Sunoco 2008 Annual Report Download - page 33

2009. We also may make up to $80 million of contributions to our funded defined benefit plans in 2009.
Continued 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.
We also have substantial benefit obligations in connection with our postretirement health care plans that
provide health care benefits for substantially all of our retirees. These plans are unfunded and the costs are shared
by us and our retirees.
To the extent that we have to fund our pension and postretirement health care obligations with cash from
operations, we may be at a disadvantage to some of our competitors who do not have the same level of retiree
obligations that we have.
The financial performance of our coke business is dependent upon customers in the steel industry whose
failure to perform under their contracts with us could adversely affect our coke business.
Substantially all of our domestic coke sales are currently made under long-term contracts with affiliates of
ArcelorMittal and OAO Severstal. In addition, our technology and operating fees, as well as preferred dividends
pertaining to our Brazilian operations, are payable under long-term contracts with a project company in which a
Brazilian subsidiary of ArcelorMittal is the major shareholder.
The global economic slowdown has had an adverse impact on the steel industry. In certain instances,
steelmakers are suspending and renegotiating contracts with their raw-material suppliers in response to a decline
in steel demand. Some steel companies are requesting that their suppliers cancel or postpone deliveries, while
others are refusing deliveries and buying their raw materials on the spot market where prices have fallen below
long-term contract prices. Our steel customers have not suspended or renegotiated any of our long-term
contracts. However, in the event of nonperformance by our current or future steelmaking customers, our results
of operations and cash flows may be adversely affected.
A portion of our workforce is unionized, and we may face labor disruptions that could materially and
adversely affect our operations.
Approximately 20 percent of our employees are covered by many collective bargaining agreements with
various terms and dates of expiration. In February 2009, we reached an agreement on a three-year contract with
the hourly workers at our Toledo refinery. Negotiations continue at our Marcus Hook and Philadelphia refineries
and we are hopeful that agreement will be reached prior to the expiration of the contracts on March 1, 2009. A
labor disturbance at any of our major facilities could have a material adverse effect on our operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 3. LEGAL PROCEEDINGS
Various lawsuits and governmental proceedings arising in the ordinary course of business are pending
against the Company, as well as the lawsuits and proceedings discussed below:
Administrative Proceedings
In September 2005, Sunoco, Inc. (R&M), a wholly owned subsidiary of Sunoco, Inc., received a Finding of
Violation (“FOV”) from the U.S. Environmental Protection Agency (“EPA”), Region 5,that alleged violations of
certain requirements of the Clean Air Act (New Source Performance Standards, Hazardous Organic National
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