Annual Report (Form 10-K), fiscal year 1994





ITEM 3. LEGAL PROCEEDINGS
On December 29, 1994, the United States Environmental Protection Agency ("EPA") filed an administrative action alleging that Puerto Rico Sun Oil Company ("PRSOC"), an indirect subsidiary of the Company, failed to file a SARA/EPCRA Form R for the year 1989. Additionaly, the EPA alleged that, for the years 1990, 1991, and 1992, PRSOC failed to report specific chemicals in its Form R submittals. The EPA has made a preliminary civil penalty demand in excess of $100,000.
On December 6, 1994, Tosco Corporation ("Tosco") filed an action against the Company in the United States District Court for the Northern District of California, seeking only a judicial declaration regarding Tosco's rights and obligations (including, in particualr, Tosco's indemnification obligations with respect to environmental remediation under CERCLA and/or RCRA) under its November 1, 1980 agreement with Sun Company, Inc. (R&M) ("Sun R&M") for the sale to Tosco of Sun R&M's formerly-owned Duncan, OK, refinery. Management believes it is likely that the court will find that Tosco has a contractual obligation to fully indemnify Sun R&M for any costs incurred in connection with contamination at this site.
On October 27, 1994, an agreement in principle was reached with the Ohio EPA which will settle numerous allegations of violations of Ohio air regulations at Sun's Toledo refinery. Sun will enter into a judicial Consent Order which will be filed together with an enforcement Complaint in the Lucas County, Ohio Court of Common Pleas. Part of the Consent Order requires Sun to pay a civil penalty of $200,000.
Many other legal and administrative proceedings are pending against Sun. Although the ultimate outcome of these proceedings cannot be ascertained at this time, it is reasonably possible that some of them could be resolved unfavorably to Sun. Management of Sun believes that any liabilities which may arise from such proceedings, including those discussed above, would not be material in relation to the consolidated financial positions of Sun at December 31, 1994.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF SUN COMPANY, INC.
NAME, AGE AND PRESENT POSITION WITH SUN COMPANY, INC. ---------------------- BUSINESS EXPERIENCE DURING PAST FIVE YEARS -------------------------- Robert M. Aiken, Jr., 52 Senior Vice President and Chief Financial Officer Mr. Aiken was named to his present position in May 1992. He assumed additional responsibility for Sun's Materials Management function and Real Estate and Coal operations in August 1994. From September 1990 until May 1992, he was Senior Vice President, Finance and from April 1979 to September 1990, he was Comptroller. Robert H. Campbell, 57 Chairman of the Board, Chief Executive Officer and President Mr. Campbell was elected Chairman of the Board in May 1992, Chief Executive Officer in September 1991 and President and Chief Operating Officer in February 1991. From November 1988 to February 1991, he was Executive Vice President. He has been a Director since November 1988. Richard L. Cartlidge, 40 Comptroller Mr. Cartlidge has been in his present position since October 1991. From July 1989 to October 1991, he was Controller of Sun's domestic refining and marketing subsidiary. John G. Driscoll, 48 Senior Vice President Marketing Mr. Driscoll has been in his present position since August 1994. Prior to assuming this position, he served in various capacities within Sun's domestic refining and marketing subsidiary: from May 1993 to August 1994, he was Vice President of Chemicals; from October 1992 to May 1993, Vice President, Branded Marketing & Development; and from 1989 to October 1992, Director, Business Development & Strategic Planning in Fuels, and Director, Planning & New Product Development.
NAME, AGE AND PRESENT POSITION WITH SUN COMPANY, INC. ---------------------- BUSINESS EXPERIENCE DURING PAST FIVE YEARS -------------------------- Jack L. Foltz, 59 Vice President and General Counsel Mr. Foltz has been in his present position since October 1992, and from December 1991 to October 1992 he was Assistant General Counsel, Refining and Marketing. From December 1989 to December 1991, he was Vice President and General Counsel of Sun's domestic refining and marketing subsidiary. Deborah M. Fretz, 46 Senior Vice President Logistics Ms. Fretz has been in her present position since August 1994. In addition, she has been President of Sun Pipe Line Company, a subsidiary, since October 1991. From 1989 to October 1991, she served as General Manager, Wholesale Fuels Marketing and Distribution. David E. Knoll, 51 Senior Vice President Corporate Development Mr. Knoll has been in his present position, which includes responsibility for Sun's International Production operations, since August 1994. From October 1992 to August 1994, he was Senior Vice President, Marketing and Logistics and from October 1991 to October 1992, Group Vice President, Refining and Marketing. From November 1988 to October 1991, he was President of Sun's domestic refining and marketing subsidiary. Harwood S. Roe, Jr., 50 Senior Vice President Operations Mr. Roe has been in his present position since October 1992 and assumed additional responsibility for Sun's Public Affairs function in August 1994. From 1991 to October 1992, he was Vice President, Operations. From 1988 to 1991, he was Vice President, Refining of Sun's domestic refining and marketing subsidiary. Malcolm I. Ruddock, 52 Treasurer Mr. Ruddock has been in his present position for the past five years.
NAME, AGE AND PRESENT POSITION WITH SUN COMPANY, INC. ---------------------- BUSINESS EXPERIENCE DURING PAST FIVE YEARS -------------------------- Sheldon L. Thompson, 56 Senior Vice President and Chief Administrative Officer Mr. Thompson has been in his present position since October 1992 and he assumed additional responsibility for Sun's Research and Development function in August 1994. From 1991 to October 1992, he was Vice President, Chemicals, Lubricants and Technology and from 1989 to 1991, Vice President, Chemicals and Technology for Sun's domestic refining and marketing subsidiary.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated herein by reference to the Quarterly Financial and Stock Market Information on page 68 of the Company's 1994 Annual Report to Shareholders. The market exchanges on which the Company's stock is traded are listed on the cover page of this Annual Report on Form 10-K.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated herein by reference to the Selected Financial Data on page 25 of the Company's 1994 Annual Report to Shareholders.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is incorporated herein by reference to pages 26-37 in the Company's 1994 Annual Report to Shareholders.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information in the Company's 1994 Annual Report to Shareholders is incorporated herein by reference: the Consolidated Financial Statements on pages 38-41; the Notes to Consolidated Financial Statements on pages 42-57; the Report of Independent Accountants on page 58; the Supplemental Financial and Operating Information on pages 63-67 (excluding the sections on Revenues Per Unit of Oil and Gas Production and Average Net Oil and Gas Production); and the Quarterly Financial Information on page 68.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information on directors required by Items 401 and 405 of Regulation S-K is incorporated herein by reference to the Company's definitive Proxy Statement ("Proxy Statement") which will be filed with the Securities and Exchange Commission ("SEC") within 120 days after December 31, 1994.
Information concerning the Company's executive officers appears in Part I of this Annual Report on Form 10-K.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 402 of Regulation S-K is incorporated herein by reference to the Company's Proxy Statement which will be filed with the SEC within 120 days after December 31, 1994, except that the Report of the Compensation Committee and the Stock Performance Graphs contained in the Proxy Statement are specifically excluded from incorporation by reference herein.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 403 of Regulation S-K is incorporated herein by reference to the Company's Proxy Statement which will be filed with the SEC within 120 days after December 31, 1994.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 404 of Regulation S-K is incorporated herein by reference to the Company's Proxy Statement which will be filed with the SEC within 120 days after December 31, 1994.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Consolidated Financial Statements:
The information appearing in the Company's 1994 Annual Report to Shareholders as described in Item 8 is incorporated herein by reference.
2. Financial Statement Schedules:
Page ---- Report of Independent Accountants.................. 37
Schedule II - Valuation Accounts................... 38
Other schedules are omitted because the required information is shown elsewhere in this report, is not required or is not applicable.
3. Exhibits:
3.(i) - Articles of Incorporation of Sun Company, Inc., as restated and amended (incorporated by reference to Exhibit 3.(i) of the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1993, File No. 1-6841).
3.(ii) - Sun Company, Inc. Bylaws, as amended July 5, 1990 (incorporated by reference to Exhibit 3(b) of the Form SE filed March 15, 1991, File No. 1-6841).
4 - Instruments defining the rights of security holders of long-term debt of the Company and its subsidiaries are not being filed since the total amount of securities authorized under each such instrument does not exceed 10 percent of the total assets of the Company and its subsidiaries on a consolidated basis. The Company will provide the SEC a copy of any instruments defining the rights of holders of long- term debt of the Company and its subsidiaries upon request.
10.1* - Long-Term Incentive Plan, as amended (incorporated by reference to Exhibit 10(c) of the Form SE filed March 15, 1989, File No. 1-6841).
10.2* - Executive Retirement Plan, as amended September 6, 1991 (incorporated by reference to Exhibit 10(d) of the Form SE filed March 13, 1992, File No. 1-6841).
10.3* - Directors' Deferred Compensation Plan, as amended and restated effective September 5, 1991 (incorporated by reference to Exhibit 10.5 of the Form SE filed March 11, 1993, File No. 1-6841).
10.4* - Deferred Compensation Plan (incorporated by reference to Exhibit 10(e) of the Form SE filed March 20, 1986, File No. 1-6841).
10.5* - Pension Restoration Plan, as amended and restated effective January 1, 1991 and amended September 6, 1991 (incorporated by reference to Exhibit 10(g) of the Form SE filed March 13, 1992, File No. 1-6841).
10.6* - Executive Incentive Plan, as amended and restated effective January 1, 1992 and revised November 5, 1992 (incorporated by reference to Exhibit 10.9 of the Form SE filed March 11, 1993, File No. 1-6841).
10.7* - Sun Company, Inc. Savings Restoration Plan (incorporated by reference to Exhibit 10(j) of the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1987, File No. 1-6841), as amended effective January 1, 1994.
10.8* - Sun Company, Inc. Savings Restoration Plan II (incorporated by reference to Exhibit 10(k) of the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1989, File No. 1-6841), as amended effective January 1, 1994.
10.9* - Sun Company, Inc. Non-Employee Directors Retirement Plan (incorporated by reference to Exhibit 10(k) of the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1988, File No. 1-6841).
10.10* - Sun Company, Inc. Deferred Compensation and Benefits Trust (incorporated by reference to Exhibit 10(l) of the Form SE filed March 15, 1989, File No. 1-6841).
10.11* - Sun Company, Inc. Retainer Stock Plan for Outside Directors, as amended and restated effective April 1, 1992 (incorporated by reference to Exhibit 10.14 of the Form SE filed March 11, 1993, File No. 1-6841).
10.12* - Sun Company, Inc. Executive Long-Term Stock Investment Plan (incorporated by reference to Exhibit 10.13 of the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1993, File No. 1-6841), as amended March 20, 1994.
10.13* - Memorandum of Agreement between Alexander B. Trowbridge and Sun Company, Inc. (incorporated by reference to Exhibit 10.16 of the Form SE filed March 11, 1993, File No. 1-6841).
10.14* - Consulting Agreement between James G. Kaiser and Sun Company, Inc.
10.15* - Termination Agreement and General Release and Waiver between Robert H. Writz and Sun Company, Inc.
11 - Statements re Sun Company, Inc. and Subsidiaries Computation of Per Share Earnings for the Years Ended December 31, 1994, 1993 and 1992.
12 - Statement re Sun Company, Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges for the Year Ended December 31, 1994.
13 - Sun Company, Inc. 1994 Annual Report to Shareholders Financial Section.
21 - Subsidiaries of Sun Company, Inc.
23 - Consent of Independent Accountants.
24.1 - Power of Attorney executed by certain officers and directors of Sun Company, Inc.
24.2 - Certified copy of the resolution authorizing certain officers to sign on behalf of Sun Company, Inc.
27 - Article 5 of Regulation S-X, Financial Data Schedule.
- ----------- *These exhibits constitute the Executive Compensation Plans and Arrangements of the Company.
(b) Reports on Form 8-K:
A report on Form 8-K dated October 24, 1994 was filed to disclose under Item 5, "Other Events," the Company's press release discussing earnings for the period ended September 30, 1994.
Note: Copies of each Exhibit to this Form 10-K are available upon request, at $2 per copy.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SUN COMPANY, INC.
By s/ROBERT M. AIKEN, JR. Robert M. Aiken, Jr. Senior Vice President and Chief Financial Officer Date March 2, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY OR ON BEHALF OF THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED ON MARCH 2, 1995:
Signatures Titles ---------- ------
ROBERT M. AIKEN, JR.* Senior Vice President and Chief --------------------- Financial Officer Robert M. Aiken, Jr. (Principal Financial Officer)
ROBERT H. CAMPBELL* Chairman of the Board, Chief Executive ------------------- Officer, President and Director Robert H. Campbell (Principal Executive Officer)
RAYMOND E. CARTLEDGE* Director --------------------- Raymond E. Cartledge
RICHARD L. CARTLIDGE* Comptroller --------------------- (Principal Accounting Officer) Richard L. Cartlidge
ROBERT E. CAWTHORN* Director ------------------- Robert E. Cawthorn
MARY J. EVANS* Director -------------- Mary J. Evans
THOMAS P. GERRITY* Director ------------------ Thomas P. Gerrity
JAMES G. KAISER* Director ---------------- James G. Kaiser
ROBERT D. KENNEDY* Director ------------------ Robert D. Kennedy
THOMAS W. LANGFITT* Director ------------------- Thomas W. Langfitt
R. ANDERSON PEW* Director ---------------- R. Anderson Pew
ALBERT E. PISCOPO* Director ------------------ Albert E. Piscopo
WILLIAM F. POUNDS* Director ------------------ William F. Pounds
ALEXANDER B. TROWBRIDGE* Director ------------------------ Alexander B. Trowbridge
*By s/ROBERT M. AIKEN, JR. Individually and as Attorney-in-Fact ---------------------- Robert M. Aiken, Jr.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors, Sun Company, Inc.:
Our report on the consolidated financial statements of Sun Company, Inc. and its subsidiaries has been incorporated by reference in this Form 10-K from page 58 of the Sun Company, Inc. 1994 Annual Report to Shareholders. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index on page 31 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center Philadelphia, PA 19103 February 14, 1995
SUN COMPANY, INC. AND SUBSIDIARIES SCHEDULE II--VALUATION ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992 (MILLIONS OF DOLLARS)
ADDITIONS BALANCE AT CHARGED TO BALANCE BEGINNING COSTS AND DEDUC- AT END OF PERIOD EXPENSES TIONS OF PERIOD ---------- ---------- ------ ---------
For the year ended December 31, 1994: Deducted from asset in balance sheet--allowance for doubtful accounts and notes receivable.......... $11 $ 2 $ 1 $12 === === === ===
For the year ended December 31, 1993: Deducted from asset in balance sheet--allowance for doubtful accounts and notes receivable.......... $11 $ 2 $ 2 $11 === === === ===
For the year ended December 31, 1992: Deducted from asset in balance sheet--allowance for doubtful accounts and notes receivable.......... $12 $ 7 $ 8 $11 === === === ===