Sunoco 2004 Annual Report Download - page 29

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ponent of the lease payments has been estimated utilizing the average spot-market prices for
the year 2004. The actual variable component of the lease payments attributable to these
time charters could vary significantly from the estimates included in the table.
A purchase obligation is an enforceable and legally binding agreement to purchase goods
or services that specifies significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum or variable price provisions; and the approximate timing of the
transaction. Sunoco has various obligations to purchase in the ordinary course of business:
crude oil, other feedstocks and refined products; convenience store items; transportation
and distribution services, including pipeline and terminal throughput and railroad services;
and fuel and utilities. Approximately one quarter of the contractual obligations to purchase
crude oil and other feedstocks and refined products reflected in the above table for 2005
relates to spot-market purchases to be satisfied within the first 60-90 days of the year.
Sunoco also has contractual obligations supporting financing arrangements of third parties,
contracts to acquire or construct properties, plants and equipment, and other contractual
obligations, primarily related to services and materials, including commitments to purchase
supplies and various other maintenance, systems and communications services. Most of
Sunoco’s purchase obligations are based on market prices or formulas based on market
prices. These purchase obligations generally include fixed or minimum volume require-
ments. The purchase obligation amounts in the table above are based on the minimum
quantities to be purchased at estimated prices to be paid based on current market con-
ditions. Accordingly, the actual amounts may vary significantly from the estimates in-
cluded in the table.
Sunoco also has obligations with respect to its defined benefit pension plans and postretire-
ment health care plans (see “Pension Plan Funded Status” below and Note 9 to the con-
solidated financial statements).
Off-Balance Sheet Arrangements—Sunoco is contingently liable under various arrangements
that guarantee debt of third parties aggregating to approximately $11 million at December
31, 2004. At this time, management does not believe that it is likely that the Company
will have to perform under any of these guarantees.
A wholly owned subsidiary of the Company, Sunoco Receivables Corporation, Inc., is a
party to an accounts receivable securitization facility that terminates in 2006 under which
the subsidiary may sell on a revolving basis up to a $200 million undivided interest in a
designated pool of certain accounts receivable. No receivables have been sold to third par-
ties under this facility.
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