Snapple 2009 Annual Report Download - page 115

In 2008, DPS’ Compensation Committee approved the suspension of two of the Company’s principal defined
benefit pension plans, which are cash balance plans. The cash balance plans maintain individual recordkeeping
accounts for each participant and are credited with interest credits. The interest credit is updated annually and equals
the 12-month average of one year U.S. Treasury Bill rates, plus 1%, with a required minimum rate of 5%. Effective
December 31, 2008, participants in the plans will not earn additional benefits for future services or salary increases.
However, effective January 1, 2009, current participants are eligible for an enhanced defined contribution (the
“EDC”) within DPS’ Savings Incentive Plan (the “SIP”).
During the fourth quarter of 2009, the Company recorded a pension settlement loss of approximately
$3 million due to lump-sum distributions that occurred during 2009. The Company recorded approximately
$17 million in 2008 related to pension plan settlements that resulted from the organizational restructuring program
initiated in the fourth quarter of 2007. Additionally, the Company recorded a pension curtailment gain of less than
$1 million for the year ended December 31, 2008.
U.S. GAAP Changes
On December 31, 2009, the Company adopted the enhanced disclosure requirement related to employers’
disclosures about pensions and other postretirement benefits as required by U.S. GAAP. This requirement includes
enhanced disclosures about the plan assets of a company’s defined benefit pension and other postretirement plans
intended to provide users of financial statements with a greater understanding of: (1) how investment allocation
decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies;
(2) the major categories of plan assets; (3) the inputs and valuation techniques used to measure the fair value of plan
assets; (4) the effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan
assets for the period; and (5) significant concentrations of credit risk within plan assets. The adoption of the
guidance is disclosure related only and did not impact the Company’s results of operations or financial position. The
plans do not currently hold any assets that are Level 3 and there are no significant concentrations of credit risk
within the plan assets. Refer to Note 14 for a description of the fair value hierarchy levels 1, 2, and 3.
Effective December 31, 2009, the Company also adopted the U.S. GAAP guidance on how companies should
estimate the fair value of certain alternative investments and allows companies to use Net Asset Value (NAV) as a
practical expedient in determining fair value. Approximately $98 million of pension plan assets and postretirement
benefit plan assets reflected were valued using NAV as of December 31, 2009.
On January 1, 2008, the Company adopted the measurement date provisions under U.S. GAAP, which requires
that assumptions used to measure the Company’s annual pension and postretirement medical expenses be
determined as of the balance sheet date and all plan assets and liabilities be reported as of that date. On January 1,
2008, the Company elected the transition method under which DPS re-measured the defined benefit pension and
postretirement plan assets and obligations as of January 1, 2008, the first day of the 2008 year, for plans that
previously had a measurement date other than December 31. As a result of implementing the measurement date
provision, the Company recorded a charge of less than $1 million to Retained Earnings and an increase of
approximately $2 million ($3 million gross, net of $1 million tax benefit), to AOCL.
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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)