Sunoco 2004 Annual Report Download - page 12

• Diversify, upgrade and grow the Company’s asset base through strategic acquisitions
and investments;
• Divest assets that do not meet the Company’s return-on-investment criteria;
• Optimize the Company’s capital structure; and
• Return cash to the Company’s shareholders through the payment of cash dividends and
the purchase of Company common stock.
During the 2003-2004 period, Sunoco has undertaken the following initiatives as part of
this strategy:
• Effective March 31, 2003, the Company invested $198 million to secure a favorable
long-term supply of propylene for its Gulf Coast polypropylene business through the
formation of a limited partnership with Equistar Chemicals, L.P. (“Equistar”) and to
increase its polypropylene capacity through the acquisition of Equistar’s polypropylene
facility in Bayport, TX. Equistar’s income contribution amounted to $27 and $14 mil-
lion after tax in 2004 and 2003, respectively.
• During the second quarter of 2003, Sunoco completed the $162 million purchase from
a subsidiary of Marathon Ashland Petroleum LLC (“Marathon”) of 193 Speedway®
retail gasoline sites located primarily in Florida and South Carolina. The income con-
tribution from these sites amounted to $13 and $7 million after tax in 2004 and 2003,
respectively.
• In October 2003, Sun Coke entered into an agreement to supply International Steel
Group with 550 thousand tons-per-year of coke from Sun Coke’s new $146 million
cokemaking facility in Haverhill, OH, which is expected to be operational in March
2005.
• During 2003, the Company accelerated its Retail Portfolio Management program to
selectively reduce its invested capital in Company-owned or leased sites, while retain-
ing most of the gasoline sales volumes attributable to the divested sites. Through year-
end 2004, 241 sites have been divested, with most of the sites converted to contract
dealers or distributors, generating $120 million of divestment proceeds. The Company
expects to generate approximately $50 million of additional proceeds in 2005 under
this program through the divestment/conversion of an additional 100 sites.
• During the fourth quarter of 2003, Sunoco substantially completed a program to sell its
interest in certain retail sites in Michigan and the southern Ohio markets of Colum-
bus, Dayton and Cincinnati, generating $46 million of cash proceeds.
• In January 2004, Sunoco completed the acquisition from El Paso Corporation of the
150 thousand barrels-per-day Eagle Point refinery and related assets located near the
Company’s existing Northeast Refining operations for $250 million, including in-
ventory. The income contribution from the Eagle Point refinery amounted to $135
million after tax in 2004.
• In January 2004, the Company completed the sale of its plasticizer business to BASF,
generating approximately $90 million of cash proceeds.
• In April 2004, Sunoco Logistics Partners L.P. (the “Partnership”), the master limited
partnership that is 62.6 percent owned by Sunoco, issued 3.4 million limited partner-
ship units, generating $129 million of net proceeds. Coincident with the offering, the
Partnership redeemed 2.2 million limited partnership units owned by Sunoco for $83
million.
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