Sunoco 2010 Annual Report Download - page 38

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
system was to fail or experience unscheduled downtime for any reason, even if only for a short period, our
operations and financial results could be affected adversely. Our systems could be damaged or interrupted by a
security breach, fire, flood, power loss, telecommunications failure or similar event. We have a formal disaster
recovery plan in place, but this plan may not entirely prevent delays or other complications that could arise from
an information systems failure. Our business interruption insurance may not compensate us adequately for losses
that may occur.
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 June 2007, Sunoco, Inc. (R&M), a wholly owned subsidiary of Sunoco, Inc., received an Administrative
Order of Revocation and Notice of Civil Administrative Penalty Assessment from the New Jersey Department of
Environmental Protection (“NJDEP”) for alleged violation of certain provisions of the New Jersey Air Pollution
Control Act and related regulations as a result of failed stack tests at Sunoco’s Eagle Point refinery. In March
2009, Sunoco entered into an administrative consent order with NJDEP, which requires Sunoco to pay NJDEP
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