Sara Lee 2010 Annual Report Download - page 71

Note 8 – Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income
are as follows:
Net Unrealized
Gain (Loss) Pension/
on Qualifying Post- Accumulated
Cumulative Cash Flow retirement Other
Translation Hedges Liability Comprehensive
In millions Adjustment and Other Adjustment Income (Loss)
Balance at June 30, 2007 $(147) $«(4) $(603) $(754)
Goodwill Redenomination 106 – – 106
Disposition of Mexican
Meat business 31 – – 31
Amortization of net actuarial
loss and prior service credit – – 27 27
Net actuarial gain arising
during the period – – 190 190
Other comprehensive
income (loss) activity 549 25 (25) 549
Balance at June 28, 2008 539 21 (411) 149
Measurement date adjustment ––3 3
Amortization of net actuarial
loss and prior service credit ––1 1
Net actuarial loss arising
during the period – – (299) (299)
Postretirement plan
amendments – – 55 55
Other comprehensive
income (loss) activity (561) (32) 79 (514)
Balance at June 27, 2009 (22) (11) (572) (605)
Disposition of Godrej J.V. 14 – – 14
Amortization of net actuarial
loss and prior service credit – – 19 19
Net actuarial loss arising
during the period – – (323) (323)
Pension plan curtailment – – 27 27
Pension and postretirement
plan amendments – – (4) (4)
Other comprehensive
income (loss) activity (96) 10 46 (40)
Balance at July 3, 2010 $(104) $«(1) $(807) $(912)
Note 9 – Stock-Based Compensation
The corporation has various stock option, employee stock purchase
and stock award plans. At July 3, 2010, 103.5 million shares were
available for future grant in the form of options, restricted shares
or stock appreciation rights out of 118.7 million shares originally
authorized. The corporation will satisfy the requirement for common
stock for share-based payments by issuing shares out of authorized
but unissued common stock.
Stock Options The exercise price of each stock option equals the
market price of the corporation’s stock on the date of grant. Options
can generally be exercised over a maximum term of 10 years. Options
generally cliff vest and expense is recognized on a straightline basis
during the vesting period. The fair value of each option grant is esti-
mated on the date of grant using the Black-Scholes option-pricing
model and the following weighted average assumptions:
2010 2009 2008
Weighted average
expected lives 8.0 years 8.0 years 8.0 years
Weighted average
risk-free interest rates 3.03% 3.1% 4.2%
Range of risk-free
interest rates 3.02 – 3.15% 3.1% 4.2%
Weighted average
expected volatility 27.2% 22.1% 24.3%
Range of
expected volatility 27.2 – 27.6% 22.1% 24.3%
Dividend yield 4.4% 3.0% 2.4%
The corporation uses historical volatility for a period of time
that is comparable to the expected life of the option to determine
volatility assumptions.
A summary of the changes in stock options outstanding under
the corporation’s option plans during 2010 is presented below:
Weighted
Weighted Average Aggregate
Average Remaining Intrinsic
Exercise Contractual Value
Shares in thousands Shares Price Term (Years) (in millions)
Options outstanding
at June 27, 2009 27,777 $17.54 3.0 $÷–
Granted 4,132 10.05 – –
Exercised (1,008) 13.22 – –
Canceled/expired (10,865) 18.31 – –
Options outstanding
at July 3, 2010 20,036 $15.79 4.7 $16
Options exercisable
at July 3, 2010 13,121 $17.66 2.7 $÷–
Sara Lee Corporation and Subsidiaries 69