Kraft 2009 Annual Report Download - page 93

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
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.
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Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠