Sara Lee 2011 Annual Report Download - page 79

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statements. The amendments did not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendment is retroactively effective for the corporation begin- ning in the first quarter of fiscal 2013. This standard will not have an impact on our consolidated results of operations, financial position or cash flows. Fair Value Measurement and Disclosure
In May 2011, the FASB
issued an update amending the accounting standards for fair value measurement and disclosure, resulting in common principles and requirements under U.S. generally accepted accounting principles (“US GAAP”) and International Financial Reporting Standards (“IFRS”). The amendments change the wording used to describe certain of the US GAAP requirements either to clarify the intent of existing requirements, to change measurement or expand disclo- sure principles or to conform to the wording used in IFRS. The amendments are to be applied prospectively and will be effective beginning with the second quarter of 2012 for the corporation. Early application is not permitted. We do not expect adoption of these amendments to have a significant impact on our consoli- dated results of operations, financial position or cash flows. Forward-Looking Information This document contains certain forward-looking statements, including the anticipated costs and benefits of restructuring, transformation and Project Accelerate actions, access to credit markets and the corporation’s credit ratings, the planned extinguishment of debt, the funding of pension plans, potential payments under guarantees and amounts due under future contractual obligations and commitments, projected capital expenditures, cash tax payments, pension settlement amounts and effective tax rates. In addition, from time to time, in oral statements and written reports, the corporation discusses its expectations regarding the corporation’s future performance by making forward-looking statements preceded by terms such as “expects,” “projects,” “anticipates” or “believes.” These forward-looking state- ments are based on currently available competitive, financial and economic data, as well as management’s views and assumptions regarding future events. Such forward-looking statements are inher- ently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Consequently, the corporation wishes to caution read- ers not to place undue reliance on any forward-looking statements. Among the factors that could cause Sara Lee’s actual results to differ from such forward-looking statements are those described under Item 1A, Risk Factors, in Sara Lee’s most recent Annual Report on Form 10-K and other SEC Filings, as well as factors relating to:
The following information illustrates the sensitivity of the net
periodic benefit cost and projected benefit obligation to a change in the discount rate and return on plan assets. Amounts relating to foreign plans are translated at the spot rate at the close of 2011. The sensitivities reflect the impact of changing one assumption at a time and are specific to base conditions at the end of 2011 and treat the North American fresh bakery and household and body care businesses as discontinued operations. It should be noted that economic factors and conditions often affect multiple assumptions simultaneously and that the effects of changes in assumptions are not necessarily linear.
Increase/(Decrease) in
2011
2012 Projected
Net Periodic Benefit
Assumption Change Benefit Cost Obligation Discount rate 1% increase $(10) $(547) 1% decrease 31 624 Asset return 1% increase (45) – 1% decrease 45 –
The corporation’s defined benefit pension plans had a net
unamortized actuarial loss of $715 million in 2011 and $1.032 bil- lion in 2010. The unamortized actuarial loss is reported in the “Accumulated other comprehensive loss” line of the Consolidated Balance Sheet. The decrease in the net actuarial loss in 2011 was pri- marily due to an increase in the weighted average discount rate and actual asset performances in excess of the asset return assumptions.
As indicated above, changes in the bond yields, expected future
returns on assets, and other assumptions can have a material impact upon the funded status and the net periodic benefit cost of defined benefit pension plans. It is reasonably likely that changes in these external factors will result in changes to the assumptions used by the corporation to measure plan obligations and net periodic benefit cost in future periods.
Issued but not yet Effective Accounting Standards Following is a discussion of recently issued accounting standards that the corporation will be required to adopt in a future period.
Comprehensive Income
The Financial Accounting Standards Board
(“FASB”) amended the reporting standards for comprehensive income in June 2011 to eliminate the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. All non-owner changes in stockholders’ equity are required to be presented either in a single continuous statement of comprehensive income or in two separate but consecutive