UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 1-6841
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
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(Title of plan and address of plan, if different from issuer)
SUNOCO, INC.
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(Exact name of issuer of securities held pursuant to the plan)
PENNSYLVANIA 23-1743282
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
TEN PENN CENTER, 1801 MARKET STREET, PHILADELPHIA, PA 19103-1699
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(Address of principal executive offices)
(Zip Code)
(215) 977-3000
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(Registrant's telephone number, including area code)
1
SIGNATURE
Pursuant to the requirements 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.
SUNOCO, INC. (Registrant)
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
BY /s/Joseph P. Krott
------------------
Joseph P. Krott
Comptroller
(Principal Accounting Officer)
DATE June 28, 2001
2
REPORT OF INDEPENDENT AUDITORS
Plan Administrator
Sunoco, Inc. Capital Accumulation Plan
We have audited the accompanying statements of assets available for benefits of
the Sunoco, Inc. Capital Accumulation Plan (Plan) as of December 31, 2000 and
1999, and the related statements of changes in assets available for 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 auditing standards generally accepted
in the United States. 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 present fairly, in
all material respects, the assets available for benefits of the Plan at December
31, 2000 and 1999 and the changes in its assets available for benefits for the
years then ended, in conformity with accounting principles generally accepted in
the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental Schedule of
Assets (Held at End of Year) as of December 31, 2000 is presented for purposes
of additional analysis and is not a required part of the financial statements
but is 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. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
June 15, 2001
3
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 2000 AND 1999
2000 1999
---- ----
Investment in Sunoco, Inc. Defined
Contribution Master Trust (Notes 1
and 2) $802,912,076 $800,903,321
Loans receivable from participants,
including accrued interest (Note 1) 17,098,921 16,053,428
------------ ------------
Assets available for benefits (Note 5) $820,010,997 $816,956,749
============ ============
See accompanying notes to financial statements.
4
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
2000 1999
---- ----
Additions (deductions):
Employees' contributions $ 24,944,418 $ 24,890,064
Employers' contributions 13,807,123 13,908,253
Transfers and rollovers from tax-
qualified plans (Note 1) 9,750,682 5,678,415
Interest income 1,384,191 1,306,790
Increase in value of participation in
Sunoco, Inc. Defined Contribution
Master Trust (Notes 1 and 3) 17,947,947 56,309,235
Benefits paid to participants (Note 5) (63,603,231) (60,826,386)
Administrative expenses (Note 2) (1,176,882) (843,598)
------------ ------------
Net additions 3,054,248 40,422,773
Assets available for benefits, 816,956,749 776,533,976
beginning of year ------------ ------------
Assets available for benefits, $820,010,997 $816,956,749
end of year ============ ============
See accompanying notes to financial statements.
5
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS
1. GENERAL DESCRIPTION
-------------------
The Sunoco, 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 Sunoco, Inc. and
its participating subsidiary companies (collectively, Sunoco) who have
completed at least 1,000 hours of service with Sunoco 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 the day
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 make Basic Contributions to the Plan of
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,
Sunoco contributes another full dollar (Matching Employer
Contributions).
Pre-tax contributions by each participant may not exceed an annual
limit which is determined under Internal Revenue Service (IRS)
regulations. This limit was $10,500 in 2000 and $10,000 in 1999.
6
SUNOCO, 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 Sunoco
Common Stock. Such borrowing could only occur upon the action of the
Board of Directors of Sunoco, 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, at the discretion of the Plan Administrator, be used to
satisfy Sunoco's obligation with respect to any Matching Employer
Contributions. As of December 31, 2000, no borrowings had been
approved.
A participant's account is credited daily with units representing
interests held in each of the funds described below except for the
Personal Choice Retirement Account (PCRA) Fund. A participant's account
balance is immediately 100% vested.
Investment Alternatives:
-----------------------
Bankers Trust Company is the Trustee for all investments. The
participant has the option of investing in any one or more of six core
investment funds (collectively, the Core Funds) (the Equity Index Fund;
the U.S. Extended Market Equity Fund; the International Equity Fund;
the Diversified Investments Fund; the Capital Preservation Fund; and
the Sunoco Common Stock Fund) and the Personal Choice Retirement
Account (PCRA) Fund. For all funds except the PCRA Fund, participants'
accounts earn a blended rate, or weighted average, of all of the
investments held in the respective funds. These seven funds and the
ESOP Fund are currently invested in corresponding funds with the same
investment objectives in the Sunoco, Inc. Defined Contribution Master
Trust (Master Trust). The Master Trust also includes investments from
other Sunoco tax-qualified defined contribution plans. Except for the
PCRA Fund, each plan's relative interest in the individual Master Trust
funds and the related income
7
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
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 PCRA investments are held in separate accounts for each
participant. If a participant wants to transfer an amount to the PCRA
Fund, at a minimum, the greater of $1,000 or 10 percent of his account
balance must remain invested in the Core Funds. Actual income, losses
and investment expenses associated with PCRA investments are recorded
directly in the respective participants' accounts.
The following table sets forth each fund's respective share of the
total net assets of the corresponding Master Trust fund at December 31,
2000 and 1999:
2000 1999
---- ----
Equity Index Fund 98.4786% 98.5680%
U.S. Extended Market Equity Fund 97.3603% 98.8610%
International Equity Fund 96.9959% 99.3473%
Diversified Investments Fund 96.8466% 97.0640%
Capital Preservation Fund 93.0785% 92.9696%
Sunoco Common Stock Fund 100.0000% 100.0000%
ESOP Fund 100.0000% 100.0000%
PCRA Fund 100.0000% 100.0000%
Set forth below is a brief description of these funds:
Equity Index Fund - a fund to be invested by investment managers in a
broadly diversified portfolio of common stocks, other types of equity
investments and/or an index fund of large, established, well-known
corporations. The fund may not be invested in any Sunoco, Inc.
securities except that an index fund may contain Sunoco, Inc.
securities. The Equity Index Fund of the Master Trust is currently
invested in an index fund maintained by Deutsche Asset Management 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.
U.S. Extended Market Equity Fund - a fund to be invested by investment
managers in a portfolio of common stocks, other types of equity
investments and/or an index fund of small and medium-sized United
States companies diversified across a broad range of industry sectors.
The U.S. Extended Market Equity Fund of the Master Trust is currently
invested in an index fund maintained by Deutsche Asset Management which
is designed to approximate the performance of the Russell 2500 Index;
however, alternate stock market indices and/or an actively managed
portfolio could be substituted at any time.
8
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
International Equity Fund - a fund to be invested by investment
managers in a diversified portfolio of common stocks, other types of
equity investments and/or an index fund of companies based outside the
United States. This fund is subject to foreign currency exchange rate
risk and "single country" investment risk. The International Equity
Fund of the Master Trust is currently invested in an actively managed
portfolio which is managed by the Capital Guardian Trust Company.
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 of
large, established, well-known corporations) and fixed income
securities, including U.S Treasury bonds and money market instruments.
The fund may not be invested in any Sunoco, Inc. securities except that
an index fund may contain Sunoco, Inc. securities. The Diversified
Investments Fund of the Master Trust is currently invested in a
tactical asset allocation fund managed by Barclays Global Investors.
Capital Preservation Fund - a fund to be invested in: (1) contracts
with insurance companies or other financial institutions backed by the
types of obligations described in (3) and (4) below (synthetic
investment contracts); (2) 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); (3) U.S. government-backed and agency obligations; or (4)
fixed income securities of corporations primarily rated "investment
grade" and high-quality asset-backed securities primarily rated "AAA".
The Capital Preservation Fund of the Master Trust is currently managed
by Certus Asset Advisors.
Sunoco Common Stock Fund - a fund to be invested principally in Sunoco
Common Stock. Cash contributions directed for investment in the Sunoco
Common Stock Fund are used by the Trustee to purchase Sunoco Common
Stock on securities exchanges, from Sunoco, Inc., or from any other
bona fide offeror of such Sunoco Common Stock, at the lowest price
obtainable at the time.
ESOP Fund - a fund to be invested principally in Sunoco Common Stock,
which constitutes an employee stock ownership plan under Section
4975(e)(7) of the Code. No contributions are invested directly in the
ESOP Fund.
9
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
PCRA Fund - a fund to be invested by the participant in a wide range of
investment choices including common stocks listed on major U.S.
exchanges, over-the-counter stocks, bonds and eligible mutual funds.
Investments are made as directed by the participant and are purchased
through Charles Schwab & Co., Inc., a brokerage firm. Participants may
not invest in common stock or debt securities of Sunoco through this
account.
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.
The following table details the above funds' investments in the net
assets of the corresponding Master Trust funds at December 31, 2000 and
1999:
2000 1999
---- ----
Equity Index Fund $227,080,244 $264,098,373
U.S. Extended Market Equity Fund 32,890,645 25,378,529
International Equity Fund 25,378,288 27,613,529
Diversified Investments Fund 117,115,944 124,488,355
Capital Preservation Fund 242,508,937 241,438,199
Sunoco Common Stock Fund 72,866,046 52,118,127
ESOP Fund 57,227,215 44,875,997
PCRA Fund 27,844,757 20,892,212
------------ ------------
Investment in Sunoco, Inc.
Defined Contribution Master Trust $802,912,076 $800,903,321
============ ============
At December 31, 2000 and 1999, the Capital Preservation Fund of the
Master Trust is principally invested in both synthetic and standard
investment contracts.
The synthetic investment contracts are currently with Bank of America,
CDC Financial Products, Inc., Monumental Life Insurance Co., National
Westminster Bank plc, Rabobank Nederland, Transamerica Life Companies
and Westdeutsche Landesbank Giroentrale. They 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.
10
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
The following table details for each synthetic investment contract
respective interest crediting rates and percentage of the net assets of
the Capital Preservation Fund of the Master Trust at December 31, 2000
and 1999:
% of Master Trust
Capital Preservation
Financial Institutions Average Interest Fund Net Assets
Providing Wrapper Crediting Rate at 12/31
---------------------- --------------------- --------------------------
2000 1999 2000 1999
------ ------ --------- --------
Buy and Hold Portfolios:
-----------------------
CDC Financial Products, Inc. 6.58% 6.58% 3 3
Monumental Life Insurance Co. 6.69% 5.88% 4 1
National Westminster Bank plc 6.98% 6.64% 2 4
Rabobank Nederland 6.53% 5.78% 8 4
Transamerica Life Companies 6.88% 6.61% -- 3
Managed Portfolios:
------------------
Bank of America 6.32% 6.70% 16 16
Monumental Life Insurance Co. 6.35% 6.74% 22 22
Westdeutsche Landesbank
Giroentrale 6.34% 6.73% 16 17
--- ---
71%* 70%*
=== ===
----------
*The other 29% and 30% of net assets of the Capital Preservation Fund
of the Master Trust at December 31, 2000 and 1999, respectively, are
invested in standard investment contracts (20% and 21%) and in cash
and collective trust funds (9% and 9%) maintained by Barclay's Global
Investors. The collective trust funds are comprised primarily of U.S.
government-backed and agency obligations and short-term investments.
Over time, the contracts will earn the rate of return of the
underlying assets.
11
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
Identified below are the insurance companies and other financial
institutions that have entered into standard investment contracts as of
December 31, 2000 and 1999 with the Master Trust to pay interest on
funds invested in them:
% of Master
Trust Capital
Effective Preservation
Annual Fund Net Assets
Interest at 12/31 Last
Rate (Net -------------------- Maturity
Financial Institution of Expenses) 2000 1999 Date
--------------------- ------------ ---- ---- --------
Hartford Life Insurance Company 7.13% 2 - 12/15/05
Monumental Life Insurance Company 5.58% 2 2 12/16/02
New York Life Insurance Co. 7.97% - 2 10/16/00
Ohio National Life Insurance Company 5.96% 2 2 11/15/02
Pacific Life Insurance Company 4.98% 2 2 11/15/01
Protective Life Insurance Company 6.74% 1 2 6/15/01
Safeco Life Insurance Companies 7.05% - 1 6/15/00
Safeco Life Insurance Companies 6.55% 2 2 12/17/01
Safeco Life Insurance Companies 6.00% 2 2 7/15/03
Security Life of Denver Insurance Company 6.56% 2 2 9/16/02
SunAmerica Life Insurance Co. 6.68% 3 2 11/17/03
United of Omaha 7.09% 2 2 11/15/04
--- ---
20% 21%
=== ===
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 the Capital Preservation Fund 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 potential
credit 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 substantially all of
the standard investment contracts in the Capital Preservation Fund.
Plan management believes that future credit losses of the Plan's
investment in the Capital Preservation Fund of the Master Trust, if
any, would not be material in relation to the Capital Preservation
Fund's net assets available for benefits at December 31, 2000. There
are no other significant concentrations of credit risk in other Plan
assets.
12
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
The average interest crediting rates at December 31, 2000 and 1999 for
all synthetic and standard investment contracts in the aggregate were
6.38% and 6.58%, respectively. The average yields for the years ended
December 31, 2000 and 1999 for such contracts in the aggregate were
6.54% and 6.40%, respectively.
Employers' Contributions:
------------------------
Employer contributions are invested in each of the funds in the same
proportion as the participant's contributions are invested in such
funds.
Investment Earnings Reinvestment/Distribution:
---------------------------------------------
Earnings from dividends and interest in all funds (except the ESOP Fund
and the PCRA Fund) are retained by the Trustee 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 all Sunoco Common Stock
attributable to his or her account in the ESOP Fund (dividend
equivalents) if they exceed $10. Dividends on Sunoco 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 or her account in the ESOP Fund and are reinvested in
Sunoco Common Stock by the Trustee. Earnings from dividends and
interest in the PCRA Fund are invested in short-term investments that
are credited directly to the participant's account.
Rollovers, Withdrawals and Transfers:
------------------------------------
Certain employees of Sunoco 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. Such transfers are separately reflected in the statements of
changes in assets available for 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 Sunoco 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. However, if the participant is still employed at
age 70 1/2, the balances will be distributed at retirement.
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 a
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.
13
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
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 the Equity Index Fund, U.S. Extended Market Equity
Fund, International Equity Fund and Diversified Investments Fund are
made in cash only while those from the Capital Preservation Fund may be
made in cash or as an annuity. Withdrawals from the Sunoco Common Stock
Fund and the ESOP Fund are made in the form of Sunoco Common Stock or
cash at the participant's discretion. Withdrawals of Sunoco Common
Stock are valued at the closing market prices on the last business day
of the week in which the notice of withdrawal has been processed by the
Plan. Withdrawals will be distributed from participants' accounts in
the following order:
Capital Preservation Fund
Diversified Investments Fund
Equity Index Fund
U.S. Extended Market Equity Fund
International Equity Fund
Sunoco Common Stock Fund
ESOP Fund
Account balances in the PCRA Fund cannot be withdrawn directly.
Participants must first liquidate investments held in the PCRA Fund and
transfer sufficient proceeds to one of the other investment funds from
which the withdrawal or a loan to the participant (see below) can be
made.
While actively employed, a participant generally is not entitled to
withdraw Basic Pre-Tax Contributions, Basic Post-Tax Contributions or
Additional Pre-Tax Contributions, including earnings thereon.
A participant may transfer investments among all funds (except the Loan
Fund), subject generally to the following rules. A participant may
elect to change the investment allocation percentage for any fund
(except the Loan Fund or PCRA Fund) or elect to transfer a specified
dollar amount from the Equity Index Fund, U.S. Extended Market Equity
Fund, International Equity Fund, Diversified Investments Fund, Capital
Preservation Fund and PCRA Fund or share equivalents from the Sunoco
Common Stock and ESOP Funds. Transfers or changes in fund allocation
percentages may be made daily.
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.
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 or her 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 or, if employed at age 70 1/2,
at retirement.
14
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
------------------------------
Loans to Participants
---------------------
The Plan Administrator has the authority, at 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.
Participants are eligible to borrow if they are on the active payroll
of Sunoco 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 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 (except for the PCRA Fund)
on a pro rata basis and are not taxable to the participant when
received. Any loan which is not repaid according to its terms is in
default and the outstanding loan balance (including accrued interest
thereon) is treated as a distribution from the Plan. Loans may be
prepaid in full but only after they have been outstanding for at least
six months. Loans are reflected in the accompanying statements of
assets available for benefits. As loans receivable (including interest
thereon) are repaid, amounts are transferred into the funds in the same
proportion as the participant's current contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates:
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. 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 synthetic and standard 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. Synthetic investment
contracts earn interest at rates that are reset at least quarterly as
specified in the respective contract while standard investment
contracts earn interest at fixed rates. 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
15
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
-----------------------------------------------------
indicative of amounts that could be realized in a current market
exchange. The valuation of Sunoco 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. Investments held in the PCRA Fund are
valued at their closing market prices 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 is
recorded as earned on an accrual basis. The net appreciation in the
fair value of investments, which consists of realized gains (losses)
and unrealized appreciation (depreciation), is reported as a component
of the increase in value of participation in the Sunoco, Inc. Defined
Contribution Master Trust (Note 3).
Benefits Paid to Participants:
-----------------------------
Benefits paid to participants, which include withdrawals and
distributions, are recorded upon distribution.
Administrative Expenses:
-----------------------
All brokerage fees, taxes and other expenses related to the purchase
and sale of securities in all funds are paid out of the respective
assets of such funds. All other costs and expenses (other than the cost
of services provided by Sunoco employees which are paid by Sunoco)
incurred in administering the Plan are generally charged, pro rata, to
each of the respective funds (except the PCRA Fund). Participants with
investments in the PCRA Fund are charged a separate administrative fee
which is deducted from their Core Fund investments.
Reclassifications:
-----------------
Certain amounts in the 1999 financial statements have been reclassified
to conform to the 2000 presentation.
16
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
3. SUPPLEMENTAL INFORMATION
------------------------
The increase in value of participation in the Sunoco, Inc. Defined
Contribution Master Trust for the years ended December 31, 2000 and
1999 was composed of the following:
2000 1999
---- ----
Net appreciation (depreciation) in fair value of investments:
Equity Index Fund $(22,900,252) $ 47,476,658
U.S. Extended Market Equity Fund (3,483,158) 5,828,454
International Equity Fund (6,348,743) 9,883,074
Diversified Investments Fund 2,332,030 12,347,837
Sunoco Common Stock and ESOP Funds 42,229,516 (42,558,306)
PCRA Fund (12,978,222) 4,542,970
------------ ------------
(1,148,829) 37,520,687
Dividend income 4,449,592 3,686,617
Interest income 14,507,545 15,052,148
Income from collective trust funds 139,639 49,783
------------ ------------
$ 17,947,947 $ 56,309,235
============ ============
4. INCOME TAX STATUS
-----------------
The Plan has received a determination letter from the Internal Revenue
Service dated September 16, 1995, stating that the Plan is qualified
under Section 401(a) of the Internal Revenue Code and, therefore, the
related trust is exempt from taxation. Once qualified, the Plan is
required to operate in conformity with the Code to maintain its
qualification. The Plan Administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code
and, therefore, believes that the Plan is qualified and the related
trust is tax exempt.
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
---------------------------------------------------
The following is a reconciliation of assets available for benefits per
the financial statements to the Internal Revenue Service Form 5500 at
December 31, 2000 and 1999:
2000 1999
---- ----
Assets available for benefits
per the financial statements $820,010,997 $816,956,749
Benefit payments requested
by participants which have not
yet been paid at December 31 (1,372,311) (1,124,402)
------------ ------------
Assets available for benefits
per the Form 5500 $818,638,686 $815,832,347
============ ============
17
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
5. 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, 2000 and 1999:
2000 1999
---- ----
Benefits paid to participants per
the financial statements $63,603,231 $60,826,386
Benefit payments requested by
participants which have not yet
been paid at December 31 1,372,311 1,124,402
Benefit payments requested by
participants during the preceding
year which were paid during the (1,124,402) (378,138)
current year ----------- -----------
Benefits paid to participants per
the Form 5500 $63,851,140 $61,572,650
=========== ===========
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.
18
SUNOCO, INC.
CAPITAL ACCUMULATION PLAN
PN 002
E.I. 23-1743282
SCHEDULE H, Line 4:
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2000
Description of Investment,
Including Maturity Date,
Identity of Issue, Borrower, Lessor Rate of Interest, Par Cost Current
or Similar Party or Maturity Value Value Value
----------------------------------- -------------------------- ------ -------
Loans Receivable from Participants 7.75% - 9.50% with various maturity
dates (last maturity date - 9/24/2010) $ -- $ 17,098,921
============ ============
19
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:
23.1 - Consent of Ernst & Young LLP for the Sunoco, Inc. Capital
Accumulation Plan.
20
EXHIBIT INDEX
Exhibit
Number Exhibit
------- -------
23.1 Consent of Ernst & Young LLP for the Sunoco, Inc. Capital
Accumulation Plan.
1