Sunoco 2012 Annual Report Download - page 94

and nature of required remedial actions, the technology available and needed to meet the various existing legal
requirements, the nature and extent of future environmental laws, inflation rates and the determination of the
Partnership’s liability at multi-party sites, if any, in light of uncertainties with respect to joint and several
liability, and the number, participation levels and financial viability of other parties. Management believes it is
reasonably possible that additional environmental remediation losses will be incurred. At December 31, 2012, the
aggregate of the estimated maximum additional reasonably possible losses, which relate to numerous individual
sites, totaled $2 million.
The Partnership is a party to certain pending and threatened claims. Although the ultimate outcome of these
claims cannot be ascertained at this time nor can a range of reasonably possible losses be determined, it is
reasonably possible that some portion of them could be resolved unfavorably to the Partnership and its predecessor.
Management does not believe that any liabilities which may arise from such claims and the environmental matters
discussed above would be material in relation to the Partnership’s results of operations, financial position or cash
flows at December 31, 2012. Furthermore, management does not believe that the overall costs for such matters will
have a material impact, over an extended period of time, on the Partnership’s operations, cash flows or liquidity.
Sunoco has indemnified the Partnership for 30 years from environmental and toxic tort liabilities related to
the assets contributed to the Partnership that arose from the operation of such assets prior to the closing of the
February 2002 initial public offering (“IPO”). Sunoco has indemnified the Partnership for 100 percent of all
losses asserted within the first 21 years of closing of the IPO. Sunoco’s share of liability for claims asserted
thereafter will decrease by 10 percent a year. For example, for a claim asserted during the twenty-third year after
closing of the IPO, Sunoco would be required to indemnify the Partnership for 80 percent of its loss. There is no
monetary cap on the amount of indemnity coverage provided by Sunoco. The Partnership has agreed to
indemnify Sunoco for events and conditions associated with the operation of the Partnership’s assets that occur
on or after the closing of the IPO and for environmental and toxic tort liabilities to the extent Sunoco is not
required to indemnify the Partnership.
Sunoco also has indemnified the Partnership for liabilities, other than environmental and toxic tort liabilities
related to the assets contributed to the Partnership, that arose out of Sunoco’s ownership and operation of the
assets prior to the closing of the IPO and that are asserted within 10 years after closing of the IPO. In addition,
Sunoco has indemnified the Partnership from liabilities relating to certain defects in title to the assets contributed
to the Partnership and associated with failure to obtain certain consents and permits necessary to conduct its
business that arise within 10 years after closing of the IPO, as well as from liabilities relating to legal actions
currently pending against Sunoco or its affiliates and events and conditions associated with any assets retained by
Sunoco or its affiliates.
Management of the Partnership does not believe that any liabilities which may arise from claims
indemnified by Sunoco would be material in relation to the operations, cash flows or financial position of the
Partnership at December 31, 2012. There are certain other pending legal proceedings related to matters arising
after the IPO that are not indemnified by Sunoco. Management believes that any liabilities that may arise from
these legal proceedings will not be material in relation to the operations, cash flows or financial position of the
Partnership at December 31, 2012.
12. Equity Offerings
On December 2, 2011, the Partnership completed a three-for-one split of its common and Class A units. The
unit split resulted in the issuance of two additional common or Class A units for every one unit owned. All unit
and per unit information included in this report are presented on a post-split basis.
In July 2011, the Partnership issued 3.9 million Class A units to Sunoco in connection with the acquisition
of the Eagle Point tank farm and related assets. These deferred distribution units represented a new class of units
that were converted to common units in July 2012. Prior to their conversion, the Class A units participated in the
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