Current report filing

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)

v3.5.0.2
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)
12 Months Ended
Dec. 31, 2015
Pension and Other Postretirement Benefit Plans [Abstract]  
Changes in benefit obligations and the fair value of plan assets for our benefit plans
The following table sets forth the changes in benefit obligations and the fair value of plan assets for our benefit plans (in millions):
 
Pension Benefits  
 
Other Benefits  
Year Ended December 31,
2015

 
2014

 
2015

 
2014

Benefit obligation at beginning of year1
$
10,346

 
$
8,845

 
$
1,006

 
$
946

Service cost
265

 
261

 
27

 
26

Interest cost
379

 
406

 
37

 
43

Foreign currency exchange rate changes
(309
)
 
(183
)
 
(14
)
 
(4
)
Amendments
6

 

 
(10
)
 
(31
)
Actuarial loss (gain)
(479
)
 
1,519

 
(54
)
 
88

Benefits paid2
(353
)
 
(522
)
 
(59
)
 
(62
)
Business combinations
1

 
4

 

 

Divestitures3
(218
)
 

 

 

Settlements4
(499
)
 
(7
)
 

 
(1
)
Special termination benefits
21

 
5

 
2

 

Other
(1
)
 
18

 
5

 
1

Benefit obligation at end of year1
$
9,159

 
$
10,346

 
$
940

 
$
1,006

Fair value of plan assets at beginning of year
$
8,902

 
$
8,746

 
$
246

 
$
243

Actual return on plan assets
(44
)
 
574

 
(3
)
 
2

Employer contributions
121

 
214

 

 

Foreign currency exchange rate changes
(322
)
 
(203
)
 

 

Benefits paid
(270
)
 
(435
)
 
(3
)
 
(3
)
Divestitures3
(206
)
 

 

 

Settlements4
(486
)
 
(1
)
 

 

Other
(6
)
 
7

 
5

 
4

Fair value of plan assets at end of year
$
7,689

 
$
8,902

 
$
245

 
$
246

Net liability recognized
$
(1,470
)
 
$
(1,444
)
 
$
(695
)
 
$
(760
)
1 
For pension benefit plans, the benefit obligation is the projected benefit obligation. For other benefit plans, the benefit obligation is the accumulated postretirement benefit obligation. The accumulated benefit obligation for our pension plans was $8,868 million and $10,028 million as of December 31, 2015 and 2014, respectively.
2 
Benefits paid to pension plan participants during 2015 and 2014 included $83 million and $87 million, respectively, in payments related to unfunded pension plans that were paid from Company assets. Benefits paid to participants of other benefit plans during 2015 and 2014 included $56 million and $59 million, respectively, that were paid from Company assets.
3 
Divestitures are primarily related to the transfer of assets and liabilities associated with the Company's consolidated German bottling operations to assets held for sale and liabilities held for sale as of December 31, 2015. Refer to Note 2 for additional information.
4 
Settlements are primarily related to the Company's productivity, restructuring and integration initiatives. Refer to Note 18.
Pension and other benefit amounts recognized in consolidated balance sheets
Pension and other benefit amounts recognized in our consolidated balance sheets are as follows (in millions):
 
Pension Benefits  
 
Other Benefits  
December 31,
2015

 
2014

 
2015

 
2014

Noncurrent asset
$
454

 
$
479

 
$

 
$

Current liability
(72
)
 
(78
)
 
(21
)
 
(20
)
Long-term liability
(1,852
)
 
(1,845
)
 
(674
)
 
(740
)
Net liability recognized
$
(1,470
)
 
$
(1,444
)
 
$
(695
)
 
$
(760
)
Schedule of pension plans with projected benefit obligation in excess of fair value of plan assets
Certain of our pension plans have projected benefit obligations in excess of the fair value of plan assets. For these plans, the projected benefit obligations and the fair value of plan assets were as follows (in millions):
December 31,
2015

 
2014

Projected benefit obligation
$
7,767

 
$
8,753

Fair value of plan assets
5,865

 
6,854

Accumulated benefit obligations in excess of fair value of plan assets
Certain of our pension plans have accumulated benefit obligations in excess of the fair value of plan assets. For these plans, the accumulated benefit obligations and the fair value of plan assets were as follows (in millions):
December 31,
2015

 
2014

Accumulated benefit obligation
$
7,537

 
$
8,501

Fair value of plan assets
5,846

 
6,820

Total pension assets for U.S. and non-U.S. plans
The following table presents total assets for our U.S. and non-U.S. pension plans (in millions):
 
U.S. Plans  
 
Non-U.S. Plans  
December 31,
2015

 
2014

 
2015

 
2014

Cash and cash equivalents
$
222

 
$
186

 
$
54

 
$
75

Equity securities:
 
 
 
 
 
 
 
U.S.-based companies
1,118

 
1,274

 
445

 
542

International-based companies
398

 
558

 
419

 
505

Fixed-income securities:
 
 
 
 
 
 
 
Government bonds
442

 
455

 
295

 
411

Corporate bonds and debt securities
1,037

 
1,379

 
136

 
187

Mutual, pooled and commingled funds1
713

 
863

 
410

 
400

Hedge funds/limited partnerships
723

 
756

 
41

 
43

Real estate
462

 
391

 
2

 
17

Other
513

 
481

 
259

 
379

Total pension plan assets2
$
5,628

 
$
6,343

 
$
2,061

 
$
2,559

1 
Mutual, pooled and commingled funds include investments in equity securities, fixed-income securities and combinations of both. There are a significant number of mutual, pooled and commingled funds from which investors can choose. The selection of the type of fund is dictated by the specific investment objectives and needs of a given plan. These objectives and needs vary greatly between plans.
2 
Fair value disclosures related to our pension assets are included in Note 16. Fair value disclosures include, but are not limited to, the levels within the fair value hierarchy in which the fair value measurements in their entirety fall; a reconciliation of the beginning and ending balances of Level 3 assets; and information about the valuation techniques and inputs used to measure the fair value of our pension assets.
Other postretirement benefit plan assets
The following table presents total assets for our other postretirement benefit plans (in millions):
December 31,
2015

 
2014

Cash and cash equivalents
$
8

 
$
10

Equity securities:
 
 
 
U.S.-based companies
116

 
114

International-based companies
6

 
7

Fixed-income securities:
 
 
 
Government bonds
80

 
79

Corporate bonds and debt securities
8

 
9

Mutual, pooled and commingled funds
15

 
16

Hedge funds/limited partnerships
5

 
5

Real estate
3

 
3

Other
4

 
3

Total other postretirement benefit plan assets1
$
245

 
$
246

1 
Fair value disclosures related to our other postretirement benefit plan assets are included in Note 16. Fair value disclosures include, but are not limited to, the levels within the fair value hierarchy in which the fair value measurements in their entirety fall and information about the valuation techniques and inputs used to measure the fair value of our other postretirement benefit plan assets.
Net periodic benefit cost for pension and other postretirement benefit plans
Net periodic benefit cost for our pension and other postretirement benefit plans consisted of the following (in millions):
 
Pension Benefits  
 
Other Benefits  
Year Ended December 31,
2015

 
2014

 
2013

 
2015

 
2014

 
2013

Service cost
$
265

 
$
261

 
$
280

 
$
27

 
$
26

 
$
36

Interest cost
379

 
406

 
378

 
37

 
43

 
42

Expected return on plan assets1
(705
)
 
(713
)
 
(659
)
 
(11
)
 
(11
)
 
(9
)
Amortization of prior service cost (credit)
(2
)
 
(2
)
 
(2
)
 
(19
)
 
(17
)
 
(10
)
Amortization of actuarial loss2
199

 
73

 
197

 
10

 
2

 
13

Net periodic benefit cost
$
136

 
$
25

 
$
194

 
$
44

 
$
43

 
$
72

Settlement charge3
149

 
4

 
1

 

 

 

Special termination benefits3
20

 
5

 
2

 
2

 

 

Total cost recognized in statements of income
$
305

 
$
34

 
$
197

 
$
46

 
$
43

 
$
72

1 
The Company has elected to use the actual fair value of plan assets as the market-related value of assets in the determination of the expected return on plan assets.
2 
Actuarial gains and losses are amortized using a corridor approach. The gain/loss corridor is equal to 10 percent of the greater of the pension benefit obligation and the market-related value of assets. Gains and losses in excess of the corridor are generally amortized over the average future working lifetime of the pension plan participants.
3 
The settlement charge and special termination benefits were primarily related to the Company's productivity, restructuring and integration initiatives. Refer to Note 18.
Changes in AOCI for benefit plans
The following table sets forth the changes in AOCI for our benefit plans (in millions, pretax):
 
Pension Benefits  
 
Other Benefits  
Year Ended December 31,
2015

 
2014

 
2015

 
2014

Balance in AOCI at beginning of year
$
(3,069
)
 
$
(1,537
)
 
$
(67
)
 
$
13

Recognized prior service cost (credit)
(2
)
 
(2
)
 
(19
)
 
(17
)
Recognized net actuarial loss (gain)
348

 
77

 
10

 
2

Prior service credit (cost) arising in current year
(6
)
 

 
10

 
31

Net actuarial (loss) gain arising in current year
(270
)
 
(1,658
)
 
40

 
(97
)
Foreign currency translation gain (loss)
92

 
51

 

 
1

Balance in AOCI at end of year
$
(2,907
)
 
$
(3,069
)
 
$
(26
)
 
$
(67
)
Amounts in AOCI for benefit plans (pretax)
The following table sets forth amounts in AOCI for our benefit plans (in millions, pretax):
 
Pension Benefits  
 
Other Benefits  
December 31,
2015

 
2014

 
2015

 
2014

Prior service credit (cost)
$
3

 
$
10

 
$
93

 
$
100

Net actuarial loss
(2,910
)
 
(3,079
)
 
(119
)
 
(167
)
Balance in AOCI at end of year
$
(2,907
)
 
$
(3,069
)
 
$
(26
)
 
$
(67
)
Amounts in AOCI expected to be recognized as components of net periodic pension cost in next fiscal year

Amounts in AOCI expected to be recognized as components of net periodic pension cost in 2016 are as follows (in millions, pretax):
 
Pension Benefits
 
Other Benefits
Amortization of prior service cost (credit)
$
(2
)
 
$
(19
)
Amortization of actuarial loss
181

 
7

Total
$
179

 
$
(12
)
Certain weighted average assumptions used in computing the benefit obligations and net periodic benefit cost
Certain weighted-average assumptions used in computing the benefit obligations are as follows:
 
Pension Benefits  
 
Other Benefits  
December 31,
2015

 
2014

 
2015

 
2014

Discount rate
4.25
%
 
3.75
%
 
4.25
%
 
3.75
%
Rate of increase in compensation levels
3.50
%
 
3.50
%
 
N/A

 
N/A


Certain weighted-average assumptions used in computing net periodic benefit cost are as follows:
 
Pension Benefits  
 
Other Benefits  
Year Ended December 31,
2015

 
2014

 
2013

 
2015

 
2014

 
2013

Discount rate
3.75
%
 
4.75
%
 
4.00
%
 
3.75
%
 
4.75
%
 
4.00
%
Rate of increase in compensation levels
3.50
%
 
3.50
%
 
3.50
%
 
N/A

 
N/A

 
N/A

Expected long-term rate of return on plan assets
8.25
%
 
8.25
%
 
8.25
%
 
4.75
%
 
4.75
%
 
4.75
%
Assumed health care cost trend rates
The assumed health care cost trend rates are as follows:
December 31,
2015

 
2014

Health care cost trend rate assumed for next year
7.00
%
 
7.50
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
5.00
%
 
5.00
%
Year that the rate reaches the ultimate trend rate
2021

 
2020

Estimated future benefit payments for funded and unfunded plans
Our estimated future benefit payments for funded and unfunded plans are as follows (in millions):
Year Ended December 31,
2016

 
2017

 
2018

 
2019

 
2020

 
2021–2025

Pension benefit payments
$
521

 
$
504

 
$
533

 
$
551

 
$
570

 
$
3,065

Other benefit payments1
61

 
63

 
64

 
65

 
67

 
332

Total estimated benefit payments
$
582

 
$
567

 
$
597

 
$
616

 
$
637

 
$
3,397

1 
The expected benefit payments for our other postretirement benefit plans are net of estimated federal subsidies expected to be received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Federal subsidies are estimated to be $4 million for the period 2016–2020, and $3 million for the period 2021–2025.