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, 2001
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)
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, 2001 and
2000, 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, 2001 and 2000 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, 2001 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
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Ernst & Young LLP
Philadelphia, Pennsylvania
May 31, 2002
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 2001 AND 2000
2001 2000
---- ----
Investment in Sunoco, Inc. Defined
Contribution Master Trust (Notes 1
and 2) $799,634,077 $802,912,076
Loans receivable from participants,
including accrued interest (Note 1) 18,252,522 17,098,921
------------ ------------
Assets available for benefits (Note 6) $817,886,599 $820,010,997
============ ============
See accompanying notes to financial statements.
1
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
2001 2000
---- ----
Additions (deductions):
Employees' contributions $ 26,733,558 $ 24,944,418
Employers' contributions 14,727,239 13,807,123
Transfers from Aristech Savings Plan (Note 3) 38,098,158 --
Transfers and rollovers from other tax-
qualified plans (Note 1) 4,886,183 9,750,682
Interest income 1,344,712 1,384,191
Increase (decrease)in value of participation
in Sunoco, Inc. Defined Contribution
Master Trust (Notes 1 and 4) (16,092,134) 17,947,947
Benefits paid to participants (Note 6) (70,573,205) (63,603,231)
Administrative expenses (Note 2) (1,248,909) (1,176,882)
------------ ------------
Net additions (deductions) (2,124,398) 3,054,248
Assets available for benefits,
beginning of year 820,010,997 816,956,749
------------ ------------
Assets available for benefits,
end of year $817,886,599 $820,010,997
============ ============
See accompanying notes to financial statements.
2
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 for both 2001 and 2000.
3
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, 2001, 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:
Deutsche Bank 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
4
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, 2001 and
2000:
2001 2000
---- ----
Equity Index Fund 98.7508% 98.4786%
U.S. Extended Market Equity Fund 98.5871% 97.3603%
International Equity Fund 98.4457% 96.9959%
Diversified Investments Fund 97.2196% 96.8466%
Capital Preservation Fund 93.6611% 93.0785%
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.
5
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 allocation of assets
between these types of investments varies over time and is determined by
the investment manager. 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 or variable 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.
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.
6
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
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, 2001 and 2000:
2001 2000
---- ----
Equity Index Fund $199,309,676 $227,080,244
U.S. Extended Market Equity Fund 31,719,418 32,890,645
International Equity Fund 19,626,182 25,378,288
Diversified Investments Fund 104,184,518 117,115,944
Capital Preservation Fund 297,576,474 242,508,937
Sunoco Common Stock Fund 67,140,013 72,866,046
ESOP Fund 54,062,666 57,227,215
PCRA Fund 26,015,130 27,844,757
------------ ------------
Investment in Sunoco, Inc.
Defined Contribution Master Trust $799,634,077 $802,912,076
============ ============
At December 31, 2001 and 2000, 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
Capital, Inc. (formerly CDC Financial Products, Inc.), Monumental Life
Insurance Company, 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.
7
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, 2001 and
2000:
% of Master Trust
Capital Preservation
Financial Institutions Average Interest Fund Net Assets
Providing Wrapper Crediting Rate at 12/31
---------------------- ---------------- --------------------
2001 2000 2001 2000
---- ---- ---- ----
Buy and Hold Portfolios:
-----------------------
CDC Capital, Inc. 6.29% 6.58% 5 3
Monumental Life Insurance
Company 6.40% 6.69% 1 4
National Westminster Bank plc 6.99% 6.98% 1 2
Rabobank Nederland 6.03% 6.53% 14 8
Transamerica Life Companies 6.95% 6.88% 2 --
Managed Portfolios:
------------------
Bank of America 5.62% 6.32% 14 16
Monumental Life Insurance
Company 5.56% 6.35% 19 22
Westdeutsche Landesbank
Giroentrale 5.57% 6.34% 14 16
--- ---
70%* 71%*
=== ===
----------
*The other 30% and 29% of net assets of the Capital Preservation Fund of
the Master Trust at December 31, 2001 and 2000, respectively, are invested
in standard investment contracts (26% and 20%) and in cash and collective
trust funds (4% 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.
8
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, 2001 and 2000 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) 2001 2000 Date
--------------------- ------------ ---- ---- --------
GE Capital Assurance Company 6.15% 3 - 11/15/06
Hartford Life Insurance Company 5.89% 2 - 11/15/05
Hartford Life Insurance Company 7.13% 2 2 12/15/05
Jackson National Life Insurance Co. 4.98% 3 - 04/11/06
Monumental Life Insurance Company 5.58% 2 2 12/16/02
Ohio National Life Insurance Company 5.96% 2 2 11/15/02
Ohio National Life Insurance Company 3.49% 1 - 09/15/03
Pacific Life Insurance Company 4.98% - 2 11/15/01
Protective Life Insurance Company 6.74% - 1 6/15/01
Safeco Life Insurance Companies 6.55% - 2 12/17/01
Safeco Life Insurance Companies 6.00% 2 2 7/15/03
Security Life of Denver Insurance
Company 6.56% 1 2 9/16/02
Security Life of Denver Insurance
Company 4.30% 3 - 08/15/06
SunAmerica Life Insurance Co. 6.68% 2 3 11/17/03
United of Omaha 7.09% 2 2 11/15/04
United of Omaha 5.00% 1 - 11/17/05
--- ---
26% 20%
=== ===
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. 107,
"Disclosures about Fair Value of Financial Instruments" (SFAS No. 107).
SFAS No. 107 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 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, 2001. There are no
other significant concentrations of credit risk in other Plan assets.
9
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. GENERAL DESCRIPTION (Continued)
The average interest crediting rates at December 31, 2001 and 2000 for all
synthetic and standard investment contracts in the aggregate were 5.75% and
6.38%, respectively. The average yields for the years ended December 31,
2001 and 2000 for such contracts in the aggregate were 5.97% and 6.54%,
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 (Note 3).
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.
10
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.
11
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 or variable
rates that are reset at least quarterly. 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
12
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 (depreciation)
in the fair value of investments, which consists of realized gains (losses)
and unrealized appreciation (depreciation), is reported as a component of
the increase (decrease) in value of participation in the Sunoco, Inc.
Defined Contribution Master Trust (Note 4).
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.
3. Transfers from Aristech Savings Plan
On August 17, 2001, the Aristech Savings Plan, a defined contribution plan
sponsored by Aristech Chemical Corporation, an indirect wholly owned
subsidiary of Sunoco, Inc., was merged into the Plan. In connection with
the merger, $38,098,158 of assets were transferred into the Plan.
13
SUNOCO, INC. CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
4. SUPPLEMENTAL INFORMATION
The increase (decrease) in value of participation in the Sunoco, Inc.
Defined Contribution Master Trust for the years ended December 31, 2001 and
2000 was composed of the following:
2001 2000
---- ----
Net appreciation (depreciation) in fair value
of investments:
Equity Index Fund $(27,099,996) $(22,900,252)
U.S. Extended Market Equity Fund (3,529,717) (3,483,158)
International Equity Fund (4,041,111) (6,348,743)
Diversified Investments Fund (7,465,049) 2,332,030
Sunoco Common Stock and ESOP Funds 13,661,270 42,229,516
PCRA Fund (7,108,863) (12,978,222)
------------ ------------
(35,583,466) (1,148,829)
Dividend income 3,300,566 4,449,592
Interest income 15,970,723 14,507,545
Income from collective trust funds 220,043 139,639
------------ ------------
$(16,092,134) $ 17,947,947
============ ============
5. 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.
6. 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, 2001 and 2000:
2001 2000
---- ----
Assets available for benefits
per the financial statements $817,886,599 $820,010,997
Benefit payments requested
by participants which have not
yet been paid at December 31 (183,735) (1,372,311)
------------ ------------
Assets available for benefits
per the Form 5500 $817,702,864 $818,638,686
============ ============
14
SUNOCO, 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, 2001 and 2000:
2001 2000
---- ----
Benefits paid to participants per
the financial statements $ 70,573,205 $ 63,603,231
Benefit payments requested by
participants which have not yet
been paid at December 31 183,735 1,372,311
Benefit payments requested by
participants during the preceding
year which were paid during the (1,372,311) (1,124,402)
current year ------------ ------------
Benefits paid to participants per
the Form 5500 $ 69,384,629 $ 63,851,140
============ ============
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.
7. SUBSEQUENT EVENT
In June 2002, the Vanguard Group will become the Plan's new recordkeeper
and trustee. Effective with this change, in addition to the current funds,
participants will also have the option of investing in a bond index fund
and three additional equity funds.
15
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, 2001
Description of Investment,
Including Maturity Date,
Identity of Issue, Borrower, Lessor Rate of Interest, Par Current
or Similar Party or Maturity Value Value
----------------------------------- -------------------------- -------
Loans Receivable from Participants 5.0% - 9.5% with various maturity
dates (last maturity date - 07/08/2011) $ 18,252,522
============
16
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.
17
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 21, 2002
18
EXHIBIT INDEX
Exhibit
Number Exhibit
23.1 Consent of Ernst & Young LLP for the Sunoco, Inc. Capital Accumulation
Plan.