Sunoco 2009 Annual Report Download - page 92

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The health care cost trend assumption used at December 31, 2009 to compute the APBO for the
postretirement benefit plans was an increase of 9.0 percent (9.5 percent at December 31, 2008), which is assumed
to decline gradually to 5.5 percent in 2017 and to remain at that level thereafter. A one-percentage point change
each year in assumed health care cost trend rates would have the following effects at December 31, 2009 (in
millions of dollars):
1-Percentage
Point Increase
1-Percentage
Point Decrease
Effect on total of service and interest cost components
of postretirement benefits expense ...................... $1 $(1)
Effect on APBO ....................................... $12 $(10)
Defined Contribution Pension Plans
Sunoco has defined contribution pension plans which provide retirement benefits for most of its employees.
Sunoco’s contributions, which are principally based on a percentage of employees’ annual base compensation
and are charged against income as incurred, amounted to $28, $28 and $27 million in 2009, 2008 and 2007,
respectively.
Sunoco’s principal defined contribution plan is SunCAP. SunCAP is a combined profit sharing and
employee stock ownership plan which contains a provision designed to permit SunCAP, only upon approval by
the Company’s Board of Directors, to borrow in order to purchase shares of Company common stock. As of
December 31, 2009, no such borrowings had been approved.
10. Deferred Charges and Other Assets
Deferred charges and other assets consist of the following (in millions of dollars):
December 31
2009 2008
Goodwill ......................................................... $ 86 $ 95
Propylene supply contract .......................................... 76 87
Dealer and distributor contracts and other intangible assets ............... 66 54
Other ........................................................... 98 107
$326 $343
During 2003, Sunoco formed a limited partnership with Equistar Chemicals, L.P. (“Equistar”) involving
Equistar’s ethylene facility in LaPorte, TX. Equistar is a wholly owned subsidiary of LyondellBasell Industries.
Under the terms of the partnership agreement, the partnership has agreed to provide Sunoco with 500 million
pounds per year of propylene for 15 years priced on a cost-based formula that includes a fixed discount that
declines over the life of the partnership. At the time of the transaction, $160 million was allocated to the
propylene supply contract, which is being amortized over the life of the contract in a manner that reflects the
future decline in the fixed discount over the contract period. In January 2009, LyondellBasell Industries
announced that its U.S. operations (including Equistar) filed to reorganize under Chapter 11 of the U.S.
Bankruptcy Code. Neither the partnership nor the Equistar entities that are partners of the partnership has filed
for bankruptcy. Equistar has met all of its obligations under the contracts during 2009 and has not given any
indication that it will not perform under its contracts in the future. Effective December 31, 2009, the partners
mutually agreed to discontinue a separate 200 million pounds-per-year propylene supply agreement. In
connection therewith, under the terms of the partnership agreement, Equistar will increase the amount of
propylene provided to Sunoco from 500 to 520 million pounds per year.
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