Pepsi 2010 Annual Report Download - page 88

Download and view the complete annual report

Please find page 88 of the 2010 Pepsi annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 113

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113

87
In connection with our acquisitions of PBG and PAS, we
assumed sponsorship of pension and retiree medical plans that
provide benefits to U.S. and certain international employees.
Subsequently, during the third quarter of 2010, we merged the
pension plan assets of the legacy PBG and PAS U.S. pension plans
with those of PepsiCo into one master trust.
During 2010, the Compensation Committee of PepsiCo’s Board
of Directors approved certain changes to the U.S. pension and
retiree medical plans, eective January 1, 2011. Pension plan
design changes include implementing a new employer contribu-
tion to the 401(k) savings plan for all future salaried new hires of
the Company, as salaried new hires are no longer eligible to partici-
pate in the defined benefit pension plan, as well as implementing
a new defined benefit pension formula for certain hourly new
hires of the Company. Pension plan design changes also include
implementing a new employer contribution to the 401(k) savings
plan for certain legacy PBG and PAS salaried employees
(as such employees are also not eligible to participate in the
defined benefit pension plan), as well as implementing a
new defined benefit pension formula for certain legacy PBG and
PAS hourly employees. The retiree medical plan design change
includes phasing out Company subsidies of retiree medicalbenefits.
As a result of these changes, we remeasured our pension and
retiree medical expenses and liabilities in the third quarter of
2010, which resulted in a one-time pre-tax curtailment gain of
$62million included in retiree medical expense.
The provisions of both the PPACA and the Health Care
and Education Reconciliation Act are reflected in our retiree
medical expenses and liabilities and were not material to our
financialstatements.
Selected financial information for our pension and retiree medical plans is as follows:
Pension Retiree Medical
2010 2009 2010 2009 2010 2009
U.S. International
Change in projected benet liability
Liability at beginning of year
$6,606 $ 6,217 $1,709 $1,270 $ 1,359 $ 1,370
Acquisitions 2,161 – 90 – 396 –
Service cost 299 238 81 54 54 44
Interest cost 506 373 106 82 93 82
Plan amendments 28 – – – (132) –
Participant contributions – – 3 10 – –
Experience loss/(gain) 583 70 213 221 95 (63)
Benet payments (375) (296) (69) (50) (100) (80)
Settlement/curtailment gain (2) – (3) (8) – –
Special termination benets 45 – 3 – 3 –
Foreign currency adjustment – – (18) 130 2 6
Other – 4 27 – – –
Liability at end of year $9,851 $ 6,606 $2,142 $1,709 $ 1,770 $ 1,359
Change in fair value of plan assets
Fair value at beginning of year $5,420 $ 3,974 $1,561 $1,165 $ 13 $ –
Acquisitions 1,633 – 52 – – –
Actual return on plan assets 943 697 164 159 7 2
Employer contributions/funding 1,249 1,041 215 167 270 91
Participant contributions – – 3 10 – –
Benet payments (375) (296) (69) (50) (100) (80)
Settlement – – (2) (8) – –
Foreign currency adjustment – – (28) 118 – –
Other – 4 – – – –
Fair value at end of year $8,870 $ 5,420 $1,896 $1,561 $ 190 $ 13
Funded status $ (981) $(1,186) $ (246) $ (148) $(1,580) $(1,346)