Kraft 2009 Annual Report Download - page 77

Restructuring Costs:
Under the Restructuring Program, we recorded asset impairment and exit costs of $884 million during 2008 and $332 million during 2007.
Restructuring liability activity for the years ended December 31, 2009 and 2008 was:
Severance
Asset
Write-downs Other Total
(in millions)
Liability balance, January 1, 2008 $ 154 $ - $ 16 $ 170
Charges 590 195 99 884
Cash (spent) / received (255) 33 (71) (293)
Charges against assets (30) (214) 2 (242)
Currency (15) (14) (1) (30)
Liability balance, December 31, 2008 444 - 45 489
Reversal of charges (77) (4) (4) (85)
Cash (spent) / received (162) 1 (15) (176)
Currency 40 3 (1) 42
Liability balance, December 31, 2009 $ 245 $ - $ 25 $ 270
Our 2009 activity was related to the aforementioned reversal of $85 million and cash outflows on prior year Restructuring Program charges. Our
prior year severance charges included the cost of benefits received by terminated employees. Severance charges against assets primarily related
to incremental pension costs, which reduced prepaid pension assets. Asset impairment write-downs were caused by plant closings and related
activity. Cash received on asset write-downs reflected the higher than anticipated net proceeds from the sales of assets previously written-down
under the Restructuring Program. Other prior year costs related primarily to the renegotiation of supplier contract costs, workforce reductions
associated with facility closings and the termination of leasing agreements.
Implementation Costs:
Implementation costs were directly attributable to exit and disposal costs; however, they did not qualify for special accounting treatment as exit or
disposal activities. These costs primarily included the discontinuance of certain product lines, incremental expenses related to the closure of
facilities and the reorganization of our European operations discussed above. Management believes the disclosure of implementation charges
provides readers of our financial statements greater transparency to the total costs of our Restructuring Program.
Implementation costs associated with the Restructuring Program were:
2008 2007
(in millions)
Cost of sales $ 38 $ 67
Marketing, administration and
research costs 67 60
Total implementation costs $ 105 $ 127
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Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠