What changed in this filing

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Item 1A. Risk Factors

2022-02-17 compared with 2021-02-19 · 81 added, 93 removed, 281 unchanged (38% of the section changed)

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Actual or anticipated changes or downgrades in our ratings, including any announcement that our ratings are under review for a downgrade, could adversely affect our business, cash flows, financial condition and operating results.

Discontinuation, reform or replacement of LIBOR may adversely affect our variable rate debt.

Borrowings under our credit facilities are at variable rates of interest, primarily based on London Interbank Offered Rate ("LIBOR").

LIBOR tends to fluctuate based on general interest rates, rates set by the U.S.

Federal Reserve Board and other central banks, the supply of and demand for credit in the London interbank market, and general economic conditions.

In July 2017, the Financial Conduct Authority in the U.K.

announced a desire to

phase out LIBOR as a benchmark by the end of 2021.

In November 2020, it was announced that one-week and two-month U.S.

dollar denominated LIBOR rates will retire December 31, 2021, and the overnight, one-month, three month, six-month and 12-month U.S.

dollar LIBOR rates will continue to be published through June 2023.

Financial industry working groups are developing replacement rates and methodologies to transition existing agreements that depend on LIBOR as a reference rate;

however, we can provide no assurance that market-accepted rates and transition methodologies will be available and finalized at the time of LIBOR cessation.

If clear market standards and transition methodologies have not been developed by the time LIBOR becomes unavailable, we may have difficulty reaching agreement on acceptable replacement rates under our credit facilities.

If we are unable to negotiate replacement rates on favorable terms, it could have a material adverse effect on our earnings and cash flows.

The interest rates on our credit facilities may be impacted by the phase-out of the London Interbank Offered Rate ("LIBOR") and the transition to the Secured Overnight Financing Rate ("SOFR").

Interest rates on borrowings under our credit agreement may be based on LIBOR.

Following announcements by the United Kingdom Financial Conduct Authority (“FCA”) and ICE Benchmark Administration Limited, the FCA-regulated LIBOR administrator, publication of the one-week and two-month United States Dollar (“USD”)-LIBOR tenors ceased after December 31, 2021.

While publication of all other USD-LIBOR tenors is expected to cease after June 30, 2023, U.S.

regulators and the FCA have published guidance instructing banks to cease entering into new contracts referencing USD-LIBOR no later than December 31, 2021, with limited exceptions.

As of the date hereof, the current recommended replacement for USD-LIBOR is the Secured Overnight Financing Rate (“SOFR”).

In March 2020, the Federal Reserve Bank of New York began publishing 30-, 90- and 180-day tenor SOFR Averages and a SOFR Index.

In addition, forward-looking SOFR term rates are being published.

However, the composition and characteristics of SOFR are not the same as those of LIBOR.

As a result, there can be no assurance that SOFR or any rate based on SOFR will perform in the same way as LIBOR would have at any time.

For example, since publication of SOFR began on April 3, 2018, daily changes in SOFR have, on occasion, been more volatile than daily changes in comparable benchmark or other market rates.

Any transition away from LIBOR as a benchmark for establishing the applicable interest rate is complex and may affect the cost of servicing our debt under our credit agreement.

Although these borrowing arrangements provide for alternative base rates, the composition and characteristics of such alternative base rates are not the same as those of LIBOR, and the consequences of the phase-out of LIBOR cannot be entirely predicted at this time.

Our ability to meet our payment obligations under the notes and our other debt depends on our ability to generate significant cash flow in the future.

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Our ability to successfully manage operating costs is important because we have little or no influence on the sales prices or regional and worldwide consumer demand for oil and gasoline.

Furthermore, oil prices, wholesale motor fuel costs, motor fuel sales volumes, motor fuel gross margins and merchandise sales can be subject to seasonal fluctuations.

Furthermore, oil prices, wholesale motor fuel costs, motor fuel sales

volumes, motor fuel gross margins and merchandise sales can be subject to seasonal fluctuations.

For example, consumer demand for motor fuel typically increases during the summer driving season, and typically falls during the winter months.

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A significant change in any of these factors, including a significant decrease in consumer demand (other than typical seasonal variations), could materially affect our motor fuel and merchandise volumes, motor fuel gross profit and overall customer traffic, which in turn could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Further, recessionary economic conditions, higher interest rates, higher gasoline and other energy costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors may affect consumer spending or buying habits, and could adversely affect the demand for products we sell at our retail sites.

Unfavorable economic conditions, higher gasoline prices and unemployment levels can affect consumer confidence, spending patterns and vehicle miles driven.

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Walmart continues to be a key relationship with regard to our Murphy USA network.

At December 31, 2020, most of our 1,503 Company stores were located in close proximity to Walmart Supercenter stores.

At December 31, 2021, most of our Murphy branded stores were located in close proximity to Walmart Supercenter stores.

Therefore, our relationship with Walmart, the continued goodwill of Walmart and the integrity of Walmart’s brand name in the retail marketplace are all important drivers for our business.

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The market price for RINs fluctuates based on a variety of factors, including but not limited to governmental and regulatory action and market dynamics.

2020, RIN prices fluctuated more widely along with the volatile wholesale fuel supply market due to COVID pressures and continued increasing into year-end as the new administration prepared to take office in Washington D.C.

In 2021, RIN prices continued to fluctuate but were higher on average due to uncertainty of future regulations.

Although a decline in RIN prices could have a material impact on the Company's revenues, Murphy USA's business model is not dependent on its ability to generate revenues from the sale of RINs.

Current litigation and future rulemaking could impact the present point of obligation under the Renewable Fuel Standard ("RFS") program.

Current litigation and future rule making could impact the present point of obligation under the Renewable Fuel Standard ("RFS") program.

The RFS program is the regulatory means by which the federal government requires the introduction of an increasing amount of renewable fuel into the fuel supply.

As it is, refiners are obligated to obtain—either by blending biofuels into petroleum-based fuels or through purchase on the open market—and then retire with the federal government RINs to satisfy their individual obligations.

However, pending litigation and soon-to-begin EPA rulemaking activities concerning the RFS standard could potentially open the door to a change in the point of obligation.

However, pending litigation and soon-to-begin EPA rule making activities concerning the RFS standard could potentially open the door to a change in the point of obligation.

If the point of obligation were to be shifted from refiners to blenders, Murphy USA would potentially have to utilize the RINs that it obtains through its blending activities to satisfy a new obligation and would therefore be unable to sell those RINs to third parties.

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Much of our competitive advantage arises out of these proprietary arrangements which, if disrupted, could materially and adversely affect us.

In addition to our own operational risks discussed above, we could experience interruptions of supply or increases in costs to deliver refined products to market if the ability of the pipelines or vessels to transport petroleum or refined products is disrupted because of weather events, accidents, governmental regulations or third-party actions.

The novel coronavirus ("COVID-19") pandemic impacted 2021 and continues to cause disruptions in supply chains into 2022.

disrupted because of weather events, accidents, governmental regulations or third-party actions.

Furthermore, at some of our locations there are very few suppliers for fuel in that market.

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Lower income on gasoline sales caused by higher credit card fees may decrease our overall profitability and could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Failure to maintain the quality and safety of our food products could adversely impact our reputation and business.

As we continue to focus on enhancing our food and beverage offerings, concerns regarding the quality or safety of our food products or our food supply chain, even if factually incorrect or based on isolated incidents, could hurt our sales of prepared food products and possibly lead to product liability and personal injury claims, litigation, government agency investigations and damages.

Walmart retains certain rights in its agreements with us, which may adversely impact our ability to conduct our business.

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The ECRs impose customary restrictions on the use of our properties, which Walmart has the right to enforce.

The ECRs also provide that if we propose to sell a fueling station property or any portion thereof (other than in connection with the sale of all or substantially all of our properties that were purchased from Walmart or in connection with a bona fide financing), Walmart has a right of first refusal to purchase such property or portion thereof on similar terms.

The ECRs also provide that if we propose to sell a fueling store property or any portion thereof (other than in connection with the sale of all or substantially all of our properties that were purchased from Walmart or in connection with a bona fide financing), Walmart has a right of first refusal to purchase such property or portion thereof on similar terms.

Subject to certain exceptions (including a merger in which we participate, the transfer of any of our securities or a change in control of us), if we market for sale to a third party all or substantially all of our properties that were purchased from Walmart, or if we receive an unsolicited offer to purchase such properties that we intend to accept, we are required to notify Walmart.

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If Walmart makes such an offer, for a period of one year we will generally only be permitted to accept third-party offers where the net consideration to us would be greater than that offered by Walmart.

The ECRs also prohibit us from transferring all or substantially all of our fueling station properties that were purchased from Walmart to a “competitor” of Walmart, as reasonably determined by Walmart.

The ECRs also prohibit us from transferring all or substantially all of our fueling store properties that were purchased from Walmart to a “competitor” of Walmart, as reasonably determined by Walmart.

The term “competitor” is generally defined in the ECRs as an entity that owns, operates or controls grocery stores or supermarkets, wholesale club operations similar to that of a Sam’s Club, discount department stores or other discount retailers similar to any of the various Walmart store prototypes or pharmacy or drug stores.

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is acquired or becomes party to any merger or consolidation that results in a material change in the management of the stores, Walmart will have the option to purchase the stores at fair market value.

The master lease also prohibits us from selling all or any portion of a station without first offering to sell all or such portion to Walmart on the same terms and conditions.

The master lease also prohibits us from selling all or any portion of a store without first offering to sell all or such portion to Walmart on the same terms and conditions.

These provisions may restrict our ability to conduct our business on the terms and in the manner we consider most favorable and may adversely affect our future growth.

An inability to maintain a multi-year new store project pipeline may cause our Company's growth to slow in 2022 and beyond.

While we have a high confidence level that our growth of up to 55 new stores and up to 25 raze-and-rebuild stores is secure due to our existing pipeline of land closures, the future development relies on the continued growth of our project pipeline.

Our ability to grow by up to 45 new stores and up to 35 raze-and-rebuild stores in 2022 and by up to 55 NTI stores and 25 raze-and-rebuild stores in future years relies on the continued growth of our project pipeline and the building material supply chain.

We have a very active Asset Development group that works to focus on our key target areas to locate suitable traffic count locations for this future growth.

If the Asset Development group is unable to locate suitable locations or is unable to close the purchase of those locations in a timely fashion, the Company could find that it does not have sufficient land to fulfill its pipeline.

If the Asset Development group is unable to locate suitable locations or is unable to close the purchase for those locations in a timely fashion, the Company

could find that it does not have sufficient land to fulfill its pipeline.

Further, permitting delays due to local government agency ability to timely respond to our requests could also negatively impact our pipeline.

We currently have one primary supplier for over 70% of our merchandise.

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In 2021, over 70% of our merchandise, including most tobacco products and grocery items, was purchased from a single wholesale grocer, Core-Mark.

In January 2021, we renewed and extended for another five years a supply contract with Core-Mark that began in late January 2016.

If Core-Mark is unable to fulfill its obligations under our contract, alternative suppliers that we could use in the event of a disruption may not be immediately available.

In January 2021, we renewed and extended for another five years a supply contract with Core-Mark.

If Core-Mark is unable to fulfill its obligations under our contract, alternative suppliers that we could use in the event of a disruption may not be immediately available or offer merchandise on similar commercial terms.

A disruption in supply could have a material effect on our business, financial condition, results of operations and cash flows.

We may be unable to protect or maintain our rights in the trademarks we use in our business.

We expect to use the Murphy USA ® and Murphy Express trademarks under the Trademark License Agreement that we entered into with Murphy Oil, which will continue to own those trademarks.

Murphy Oil’s actions and our actions to protect our rights in those trademarks may not be adequate to prevent others from using similar marks or otherwise violating our rights in those trademarks.

Furthermore, our right to use those trademarks is limited to the marketing business and can be terminated by Murphy Oil upon the occurrence of certain events, such as our uncured material breach, insolvency or change of control.

Capital financing may not always be available to fund our activities.

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Accordingly, we may not be able to obtain the full amount of the funds available under our credit facility to satisfy our cash requirements, and our failure to do so could have a material adverse effect on our operations and financial position.

Further, since the credit facility is secured by receivables and inventories, low commodity prices can limit the borrowing base to an amount substantially less than its ceiling as the resulting collateral for the loan is required to be valued at then current pricing on a monthly basis.

We could be adversely affected if we are not able to attract and retain highly qualified senior personnel.

We are dependent on our ability to attract and retain highly qualified senior personnel.

If, for any reason, we are not able to attract and retain qualified senior personnel, our business, financial condition, results of operations and cash flows could be adversely affected.

We could be adversely affected if we are not able to attract and retain qualified personnel.

We are dependent on our ability to attract and retain qualified personnel.

If, for any reason, we are not able to attract and retain qualified personnel, our business, financial condition, results of operations and cash flows could be adversely affected.

Risks Relating to the QuickChek Acquisition

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The combination of two independent businesses is a complex, costly, and time-consuming process.

As a result, we and QuickChek have devoted significant management attention and resources prior to closing to prepare for integrating, and we will devote significant management attention and resources post-closing to integrate the business practices and operations of both organizations.

As a result, we have devoted significant management attention and resources to integrate the business practices and operations of both organizations.

The integration process may disrupt the businesses and, if implemented ineffectively, would impair the realization of the full expected benefits.

Following completion of the QuickChek acquisition, we may not be able to maintain the growth rate, levels of revenue, earnings, or operating efficiency that we and QuickChek have achieved or might achieve separately.

We may not be able to maintain the growth rate, levels of revenue, earnings, or operating efficiency that we and QuickChek have achieved or might achieve separately.

In addition, we continue to evaluate our estimates of synergies to be realized from the QuickChek acquisition, so our actual cost-savings could differ materially from our current estimates.

We cannot give assurance that we will achieve the full amount of cost-savings on the schedule anticipated or at all.

A failure to meet the challenges involved in integrating the two businesses and to realize the anticipated benefits of the transaction could cause an interruption of, or a loss of momentum in, the activities of the post-acquisition company and could adversely affect its results of operations.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer and other business relationships, and diversion of management's attention.

The difficulties of combining the operations of the companies include, among others:

• the diversion of management's attention to integration matters;

• difficulties in achieving anticipated cost savings, synergies, business opportunities and growth;

• difficulties in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;

• difficulties in the assimilation of employees;

• difficulties in managing the expanded operations of a significantly larger and more complex company;

• challenges in keeping existing customers and obtaining new customers;

• potential unknown liabilities, adverse consequences, and unforeseen increased expenses and unanticipated competitive responses associated with the QuickChek acquisition;

• coordinating a more geographically dispersed organization.

Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues, and diversion of management's time and energy, which could materially impact the business, financial condition, and results of operations of the post-acquisition company.

In addition, even if our operations are integrated successfully with QuickChek, the full benefits of the transaction may not be realized, including the synergies, cost savings, or sales or growth opportunities that are expected.

Many factors affecting our ability to realize anticipated benefits are outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues, and diversion of management's time and energy, which could materially impact our business, financial condition, and results of operations.

These benefits may not be achieved within the anticipated time frame, or at all.

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We may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets.

We expect to have balances of goodwill and identified intangible assets as a result of the QuickChek acquisition.

We have balances of goodwill and intangible assets as a result of the QuickChek acquisition.

We are required to test goodwill and any other intangible assets with an indefinite life for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment.

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An impairment charge would be determined based on the estimated fair value of the assets and any such impairment charge could have a material adverse effect on our business, financial condition and results of operations.

We have incurred, and expect to continue to incur, significant transaction costs in connection with the QuickChek acquisition.

We have incurred, and expect to continue to incur, significant integration costs in connection with the QuickChek acquisition.

In connection with the QuickChek acquisition, we have incurred and expect to continue to incur significant costs and expenses, including financial advisory, legal, accounting, consulting and other advisory fees and expenses, reorganization and restructuring costs, employee benefit–related expenses, printing expenses and other related charges.

In addition, we may incur significant one–time charges as a result of costs associated with the QuickChek acquisition.

We will not be able to quantify the exact amount of these charges or the period in which they will be incurred until after the QuickChek acquisition is completed.

While we have assumed that a certain level of expenses will be incurred in connection with the QuickChek acquisition, there are many factors that could affect the total amount or timing of the integration and implementation expenses.

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Risks Relating to Our Industry

Pandemics or disease outbreaks, such as the novel coronavirus ("COVID-19 virus"), may disrupt consumption and trade patterns, supply chains and normal business activities, which could materially affect our operations and results of operations.

Pandemics or disease outbreaks such as COVID-19 virus may continue to have depressed demand for our fuel and convenience merchandise products because quarantines may inhibit the ability or need for our customers to shop with us.

Pandemics or disease outbreaks, such as COVID-19, may disrupt consumption and trade patterns, supply chains and normal business activities, which could materially affect our operations and results of operations.

Pandemics or disease outbreaks such as COVID-19 may continue to cause depressed demand for our fuel and convenience merchandise products because quarantines may inhibit the ability or need for our customers to shop with us.

We also may experience disruptions of logistics necessary to obtain and deliver products to our stores and our customers as we rely on third-parties to perform these vital functions to our business.

In addition, we could experience issues with our workforce that limit our ability to continue to operate our stores at their normal hours of operations or experience government intervention that requires us to reduce hours or close certain locations.

In addition, we could again experience issues with our workforce that limit our ability to continue to operate our stores at their normal hours of operations or experience government intervention that requires us to reduce hours or close certain locations.

If a significant percentage of our workforce is unable to work, including because of illness or travel or government restrictions in connection with pandemics or disease outbreaks, our operations may be negatively impacted.

In addition, pandemics or disease outbreaks could result in an economic downturn that could adversely affect the economies and financial markets, resulting in an economic downturn that could affect customers' demand for our products and services.

We have had to reduce hours of operation in some stores temporarily, but this has not had a material impact on our financial results.

We operate in a highly competitive industry, which could adversely affect us in many ways, including our profitability, our ability to grow, and our ability to manage our businesses.

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marketing petroleum business is highly competitive, particularly with regard to accessing and marketing petroleum and other refined products.

We compete with other chains of retail fuel stores for fuel supply and in the retail sale of refined products to end consumers, primarily on the basis of price, but also on the basis of convenience and consumer appeal.

We compete with other chains of retail fuel stores for fuel supply and in the retail sale of refined products to end consumers, primarily on the

basis of price, but also on the basis of convenience and consumer appeal.

In addition, we may also face competition from other retail fueling stores that adopt marketing strategies similar to ours by associating with non-traditional retailers, such as supermarkets, discount club stores and hypermarkets, particularly in the geographic areas in which we operate.

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We also compete with integrated companies that have their own production and/or refining operations that are at times able to offset losses from marketing operations with profits from producing or refining operations, and may be better positioned to withstand periods of depressed retail margins or supply shortages.

In addition, we compete with other retail and wholesale gasoline

marketing companies that have more extensive retail outlets and greater brand name recognition.

In addition, we compete with other retail and wholesale gasoline marketing companies that have more extensive retail outlets and greater brand name recognition.

Some of our competitors have been in existence longer than we have and have greater financial, marketing and other resources than we do.

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In addition, the retail gasoline industry in the United States is highly competitive due to ease of entry and constant change in the number and type of retailers offering similar products and services.

With respect to merchandise, our retail sites compete with other convenience store chains, independently owned convenience stores, supermarkets, drugstores, discount clubs, gasoline service stations, mass merchants, fast food operations and other similar retail outlets.

Non-traditional retailers, including supermarkets, discount club stores and mass merchants, now compete directly with retail gasoline sites.

With respect to merchandise, our retail stores compete with other convenience store chains, independently owned convenience stores, supermarkets, drugstores, discount clubs, gasoline service stores, mass merchants, fast food operations and other similar retail outlets.

Non-traditional retailers, including supermarkets, discount club stores and mass merchants, now compete directly with retail gasoline stores.

These non-traditional gasoline retailers have obtained a significant share of the gasoline market, and their market share is expected to grow, and these retailers may use promotional pricing or discounts, both at the fuel pump and in the convenience store, to encourage in-store merchandise sales and gasoline sales.

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Competition from these retailers may reduce our market share and our revenues, and the resulting impact on our business and results of operations could be materially adverse.

Future tobacco legislation, potential court rulings affecting the tobacco industry, campaigns to discourage smoking, increases in tobacco taxes and wholesale cost increases of tobacco products could have a material adverse impact on our retail operating revenues and gross margin.

Sales of tobacco products have historically accounted for an important portion of our total sales of convenience store merchandise.

Significant increases in wholesale cigarette costs and tax increases on tobacco products, as well as future legislation, potential rulings in court cases impacting the tobacco industry, and national and local campaigns to discourage smoking in the United States, may have an adverse effect on the demand for tobacco products, and therefore reduce our revenues and profits.

Also, increasing regulations, including those for e-cigarettes and vapor products could offset some of the recent gains we have experienced from selling these products.

Governing bodies continue to consider banning flavored tobacco products.

If such efforts are successful, it could have a further negative impact on our tobacco sales.

These factors could materially and adversely affect our retail price of cigarettes, tobacco unit volume and sales, merchandise gross margin and overall customer traffic.

Reduced sales of tobacco products or smaller gross margins on the sales we make could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Currently, major cigarette manufacturers offer substantial rebates to retailers.

We include these rebates as a component of our gross margin.

In the event these rebates are no longer offered, or decreased, our profit from cigarette sales will decrease accordingly.

In addition, reduced retail display allowances on cigarettes offered by cigarette manufacturers would negatively affect gross margins.

These factors could materially affect our retail price of cigarettes, cigarette unit volume and revenues, merchandise gross margin and overall customer traffic, which could in turn have a material adverse effect on our business, financial condition, results of operations and cash flows.

Changes in consumer behavior and travel as a result of changing economic conditions, the development of alternative energy technologies or otherwise could affect our business.

In the retail gasoline industry, customer traffic is generally driven by consumer preferences and spending trends, growth rates for commercial truck traffic and trends in travel and weather.

Changes in economic conditions generally, or in the regions in which we operate, could adversely affect consumer spending patterns and travel in our markets.

Changes in economic conditions

generally, or in the regions in which we operate, could adversely affect consumer spending patterns and travel in our markets.

In particular, weakening economic conditions may result in decreases in miles driven and discretionary consumer spending and travel, which affect spending on gasoline and convenience items.

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Our success depends on our ability to anticipate and respond in a timely manner to changing consumer demands and preferences while continuing to sell products and services that remain relevant to the consumer and thus will positively impact overall retail gross margin.

Developments regarding climate change and the effects of greenhouse gas emissions on climate change and the environment may lead to increased use of “green” automobiles.

Other market and social initiatives such as public and private initiatives that aim to subsidize the development of non-fossil fuel energy sources may reduce the competitiveness of gasoline.

Consequently, attitudes toward gasoline and its relationship to the environment may significantly affect our sales and ability to market our products.

Similarly, advanced technology, improved fuel efficiency and increased use of “green” automobiles (e.g., those automobiles that do not use gasoline or that are powered by hybrid engines) would reduce demand for gasoline and could fundamentally change our customers' shopping habits or lead to new forms of fueling destinations or new competitive pressures.

Developments regarding climate change and the effects of greenhouse gas emissions on climate change and the environment have led to increased use of “green” automobiles.

In addition, in August 2021, the Biden Administration issued an executive order which set a target to make half of all new vehicles sold in 2030 zero emission vehicles.

Other market and social initiatives such as public and private initiatives that aim to subsidize the development of non-fossil fuel energy sources may also reduce the competitiveness of gasoline.

Consequently, the increased adoption of "green" automobiles and general attitudes toward gasoline and its relationship to the environment may significantly affect our sales and ability to market our products.

Reduced consumer demand for gasoline could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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As a retail gasoline marketing company, we are significantly affected by these factors.

specific events, it is not practical to attempt to predict the effects of such factors on our future operations and earnings.

Because these and other factors are subject to changes caused by governmental and political considerations and are often made in response to changing internal and worldwide economic conditions and to actions of other governments or specific events, it is not practical to attempt to predict the effects of such factors on our future operations and earnings.

Our business is subject to operational hazards and risks normally associated with the marketing of petroleum products.

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and personal injury, including death, for which we could be deemed to be liable, and which could subject us to substantial fines and/or claims for punitive damages.

We store gasoline in storage tanks at our retail sites.

We store gasoline in storage tanks at our retail stores.

Our operations are subject to significant hazards and risks inherent in storing gasoline.

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coastline and are vulnerable to hurricane and tropical storm damages, which may result in shutdowns.

hurricane season runs from June through November, but the most severe storm activities usually occur in late summer.

season runs from June through November, but the most severe storm activities usually occur in late summer.

Moreover, it should be noted that scientists have predicted that increasing concentrations of greenhouse gases in the earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events.

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In addition, some of our facilities are subject to GHG regulation.

We are currently required to report annual GHG emissions from certain of our operations, and additional GHG emission-related requirements that may affect our business have been finalized or are in various phases of discussion or

implementation.

Any existing or future GHG emission requirements could result in increased operating costs and additional compliance expenses.

Our expenditures, liabilities and obligations relating to environmental matters could have a material adverse effect on our business, product demand, reputation, results of operations and financial condition.