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This excerpt taken from the HBI 10-Q filed Nov 5, 2007. Significant
Accounting Policies and Critical Estimates
We have chosen accounting policies that we believe are
appropriate to accurately and fairly report our operating
results and financial position in conformity with accounting
principles generally accepted in the United States. We apply
these accounting policies in a consistent manner. Our
significant accounting policies are discussed in Note 2,
titled “Summary of Significant Accounting Policies,”
to our Combined and Consolidated Financial Statements included
in our Report on
Form 10-KT
for the six months ended December 30, 2006.
The application of these accounting policies requires that we
make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses, and related
disclosures. These estimates and assumptions are based on
historical and other factors believed to be reasonable under the
circumstances. We evaluate these estimates and assumptions on an
ongoing basis and may retain outside consultants to assist in
our evaluation. If actual results ultimately differ from
previous estimates, the revisions are included in results of
operations in the period in which the actual amounts become
known. The accounting policies that involve the most significant
management judgments and estimates used in preparation of our
consolidated financial statements, or are the most sensitive to
change from outside factors, are discussed in Management’s
Discussion and Analysis of Financial Condition and Results of
Operations in our Report on
Form 10-KT
for the six months ended December 30, 2006. There have been
no material changes during the nine months ended
September 29, 2007 in these policies except as follows:
Goodwill
During the third quarter of fiscal 2007, we changed the timing
of our annual goodwill impairment testing to the first day of
the third fiscal quarter. Prior to fiscal 2007, our policy was
to perform the test at the end of the second fiscal quarter
which coincided with Sara Lee’s policy before the spin off.
The change in the annual goodwill impairment testing date was
made following the change in our fiscal year-end from the
Saturday closest to June 30 to the Saturday closest to December
31 and results in the testing continuing to be performed in the
middle of our fiscal year. In addition, this accounting change
better aligns the annual goodwill impairment test with the
timing of our annual long range planning cycle. The change in
accounting principle does not delay, accelerate or avoid an
impairment charge. Accordingly, we believe that the accounting
change described above is preferable under the circumstances.
Income
Taxes
In July 2006, the Financial Accounting Standards Board
(“FASB”) issued Interpretation 48, Accounting for
Uncertainty in Income Taxes (“FIN 48”), which
became effective during the first quarter ended March 31,
2007. FIN 48 addresses the determination of how tax
benefits claimed or expected to be claimed on a tax return
should be recorded in the financial statements. Under
FIN 48, a company must recognize the tax benefit from an
uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The
tax benefits
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recognized in the financial statements from such a position are
measured based on the largest benefit that has a greater than
fifty percent likelihood of being realized upon ultimate
resolution. The impact of the reassessment of our tax positions
in accordance with FIN 48 did not have a material impact on
our results of operations, financial condition or liquidity.
For additional information regarding the adoption of
FIN 48, see Note 5, Income Taxes. For further
discussion of our critical accounting estimates related to
income taxes, see our Report on
Form 10-KT
for the six months ended December 30, 2006.
This excerpt taken from the HBI 10-Q filed Aug 3, 2007. Significant
Accounting Policies and Critical Estimates
We have chosen accounting policies that we believe are
appropriate to accurately and fairly report our operating
results and financial position in conformity with accounting
principles generally accepted in the United States. We apply
these accounting policies in a consistent manner. Our
significant accounting policies are discussed in Note 2,
titled “Summary of Significant Accounting Policies,”
to our Combined and Consolidated Financial Statements included
in our Report on
Form 10-KT
for the six months ended December 30, 2006.
The application of these accounting policies requires that we
make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses, and related
disclosures. These estimates and assumptions are based on
historical and other factors believed to be reasonable under the
circumstances. We evaluate these estimates and assumptions on an
ongoing basis and may retain outside consultants to assist in
our evaluation. If actual results ultimately differ from
previous estimates, the revisions are included in results of
operations in the period in which the actual amounts become
known. The accounting policies that involve the most significant
management judgments and estimates used in preparation of our
consolidated financial statements, or are the most sensitive to
change from outside factors, are discussed in Management’s
Discussion and Analysis of Financial Condition and Results of
Operations in our Report on
Form 10-KT
for the six months ended December 30, 2006. There have been
no material changes during the six months ended June 30,
2007 in these policies except as follows:
Income
Taxes
In July 2006, the Financial Accounting Standards Board
(“FASB”) issued Interpretation 48, Accounting for
Uncertainty in Income Taxes (“FIN 48”), which
became effective during the first quarter ended March 31,
2007. FIN 48 addresses the determination of how tax
benefits claimed or expected to be claimed on a tax return
should be recorded in the financial statements. Under
FIN 48, a company must recognize the tax benefit from an
uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The
tax benefits recognized in the financial statements from such a
position are measured based on the largest benefit that has a
greater than fifty percent likelihood of being realized upon
ultimate resolution. The impact of the reassessment of our tax
positions in accordance with FIN 48 did not have an impact
on our results of operations, financial condition or liquidity.
For additional information regarding the adoption of
FIN 48, see Note 5, Income Taxes. For further
discussion of our critical accounting estimates related to
income taxes, see our Report on
Form 10-KT
for the six months ended December 30, 2006.
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This excerpt taken from the HBI 10-Q filed May 14, 2007. Significant
Accounting Policies and Critical Estimates
We have chosen accounting policies that we believe are
appropriate to accurately and fairly report our operating
results and financial position in conformity with accounting
principles generally accepted in the United States. We apply
these accounting policies in a consistent manner. Our
significant accounting policies are discussed in Note 2,
titled “Summary of Significant Accounting Policies,”
to our Combined and Consolidated Financial Statements included
in our Report on
Form 10-KT
for the six months ended December 30, 2006.
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The application of these accounting policies requires that we
make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses, and related
disclosures. These estimates and assumptions are based on
historical and other factors believed to be reasonable under the
circumstances. We evaluate these estimates and assumptions on an
ongoing basis and may retain outside consultants to assist in
our evaluation. If actual results ultimately differ from
previous estimates, the revisions are included in results of
operations in the period in which the actual amounts become
known. The accounting policies that involve the most significant
management judgments and estimates used in preparation of our
consolidated financial statements, or are the most sensitive to
change from outside factors, are discussed in Management’s
Discussion and Analysis of Financial Condition and Results of
Operations in our Report on
Form 10-KT
for the six months ended December 30, 2006. There have been
no material changes during the first quarter ended
March 31, 2007 in these policies except as follows:
Income
Taxes
In July 2006, the FASB issued Interpretation 48, Accounting
for Uncertainty in Income Taxes (“FIN 48”),
which became effective during the first quarter ended
March 31, 2007. FIN 48 addresses the determination of
how tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under
FIN 48, a company must recognize the tax benefit from an
uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The
tax benefits recognized in the financial statements from such a
position are measured based on the largest benefit that has a
greater than fifty percent likelihood of being realized upon
ultimate resolution. The impact of the reassessment of our tax
positions in accordance with FIN 48 did not have an impact
on our results of operations, financial condition or liquidity.
For additional information regarding the adoption of
FIN 48, see Note 5, Income Taxes. For further
discussion of our critical accounting estimates related to
income taxes, see our Report on
Form 10-KT
for the six months ended December 30, 2006.
This excerpt taken from the HBI 10-Q filed Nov 13, 2006. Significant
Accounting Policies and Critical Estimates
We have chosen accounting policies that we believe are
appropriate to accurately and fairly report our operating
results and financial position in conformity with accounting
principles generally accepted in the United States. We apply
these accounting policies in a consistent manner. Our
significant accounting policies are discussed in Note 3,
titled “Summary of Significant Accounting Policies,”
to our Combined and Consolidated Financial Statements included
in our Annual Report on
Form 10-K.
The application of these accounting policies requires that we
make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses, and related
disclosures. These estimates and assumptions are based on
historical and other factors believed to be reasonable under the
circumstances. We evaluate these estimates and assumptions on an
ongoing basis and may retain outside consultants to assist in
our evaluation. If actual results ultimately differ from
previous estimates, the revisions are included in results of
operations in the period in which the actual amounts become
known. The accounting policies that involve the most significant
management judgments and estimates used in preparation of our
consolidated financial statements, or are the most sensitive to
change from outside factors, are discussed in Management’s
Discussion and Analysis of Financial Condition and Results of
Operations in our Annual Report on
Form 10-K
for the fiscal year ended July 1, 2006. There have been no
material changes during the quarter ended September 30,
2006 in these policies except for the following:
Insurance
Reserves
Prior to the spin off on September 5, 2006, we were insured
through Sara Lee for property, workers’ compensation, and
other casualty programs, subject to minimum claims thresholds.
Sara Lee charged an amount to cover premium costs to each
operating unit. Subsequent to the spin off on September 5,
2006, we maintain our own insurance coverage for these programs.
We are responsible for losses up to certain limits and are
required to estimate a liability that represents the ultimate
exposure for aggregate losses below those limits. This liability
is based on management’s estimates of the ultimate costs to
be incurred to settle known claims and claims not reported as of
the balance sheet date. The estimated liability is not
discounted and is based on a number of assumptions and factors,
including historical trends, actuarial assumptions, and economic
conditions. If actual trends differ from the estimates, the
financial results could be impacted.
Income
Taxes
Prior to the spin off on September 5, 2006, all income
taxes were computed and reported on a separate return basis as
if we were not part of Sara Lee. Deferred taxes were recognized
for the future tax effects of temporary differences between
financial and income tax reporting using tax rates in effect for
the years in which the differences are expected to reverse. Net
operating loss carry forwards had been determined in our
financial statements as if we were separate from Sara Lee,
resulting in a different net operating loss carry forward amount
than reflected by Sara Lee. Given our continuing losses in
certain geographic locations on a separate return basis, a
valuation reserve had been established for the value of the
deferred tax assets relating to these specific locations.
Federal income taxes are provided on that portion of our income
of foreign subsidiaries that is expected to be remitted to the
United States and be taxable, reflecting the historical
decisions made by Sara Lee with regards to earnings permanently
reinvested in foreign jurisdictions. In periods after the spin
off, we may make different decisions as to the amount of
earnings permanently reinvested in foreign jurisdictions, due to
anticipated cash flow or other business requirements, which may
result in a different federal income tax provision.
In conjunction with the spin off, we and Sara Lee entered into a
Tax Sharing Agreement. This agreement allocates responsibilities
between us and Sara Lee for taxes and certain other tax matters.
Under the Tax Sharing Agreement, Sara Lee generally is liable
for all U.S. federal, state, local and foreign income taxes
attributable to us with respect to taxable periods ending on or
before September 5, 2006. Sara Lee also is liable for
income taxes attributable to us with respect to taxable periods
beginning before September 5, 2006 and ending after
September 5, 2006, but only to the extent those taxes are
allocable to the portion of the
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taxable period ending on September 5, 2006. We are
generally liable for all other taxes attributable to us. Changes
in the amounts payable or receivable by us under the
stipulations of this agreement may impact our tax provision in
any period.
Defined
Benefit Pension and Post Retirement Plans
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.
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