Sunoco 2009 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2009 Sunoco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

security breaches at our facilities, labor disputes and maritime accidents, any of which could result in loss of life
or equipment, business interruptions, environmental pollution, personal injury and damage to our property and
that of others. In addition, certain of our facilities provide or share necessary resources, materials or utilities, rely
on common resources or utilities for their supply, distribution or materials or are located in close proximity to
other of our facilities. As a result, an event, such as the closure of a transportation route, could adversely affect
more than one facility. Our refineries, chemical plants, cokemaking and coal mining facilities, pipelines and
storage facilities also may be potential targets for terrorist attacks.
We maintain insurance against many, but not all, potential losses or liabilities arising from operating
hazards in amounts that we believe to be prudent. Our insurance program includes a number of insurance
carriers. Disruptions in the U.S. financial markets have resulted in the deterioration in the financial condition of
many financial institutions, including insurance companies. In light of this uncertainty, it is possible that we may
not be able to obtain insurance coverage for insured events. Our failure to do so could have a material adverse
effect on our future cash flows, operating results and financial condition.
We must make substantial capital expenditures on our operating facilities to maintain their reliability and
efficiency. If we are unable to complete capital projects at their expected costs and/or in a timely manner, or if
the market conditions assumed in our project economics deteriorate, our financial condition, results of
operations or cash flows could be materially and adversely affected.
Delays or cost increases related to capital spending programs involving engineering, procurement and
construction of new facilities (or improvements and repairs to our existing facilities) could adversely affect our
ability to achieve forecasted internal rates of return and operating results. Delays in making required changes or
upgrades to our facilities could subject us to fines or penalties as well as affect our ability to supply certain
products we make. Such delays or cost increases may arise as a result of unpredictable factors in the marketplace,
many of which are beyond our control, including:
• denial or delay in issuing regulatory approvals and/or permits;
• unplanned increases in the cost of construction materials or labor;
• disruptions in transportation of modular components and/or construction materials;
• severe adverse weather conditions, natural disasters or other events (such as equipment malfunctions,
explosions, fires or spills) affecting our facilities, or those of vendors and suppliers;
• shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;
• market-related increases in a project’s debt or equity financing costs; and/or
• nonperformance or force majeure by, or disputes with, vendors, suppliers, contractors or
sub-contractors involved with a project.
Our refineries consist of many processing units, a number of which have been in operation for many years.
Equipment, even if properly maintained, may require significant capital expenditures to keep it operating at
optimum efficiency. One or more of the units may require unscheduled downtime for unanticipated maintenance
or repairs that are more frequent than our scheduled turnarounds for such units. Scheduled and unscheduled
maintenance could reduce our revenues during the period of time that the units are not operating.
Our forecasted internal rates of return are also based upon our projections of future market fundamentals
which are not within our control, including changes in general economic conditions, available alternative supply
and customer demand.
Any one or more of these factors could have a significant impact on our business. If we were unable to make
up the delays associated with such factors or to recover the related costs, or if market conditions change, it could
materially and adversely affect our financial position, results of operations or cash flows.
22