EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO   News Release

Sunoco, Inc.

1735 Market Street

Philadelphia, Pa. 19103-7583

 

For further information contact   For release: IMMEDIATELY

    Thomas Golembeski (media) 215-977-6298

    Tom Harr (investors) 215-977-6764

No: 11-08

SUNOCO REPORTS FIRST QUARTER RESULTS

PHILADELPHIA, April 30, 2008 — Sunoco, Inc. (NYSE: SUN) today reported a net loss of $59 million ($(.50) per share diluted) for the first quarter of 2008 versus net income of $175 million ($1.44 per share diluted) for the first quarter of 2007. Income before special items was $85 million ($0.70 per share diluted) for the first quarter of 2007. There were no special items in the first quarter of 2008.

“The first quarter market environment was clearly a challenging one for Sunoco and the refining industry,” said John G. Drosdick, Sunoco Chairman and Chief Executive Officer. “While earnings from our non-refining businesses were significantly improved from prior periods, our Refining and Supply business lost $123 million. The loss in Refining and Supply was primarily the result of weakness in refined product margins, especially for gasoline, which were compressed by the combination of higher crude oil costs and lower product demand.

“Sunoco’s non-refining business units earned $84 million in the first quarter, with the largest contributions coming from Retail Marketing and SunCoke Energy. Retail Marketing earned $26 million, benefiting from expanded retail gasoline margins despite lower gasoline sales volumes versus a year ago. Earnings from SunCoke Energy were $25 million, aided by increased price realizations from our coal and coke production at our Jewell operations. With the anticipated completion later this year of a second cokemaking facility currently under construction at our Haverhill site, and with the recently announced agreements to construct, own and operate additional cokemaking plants in Middletown, Ohio and Granite City, Illinois, we are extremely pleased with the growth in this business.”

Commenting on the outlook for the second quarter, Drosdick said, “Recent declines in U.S. gasoline inventories and continued low refinery utilization rates have led to some improvement in refining market fundamentals as we enter the spring and summer driving seasons. While higher crude oil costs

 

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SUNOCO 1Q08 EARNINGS, PAGE 2

 

and lower gasoline demand continued to challenge refiners in April, margins for distillate products remain very strong and gasoline margins are beginning to improve as we progress through the quarter. Due to maintenance activity and some rate reductions related to the market environment, we expect crude runs and production levels in the second quarter to approximate 90 to 95 percent of capacity.”

DETAILS OF FIRST QUARTER RESULTS

REFINING AND SUPPLY

Refining and Supply had a loss of $123 million in the first quarter of 2008 versus income of $76 million in the first quarter of 2007. The decrease in earnings was due to lower realized margins and higher expenses, partially offset by higher production volumes. The lower margins reflect the negative impact of much higher average crude oil costs and lower product demand than a year ago, while the higher expenses were largely the result of increased prices for purchased fuel. Production volumes increased in the first quarter of 2008 compared to the year-ago period, although planned and unplanned maintenance work reduced production by approximately 11 million barrels throughout the refining system versus the record level of production in the fourth quarter of 2007. Production in the first quarter of 2007 was negatively impacted by major turnaround and expansion work at the Philadelphia refinery as well as downtime at the Tulsa and Marcus Hook refineries.

RETAIL MARKETING

Retail Marketing earned $26 million in the first quarter of 2008 versus $7 million in the first quarter of 2007. The increase in earnings was primarily due to higher average retail gasoline margins and lower expenses, partially offset by lower gasoline and distillate sales volumes.

CHEMICALS

Chemicals earned $18 million in the current quarter versus $9 million in the first quarter of 2007. The increase in earnings was due primarily to lower expenses and higher sales volumes. The lower expenses during the first quarter of 2008 were largely due to the transfer of cumene and propylene splitter assets to Refining and Supply, effective January 1, 2008. This asset transfer also reduced margins during the current quarter which was offset by higher realized margins on both phenol and polypropylene sales.

LOGISTICS

Earnings for the Logistics segment were $15 million in the first quarter of 2008 versus $9 million in the first quarter of 2007. The increase was due to record results from Sunoco Logistics Partners L.P. (NYSE: SXL) which benefited from strong performance in its western pipeline system and terminalling operations. Sunoco currently has a 43 percent interest in Sunoco Logistics Partners L.P., which includes its 2 percent general partnership interest.

 

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SUNOCO 1Q08 EARNINGS, PAGE 3

 

COKE

The Coke business earned $25 million in the first quarter of 2008 versus $11 million in the prior year first quarter. The increase in earnings was primarily due to increased price realizations from coal and coke production at Jewell, partially offset by lower tax benefits from cokemaking operations.

CORPORATE AND OTHER

Corporate administrative expenses were $17 million after tax in the first quarter of 2008 versus $15 million in the first quarter of 2007. The increase was primarily due to a $9 million unfavorable income tax consolidation adjustment, partially offset by lower accruals for performance-related incentive compensation.

Net financing expenses were $3 million after tax in the first quarter of 2008 versus $12 million after tax in the first quarter of 2007. The decrease was primarily due to lower interest expense, higher interest income and the absence of expense attributable to the preferential return of third-party investors in Sunoco’s Indiana Harbor cokemaking operations.

SPECIAL ITEM

During the first quarter of 2007, Sunoco recognized a $90 million after-tax gain related to the prior issuance of limited partnership units of Sunoco Logistics Partners L.P. to the public.

Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer and marketer of petroleum and petrochemical products. With 910 thousand barrels per day of refining capacity, nearly 4,700 retail sites selling gasoline and convenience items, approximately 5,500 miles of crude oil and refined product owned and operated pipelines and 38 product terminals, Sunoco is one of the largest independent refiner-marketers in the United States. Sunoco is a significant manufacturer of petrochemicals with annual sales of approximately five billion pounds, largely chemical intermediates used to make fibers, plastics, film and resins. Utilizing a unique, patented technology, Sunoco’s cokemaking facilities in the United States have the capacity to manufacture over 2.5 million tons annually of high-quality metallurgical-grade coke for use in the steel industry. Sunoco also is the operator of, and has an equity interest in, a 1.7 million tons-per-year cokemaking facility in Vitória, Brazil.

Anyone interested in obtaining further insights into the first quarter’s results can monitor the Company’s quarterly teleconference call, which is scheduled for 3:00 p.m. ET on May 1, 2008. It can be accessed through Sunoco’s website—www.SunocoInc.com. It is suggested that you visit the site prior to the teleconference to ensure that you have downloaded any necessary software.

Those statements made in this release that are not historical facts are forward-looking statements intended to be covered by the safe harbor provisions of Section 27A of the Securities Act of 1933 and

 

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Section 21E of the Securities Exchange Act of 1934. Although Sunoco believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect Sunoco’s business prospects and performance, causing actual results to differ materially from those discussed in this release. Such risks and uncertainties include, by way of example and not of limitation: general economic, financial and business conditions which could affect Sunoco’s financial condition and results of operations; changes in competition and competitive practices, including the impact of foreign imports; effects of weather conditions and natural disasters on the Company’s operating facilities and on product supply and demand; changes in refining, marketing and chemical margins; changes in coal and coke prices; variation in petroleum-based commodity prices and availability of crude oil and feedstock supply or transportation; effects of transportation disruptions; changes in the price differentials between light-sweet and heavy-sour crude oils; changes in the marketplace which may affect supply and demand for Sunoco’s products; changes in the level of capital expenditures or operating expenses; changes in product specifications; availability and pricing of ethanol; changes in the expected level of environmental capital, operating or remediation expenditures; age of, and changes in the reliability, efficiency and capacity of, the Company’s operating facilities or those of third parties; effects of adverse events relating to the operation of the Company’s facilities and to the transportation and storage of hazardous materials (including equipment malfunction, explosions, fires, spills, and the effects of severe weather conditions); risks related to labor relations and workplace safety; changes in, or new, statutes and government regulations or their interpretations, including those relating to the environment and global warming; changes in tax laws or their interpretations, including pension funding requirements; ability to identify acquisitions, execute them under favorable terms and integrate them into the Company’s existing businesses; ability to enter into joint ventures and other similar arrangements under favorable terms; delays and/or costs related to construction, improvements and/or repairs of facilities (including shortages of skilled labor, the issuance of applicable permits and inflation); nonperformance or force majeure by, or disputes with, major customers, suppliers, dealers, distributors or other business partners; changes in financial markets impacting pension expense and funding requirements; political and economic conditions in the markets in which the Company, its suppliers or customers operate, including the impact of potential terrorist acts and international hostilities; military conflicts between, or internal instability in, one or more oil producing countries, governmental actions and other disruptions in the ability to obtain crude oil; and changes in the status of, or initiation of new, litigation, arbitration or other proceedings to which the Company is a party or liability resulting from such litigation, arbitration or other proceedings, including natural resource damage claims. These and other applicable risks and uncertainties have been described more fully in Sunoco’s 2007 Form 10-K filed with the Securities and Exchange Commission on February 27, 2008 and in other periodic reports filed with the Securities and Exchange Commission. Sunoco undertakes no obligation to update any forward-looking statements in this release, whether as a result of new information or future events.

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SUNOCO 1Q08 EARNINGS, PAGE 5

 

Sunoco, Inc.

2008 First Quarter Financial Summary

(Unaudited)

 

First Quarter

   2008     2007

Revenues

   $ 12,813,000,000     $ 9,305,000,000

Net Income (Loss)

   $ (59,000,000 )   $ 175,000,000

Net Income (Loss) Per Share of Common Stock:

    

Basic

   $ (.50 )   $ 1.44

Diluted

   $ (.50 )*   $ 1.44

Weighted-Average Number of Shares

Outstanding (In Millions):

    

Basic

     117.2       121.4

Diluted

     117.2 *     121.7

 

* Since the assumed issuance of common stock under stock incentive awards would not have been dilutive, the diluted per share amounts are equal to the basic per share amounts.

 

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SUNOCO 1Q08 EARNINGS, PAGE 6

 

Sunoco, Inc.

Earnings Profile of Sunoco Businesses (after tax)

(Millions of Dollars, Except Per-Share Amounts)

(Unaudited)

 

     Three Months
Ended

March 31
       
     2008     2007     Variance  

Refining and Supply

   $ (123 )   $ 76     $ (199 )

Retail Marketing

     26       7       19  

Chemicals

     18       9       9  

Logistics

     15       9       6  

Coke

     25       11       14  

Corporate and Other:

      

Corporate expenses

     (17 )     (15 )     (2 )

Net financing expenses and other

     (3 )     (12 )     9  
                        
     (59 )     85       (144 )

Special items

     —         90       (90 )
                        

Consolidated net income (loss)

   $ (59 )   $ 175     $ (234 )
                        

Earnings (loss) per share of common stock (diluted):

      

Income (loss) before special items

   $ (.50 )   $ .70     $ (1.20 )

Special items

     —         .74       (.74 )
                        

Net income (loss)

   $ (.50 )   $ 1.44     $ (1.94 )
                        

 

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SUNOCO 1Q08 EARNINGS, PAGE 7

 

Sunoco, Inc.

Financial and Operating Statistics (Unaudited)

 

     For the Three
Months Ended
March 31
     2008     2007

TOTAL REFINING AND SUPPLY

    

Income (Loss) (Millions of Dollars)

   $ (123 )   $ 76

Realized Wholesale Margin* (Per Barrel of Production Available for Sale)

   $ 3.43     $ 6.98

Crude Inputs as Percent of Crude Unit Rated Capacity

     85 **     85

Throughputs (Thousand Barrels Daily):

    

Crude Oil

     777.9       761.5

Other Feedstocks

     78.3       79.4
              

Total Throughputs

     856.2       840.9
              

Products Manufactured (Thousand Barrels Daily):

    

Gasoline

     393.5       401.4

Middle Distillates

     298.6       285.4

Residual Fuel

     56.3       61.1

Petrochemicals

     32.8       34.4

Lubricants

     12.2       12.9

Other

     95.3       75.8
              

Total Production

     888.7       871.0

Less: Production Used as Fuel in Refinery Operations

     40.4       39.7
              

Total Production Available for Sale

     848.3       831.3
              

 

* Wholesale sales revenue less related cost of crude oil, other feedstocks, product purchases and terminalling and transportation divided by production available for sale.
** Reflects the impact of a 10 thousand barrels-per-day increase in crude unit capacity in MidContinent Refining in July 2007 attributable to a crude unit debottleneck project at the Toledo refinery.

 

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SUNOCO 1Q08 EARNINGS, PAGE 8

 

Sunoco, Inc.

Financial and Operating Statistics (Unaudited)

 

     For the Three
Months Ended
March 31
     2008     2007

Northeast Refining*

    

Realized Wholesale Margin (Per Barrel of Production Available for Sale)

   $ 3.50     $ 5.25

Market Benchmark 6-3-2-1 (Value Added ) (Per Barrel)

   $ 5.78     $ 8.16

Crude Inputs as Percent of Crude Unit Rated Capacity

     87       82

Throughputs (Thousand Barrels Daily):

    

Crude Oil

     569.5       539.1

Other Feedstocks

     70.6       69.5
              

Total Throughputs

     640.1       608.6
              

Products Manufactured (Thousand Barrels Daily):

    

Gasoline

     294.2       289.3

Middle Distillates

     228.4       210.1

Residual Fuel

     52.1       57.4

Petrochemicals

     27.0       25.6

Other

     61.2       44.7
              

Total Production

     662.9       627.1

Less: Production Used as Fuel in Refinery Operations

     29.8       28.2
              

Total Production Available for Sale

     633.1       598.9
              

MidContinent Refining**

    

Realized Wholesale Margin (Per Barrel of Production Available for Sale)

   $ 3.21     $ 11.42

Market Benchmark 3-2-1 (Per Barrel)

   $ 6.12     $ 11.06

Crude Inputs as Percent of Crude Unit Rated Capacity

     82 ***     91

Throughputs (Thousand Barrels Daily):

    

Crude Oil

     208.4       222.4

Other Feedstocks

     7.7       9.9
              

Total Throughputs

     216.1       232.3
              

 

* Comprised of the Marcus Hook, Philadelphia and Eagle Point refineries.
** Comprised of the Toledo and Tulsa refineries.
*** Reflects the impact of a 10 thousand barrels-per-day increase in crude unit capacity in July 2007 attributable to a crude unit debottleneck project at the Toledo refinery.

 

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SUNOCO 1Q08 EARNINGS, PAGE 9

 

Sunoco, Inc.

Financial and Operating Statistics (Unaudited)

 

     For the Three
Months Ended
March 31
 
     2008     2007  

MidContinent Refining (continued)

    

Products Manufactured (Thousand Barrels Daily):

    

Gasoline

     99.3       112.1  

Middle Distillates

     70.2       75.3  

Residual Fuel

     4.2       3.7  

Petrochemicals

     5.8       8.8  

Lubricants

     12.2       12.9  

Other

     34.1       31.1  
                

Total Production

     225.8       243.9  

Less: Production Used as Fuel in Refinery Operations

     10.6       11.5  
                

Total Production Available for Sale

     215.2       232.4  
                

RETAIL MARKETING

    

Income (Millions of Dollars)

   $ 26     $ 7  

Retail Margin* (Per Barrel):

    

Gasoline

   $ 4.68     $ 3.48  

Middle Distillates

   $ 7.12     $ 6.84  

Sales (Thousand Barrels Daily):

    

Gasoline

     280.1       299.3  

Middle Distillates

     37.7       46.9  
                
     317.8       346.2  
                

Total Retail Gasoline Outlets, End of Period

     4,682       4,683  

Gasoline and Diesel Throughput per Company- Owned or Leased Outlet (M Gal/Site/Month)

     146       142  

Convenience Stores:

    

Total Stores, End of Period

     719       736  

Merchandise Sales (M$/Store/Month)

   $ 82     $ 76  

Merchandise Margin (Company Operated) (% of Sales)

     27 %     26 %
                

 

* Retail sales price less related wholesale price, terminalling and transportation costs and consumer excise taxes per barrel. The retail sales price is the weighted-average price received through the various branded marketing distribution channels.

 

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SUNOCO 1Q08 EARNINGS, PAGE 10

 

Sunoco, Inc.

Financial and Operating Statistics (Unaudited)

 

     For the Three
Months Ended
March 31
     2008    2007

CHEMICALS

     

Income (Millions of Dollars)

   $ 18    $ 9

Margin* (Cents per Pound):

     

All Products**

     10.6      10.5

Phenol and Related Products

     9.2      8.8

Polypropylene**

     12.5      12.7

Sales (Millions of Pounds):

     

Phenol and Related Products

     599      592

Polypropylene

     569      548

Other

     24      20
             
     1,192      1,160
             

 

*       Wholesale sales revenue less cost of feedstocks, product purchases and related terminalling and transportation divided by sales volumes.

**     The polypropylene and all products margins include the impact of a long-term supply contract with Equistar Chemicals, L.P. which is priced on a cost-based formula that includes a fixed discount.

LOGISTICS

     

Income (Millions of Dollars)

   $ 15    $ 9

Pipeline and Terminal Throughput (Thousand Barrels Daily)*:

     

Unaffiliated Customers

     1,254      1,156

Affiliated Customers

     1,579      1,566
             
     2,833      2,722
             

 

*  Excludes joint-venture operations.

     

COKE

     

Income (Millions of Dollars)

   $ 25    $ 11

Coke Production (Thousands of Tons):

     

United States

     613      611

Brazil*

     388      32
             

 

* Represents amounts attributable to the facility in Vitória, Brazil which commenced limited operations in March 2007, with full production achieved during the fourth quarter of 2007.

 

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SUNOCO 1Q08 EARNINGS, PAGE 11

 

Sunoco, Inc.

Financial and Operating Statistics (Unaudited)

 

     For the Three
Months Ended
March 31
     2008    2007

CAPITAL EXPENDITURES (Millions of Dollars)

     

Refining and Supply

   $ 178    $ 270

Retail Marketing

     13      13

Chemicals

     6      14

Logistics

     23      18

Coke

     37      17
             
   $ 257    $ 332
             

DEPRECIATION, DEPLETION AND AMORTIZATION (Millions of Dollars)

     

Refining and Supply

   $ 65    $ 56

Retail Marketing

     26      26

Chemicals

     17      19

Logistics

     15      9

Coke

     5      5
             
   $ 128    $ 115
             

 

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SUNOCO 1Q08 EARNINGS, PAGE 12

 

Sunoco, Inc.

Earnings Profile of Sunoco Businesses (after tax)

(Millions of Dollars, Except Per-Share Amounts)

(Unaudited)

 

     2007  
     1st     2nd     3rd     4th     Total  

Refining and Supply

   $ 76     $ 482     $ 171     $ 43     $ 772  

Retail Marketing

     7       30       31       1       69  

Chemicals

     9       6       13       (2 )     26  

Logistics

     9       10       14       12       45  

Coke

     11       13       7       (2 )     29  

Corporate and Other:

          

Corporate expenses

     (15 )     (18 )     (11 )     (23 )     (67 )

Net financing expenses and other

     (12 )     (14 )     (9 )     (6 )     (41 )
                                        
     85       509       216       23       833  

Special items

     90       —         —         (32 )     58  
                                        

Consolidated net income (loss)

   $ 175     $ 509     $ 216     $ (9 )   $ 891  
                                        

Earnings (loss) per share of common stock (diluted):

          

Income before special items

   $ .70     $ 4.20     $ 1.81     $ .20     $ 6.94  

Special items

     .74       —         —         (.28 )     .49  
                                        

Net income (loss)

   $ 1.44     $ 4.20     $ 1.81     $ (.08 )   $ 7.43  
                                        

 

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SUNOCO 1Q08 EARNINGS, PAGE 13

 

Sunoco, Inc.

Earnings Profile of Sunoco Businesses (after tax)

(Millions of Dollars, Except Per-Share Amounts)

(Unaudited)

 

     2008
First Quarter
 

Refining and Supply

   $ (123 )

Retail Marketing

     26  

Chemicals

     18  

Logistics

     15  

Coke

     25  

Corporate and Other:

  

Corporate expenses

     (17 )

Net financing expenses and other

     (3 )
        
     (59 )

Special Items

     —    
        

Consolidated net income (loss)

   $ (59 )
        

Earnings (loss) per share of common stock (diluted):

  

Income (loss) before special items

   $ (.50 )

Special items

     —    
        

Net income (loss)

   $ (.50 )
        

 

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SUNOCO 1Q08 EARNINGS, PAGE 14

 

Sunoco, Inc.

Consolidated Statements of Operations

(Millions of Dollars)

(Unaudited)

 

     2007  
     1st     2nd     3rd     4th     Total  

REVENUES

          

Sales and other operating revenue (including

consumer excise taxes)

   $ 9,135     $ 10,724     $ 11,475     $ 13,136     $ 44,470  

Interest income

     5       4       7       9       25  

Gain related to issuance of Sunoco Logistics

Partners L.P. limited partnership units

     151       —         —         —         151  

Other income, net

     14       36       15       17       82  
                                        
     9,305       10,764       11,497       13,162       44,728  
                                        

COSTS AND EXPENSES

          

Cost of products sold and operating expenses

     7,988       8,865       10,078       12,040       38,971  

Consumer excise taxes

     641       669       673       644       2,627  

Selling, general and administrative expenses

     221       236       221       274       952  

Depreciation, depletion and amortization

     115       117       123       125       480  

Payroll, property and other taxes

     37       30       36       32       135  

Provision for asset write-downs and other matters

     —         —         —         53       53  

Interest cost and debt expense

     35       32       29       31       127  

Interest capitalized

     (9 )     (5 )     (5 )     (7 )     (26 )
                                        
     9,028       9,944       11,155       13,192       43,319  

Income (loss) before income tax expense (benefit)

     277       820       342       (30 )     1,409  

Income tax expense (benefit)

     102       311       126       (21 )     518  
                                        

Net income (loss)

   $ 175     $ 509     $ 216     $ (9 )   $ 891  
                                        

 

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SUNOCO 1Q08 EARNINGS, PAGE 15

 

Sunoco, Inc.

Consolidated Statements of Operations

(Millions of Dollars)

(Unaudited)

 

     2008
First Quarter
 

REVENUES

  

Sales and other operating revenue (including

consumer excise taxes)

   $ 12,796  

Interest income

     9  

Other income, net

     8  
        
     12,813  
        

COSTS AND EXPENSES

  

Cost of products sold and operating expenses

     11,935  

Consumer excise taxes

     590  

Selling, general and administrative expenses

     198  

Depreciation, depletion and amortization

     128  

Payroll, property and other taxes

     42  

Interest cost and debt expense

     28  

Interest capitalized

     (9 )
        
     12,912  

Income (loss) before income tax expense (benefit)

     (99 )

Income tax expense (benefit)

     (40 )
        

Net income (loss)

   $ (59 )
        

 

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SUNOCO 1Q08 EARNINGS, PAGE 16

 

Sunoco, Inc.

Consolidated Balance Sheets

(Millions of Dollars)

(Unaudited)

 

     At
March 31
2008
   At
December 31
2007

ASSETS

     

Current Assets

     

Cash and cash equivalents

   $ 347    $ 648

Accounts and notes receivable, net

     3,406      2,710

Inventories

     1,082      1,150

Deferred income taxes

     132      130
             

Total Current Assets

     4,967      4,638

Investments and long-term receivables

     173      175

Properties, plants and equipment, net

     7,169      7,039

Deferred charges and other assets

     529      574
             

Total Assets

   $ 12,838    $ 12,426
             

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Current Liabilities

     

Accounts payable and accrued liabilities

   $ 6,125    $ 5,443

Current portion of long-term debt

     3      4

Taxes payable

     88      193
             

Total Current Liabilities

     6,216      5,640

Long-term debt

     1,683      1,724

Retirement benefit liabilities

     526      525

Deferred income taxes

     1,084      1,027

Other deferred credits and liabilities

     533      538

Minority interests

     429      439

Shareholders’ equity

     2,367      2,533
             

Total Liabilities and Shareholders’ Equity

   $ 12,838    $ 12,426
             

 

- more -


SUNOCO 1Q08 EARNINGS, PAGE 17

 

Sunoco, Inc.

Consolidated Statements of Cash Flows

(Millions of Dollars)

(Unaudited)

 

     For the Three Months
Ended March 31
 
     2008     2007  

INCREASES (DECREASES) IN CASH AND CASH EQUIVALENTS

    

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income (loss)

   $ (59 )   $ 175  

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Gain related to issuance of Sunoco Logistics Partners L.P. limited partnership units

     —         (151 )

Depreciation, depletion and amortization

     128       115  

Deferred income tax expense

     49       92  

Payments less than expense for retirement plans

     8       11  

Changes in working capital pertaining to operating activities

     (71 )     (22 )

Other

     14       17  
                

Net cash provided by operating activities

     69       237  
                

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Capital expenditures

     (257 )     (332 )

Proceeds from divestments

     3       6  

Other

     40       (3 )
                

Net cash used in investing activities

     (214 )     (329 )
                

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Net proceeds from short-term borrowings

     —         55  

Net proceeds from issuance of long-term debt

     5       48  

Repayments of long-term debt

     (47 )     (4 )

Cash distributions to investors in cokemaking operations

     (17 )     (7 )

Cash distributions to investors in Sunoco Logistics Partners L.P.

     (14 )     (13 )

Cash dividend payments

     (32 )     (30 )

Purchases of common stock for treasury

     (49 )     —    

Proceeds from issuance of common stock under management incentive plans

     —         4  

Other

     (2 )     (2 )
                

Net cash provided by (used in) financing activities

     (156 )     51  
                

Net decrease in cash and cash equivalents

     (301 )     (41 )

Cash and cash equivalents at beginning of period

     648       263  
                

Cash and cash equivalents at end of period

   $ 347     $ 222  
                

-END OF SUNOCO 1Q08 EARNINGS REPORT-