Sunoco 2011 Annual Report Download - page 34

The tax treatment of publicly traded partnerships or an investment in the Partnership’s common units could
be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on
a retroactive basis.
The present federal income tax treatment of publicly traded partnerships, including the Partnership, or an
investment in its common units, may be modified by administrative, legislative or judicial interpretation at any
time. Any modification to the federal income tax laws and interpretations thereof may or may not be applied
retroactively. Moreover, any such modification could make it more difficult or impossible for the Partnership to
meet the exception which allows publicly traded partnerships that generate qualifying income to be treated as
partnerships (rather than corporations) for U.S. federal income tax purposes, affect or cause us to change our
business activities, or affect the tax consequences of an investment in its common units. For example, members
of Congress have been considering substantive changes to the definition of qualifying income and the treatment
of certain types of income earned from partnerships. While these specific proposals would not appear to affect
the treatment of the Partnership as a partnership, we are unable to predict whether any of these changes, or other
proposals, will ultimately be enacted. Any such changes could negatively impact the value of Sunoco’s
investment in the Partnership’s common units.
Poor performance in the financial markets could have a material adverse effect on the level of funding of our
pension obligations, on the level of pension expense and on our financial position. In addition, any use of
current cash flow to fund our pension could have a significant adverse effect on our financial position.
We have substantial benefit obligations in connection with our noncontributory defined benefit pension
plans. We have made contributions to the plans over the past several years to improve their funded status, and we
expect to make additional contributions to the plans in the future as well. The projected benefit obligation of our
funded defined benefit plans at December 31, 2011 (excluding amounts attributable to SunCoke Energy)
exceeded the market value of our plan assets by $160 million. The Company expects that upon its exit from the
refining business, defined benefit pension plans will be frozen for all participants and no additional benefits will
be earned. As a result of the workforce reduction, divestments and the shutdown of our Eagle Point refinery, we
incurred noncash settlement and curtailment losses and special termination benefits in these plans during 2011,
2010 and 2009 totaling approximately $60, $55 and $130 million pretax, respectively. The Company expects to
incur additional settlement losses related to the exit from the refining business. In 2010, we contributed $234
million to our funded defined benefit plans consisting of $144 million of cash and 3.59 million shares of our own
common stock valued at $90 million. We also intend to make cash contributions of approximately $80 million in
2012. Poor performance of the financial markets, or decreases in interest rates, could result in additional
significant charges to shareholders’ equity and additional significant increases in future pension expense and
funding requirements. To the extent that we have to fund our pension obligations with cash from operations, we
may be at a disadvantage to some of our competitors who do not have the same level of obligations that we have.
Acquisitions, divestitures and other significant transactions may adversely affect our business.
We regularly review acquisition, divestiture and other strategic opportunities, such as the planned exit from
the refining business, that would further our business objectives, diversity, upgrade or grow our asset base, or
eliminate assets that do not meet our return-on-investment criteria. The anticipated benefits of our acquisitions,
divestitures and other strategic transactions may not be realized or may be realized more slowly than we
expected. Acquisitions, divestitures and other strategic opportunities have resulted in, and in the future could
result in, a number of financial consequences, including without limitation: reduced cash balances and related
interest income; higher fixed expenses; the incurrence of debt and contingent liabilities, including
indemnification obligations; restructuring actions, which could result in charges that have a material effect on our
results of operations and our financial position; loss of customers, suppliers, distributors, licensors or employees
of the acquired company; legal, accounting and advisory fees; and one-time write-offs of large amounts.
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