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The Company classifies liabilities for unrecognized tax benefits and related interest and penalties as long-term liabilities. Interest expense and penalties related to unrecognized tax benefits are classified as income tax expense. The Company recognized after tax interest of $34 million income, $36 million expense and $69 mil- lion expense in 2010, 2009 and 2008, respectively. The total amount of accrued interest was $264 million and $309 million in 2010 and 2009, respectively. 

## 9. Employee Related Obligations 

At the end of 2010 and 2009, employee related obligations recorded on the Consolidated Balance Sheet were: 

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Prepaid employee related obligations of $615 million and $266 mil- lion for 2010 and 2009, respectively, are included in other assets on the consolidated balance sheet. 

## 10. Pensions and Other Benefit Plans 

The Company sponsors various retirement and pension plans, including defined benefit, defined contribution and termination indemnity plans, which cover most employees worldwide. The Company also provides postretirement benefits, primarily health care, to all U.S. retired employees and their dependents. 

Many international employees are covered by government- sponsored programs and the cost to the Company is not significant. 

Retirement plan benefits are primarily based on the employee’s compensation during the last three to five years before retirement and the number of years of service. International subsidiaries have plans under which funds are deposited with trustees, annuities are purchased under group contracts, or reserves are provided. 

The Company does not fund retiree health care benefits in advance and has the right to modify these plans in the future. 

The Company uses the date of its consolidated financial state- ments (January 2, 2011 and January 3, 2010, respectively) as the measurement date for all U.S. and international retirement and other benefit plans. 

In accordance with U.S. GAAP, the Company has adopted the recent standards related to employers’ accounting for defined benefit pension and other postretirement plans. 

Net periodic benefit costs for the Company’s defined benefit retirement plans and other benefit plans for 2010, 2009 and 2008 include the following components: 

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The net periodic benefit cost attributable to U.S. retirement plans was $294 million, $286 million and $220 million in 2010, 2009 and 2008, respectively. 

