Sunoco 2003 Annual Report Download - page 56

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The net amount recognized in the consolidated balance sheets at December 31, 2003 and 2002 is classified as follows:
Defined
Benefit Plans
Postretirement
Benefit Plans
(Millions of Dollars) 2003 2002 2003 2002
Prepaid retirement costs $11 $5 $— $—
Retirement benefit liabilities (244) (287) (360) (366)
Deferred charges and other assets* 21 22 ——
Accumulated other comprehensive loss (before related tax benefit)** 292 303 ——
$80 $43 $(360) $(366)
* Represents an intangible asset for which an equivalent additional minimum liability is included in retirement benefit liabilities.
** Represents a separate component of shareholders’ equity for which an equivalent additional minimum liability is included in retirement benefit liabilities.
The asset allocations attributable to the funded defined benefit plans at December 31, 2003 and 2002 and the target
allocation of plan assets for 2004, by asset category, are as follows:
December 31
(In Percentages) 2004 Target* 2003 2002
Asset category:
Equity securities 60% 62% 57%
Debt securities 35 33 37
Other 556
Total 100% 100% 100%
* The target allocation has been in effect since 1999.
The investment strategy of the Company’s funded defined benefit plans is to achieve consistent positive returns, after
adjusting for inflation, and to maximize long-term total return within prudent levels of risk through a combination of
income and capital appreciation. Risk to capital is minimized through the diversification of investments across and
within various asset categories.
In March 2003, a temporary interest rate relief bill was enacted by Congress that mitigated the impact of a decline in
interest rates used in pension funding calculations. Congress is currently considering legislation that would extend in-
terest rate relief beyond 2003. The planned employer contributions for 2004 for the Company’s funded defined benefit
plans, which are estimated to be $50 million, are based on the assumption that this legislation will be enacted. In the
event the pending legislation does not become law, the Company’s employer contributions in 2004 and later years
could increase significantly.
The expected benefit payments through 2013 for the defined benefit plans and postretirement benefit plans are as follows:
Defined Benefit Plans
(Millions of Dollars)
Funded
Plans
Unfunded
Plans
Postretirement
Benefit Plans*
Year ending December 31:
2004 $121 $13 $32
2005 $122 $12 $33
2006 $125 $12 $34
2007 $129 $14 $36
2008 $131 $17 $35
2009 through 2013 $666 $59 $170
* Before premiums paid by participants.
The measurement date for the Company’s defined benefit plans and its postretirement benefit plans is December 31.
The following weighted-average assumptions were used at December 31, 2003 and 2002 to determine benefit obliga-
tions for the plans:
Defined
Benefit Plans
Postretirement
Benefit Plans
2003 2002 2003 2002
Discount rate 6.00% 6.75% 6.00% 6.75%
Rate of compensation increase 4.00% 4.00%
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