Snapple 2011 Annual Report Download - page 103

DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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The fair value of long term debt as of December 31, 2011 and 2010 was estimated based on quoted market prices for publicly
traded securities. The difference between the fair value and the carrying value represents the theoretical net premium or discount
that would be paid or received to retire all debt at such date.
13. Employee Benefit Plans
Pension and Postretirement Plans
Overview
The Company has U.S. and foreign pension and postretirement medical plans which provide benefits to a defined group of
employees. The Company has several non-contributory defined benefit plans and postretirement medical plans, each having a
measurement date of December 31. To participate in the defined benefit plans, eligible employees must have been employed by
the Company for at least one year. The postretirement benefits are limited to qualified expenses and are subject to deductibles, co-
payment provisions, and other provisions. Employee benefit plan obligations and expenses included in our Audited Consolidated
Financial Statements are determined using actuarial analyses based on plan assumptions including employee demographic data
such as years of service and compensation, benefits and claims paid and employer contributions, among others. The Company
also participates in various multi-employer defined benefit plans.
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 which
are annually credited with interest credits equal to 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 no longer earned additional benefits for
future services or salary increases. However, effective January 1, 2009, current participants were eligible for an enhanced defined
contribution (the "EDC") within DPS’ Savings Incentive Plan (the "SIP").
During 2010, the Company approved and communicated various changes to certain U.S. postretirement medical plans. The
Company provides a subsidy to eligible participants who have reached the age of 65, which replaced certain current retiree medical
plans and could be used to help pay for qualified medical expenses. These changes were effective beginning January 1, 2011, for
all Medicare eligible retirees and their Medicare eligible dependents formerly covered by certain postretirement medical plans
sponsored by the Company. As a result of these changes, the Company recognized a one-time curtailment gain of $8 million during
the year ended December 31, 2010, representing the immediate recognition of previously unamortized prior service credits.
During the years ended December 31, 2011, 2010 and 2009, the total amount of lump sum payments made to participants of
various U.S. defined pension plans exceeded the estimated annual interest and service costs. As a result, non-cash settlement
charges of $3 million, $5 million and $3 million were recognized for the years ended December 31, 2011, 2010 and 2009,
respectively.
U.S. GAAP Changes
On December 31, 2009, the Company adopted the enhanced disclosure requirements required by U.S. GAAP related to
employers' disclosures about pensions and other postretirement benefits. This requirement includes enhanced disclosures about
the plan assets of a company's defined benefit pension and other postretirement medical plans. These disclosures are 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, therefore it 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 as of December 31, 2011 and 2010. Refer to Note 12 for a description of the
fair value hierarchy levels 1, 2, and 3.