Sunoco 2004 Annual Report Download - page 6

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• We spent capital to maintain and grow our asset
base, but we have also generated significant cash
through effective portfolio management and
divestment activities. In 2004, we received
approximately $425 million from sales of assets
that will have a minimal impact on future earnings.
We will continue to evaluate our portfolio for other
assets that might appropriately be monetized.
During 2004, we restructured our debt and
expanded our liquidity. We refinanced over $500
million of high-coupon debt which will result in
pretax interest savings of approximately $20 million
in 2005. We increased our revolving credit facility
from $785 million to $900 million and lengthened
the term to five years. We ended the year with a
net debt-to-capital ratio (as defined in our revolving
credit agreement) of 37 percent, an improvement
from prior-year levels. Our investment-grade credit
rating is very important to us, and we will continue
to maintain our conservative balance sheet.
• In addition to growing the Company, we also
continued to return significant cash to our
shareholders. We increased our dividend by 33
percent for the second quarter of 2005 after a 9
percent increase for the third quarter of 2004. We
repurchased 8.0 million shares ($568 million) of
our common stock during 2004. Over the past five
years, we have repurchased 26.8 million shares
($1.2 billion) and reduced shares outstanding
by 23 percent. We are unique among our peers
in returning excess free cash to you. Our share
repurchase is an investment in Sunoco. It is our
way of giving long-term shareholders an increasing
share of a growing and improving Sunoco. Returning
cash to our shareholders has been, and will
continue to be, a core element of our strategy
to increase shareholder value.
We are absolutely committed to increasing value for
our shareholders. We have consistently improved our
operating performance and have made sustainable
progress in getting more from existing assets. We are
very careful not to overspend in our basic commodity
businesses. We have profitably grown each of our
businesses. We have increased our dividend and
significantly reduced shares outstanding. We have
maintained a healthy balance sheet and good financial
capacity through both strong and weak business markets.
We will continue to follow the same course that has
brought us to this point. The markets in which we
operate, particularly refining and chemicals, look very
good but we have a healthy respect for the volatility
and unpredictability of many of the underlying
fundamentals. We must, and will, continue to incorporate
that thinking into our strategies and actions.
Ultimately, our success comes primarily from the
good efforts of our capable Sunoco workforce. These
very talented and dedicated people have delivered the
results and form the real foundation of our success
and my optimism for our future.
We continue to benefit from the guidance and counsel
of our Board of Directors. They have been questioning,
constructive and supportive when appropriate. This
year, I offer a special thanks to Bob Kennedy and
Norm Matthews who will be retiring from our Board
after 10 and 6 years, respectively, of service to
Sunoco. They have had an impact, and they will
be missed.
The Company’s value and prospects have never been
better. All of our efforts are aimed at delivering results
that will continue to grow Sunoco’s value for years to
come.
JOHN G. DROSDICK
Chairman, Chief Executive
Officer and President