Sunoco 2010 Annual Report Download - page 63

Retirement Benefit Plans
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
2010 2009
Balance at beginning of year ...................................... $ 804 $837
Increase (reduction) in market value of investments resulting from:
Net investment income ......................................... 149 169
Company contributions ......................................... 234 47
Plan benefit payments ......................................... (168) (249)
Divestments ................................................. (11) —
Balance at end of year ....................................... $1,008 $ 804
As a result of the workforce reduction, the sale of the Tulsa refinery, the permanent shutdown of the Eagle
Point refinery and the sale of the polypropylene chemicals business, the Company incurred noncash settlement
and curtailment losses in these plans during 2010 and 2009 totaling approximately $30 and $75 million after tax,
respectively. In 2010, the Company contributed $234 million to its funded defined benefit plans consisting of
$144 million of cash and 3.59 million shares of Sunoco common stock valued at $90 million. The Company
anticipates that it will have no required pension contributions during 2011, but may make voluntary contributions
to its funded defined benefit plans with available cash. At December 31, 2010, the projected benefit obligation
for the Company’s funded pension plans, determined using a discount rate of 4.95 percent, exceeded plan assets
by $61 million. The Company also has unfunded obligations for other defined benefit plans and postretirement
benefit plans which totaled approximately $475 million at December 31, 2010. There is no legal requirement to
pre-fund these plans which are funded as benefit payments are made.
Effective June 30, 2010, pension benefits under the Company’s defined benefit pension plans were frozen
for most of the participants in these plans at which time the Company instituted a discretionary profit-sharing
contribution on behalf of these employees in its defined contribution plan. Postretirement medical benefits have
also been phased down or eliminated for all employees retiring after July 1, 2010. There are no planned changes
in benefits for current retirees. As a result of these changes, the Company’s pension and postretirement benefits
liability declined approximately $95 million in the fourth quarter of 2009. The benefit of this liability reduction
will be amortized into income through 2019.
SunCoke Energy also amended its postretirement plans during the first quarter of 2010. Postretirement
medical benefits for its future retirees will be 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 these changes, SunCoke Energy’s postretirement
medical liability declined approximately $35 million during the first quarter of 2010. Most of the benefit of this
liability reduction will be amortized into income through 2016.
Environmental Matters
General
Sunoco is subject to extensive and frequently changing federal, state and local laws and regulations,
including, but not limited to, those relating to the discharge of materials into the environment or that otherwise
relate to the protection of the environment, waste management and the characteristics and composition of fuels.
As with the industry generally, compliance with existing and anticipated laws and regulations increases the
overall cost of operating Sunoco’s businesses, including remediation, operating costs and capital costs to
construct, maintain and upgrade equipment and facilities. Existing laws and regulations have required, and are
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