Snapple 2008 Annual Report Download - page 111

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The following table summarizes the weighted-average assumptions used to determine benefit obligations at
the plan measurement dates for foreign plans:
2008 2007 2008 2007
Pension Plans
Postretirement
Benefit Plans
Weighted-average discount rate ............................. 6.98% 6.06% 6.25% 5.25%
Rate of increase in compensation levels ...................... 3.90% 3.81% N/A 3.50%
The following table summarizes the weighted average actuarial assumptions used to determine the net periodic
benefit costs for foreign plans for the years ended December 31, 2008, 2007, and 2006:
2008 2007 2006 2008 2007 2006
Pension Plans Postretirement Benefit Plans
Weighted-average discount rate ........... 7.14% 6.06% 5.98% 5.25% 5.25% 5.98%
Expected long-term rate of return on assets. . . 7.66% 7.56% 7.61% N/A N/A N/A
Rate of increase in compensation levels ..... 4.23% 3.81% 4.13% N/A 3.50% 4.50%
The following table summarizes the health care cost trend rate assumptions used to determine the
postretirement benefit obligation for U.S. and foreign plans:
Health care cost trend rate assumed for 2009 (Initial Rate)........................... 9.00%
Rate to which the cost trend rate is assumed to decline (Ultimate Rate) ................. 5.00%
Year that the rate reaches the ultimate trend rate .................................. 2016
The effect of a 1% increase or decrease in health care trend rates on the U.S. and foreign postretirement benefit
plans would change the benefit obligation at the end of the year and the service cost plus interest cost by less than
$1 million.
The pension assets of DPS’ U.S. plans represent approximately 93 percent of the total pension plan assets. The
asset allocation for the U.S. defined benefit pension plans for December 31, 2008 and 2007 are as follows:
Asset Category 2009 2008 2007
Target Actual
Equity securities .............................................. 60% 49% 60%
Fixed income ................................................ 40% 51% 40%
Total ..................................................... 100% 100% 100%
The Company has established formal investment policies for the assets associated with defined benefit plans.
The Company’s pension investment policy and strategy are mandated by the Investment Committee. DPS’ pension
plan investment strategy includes the use of actively-managed securities and is reviewed annually based upon
changes in plan liabilities, an evaluation of market conditions, tolerance for risk and cash requirements for benefit
payments. DPS’ investment objective is to have funds available to meet the plans’ benefit obligations when they
become due. The overall investment strategy is to prudently invest plan assets in high-quality and diversified equity
and debt securities to achieve the investment objective. DPS employs certain equity strategies which, in addition to
investments in U.S. and international common and preferred stock, include investments in certain equity and debt-
based securities used collectively to generate returns in excess of certain equity-based indices. None of the current
assets are invested directly in equity or debt instruments issued by DPS, although it is possible that insignificant
indirect investments exist through its broad market indices. The equity and fixed income investments under DPS
sponsored pension plan assets are currently well diversified across all areas of the equity market and consist of both
corporate and U.S. government bonds. The pension plans currently do not invest directly in any derivative
investments.
87
DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)