Sunoco 2008 Annual Report Download - page 87

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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, 2008 and 2007 to determine benefit
obligations for the plans:
Defined
Benefit Plans
Postretirement
Benefit Plans
2008 2007 2008 2007
Discount rate .................................. 6.00% 6.25% 5.95% 6.10%
Rate of compensation increase ................... 4.00% 4.00%
The health care cost trend assumption used at December 31, 2008 to compute the APBO for the
postretirement benefit plans was an increase of 9.5 percent (10.0 percent at December 31, 2007), 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, 2008
(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 ....................................... $10 $(9)
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, $27 and $24 million in 2008, 2007 and 2006,
respectively.
Sunoco’s principal defined contribution plan is SunCAP. Sunoco matches 100 percent of employee
contributions to this plan up to 5 percent of an employee’s base compensation. 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, 2008, 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
2008 2007
Goodwill ......................................................... $ 95 $126
Propylene supply contract .......................................... 87 99
Dealer and distributor contracts and other intangible assets ............... 54 59
Prepaid retirement costs ............................................ — 122
Restricted cash ................................................... 18 68
Other ........................................................... 89 100
$343 $574
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 Lyondell/Basell 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
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