Sunoco 2007 Annual Report Download - page 22

sitions) and working capital. During those periods, the Company may supplement its cash
generation with proceeds from financing activities.
The Company has a $1.3 billion revolving credit facility (the “Facility”), of which $1.2245
billion matures in August 2012 with the balance maturing in August 2011. The Facility
provides the Company with access to short-term financing and is intended to support the
issuance of commercial paper, letters of credit and other debt. The Company also can bor-
row directly from the participating banks under the Facility. The Facility is subject to
commitment fees, which are not material. Under the terms of the Facility, Sunoco is re-
quired to maintain tangible net worth (as defined in the Facility) in an amount greater
than or equal to targeted tangible net worth (targeted tangible net worth being determined
by adding $1.125 billion and 50 percent of the excess of net income over share repurchases
(as defined in the Facility) for each quarter ended after March 31, 2004). At December 31,
2007, the Company’s tangible net worth was $2.8 billion and its targeted tangible net
worth was $1.7 billion. The Facility also requires that Sunoco’s ratio of consolidated net
indebtedness, including borrowings of Sunoco Logistics Partners L.P., to consolidated capi-
talization (as those terms are defined in the Facility) not exceed .60 to 1. At December 31,
2007, this ratio was .27 to 1. At December 31, 2007, the Facility was being used to support
$103 million of floating-rate notes due in 2034.
Sunoco Logistics Partners L.P. had a $300 million revolving credit facility, which was
scheduled to mature in November 2010. In August 2007, the Partnership replaced this fa-
cility with a new $400 million revolving credit facility, which expires in November 2012.
During August 2007, $115 million was drawn against the new facility, which was used to
repay the then outstanding borrowings under the former facility. The new facility is avail-
able to fund the Partnership’s working capital requirements, to finance acquisitions, and
for general partnership purposes. Amounts outstanding under these facilities totaled $91
and $68 million at December 31, 2007 and 2006, respectively. The new facility contains a
covenant requiring the Partnership to maintain a ratio of up to 4.75 to 1 of its consolidated
total debt (including letters of credit) to its consolidated EBITDA (each as defined in the
new facility). At December 31, 2007, the Partnership’s ratio of its consolidated debt to its
consolidated EBITDA was 2.7 to 1.
The following table sets forth Sunoco’s outstanding debt:
December 31
(Millions of Dollars) 2007 2006
Short-term borrowings $— $ 275
Current portion of long-term debt 47
Long-term debt 1,724 1,705
Total debt* $1,728 $1,987
*Includes $515 and $492 million at December 31, 2007 and 2006, respectively, attributable to Sunoco Logistics Partners L.P.
Management believes there is sufficient borrowing capacity available to pursue strategic
opportunities as they arise. In addition, the Company has the option of issuing additional
common or preference stock or selling an additional portion of its Sunoco Logistics Part-
ners L.P. interests, and Sunoco Logistics Partners L.P. has the option of issuing additional
common units.
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