Sunoco 2010 Annual Report Download - page 37

of cash and 3.59 million shares of our own common stock valued at $90 million. We also may make additional
contributions to our funded defined benefit plans in the future with available cash. 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 current 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.
A portion of our workforce is unionized, and we may face labor disruptions that could materially and
adversely affect our operations.
Approximately 22 percent of our employees are covered by many collective bargaining agreements with
various terms and dates of expirations. All of the contracts at our 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.
Acquisitions, divestitures and other significant transactions may adversely affect our business.
We regularly review acquisition, divestiture and other strategic opportunities, such as the expected
separation of SunCoke Energy, 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.
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, including
certain information systems functions such as information technology operations and computer programming,
certain financial processes such as accounts payable and accounting, and/or human resource functions such as
administration of employee benefit plans.
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
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