Sunoco 2011 Annual Report Download - page 92
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SunCoke Energy also amended its postretirement plans during 2010. Postretirement medical benefits for its
future retirees were phased out or eliminated, effective January 1, 2011, for most non-mining employees with
less than ten years of service on January 1, 2011 and employer costs for all those still eligible for such benefits
have been capped.
As a result of the changes implemented during 2010, the Company’s pension and postretirement benefits
liability declined approximately $35 and $95 million in 2010 and 2009, respectively. The benefit of these liability
reductions will be amortized into earnings through 2016 and 2019, respectively. The service and interest cost on
the existing obligations have declined as a result of these changes. The reduction in service and interest cost
attributable to the Company’s defined benefit plans has also increased the likelihood that settlement gains or
losses, representing the accelerated amortization of deferred gains and losses, will be recognized in the future as
previously earned lump sum payments are made.
Defined benefit plans and postretirement benefit plans expense (including amounts attributable to
discontinued chemicals and Tulsa refining operations) consisted of the following components (in millions of
dollars):
Defined Benefit Plans Postretirement Benefit Plans
2011 2010 2009 2011 2010 2009
Service cost (cost of benefits earned during the year) ........ $ 7 $ 23 $ 39 $ 1 $ 2 $ 8
Interest cost on benefit obligations ...................... 51 61 75 14 17 24
Expected return on plan assets .......................... (68) (68) (58) — — —
Amortization of:
Actuarial losses ................................... 31 47 56 8 4 2
Prior service cost (benefit) ........................... — — 1 (20) (20) (4)
21 63 113 3 3 30
Settlement losses (Note 2) ............................. 56 56 111 — — —
Special termination benefits and
curtailment losses (gains) (Note 2) .................... 8 3 28 (1) (3) (9)
$ 85 $122 $252 $ 2 $ — $21
For 2012, amortization of actuarial losses and prior service cost (benefit) (excluding amounts attributable to
SunCoke Energy) is estimated at $25 and $— million, respectively, for defined benefit plans and $3 and $(6)
million, respectively, for postretirement benefit plans.
Defined benefit plans and postretirement benefit plans expense is generally determined using actuarial
assumptions as of the beginning of the year, or using weighted-average assumptions when curtailments,
settlements and/or other events require a plan remeasurement. The following weighted-average assumptions were
used to determine defined benefit plans and postretirement benefit plans expense:
Defined Benefit Plans Postretirement Benefit Plans
2011 2010 2009 2011 2010 2009
Discount rate ....................................... 4.80% 5.20% 6.00% 4.25% 4.90% 5.95%
Long-term expected rate of return on plan assets ........... 8.25% 8.25% 8.25%
Rate of compensation increase ......................... 3.00% 3.00% 4.00%
84