Sunoco 2003 Annual Report Download - page 58

Cash payments for interest related to short-term borrow-
ings and long-term debt (net of amounts capitalized) were
$108, $100 and $98 million in 2003, 2002 and 2001, re-
spectively.
The following table summarizes Sunoco’s long-term debt
(including current portion) by issuer:
December 31
(Millions of Dollars) 2003 2002
Sunoco, Inc. $ 807 $ 807
Sunoco Logistics Partners L.P. 313 317
Other 333 331
$1,453 $1,455
12. Commitments and Contingent Liabilities
Sunoco, as lessee, has noncancelable operating leases for
marine transportation vessels, service stations, office
space and other property and equipment. Total rental
expense for such leases for the years 2003, 2002 and 2001
amounted to $137, $136 and $145 million, respectively,
which include contingent rentals totaling $17, $16 and
$14 million, respectively. Approximately 6 percent of
total rental expense was recovered through related sub-
lease rental income during 2003.
The aggregate amount of future minimum annual rentals
applicable to noncancelable operating leases are as fol-
lows (in millions of dollars):
Year ending December 31:
2004 $123
2005 105
2006 92
2007 86
2008 81
Thereafter 293
$780
Approximately one half of the aggregate amount of future
minimum annual rentals applicable to noncancelable
operating leases relates to time charters for marine trans-
portation vessels. Most of these time charters were re-
cently entered into by the Company and contain seven-
year terms with renewal and sublease options. The lease
payments consist of a fixed-price minimum and a variable
component based on spot-market rates. In the table
above, the variable component of the lease payments has
been estimated utilizing the average spot market prices for
the year 2003. The actual variable component of the lease
payments attributable to these time charters could vary
significantly from the estimates included in the table.
Sunoco is contingently liable under an arrangement that
guarantees a $120 million term loan due in 2006 of the
Epsilon Products Company, LLC polypropylene joint
venture in which the Company is a partner. Under this
arrangement, Sunoco also guarantees borrowings under
the joint venture’s $40 million revolving credit facility
maturing in September 2006, which amounted to $28
million at December 31, 2003. Sunoco is also con-
tingently liable under various arrangements which
guarantee debt of third parties aggregating to approx-
imately $12 million at December 31, 2003. At this time,
management does not believe that it is likely that the
Company will have to perform under any of these
guarantees.
Over the years, Sunoco has sold thousands of retail gaso-
line outlets as well as refineries, terminals, coal mines, oil
and gas properties and various other assets. In connection
with these sales, the Company has indemnified the pur-
chasers for potential environmental and other contingent
liabilities related to the period prior to the transaction
dates. In most cases, the effect of these arrangements was
to afford protection for the purchasers with respect to
obligations for which the Company was already primarily
liable. While some of these indemnities have spending
thresholds which must be exceeded before they become
operative, or limits on Sunoco’s maximum exposure, they
generally are not limited. The Company accrues for any
obligations under these agreements when a loss is prob-
able and reasonably estimable. The Company cannot rea-
sonably estimate the maximum potential amount of
future payments under these agreements.
Sunoco is a party under agreements which provide for
future payments to secure wastewater treatment services
at its Toledo refinery and coal handling services at its
Indiana Harbor cokemaking facility. The fixed and
determinable amounts of the obligations under these
agreements are as follows (in millions of dollars):
Year ending December 31:
2004 $ 9
2005 9
2006 9
2007 9
2008 8
2009 through 2018 53
Total 97
Less: Amount representing interest (32)
Total at present value $65
Payments under these agreements, including variable
components, totaled $18 million in each of the years
2003, 2002 and2001.
Sunoco is subject to extensive and frequently changing
federal, state and local laws and regulations, including,
but not limited to, those relating to the discharge of
materials into the environment or that otherwise deal
56