Pepsi 2007 Annual Report Download - page 73

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Note 7 — Pension, Retiree Medical and Savings Plans
Our pension plans cover full-time employ-
ees in the U.S. and certain international
employees. Benefi ts are determined based
on either years of service or a combina-
tion of years of service and earnings. U.S.
and Canada retirees are also eligible for
medical and life insurance benefi ts (retiree
medical) if they meet age and service re-
quirements. Generally, our share of retiree
medical costs is capped at specifi ed dollar
amounts, which vary based upon years
of service, with retirees contributing the
remainder of the costs.
Other gains and losses resulting from
actual experience differing from our
assumptions and from changes in our
assumptions are also determined at each
measurement date. If this net accumu-
lated gain or loss exceeds 10% of the
greater of plan assets or liabilities, a
portion of the net gain or loss is included
in expense for the following year. The cost
or benefi t of plan changes that increase or
decrease benefi ts for prior employee ser-
vice (prior service cost/(credit)) is included
in earnings on a straight-line basis over
the average remaining service period of
active plan participants, which is approxi-
mately 11 years for pension expense and
approximately 13 years for retiree medical
expense.
On December 30, 2006, we adopted
SFAS 158. In connection with our adop-
tion, we recognized the funded status
of our Plans on our balance sheet as of
December 30, 2006 with subsequent
changes in the funded status recognized
in comprehensive income in the years in
which they occur. In accordance with SFAS
158, amounts prior to the year of adop-
tion have not been adjusted. SFAS 158
also requires that, no later than 2008, our
assumptions used to measure our annual
pension and retiree medical expense
be determined as of the balance sheet
date, and all plan assets and liabilities be
reported as of that date. Accordingly, as
of the beginning of our 2008 fi scal year,
we will change the measurement date for
our annual pension and retiree medical
expense and all plan assets and liabilities
from September 30 to our year-end bal-
ance sheet date. As a result of this change
in measurement date, we will record an
after-tax $7 million reduction to 2008
opening shareholders’ equity which
will be refl ected in our 2008 fi rst quarter
Form 10-Q.
Selected fi nancial information for
our pension and retiree medical plans is
as follows:
71