Kraft 2005 Annual Report Download - page 85
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MERRILL CORPORATION FLANGST// 9-MAR-06 02:25 DISK126:[06CHI5.06CHI1135]EA1135A.;8
mrll.fmt Free: 300DM/0D Foot: 0D/ 0D VJ RSeq: 10 Clr: 0
DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;51
KRAFT FOODS-FSC CERTIFIED-10K/AR Proj: P1102CHI06 Job: 06CHI1135 File: EA1135A.;8
Merrill Corporation/Chicago (312) 786-6300 Page Dim: 8.250 X 10.750Copy Dim: 38. X 54.3
The Company’s estimated future benefit payments for its postretirement health care plans at
December 31, 2005, were as follows:
U.S. Plans Canadian Plans
(in millions)
2006 .................................................. $ 201 $ 7
2007 .................................................. 208 7
2008 .................................................. 208 8
2009 .................................................. 208 8
2010 .................................................. 206 8
2011-2015 .............................................. 1,031 48
Postemployment Benefit Plans
Kraft and certain of its affiliates sponsor postemployment benefit plans covering substantially all
salaried and certain hourly employees. The cost of these plans is charged to expense over the working
life of the covered employees. Net postemployment costs consisted of the following for the years ended
December 31, 2005, 2004 and 2003:
2005 2004 2003
(in millions)
Service cost ................................................ $ 7 $ 7 $ 10
Amortization of unrecognized net gains ............................ (7) (7) (5)
Other expense .............................................. 139 167 1
Net postemployment costs ................................... $139 $167 $ 6
As previously discussed in Note 3. Asset Impairment, Exit and Implementation Costs, the Company
announced several workforce reduction programs during 2005 and 2004 as part of the overall
restructuring program. The cost of these programs, $139 million and $167 million in 2005 and 2004,
respectively, is included in other expense, above.
The Company’s postemployment plans are not funded. The changes in the benefit obligations of
the plans at December 31, 2005 and 2004, were as follows:
2005 2004
(in millions)
Accumulated benefit obligation at January 1 ............................. $252 $241
Service cost .................................................. 7 7
Restructuring program ........................................... 139 167
Benefits paid .................................................. (158) (135)
Actuarial losses (gains) .......................................... 14 (28)
Accumulated benefit obligation at December 31 .......................... 254 252
Unrecognized experience gains .................................... 46 74
Accrued postemployment costs ...................................... $300 $326
The accumulated benefit obligation was determined using an assumed ultimate annual turnover
rate of 0.3% in 2005 and 2004, assumed compensation cost increases of 4.0% in 2005 and 2004, and
assumed benefits as defined in the respective plans. Postemployment costs arising from actions that
offer employees benefits in excess of those specified in the respective plans are charged to expense
when incurred.
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6 C Cs: 28271