Sunoco 2011 Annual Report Download - page 31

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• 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. The need for
significant future capital spending to maintain our refineries may have a material adverse impact on the
likelihood of our successful completion of a sale of our refining assets and the ultimate value which may be
realized upon such sale.
Our forecasted internal rates of return are also based upon our projections of future market fundamentals
that 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 that 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 $1.35 billion of
revolving credit facilities (excluding amounts attributable to SunCoke Energy) and a $250 million accounts
receivable securitization facility that 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.
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