Attached files
| file | filename |
|---|---|
| 8-K - SUNOCO INC--FORM 8-K - SUNOCO INC | d284735d8k.htm |
| EX-99.1 - PRESS RELEASE - SUNOCO INC | d284735dex991.htm |
Exhibit 99.2
SUNOCO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Sunoco, Inc. (“Sunoco”) contributed its cokemaking and coal mining operations to SunCoke Energy, Inc. on July 18, 2011. (Throughout these pro forma financial statements, SunCoke Energy, Inc. and its predecessor entities, which made up Sunoco’s cokemaking and coal mining operations, will be referred to as SunCoke). Effective with the closing of an initial public offering (the “IPO”) of SunCoke’s common stock on July 26, 2011, Sunoco had an 81-percent interest in SunCoke. On January 17, 2012, Sunoco completed the spin-off of its remaining interest in SunCoke by means of a special stock dividend of 56,660,000 shares of SunCoke common stock (the “Distribution”). Sunoco stockholders of record as of the close of business on January 5, 2012 (the “Record Date”) received 0.53046456 of a share of SunCoke common stock for every common share of Sunoco stock held as of the Record Date.
Prior to the completion of the IPO, Sunoco and SunCoke entered into a Separation and Distribution Agreement and other agreements that govern the post-IPO relationship. These agreements allow for a settlement process surrounding the transfer of certain assets and liabilities, for which future adjustments could occur as these transfers are resolved.
The unaudited pro forma consolidated financial information of Sunoco presented below was derived from Sunoco’s historical consolidated financial statements and is being presented to give effect to the spin-off of SunCoke. The unaudited pro forma consolidated statements of continuing operations give effect to the spin-off of SunCoke as if the spin-off occurred on January 1, 2008. The unaudited pro forma consolidated balance sheet assumes the spin-off of SunCoke occurred on September 30, 2011. SunCoke will be reported as a discontinued operation beginning with Sunoco’s Form 10-Q for the quarter ended March 31, 2012.
In connection with the contribution of Sunoco’s cokemaking and coal operations to SunCoke and SunCoke’s issuance of approximately $700 million of long-term debt, Sunoco received $575 million of cash for the repayment of certain intercompany obligations of SunCoke in July 2011. As the cash received by Sunoco was not designated for any specific purpose, there are no pro forma adjustments to reflect potential uses for this cash and no interest income was assumed.
The pro forma adjustments are based on the best information available and assumptions that management believes are factually supportable. The unaudited pro forma consolidated financial information is for illustrative and informational purposes only and is not intended to reflect what Sunoco’s financial position and results of operations would have been had the spin-off occurred on the dates indicated and is not necessarily indicative of Sunoco’s future financial position and future results of operations. The unaudited pro forma consolidated financial information should be read in conjunction with Sunoco’s historical financial statements and accompanying notes.
Sunoco, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Continuing Operations (Unaudited)
For the Nine Months Ended September 30, 2011
(Millions of Dollars and Shares, Except Per-Share Amounts)
| Spin-off of | Pro Forma | Pro | ||||||||||||||
| Historical | SunCoke | Adjustments | Forma | |||||||||||||
| Revenues |
||||||||||||||||
| Sales and other operating revenue (including consumer excise taxes) |
$ | 34,123 | $ | (1,114 | ) | $ | 7 | (A) | $ | 33,016 | ||||||
| Interest income |
17 | (12 | ) | 12 | (B) | 17 | ||||||||||
| Gain on remeasurement of pipeline equity interests |
9 | — | — | 9 | ||||||||||||
| Other income, net |
40 | (1 | ) | — | 39 | |||||||||||
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| 34,189 | (1,127 | ) | 19 | 33,081 | ||||||||||||
| Costs and Expenses |
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| Cost of products sold and operating expenses |
31,313 | (942 | ) | 7 | (A) | 30,378 | ||||||||||
| Consumer excise taxes |
1,683 | — | — | 1,683 | ||||||||||||
| Selling, general and administrative expenses |
479 | (61 | ) | — | 418 | |||||||||||
| Depreciation, depletion and amortization |
323 | (43 | ) | — | 280 | |||||||||||
| Payroll, property and other taxes |
84 | (16 | ) | — | 68 | |||||||||||
| Provision for asset write-downs and other matters |
1,977 | — | — | 1,977 | ||||||||||||
| Interest cost and debt expense |
138 | (13 | ) | 4 | (B) | 129 | ||||||||||
| Interest capitalized |
(20 | ) | 15 | — | (5 | ) | ||||||||||
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| 35,977 | (1,060 | ) | 11 | 34,928 | ||||||||||||
| Income (loss) from continuing operations before income tax expense (benefit) |
(1,788 | ) | (67 | ) | 8 | (1,847 | ) | |||||||||
| Income tax expense (benefit) |
(752 | ) | (10 | ) | 3 | (C) | (779 | ) | ||||||||
| (20 | )(D) | |||||||||||||||
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| Income (loss) from continuing operations |
(1,036 | ) | (57 | ) | 25 | (1,068 | ) | |||||||||
| Less: Income from continuing operations attributable to noncontrolling interests |
133 | — | — | 133 | ||||||||||||
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| Income (loss) from continuing operations attributable to Sunoco, Inc. shareholders |
$ | (1,169 | ) | $ | (57 | ) | $ | 25 | $ | (1,201 | ) | |||||
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| Loss from continuing operations attributable to Sunoco, Inc. shareholders per share of common stock |
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| Basic |
$ | (9.86 | ) | $ | (10.13 | ) | ||||||||||
| Diluted |
$ | (9.86 | ) | $ | (10.13 | ) | ||||||||||
| Weighted-average number of shares outstanding: |
||||||||||||||||
| Basic |
118.6 | 118.6 | ||||||||||||||
| Diluted |
118.6 | 118.6 | ||||||||||||||
(See accompanying notes to the unaudited pro forma consolidated financial statements)
Sunoco, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Continuing Operations (Unaudited)
For the Nine Months Ended September 30, 2010
(Millions of Dollars and Shares, Except Per-Share Amounts)
| Historical | Spin-off of SunCoke |
Pro Forma Adjustments |
Pro Forma |
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| Revenues |
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| Sales and other operating revenue (including consumer excise taxes) |
$ | 26,269 | $ | (1,010 | ) | $ | 7 | (A) | $ | 25,266 | ||||||
| Interest income |
4 | (18 | ) | 18 | (B) | 4 | ||||||||||
| Gain on remeasurement of pipeline equity interests |
128 | — | — | 128 | ||||||||||||
| Other income, net |
68 | — | — | 68 | ||||||||||||
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| 26,469 | (1,028 | ) | 25 | 25,466 | ||||||||||||
| Costs and Expenses |
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| Cost of products sold and operating expenses |
23,224 | (762 | ) | 7 | (A) | 22,469 | ||||||||||
| Consumer excise taxes |
1,754 | — | — | 1,754 | ||||||||||||
| Selling, general and administrative expenses |
462 | (38 | ) | — | 424 | |||||||||||
| Depreciation, depletion and amortization |
343 | (37 | ) | — | 306 | |||||||||||
| Payroll, property and other taxes |
93 | (15 | ) | — | 78 | |||||||||||
| Provision for asset write-downs and other matters |
64 | — | — | 64 | ||||||||||||
| Interest cost and debt expense |
122 | (4 | ) | 4 | (B) | 122 | ||||||||||
| Interest capitalized |
(10 | ) | 5 | — | (5 | ) | ||||||||||
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| 26,052 | (851 | ) | 11 | 25,212 | ||||||||||||
| Income from continuing operations before income tax expense |
417 | (177 | ) | 14 | 254 | |||||||||||
| Income tax expense |
86 | (46 | ) | 5 | (C) | 50 | ||||||||||
| 5 | (D) | |||||||||||||||
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| Income from continuing operations |
331 | (131 | ) | 4 | 204 | |||||||||||
| Less: Income from continuing operations attributable to noncontrolling interests |
163 | (10 | ) | — | 153 | |||||||||||
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| Income from continuing operations attributable to Sunoco, Inc. shareholders |
$ | 168 | $ | (121 | ) | $ | 4 | $ | 51 | |||||||
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| Income from continuing operations attributable to Sunoco, Inc. shareholders per share of common stock |
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| Basic |
$ | 1.40 | $ | 0.43 | ||||||||||||
| Diluted |
$ | 1.40 | $ | 0.42 | ||||||||||||
| Weighted-average number of shares outstanding: |
||||||||||||||||
| Basic |
120.0 | 120.0 | ||||||||||||||
| Diluted |
120.1 | 120.1 | ||||||||||||||
(See accompanying notes to the unaudited pro forma consolidated financial statements)
Sunoco, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Continuing Operations (Unaudited)
For the Year Ended December 31, 2010
(Millions of Dollars and Shares, Except Per-Share Amounts)
| Historical* | Spin-off of SunCoke |
Pro Forma Adjustments |
Pro Forma |
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| Revenues |
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| Sales and other operating revenue (including consumer excise taxes) |
$ | 36,175 | $ | (1,318 | ) | $ | 10 | (A) | $ | 34,867 | ||||||
| Interest income |
5 | (23 | ) | 23 | (B) | 5 | ||||||||||
| Gain on remeasurement of pipeline equity interests |
128 | — | — | 128 | ||||||||||||
| Other income, net |
92 | (10 | ) | — | 82 | |||||||||||
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| 36,400 | (1,351 | ) | 33 | 35,082 | ||||||||||||
| Costs and Expenses |
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| Cost of products sold and operating expenses |
32,011 | (1,018 | ) | 10 | (A) | 31,003 | ||||||||||
| Consumer excise taxes |
2,348 | — | — | 2,348 | ||||||||||||
| Selling, general and administrative expenses |
640 | (62 | ) | — | 578 | |||||||||||
| Depreciation, depletion and amortization |
467 | (49 | ) | — | 418 | |||||||||||
| Payroll, property and other taxes |
113 | (19 | ) | — | 94 | |||||||||||
| Provision for asset write-downs and other matters |
109 | — | — | 109 | ||||||||||||
| Interest cost and debt expense |
164 | (5 | ) | 5 | (B) | 164 | ||||||||||
| Interest capitalized |
(15 | ) | 8 | — | (7 | ) | ||||||||||
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| 35,837 | (1,145 | ) | 15 | 34,707 | ||||||||||||
| Income from continuing operations before income tax expense |
563 | (206 | ) | 18 | 375 | |||||||||||
| Income tax expense |
118 | (52 | ) | 7 | (C) | 73 | ||||||||||
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| Income from continuing operations |
445 | (154 | ) | 11 | 302 | |||||||||||
| Less: Income from continuing operations attributable to noncontrolling interests |
194 | (8 | ) | — | 186 | |||||||||||
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| Income from continuing operations attributable to Sunoco, Inc. shareholders |
$ | 251 | $ | (146 | ) | $ | 11 | $ | 116 | |||||||
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| Income from continuing operations attributable to Sunoco, Inc. shareholders per share of common stock |
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| Basic |
$ | 2.09 | $ | 0.97 | ||||||||||||
| Diluted |
$ | 2.09 | $ | 0.96 | ||||||||||||
| Weighted-average number of shares outstanding: |
||||||||||||||||
| Basic |
120.1 | 120.1 | ||||||||||||||
| Diluted |
120.3 | 120.3 | ||||||||||||||
| * | Amounts have been restated to reflect Sunoco’s phenol chemical business as discontinued operations consistent with the presentation in Sunoco’s Form 10-Q for the quarter ended September 30, 2011. |
(See accompanying notes to the unaudited pro forma consolidated financial statements)
Sunoco, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Continuing Operations (Unaudited)
For the Year Ended December 31, 2009
(Millions of Dollars and Shares, Except Per-Share Amounts)
| Historical* | Spin-off of SunCoke |
Pro Forma Adjustments |
Pro Forma |
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| Revenues |
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| Sales and other operating revenue (including consumer excise taxes) |
$ | 29,575 | $ | (1,124 | ) | $ | 8 | (A) | $ | 28,459 | ||||||
| Interest income |
5 | (24 | ) | 24 | (B) | 5 | ||||||||||
| Other income, net |
116 | (21 | ) | — | 95 | |||||||||||
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| 29,696 | (1,169 | ) | 32 | 28,559 | ||||||||||||
| Costs and Expenses |
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| Cost of products sold and operating expenses |
25,876 | (844 | ) | 8 | (A) | 25,040 | ||||||||||
| Consumer excise taxes |
2,387 | — | — | 2,387 | ||||||||||||
| Selling, general and administrative expenses |
651 | (39 | ) | — | 612 | |||||||||||
| Depreciation, depletion and amortization |
456 | (33 | ) | — | 423 | |||||||||||
| Payroll, property and other taxes |
129 | (18 | ) | — | 111 | |||||||||||
| Provision for asset write-downs and other matters |
687 | (1 | ) | — | 686 | |||||||||||
| Interest cost and debt expense |
145 | (6 | ) | 6 | (B) | 145 | ||||||||||
| Interest capitalized |
(39 | ) | 15 | — | (24 | ) | ||||||||||
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| 30,292 | (926 | ) | 14 | 29,380 | ||||||||||||
| Income (loss) from continuing operations before income tax expense (benefit) |
(596 | ) | (243 | ) | 18 | (821 | ) | |||||||||
| Income tax expense (benefit) |
(358 | ) | (23 | ) | 7 | (C) | (374 | ) | ||||||||
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| Income (loss) from continuing operations |
(238 | ) | (220 | ) | 11 | (447 | ) | |||||||||
| Less: Income from continuing operations attributable to noncontrolling interests |
129 | (22 | ) | — | 107 | |||||||||||
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| Income (loss) from continuing operations attributable to Sunoco, Inc. shareholders |
$ | (367 | ) | $ | (198 | ) | $ | 11 | $ | (554 | ) | |||||
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| Loss from continuing operations attributable to Sunoco, Inc. shareholders per share of common stock |
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| Basic |
$ | (3.14 | ) | $ | (4.74 | ) | ||||||||||
| Diluted |
$ | (3.14 | ) | $ | (4.74 | ) | ||||||||||
| Weighted-average number of shares outstanding: |
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| Basic |
116.9 | 116.9 | ||||||||||||||
| Diluted |
116.9 | 116.9 | ||||||||||||||
| * | Amounts have been restated to reflect Sunoco’s phenol chemical business as discontinued operations consistent with the presentation in Sunoco’s Form 10-Q for the quarter ended September 30, 2011. |
(See accompanying notes to the unaudited pro forma consolidated financial statements)
Sunoco, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Continuing Operations (Unaudited)
For the Year Ended December 31, 2008
(Millions of Dollars and Shares, Except Per-Share Amounts)
| Historical* | Spin-off of SunCoke |
Pro Forma Adjustments |
Pro Forma |
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| Revenues |
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| Sales and other operating revenue (including consumer excise taxes) |
$ | 48,058 | $ | (838 | ) | $ | 11 | (A) | $ | 47,231 | ||||||
| Interest income |
17 | (27 | ) | 27 | (B) | 17 | ||||||||||
| Other income, net |
73 | (3 | ) | — | 70 | |||||||||||
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| 48,148 | (868 | ) | 38 | 47,318 | ||||||||||||
| Costs and Expenses |
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| Cost of products sold and operating expenses |
42,951 | (613 | ) | 11 | (A) | 42,349 | ||||||||||
| Consumer excise taxes |
2,436 | — | — | 2,436 | ||||||||||||
| Selling, general and administrative expenses |
781 | (34 | ) | — | 747 | |||||||||||
| Depreciation, depletion and amortization |
432 | (25 | ) | — | 407 | |||||||||||
| Payroll, property and other taxes |
130 | (18 | ) | — | 112 | |||||||||||
| Provision for asset write-downs and other matters |
(18 | ) | — | — | (18 | ) | ||||||||||
| Interest cost and debt expense |
111 | (11 | ) | 11 | (B) | 111 | ||||||||||
| Interest capitalized |
(39 | ) | 11 | — | (28 | ) | ||||||||||
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| 46,784 | (690 | ) | 22 | 46,116 | ||||||||||||
| Income from continuing operations before income tax expense |
1,364 | (178 | ) | 16 | 1,202 | |||||||||||
| Income tax expense |
429 | (38 | ) | 6 | (C) | 397 | ||||||||||
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| Income from continuing operations |
935 | (140 | ) | 10 | 805 | |||||||||||
| Less: Income from continuing operations attributable to noncontrolling interests |
113 | (19 | ) | — | 94 | |||||||||||
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| Income from continuing operations attributable to Sunoco, Inc. shareholders |
$ | 822 | $ | (121 | ) | $ | 10 | $ | 711 | |||||||
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| Income from continuing operations attributable to Sunoco, Inc. shareholders per share of common stock |
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| Basic |
$ | 7.03 | $ | 6.08 | ||||||||||||
| Diluted |
$ | 7.02 | $ | 6.07 | ||||||||||||
| Weighted-average number of shares outstanding: |
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| Basic |
117.0 | 117.0 | ||||||||||||||
| Diluted |
117.1 | 117.1 | ||||||||||||||
| * | Amounts have been restated to reflect Sunoco’s phenol chemical business as discontinued operations consistent with the presentation in Sunoco’s Form 10-Q for the quarter ended September 30, 2011. |
(See accompanying notes to the unaudited pro forma consolidated financial statements)
Sunoco, Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheet (Unaudited)
At September 30, 2011
(Millions of Dollars)
| Historical | Spin-off of SunCoke |
Pro Forma Adjustments |
Pro Forma |
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| Assets |
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| Cash and cash equivalents |
$ | 1,656 | $ | (111 | ) | $ | (11 | )(E) | $ | 1,534 | ||||||
| Accounts and notes receivable, net |
3,092 | (52 | ) | — | 3,040 | |||||||||||
| Inventories |
1,153 | (222 | ) | — | 931 | |||||||||||
| Deferred income taxes |
137 | — | — | 137 | ||||||||||||
| Assets held for sale |
89 | — | — | 89 | ||||||||||||
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| Total current assets |
6,127 | (385 | ) | (11 | ) | 5,731 | ||||||||||
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| Investments and long-term receivables |
165 | (41 | ) | — | 124 | |||||||||||
| Note receivable from sale of Toledo refinery |
182 | — | — | 182 | ||||||||||||
| Properties, plant and equipment, cost |
7,163 | (1,831 | ) | — | 5,332 | |||||||||||
| Less: accumulated depreciation, depletion and amortization |
1,980 | (382 | ) | — | 1,598 | |||||||||||
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| Properties, plant and equipment, net |
5,183 | (1,449 | ) | — | 3,734 | |||||||||||
| Deferred charges and other assets |
590 | (45 | ) | (5 | )(E) | 540 | ||||||||||
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| Total assets |
$ | 12,247 | $ | (1,920 | ) | $ | (16 | ) | $ | 10,311 | ||||||
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| Liabilities and Equity |
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| Accounts payable |
$ | 4,240 | $ | (185 | ) | — | $ | 4,055 | ||||||||
| Accrued liabilities |
522 | (52 | ) | — | 470 | |||||||||||
| Short-term borrowings |
115 | — | — | 115 | ||||||||||||
| Current portion of long-term debt |
32 | (3 | ) | — | 29 | |||||||||||
| Taxes payable |
125 | 98 | (77 | )(F) | 146 | |||||||||||
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| Total current liabilities |
5,034 | (142 | ) | (77 | ) | 4,815 | ||||||||||
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| Long-term debt |
3,377 | (695 | ) | — | 2,682 | |||||||||||
| Retirement benefit liabilities |
464 | (45 | ) | — | 419 | |||||||||||
| Deferred income taxes |
663 | (333 | ) | (19 | )(F) | 311 | ||||||||||
| Other deferred credits and liabilities |
504 | (59 | ) | — | 445 | |||||||||||
| Commitments and contingent liabilities |
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| Total liabilities |
10,042 | (1,274 | ) | (96 | ) | 8,672 | ||||||||||
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| Equity |
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| Common stock |
282 | (1 | ) | 1 | (G) | 282 | ||||||||||
| Capital in excess of par value |
1,806 | (483 | ) | 483 | (G) | 1,670 | ||||||||||
| (131 | )(H) | |||||||||||||||
| (5 | )(E) | |||||||||||||||
| Retained earnings |
4,309 | (12 | ) | 12 | (G) | 4,029 | ||||||||||
| (269 | )(H) | |||||||||||||||
| (11 | )(E) | |||||||||||||||
| Common stock held in treasury, at cost |
(4,889 | ) | — | — | (4,889 | ) | ||||||||||
| Accumulated other comprehensive loss |
(206 | ) | (1 | ) | — | (207 | ) | |||||||||
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| Total Sunoco, Inc. shareholders’ equity |
1,302 | (497 | ) | 80 | 885 | |||||||||||
| Noncontrolling interests |
903 | (149 | ) | — | 754 | |||||||||||
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| Total equity |
2,205 | (646 | ) | 80 | 1,639 | |||||||||||
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| Total liabilities and equity |
$ | 12,247 | $ | (1,920 | ) | $ | (16 | ) | $ | 10,311 | ||||||
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(See accompanying notes to the unaudited pro forma consolidated financial statements)
SUNOCO, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
| (A) | Restoration and reclassification of intercompany sales by SunCoke to Sunoco which were previously eliminated in Sunoco’s consolidation to offset the amounts removed in the SunCoke column. The adjustment results in the inclusion of these costs as costs of goods sold and operating expense in Sunoco’s consolidated statements of continuing operations. |
| (B) | Reflects the elimination of intercompany interest income and expense associated with the disposition of intercompany receivables and payables between Sunoco and SunCoke in connection with the contribution of Sunoco’s cokemaking and coal mining operations to SunCoke on July 18, 2011. |
| (C) | Reflects the tax effect of the elimination of intercompany interest income and expense described in pro forma adjustment (B). The applicable tax rate was approximately 38 percent. |
| (D) | Adjusts the pro forma tax provisions for Sunoco (excluding SunCoke) to the applicable estimated effective tax rate for the applicable interim period. The effective tax rate for income from continuing operations attributable to Sunoco, Inc. shareholders was 39 and 50 percent for the nine months ended September 30, 2011 and 2010, respectively. |
| (E) | Reflects the pro rata charge to paid in capital in excess of par value and retained earnings for the expenses totaling $16 million which were incurred in connection with the Distribution. There are no transaction costs included in the consolidated statements of continuing operations for the nine months ended September 30, 2011 or the year ended December 31, 2010 as all costs of the Distribution have been charged to equity. The unaudited pro forma consolidated statements of continuing operations do not include any adjustments to Sunoco’s selling, general and administrative expenses after the spin-off of SunCoke since any such adjustment would not be factually supportable. |
| (F) | Reflects the reduction in Sunoco’s income taxes payable and deferred income tax liability as a result of its retention of a portion of SunCoke’s 2011 anticipated net operating loss and prior year deferred tax credit carryforwards which are being retained by Sunoco under the tax-sharing agreement between Sunoco and SunCoke. |
| (G) | Reflects the restoration of the common stock, capital in excess of par value and retained earnings of SunCoke to offset the amounts removed in the SunCoke column. See adjustment (H) below for the removal of Sunoco’s investment in SunCoke from the applicable Sunoco equity accounts as a result of the distribution of SunCoke to Sunoco shareholders. |
| (H) | Reflects the pro rata charge to Sunoco’s paid in capital and retained earnings for the distribution of its investment in SunCoke, as adjusted to reflect the reductions in this investment as a result of the retention of tax assets as described in pro forma adjustment (F), to Sunoco shareholders. |