Hanesbrands (HBI)

 

Prior to the spin off on September 5, 2006, certain eligible employees of the Company participated in the defined benefit pension plans and the postretirement health-care and life insurance plans of Sara Lee. In connection with the spin off, we assumed approximately $299 million in obligations under the Sara Lee sponsored pension and post-retirement plans and the Sara Lee Corporation Supplemental Executive Retirement Plan that related to our current and former employees. The amount of the net liability actually assumed was evaluated in a manner specified by ERISA and will be finalized and certified by plan actuaries several months after the completion of the spin off. Benefits under the pension and postretirement benefit plans are generally based on age at retirement and years of service and for some pension plans, benefits are also based on the employee’s annual earnings. The net periodic cost of the pension and post-retirement plans is determined using the projections and actuarial assumptions, the most significant of which are the discount rate, the long-term rate of asset return, and medical trend (rate of growth for medical costs). The net periodic pension and postretirement income or expense is recognized in the year incurred. Gains and losses, which occur when actual experience differs from actuarial assumptions, are amortized over the average future service period of employees.