In Its 2009 Annual Report to Shareholders, the Marianne James

question 132

Essay

In its 2009 annual report to shareholders, the Marianne James Companies Inc. (MJCI) disclosed the following information, regarding its postemployment benefit plans.
The Company and certain of its affiliates sponsor postemployment benefit plans covering substantially all salaried and certain hourly employees. The cost of these plans is charged to expense over the working life of the covered employees. Net postemployment costs consisted of the following for the years ended December 31, 2009, 2008 and 2007:
The company instituted workforce reduction programs in its North American food operations in 2007. These actions resulted in incremental postemployment costs, which are shown as other expense above.
Required:
Describe the three components in the net postemployment costs disclosed by MJCI.
(in millions)
$\begin{array}{lrrr} & \mathbf{2 0 0 9} & \mathbf{2 0 0 8} & \mathbf{2 0 0 7} \\\text { Service cost } & \$ 34 & \$ 26 & \$ 24 \\\text { Amortization of net loss } & 8 & 6 & 2 \\\text { Other expense } & -- & -- & 161 \\\text { Net postemployment costs }&\$42&\$32&\$187\end{array}$