Sunoco 2007 Annual Report Download - page 55

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The following amounts were recognized as components of other comprehensive income for the year ended
December 31, 2007:
(Millions of Dollars)
Defined
Benefit Plans
Postretirement
Benefit Plans
Reclassifications to earnings of:
Actuarial loss amortization $32 $ 3
Prior service cost (benefit) amortization 2(1)
Retirement benefit plan funded status adjustment:
Actuarial gains 23 15
Prior service cost — (10)
$57 $ 7
For 2008, amortization of actuarial losses and prior service cost (benefit) is estimated at $22 and $2 million, re-
spectively, for defined benefit plans and $1 and $1 million, respectively, for postretirement benefit plans.
Defined benefit plans and postretirement benefit plans expense is determined using actuarial assumptions as of the
beginning of the year. The following weighted-average assumptions were used to determine defined benefit plans and
postretirement benefit plans expense:
Defined Benefit Plans Postretirement Benefit Plans
(In Percentages) 2007 2006 2005 2007 2006 2005
Discount rate 5.85% 5.60% 5.75% 5.80% 5.50% 5.50%
Long-term expected rate of return on plan assets 8.25% 8.25% 8.50%
Rate of compensation increase 4.00% 4.00% 4.00%
The long-term expected rate of return on plan assets was estimated based on a variety of factors including the histor-
ical investment return achieved over a long-term period, the targeted allocation of plan assets and expectations con-
cerning future returns in the marketplace for both equity and debt securities.
The following tables set forth the components of the changes in benefit obligations and fair value of plan assets during
2007 and 2006 as well as the funded status at December 31, 2007 and 2006:
Defined Benefit Plans
Postretirement
Benefit Plans
2007 2006
(Millions of Dollars)
Funded
Plans
Unfunded
Plans
Funded
Plans
Unfunded
Plans 2007 2006
Benefit obligations at beginning of year* $1,268 $ 147 $1,391 $ 153 $ 428 $ 417
Service cost 48 2 47 6 99
Interest cost 74 9 76 9 25 22
Actuarial losses (gains) (47) — (90) (6) (15) 9
Plan amendments 1— 2 (2) 10 (1)
Benefits paid (147) (12) (158) (13) (40) (39)
Premiums paid by participants ————13 11
Special termination benefits 5—————
Benefit obligations at end of year* $1,202 $ 146 $1,268 $ 147 $ 430 $ 428
Fair value of plan assets at beginning of year** $1,287 $1,196
Actual return on plan assets 75 149
Employer contributions 100 100
Benefits paid from plan assets (147) (158)
Fair value of plan assets at end of year** $1,315 $1,287
Overfunded (underfunded) accumulated obligation $ 173 $(144) $ 95 $(145)
Provision for future salary increases (60) (2) (76) (2)
Funded status at end of year $ 113 $(146) $ 19 $(147) $(430) $(428)
* Represents the projected benefit obligations for defined benefit plans and the accumulated postretirement benefit obligations (“APBO”) for postretirement benefit plans. The
accumulated benefit obligations for funded and unfunded defined benefit plans amounted to $1,142 and $144 million, respectively, at December 31, 2007 and $1,192 and $145
million, respectively, at December 31, 2006.
** There are no plan assets invested in Company stock.
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