Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)

v2.4.0.6
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)
12 Months Ended
Dec. 31, 2011
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  
 
2011

 
2010

 
2011

 
2010

Benefit obligation at beginning of year1
$
7,292

 
$
3,996

 
$
889

 
$
483

Service cost
249

 
143

 
32

 
24

Interest cost
391

 
260

 
45

 
30

Foreign currency exchange rate changes
30

 
(80
)
 
2

 

Amendments
(57
)
 
(6
)
 
(12
)
 

Actuarial loss (gain)
773

 
109

 
45

 
1

Benefits paid2
(440
)
 
(249
)
 
(63
)
 
(37
)
Business combinations3

 
3,163

 

 
381

Divestitures4

 
(24
)
 

 

Settlements
(24
)
 
(22
)
 

 

Curtailments

 

 

 

Special termination benefits
8

 

 
3

 
1

Other
33

 
2

 
12

 
6

Benefit obligation at end of year1
$
8,255

 
$
7,292

 
$
953

 
$
889

Fair value of plan assets at beginning of year
$
5,497

 
$
3,032

 
$
187

 
$
173

Actual return on plan assets
73

 
445

 
(4
)
 
16

Employer contributions
1,001

 
77

 

 

Foreign currency exchange rate changes
(1
)
 
(59
)
 

 

Benefits paid
(374
)
 
(193
)
 
(1
)
 
(6
)
Business combinations3

 
2,231

 

 

Divestitures4

 
(18
)
 

 

Settlements
(27
)
 
(20
)
 

 

Other
2

 
2

 
3

 
4

Fair value of plan assets at end of year
$
6,171

 
$
5,497

 
$
185

 
$
187

Net liability recognized
$
(2,084
)
 
$
(1,795
)
 
$
(768
)
 
$
(702
)
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 $7,958 million and $6,949 million as of December 31, 2011 and 2010, respectively.
2 
Benefits paid to pension plan participants during 2011 and 2010 included $66 million and $56 million, respectively, in payments related to unfunded pension plans that were paid from Company assets. Benefits paid to participants of other benefit plans during 2011 and 2010 included $62 million and $31 million, respectively, that were paid from Company assets.
3 
Related to the acquisition of CCE's North American business during the fourth quarter of 2010. Refer to Note 2.
4 
Primarily related to the sale of our Norwegian bottling operation to New CCE during the fourth quarter of 2010. Refer to Note 2.
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,
2011

 
2010

 
2011

 
2010

Noncurrent asset
$
468

 
$
66

 
$

 
$

Current liability
(68
)
 
(55
)
 
(21
)
 
(21
)
Long-term liability
(2,484
)
 
(1,806
)
 
(747
)
 
(681
)
Net liability recognized
$
(2,084
)
 
$
(1,795
)
 
$
(768
)
 
$
(702
)
Schedule of pension plans with projected benefit obligation in excess of 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,
2011

 
2010

Projected benefit obligation
$
7,591

 
$
7,024

Fair value of plan assets
5,048

 
5,172

Accumulated benefit obligations in excess of 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,
2011

 
2010

Accumulated benefit obligation
$
7,277

 
$
6,503

Fair value of plan assets
4,998

 
4,981

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,
2011

 
2010

 
2011

 
2010

Cash and cash equivalents
$
104

 
$
88

 
$
123

 
$
38

Equity securities:
 
 
 
 
 
 
 
U.S.-based companies
1,362

 
1,324

 
33

 
30

International-based companies
630

 
631

 
323

 
107

Fixed-income securities:
 
 
 
 
 
 
 
Government bonds
358

 
268

 
415

 
163

Corporate bonds and debt securities
669

 
625

 
49

 
20

Mutual, pooled and commingled funds1
323

 
431

 
406

 
700

Hedge funds/limited partnerships
458

 
415

 
31

 
23

Real estate
256

 
230

 
14

 
12

Other
114

 
106

 
503

 
286

Total pension plan assets2
$
4,274

 
$
4,118

 
$
1,897

 
$
1,379

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 and pooled 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 on 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 and other postretirement assets.
Other postretirement benefit plan assets
The following table presents total assets for our other postretirement benefit plans (in millions):
December 31,
2011

 
2010

Cash and cash equivalents
$
86

 
$
84

Equity securities:
 
 
 
U.S.-based companies
70

 
75

International-based companies
13

 
14

Fixed-income securities:
 
 
 
Government bonds
2

 
1

Corporate bonds and debt securities
6

 
6

Mutual, pooled and commingled funds
3

 
3

Hedge funds/limited partnerships
2

 
1

Real estate
2

 
2

Other
1

 
1

Total other postretirement benefit plan assets1
$
185

 
$
187

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 on 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 and other postretirement 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,
2011

 
2010

 
2009

 
2011

 
2010

 
2009

Service cost
$
249

 
$
143

 
$
113

 
$
32

 
$
24

 
$
21

Interest cost
391

 
260

 
213

 
45

 
30

 
29

Expected return on plan assets
(494
)
 
(295
)
 
(214
)
 
(8
)
 
(8
)
 
(8
)
Amortization of prior service cost (credit)
5

 
5

 
5

 
(61
)
 
(61
)
 
(61
)
Amortization of actuarial loss
87

 
57

 
86

 
2

 
3

 

Net periodic benefit cost (credit)
$
238

 
$
170

 
$
203

 
$
10

 
$
(12
)
 
$
(19
)
Settlement charge
3

 
6

 
5

 

 

 

Curtailment charge

 

 
1

 

 

 

Special termination benefits1
8

 

 
9

 
3

 
1

 
4

Total cost (credit) recognized in the statements of income
$
249

 
$
176

 
$
218

 
$
13

 
$
(11
)
 
$
(15
)
1 
The special termination benefits primarily relate to the Company's productivity, restructuring and integration initiatives. Refer to Note 18 for additional information related to our productivity, restructuring and integration initiatives.
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  
December 31,
2011

 
2010

 
2011

 
2010

Beginning balance in AOCI
$
(1,006
)
 
$
(1,119
)
 
$
72

 
$
118

Recognized prior service cost (credit)
5

 
5

 
(61
)
 
(61
)
Recognized net actuarial loss (gain)
90

 
63

 
2

 
3

Prior service credit (cost) arising in current year
57

 
6

 
12

 

Net actuarial (loss) gain arising in current year
(1,194
)
 
41

 
(57
)
 
8

Impact of divestitures1

 
(8
)
 

 

Translation gain (loss)
(7
)
 
6

 
(2
)
 
4

Ending balance in AOCI
$
(2,055
)
 
$
(1,006
)
 
$
(34
)
 
$
72

1 
Primarily related to the sale of our Norwegian bottling operation to New CCE. Refer to Note 2.
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,
2011

 
2010

 
2011

 
2010

Prior service credit (cost)
$
14

 
$
(49
)
 
$
73

 
$
122

Net actuarial loss
(2,069
)
 
(957
)
 
(107
)
 
(50
)
Ending balance in AOCI
$
(2,055
)
 
$
(1,006
)
 
$
(34
)
 
$
72

Amounts in AOCI expected to be recognized as components of net periodic pension cost in 2012

Amounts in AOCI expected to be recognized as components of net periodic pension cost in 2012 are as follows (in millions, pretax):
 
Pension Benefits
 
Other Benefits
Amortization of prior service cost (credit)
$
(2
)
 
$
(52
)
Amortization of actuarial loss
137

 
7

 
$
135

 
$
(45
)
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,
2011

 
2010

 
2011

 
2010

Discount rate
4.75
%
 
5.50
%
 
4.75
%
 
5.25
%
Rate of increase in compensation levels
3.25
%
 
4.00
%
 
N/A

 
N/A

Certain weighted-average assumptions used in computing net periodic benefit cost are as follows:
 
Pension Benefits  
 
Other Benefits  
December 31,
2011

 
2010

 
2009

 
2011

 
2010

 
2009

Discount rate
5.50
%
 
5.75
%
 
6.00
%
 
5.25
%
 
5.50
%
 
6.25
%
Rate of increase in compensation levels
4.00
%
 
3.75
%
 
3.75
%
 
N/A

 
N/A

 
N/A

Expected long-term rate of return on plan assets
8.25
%
 
8.00
%
 
8.00
%
 
4.75
%
 
4.75
%
 
4.75
%
Assumed health care cost trend rates
The assumed health care cost trend rates are as follows:
December 31,
2011

 
2010

Health care cost trend rate assumed for next year
8.00
%
 
8.50
%
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
2018

 
2018

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,
2012

 
2013

 
2014

 
2015

 
2016

 
2017–2021

Pension benefit payments
$
486

 
$
501

 
$
521

 
$
537

 
$
553

 
$
3,042

Other benefit payments1
53

 
56

 
59

 
62

 
65

 
342

Total estimated benefit payments
$
539

 
$
557

 
$
580

 
$
599

 
$
618

 
$
3,384

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 approximately $17 million for the period 2012–2016, and $21 million for the period 2017–2021