1323468--3/12/2010--GLOBAL_PARTNERS

related topics

{tax, income, asset}

{debt, indebtedness, cash}

{gas, price, oil}

{stock, price, operating}

{operation, natural, condition}

{cost, regulation, environmental}

{investment, property, distribution}

{control, financial, internal}

{cost, operation, labor}

{regulation, change, law}

{acquisition, growth, future}

{operation, international, foreign}

{loss, insurance, financial}

{personnel, key, retain}

{capital, credit, financial}

Risks Related to Our Business We may not have sufficient cash from operations to enable us to pay the minimum quarterly distribution or maintain distributions at current levels following establishment of cash reserves and payment of fees and expenses, including payments to our general partner. The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability. Our financial results are seasonal and generally lower in the second and third quarters of the calendar year, which may result in our need to borrow money in order to make distributions to our unitholders during these quarters. A significant decrease in demand for refined petroleum products in the areas served by our storage facilities would reduce our ability to make distributions to our unitholders. Our financial condition and results of operations are influenced by the overall forward market for refined petroleum products, and increases and/or decreases in the prices of refined petroleum products may adversely impact the amount of borrowing available for working capital under our credit agreement, which credit agreement has borrowing base limitations and advance rates. Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities. We may not be able to obtain funding on acceptable terms or obtain additional requested funding in excess of total commitments under our credit agreement, which could have a material adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. Our credit agreement contains operating and financial restrictions that may restrict our business and financing activities. Restrictions in our credit agreement limit our ability to pay distributions upon the occurrence of certain events. We can borrow money under our credit agreement to pay distributions, which would reduce the amount of credit available to operate our business. Warmer weather conditions could adversely affect our financial condition, results of operations and cash available for distribution to our unitholders. Our risk management policies cannot eliminate all commodity risk. In addition, any noncompliance with our risk management policies could result in significant financial losses. We are exposed to trade credit risk and risk associated with our trade credit support in the ordinary course of our business activities. We are exposed to performance risk in our supply chain. Some of our competitors have capital resources many times greater than ours and control greater supplies of refined petroleum products. Some of our residual oil volumes are subject to customers switching or converting to natural gas which could result in loss of customers, which in turn could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. Some of our heating oil volumes are subject to residential conversion to natural gas which could result in less demand for home heating oil and, in turn, could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. We face intense competition in our purchasing, terminalling and storage activities. Competition from other providers of refined petroleum products and natural gas that are able to supply our customers with those products and services at a lower price could reduce our ability to make distributions to our unitholders. Energy efficiency, new technology and alternative fuels could reduce demand for our products and adversely affect our financial condition, results of operations and cash available for distribution to our unitholders. A principal focus of our business strategy is to grow and expand our business through acquisitions. If we do not make acquisitions on economically acceptable terms, our future growth may be limited. Our acquisition strategy involves risks that could reduce our ability to make distributions to our unitholders. We may not be able to renew our leases or our agreements for dedicated storage when they expire. A material amount of our terminalling capacity is controlled by one of our affiliates. Loss of that capacity could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. Some of our sales are generated under contracts that must be renegotiated or replaced periodically. If we are unable to successfully renegotiate or replace these contracts, our financial condition, results of operations and cash available for distribution to our unitholders could be adversely affected. Due to our lack of asset and geographic diversification, adverse developments in the terminals we use or in our operating areas would reduce our ability to make distributions to our unitholders. Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured. New, stricter environmental laws and regulations could significantly increase our costs, which could adversely affect our financial condition, results of operations and cash available for distribution to our unitholders. Our operations are subject to federal, state and local laws and regulations relating to environmental protection and operational safety that could require us to incur substantial costs. We are subject to federal, state and local laws and regulations that govern the product quality specifications of the refined petroleum products we purchase, store, transport and sell. Any terrorist attacks aimed at our facilities and any global and domestic economic repercussions from terrorist activities and the government's response could adversely affect our financial condition, results of operations and cash available for distribution to our unitholders. We depend on key personnel for the success of our business, and some of those persons face conflicts in the allocation of their time to our business. We depend on unionized labor for the operation of our terminal in Chelsea, Massachusetts and our five terminals in New York and at the facility in Revere, Massachusetts which is controlled and operated by one of our affiliates. Any work stoppages or labor disturbances at these facilities could disrupt our business. If we fail to maintain an effective system of internal controls, then we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential unitholders could lose confidence in our financial reporting, which would harm our business and the trading price of our common units. Risks Related to our Structure Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to the detriment of our unitholders. Our partnership agreement limits our general partner's fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty. Unitholders have limited voting rights and are not entitled to elect our general partner or its directors or remove our general partner without its consent, which could lower the trading price of our common units. We may issue additional units without unitholder approval, which would dilute unitholders' ownership interests. The market price of our common units could be adversely affected by sales of substantial amounts of our common units, including sales by our existing unitholders. An increase in interest rates may cause the market price of our common units to decline. Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price. Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units. Cost reimbursements due our general partner and its affiliates will reduce cash available for distribution to our unitholders. Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business. Unitholders may have liability to repay distributions. The control of our general partner may be transferred to a third party without unitholder consent. Certain members of the Slifka family and their affiliates may engage in activities that compete directly with us. Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation by individual states. If the Internal Revenue Service were to treat us as a corporation for federal income tax purposes or if we were to become subject to additional amounts of entity-level taxation for state tax purposes, our cash available for distribution to unitholders would be substantially reduced. The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis. We have a subsidiary that is treated as a corporation for federal income tax purposes and subject to corporate-level income taxes. If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted, and the costs of any contest will reduce our cash available for distribution to unitholders. Unitholders will be required to pay taxes on their share of our income even if they do not receive any cash distributions from us. Tax gain or loss on the disposition of our common units could be different than expected. Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them. We treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could decrease the value of the common units. We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders. A unitholder whose units are loaned to a "short seller" to cover a short sale of units may be considered as having disposed of those units. If so, he would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition. We have adopted certain valuation methodologies that may result in a shift of income, gain, loss and deduction between the general partner and the unitholders. The IRS may challenge this treatment, which could adversely affect the value of the common units. The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income tax purposes. Unitholders may be subject to state and local taxes and return filing requirements in jurisdictions where they do not live as a result of investing in our common units.

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1323468--3/12/2010--GLOBAL_PARTNERS_LP