Sunoco 2009 Annual Report Download - page 31

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 $1.7 billion of
revolving credit facilities and a $300 million accounts receivable securitization facility which provides us with
available financing to meet our cash needs. In the event of a significant downturn in the financial markets, it is
possible that we would 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 volatility in the credit and capital markets.
Global market and economic conditions have been, and continue to be volatile. In the event of a significant
downturn in the market, the cost of raising money in the debt and equity capital markets could increase
substantially and the availability of funds from those markets could diminish significantly. In addition, the cost of
obtaining money from the credit markets could increase if lenders and institutional investors increase interest
rates, enact tighter lending standards and reduce and/or cease to provide funding to borrowers.
The banks that participate in our revolving credit facilities are subject to the turmoil and volatility of the
global economic market. If one or more of these banks were to declare bankruptcy or otherwise be unable to fund
its loan commitments under our credit facilities, we may be unable to obtain the full amount of the funds
available under the credit facilities and therefore be unable to satisfy our cash requirements.
If funding is not available when needed, or is available only on unfavorable terms, meeting our capital needs
or otherwise taking advantage of business opportunities or responding to competitive pressures may become
challenging, which could have a material adverse effect on our revenues and results of operations.
We have various credit agreements and other financing arrangements that impose certain restrictions on us
and may limit our flexibility to undertake certain types of transactions. If we fail to comply with the terms and
provisions of our debt instruments, the indebtedness under them may become immediately due and payable,
which could have a material adverse effect on our financial position.
Several of our existing debt instruments and financing arrangements contain restrictive covenants that limit
our financial flexibility and that of our subsidiaries. Our credit facilities require the maintenance of certain
financial ratios, satisfaction of certain financial condition tests and, subject to certain exceptions, impose
restrictions on:
• incurrence of additional indebtedness;
• issuance of preferred stock by our subsidiaries;
• incurrence of liens;
• sale and leaseback transactions;
• agreements by our subsidiaries which would limit their ability to pay dividends, make distributions or
repay loans or advances to us; and
• fundamental changes, such as certain mergers and dispositions of assets.
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