Sunoco 2009 Annual Report Download - page 63

of retiree medical benefits described above. Such benefits are being amortized over the remaining service period
to full eligibility of plan participants which is approximately 3 years.
The initial health care cost trend assumptions used to compute the accumulated postretirement benefit
obligation were increases of 9.0 percent, 9.5 percent and 10.0 percent at December 31, 2009, 2008 and 2007,
respectively. These trend rates were assumed to decline gradually to 5.5 percent in 2017 and to remain at that
level thereafter.
Set forth below are the estimated increases in pension and postretirement benefits expense and benefit
obligations that would occur in 2010 from a change in the indicated assumptions (dollars in millions):
Change
in Rate Expense
Benefit
Obligations*
Pension benefits:
Decrease in the discount rate ........................ .25% $4 $28
Decrease in the long-term expected rate of return
on plan assets .................................. .25% $2 $—
Postretirement benefits:
Decrease in the discount rate ........................ .25% $— $8
Increase in the annual health care cost trend rates ...... 1.00% $1 $12
*Represents the projected benefit obligations for defined benefit plans and the accumulated postretirement benefit obligations for
postretirement benefit plans.
Long-Lived Assets
The cost of plants and equipment is generally depreciated on a straight-line basis over the estimated useful
lives of the assets. Useful lives are based on historical experience and are adjusted when changes in planned use,
technological advances or other factors show that a different life would be more appropriate. Changes in useful
lives that do not result in the impairment of an asset are recognized prospectively. There have been no significant
changes in the useful lives of the Company’s plants and equipment during the 2007-2009 period.
A decision to dispose of an asset may necessitate an impairment review. In this situation, an impairment
would be recognized for any excess of the carrying amount of the long-lived asset over its fair value less cost to
sell.
Long-lived assets, other than those held for sale, are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be recoverable. Such events and
circumstances include, among other factors: operating losses; unused capacity; market value declines;
technological developments resulting in obsolescence; changes in demand for the Company’s products or in
end-use goods manufactured by others utilizing the Company’s products as raw materials; changes in the
Company’s business plans or those of its major customers, suppliers or other business partners; changes in
competition and competitive practices; uncertainties associated with the United States and world economies;
changes in the expected level of capital, operating or environmental remediation expenditures; and changes in
governmental regulations or actions. Additional factors impacting the economic viability of long-lived assets are
described under “Forward-Looking Statements” below.
A long-lived asset that is not held for sale is considered to be impaired when the undiscounted net cash
flows expected to be generated by the asset are less than its carrying amount. Such estimated future cash flows
are highly subjective and are based on numerous assumptions about future operations and market conditions. The
impairment recognized is the amount by which the carrying amount exceeds the fair market value of the impaired
asset. It is also difficult to precisely estimate fair market value because quoted market prices for the Company’s
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