Kraft 2009 Annual Report Download - page 223

for next year
Ultimate trend
rate 5.00% 5.00% 6.00% 6.00%
Year that the
rate reaches
the ultimate
trend rate 2014 2014 2016 2015
Year-end discount rates for our U.S. and Canadian plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected
future cash flows of the benefit obligations. Changes in our U.S. and Canadian discount rates were primarily the result of changes in bond yields year-over-year. Our expected health
care cost trend rate is based on historical costs.
Assumed health care cost trend rates have a significant impact on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend
rates would have the following effects as of December 31, 2009:
One-Percentage-Point
Increase Decrease
Effect on total of
service and
interest cost 12.3% (10.2%)
Effect on
postretirement
benefit
obligation 9.8% (8.3%)
Components of Net Postretirement Health Care Costs:
Net postretirement health care costs consisted of the following for the years ended December 31, 2009, 2008 and 2007:
2009 2008 2007
(in millions)
Service cost $ 35 $ 44 $ 46
Interest cost 174 183 177
Amortization:
Net loss from experience
differences 44 55 58
Prior service credit (32) (28) (26)
Other expense - - 5
Net postretirement health care
costs $ 221 $ 254 $ 260
As of December 31, 2009, we expected to amortize from accumulated other comprehensive earnings / (losses) into net
postretirement health care costs during 2010:
• an estimated $50 million of net loss from experience differences; and
• an estimated $31 million of prior service credit.
We used the following weighted-average assumptions to determine our net postretirement cost for the years ended December 31:
U.S. Plans Canadian Plans
2009 2008 2007 2009 2008 2007
Discount rate 6.10% 6.10% 5.90% 7.60% 5.80% 5.00%
Health care cost trend rate 7.00% 7.50% 8.00% 9.00% 9.00% 8.50%
Future Benefit Payments:
Our estimated future benefit payments for our postretirement health care plans at December 31, 2009 were:
U.S. Plans
Canadian
Plans
(in millions)
2010 $ 206 $ 10
2011 209 10
2012 208 10
2013 208 11
2014 207 11
2015-2019 1,026 62
Other Costs:
We made contributions to multiemployer medical plans totaling $35 million in 2009, $33 million in 2008 and $33 million in 2007.
Postemployment Benefit Plans
Obligations:
Our postemployment plans are not funded. The changes in the benefit obligations of the plans and net amount accrued at
December 31, 2009 and 2008 were:
2009 2008
(in millions)
Accrued benefit obligation at January 1 $ 560 $ 254
Service cost 8 6
Interest cost 8 7
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠