Sunoco 2010 Annual Report Download - page 33

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The actions of our competitors, including the impact of foreign imports, could lead to lower prices or
reduced margins for the products we sell, which could have an adverse effect on our business or results of
operations.
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
ArcelorMittal, AK Steel or US Steel. 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 have been suspending and renegotiating contracts with their raw-material suppliers in response to a
decline in steel demand. Some steel companies have been 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. In the event of nonperformance by our current or future steelmaking
customers, our results of operations and cash flows may be adversely affected.
We are exposed to the credit and other counterparty risk of our customers in the ordinary course of our
business.
We have various credit terms with virtually all of our customers, and our customers have varying degrees of
creditworthiness. Although we evaluate the creditworthiness of each of our customers, we may not always be
able to fully anticipate or detect deterioration in their creditworthiness and overall financial condition, which
could expose us to an increased risk of nonpayment or other default under our contracts and other arrangements
with them. In the event that a material customer or customers default on their payment obligations to us, this
could materially adversely affect our financial condition, results of operations or cash flows.
We maintain insurance against many, but not all, potential losses or liabilities arising from operating hazards
in amounts that we believe to be prudent. Failure by one or more insurers to honor their coverage
commitments for an insured event could materially and adversely affect our future cash flows, operating
results and financial condition.
Our business is subject to hazards and risks inherent in refining operations, chemical manufacturing and
cokemaking and coal mining operations and the transportation and storage of crude oil, refined products and
chemicals. These risks include explosions, fires, spills, adverse weather, natural disasters, mechanical failures,
security breaches at our facilities, labor disputes and maritime accidents, any of which could result in loss of life
or equipment, business interruptions, environmental pollution, personal injury and damage to our property and
that of others. In addition, certain of our facilities provide or share necessary resources, materials or utilities, rely
on common resources or utilities for their supply, distribution or materials or are located in close proximity to
other of our facilities. As a result, an event, such as the closure of a transportation route, could adversely affect
more than one facility. Our refineries, chemical plants, cokemaking and coal mining facilities, pipelines and
storage facilities also may be potential targets for terrorist attacks.
We maintain insurance against many, but not all, potential losses or liabilities arising from operating
hazards in amounts that we believe to be prudent. Our insurance program includes a number of insurance
carriers. Disruptions in the U.S. financial markets have resulted in the deterioration in the financial condition of
many financial institutions, including insurance companies. In light of this uncertainty, it is possible that we may
not be able to obtain insurance coverage for insured events. Our failure to do so could have a material adverse
effect on our future cash flows, operating results and financial condition.
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