Sunoco 2009 Annual Report Download - page 105
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For the years 2009, 2008 and 2007, the Company recognized stock-based compensation expense of $5, $7
and $33 million, respectively, and related tax benefits of $2, $3 and $13 million, respectively. As of
December 31, 2009, total compensation cost related to nonvested awards not yet recognized was $22 million, and
the weighted-average period over which this cost is expected to be recognized in income is 2.9 years. The stock-
based compensation expense and the total compensation cost related to nonvested awards not yet recognized
reflect the Company’s estimates of performance factors pertaining to performance-based common stock unit
awards. In addition, equity-based compensation expense attributable to Sunoco Logistics Partners L.P. for 2009,
2008 and 2007 amounted to $5, $4 and $5 million, respectively.
18. Fair Value Measurements
The following tables set forth the assets and liabilities measured at fair value on a recurring basis, by input
level, in the consolidated balance sheets at December 31, 2009 and 2008 (in millions of dollars):
Quoted Prices in
Active Markets
for Identical
Assets
or Liabilities
(Level 1)
Significant
Other Observable
Inputs (Level 2)
Significant
Unobservable
Inputs
(Level 3) Total
December 31, 2009
Assets:
Cash equivalents ............. $367 $ — $— $367
Available-for-sale securities ..... 12 7 — 19
Derivative contract gains ....... 2 2 — 4
$381 $ 9 $— $390
Liabilities:
Derivative contract losses ...... $ — $ 4 $— $ 4
$— $4 $— $ 4
December 31, 2008
Assets:
Cash equivalents ............. $218 $ — $— $218
Available-for-sale securities ..... 10 9 — 19
Derivative contract gains ....... — 77 — 77
$228 $ 86 $— $314
Liabilities:
Derivative contract losses ...... $ 14 $80 $— $ 94
$ 14 $ 80 $— $ 94
Sunoco’s current assets (other than inventories and deferred income taxes) and current liabilities (other than
the current portion of retirement benefit liabilities) are financial instruments and most of these items are recorded
at cost in the consolidated balance sheets. The estimated fair values of these financial instruments approximate
their carrying amounts. At December 31, 2009 and 2008, the estimated fair value of Sunoco’s long-term debt was
$2,186 and $1,686 million, respectively, compared to carrying amounts of $2,061 and $1,705 million,
respectively. Long-term debt that is publicly traded was valued based on quoted market prices while the fair
value of other debt issues was estimated by management based upon current interest rates available to Sunoco at
the respective balance sheet dates for similar issues.
Sunoco is exposed to credit risk in the event of nonperformance by counterparties on its derivative
instruments. Management believes this risk is not significant as the Company has established credit limits with
such counterparties which require the settlement of net positions when these credit limits are reached. As a result,
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