1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Section 12, 13, or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
SUN COMPANY, INC.
--------------------------------------------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 2
The undersigned registrant hereby amends the following items of its
Annual Report on Form 10-K for the fiscal year ended December 31, 1995 as
set forth in the pages attached hereto:
Part II. Item 8. Financial Statements and Supplementary Data
Part IV. Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by
the undersigned, thereunto duly authorized.
SUN COMPANY, INC.
BY s/Thomas W. Hofmann
------------------------------
Thomas W. Hofmann
Comptroller
(Principal Accounting Officer)
DATE June 14, 1996
2
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pursuant to General Instruction F to Form 10-K and Rule 15(d)-21 under the
Securities Exchange Act of 1934, the financial statements required by
Form 11-K with respect to the Sun Company, Inc. Capital Accumulation Plan
are furnished as part of the Sun Company, Inc. Annual Report on Form 10-K
for the fiscal year ended December 31, 1995. As permitted by the rules
with respect to Form 11-K, plan financial statements for the Sun Company,
Inc. Capital Accumulation Plan are furnished in accordance with the
financial reporting requirements of the Employee Retirement Income Security
Act of 1974, as amended (ERISA).
3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of the Sun Company, Inc. Capital
Accumulation Plan:
We have audited the accompanying statements of net assets available for
plan benefits of the Sun Company, Inc. Capital Accumulation Plan (Plan) as
of December 31, 1995 and 1994, and the related statements of changes in net
assets available for plan benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above (pages 4 through
22) present fairly, in all material respects, the net assets available for
plan benefits of the Plan as of December 31, 1995 and 1994, and the changes
in net assets available for plan benefits for the years then ended, in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
the Plan (pages 23 and 24), Assets Held for Investment Purposes at
December 31, 1995 and Schedule of Reportable Transactions for the Year
Ended December 31, 1995 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but
are supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The Fund Information in the statements of net
assets available for plan benefits and the statements of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits
and changes in net assets available for plan benefits of each fund. The
supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
May 31, 1996
4
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AT DECEMBER 31, 1995
ASSETS FUND A FUND B FUND C FUND D ESOP FUND LOAN FUND TOTAL
- ------ ----------- ----------- ------------ ----------- ------------ --------- ------------
Investment in Sun Company, Inc.
Defined Contribution Master
Trust (Notes 1 and 2) $89,996,014 $80,493,176 $239,466,149 $ -- $ -- $ -- $409,955,339
Other investments (Notes 1 and 2):
Short-term funds -- -- -- 128,692 445,334 -- 574,026
Sun Common Stock (942,681 shares
in Fund D and 3,261,342 shares
in the ESOP Fund) -- -- -- 25,805,892 89,279,237 -- 115,085,129
Loans receivable from participants,
including accrued interest (Note 1) -- -- -- -- -- 7,931,710 7,931,710
Other receivables 2,502 2,238 34,238 23,118 14,818 116 77,030
Interfund transfer
receivable (payable) 1,546,738 1,014,652 (1,386,803) (172,216) (1,002,371) -- --
----------- ----------- ------------ ----------- ----------- ---------- ------------
Total assets 91,545,254 81,510,066 238,113,584 25,785,486 88,737,018 7,931,826 533,623,234
----------- ----------- ------------ ----------- ----------- ---------- ------------
LIABILITIES
- -----------
Miscellaneous payables 65,799 138,498 162,837 17,309 54,591 -- 439,034
----------- ----------- ------------ ----------- ----------- ---------- ------------
Total liabilities 65,799 138,498 162,837 17,309 54,591 -- 439,034
----------- ----------- ------------ ----------- ----------- ---------- ------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS (Notes 3 and 6) $91,479,455 $81,371,568 $237,950,747 $25,768,177 $88,682,427 $7,931,826 $533,184,200
=========== =========== ============ =========== =========== ========== ============
See accompanying notes to financial statements.
5
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
FUND A FUND B FUND C FUND D ESOP FUND LOAN FUND TOTAL
----------- ----------- ------------ ----------- ------------ ------------ ------------
Additions (deductions):
Employees' contributions $ 4,639,952 $ 4,080,532 $ 10,774,483 $ 3,824,339 $ -- $ -- $ 23,319,306
Employers' contributions 2,336,115 2,047,145 5,347,983 1,887,766 2,123,967 -- 13,742,976
Transfers and rollovers
from tax-qualified plans
(Note 1):
MidCAP 612,947 210,523 3,954,908 -- -- -- 4,778,378
Other 577,587 691,136 3,091,631 25,021 18,012 -- 4,403,387
Interfund transfers 20,313,677 12,317,858 (5,804,880) (7,693,422) (26,404,071) 7,270,838 --
Dividends on Sun Common
Stock -- -- -- 1,332,211 5,236,227 -- 6,568,438
Interest income -- -- -- -- -- 99,122 99,122
Income from collective trust
funds -- -- -- 31,395 120,441 -- 151,836
Increase in value of
participation in Sun
Company, Inc. Defined
Contribution Master
Trust (Notes 1 and 3) 19,873,497 16,286,282 17,466,560 -- -- -- 53,626,339
Net depreciation in
fair value of Sun
common stock (Note 3) -- -- -- (1,007,541) (3,887,422) -- (4,894,963)
Benefits paid to
participants (Note 6) (4,721,748) (4,595,595) (27,416,858) (642,597) (3,992,166) (4,812) (41,373,776)
Administrative expenses
(Note 2) (82,355) (224,783) (543,092) (102,195) (390,381) -- (1,342,806)
----------- ----------- ------------ ----------- ------------ ---------- ------------
Net additions (deductions) 43,549,672 30,813,098 6,870,735 (2,345,023) (27,175,393) 7,365,148 59,078,237
Net assets available for
plan benefits,
January 1, 1995 47,929,783 50,558,470 231,080,012 28,113,200 115,857,820 566,678 474,105,963
----------- ----------- ------------ ----------- ------------ ---------- ------------
Net assets available for
plan benefits,
December 31, 1995 $91,479,455 $81,371,568 $237,950,747 $25,768,177 $ 88,682,427 $7,931,826 $533,184,200
=========== =========== ============ =========== ============ ========== ============
See accompanying notes to financial statements.
6
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AT DECEMBER 31, 1994
ASSETS FUND A FUND B FUND C FUND D ESOP FUND LOAN FUND TOTAL
- ------ ----------- ----------- ------------ ----------- ------------ --------- ------------
Investment in Sun Company, Inc.
Defined Contribution Master
Trust (Notes 1 and 2) $47,861,671 $50,868,387 $230,497,112 $ -- $ -- $ -- $329,227,170
Other investments (Notes 1 and 2):
Short-term funds -- -- -- 247,242 1,012,431 -- 1,259,673
Sun Common Stock (977,063 shares
in Fund D and 4,006,050 shares
in the ESOP Fund) -- -- -- 28,090,561 115,173,932 -- 143,264,493
Loans receivable from participants
(Note 1) -- -- -- -- -- 561,794 561,794
Other receivables -- 4 -- 8 4,708 4,884 9,604
Interfund transfer
receivable (payable) 82,724 (266,118) 705,321 (217,623) (304,304) -- --
----------- ----------- ------------ ----------- ------------ -------- ------------
Total assets 47,944,395 50,602,273 231,202,433 28,120,188 115,886,767 566,678 474,322,734
----------- ----------- ------------ ----------- ------------ -------- ------------
LIABILITIES
- -----------
Miscellaneous payables 14,612 43,803 122,421 6,988 28,947 -- 216,771
----------- ----------- ------------ ----------- ------------ -------- ------------
Total liabilities 14,612 43,803 122,421 6,988 28,947 -- 216,771
----------- ----------- ------------ ----------- ------------ -------- ------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS (Notes 3 and 6) $47,929,783 $50,558,470 $231,080,012 $28,113,200 $115,857,820 $566,678 $474,105,963
=========== =========== ============ =========== ============ ======== ============
See accompanying notes to financial statements.
7
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
FUND A FUND B FUND C FUND D ESOP FUND LOAN FUND TOTAL
----------- ----------- ------------ ----------- ------------ ------------ ------------
Additions (deductions):
Employees' contributions $ 3,906,456 $ 3,427,500 $ 10,451,432 $ 3,193,402 $ -- $ -- $ 20,978,790
Employers' contributions -- -- -- -- 12,466,416 -- 12,466,416
Transfers and rollovers
from tax-qualified plans
(Note 1):
Chevron 968,630 988,011 1,458,125 2,579,707 96,170 646,311 6,736,954
Other 131,150 351,661 2,614,644 106,380 99,404 -- 3,303,239
Interfund transfers (295,098) (1,389,417) 7,203,295 1,032,375 (6,460,090) (91,065) --
Dividends on Sun
Common Stock -- -- -- 1,416,862 6,851,183 -- 8,268,045
Interest income -- -- -- -- -- 11,432 11,432
Income from collective trust
funds -- -- -- 10,563 49,225 -- 59,788
Increase (decrease) in value
of participation in Sun
Company, Inc. Defined
Contribution Master Trust
(Notes 1 and 3) 641,052 (974,846) 14,983,455 -- -- -- 14,649,661
Net depreciation in fair
value of Sun Common
Stock (Note 3) -- -- -- (569,233) (2,080,635) -- (2,649,868)
Benefits paid to
participants (Note 6) (2,178,261) (3,080,225) (15,638,377) (195,825) (3,668,263) -- (24,760,951)
Administrative expenses
(Note 2) (49,817) (170,392) (446,778) (28,493) (135,354) -- (830,834)
----------- ----------- ------------ ----------- ------------ -------- ------------
Net additions (deductions) 3,124,112 (847,708) 20,625,796 7,545,738 7,218,056 566,678 38,232,672
Net assets available for
plan benefits,
January 1, 1994 44,805,671 51,406,178 210,454,216 20,567,462 108,639,764 -- 435,873,291
----------- ----------- ------------ ----------- ------------ -------- ------------
Net assets available for
plan benefits,
December 31, 1994 $47,929,783 $50,558,470 $231,080,012 $28,113,200 $115,857,820 $566,678 $474,105,963
=========== =========== ============ =========== ============ ======== ============
See accompanying notes to financial statements.
8
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS
1. GENERAL DESCRIPTION
-------------------
The Sun Company, Inc. Capital Accumulation Plan (Plan) is a combined
profit-sharing and employee stock ownership plan. The Plan provides
eligibility for membership for certain employees of Sun Company, Inc.
and its participating subsidiary companies (collectively, Sun) who are
paid in U.S. dollars and who have completed at least 1,000 hours of
service with Sun in a twelve-month period. An eligible employee can
join the Plan at any time starting with the first payroll period which
begins on or next following 30 days after he or she gives written
notice to the Plan Administrator. The ESOP Fund is an employee stock
ownership plan, while the remaining funds form a profit-sharing plan.
The Plan provides an individual account for each participant. Amounts
disbursed to participants or transferred among funds are based solely
upon amounts contributed to each participant's account adjusted to
reflect any withdrawals and distributions, investment earnings
attributable to such account balances, and appreciation or
depreciation of the market value of the account balance.
Contributions:
-------------
In general, a participant may contribute to the Plan up to 5% in whole
percentages of base pay on a pre-tax basis (Basic Pre-Tax
Contributions) or on a post-tax basis (Basic Post-Tax Contributions).
The participant also may elect to make additional contributions up to
10% of base pay provided, however, that Basic Pre-Tax or Basic Post-
Tax Contributions are at least 5% of base pay. The additional 10% may
be contributed either on a pre-tax basis (Additional Pre-Tax
Contributions), post-tax basis (Additional Post-Tax Contributions) or
any combination thereof. For certain participants, limitations
imposed by the Internal Revenue Code of 1986, as amended (Code), as
described below, restrict their ability to make Basic Pre-Tax
Contributions or Additional Pre-Tax Contributions. However, such
participants may make Basic Post-Tax Contributions and Additional
Post-Tax Contributions such that the sum of their total and employer
contributions do not exceed other limits imposed by the Plan or the
Code.
For every dollar a participant contributes as Basic Contributions, Sun
contributes another full dollar (Matching Employer Contributions).
Pre-tax contributions by each participant may not exceed an annual
limit which is subject to annual upward adjustment for increases in
the cost of living as determined under Internal Revenue Service (IRS)
regulations. This limit was $9,240 for 1994 and 1995, and will be
$9,500 for 1996.
9
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
The pre-tax contributions and combined Basic Post-Tax Contributions,
Additional Post-Tax Contributions and Matching Employer Contributions
of participants who come within the classification of "highly
compensated employees" as defined in the Code, may not exceed certain
technical limits under the Code. Generally, the allowable percentage
of such contributions for the highly compensated employees is
dependent upon the percentage of contributions made by all other
employees. These limitations may have the effect of reducing the
level of contributions initially selected by the highly compensated
employees. In addition, the total employer and employee contributions
which may be allocated to a participant's account may be limited by
Section 415 of the Code.
The Plan contains a special provision designed to permit the Plan to
borrow money to purchase a significant number of shares of Sun Common
Stock. Such borrowing could only occur upon the action of the Board
of Directors of Sun Company, Inc. If this should occur, the
securities purchased with the proceeds of such a loan will not be
allocated immediately to the accounts of Plan participants but will be
held by the Plan in an unallocated suspense account. Securities will
be released from the suspense account as the loan is repaid and will
be allocated to participants' accounts according to the ratio which
the participant's compensation bears to the compensation of all
participants in the Plan. No participant contributions will be
required or permitted in paying off the loan. Further, subject to
applicable limitations imposed by Section 415 of the Code and
limitations on allocations as set forth in the Plan, any securities
which are allocated to participants' accounts as a result of the
repayment of the loan may, in the discretion of the Plan
Administrator, be used to satisfy Sun's obligation with respect to any
Matching Employer Contributions. As of December 31, 1995, no
borrowings had been approved.
At the end of each month, a participant's account is credited with
units representing interests held in each of the funds described
below. A participant's account balance is immediately 100% vested.
Investment of Employees' Contributions:
--------------------------------------
Bankers Trust Company is the Trustee for investments. The participant
has the option of investing contributions in any one or more of funds
A, B, C or D. Participants' accounts earn a blended rate, or weighted
average, of all of the investments held in the respective funds.
Funds A, B and C are currently invested in corresponding funds with
10
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
the same investment objectives in the Sun Company, Inc. Defined
Contribution Master Trust (Master Trust). The Master Trust also
includes investments from other Sun tax-qualified defined contribution
plans. Each plan's relative interest in the individual Master Trust
funds and the related income and administrative expense is determined
on a basis proportionate to each plan's past contributions adjusted to
reflect distributions, transfers and prior investment earnings to such
funds.
The following table sets forth each fund's respective share of the
total net assets of the corresponding Master Trust fund at
December 31, 1995 and 1994:
1995 1994
Fund A 99.4952% 98.3866%
Fund B 98.9478% 98.7724%
Fund C 91.1646% 91.4081%
Set forth below is a brief description of Funds A, B, C, D and the
ESOP Fund.
Fund A: The Equities Fund - a fund to be invested by investment
managers in a broadly diversified portfolio consisting of
common stock, other types of equity investments and/or an
index fund. The fund may not be invested in any Sun
Company, Inc. securities except that an index fund may
contain Sun Company, Inc. securities. Fund A of the
Master Trust is currently invested in an index fund
maintained by Wells Fargo Institutional Trust Company
which is designed to approximate the performance of the
Standard & Poor's 500 Composite Stock Index; however,
alternate stock market indices and/or an actively managed
portfolio could be substituted at any time.
Fund B: The Diversified Investments Fund - a fund to be invested
by investment managers in a combination of equity
investments (diversified common stocks, other types of
equity investments and/or an index fund) and fixed income
securities, including U.S Treasury bonds and money market
instruments. The fund may not be invested in any Sun
Company, Inc. securities except that an index fund may
contain Sun Company, Inc. securities. Fund B of the
Master Trust is currently invested in a tactical asset
allocation fund maintained by Wells Fargo Institutional
Trust Company.
11
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
Fund C: The Capital Preservation Fund - a fund to be invested in:
(1) a series of contracts with insurance companies or
other financial institutions where the repayment of
principal and payment of interest at a fixed rate for a
fixed period of time are backed by the financial strength
of such financial institutions (standard investment
contracts); (2) contracts with financial institutions
backed by the types of obligations described below
(synthetic investment contracts); (3) U.S. government-
backed and agency obligations; or (4) fixed income
securities of corporations rated "investment grade" and
high-quality asset-backed securities primarily rated
"AAA."
At December 31, 1995, Fund C of the Master Trust is
principally invested in both standard and synthetic
investment contracts. Identified below are the insurance
companies and other financial institutions that have
entered into standard investment contracts as of
December 31, 1995 and 1994 with the Master Trust to pay
interest on funds invested with them:
12
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
% of
Master Trust
Fund C
Net Assets
Effective Annual at 12/31 Last
Interest Rate ------------- Maturity
Financial Institution (Net of Expenses) 1995 1994 Date
- --------------------- ----------------- ------------- --------
CIGNA Corporation 9.00% 1% 3% 1/13/96
Hartford Life Insurance Company 8.31% 2 3 7/15/97
Metropolitan Life Insurance Company 9.25% - 4 5/31/95
Metropolitan Life Insurance Company 7.41% 2 2 9/15/99
Morgan Bank (Delaware) 8.56% 3 3 1/16/96
New York Life Insurance Co. 7.35% 2 2 3/17/97
New York Life Insurance Co. 8.07% 3 3 10/16/00
Principal Mutual Life Insurance
Company 9.15% - 2 9/29/95
Principal Mutual Life Insurance
Company 9.22% 6 9 6/30/97
Provident National Assurance Co. 8.70% 4 4 6/20/96
Provident National Assurance Co. 8.46% - 1 11/15/95
Provident National Assurance Co. 8.35% 4 3 5/15/96
Prudential Asset Management Co. 8.76% - 5 1/3/95
Prudential Asset Management Co. 5.53% 5 5 12/31/98
The Travelers Companies 9.66% - 1 2/28/95
Safeco Life Insurance Companies 7.05% 2 - 6/15/00
Other 6.96% - 1 9/15/96
--- ---
34%* 51%*
=== ===
- -------------
*The remaining 66% and 49% of the net assets of Fund C of the Master Trust
at December 31, 1995 and 1994, respectively, are invested in synthetic
investment contracts (58% and 41%) and in collective trust funds (8% and
8%) maintained by Bankers Trust Company and Wells Fargo Institutional
Trust Company. The collective trust funds are comprised primarily of
U.S. government-backed and agency obligations and short-term investments.
13
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
The Plan's relative interest in the standard investment
contracts with insurance companies or other financial
institutions described above represents the maximum
potential credit losses from concentrations of credit risk
in Fund C in accordance with the provisions of Statement
of Financial Accounting Standards No. 105, "Disclosure of
Information about Financial Instruments with Off-Balance-
Sheet Risk and Financial Instruments with Concentrations
of Credit Risk" (SFAS No. 105). SFAS No. 105 requires
that such losses be determined assuming (1) complete
nonperformance by the counterparties to the transactions
and (2) any related collateral has no value. There is no
collateral associated with the investments in Fund C.
Plan management believes that future credit losses of the
Plan's investment in Fund C of the Master Trust, if any,
would not be material in relation to Fund C's net assets
available for plan benefits at December 31, 1995. There
are no other significant concentrations of credit risk in
other Plan assets.
The Master Trust also has entered into synthetic
investment contracts with Bankers Trust Company, National
Westminster Bank plc, People's Security Life Insurance
Company and Transamerica Life Companies. The synthetic
investment contracts are composed of underlying assets and
"wrappers", which are contracts that enable withdrawals to
be made at contract value, rather than at the market value
of the underlying assets. The contracts have underlying
assets invested either directly or through collective
trust funds in government agency-backed collateralized
mortgage obligation issues, government and corporate bonds
and other asset-backed securities. The contracts are
presented below in two separate portfolios based upon the
investment strategy for the underlying assets. The assets
in the "Buy and Hold Portfolios" are expected to be held
until maturity, while the "Managed Portfolios" are
actively managed to reflect changing market conditions.
Interest crediting rates for these contracts are reset at
least quarterly, as specified in the respective contracts.
The following table details for each contract respective
14
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
interest crediting rates and percentage of the net assets
of Fund C of the Master Trust at December 31, 1995 and
1994:
% of Master Trust
Fund C
Financial Institutions Average Interest Net Assets
Providing Wrapper Crediting Rate at 12/31
---------------------- ---------------- -----------------
1995 1994 1995 1994
---- ---- ---- ----
Buy and Hold Portfolios:
-----------------------
Bankers Trust Company 8.25% 2% --%
National Westminster Bank plc 6.25% 2 --
People's Security Life
Insurance Co. 5.85% 5.57% 6 13
Transamerica Life Companies 6.52% 6.66% 12 8
Managed Portfolios:
------------------
Bankers Trust Company 6.69% 6.33% 20 20
People's Security Life
Insurance Co. 6.89% 16 --
---- ----
58% 41%
==== ====
Over time, the contracts will earn the rate of return of
the underlying assets.
Fund D: The Sun Common Stock Fund - a fund to be invested
principally in Sun Common Stock. Cash contributions
directed for investment in Fund D are used by Mellon Bank
(Common Stock Trustee) to purchase Sun Common Stock on
securities exchanges, from Sun Company, Inc., or from any
other bona fide offeror of such Sun Common Stock, at the
lowest price obtainable at the time.
ESOP
Fund: The Employee Stock Ownership Plan Fund - a fund to be
invested principally in Sun Common Stock, which
constitutes an employee stock ownership plan under
Section 4975(e)(7) of the Code. The ESOP Fund also
includes the investments of the Sun Company, Inc. Employee
Stock Ownership Plan (ESOP) and the Sun Company, Inc.
Payroll Employee Stock Ownership Plan (PAYSOP) which were
merged into the Plan effective January 1, 1987. Cash
15
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
contributions directed for investment in the ESOP Fund are
used by the Common Stock Trustee to purchase Sun Common
Stock on securities exchanges, from Sun Company, Inc., or
from any other bona fide offeror of such Sun Common Stock,
at the lowest price obtainable at the time. Effective
March 1, 1995, no contributions are invested directly in
the ESOP Fund; prior to such date only company
contributions were invested directly in the ESOP Fund.
Each of the above funds may invest in short-term investments for
purposes of administering the funds, including satisfying the
transfer and withdrawal requests of participants.
Investment of Employers' Contributions:
--------------------------------------
Effective March 1, 1995, all employer contributions are invested in
Funds A, B, C and D in the same proportion as the participant's
contributions are invested. Prior to this date, all employer
contributions were invested in the ESOP Fund.
Investment Earnings Reinvestment/Distribution:
---------------------------------------------
Earnings from dividends and interest on Funds A, B, C and D are
retained by the trustees and reinvested in the same fund. A
participant who has funds in the ESOP Fund may elect to receive a
payment equal to the dividends due on certain Sun Common Stock
attributable to his account in the ESOP Fund (dividend equivalents)
if they exceed $10. Dividend equivalents on Sun Common Stock
transferred to the participant's account from the PAYSOP are
distributed to participants in the sole discretion of the Plan
Administrator. Dividends on Sun Common Stock in the ESOP Fund for
which a participant has not elected to receive an equivalent
distribution, or which are not eligible for payment, are credited
to his account in the ESOP Fund and are reinvested in Sun Common
Stock by the Common Stock Trustee.
Rollovers, Withdrawals and Transfers:
------------------------------------
Certain employees of Sun may roll over the taxable portion of a
distribution from a tax-qualified plan of a previous employer into
the Plan, provided certain conditions imposed by the Plan
Administrator are met. Effective May 1, 1995, all employees of
Mid-Valley Pipeline Company, an affiliate of Sun, became employees
of Sun and participants in the Plan. In connection therewith, the
Mid-Valley Pipeline Company Capital Accumulation Plan (MidCAP) was
merged into the Plan at such time. In addition, in conjunction
16
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
with Sun's August 1994 acquisition of the Chevron U.S.A. (Chevron)
Girard Point refinery and related assets, certain Chevron employees
became eligible to participate in the Plan and elected to roll over
the taxable portion of their distributions from Chevron's
tax-qualified plan into the Plan. The MidCAP and Chevron transfers
are separately reflected by fund in the statements of changes in
net assets available for plan benefits.
Employees who terminate employment and elect to defer the
distribution of their Plan account may also directly roll over the
taxable portion of distributions from other Sun tax-qualified plans
into the Plan.
Upon retirement or other termination of employment, the balances
credited to a participant's account will be held in the Plan until
the participant reaches age 70 1/2, unless the participant elects
an earlier distribution. Alternatively, a participant who
terminates service may request that the account balance be
transferred directly to an individual retirement account or annuity
or a defined contribution plan maintained by his or her successor
employer.
Retirees or terminated vested persons, regardless of age, may elect
to take periodic distributions either through withdrawals every six
months in varying amounts or in substantially equal payments every
six months over the participant's remaining life expectancy.
A participant, during employment, may withdraw up to 100% of
Matching Employer Contributions, including any earnings thereon,
and his ESOP sub-account under the ESOP Fund, if any, provided that
such contributions have been in the Plan for two years. In
addition, a participant may withdraw up to 100% of Additional Post-
Tax Contributions including any earnings thereon. Withdrawals are
permitted once every six months.
Withdrawals from Funds A and B are made in cash only while those
from Fund C may be made in cash or as an annuity. Withdrawals from
Fund D and the ESOP Fund are made in the form of Sun Common Stock
or cash at the participant's discretion. Withdrawals of Sun Common
Stock are valued at the closing market prices on the last business
day of the month in which the notice of withdrawal has been
processed by the Plan. Withdrawals will be distributed from
participants accounts in the following order:
Fund C
Fund B
Fund A
Fund D
Fund ESOP
17
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
While actively employed, a participant generally is not entitled to
withdraw Basic Pre-Tax Contributions, Basic Post-Tax Contributions,
Additional Pre-Tax Contributions, including earnings thereon, or
the PAYSOP sub-account under the ESOP Fund.
A participant may transfer investments among Funds A, B, C, D and
the ESOP Fund, subject generally to the following rules. A
participant may elect to change the investment allocation
percentage for Funds A, B, C, D or the ESOP Fund or to transfer a
specified dollar amount for Funds A, B and C or share equivalents
for Fund D and the ESOP Fund. Effective March 1, 1995, transfers
or changes in fund allocation percentages may be made monthly;
prior to that date, they were permitted once every three months. A
participant may not transfer the PAYSOP sub-account (if any) under
the ESOP Fund to any of the other funds; however, a portion of the
PAYSOP sub-account may be converted for participants who have
attained age 55 and have 10 or more years of participation in the
Plan. A participant may transfer the ESOP sub-account (if any)
under the ESOP Fund to any of the other funds.
Should total withdrawals or transfers from a fund during a month cause
the trustee to liquidate securities, resulting in a gain or loss to
the fund, such gain or loss will be allocated, pro rata, among the
participants who made such withdrawals or transfers during that month.
Withdrawals and transfers of Sun Common Stock are subject to a maximum
500,000 shares per month limitation except that there is no limit in
the number of shares which may be withdrawn from the Plan.
Notwithstanding the foregoing, benefit payments shall be made in
accordance with the Code and IRS regulations and shall be made to a
participant and/or his designated beneficiary not later than April 1
of the calendar year following the calendar year in which the
participant attains 70 1/2 years of age.
Loans to Participants
---------------------
The Plan Administrator has the authority, in his sole discretion, to
direct the Trustee to lend a participant an amount not exceeding
certain portions of the participant's account balance in the Plan.
Prior to October 9, 1995, the Plan Administrator did not permit any
loans to Plan participants, except for loans that were outstanding
from participants of Chevron's tax-qualified plan which had been
transferred into the Plan. Effective October 9, 1995, the Plan
Administrator elected to permit loans to Plan participants.
Participants are eligible to borrow if they are on the active payroll
of Sun and have a Plan account balance of at least $2,000. The
minimum loan amount is $1,000, while the maximum loan amount is the
lesser of (a) $50,000 adjusted downward by the highest outstanding
18
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
loan balance in the past twelve months or (b) one-half the value of
the participant's account balance. Participants are permitted to
borrow only once in a twelve-month period and to have no more than two
loans outstanding at any time. Loan proceeds are withdrawn from each
fund in which the participant has an account balance on a pro rata
basis and are not taxable to the participant when received. Any loan
which is not repaid is in default and the outstanding loan balance
(including accrued interest thereon) is treated as a distribution from
the Plan. Loans and related activity are reflected in the Loan Fund
in the accompanying financial statements. As loans receivable
(including interest thereon) are repaid, amounts are transferred into
Funds A, B, C and D in the same proportion as the participant's
current contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates:
----------------
Certain amounts included in the accompanying financial statements and
related footnotes reflect the use of estimates based on assumptions
made by the Plan's management. Actual amounts could differ from these
estimates.
Investments:
-----------
The valuation of the Plan's interests in collective trust funds or its
relative interest in such funds held by the Master Trust is based on
the closing market price on the last business day of the year of the
assets held in the funds; the Plan's relative interest in such funds
is determined by the Trustee on a unit-method basis. The Plan's
relative interest in investments in both standard and synthetic
investment contracts with insurance companies or other financial
institutions held by the Master Trust are stated at contract value.
Contract value represents contributions made under the contract plus
interest accrued at the contract rate less any withdrawals. Standard
investment contracts earn interest at fixed rates while synthetic
investment contracts earn interest at rates that are reset at least
quarterly as specified in the respective contract. The Master Trust's
management believes that the contract value of all of its investment
contracts approximates fair value. However, since there is no
significant secondary market for these investments, contract value may
not be indicative of amounts that could be realized in a current
market exchange. The valuation of Sun Common Stock is based on the
closing market price reported on the New York Stock Exchange on the
last business day of the Plan year.
Purchases and sales of securities are reflected on a trade-date basis.
Dividend income is reported on the ex-dividend date; interest income
19
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------------------------------
is recorded as earned on an accrual basis. In the statements of
changes in net assets available for plan benefits, the net
appreciation (depreciation) in the fair value of Sun Common Stock
consists of the realized gains or losses and the unrealized
appreciation (depreciation) on Sun Common Stock.
Benefits Paid to Participants:
-----------------------------
Benefits paid to participants, which include withdrawals and
distributions, are recorded upon distribution.
Administrative Expenses:
-----------------------
With the exception of the PAYSOP sub-account under the ESOP Fund, all
brokerage fees, taxes and other expenses related to the purchase and
sale of securities in Funds A, B, D and the ESOP Fund are paid out of
the respective assets of such funds. All investment expenses of
Fund C are paid out of the assets of such fund. All other costs and
expenses (other than the cost of services provided by Sun employees
which are paid by Sun) incurred in administering the Plan are
generally charged, pro rata, to each of the respective funds. Up to
$100,000 of expenses related to the PAYSOP sub-account under the ESOP
Fund are paid from the sub-account; thereafter, all expenses are paid
by Sun.
3. SUPPLEMENTAL INFORMATION
------------------------
The net asset value per unit and the number of units in the Plan at
December 31, 1995 and 1994, respectively, are as follows:
At December 31, 1995 At December 31, 1994
--------------------- ---------------------
Net Asset Number Net Asset Number
Value of Value of
Per Unit Units Per Unit Units
-------- -------- -------- ----------
Fund A $6.472 14,134,650 $4.750 10,090,481
Fund B $4.140 19,654,968 $3.198 15,809,403
Fund C $3.454 68,891,357 $3.220 71,763,979
Fund D $ .739 34,868,981 $ .773 36,368,952
ESOP Fund $1.619 54,776,051 $1.692 68,473,889
20
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
3. SUPPLEMENTAL INFORMATION (Continued)
------------------------------------
Net asset value per unit is computed by dividing the value of all
members' accounts by the units outstanding.
The increase (decrease) in value of participation in the Sun
Company,Inc. Defined Contribution Master Trust by fund for the years
ended December 31, 1995 and 1994 was composed of the following:
1995 1994
------------------------------------------- -----------------------------------------
Fund A Fund B Fund C Fund A Fund B Fund C
----------- ----------- ---------- --------- --------- ---------
Interest income $ -- $ -- $15,752,606 $ -- $ -- $14,840,199
Income from
collective
trust funds 1,682,481 2,917,278 1,330,533 1,330,750 2,575,174 716,479
Net appreciation
(depreciation)
in fair value
of investments 18,191,016 13,369,004 383,421 (689,698) (3,550,020) (573,223)
----------- ----------- ----------- ---------- ----------- -----------
$19,873,497 $16,286,282 $17,466,560 $ 641,052 $ (974,846) $14,983,455
=========== =========== =========== ========== =========== ===========
4. SUN COMPANY, INC. TENDER OFFER
------------------------------
On June 13, 1995, Sun Company, Inc. announced an extensive operational
and financial restructuring of the Company, including a reduction in
the annual dividend rate on Sun Common Stock from $1.80 to $1.00 per
share, an offer to exchange up to 25,000,000 newly-issued depositary
shares each representing one-half share of its Series A Cumulative
Preference Stock for an equal number of shares of Sun Common Stock
(Exchange Offer) and an offer to repurchase in a "Dutch Auction" up to
6,400,000 shares of Sun Common Stock at cash prices not greater than
$33 nor less than $30 (Cash Offer). Sun Common Stock held in the Plan
could not be tendered in the Exchange Offer, as the Plan does not
provide for investments in the depositary shares.
Sun's Benefit Plans Investment Committee, a Plan fiduciary, engaged an
independent investment manager to decide whether or not to tender the
Plan's shares of Sun Common Stock in the Cash Offer and to manage a
repurchase program if the shares were tendered pursuant thereto. All
of the Sun Common Stock held by the Plan was tendered on behalf of the
Plan participants in the Cash Offer at a price of $30 per share.
Since the Cash Offer was oversubscribed, approximately 18% of all
shares tendered was accepted by the Company on a pro rata basis.
Proceeds received by the Plan for the 808,955 shares of Sun Common
Stock accepted by the Company in the Cash Offer were reinvested over a
period of time in Sun Common Stock in accordance with the investment
objectives of Fund D and ESOP, resulting in a net increase in shares
held by the Plan of 26,645.
21
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
5. TAX STATUS
----------
By letter dated September 16, 1995, the IRS ruled that the Plan is
qualified as a tax-exempt plan with an underlying trust under
Sections 401(a), 401(k) and 501(a) of the Code and as an employee
stock ownership plan under Section 4975 (e)(7) of the Code.
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
---------------------------------------------------
The following is a reconciliation of net assets available for plan
benefits per the financial statements to the Internal Revenue Service
Form 5500 at December 31, 1995 and 1994:
1995 1994
------------ ------------
Net assets available for plan
benefits per the financial
statements $533,184,200 $474,105,963
Less: Benefit payments requested
by participants which have not
yet been paid at December 31 (3,362,844) (1,645,109)
------------ ------------
Net assets available for plan
benefits per the Form 5500 $529,821,356 $472,460,854
============ ============
22
SUN COMPANY, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 (Continued)
--------------------------------------------------------------
The following is a reconciliation of benefits paid to participants per
the financial statements to the Internal Revenue Service Form 5500 for
the years ended December 31, 1995 and 1994:
1995 1994
----------- ------------
Benefits paid to participants per
the financial statements $41,373,776 $24,760,951
Add: Benefit payments requested by
participants which have not yet
been paid at December 31 3,362,844 1,645,109
Less: Benefit payments requested by
participants during the preceding
year which were paid during the
current year (1,645,109) (1,501,813)
----------- -----------
Benefits paid to participants per
the Form 5500 $43,091,511 $24,904,247
=========== ===========
Withdrawals requested by participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment
prior to December 31 but not yet paid as of that date.
23
SUN COMPANY, INC.
CAPITAL ACCUMULATION PLAN
PN 002
E.I. 23-1743282
SCHEDULE G
PART I - ASSETS HELD FOR INVESTMENT PURPOSES
FOR IRS FORM 5500 - ITEM 27(a)
AT DECEMBER 31, 1995
Description of Investment
-------------------------
Last
Identity of issue, borrower, lessor Maturity Rate of Cost Current
or similar party Date Interest Value Value
----------------------------------- -------- -------- ----- -------
LOANS RECEIVABLE FROM PARTICIPANTS 9/2/05 8.50% - 8.75% $ 7,931,710 $ 7,931,710
------------ ------------
VALUE OF INTEREST IN COLLECTIVE TRUST FUNDS
-------------------------------------------
Mellon Bank EB Temporary Investment Fund - - 574,026 574,026
------------ ------------
VALUE OF INTEREST IN MASTER TRUST
--------------------------------
Sun Company, Inc. Defined Contribution Master Trust
Fund A - - 58,697,937 89,996,014
Fund B - - 63,780,259 80,493,176
Fund C - - 239,488,364 239,466,149
------------ ------------
361,966,560 409,955,339
------------ ------------
EMPLOYER RELATED INVESTMENT
---------------------------
Sun Company, Inc. Common Stock, 4,204,023 shares - - 118,860,414 115,085,129
------------ ------------
$489,332,710 $533,546,204
============ ============
24
SUN COMPANY, INC.
CAPITAL ACCUMULATION PLAN
PN 002
E.I. 23-1743282
SCHEDULE G
PART V - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR IRS FORM 5500 - ITEM 27(d)
FOR THE YEAR ENDED DECEMBER 31, 1995
Dispositions Acquisitions
-------------------------------------------------------------- ------------------------------------
Original
Cost of Selling Transaction Gain or Purchase Transaction
Description Number Asset Price* Costs (Loss) Number Price* Costs
----------- ------ -------- ------- ----------- ------- ------ -------- -----------
VALUE OF INTEREST IN
COLLECTIVE TRUST FUNDS
----------------------
**Mellon Bank EB Temporary
Investment Fund 45 $53,041,852 $53,041,852 $ -- $ -- 96 $52,458,179 $ --
**Mellon Bank EB Deposited
at Interest 20 $10,551,000 $10,551,000 $ -- $ -- 19 $ 9,875,000 $ --
EMPLOYER RELATED INVESTMENT
---------------------------
**Sun Company, Inc. Common
Stock 33 $44,464,929 $46,631,469 $41,648 $2,124,892 32 $25,867,388 $43,935
- ----------------
*The selling price or purchase price, as applicable, was equal to the current value of the asset on the transaction date.
**Series of 5% transactions.
25
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following document is filed as part of this report:
3. Exhibits:
23 - Consent of Independent Accountants for the Sun
Company, Inc. Capital Accumulation Plan.