Kraft 2009 Annual Report Download - page 91
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Postretirement Benefit Plans
Obligations:
Our postretirement health care plans are not funded. The changes in the accrued benefit obligation and net amount accrued at December 31,
2009 and 2008 were:
2009 2008
(in millions)
Accrued postretirement benefit
obligation at January 1 $ 2,899 $ 3,063
Service cost 35 44
Interest cost 174 183
Benefits paid (210) (206)
Plan amendments - (84)
Currency 25 (30)
Assumption changes 157 (28)
Actuarial gains (48) (43)
Accrued postretirement health care costs
at December 31 $ 3,032 $ 2,899
The current portion of our accrued postretirement health care costs of $216 million at December 31, 2009 and $221 million at December 31, 2008
was included in other accrued liabilities.
We used the following weighted-average assumptions to determine our postretirement benefit obligations at December 31:
U.S. Plans Canadian Plans
2009 2008 2009 2008
Discount rate 5.70% 6.10% 5.25% 7.60%
Health care cost trend rate assumed
for next year 7.00% 7.00% 9.00% 9.00%
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%)
88
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠