Coca Cola 2008 Annual Report Download - page 120

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Continued)
In February and October of 2007, the Company amended its U.S. retiree medical plan to limit the
Company’s exposure to increases in retiree medical costs associated with current and future retirees. Based on
the materiality of the change in liability resulting from the amendments, we remeasured the assets and liabilities
of the U.S. retiree medical plan effective February 28, 2007 and October 31, 2007. As a result of the
remeasurements, the Company reduced its liabilities for the U.S. retiree medical plan by approximately
$435 million. In accordance with SFAS No. 158, the Company also recognized the appropriate effects of the
change in AOCI and deferred taxes.
The primary U.S. defined benefit pension plan was amended effective December 31, 2008. The plan will
now have a two-part formula to determine pension benefits. The first part will retain the current final-average
pay structure, where service will freeze as of January 1, 2010, with pay escalating for the lesser of 10 years or
until termination. The second part of the formula will be a cash balance account which will commence January 1,
2010 under which employees will receive credits based on age, service, pay and interest. The plan was also
modified to allow lump sum distributions. These changes, as well as related changes to other U.S. plans, reduced
pension obligations by approximately $21 million. In addition, the U.S. retiree medical plan was amended to
close the plan to new hires effective January 1, 2009.
Certain amounts in the prior years’ disclosure have been reclassified to conform to the current year
presentation.
Obligations and Funded Status
The following table sets forth the change in benefit obligations for our benefit plans (in millions):
Pension Benefits Other Benefits
December 31, 2008 2007 2008 2007
Benefit obligation at beginning of year1$ 3,517 $ 3,297 $ 438 $ 828
Service cost 114 123 20 40
Interest cost 205 191 26 34
Foreign currency exchange rate changes (141) 117 (3) 1
Amendments (13) 48 —(342)
Actuarial loss (gain) 125 (189) (20) (95)
Benefits paid2(199) (159) (27) (31)
Business combinations —103 ——
Settlements (3) (23) ——
Curtailments (1) 1(6) —
Special termination benefits 11 7——
Other 3123
Benefit obligation at end of year1$ 3,618 $ 3,517 $ 430 $ 438
1For pension benefit plans, the benefit obligation is the projected benefit obligation. For other benefit
plans, the benefit obligation is the accumulated postretirement benefit obligation.
2Benefits paid to pension plan participants during 2008 and 2007 included approximately $44 million
and $41 million, respectively, in payments related to unfunded pension plans that were paid from
Company assets. Benefits paid to participants of other benefit plans during 2008 and 2007 included
approximately $2 million and $13 million, respectively, that were paid from Company assets.
118