphia
and Puerto Rico refineries process foreign crude oils, while Sun's Tulsa
refinery processes domestic crude oil. The Toledo refinery processes
domestic, Canadian and foreign crude oils. Supplies of feedstocks and
refined products also have been sufficient to meet Sun's refining and
marketing needs. Sun's refined product prices are generally determined by
both worldwide and regional supply and demand for such products, as well as
by crude oil prices.
Feedstock supply and refined product transportation systems include:
four ocean-going tankers, a fleet of coastal distribution tankers, tugs and
barges, and a crude oil trucking operation. Sun supplements its own fleet
with charters that accounted for the majority of its marine transportation
requirements during 1994. Sun has implemented an extensive vessel
inspection review and evaluation program to assure appropriate quality of
the vessels chartered into Sun service. The crude oil trucking operation
supports Sun's crude oil acquisitions and pipeline operations throughout
the southwestern United States, primarily in Oklahoma and Texas.
Sun's supply and distribution operations have emphasized prevention of
oil spills. Sun utilizes the services of various organizations and local
cooperatives in order to enable Sun to respond to potential oil spills in
specific geographic locations.
FUELS
Sun's Fuels business consists primarily of the manufacture and sale of
petroleum products, including gasoline, distillates, jet fuel, residual
fuel oil and asphalt to retail, wholesale, commercial and industrial
customers and to the United States government for defense fuel supply.
This business currently includes the retail sale of fuels (gasoline and
middle distillates) under Sun's SUNOCO(R) and ATLANTIC(R) brands (see
"Branded Fuels Marketing" below).
Wholesale Fuels
Total third-party fuels products sold at wholesale from Sun's Fuels
Refineries in 1994 were 301.1 thousand barrels daily compared to 217.0
thousand barrels daily in 1993. The 39 percent increase in 1994 was due to
the August 4, 1994 Girard Point acquisition, as the production from this
facility is principally sold to wholesale and industrial customers. For a
discussion of wholesale fuels marketing at Sun's Tulsa and Puerto Rico
lubricants refineries, see "Lubricants" below.
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The refining operations of Sun's Fuels business are conducted at its
Marcus Hook, Philadelphia and Toledo refineries ("Fuels Refineries"). The
Company continues to operate its Tulsa, OK and Yabucoa, Puerto Rico
refineries to emphasize lubricants production. Accordingly, the related
wholesale fuels operations of these two lubricants refineries are included
in the operating results of the Lubricants business (see "Lubricants"
below).
Sun's Marcus Hook and Toledo refineries and the Girard Point facility
in the Philadelphia refinery complex refine predominantly light, low-sulfur
crude oils. The Point Breeze facility in the Philadelphia refinery complex
is able to process heavier, higher sulfur crude oils and is a major
producer of asphalt in Sun's northeastern United States marketing area.
Sun's Philadelphia and Marcus Hook refineries are interconnected by
barge, truck, rail and pipeline. The pipeline interconnection between the
two facilities was completed during the latter part of 1994 and is expected
to be operational in early 1995. Feedstocks currently being transferred
between these refineries include reformate, naphtha, light cycle oil and
butanes. See "Logistics" below for further discussion of the inter-
refinery pipeline project.
Environmental laws require Sun to make significant expenditures at its
refineries, of both a capital and expense nature. For example, a $110
million capital project to significantly upgrade the sewer system and close
an unlined impoundment at Sun's Marcus Hook refinery was substantially
completed in 1994.
Additionally, significant alterations in the composition of gasoline
sold in Sun's northeastern U.S. branded marketing area are required under
the Clean Air Act of 1990, as amended (the "Clean Air Act"), to reduce the
maximum allowable benzene content, reduce summertime Reid Vapor Pressure
("RVP") and increase the minimum oxygenate content. These requirements,
which continue to be phased in, significantly impact operations at Sun's
Fuels Refineries, and to a lesser extent at Sun's Tulsa and Puerto Rico
refineries which generate fuels and intermediate feedstocks as by-products
of their lubricants production. While the Clean Air Act covers all motor
fuels, the major impact of this legislation has been in the production of
motor gasolines which must meet strict reformulated fuels guidelines.
In response to the regulatory environment, the Company has undertaken
various initiatives to meet these requirements:
. Sun completed a project to expand its benzene extraction capacity by 60
million gallons per year at its Marcus Hook refinery (see "Chemicals"
below);
. Sun enhanced its East Coast alkylation capacity, a key refining process
in the production of reformulated fuels, through the 1994 acquisition of
the Girard Point facility; and
. As a result of the reconfiguration of Sun's Tulsa refinery in 1992, the
capital investment needed to comply with the Clean Air Act has been
significantly reduced (see "Lubricants" below).
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In addition, Sun's Toledo, Philadelphia and Yabucoa, Puerto Rico
refineries have the ability, without additional capital investment, to
produce low-sulfur diesel that meets the requirements, imposed in 1993, for
reduction of sulfur in on-road diesel. While there is considerable
uncertainty concerning the impact on Sun's future profitability of the
implementation of the amendments to the Clean Air Act, management believes
that the Company is well positioned to meet the new air toxics and
reformulated fuels requirements under present regulations as they continue
to be phased in over the next few years.
Sun also has an alternative fuels research and testing program
focusing on methanol/gasoline mixtures, liquefied petroleum gas and
compressed natural gas.
Branded Marketing
Sun's U.S. branded fuels marketing operations consist of the sale of
gasoline and middle distillates. Sun markets a full slate of retail
gasoline products, including high-octane premium gasolines represented by
Sunoco's ULTRA(R) 94 and Atlantic's OPTIMA(R) 93 grades, as well as a
choice of several lower octane gasolines. Domestic branded fuels sales
averaged 235.4 thousand barrels daily in 1994 compared to 245.0 thousand
barrels daily in 1993. The four percent decline was caused primarily by
the temporary closure of service stations during the Branded for Success
program (see below), the elimination of some marginal distributor accounts
and the completion in 1993 of a withdrawal from certain areas supplied by
the Tulsa refinery. Partially offsetting the adverse impact on volumes of
these factors was the addition of 16 high-volume service stations along the
Ohio turnpike during 1994. Sun's branded fuels marketing business also
includes the ownership and operation of the SUNOCO FOOD MARKET(R) and
APLUS(R) convenience stores.
In 1993, Sun announced a major program ("Branded for Success") to
upgrade and modernize its retail service station network and convert its
ATLANTIC(R) gasoline outlets to SUNOCO(R) and convert its SUNOCO FOOD
MARKET(R) convenience stores to APLUS(R) throughout the Sun marketing area.
Some ATLANTIC(R) locations will also be converted to ULTRA SERVICE
CENTER(SM) stations. This strategy focuses Sun's market presence and
capitalizes on the individual strengths of the SUNOCO(R), APLUS(R) and
ULTRA SERVICE CENTER(SM) operations. The conversion program, which will
impact approximately 465 service stations and 240 convenience stores,
commenced in June 1993 and is expected to be completed in 1996. At year-
end 1994, 231 ATLANTIC(R) stations had been converted to SUNOCO(R), while
116 SUNOCO FOOD MARKET(R) stores had been converted to APLUS(R).
Sun sells fuels (principally gasoline) through 4,115 SUNOCO(R) and
ATLANTIC(R) retail gasoline outlets. All but 415 of these stations are
independently operated. The SUNOCO(R) outlets are located largely within a
17-state area in the Northeast and northern Midwest, with the greatest
concentration in Connecticut, New Jersey, New York, Massachusetts,
Pennsylvania, Rhode Island, Ohio and Michigan. The ATLANTIC(R) outlets are
located principally in New York and Pennsylvania. In 1994, Sun secured a
5-year lease for 16 high-volume gas stations on the Ohio turnpike. Sun is
also the sole service station operator on all 13 plazas on the New Jersey
turnpike, and supplies 16 outlets on the New York thruway, and all 22
outlets on the Pennsylvania turnpike.
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Sun's convenience stores are designed to support high-volume sales of
gasoline and provide a broad range of other goods and services. The number
of convenience stores at year-end 1994 totalled 610. In addition, the
number of Sunoco ULTRA SERVICE CENTER(SM) stations, which provide total
guaranteed car service, now totals 355.
In 1994, excluding environmental capital outlays, Sun invested
approximately $120 million in support of its branded outlets and
distribution systems as part of ongoing efforts to upgrade its facilities.
During 1994, Sun installed CardMatic(SM), its credit card activated
gasoline dispensing system, at approximately 500 high-volume service
stations, bringing the total number of outlets offering this system to 650.
In connection with the brand conversion program, Sun is accelerating the
timing of certain environmental capital expenditures, such as underground
storage tank replacements and tank top upgrades so as to minimize station
downtime.
Sun also owns and operates 34 terminals located in the Northeast and
Midwest portions of the United States that primarily support its branded
marketing system.
LUBRICANTS
Sun's Lubricants business is comprised of the manufacturing and
marketing of paraffinic lubricants and fuels by-products. Lubricants are
manufactured at the Tulsa and Puerto Rico refineries and marketed under the
SUNOCO(R) brand label, as well as formulated and packaged for sale by other
branded marketers under their labels.
Sun produces and markets a complete line of automotive and industrial
lubricants, waxes and aromatic extracts. These lubricants are marketed
directly to end-users and, through distributors, to a wide variety of
domestic and foreign customers. Sun has lube service centers located in
the Marcus Hook and Tulsa refineries. These centers, supplied with base
oils from the Puerto Rico and Tulsa refineries, blend and package
lubricants for sale by Sun and for sale by other branded marketers under
their labels.
Sun-manufactured base oils are also sold to domestic or international
third parties who manufacture their own finished automotive and industrial
lubricants. In addition, Sun sells a line of specialty lube products such
as horticultural and agricultural oils, aromatic and paraffinic rubber
oils, paper defoamers, asphalt recycling extracts, ink oils, textile oils
and finished waxes. Sun's horticultural spray oil, SUNSPRAY(R) ULTRA-
FINE(R) Year-Round Pesticide Oil was introduced to the retail market in the
spring of 1994 and currently is being distributed nationwide. Also in
1994, Sun introduced its 260 line of automotive oils, which is sold under
the SUNOCO(R) brand name and aimed at the performance-minded customer
market, and reformulated its heavy duty low-sulfur diesel engine oil,
SUNOCO(R) Super C.
Sales of lubricant products totalled 22.3 thousand barrels daily in
1994 versus 19.5 thousand barrels daily in 1993. Total fuels by-products
sold to third parties from the Tulsa and Puerto Rico refineries were 91.2
thousand barrels per day in 1994 compared to 85.3 thousand barrels daily in
1993.
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Sun's Tulsa refinery runs a light, low-sulfur crude oil slate while
the Puerto Rico refinery is able to process heavier, higher sulfur crude
oils. As of December 31, 1994, these two lubricants refineries had a
paraffinic lubricant manufacturing capacity of 16.3 thousand barrels daily
and a total crude unit processing capacity of 170 thousand barrels daily.
In late 1992, Sun reconfigured its Tulsa refinery to place a greater
emphasis on the production of lubricants. As a result, fuels production
capacity was reduced from 77 thousand barrels daily to 45 thousand barrels
daily at this facility. Lubricants production at the Tulsa refinery now
also results in the production of intermediate streams ("lubes extracted"
feedstocks) which totalled 30.5 thousand barrels daily in 1994. These
volumes have been largely transported to the Toledo refinery for further
processing. In 1993, Sun also completed the modification of its Puerto
Rico refinery to provide greater feedstock processing flexibility. This
modification has allowed the refinery to optimize feedstock selection
between crude oil and intermediate feedstocks depending upon their relative
profitability. The use of intermediate feedstocks can result in the
production of reduced levels of high-sulfur residual fuels and other
wholesale fuels products when warranted by market conditions.
During 1994, the Puerto Rico and Tulsa refineries, as well as the lube
service centers located in the Marcus Hook and Tulsa refineries, received
ISO 9002 certification indicating they have passed the International
Standards Organization's standards for quality management and oversight.
Sun is the second United States manufacturer of lubricants to achieve this
certification.
CHEMICALS
Sun's Chemicals business consists of the manufacturing, distribution
and marketing of base and intermediate commodity petrochemicals. Such
chemicals include primarily light olefins (ethylene and propylene),
aromatics (benzene, toluene and xylenes), ethylene oxide, cumene and
cyclohexane. The Chemicals business also produces MTBE which is utilized
by the Wholesale Fuels business in manufacturing reformulated fuels.
Petrochemicals are manufactured at Sun's Marcus Hook, Philadelphia and
Toledo refineries and at an ethylene and ethylene oxide facility at
Brandenburg, Kentucky and an MTBE facility in Mont Belvieu, Texas.
Sun's petrochemical products are distributed and sold on a worldwide
basis. Sales of petrochemicals to third parties totalled 27.5 thousand
barrels daily in 1994 versus 28.8 thousand barrels daily in 1993. The
majority of these sales are to manufacturers of intermediate products that
are used in the production of plastics, detergents, specialty chemicals and
fibers. Significant volumes are also marketed as solvents. During 1994,
approximately 39 percent of Sun's third-party petrochemical sales volumes
were olefin-related, another 44 percent were aromatics-related and the
balance was composed of other products such as carbon dioxide and sulfur.
Overall, approximately 15 percent of Sun's petrochemical sales were made to
customers outside the United States during 1994.
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The ongoing development of Sun's Chemicals business continued during
1994 as follows:
. A project (the "Northeast Aromatics and Cyclohexane Project") was
completed, which included the expansion of benzene extraction capacity
by 60 million gallons per year and construction of a 34-million-gallon-
per-year cyclohexane plant at the Marcus Hook refinery. This project
will enable Sun to enhance its existing benzene extraction capability to
help comply with mandated 1995 reformulated fuel requirements by
permitting Sun to extract benzene from gasoline streams from its
Philadelphia refinery and from third parties. Benzene will be sold or
further upgraded into cyclohexane, the majority of which will be sold
pursuant to a contract with a major chemical company;
. The addition of the Girard Point facility to Sun's East Coast supply and
logistics network complements and enhances Sun's expanded northeast U.S.
chemicals presence. This acquisition included a cumene production unit
and benzene extraction facilities. Benzene is now extracted at Sun's
Marcus Hook and Girard Point facilities and combined with refinery-grade
propylene to produce cumene at Girard Point. The cumene is then sold
primarily to a third-party customer;
. The construction of the MTBE production facility owned and operated by
Belvieu Environmental Fuels ("BEF"), a joint venture in which Sun is a
one-third partner, is essentially completed. Pursuant to a 10-year off-
take agreement, Sun will purchase all of the MTBE production from the
BEF facility. This plant has a designed capacity of 12,600 barrels
daily. Production commenced in the second half of 1994, and the plant
is currently in a sustained start-up test phase. Production in 1994
during the start-up test phase averaged 7,800 barrels daily. In order
to secure permanent financing for this project, the plant must produce
at its designed capacity for a continuous 45-day period prior to May 31,
1995. If this or certain other conditions are not met, Sun may be
required to pay its $59 million share of the construction loan for this
project. For additional information concerning Sun's participation in
this joint venture, see Note 14 to the Consolidated Financial Statements
in the Company's 1994 Annual Report to Shareholders.
LOGISTICS
Sun's Logistics business consists of pipeline transportation of crude
oil and refined petroleum products to fifteen states in the northeastern
and midwestern U.S. and petroleum terminalling operations in Nederland,
Texas. These operations are conducted by Sun Pipe Line Company, Mid-
Continent Pipe Line Company, Sun Pipeline Services Co., Atlantic Pipeline
Corp., and Sun Oil Line Company of Michigan, all of which are wholly owned
subsidiaries of Sun, and Mid-Valley Pipeline Company, which is 55.3 percent
owned by Sun. In addition, Sun owns equity interests in the West Texas
Gulf Pipe Line Company (17.3%), Inland Corporation (10%) and Explorer
Pipeline Company (9.4%) systems.
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The pipelines are principally common carriers and, as such, are
regulated by the Federal Energy Regulatory Commission for interstate
movements and by local regulatory agencies for intrastate movements. The
tariff rates charged, while regulated by the governing agencies, are based
upon competition from other pipelines or alternate modes of transportation.
Sun's crude oil pipeline systems, located primarily in the Midwest,
transport crude oil gathered in Oklahoma, Texas and Louisiana (as well as
foreign crude oil from the Gulf Coast and Canada) to refiners or to local
trade points. The refined product pipeline systems, located primarily in
the Northeast, transport gasoline, jet fuel, diesel fuel, home heating oil
and other products to many customers including Sun's Fuels businesses,
integrated petroleum companies and independent marketers and distributors.
In conjunction with the Girard Point acquisition from Chevron, in
October 1994, Sun purchased a one-third undivided interest in the Harbor
pipeline, an 80-mile refined petroleum products pipeline operating from
Woodbury, New Jersey to Linden, New Jersey, and acquired the Woodbury
pipeline, a seven-mile pipeline that connects Sun's Girard Point facility
to the Harbor pipeline. The Harbor pipeline provides Philadelphia-area
refineries, including Sun's Girard Point facility, access to the New York
harbor markets.
In 1994, Sun completed the pipeline construction phase of its 19-mile
inter-refinery project which connects Sun's Marcus Hook refinery and Point
Breeze facility. This project is scheduled to start up in the first
quarter of 1995 with the completion of the pump stations. Once
operational, this pipeline will provide Sun synergies in making
reformulated gasoline by enabling gasoline component streams from the Point
Breeze facility to move via pipeline to the Marcus Hook refinery.
In December 1994, Sun also completed a pipeline expansion project near
Williamsport, Pennsylvania which replaced seven miles of existing eight-
inch pipe with new fourteen-inch pipe. This expansion enables Sun to
transport additional volumes of refined petroleum products to central
Pennsylvania and western New York.
At December 31, 1994, Sun had an equity interest in 5,577 miles of
crude oil pipelines and 4,552 miles of refined product pipelines in the
United States. In 1994, crude oil and refined product shipments in the
United States, including Sun's share of shipments in which it had an
ownership interest, totalled 48.4 and 28.3 billions of barrel miles,
respectively, as compared to 50.4 and 30.7 billions of barrel miles in
1993.
Sun's Nederland, TX terminal provides in excess of ten million barrels
of storage and provides terminalling capacity exceeding one million barrels
per day of throughput. Its Gulf Coast location provides local and
midwestern refiners access to foreign crude oil. The facility is also a
key link in the distribution system for United States government purchases
and sales of crude oil for the Strategic Petroleum Reserve storage
facilities in Texas and Louisiana.
Additional information concerning Sun's domestic refining and
marketing operations is set forth on pages 59 through 62 in the Company's
1994 Annual Report to Shareholders.
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INTERNATIONAL EXPLORATION AND PRODUCTION
Sun's exploration and production operations outside North America are
conducted through Sun Oil Britain Limited and its affiliates. In October
1992, Sun commenced a withdrawal from exploration activities outside of
Canada and focused its international production and near-term development
activities in the U.K. sector of the North Sea. This strategy has enabled
Sun to enhance its operating profits in the near term, and reduce
significantly its investment risk profile.
The Company's strategy is to opportunistically invest in producing
properties or near-term development projects in the U.K. sector of the
North Sea, if returns on such investments are expected to exceed the
Company's cost of capital for such projects. In the absence of such
acquisitions, income, reserves, and production from this business will
decline significantly by the end of the decade.
In support of this strategy, Sun has increased its oil producing
interests in the U.K. North Sea through the acquisition of additional
ownership interests in the Balmoral and Stirling fields in 1993, and the
acquisition of Lasmo's interest in Block 3/8a in the third quarter of 1994.
The Block 3/8a acquisition provides Sun Oil Britain Limited with a 12.93
percent interest in the producing Ninian field and a 45 percent interest in
the adjacent Columba field development. Net liquids production from the
Ninian and Columba fields is expected to exceed over 10 thousand barrels
daily during 1995.
During 1994, Sun disposed of its remaining interests in the Espinal
Block in Colombia, South America, and Blocks 211/22a, 16/12a and the East
Leman gas field in the U.K. North Sea. In addition, Sun relinquished its
remaining exploration interests outside North America, except for those in
Algeria, which will be relinquished in 1995.
Sun's crude oil and natural gas production levels are not generally
affected by fluctuations in the prices received from these products. The
volumes produced are required to fulfill contractual agreements which
specify certain production levels independent of the prices received.
Sun sells its crude oil production in the worldwide crude oil market
where prices are affected by a wide variety of economic and political
factors. Sun's natural gas production is sold primarily to the British Gas
Corporation. These sales are seasonal in nature and are made pursuant to
long-term contracts which include annual price escalation clauses.
Sun is the operator and a 59-percent owner of a floating production
vessel ("FPV") which has been utilized in the successful development of the
Balmoral, Glamis and Stirling fields in the U.K. North Sea. Sun is one of
only a few companies experienced in the management and operation of this
state-of-the-art technology which can be used in producing small-to-medium
sized oil fields.
14
The following tables set forth certain information concerning Sun's
International Exploration and Production activities:
AVERAGE NET OIL AND GAS PRODUCTION
1994 1993 1992
---- ---- ----
Crude oil, condensate and natural gas
liquids (thousands of barrels daily)*.............. 29.0 28.0 42.7
==== ==== ====
Natural gas (millions of cubic feet daily)........... 46 56 46
== == ==
-----------
*Reflects impact of the April 1993 sale of producing properties in Dubai.
Production from these properties averaged 4.4 thousand barrels daily
during 1993 (based on a 365-day period) and 17.8 thousand barrels daily
during 1992.
PROVED RESERVES AT DECEMBER 31
1994 1993 1992
---- ---- ----
Crude oil, condensate and natural gas
liquids (millions of barrels)*..................... 38 31 77
== == ==
Natural gas (billions of cubic feet)................. 96 109 104
== === ===
-----------
*Reflects impact of April 1993 sale of producing properties in Dubai.
NET OIL AND GAS WELLS DRILLED
1994 1993 1992
---- ---- ----
Net Exploratory Wells:*
Oil................................................ -- 1 3
Gas................................................ -- -- --
Dry ............................................... -- 3 4
-- -- --
-- 4 7
== == ==
Net Development Wells:**
Oil................................................ 1 2 --
Gas................................................ -- -- 1
Dry................................................ -- -- --
-- -- --
1 2 1
== == ==
-----------
*The net exploratory wells drilled in 1993 essentially completed all
remaining exploration commitments related to properties subject to
disposition as part of the Company's plan adopted in 1992 to withdraw
from exploration activities outside North America.
**As of December 31, 1994, Sun was in the process of drilling or
participating in the drilling of 2 gross wells and 1 net well outside
North America.
15
PRODUCING OIL AND GAS WELLS
At December 31, 1994
--------------------
Gross Net
----- ---
Oil.................................................. 81 16
Gas.................................................. 54 6
--- --
135 22
=== ==
OIL AND GAS ACREAGE
Thousands of Acres at December 31
---------------------------------
1994 1993
------------- --------------
Gross Net Gross Net
----- --- ----- ---
Developed.............................. 277 65 359 99
=== == === ==
Undeveloped ........................... 1,843 505 13,627 9,849
===== === ====== =====
Additional information concerning Sun's international exploration and
production business is set forth on pages 63 through 66 in the Company's
1994 Annual Report to Shareholders.
CANADA (SUNCOR)
Suncor Inc. ("Suncor") is Sun's 55 percent owned, vertically
integrated Canadian petroleum subsidiary. Its operations consist of the
exploration, production and marketing of conventional crude oil and natural
gas, the production and marketing of synthetic crude oil from oil sands,
and petroleum refining and marketing.
EXPLORATION AND PRODUCTION
Suncor's conventional crude oil and natural gas exploration and
production operations are concentrated in western Canada, with increasing
emphasis on natural gas. During 1994, Suncor continued to increase its
crude oil and natural gas portfolio through exploration and development
activities, which added proved reserves of 139 billion cubic feet of
natural gas and 9 million barrels of crude oil, condensate and natural gas
liquids. These reserve additions contributed to a reserve replacement
ratio of nearly 300 percent for the year. Suncor's goal is to have an
annual reserve replacement ratio of 150 percent. Exploration activities
are focused in northeast British Columbia, northwest Alberta and central
Alberta, while major production and development programs are located in the
central Alberta areas of Grande Prairie, Glacier, Boundary Lake South,
Simonette and Medicine River and in Blueberry in British Columbia.
16
Suncor's crude oil production is used in its refining operations,
exchanged for other crude oil, or sold to Canadian and U.S. purchasers.
Sales are generally made under contracts which are terminable by relatively
short notice or on a spot basis. Natural gas production is marketed under
direct sales arrangements to customers in eastern Canada, the U.S. midwest,
the U.S. Pacific northwest and California, and is used in Suncor's oil
sands and petroleum refining operations.
To ensure ongoing direct sales access to U.S. markets, Suncor has
entered into long-term pipeline transportation contracts. Suncor has 53
million cubic feet per day of capacity on the Northern Border Pipeline to
the U.S. midwest. This contract extends to the year 2003. Suncor also has
firm capacity of 40 million cubic feet per day contracted on the Pacific
Gas Transmission Pipeline to the California border, extending to the year
2023.
The following tables set forth certain information concerning Sun's
Exploration and Production activities in Canada:
AVERAGE NET OIL AND GAS PRODUCTION
1994 1993 1992
---- ---- ----
Crude oil, condensate and natural gas
liquids (thousands of barrels daily)............... 10.8 10.1 10.1
==== ==== ====
Natural gas (millions of cubic feet daily)........... 119 116 116
=== === ===
PROVED RESERVES AT DECEMBER 31
1994 1993 1992
---- ---- ----
Crude oil, condensate and natural gas
liquids (millions of barrels)...................... 40 34 34
== == ==
Natural gas (billions of cubic feet)................. 593 492 475
=== === ===
17
NET OIL AND GAS WELLS DRILLED
1994 1993 1992
---- ---- ----
Net Exploratory Wells:*
Oil................................................ 1 2 --
Gas................................................ 8 8 6
Dry ............................................... 12 9 7
-- -- --
21 19 13
== == ==
Net Development Wells:**
Oil................................................ 30 18 15
Gas................................................ 13 10 2
Dry................................................ 9 7 3
-- -- --
52 35 20
== == ==
-----------
*As of December 31, 1994, Suncor was in the process of drilling or
participating in the drilling of 15 gross and 13 net wells in Canada.
PRODUCING OIL AND GAS WELLS
At December 31, 1994
--------------------
Gross* Net
----- ---
Oil................................................. 3,016 421
Gas................................................. 290 86
----- ---
3,306 507
===== ===
-----------
*Gross producing wells include 30 multiple completion wells (more than
one formation producing into the same well bore).
OIL AND GAS ACREAGE
Thousands of Acres at December 31
---------------------------------
1994 1993
------------- -------------
Gross Net Gross Net
----- --- ----- ---
Developed ............................. 649 345 660 350
=== === === ===
Undeveloped ........................... 1,728 853 1,715 809
===== === ===== ===
Additional information concerning Suncor's exploration and production
operations is set forth on pages 63 through 66 in the Company's 1994 Annual
Report to Shareholders.
18
OIL SANDS
Suncor produces synthetic crude oil by mining the Athabasca oil sands
and upgrading the bitumen extracted at its plant located near Fort
McMurray, Alberta. As part of strategic initiatives announced in 1992, the
bucketwheel excavator system has been replaced by a more flexible and
efficient truck and shovel mining method. This change in mining
technology, coupled with workforce reductions and increased production
volumes, resulted in a reduction in cash operating costs from approximately
$C19.50 per barrel in 1992 to $C14.00 per barrel in 1994.
Synthetic crude oil produced for shipment averaged 70.7 thousand
barrels daily in 1994, 60.5 thousand in 1993 and 58.5 thousand in 1992. A
major portion of Suncor's synthetic crude oil production is used in its
refining operations at Sarnia, Ontario, and during 1994, totalled 37
percent. The remainder is either sold pursuant to a long-term contract to
an existing customer, or sold to others under year-to-year contracts or on
a spot basis.
Upgrader modifications were completed during 1993 which increased
synthetic crude oil production capability from 60,000 barrels to 68,000
barrels daily. Suncor intends to expand further the oil sands production
capability to over 80,000 barrels per day by 1998 at an estimated cost of
$185 million. The major part of this project, which is subject to
regulatory and Suncor board of directors approval, is expected to occur in
1997, after a scheduled maintenance turnaround.
Suncor has made substantial investments in recent years to improve the
reliability and flexibility of the oil sands operations, and these
investments contributed to making 1994 the best year for production in the
plant's 27-year history. Suncor continues efforts to maintain consistently
high levels of production. However, equipment breakdowns and failures at
the oil sands operation from time to time cause partial or complete loss of
production due to the interdependence of the plant's component systems.
Severe climatic conditions such as extreme cold can also cause reduced
production. Under Sun's business interruption insurance coverage, Suncor
would bear at least the first $75 million of any loss arising from a future
insured incident at the oil sands operation.
Suncor's current oil sands operations are carried out on two leases
covering approximately six thousand acres. As of December 31, 1994, these
leases had remaining reserves of 205 million barrels of proven synthetic
crude oil, which are expected to be fully mined within approximately eight
years. Over the last three years, Suncor has acquired nine additional
leases, and in the fall of 1994 announced that feasibility studies will be
undertaken in 1995 to consider the opening of a new mine site on one of the
leases located across the Athabasca River from its existing mine site.
Geological and engineering assessments have confirmed the existence and
quality of reserves on this site and the feasibility studies will define
mine and facilities design, infrastructure requirements and cost estimates.
Subsequent to successful completion of the above assessments and studies,
approval from Suncor's board of directors and the Alberta government's
regulatory agencies would be required before work could commence.
19
Suncor's board of directors approved a capital investment of
approximately $145 million to equip its existing steam and electricity
generating facilities with limestone flue gas scrubbing technology to
reduce sulfur dioxide emissions. This project, which is expected to be
completed in 1996, will allow Suncor to comply with its air license
requirements.
Site reclamation costs at the oil sands plant are estimated based upon
the reclamation plan submitted to the Province of Alberta. This plan
includes tailings ponds reclamation and all surface reclamation and
remediation at the site. The major component of the plan relates to the
tailings ponds. The current plan includes moving the fine tailings and
water in the four active ponds to a fifth pond designed to reduce the
volume of solids and treat the water through biological means. Suncor is
conducting further testing on this "wet pond" approach and other
alternatives, including non-segregating tailings technology, to ensure that
the most cost-effective and environmentally acceptable reclamation plan is
followed. The viability and cost of other alternatives, which could be
more expensive, are being researched and evaluated on an ongoing basis.
Sun estimates the total cost for reclamation of the site will be
approximately $120 million, based on the current development and
reclamation plan which will expire in 1995. At December 31, 1994, $78
million was accrued for such reclamation.
Suncor is required to submit an update of its development and
reclamation plan with the Alberta government every five years, which can
result in changes to factors such as security requirements, the nature of
the plan itself and the timing of the work. Suncor's current operating
licenses, including its development and reclamation plan, expire on April
25, 1995. Suncor anticipates the necessary licenses will be renewed upon
expiry.
Additional information concerning Suncor's oil sands operations is set
forth on page 67 in the Company's 1994 Annual Report to Shareholders.
REFINING AND MARKETING
Suncor owns and operates one refinery which is located in Sarnia,
Ontario. As of December 31, 1994, this refinery had a crude unit
processing capacity of approximately 70,000 barrels daily and cracking
capacity of 40,200 barrels daily. An alkylation unit, capable of producing
5,500 barrels daily of alkylate, complements a petrochemical plant for
flexibility in gasoline, octane and chemical production.
Suncor's refining operation uses both synthetic and conventional crude
oil. In 1994, 68 percent of the crude oil processed at the Sarnia refinery
was synthetic crude oil compared to 69 percent in 1993. Of the synthetic
crude oil processed, 58 percent was from Suncor's oil sands plant
production in 1994 compared with 55 percent in 1993, with the balance
purchased from another producer under month-to-month contracts at market
prices. Conventional crude oil processed in Canadian refining operations
comes mainly from the production of Suncor and others in western Canada,
supplemented from time to time with crude oil from the United States which
is purchased or obtained in exchange for Canadian crude oil. Crude oil
from other countries can also be delivered via pipeline from the United
20
States Gulf Coast providing additional flexibility and security of supply.
Suncor generally acquires its conventional crude oil on the Canadian spot
market or under contracts terminable on short notice.
Suncor's self-sufficiency ratio (net production of crude oil,
condensate and synthetic crude oil related to net input to crude units) was
118 percent in 1994 compared to 105 percent in 1993.
Suncor markets an extensive line of fuels and a variety of commodity
petrochemicals. Gasoline, distillates, jet fuel, residual fuel oil,
propane and asphalt are generally marketed under the SUNOCO(R) brand to
retail, commercial and industrial customers primarily in Ontario and
Quebec. However, Suncor also supplies these products to independent
marketers. In addition, Suncor markets toluene, mixed xylenes and
orthoxylenes in Canada, the United States and Europe through a
petrochemicals marketing partnership with Sun's aromatics-based chemicals
business at the Toledo refinery. Suncor's refined product sales volumes
were 84.5 thousand barrels daily in 1994 compared to 81.9 thousand barrels
daily in 1993.
Canadian retail sales of gasoline, primarily under the SUNOCO(R)
brand, are made through 500 retail gasoline outlets, 252 of which are
operated by independent dealers. In 1993, Suncor announced a number of
strategic initiatives in its refining and marketing business designed to
rationalize and upgrade its service station portfolio and lower overhead
costs while maintaining retail volumes and market share. Pursuant to this
strategy, Suncor closed 106 low-volume retail locations during 1994.
Despite its smaller network, Suncor increased retail gasoline sales by
eight percent.
Suncor owns and operates petroleum transportation and terminalling
assets in support of its refining and marketing activities. Such assets
include storage facilities and bulk distribution plants in Ontario and
Quebec and a 55-percent interest in a refined product pipeline between
Sarnia and Toronto. Suncor's petroleum transportation and terminalling
assets are sufficient for its current and foreseeable needs.
Additional information concerning Suncor's refining and marketing
operations is set forth on pages 59 through 62 in the Company's 1994 Annual
Report to Shareholders.
COAL
Sun's coal mining and coke manufacturing operations are conducted by
Sun Coal Company and its affiliates ("Sun Coal"). As a result of Sun's
1993 decision to sell its coal business, Sun's coal mining and cokemaking
operations have been classified as operations held for sale in Sun's
consolidated financial statements. Sun completed the sale of its western
U.S. coal operations during 1993, and in 1994, sold certain of its eastern
U.S. coal assets. Sun is pursuing the sale of its remaining coal and
cokemaking operations.
21
Sun had 187 million tons of estimated coal reserves classified as
proven and probable at December 31, 1994, compared to 251 million tons at
December 31, 1993. Of the reserves at December 31, 1994, 62 percent were
metallurgical coal located in Virginia and 38 percent were bituminous steam
coal located in Kentucky. Sun's total coal production in 1994 was 6.6
million tons, compared to 12.9 million tons in 1993.
In 1994, 56 percent of Sun's metallurgical coal production was
converted into coke at Sun facilities, 31 percent was sold under contract
to a single customer and 13 percent was sold in spot transactions. Sun's
principal market for both metallurgical coal and coke is the domestic steel
industry. During 1994, 73 percent of Sun's coke sales were made under a
long-term contract to a single customer with the remainder sold in spot
transactions. When this long-term contract expires in March of 1995, it
will be replaced with one-year contracts with two other customers totalling
over 600 thousand tons. Approximately 63 percent of Sun's bituminous steam
coal sales was under long-term contracts, with the remainder sold in spot
transactions. Sun's bituminous coal and coke sales contracts generally
provide for the periodic adjustment of price to reflect the changing costs
of labor, equipment and services.
Sun Coal produces high quality coke at its cokemaking facilities,
using its Jewell/Thompson non-recovery cokemaking technology and related
patents. This technology is environmentally superior to the by-product
technology currently used by most coke producers.
Additional information concerning Sun's coal and cokemaking operations
is set forth on page 67 in the Company's 1994 Annual Report to
Shareholders.
LEASING
Sun's leasing and secured lending portfolio is managed through Helios
Capital Corporation and its subsidiaries (collectively "HCC"). Sun has
ceased making new investments in leases and secured loans, and since 1990,
has been liquidating the remaining HCC portfolio in an orderly manner
through scheduled cash recoveries of investments and through divestment
opportunities as they arise. Pursuant to this strategy, during 1994, HCC's
portfolio was reduced by $71 million. At December 31, 1994, HCC had
remaining investments in leases and secured loans totalling $40 million.
REAL ESTATE
Sun's real estate business is conducted through Radnor Corporation and
its subsidiaries (collectively "Radnor"). As of December 31, 1994, Radnor
had a diversified portfolio of real estate developed for investment (mainly
office buildings, shopping centers and hotels) or immediate sale (including
single-family homes, condominiums, residential land and business parks),
located in 11 states.
As a result of Sun's decision to sell its real estate business through
a program of controlled disposition, such operations have been classified
as operations held for sale in Sun's consolidated financial statements.
Since adoption of the disposition plan in October 1991, Radnor has divested
22
47 commercial properties and completed 23 housing and land developments and
reduced its total assets and debt by $694 and $648 million, respectively.
At December 31, 1994, Radnor's total assets and debt were $363 and $204
million, respectively. Divestment activities in 1994 included Radnor's
sale of three office projects located in Pennsylvania and two shopping
centers located in Florida.
The following table sets forth Radnor's real estate portfolio by
property type and percent of total portfolio book value as of December 31,
1994:
Percent of
Property Type Portfolio
------------- ----------
Real Estate Held for Investment:
Office Buildings................................ 22
Shopping Centers................................ 25
Hotels.......................................... 6
Other........................................... 7
Projects Developed for Immediate Sale............. 40
---
100
===
For additional information regarding Sun's real estate operations held
for sale, see Note 2 in the Consolidated Financial Statements in the
Company's 1994 Annual Report to Shareholders.
COMPETITION
Refining and marketing has generally become more competitive due to
low growth in product demand and the increase in gasoline supply and
manufacturing cost attributable to the roll-out of reformulated gasoline.
However, Sun believes that it is in a position to compete effectively, due
in part to the fact that the northeastern United States, Sun's principal
geographic area for branded fuels marketing, is a net gasoline importing
market, and manufacturers, like Sun, who are located here, are affected to
a lesser extent by the costs of transportation into this market. Sun also
believes that as a result of recent strategic initiatives, including the
enhancement of its alkylation capacity through the Girard Point acquisition
and the expansion of its benzene extraction capacity at the Marcus Hook
refinery, Sun is well positioned to meet the new reformulated fuels
requirements as they continue to be phased in over the next few years. In
addition, Sun believes that its competitive position is enhanced by its
considerable distribution flexibility resulting from the location of its
three Northeast refineries, which are well integrated with its proprietary
distribution system.
Oil and gas exploration and production and coal mining operations are
also highly competitive. Many energy companies, as well as medium to small
size independent concerns are bidders for desirable exploration acreage and
oil, gas and coal properties, as well as the equipment and labor required
to operate such properties. Sun has essentially completed its withdrawal
from oil and gas exploration activities outside of Canada and is pursuing
the sale of its remaining coal operations.
23
The availability of a ready market for Sun's refined products, as well
as its oil and gas and coal production, depends on numerous external
factors. Among other things, these factors include: the level of consumer
demand; the extent of industry production of oil and gas and coal, and
manufacture of refined products; the import levels of foreign refined
products; the cost and availability of alternative fuels; the cost and
proximity of refineries, pipelines and other transportation facilities that
support the retail gasoline marketing infrastructure; and regulations by
state, federal, local and foreign authorities including those imposed by or
resulting from compliance with applicable environmental laws.
RESEARCH AND DEVELOPMENT
In recent years, Sun's research and development activities have
focused on applied research, process and product development, and
engineering and technical services related to fuels, lubricants and
chemicals. Sun spent $8, $9 and $12 million on research and development
activities in 1994, 1993 and 1992, respectively. As of December 31, 1994,
approximately 150 scientists, engineers, technicians and support personnel
participated in these activities. Sun owns or has made application for
numerous patents in the U.S. and abroad.
EMPLOYEES
As of December 31, 1994 and 1993, Sun had approximately 14,500
employees, excluding employees from real estate operations held for sale
totalling 383 in 1994 and 487 in 1993 and employees from coal operations
held for sale totalling 1,027 in 1994 and 1,318 in 1993. Approximately 31
percent of Sun's employees were covered by 47 collective bargaining
agreements as of December 31, 1994. The collective bargaining agreements
have various terms and dates of expiration. In management's opinion, Sun's
relationship with its employees is generally satisfactory.
ENVIRONMENTAL MATTERS
Sun is subject to numerous federal, state, local and foreign laws
which regulate the discharge of materials into, or otherwise relate to the
protection of, the environment. These laws have required, and are expected
to continue to require, Sun to make significant expenditures of both a
capital and expense nature. As these laws evolve, it is expected that they
will continue to have a significant impact on the conduct of Sun's
operations.
The following table summarizes Sun's expenditures for environmental
projects and compliance activities (in millions of dollars):
1994 1993 1992
---- ---- ----
Pollution abatement capital*.......... $245 $123 $ 75
Remediation and reclamation........... 60 53 48
Operations, maintenance
and administration.................. 112 108 116
---- ---- ----
$417 $284 $239
- ---------- ==== ==== ====
*Capital expenditures for pollution abatement are expected to approximate
$170 and $158 million in 1995 and 1996, respectively.
24
The increase in pollution abatement capital expenditures during 1994 was
due primarily to outlays relating to the wastewater treatment and Northeast
Aromatics and Cyclohexane projects at the Marcus Hook refinery and to
enhancements to the steam and electricity generating facilities at Suncor's
oil sands plant.
Certain environmental laws subject Sun to possible obligations to
remove or mitigate the effects on the environment of the disposal or
release of certain wastes and petroleum substances. Included are
remediation at Sun's refineries, service stations, terminals and pipeline
and truck transportation facilities, and third-party or formerly owned
sites at which contaminants generated by Sun may be located. Several of
the more significant federal laws applicable to the Company's operations
include the Clean Air Act, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") and the Solid Waste Disposal Act,
as amended by the Resource Conservation and Recovery Act ("RCRA").
Additionally, various state and local governments have adopted or are
considering the adoption of similar laws and regulations.
The Clean Air Act establishes stringent criteria for regulating air
toxics at operating facilities by mandating major reductions in allowable
emissions and establishing a more comprehensive list of substances deemed
to be air toxics. The Clean Air Act requires refiners to market cleaner-
burning gasoline that reduces emissions of certain toxics and conventional
pollutants. Compliance with the requirements of the Clean Air Act
necessitates significant alterations to the composition of gasoline sold in
Sun's northeastern U.S. branded marketing area by reducing the maximum
allowable benzene content, reducing summertime RVP and increasing the
minimum oxygenate content. Despite uncertainties regarding the impact on
the future profitability of Sun's domestic petroleum businesses of the
Clean Air Act, as amended by additional regulations, management of Sun
believes these businesses are well positioned to meet the air toxics and
reformulated fuel requirements under present regulations as they continue
to be phased in over the next few years.
CERCLA and RCRA, and related state laws subject Sun to the potential
obligation to remove or mitigate the environmental effects of the disposal
or release of certain pollutants at various sites. Under CERCLA, Sun is
subject to potential joint and several liability for the costs of
remediation at sites at which it has been identified as a "potentially
responsible party" ("PRP"). As of December 31, 1994, Sun had been named as
a PRP at 47 sites identified or potentially identifiable as "Superfund"
sites under CERCLA. Sun has reviewed the nature and extent of its
involvement at each site and other relevant circumstances and, based upon
the other parties involved or Sun's negligible participation therein,
believes that its potential liability associated with such sites will not
be significant. Under RCRA and related state laws, corrective remedial
action has been initiated at some of Sun's facilities and will be required
to be undertaken by Sun at various of its other facilities. The cost of
such remedial actions could be significant but is expected to be incurred
over an extended period of time. In addition, Sun is currently involved in
a legal action initiated by a private party to determine responsibility for
remediation at a formerly owned refinery in Oklahoma. Sun believes it is
fully indemnified for this potential liability.
25
Sun establishes accruals related to environmental remediation
activities for work at identified sites, including those under CERCLA and
RCRA and related state laws, where an assessment has indicated that cleanup
costs are probable and reasonably estimable. Such accruals are based on
currently available facts, estimated timing of remedial actions and related
inflation assumptions, existing technology and presently enacted laws and
regulations. Sun's international production and Canadian operations are
subject to less demanding environmental regulatory requirements than its
U.S. operations and these less stringent requirements are considered in
determining the accruals for those locations. The accruals reflect Sun's
philosophy of aggressively managing remediation costs to ensure the most
cost-effective method of protecting the health, safety and environment of
affected communities. Sun's accrued liability for environmental
remediation, which totalled $246 and $259 million at December 31, 1994 and
1993, respectively, was classified in the consolidated balance sheets as
follows:
December 31
--------------
1994 1993
---- ----
Accrued Liabilities........................ $ 55 $ 55
Other Deferred Credits and Liabilities..... 191 204
---- ----
$246 $259
==== ====
Sun also accrues estimated dismantlement, restoration, reclamation and
abandonment costs at its oil sands mining and oil and gas exploration and
production operations through a charge against income primarily on a units
of production basis. The accrued liability for these activities, which
totalled $126 and $119 million at December 31, 1994 and 1993, respectively,
are classified primarily in other deferred credits and liabilities in the
consolidated balance sheets. Of the $126 million accrued liability at
December 31, 1994, $78 million relates to Sun's oil sands mining operations
and $48 million is attributable to oil and gas exploration and production
operations. Sun estimates that the total cost for reclamation at these
operations will be approximately $120 and $157 million, respectively.
Pretax charges against income for environmental remediation and
reclamation totalled $24, $45 and $62 million at December 31, 1994, 1993
and 1992, respectively. Claims for recovery of environmental liabilities
that are probable of realization totalled $11 million at December 31, 1994
and are included in deferred charges and other assets in the consolidated
balance sheets.
Total future costs for environmental remediation activities will
depend upon, among other things, the identification of additional sites,
the determination of the extent of the contamination of each site, the
timing and nature of required remedial actions, the technology available
and needed to meet the various existing requirements, the nature and extent
of future environmental laws, inflation rates and the determination of
Sun's liability at multi-party sites, if any, in light of the number,
participation level and financial viability of other parties.
26
Management believes that the overall costs for environmental
activities are likely to be significant but are expected to be incurred
over an extended period of time and to be funded from Sun's net cash flows
from operating activities. Although potentially significant with respect
to results of operations or cash flow for any one quarter or year,
management believes that such costs, including those required by CERCLA and
RCRA, will not have a material impact on Sun's consolidated financial
position or, over an extended period of time, on Sun's cash flow or
liquidity.
OTHER
Sun's financial condition and business operations are affected from
time to time by domestic and foreign political developments and laws and
regulations which relate to such matters as production, taxes, property,
product specifications, imports and pricing. Sun makes no representations
as to future events and developments which could affect its operations and
financial condition. Furthermore, Sun's businesses and financial condition
could be affected by, among other things, the state of the U.S. economy,
competition, future price changes or controls, material and labor costs,
legislation, labor conditions, new regulations, tariffs, embargoes, armed
conflicts, foreign exchange restrictions and changes in exchange rates.
ITEM 3. LEGAL PROCEEDINGS
On December 29, 1994, the United States Environmental Protection
Agency ("EPA") filed an administrative action alleging that Puerto Rico Sun
Oil Company ("PRSOC"), an indirect subsidiary of the Company, failed to
file a SARA/EPCRA Form R for the year 1989. Additionaly, the EPA alleged
that, for the years 1990, 1991, and 1992, PRSOC failed to report specific
chemicals in its Form R submittals. The EPA has made a preliminary civil
penalty demand in excess of $100,000.
On December 6, 1994, Tosco Corporation ("Tosco") filed an action
against the Company in the United States District Court for the Northern
District of California, seeking only a judicial declaration regarding
Tosco's rights and obligations (including, in particualr, Tosco's
indemnification obligations with respect to environmental remediation under
CERCLA and/or RCRA) under its November 1, 1980 agreement with Sun Company,
Inc. (R&M) ("Sun R&M") for the sale to Tosco of Sun R&M's formerly-owned
Duncan, OK, refinery. Management believes it is likely that the court will
find that Tosco has a contractual obligation to fully indemnify Sun R&M for
any costs incurred in connection with contamination at this site.
On October 27, 1994, an agreement in principle was reached with the
Ohio EPA which will settle numerous allegations of violations of Ohio air
regulations at Sun's Toledo refinery. Sun will enter into a judicial
Consent Order which will be filed together with an enforcement Complaint in
the Lucas County, Ohio Court of Common Pleas. Part of the Consent Order
requires Sun to pay a civil penalty of $200,000.
Many other legal and administrative proceedings are pending against
Sun. Although the ultimate outcome of these proceedings cannot be
ascertained at this time, it is reasonably possible that some of them could
be resolved unfavorably to Sun. Management of Sun believes that any
liabilities which may arise from such proceedings, including those
discussed above, would not be material in relation to the consolidated
financial positions of Sun at December 31, 1994.
27
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF SUN COMPANY, INC.
NAME, AGE AND PRESENT
POSITION WITH
SUN COMPANY, INC.
----------------------
BUSINESS EXPERIENCE DURING
PAST FIVE YEARS
--------------------------
Robert M. Aiken, Jr., 52
Senior Vice President
and Chief Financial
Officer
Mr. Aiken was named to his present
position in May 1992. He assumed
additional responsibility for Sun's
Materials Management function and Real
Estate and Coal operations in August
1994. From September 1990 until May
1992, he was Senior Vice President,
Finance and from April 1979 to September
1990, he was Comptroller.
Robert H. Campbell, 57
Chairman of the Board,
Chief Executive Officer
and President
Mr. Campbell was elected Chairman of the
Board in May 1992, Chief Executive
Officer in September 1991 and President
and Chief Operating Officer in February
1991. From November 1988 to February
1991, he was Executive Vice President.
He has been a Director since November
1988.
Richard L. Cartlidge, 40
Comptroller
Mr. Cartlidge has been in his present
position since October 1991. From July
1989 to October 1991, he was Controller
of Sun's domestic refining and marketing
subsidiary.
John G. Driscoll, 48
Senior Vice President
Marketing
Mr. Driscoll has been in his present
position since August 1994. Prior to
assuming this position, he served in
various capacities within Sun's domestic
refining and marketing subsidiary: from
May 1993 to August 1994, he was Vice
President of Chemicals; from October
1992 to May 1993, Vice President,
Branded Marketing & Development; and
from 1989 to October 1992, Director,
Business Development & Strategic
Planning in Fuels, and Director,
Planning & New Product Development.
28
NAME, AGE AND PRESENT
POSITION WITH
SUN COMPANY, INC.
----------------------
BUSINESS EXPERIENCE DURING
PAST FIVE YEARS
--------------------------
Jack L. Foltz, 59
Vice President and
General Counsel
Mr. Foltz has been in his present
position since October 1992, and from
December 1991 to October 1992 he was
Assistant General Counsel, Refining and
Marketing. From December 1989 to
December 1991, he was Vice President and
General Counsel of Sun's domestic
refining and marketing subsidiary.
Deborah M. Fretz, 46
Senior Vice President
Logistics
Ms. Fretz has been in her present
position since August 1994. In
addition, she has been President of Sun
Pipe Line Company, a subsidiary, since
October 1991. From 1989 to October
1991, she served as General Manager,
Wholesale Fuels Marketing and
Distribution.
David E. Knoll, 51
Senior Vice President
Corporate Development
Mr. Knoll has been in his present
position, which includes responsibility
for Sun's International Production
operations, since August 1994. From
October 1992 to August 1994, he was
Senior Vice President, Marketing and
Logistics and from October 1991 to
October 1992, Group Vice President,
Refining and Marketing. From November
1988 to October 1991, he was President
of Sun's domestic refining and marketing
subsidiary.
Harwood S. Roe, Jr., 50
Senior Vice President
Operations
Mr. Roe has been in his present position
since October 1992 and assumed
additional responsibility for Sun's
Public Affairs function in August 1994.
From 1991 to October 1992, he was Vice
President, Operations. From 1988 to
1991, he was Vice President, Refining of
Sun's domestic refining and marketing
subsidiary.
Malcolm I. Ruddock, 52
Treasurer
Mr. Ruddock has been in his present
position for the past five years.
29
NAME, AGE AND PRESENT
POSITION WITH
SUN COMPANY, INC.
----------------------
BUSINESS EXPERIENCE DURING
PAST FIVE YEARS
--------------------------
Sheldon L. Thompson, 56
Senior Vice President
and Chief Administrative
Officer
Mr. Thompson has been in his present
position since October 1992 and he
assumed additional responsibility for
Sun's Research and Development function
in August 1994. From 1991 to October
1992, he was Vice President, Chemicals,
Lubricants and Technology and from 1989
to 1991, Vice President, Chemicals and
Technology for Sun's domestic refining
and marketing subsidiary.
30
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated herein by
reference to the Quarterly Financial and Stock Market Information on page
68 of the Company's 1994 Annual Report to Shareholders. The market
exchanges on which the Company's stock is traded are listed on the cover
page of this Annual Report on Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated herein by
reference to the Selected Financial Data on page 25 of the Company's 1994
Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is incorporated herein by
reference to pages 26-37 in the Company's 1994 Annual Report to
Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information in the Company's 1994 Annual Report to
Shareholders is incorporated herein by reference: the Consolidated
Financial Statements on pages 38-41; the Notes to Consolidated Financial
Statements on pages 42-57; the Report of Independent Accountants on page
58; the Supplemental Financial and Operating Information on pages 63-67
(excluding the sections on Revenues Per Unit of Oil and Gas Production and
Average Net Oil and Gas Production); and the Quarterly Financial
Information on page 68.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information on directors required by Items 401 and 405 of
Regulation S-K is incorporated herein by reference to the Company's
definitive Proxy Statement ("Proxy Statement") which will be filed with the
Securities and Exchange Commission ("SEC") within 120 days after
December 31, 1994.
Information concerning the Company's executive officers appears in
Part I of this Annual Report on Form 10-K.
31
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 402 of Regulation S-K is incorporated
herein by reference to the Company's Proxy Statement which will be filed
with the SEC within 120 days after December 31, 1994, except that the
Report of the Compensation Committee and the Stock Performance Graphs
contained in the Proxy Statement are specifically excluded from
incorporation by reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 403 of Regulation S-K is incorporated
herein by reference to the Company's Proxy Statement which will be filed
with the SEC within 120 days after December 31, 1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 404 of Regulation S-K is incorporated
herein by reference to the Company's Proxy Statement which will be filed
with the SEC within 120 days after December 31, 1994.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Consolidated Financial Statements:
The information appearing in the Company's 1994 Annual
Report to Shareholders as described in Item 8 is incorporated
herein by reference.
2. Financial Statement Schedules:
Page
----
Report of Independent Accountants.................. 37
Schedule II - Valuation Accounts................... 38
Other schedules are omitted because the required information
is shown elsewhere in this report, is not required or is not
applicable.
3. Exhibits:
3.(i) - Articles of Incorporation of Sun Company, Inc., as
restated and amended (incorporated by reference to
Exhibit 3.(i) of the Company's Annual Report on Form
10-K, as amended, for the fiscal year ended
December 31, 1993, File No. 1-6841).
3.(ii) - Sun Company, Inc. Bylaws, as amended July 5, 1990
(incorporated by reference to Exhibit 3(b) of the
Form SE filed March 15, 1991, File No. 1-6841).
32
4 - Instruments defining the rights of security holders
of long-term debt of the Company and its subsidiaries
are not being filed since the total amount of
securities authorized under each such instrument does
not exceed 10 percent of the total assets of the
Company and its subsidiaries on a consolidated basis.
The Company will provide the SEC a copy of any
instruments defining the rights of holders of long-
term debt of the Company and its subsidiaries upon
request.
10.1* - Long-Term Incentive Plan, as amended (incorporated by
reference to Exhibit 10(c) of the Form SE filed
March 15, 1989, File No. 1-6841).
10.2* - Executive Retirement Plan, as amended September 6,
1991 (incorporated by reference to Exhibit 10(d) of
the Form SE filed March 13, 1992, File No. 1-6841).
10.3* - Directors' Deferred Compensation Plan, as amended and
restated effective September 5, 1991 (incorporated by
reference to Exhibit 10.5 of the Form SE filed
March 11, 1993, File No. 1-6841).
10.4* - Deferred Compensation Plan (incorporated by reference
to Exhibit 10(e) of the Form SE filed March 20, 1986,
File No. 1-6841).
10.5* - Pension Restoration Plan, as amended and restated
effective January 1, 1991 and amended September 6,
1991 (incorporated by reference to Exhibit 10(g) of
the Form SE filed March 13, 1992, File No. 1-6841).
10.6* - Executive Incentive Plan, as amended and restated
effective January 1, 1992 and revised November 5,
1992 (incorporated by reference to Exhibit 10.9 of
the Form SE filed March 11, 1993, File No. 1-6841).
10.7* - Sun Company, Inc. Savings Restoration Plan
(incorporated by reference to Exhibit 10(j) of the
Company's Annual Report on Form 10-K, as amended, for
the fiscal year ended December 31, 1987, File No.
1-6841), as amended effective January 1, 1994.
10.8* - Sun Company, Inc. Savings Restoration Plan II
(incorporated by reference to Exhibit 10(k) of the
Company's Annual Report on Form 10-K, as amended, for
the fiscal year ended December 31, 1989, File No.
1-6841), as amended effective January 1, 1994.
10.9* - Sun Company, Inc. Non-Employee Directors Retirement
Plan (incorporated by reference to Exhibit 10(k) of
the Company's Annual Report on Form 10-K, as amended,
for the fiscal year ended December 31, 1988, File No.
1-6841).
33
10.10* - Sun Company, Inc. Deferred Compensation and Benefits
Trust (incorporated by reference to Exhibit 10(l) of
the Form SE filed March 15, 1989, File No. 1-6841).
10.11* - Sun Company, Inc. Retainer Stock Plan for Outside
Directors, as amended and restated effective April 1,
1992 (incorporated by reference to Exhibit 10.14 of
the Form SE filed March 11, 1993, File No. 1-6841).
10.12* - Sun Company, Inc. Executive Long-Term Stock
Investment Plan (incorporated by reference to Exhibit
10.13 of the Company's Annual Report on Form 10-K, as
amended, for the fiscal year ended December 31, 1993,
File No. 1-6841), as amended March 20, 1994.
10.13* - Memorandum of Agreement between Alexander B.
Trowbridge and Sun Company, Inc. (incorporated by
reference to Exhibit 10.16 of the Form SE filed
March 11, 1993, File No. 1-6841).
10.14* - Consulting Agreement between James G. Kaiser and Sun
Company, Inc.
10.15* - Termination Agreement and General Release and Waiver
between Robert H. Writz and Sun Company, Inc.
11 - Statements re Sun Company, Inc. and Subsidiaries
Computation of Per Share Earnings for the Years Ended
December 31, 1994, 1993 and 1992.
12 - Statement re Sun Company, Inc. and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges for
the Year Ended December 31, 1994.
13 - Sun Company, Inc. 1994 Annual Report to Shareholders
Financial Section.
21 - Subsidiaries of Sun Company, Inc.
23 - Consent of Independent Accountants.
24.1 - Power of Attorney executed by certain officers and
directors of Sun Company, Inc.
24.2 - Certified copy of the resolution authorizing certain
officers to sign on behalf of Sun Company, Inc.
27 - Article 5 of Regulation S-X, Financial Data Schedule.
- -----------
*These exhibits constitute the Executive Compensation Plans and
Arrangements of the Company.
34
(b) Reports on Form 8-K:
A report on Form 8-K dated October 24, 1994 was filed to disclose
under Item 5, "Other Events," the Company's press release discussing
earnings for the period ended September 30, 1994.
Note: Copies of each Exhibit to this Form 10-K are available upon request,
at $2 per copy.
35
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SUN COMPANY, INC.
By s/ROBERT M. AIKEN, JR.
Robert M. Aiken, Jr.
Senior Vice President and Chief Financial Officer
Date March 2, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY OR ON BEHALF OF THE FOLLOWING PERSONS
ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED ON MARCH 2,
1995:
Signatures Titles
---------- ------
ROBERT M. AIKEN, JR.* Senior Vice President and Chief
--------------------- Financial Officer
Robert M. Aiken, Jr. (Principal Financial Officer)
ROBERT H. CAMPBELL* Chairman of the Board, Chief Executive
------------------- Officer, President and Director
Robert H. Campbell (Principal Executive Officer)
RAYMOND E. CARTLEDGE* Director
---------------------
Raymond E. Cartledge
RICHARD L. CARTLIDGE* Comptroller
--------------------- (Principal Accounting Officer)
Richard L. Cartlidge
ROBERT E. CAWTHORN* Director
-------------------
Robert E. Cawthorn
MARY J. EVANS* Director
--------------
Mary J. Evans
THOMAS P. GERRITY* Director
------------------
Thomas P. Gerrity
JAMES G. KAISER* Director
----------------
James G. Kaiser
ROBERT D. KENNEDY* Director
------------------
Robert D. Kennedy
36
THOMAS W. LANGFITT* Director
-------------------
Thomas W. Langfitt
R. ANDERSON PEW* Director
----------------
R. Anderson Pew
ALBERT E. PISCOPO* Director
------------------
Albert E. Piscopo
WILLIAM F. POUNDS* Director
------------------
William F. Pounds
ALEXANDER B. TROWBRIDGE* Director
------------------------
Alexander B. Trowbridge
*By s/ROBERT M. AIKEN, JR. Individually and as Attorney-in-Fact
----------------------
Robert M. Aiken, Jr.
37
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors, Sun Company, Inc.:
Our report on the consolidated financial statements of Sun Company,
Inc. and its subsidiaries has been incorporated by reference in this
Form 10-K from page 58 of the Sun Company, Inc. 1994 Annual Report to
Shareholders. In connection with our audits of such financial statements,
we have also audited the related financial statement schedule listed in the
index on page 31 of this Form 10-K.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information required
to be included therein.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
February 14, 1995
38
SUN COMPANY, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(MILLIONS OF DOLLARS)
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND DEDUC- AT END
OF PERIOD EXPENSES TIONS OF PERIOD
---------- ---------- ------ ---------
For the year ended
December 31, 1994:
Deducted from asset in
balance sheet--allowance
for doubtful accounts and
notes receivable.......... $11 $ 2 $ 1 $12
=== === === ===
For the year ended
December 31, 1993:
Deducted from asset in
balance sheet--allowance
for doubtful accounts and
notes receivable.......... $11 $ 2 $ 2 $11
=== === === ===
For the year ended
December 31, 1992:
Deducted from asset in
balance sheet--allowance
for doubtful accounts and
notes receivable.......... $12 $ 7 $ 8 $11
=== === === ===