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82 PepsiCo, Inc. 2008 Annual Report
Notes to Consolidated Financial Statements
Components of benet expense are as follows:
Pension Retiree Medical
2008 2007 2006 2008 2007 2006 2008 2007 2006
U.S. International
Service cost $«244 $«244 $«245 $÷«61 $«59 $«52 $÷45 $÷48 $÷46
Interest cost 371 338 319 88 81 68 82 77 72
Expected return on plan assets (416) (399) (391) (112) (97) (81) –– –
Amortization of prior service cost/(credit) 19 5 3 33 2 (13) (13) (13)
Amortization of net loss 55 136 164 19 30 29 718 21
273 324 340 59 76 70 121 130 126
Settlement/curtailment loss 3– 3 3– – –– –
Special termination benets 31 5 4 2– – 3– 1
Total $«307 $«329 $«347 $÷«64 $«76 $«70 $124 $130 $127
The estimated amounts to be amortized from accumulated other comprehensive loss into benet expense in 2009 for our
pension and retiree medical plans are as follows:
Pension
Retiree
Medical
U.S. International
Net loss $÷98 $10 $«11
Prior service cost/(credit) 11 2 (17)
Total $109 $12 $÷(6)
The following table provides the weighted-average assumptions used to determine projected benet liability and benet expense
for our pension and retiree medical plans:
Pension Retiree Medical
2008 2007 2006 2008 2007 2006 2008 2007 2006
U.S. International
Weighted average assumptions
Liability discount rate 6.2% 6.2% 5.8% 6.3% 5.8% 5.2% 6.2% 6.1% 5.8%
Expense discount rate 6.5% 5.8% 5.7% 5.6% 5.2% 5.1% 6.5% 5.8% 5.7%
Expected return on plan assets 7.8% 7.8% 7.8% 7.2% 7.3% 7.3%
Rate of salary increases 4.6% 4.7% 4.5% 3.9% 3.9% 3.9%
The following table provides selected information about plans with liability for service to date and total benet liability in excess
of plan assets:
Pension Retiree Medical
2008 2007 2008 2007 2008 2007
U.S. International
Selected information for plans with liability for service to
Liability for service to date $(5,411) $(364) $÷«÷(49) $÷(72)
Fair value of plan assets $«3,971 $÷÷«– $÷«÷«30 $÷«13
Benet liability $(6,217) $(707) $(1,049) $(384) $(1,370) $(1,354)
Fair value of plan assets $«3,974 $÷÷«– $÷÷916 $«278
Of the total projected pension benet liability at year-end 2008, $587 million relates to plans that we do not fund because the
funding of such plans does not receive favorable tax treatment.