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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
83
Financial Statement Impact
The following tables set forth amounts recognized in the Company's financial statements and the plans' funded status for the
years ended December 31, 2014 and 2013 (in millions):
Postretirement
Pension Plans Medical Plans
2014 2013 2014 2013
Projected Benefit Obligations
As of beginning of year $ 259 $ 308 $ 7 $ 9
Service cost 23——
Interest cost 13 13 ——
Actuarial losses (gains), net 46 (35)1(1)
Benefits paid (8)(10)—(1)
Currency exchange adjustments (3)(2)——
Settlements (82)(18)——
As of end of year $ 227 $ 259 $ 8 $ 7
Fair Value of Plan Assets
As of beginning of year $ 237 $ 257 $ 5 $ 5
Actual return on plan assets 30 71—
Employer contributions 12 2—1
Benefits paid (8)(10)—(1)
Currency exchange adjustments (2)(1)——
Settlements (82)(18)——
As of end of year $ 187 $ 237 $ 6 $ 5
Funded status of plan / net amount recognized $(40)$(22)$(2)$(2)
Funded status — overfunded $ — $ 1 $ 2 $ 2
Funded status — underfunded (40)(23)(4)(4)
Net amount recognized consists of:
Non-current assets $ — $ 1 $ 2 $ 2
Current liabilities —(1)——
Non-current liabilities (40)(22)(4)(4)
Net amount recognized $(40)$(22)$(2)$(2)
During the fourth quarter of 2014, the Company purchased annuity contracts from an insurance company to transfer certain
of its projected benefit obligation and assets related to participants currently receiving benefits as part of the U.S. defined benefit
pension plans. These actions relieve the company of primary responsibility for the pension obligations associated with these
participants and eliminate significant risks related to the obligation and assets used to effect the settlement. As a result, the projected
benefit obligation and plan assets were reduced by $82 million, of which $71 million related to the purchase of the annuity with
the remainder related to lump sum benefit payments to various participants. The decrease to the projected benefit obligation was
partially offset by an increase in the obligation resulting from a change in the discount rate and mortality table used in the annual
measurement.
Expected mortality is a key assumption in the measurement for pension and other postretirement benefit obligations. For the
Company’s U.S. plans, this assumption was updated as of December 31, 2014 in order to reflect the Society of Actuaries’ Retirement
Plan Experience Committee’s updated mortality tables and mortality improvement scale published in October 2014.This resulted
in an increase of 4% to the Company's benefit obligation.