ITEM 3. LEGAL PROCEEDINGS
In April 1993, Sun Company, Inc. (R&M) ("Sun (R&M)"), a wholly owned subsidiary of the Company, was advised by the Department of Justice, Environmental Enforcement Division ("DOJ") and the United States Environmental Protection Agency ("EPA") that they contemplated the filing of a lawsuit against Sun, seeking civil penalties and certain remedial action regarding certain alleged violations of federal and state air emissions regulations at its Philadelphia refinery. Sun (R&M) has participated in discussions with the DOJ and EPA in an effort to review and settle these allegations. A settlement in principle has been reached, and it is anticipated that any negotiated settlement will involve the payment of a civil fine in excess of $100,000 and an additional obligation to undertake certain remedial activities at the facility.
Sun and several other energy companies have been negotiating with the New York Department of Environmental Compliance ("NY DEC") regarding the terms of certain environmental remediation which the NY DEC is requiring to be conducted at certain facilities owned by Sun and other energy companies in Syracuse, NY. The companies and the NY DEC are discussing the provisions of the draft consent agreement. However, should these negotiations prove unsuccessful, the NY DEC has indicated that it will issue administrative action against Sun and the other energy companies to seek to compel environmental remediation at the facilities, and to seek civil penalties in excess of $100,000.
On March 17, 1992, Region III of the EPA issued a Compliance Order to Sun (R&M) as a result of Sun (R&M)'s inability to meet the deadline for implementing required marine vapor controls pertaining to the loading of benzene at its refinery in Marcus Hook, Pennsylvania. The deadline was missed primarily because of the need to resolve several related matters with the U.S. Coast Guard. Although a civil settlement in principle was reached with EPA whereby Sun (R&M) expects to make a payment in excess of $100,000, the negotiated consent decree has not yet been signed by the government, pending the resolution of certain issues involving the testing and monitoring procedures related to Sun's vapor recovery system.
On July 7, 1992, the EPA issued a Complaint and Compliance Order to Cordero Mining Co. ("Cordero"), then a wholly owned subsidiary of the Company, alleging violations of the Resource Conservation and Recovery Act with regard to the handling and disposal of spent solvents. The EPA had sought a civil penalty in excess of $100,000 from Cordero. On June 4, 1993, the Company completed the divestment of all of the common stock of Cordero.
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 position of Sun at December 31, 1993.
ITEM 4.
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., 51 Senior Vice President and Chief Financial Officer Mr. Aiken was named to his present position in May 1992. From September 1990 until May 1992, he held the position of Senior Vice President, Finance, and from April 1979 to September 1990, he was Comptroller. Robert H. Campbell, 56 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, 39 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, and from 1988 to July 1989, Manager, Corporate Financial Analysis. Jack L. Foltz, 58 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, Sun Refining and Marketing Company. From 1985 to December 1989, he was Assistant General Counsel, Sun Company, Inc.
NAME, AGE AND PRESENT POSITION WITH SUN COMPANY, INC. ---------------------- BUSINESS EXPERIENCE DURING PAST FIVE YEARS -------------------------- David E. Knoll, 50 Senior Vice President Marketing and Logistics Mr. Knoll has been in his present position since October 1992 and from October 1991 to October 1992, he was Group Vice President, Refining and Marketing. From November 1988 to October 1991, he was President, Sun Refining and Marketing Company. Harwood S. Roe, Jr., 49 Senior Vice President Operations Mr. Roe has been in his present position since October 1992. From 1991 to October 1992, he was Vice President, Operations and from 1988 to 1991, he was Vice President, Refining of Sun's domestic refining and marketing subsidiary. Malcolm I. Ruddock, 51 Treasurer Mr. Ruddock has been in his present position since July 1989. He was Director, Finance from November 1988 to July 1989. Sheldon L. Thompson, 55 Senior Vice President and Chief Administrative Officer Mr. Thompson has been in his present position since October 1992. Prior to assuming this position, he served in various capacities within Sun's domestic refining and marketing subsidiary: from 1991 to October 1992, he was its Vice President for Chemicals, Lubricants and Technology; from 1989 to 1991, Vice President for Chemicals and Technology; and from 1988 to 1989, Vice President for Chemicals. Robert H. Writz, Jr., 51 Senior Vice President Other Businesses Mr. Writz has been in his present position since October 1992. From October 1991 to October 1992, he was Group Vice President, Additional Businesses. From February 1991 to October 1991, he was Vice President, Business Development. From 1987 to February 1991, he was Executive Vice President, Resources Group, of Suncor Inc., a subsidiary.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market for Sun Company, Inc. Stock and Related Security Holder Matters on page 77 of the Company's 1993 Annual Report to Shareholders is incorporated herein by reference. 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.
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 1993 Annual Report to Shareholders.
ITEM 7.
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 26-40 in the Company's 1993 Annual Report to Shareholders.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information in the Company's 1993 Annual Report to Shareholders is incorporated herein by reference: the Consolidated Financial Statements on pages 41-44; the Notes to Consolidated Financial Statements on pages 45-61; the Report of Independent Accountants on page 62; and Supplemental Financial and Operating Information on pages 67-73 (excluding the sections on Exploration Expenses, Revenues Per Unit of Oil and Gas Production and Average Net Oil and Gas Production) and 75-76.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information on directors required by this Item is incorporated herein by reference to the Company's definitive Proxy Statement which will be filed with the Securities and Exchange Commission ("SEC") within 120 days after December 31, 1993.
Information concerning the Company's executive officers appears in Part I of this Annual Report on Form 10-K.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the Company's definitive Proxy Statement which will be filed with the SEC within 120 days after December 31, 1993.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to the Company's definitive Proxy Statement which will be filed with the SEC within 120 days after December 31, 1993.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to the Company's definitive Proxy Statement which will be filed with the SEC within 120 days after December 31, 1993.
PART IV
ITEM 14.
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 1993 Annual Report to Shareholders as described in Item 8 is incorporated herein by reference.
2. Financial Statement Schedules:
Page ---- Report of Independent Accountants.................. 33
Schedule V - Properties, Plants and Equipment..... 34
Schedule VI - Accumulated Depreciation, Depletion and Amortization of Properties, Plants and Equipment................. 35
Schedule VIII - Valuation Accounts................. 37
Schedule IX - Short-Term Borrowings................ 38
Schedule X - Supplementary Income Statement Information.......................... 39
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.
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).
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).
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).
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).
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).
10.6* - Special Executive Severance Plan (incorporated by reference to Exhibit 10(g) of the Form SE filed March 20, 1986, File No. 1-6841).
10.7* - 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).
10.8* - 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).
10.9* - Sun Company, Inc. Savings Restoration Plan II, effective April 6, 1989 (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).
10.10* - 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).
10.11* - Sun Company, Inc. Deferred Compensation and Benefits Trust (incorporated by reference to Exhibit 10(l) of the Form SE filed March 15, 1989).
10.12* - 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).
10.13* - Sun Company, Inc. Executive Long-Term Stock Investment Plan, as amended November 1, 1993.
10.14* - 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).
11 - Statements re Sun Company, Inc. and Subsidiaries Computation of Per Share Earnings for the Years Ended December 31, 1993, 1992 and 1991.
12 - Statement re Sun Company, Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges for the Year Ended December 31, 1993.
13 - Sun Company, Inc. 1993 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.
- ----------- *These exhibits constitute the Executive Compensation Plans and Arrangements of the Company.
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the quarter ended December 1993.
A report on Form 8-K dated February 24, 1994 was filed to disclose under Item 5, "Other Events," that Sun has signed a letter of intent with Chevron U.S.A. Products Co. to purchase Chevron's 177,000- barrel-a-day Philadelphia refinery plus Chevron's one-third interest in a petroleum pipeline connecting the refinery to the New York Harbor, for approximately $170 million, including inventory.
Note: Copies of each Exhibit to this Form 10-K are available upon request, at $2 per copy.
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 3, 1994
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 3, 1994:
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
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
B. RAY THOMPSON, JR.* Director --------------------- B. Ray Thompson, Jr.
ALEXANDER B. TROWBRIDGE* Director ------------------------ Alexander B. Trowbridge
*By s/ROBERT M. AIKEN, JR. Individually and as Attorney-in-Fact ---------------------- Robert M. Aiken, Jr.
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 62 of the Sun Company, Inc. 1993 Annual Report to Shareholders. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed in the index on page 27 of this Form 10-K.
In our opinion, the financial statement schedules 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
2400 Eleven Penn Center Philadelphia, PA 19103 February 15, 1994
SUN COMPANY, INC. AND SUBSIDIARIES SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTIES, PLANTS AND EQUIPMENT FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991--(CONTINUED) (MILLIONS OF DOLLARS)
Notes: YEARS ENDED DECEMBER 31 ----------------------- 1993 1992 1991 ---- ---- ----
(A) Depreciation, depletion and amortization.....$354 $385 $433 Leasehold impairment......................... 5 4 5 ---- ---- ---- Total additions............................ 359 389 438 Dry hole costs............................... 9 30 48 ---- ---- ---- Amounts shown in the consolidated statements of cash flows as depreciation, depletion and amortization and dry hole costs and leasehold impairment...........$368 $419 $486 ==== ==== ====
(B) A summary of the principal annual rates utilized in computing the annual provision for depreciation, depletion and amortization is not considered practicable because of the varying types of property and the rates applied thereto.
(C) Includes foreign currency translation adjustments and intersegment transfers. In 1992, also includes $59 million in refining and marketing, $350 million in exploration and production and $67 million in oil sands mining attributable to a provision for write-down of assets and other matters. (See Note 2 to the Consolidated Financial Statements in the Company's 1993 Annual Report to Shareholders.)
SUN COMPANY, INC. AND SUBSIDIARIES SCHEDULE VIII--VALUATION ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (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, 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 === === === ===
For the year ended December 31, 1991: Deducted from asset in balance sheet--allowance for doubtful accounts and notes receivable.......... $11 $14 $13 $12 === === === ===
SUN COMPANY, INC. AND SUBSIDIARIES SCHEDULE IX--SHORT-TERM BORROWINGS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (DOLLARS IN MILLIONS)
MAXIMUM AVERAGE WEIGHTED AMOUNT AMOUNT AVERAGE WEIGHTED OUT- OUT- INTEREST BALANCE AVERAGE STANDING STANDING RATE AT END INTEREST DURING DURING DURING OF PERIOD RATE PERIOD PERIOD(A) PERIOD(B) --------- -------- ------- --------- ---------
For the year ended December 31, 1993: Commercial paper.... $ 50 3.6% $308 $127 3.5% Amounts due to banks and others.. 60 3.5% $ 65 15 3.4% ---- ---- $110 3.5% $142 3.5% ==== ====
For the year ended December 31, 1992: Commercial paper.... $215 3.7% $307 $173 4.1% ==== ====
For the year ended December 31, 1991: Commercial paper.... $143 5.2% $340 $211 6.2% Amounts due to banks and others.. -- N/A $ 17 1 12.4% ---- ---- $143 5.2% $212 6.3% ==== ====
Notes:
(A) Determined from daily balances.
(B) Represents the ratio of actual interest to average amounts outstanding.
SUN COMPANY, INC. AND SUBSIDIARIES SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (MILLIONS OF DOLLARS)
1993 1992 1991 ---- ---- ----
Maintenance and repairs........................ $223 $295 $335 ==== ==== ====
APPENDIX
The Company's Management's Discussion and Analysis of Financial Condition and Results of Operations included in its 1993 Annual Report to Shareholders contains three bar charts concerning Sun's: (1) improvement in income before special items (page 26); (2) capitalization (page 37); and (3) capital expenditures (page 37). Descriptions of these bar charts have been provided within Exhibit 13.