Sunoco 2007 Annual Report Download - page 59

The aggregate amount of future minimum annual rentals
applicable to noncancelable operating leases, including
amounts pertaining to lease extension options which are
assumed to be exercised, are as follows:
(Millions of Dollars)
Current
Lease
Term
Lease
Extension
Options Total
Year ending December 31:
2008 $155 $ — $ 155
2009 127 1 128
2010 109 3 112
2011 67 6 73
2012 53 8 61
Thereafter 273 214 487
Future minimum lease payments $784 $232 1,016
Less: Sub-lease rental income (24)
Net minimum lease payments $ 992
Approximately 26 percent of the aggregate amount of
future minimum annual rentals applicable to non-
cancelable operating leases relates to time charters for
marine transportation vessels. Most of these time charters
contain terms of between three to seven years with
renewal and sublease options. The time charter leases
typically require a fixed-price payment or a fixed-price
minimum and a variable component based on spot-
market rates. In the table above, the variable component
of the lease payments has been estimated utilizing the
average spot-market prices for the year 2007. The actual
variable component of the lease payments attributable to
these time charters could vary significantly from the
estimates included in the table.
Over the years, Sunoco has sold thousands of retail gaso-
line outlets as well as refineries, terminals, coal mines, oil
and gas properties and various other assets. In connection
with these sales, the Company has indemnified the pur-
chasers for potential environmental and other contingent
liabilities related to the period prior to the transaction
dates. In most cases, the effect of these arrangements was
to afford protection for the purchasers with respect to
obligations for which the Company was already primarily
liable. While some of these indemnities have spending
thresholds which must be exceeded before they become
operative, or limits on Sunoco’s maximum exposure, they
generally are not limited. The Company recognizes the
fair value of the obligations undertaken for all guarantees
entered into or modified after January 1, 2003. In addi-
tion, the Company accrues for any obligations under
these agreements when a loss is probable and reasonably
estimable. The Company cannot reasonably estimate the
maximum potential amount of future payments under
these agreements.
Sunoco is a party under agreements which provide for
future payments to secure wastewater treatment services
at its Toledo refinery and coal handling services at its
Indiana Harbor cokemaking facility.
The fixed and determinable amounts of the obligations
under these agreements are as follows:
(Millions of Dollars)
Year ending December 31:
2008 $ 8
2009 8
2010 8
2011 8
2012 8
2013 through 2018 22
Total 62
Less: Amount representing interest (15)
Total at present value $ 47
Payments under these agreements, including variable
components, totaled $21, $21 and $20 million for the
years 2007, 2006 and 2005, respectively.
Environmental Remediation Activities
Sunoco is subject to extensive and frequently changing
federal, state and local laws and regulations, including,
but not limited to, those relating to the discharge of
materials into the environment or that otherwise relate
to the protection of the environment, waste management
and the characteristics and composition of fuels. As with
the industry generally, compliance with existing and an-
ticipated laws and regulations increases the overall cost of
operating Sunoco’s businesses, including remediation,
operating costs and capital costs to construct, maintain
and upgrade equipment and facilities.
Existing laws and regulations result in liabilities and loss
contingencies for remediation at Sunoco’s facilities and at
formerly owned or third-party sites. The accrued liability
for environmental remediation is classified in the con-
solidated balance sheets as follows:
December 31
(Millions of Dollars) 2007 2006
Accrued liabilities $39 $36
Other deferred credits and liabilities 83 85
$122 $121
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