Sunoco 2006 Annual Report Download - page 59

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The amounts reflected in the consolidated balance sheets at December 31, 2006 and 2005 pertaining to the defined
benefit and postretirement benefit plans are classified as follows:
Defined
Benefit Plans
Postretirement
Benefit Plans
(Millions of Dollars) 2006 2005 2006 2005
Deferred charges and other assets:
Prepaid retirement costs $ 21* $12 $— $—
Intangible asset —16** ——
Retirement benefit liabilities (including current portion)*** (149)* (192)** (428)* (371)
Accumulated other comprehensive loss (before related tax benefit) 321* 322** 54* —
$ 193 $ 158 $(374) $(371)
* In accordance with SFAS No. 158 (Note 1), the cumulative prior service costs (benefits) and actuarial losses not yet recognized in net income have been reflected as
accumulated other comprehensive loss at December 31, 2006. A corresponding reduction in prepaid retirement costs and increase in the retirement benefit liabilities has been
recorded to reflect the funded status of the retirement benefit plans in the consolidated balance sheet at December 31, 2006.
** For the intangible asset and accumulated other comprehensive loss, an equivalent additional minimum liability was included in retirement benefit liabilities at December 31,
2005.
*** The current portion of retirement liabilities, which totaled $54 and $38 million at December 31, 2006 and 2005, respectively, is classified in accrued liabilities in the
consolidated balance sheets.
The asset allocations attributable to the funded defined benefit plans at December 31, 2006 and 2005 and the target
allocation of plan assets for 2007, by asset category, are as follows:
December 31
(In Percentages) 2007 Target* 2006 2005
Asset category:
Equity securities 60% 65% 65%
Debt securities 35 32 32
Other 533
Total 100% 100% 100%
*These target allocation percentages have been in effect since 1999.
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.
Management currently anticipates making up to $100 million of voluntary contributions to the Company’s funded de-
fined benefit plans in 2007.
The expected benefit payments through 2016 for the defined benefit and postretirement benefit plans are as follows:
Defined Benefit Plans
(Millions of Dollars)
Funded
Plans
Unfunded
Plans
Postretirement
Benefit Plans*
Year ending December 31:
2007 $152 $21 $52
2008 $150 $21 $57
2009 $148 $21 $60
2010 $147 $25 $64
2011 $148 $15 $66
2012 through 2016 $660 $62 $387
* Before 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, 2006 and 2005 to determine benefit obligations
for the plans:
Defined
Benefit Plans
Postretirement
Benefit Plans
(In Percentages) 2006 2005 2006 2005
Discount rate 5.85% 5.60% 5.80% 5.50%
Rate of compensation increase 4.00% 4.00%
57