HBI » Topics » (9) Postretirement Healthcare and Life Insurance Plans

This excerpt taken from the HBI 10-Q filed May 14, 2007.
(9)  Postretirement Healthcare and Life Insurance Plans
 
Prior to the spin off from Sara Lee on September 5, 2006, employees who met certain eligibility requirements participated in post-retirement healthcare and life insurance sponsored by Sara Lee. The annual cost of the Sara Lee defined benefit plans was allocated from Sara Lee to all of the participating businesses based upon a specific actuarial computation which was followed consistently. In connection with the spin off on September 5, 2006, the Company assumed Sara Lee’s obligations under the Sara Lee postretirement plans. The obligations and costs related to all of these plans are included in the Company’s Condensed Consolidated Financial Statements as of March 31, 2007.
 
In December 2006, the Company changed the postretirement plan benefits to (a) pass along a higher share of retiree medical costs to all retirees effective February 1, 2007, (b) eliminate company contributions toward premiums for retiree medical coverage effective December 1, 2007, (c) eliminate retiree medical coverage options for all current and future retirees age 65 and older and (d) eliminate future postretirement life benefits. Gains associated with these amendments are currently being amortized and the Company expects to record a final gain on curtailment of plan benefits of approximately $36,000 in December 2007.
 
The postretirement plan expense (income) incurred by the Company for these postretirement plans is as follows:
 
                 
    Quarter Ended  
    March 31,
    April 1,
 
    2007     2006  
 
Participation in Sara Lee sponsored postretirement healthcare and life insurance plans
  $     $ 1,474  
Hanesbrands postretirement healthcare and life insurance plans
    (1,456 )      
                 
    $ (1,456 )   $ 1,474  
                 


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HANESBRANDS

Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)

For the first quarter ended March 31, 2007, the components of the Company’s postretirement plans net periodic benefit income were as follows:
 
         
Service cost
  $ 78  
Interest cost
    224  
Expected return on assets
    (2 )
Amortization of:
       
Transition obligation
    (2 )
Prior service cost
    (2,013 )
Net actuarial loss
    259  
         
Net periodic benefit income
  $ (1,456 )
         
 
This excerpt taken from the HBI 10-Q filed Nov 13, 2006.
(9)  Postretirement Healthcare and Life Insurance Plans
 
Prior to the spin off from Sara Lee on September 5, 2006, employees who met certain eligibility requirements participated in post-retirement healthcare and life insurance sponsored by Sara Lee. These plans included employees from a number of domestic Sara Lee business units. All obligations pursuant to these plans have historically been obligations of Sara Lee and as such, were not included on the Company’s historical Condensed Combined and Consolidated Balance Sheets, prior to September 5, 2006. The annual cost


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HANESBRANDS
 
Notes to Condensed Combined and Consolidated Financial Statements — (Continued)
(unaudited)
(dollars and shares in thousands, except per share data)

of the Sara Lee defined benefit plans was allocated to all of the participating businesses based upon a specific actuarial computation which was followed consistently.
 
In connection with the spin off on September 5, 2006, the Company assumed Sara Lee’s obligations under the Sara Lee postretirement plans. The obligations and costs related to all of these plans are included in the Company’s Condensed Combined and Consolidated Financial Statements as of September 30, 2006.
 
The postretirement plan expense incurred by the Company for these postretirement plans is as follows:
 
                 
    Quarter Ended  
    September 30,
    October 1,
 
    2006     2005  
 
Participation in Sara Lee sponsored postretirement health care and life insurance plans
  $ 214     $ 2,203  
Participation in Hanesbrands sponsored postretirement health care and life insurance plans(1)
    37        
                 
    $ 251     $ 2,203  
                 
 
 
(1) Represents the postretirement benefit expense for the period from September 5, 2006 through September 30, 2006.
 
At September 30, 2006 the Company reported a liability of $74,111 in the “Other noncurrent liabilities” line of the Condensed Combined and Consolidated Balance Sheet.
 
Measurement Date and Assumptions
 
Historically, a March 31 measurement date was used to value plan assets and obligations for the Company’s defined benefit pension plans. In connection with the spin off on September 5, 2006, a measurement date of September 5, 2006 was used to value plan assets and obligations reported for the postretirement healthcare and life insurance plans. The weighted average actuarial assumptions used in measuring the net periodic benefit cost and plan obligations for these plans at the measurement date were as follows: discount rate of 5.82% for plan obligations and net periodic benefit cost; and long term rate of return on plan assets of 3.70%.
 

EXCERPTS ON THIS PAGE:

10-Q
May 14, 2007
10-Q
Nov 13, 2006
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