Kraft 2009 Annual Report Download - page 224

Severance 125 560
Benefits paid (215) (280)
Assumption changes 26 12
Actuarial gains (7) (2)
Currency 41 (15)
Other - 18
Accrued postemployment costs at December 31 $ 546 $ 560
The accrued benefit obligation was determined using a weighted-average discount rate of 6.5% in 2009 and 7.1% in 2008, an
assumed ultimate annual turnover rate of 0.5% in 2009 and 2008, assumed compensation cost increases of 4.0% in 2009 and
2008, 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.
Components of Net Postemployment Costs:
Net postemployment costs consisted of the following for the years ended December 31, 2009, 2008 and 2007:
2009 2008 2007
(in millions)
Service cost $ 8 $ 6 $ 4
Interest cost 8 7 6
Amortization of net (gains) / losses 2 (2) (2)
Other expense 125 560 132
Net postemployment costs $ 143 $ 571 $ 140
The following costs are included within other expense above:
• we incurred severance charges of $32 million related to our Kraft Foods Europe Reorganization and $170 million related
to other Cost Savings Initiatives in 2009;
• we reversed $77 million in severance charges in 2009 related to our Restructuring Program, as discussed in Note 6,
Restructuring Costs; and
• we incurred severance charges of $560 million in 2008 and $132 million in 2007 related to workforce reduction initiatives
announced under the Restructuring Program.
As of December 31, 2009, the estimated net loss for the postemployment benefit plans that we expected to amortize from
accumulated other comprehensive earnings / (losses) into net postemployment costs during 2010 was insignificant.
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠