Sara Lee 2009 Annual Report Download - page 79

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The net periodic benefit cost of the corporation’s defined benefit
pension plans in 2008 was $34 lower than in 2007. The decline
was primarily due to a $28 reduction in amortization of net actuar-
ial losses due to net actuarial gains in the prior year, which reduced
the amount subject to amortization; and a $6 reduction in service
cost due to headcount reductions versus the prior year.
The funded status of defined benefit pension plans at the
respective year-ends was as follows:
2009 2008
Projected benefit obligation
Beginning of year $4,744 $4,926
Service cost 66 91
Interest cost 257 267
Plan amendments 26
Benefits paid (225) (241)
Elimination of early measurement date 32 –
Participant contributions 33
Actuarial (gain) loss (179) (476)
Settlement/curtailment (2) (87)
Foreign exchange (480) 255
End of year 4,218 4,744
Fair value of plan assets
Beginning of year 4,423 4,346
Actual return on plan assets (315) (27)
Employer contributions 306 175
Participant contributions 33
Benefits paid (225) (241)
Settlement (3) (88)
Elimination of early measurement date 22 –
Hanesbrands spin off adjustment –(3))
Foreign exchange (459) 258
End of year 3,752 4,423
Funded status $÷(466) $÷(321)
Amounts recognized on the
consolidated balance sheets
Noncurrent asset $÷«133 $÷÷«93
Accrued liabilities (4) (9)
Pension obligation (595) (405)
Net liability recognized $÷(466) $÷(321)
Amounts recognized in accumulated
other comprehensive income
Unamortized prior service cost $÷÷«74 $÷÷«93
Unamortized actuarial loss, net 883 570
Total $÷«957 $÷«663
The underfunded status of the plans increased from $321
in 2008 to $466 in 2009, due to a $671 decline in plan assets
which was only partially offset by a $526 reduction in the projected
benefit obligation. The decline in plan assets was the result of losses
incurred during the year and the negative impact of changes in for-
eign currency exchange rates, partially offset by a $131 increase
in employer contributions. The decline in the projected benefit obli-
gation was due to changes in foreign currency exchange rates and
$179 of actuarial gains resulting from, in part, an increase in the
discount rate.
The accumulated benefit obligation is the present value of pension
benefits (whether vested or unvested) attributed to employee service
rendered before the measurement date and based on employee
service and compensation prior to that date. The accumulated ben-
efit obligation differs from the projected benefit obligation in that
it includes no assumption about future compensation levels. The
accumulated benefit obligations of the corporation’s pension plans
as of the measurement dates in 2009 and 2008 were $4,089 and
$4,543, respectively. The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for pension plans
with accumulated benefit obligations in excess of plan assets were:
2009 2008
Projected benefit obligation $2,878 $3,009
Accumulated benefit obligation 2,809 2,945
Fair value of plan assets 2,283 2,603
Plan Assets, Expected Benefit Payments and Funding The allocation
of pension plan assets as of the respective year-end measurement
dates is as follows:
2009 2008
Asset category
Equity securities 24% 40%
Debt securities 63 46
Real estate 32
Cash and other 10 12
Total 100% 100%
Sara Lee Corporation and Subsidiaries 77