Sunoco 2008 Annual Report Download - page 30

• 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 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.
From time to time, our cash needs may exceed our internally generated cash flow, and our business could be
materially and adversely affected if we are unable to obtain the necessary funds from financing activities.
We have substantial cash needs. These cash needs are primarily to satisfy working capital requirements,
including crude oil purchases which fluctuate with the pricing and sourcing of crude oil. Our crude oil purchases
generally have terms that are longer than the terms of our product sales. When the price we pay for crude oil
decreases, this typically results in a reduction in cash generated from our operations. Our cash needs also include
capital expenditures for infrastructure, environmental and other regulatory compliance, maintenance turnarounds
at our refineries and income improvement projects.
From time to time, our cash requirements may exceed our cash generation. During such periods, we may
need to supplement our cash generation with proceeds from financing activities. We have $1.8 billion of
revolving credit facilities and a $200 million accounts receivable securitization facility which provide us with
available financing to meet our cash needs. However, our ability to obtain funds from our credit facilities may be
impaired because of the recent downturn in the financial markets, including issues surrounding the solvency of
many institutional lenders and recent failure of several banks.
In September 2008, Lehman Brothers, one of the participating banks with an aggregate commitment under
the revolving credit facilities totaling $25 million, declared bankruptcy and we believe Lehman Brothers will not
fund its future loan commitments. In light of the volatile current market environment, it is possible that we will
be unable to obtain the full amount of the funds available under these facilities to satisfy our cash requirements.
Our failure to do so could have a material adverse effect on our business.
Funding, especially on terms acceptable to us, may not be available to meet our future capital needs because
of the deterioration of the credit and capital markets.
Global market and economic conditions have been, and continue to be, disruptive and volatile. The debt and
equity capital markets have been impacted by significant write-offs in the financial services sector and the
re-pricing of credit risk in the broadly syndicated market, among other things. These events have negatively
affected general economic conditions.
In particular, the cost of raising money in the debt and equity capital markets has increased substantially
while the availability of funds from those markets has diminished significantly. Also, as a result of concern about
the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining
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