Coca Cola 2003 Annual Report Download - page 91

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 14: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Continued)
Assumptions
The weighted-average assumptions used in computing the benefit obligations are as follows:
Pension Benefits Other Benefits
December 31, 2003 2002 2003 2002
Discount rate 6% 61⁄4%61⁄4%63⁄4%
Rate of increase in compensation levels 41⁄4%41⁄4%41⁄2%41⁄2%
The weighted-average assumptions used in computing net periodic benefit cost are as follows:
Pension Benefits Other Benefits
Year Ended December 31, 2003 2002 2001 2003 2002 2001
Discount rate16% 61⁄2%7%61⁄2%71⁄4%7
1⁄2%
Rate of increase in compensation levels 41⁄4%41⁄4%4
1⁄2%41⁄2%41⁄2%4
1⁄2%
Expected long-term rate of return on plan assets 73⁄4%81⁄4%8
1⁄2%———
1On March 27, 2003, the primary qualified and nonqualified U.S. pension plans, as well as the U.S.
postretirement health care plan, were remeasured to reflect the effect of the curtailment resulting
from the Company streamlining initiatives. Refer to Note 17. The discount rate assumption used to
determine 2003 net periodic benefit cost for these U.S. plans was 63⁄4 percent prior to the
remeasurement and 61⁄2 percent subsequent to the remeasurement. This change in the discount rate is
reflected in the 2003 weighted-average discount rate of 6 percent for all pension benefit plans and
61⁄2 percent for other benefit plans.
The assumed health care cost trend rates are as follows:
December 31, 2003 2002
Health care cost trend rate assumed for next year 10% 10%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 51⁄4%51⁄4%
Year that the rate reaches the ultimate trend rate 2009 2008
Assumed health care cost trend rates have a significant effect on the amounts reported for the
postretirement health care plans. A one percentage point change in the assumed health care cost trend rate
would have the following effects (in millions):
One Percentage Point One Percentage Point
Increase Decrease
Effect on accumulated postretirement benefit obligation as
of December 31, 2003 $ 96 $ (81)
Effect on total of service cost and interest cost in 2003 $ 13 $ (11)
Refer to Note 1 for information regarding the Medicare Prescription Drug, Improvement and
Modernization Act of 2003.
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