Sunoco 2011 Annual Report Download - page 35

A portion of our workforce is unionized, and we may face labor disruptions that could materially and
adversely affect our operations.
Approximately 18 percent of our employees are covered by many collective bargaining agreements with
various terms and dates of expirations. The contracts at our Marcus Hook and Philadelphia refineries expire in
the first quarter of 2012. We cannot assure you that we will not experience a work stoppage in the future as a
result of labor disagreements. A labor disturbance at any of our major facilities could have a material adverse
effect on our operations.
We have outsourced various functions to third-party service providers, which decreases our control over the
performance of these functions. Disruptions or delays at our third-party outsourcing partners could result in
increased costs, or may adversely affect service levels and our public reporting. Fraudulent activity or misuse
of proprietary data involving our outsourcing partners could expose us to additional liability.
As part of our long-term strategy, we are continually looking for opportunities to provide essential business
services in a more cost-effective manner. In some cases, this requires the outsourcing of functions or parts of
functions that can be performed more effectively by external service providers. We have previously outsourced
various functions to third parties and expect to continue this practice with other functions in the future.
While outsourcing arrangements may lower our cost of operations, they also reduce our direct control over
the services rendered. It is uncertain what effect such diminished control will have on the quality or quantity of
products delivered or services rendered, on our ability to quickly respond to changing market conditions, or on
our ability to ensure compliance with all applicable domestic and foreign laws and regulations. We believe we
conduct appropriate due diligence before entering into agreements with our outsourcing partners. We rely on our
outsourcing partners to provide services on a timely and effective basis. Although we continuously monitor the
performance of these third parties and maintain contingency plans in case they are unable to perform as agreed,
we do not ultimately control the performance of our outsourcing partners. Much of our outsourcing takes place in
developing countries and, as a result, may be subject to geopolitical uncertainty. The failure of one or more of
our third-party outsourcing partners to provide the expected services on a timely basis at the prices we expect, or
as required by contract, due to events such as regional economic, business, environmental or political events,
information technology system failures, or military actions, could result in significant disruptions and costs to our
operations, which could materially adversely affect our business, financial condition, operating results and cash
flow and our ability to file our financial statements with the Securities and Exchange Commission in a timely or
accurate manner.
Our failure to generate significant cost savings from these outsourcing initiatives could adversely affect our
profitability and weaken our competitive position. Additionally, if the implementation of our outsourcing
initiatives is disruptive to our business, we could experience transaction errors, processing inefficiencies, and the
loss of sales and customers, which could cause our business and results of operations to suffer.
As a result of these outsourcing initiatives, more third parties are involved in processing our information and
data. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved
dissemination of proprietary information or sensitive or confidential data about us or our clients, including the
potential loss or disclosure of such information or data as a result of fraud or other forms of deception, could
expose us to a risk of loss or misuse of this information, result in litigation and potential liability for us, lead to
reputational damage to our brand, increase our compliance costs, or otherwise harm our business.
Our operations could be disrupted if our information systems fail, causing increased expenses and loss of
sales.
Our business is highly dependent on financial, accounting and other data processing systems and other
communications and information systems, including our enterprise resource planning tools. We process a large
number of transactions on a daily basis and rely upon the proper functioning of computer systems. If a key
27