Sunoco 2008 Annual Report Download - page 55

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facility and an associated cogeneration power plant, $211 million towards construction of cokemaking facilities
in Granite City, IL and Middletown, OH and $21 million for various other income improvement projects in
Retail Marketing. The $185 million of outlays for acquisitions related to the purchase by the Logistics business
of a refined products pipeline system and related storage facilities located in Texas and Louisiana.
The Company’s 2007 capital outlays consisted of $494 million for income improvement projects, $358
million for infrastructure spending, $97 million for turnarounds at the Company’s refineries, $182 million for the
projects under the 2005 Consent Decree, $48 million for other environmental projects and $57 million for
acquisitions and other capital outlays. The $494 million of outlays for income improvement projects consisted of
$126 million attributable to a project which expanded the fluid catalytic cracking capacity and crude oil
flexibility at the Philadelphia refinery, $24 million attributable to a crude unit debottleneck project at the Toledo
refinery, $33 million relating to the project at the Philadelphia refinery to increase ultra-low-sulfur-diesel fuel
production capability, $35 million for other refinery upgrade projects, $94 million related to growth opportunities
in the Logistics business, $165 million towards the expansion of the Haverhill, OH cokemaking facility and the
construction of an associated cogeneration power plant and $17 million for various other income improvement
projects in Chemicals and Retail Marketing. The $57 million for acquisitions and other capital outlays consisted
of a $39 million investment by the Coke business in a Brazilian cokemaking operation and an $18 million
purchase by the Chemicals business of the minority interest in Epsilon polypropylene operations.
The Company’s 2006 capital outlays consisted of $387 million for income improvement projects, $285
million for infrastructure and maintenance, $65 million for refinery turnarounds, $118 million to complete
spending to comply with the Tier II low-sulfur gasoline and on-road diesel fuel requirements (see
“Environmental Matters” below), $164 million for other environmental projects and $278 million for acquisitions
and other capital outlays. The income improvement spending consisted of $193 million associated with the
project which expanded the fluid catalytic cracking capacity and crude oil flexibility at the Philadelphia refinery;
$27 million associated with the crude unit debottleneck project at the Toledo refinery; $89 million for growth
opportunities in the Logistics business, including work on projects to expand the Nederland terminal’s pipeline
connectivity and storage capacity; and $78 million for various other income improvement projects across the
Company. The $278 million of acquisitions and other capital outlays consisted of a $155 million purchase by the
Coke business of the minority interest in the Jewell cokemaking operation; a $109 million purchase by the
Logistics business of two pipeline systems and related storage facilities located in Texas; and a $14 million
purchase price adjustment to Chemicals’ 2001 Aristech Chemical Corporation acquisition attributable to an
earn-out payment.
Pension Plan Funded Status
The following table sets forth the components of the change in market value of the investments in Sunoco’s
defined benefit pension plans (in millions of dollars):
December 31
2008 2007
Balance at beginning of year ..................................... $1,315 $1,287
Increase (reduction) in market value of investments resulting from:
Net investment income (loss) ................................... (358) 75
Company contributions ........................................ 46 100
Plan benefit payments ........................................ (166) (147)
Balance at end of year ...................................... $ 837 $1,315
As a result of the poor performance of the financial markets during 2008, the projected benefit obligation of
the Company’s funded defined benefit plans at December 31, 2008 exceeded the market value of the plan assets
by $358 million. In connection therewith, the Company was required to recognize a $299 million unfavorable
47