Sunoco 2009 Annual Report Download - page 91

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In early 2010, the Company contributed $230 million to its funded defined benefit plans consisting of $140
million of cash and 3.59 million shares of Sunoco common stock valued at $90 million. The Company may make
additional contributions to its funded defined benefit plans during the remainder of 2010 if it has available cash.
The asset allocations attributable to the assets of the funded defined benefit plans at December 31, 2009 and
2008 and the target allocation of plan assets for 2010 (excluding the Sunoco common stock contributed in early
2010), by asset category, are as follows (in percentages):
2010 Target
December 31
2009 2008
Asset category:
Equity securities ................................................. 50 55 53
Fixed Income securities* ........................................... 45 38 40
Private equity investments ......................................... 5 7 7
Total ......................................................... 100 100 100
*Includes cash and cash equivalents which are held to manage duration in connection with fixed income investment strategies.
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. During 2009, a shift in the targeted investment mix was
approved which is resulting in a reallocation of 10 percent of plan assets from equity securities to fixed income
securities. In addition, the duration of the fixed income portfolio will be increased to better match the duration of
the plan obligations. The objective of this strategy change is to reduce the volatility of investment returns, funded
status of the plans and required contributions. Furthermore, consistent with this change in strategy, it is expected
that the Sunoco common stock contributed to the plans in early 2010 will be liquidated over a period of
approximately two years by an independent investment manager and reinvested in accordance with the targeted
investment mix of the plans.
The expected benefit payments through 2019 for the defined benefit and postretirement benefit plans are as
follows (in millions of dollars):
Defined Benefit Plans
Postretirement
Benefit Plans*
Funded
Plans
Unfunded
Plans
Year ending December 31:
2010 ................................................... $126 $14 $35
2011 ................................................... $126 $12 $37
2012 ................................................... $119 $11 $37
2013 ................................................... $113 $10 $36
2014 ................................................... $105 $9 $35
2015 through 2019 ....................................... $411 $35 $147
*Net of premiums paid by participants.
The measurement date for the Company’s defined benefit and postretirement benefit plans is December 31.
The following weighted-average assumptions were used at December 31, 2009 and 2008 to determine benefit
obligations for the plans:
Defined
Benefit Plans
Postretirement
Benefit Plans
2009 2008 2009 2008
Discount rate .................................. 5.50% 6.00% 5.10% 5.95%
Rate of compensation increase ................... 3.00% 4.00%
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