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75PepsiCo, Inc. 2009 Annual Report
Components of benefit expense are as follows:
Pension Retiree Medical
2009 20082007 2009 2008 2007 2009 2008 2007
U.S. International
Components of benefit expense
Service cost $«238 $«244 $«244 $÷«54 $÷«61 $«59 $÷44 $÷45 $÷48
Interest cost 373 371 338 82 88 81 82 82 77
Expected return on plan assets (462) (416) (399) (105) (112) (97) –––
Amortization of prior service cost/(credit) 12 19 5 233 (17) (13) (13)
Amortization of net loss 110 55 136 919 30 11 7 18
271 273 324 42 59 76 120 121 130
Settlement/curtailment (gain)/loss (13) 3– 33– –––
Special termination benefits –31 5 –2– –3–
Total $«258 $«307 $«329 $÷«45 $÷«64 $«76 $120 $124 $130
The estimated amounts to be amortized from accumulated other comprehensive loss into benefit expense in 2010 for our
pension and retiree medical plans are as follows:
Pension Retiree Medical
U.S. International
Net loss $108 $24 $÷«5
Prior service cost/(credit) 12 2 (17)
Total $120 $26 $(12)
The following table provides the weighted-average assumptions used to determine projected benefit liability and benefit expense
for our pension and retiree medical plans:
Pension Retiree Medical
2009 2008 2007 2009 2008 2007 2009 2008 2007
U.S. International
Weighted-average assumptions
Liability discount rate 6.1% 6.2% 6.2% 5.9% 6.3% 5.8% 6.1% 6.2% 6.1%
Expense discount rate 6.2% 6.5% 5.8% 6.3% 5.6% 5.2% 6.2% 6.5% 5.8%
Expected return on plan assets 7.8% 7.8% 7.8% 7.1% 7.2% 7.3%
Rate of salary increases 4.4% 4.6% 4.7% 4.2% 3.9% 3.9%
The following table provides selected information about plans with liability for service to date and total benefit liability in excess
of plan assets:
Pension Retiree Medical
2009 2008 2009 2008 2009 2008
U.S. International
Selected information for plans with liability for service to
date in excess of plan assets
Liability for service to date $(2,695) $(5,411) $÷÷(342) $÷÷«(49)
Fair value of plan assets $«2,220 $«3,971 $÷÷309 $÷÷÷30
Selected information for plans with benefit liability in
excess of plan assets
Benefit liability $(6,603) $(6,217) $(1,566) $(1,049) $(1,359) $(1,370)
Fair value of plan assets $«5,417 $«3,974 $«1,368 $÷÷916 $÷÷÷«13 $÷÷÷÷–
Of the total projected pension benefit liability at year-end 2009, $564 million relates to plans that we do not fund because the funding of
such plans does not receive favorable tax treatment.
88045_pepsico-09ar_64-86_R3.indd 75 3/6/10 8:58 PM