Pepsi 2013 Annual Report Download - page 115

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97
Retiree Medical
In 2013, 2012 and 2011, we made non-discretionary contributions of $62 million, $111 million and $110
million, respectively, to fund the payment of retiree medical claims. In 2012, we made a discretionary
contribution of $140 million to fund future U.S. retiree medical plan benefits. This contribution was invested
consistent with the allocation of existing assets in the U.S. pension plan.
Fair Value
The guidance on fair value measurements defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. The fair value framework requires the
categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the
assets. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant
management judgment. The three levels are defined as follows:
• Level 1: Unadjusted quoted prices in active markets for identical assets.
• Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for
similar assets in active markets or quoted prices for identical assets in inactive markets.
• Level 3: Unobservable inputs reflecting assumptions about the inputs used in pricing the asset.