Coca Cola 2014 Annual Report Download - page 68

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As of December 31, 2014, the projected benefit obligation of the U.S. qualified pension plans was $7,041 million, and the fair
value of plan assets was $6,343 million. The projected benefit obligation of all pension plans other than the U.S. qualified pension
plans was $3,305 million, and the fair value of all other pension plan assets was $2,559 million. The majority of this underfunding is
attributable to an international pension plan for certain non-U.S. employees that is unfunded due to tax law restrictions, as well as
certain unfunded U.S. nonqualified pension plans. These U.S. nonqualified pension plans provide, for certain associates, benefits
that are not permitted to be funded through a qualified plan because of limits imposed by the Internal Revenue Code of 1986. The
expected benefit payments for these unfunded pension plans are not included in the table above. However, we anticipate annual
benefit payments for these unfunded pension plans to be approximately $73 million in 2015 and remain near that level through 2027,
decreasing annually thereafter. Refer to Note 13 of Notes to Consolidated Financial Statements.
In 2015, we expect to contribute an additional $90 million to our international pension plans. Refer to Note 13 of Notes to
Consolidated Financial Statements. We did not include our estimated contributions to our various plans in the table above.
In general, we are self-insured for large portions of many different types of claims; however, we do use commercial insurance above
our self-insured retentions to reduce the Company’s risk of catastrophic loss. Our reserves for the Company’s self-insured losses
are estimated through actuarial procedures of the insurance industry and by using industry assumptions, adjusted for our specific
expectations based on our claim history. As of December 31, 2014, our self-insurance reserves totaled $530 million. Refer to Note 11
of Notes to Consolidated Financial Statements. We did not include estimated payments related to our self-insurance reserves in the
table above.
Deferred income tax liabilities as of December 31, 2014, were $6,086 million. Refer to Note 14 of Notes to Consolidated Financial
Statements. This amount is not included in the total contractual obligations table because we believe that presentation would not be
meaningful. Deferred income tax liabilities are calculated based on temporary differences between the tax bases of assets and liabilities
and their respective book bases, which will result in taxable amounts in future years when the liabilities are settled at their reported
financial statement amounts. The results of these calculations do not have a direct connection with the amount of cash taxes to be paid
in any future periods. As a result, scheduling deferred income tax liabilities as payments due by period could be misleading, because
this scheduling would not relate to liquidity needs.
Additionally, as of December 31, 2014, the Company had entered into agreements related to the following future investing activities
which are not included in the table above:
In May 2014, the Company entered into an agreement with Credit Suisse Capital LLC (“CS”) to purchase additional shares of Keurig
which would increase the Company’s equity position to a 16 percent interest based on the total number of issued and outstanding
shares of Keurig as of May 1, 2014. Under the agreement, the Company will purchase from CS, on a date selected by CS no later than
February 2015, the lesser of (1) 6.5 million shares of Keurig or (2) the number of shares that shall cause our ownership to equal
16 percent. The purchase price per share will be the average of the daily volume-weighted average price per share from May 15, 2014,
to the date selected by CS, as adjusted in certain circumstances specified in the agreement. CS will have exclusive ownership and
control over any such shares until delivered to the Company. In February 2015, the Company purchased 6.4 million shares from CS
under this agreement for a total purchase price of $830 million.
In August 2014, the Company and Monster entered into definitive agreements for a long-term strategic relationship in the global
energy drink category. Upon closing of the related transactions, which is expected to take place in the second quarter of 2015, the
Company will make a net cash payment of $2.15 billion to Monster. Refer to Note 2 of Notes to Consolidated Financial Statements for
additional information on these agreements.
In November 2014, Coca-Cola Amatil Limited (“Coca-Cola Amatil”), an equity method investee, and the Company announced they
had reached an agreement under which the Company would invest $500 million for a 29 percent interest in PT Coca-Cola Bottling
Indonesia, a subsidiary of Coca-Cola Amatil. This proposed investment is expected to close in mid to late 2015.