Sara Lee 2009 Annual Report Download - page 82

Notes to financial statements
Dollars in millions except per share data
The funded status of postretirement health-care and life-insurance
plans related to continuing operations at the respective year-ends were:
2009 2008
Accumulated postretirement benefit obligation
Beginning of year $«252 $«279
Service cost 78
Interest cost 13 16
Net benefits paid (21) (19)
Plan participant contributions 3–
Actuarial (gain) loss (9) (39)
Elimination of early measurement date 6–
Plan amendments (84) –
Foreign exchange (3) 7
End of year 164 252
Fair value of plan assets –1
Funded status $(164) $(251)
Amounts recognized on the
consolidated balance sheets
Accrued liabilities $÷(12) $÷(17)
Other liabilities (152) (234)
Total liability recognized $(164) $(251)
Amounts recognized in accumulated
other comprehensive loss
Unamortized prior service credit $(197) $(167)
Unamortized net actuarial loss 25 37
Unamortized net initial asset (7) (9)
Total $(179) $(139)
Expected Benefit Payments and Funding Substantially all
postretirement health-care and life-insurance benefit payments are
made by the corporation. Using foreign exchange rates at June 27,
2009 and expected future service, it is anticipated that the future
benefit payments that will be funded by the corporation will be as
follows: $13 in 2010, $13 in 2011, $13 in 2012, $13 in 2013,
$14 in 2014 and $71 from 2015 to 2019.
The Medicare Part D subsidies received by the corporation have
not been material in any of the past three years.
Note 21 – Income Taxes
The provisions for income taxes on continuing operations computed
by applying the U.S. statutory rate to income from continuing opera-
tions before taxes as reconciled to the actual provisions were:
2009 2008 2007
Income from continuing operations
before income taxes
United States (39.0) % (347.5) % (44.4) %
Foreign 139.0 447.5 144.4
100.0 % 100.0 % 100.0 %
Tax expense at U.S. statutory rate 35.0 % 35.0 % 35.0 %
Tax on remittance of foreign earnings 9.8 74.0 42.4
Finalization of tax reviews and audits and
changes in estimate on tax contingencies (2.7) (59.9) (25.7)
Foreign taxes different than
U.S. statutory rate (9.1) (30.0) (13.4)
Valuation allowances 0.9 (12.2) 6.1
Benefit of foreign tax credits (2.7) (14.5) (7.2)
Contingent sale proceeds (9.0) (28.6) (9.8)
Tax rate changes (0.1) (0.1) (3.8)
Goodwill impairment 14.4 173.5 7.8
Tax provision adjustments 1.4 (8.5) 3.8
Sale of capital assets – – (35.5)
Other, net 0.2 (3.1) (2.3)
Taxes at effective worldwide tax rates 38.1 % 125.6 % (2.6) %
The tax expense related to continuing operations was $23
higher in 2009 than in 2008 despite a $428 increase in income
from continuing operations before income taxes. The 2009 tax
expense was impacted by $242 of non-deductible impairment charges
compared to $790 in 2008, a reduction in costs associated with
the repatriation of earnings from certain foreign subsidiaries, the
reduction in certain contingent tax obligations after statutes in multi-
ple jurisdictions lapsed, the resolution of certain tax regulatory
examinations and reviews, and changes in estimate.
The tax expense related to continuing operations was $212
higher in 2008 than in 2007 despite a $269 decrease in income
from continuing operations before income taxes. The 2008 tax
expense was impacted by $790 of non-deductible impairment charges,
a reduction in costs associated with the repatriation of earnings
from certain foreign subsidiaries, the reduction in certain contingent
tax obligations after statutes in multiple jurisdictions lapsed, and
the resolution of certain tax regulatory examinations and reviews.
80 Sara Lee Corporation and Subsidiaries