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The Following pages contain excerpts from a Pension Footnote and an Income Tax Footnote. 1. From the Tax Footnote, answer the following questions: What amount of tax expense is reported in the company's 2019 income statement? a. b. How much of the tax expense is payable, and how much is deferred? C. What is the effective tax rate? d. What factor causes the biggest difference between the statutory and effective tax rates? 2. From the Pension Footnote, answer the following questions: How much Pension Expense does the company report on its 2019 income statement? a b. What is the Actual return on plan assets? c. What is the expected return on plan assets? d. Why is expected return used in the computation of pension expense? e. How much was paid to retirees in 2019? f. How much did the company contribute to the pension plan in 2019? What is the funded status of the pension plan? (State over or under-funded and by how much) h. What amount of asset or liability does the company report on its balance sheet? i. If the company decreases its discount rate, what effect will this have on its balance sheet? j. If the company decreases its discount rate, what effect will this have on its income statement? NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 13 -INCOME TAXES The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017, and includes, among other items, a reduction in the federal corporate income tax rate from 35.0 percent to 21.0 percent effective January 1, 2018. In accordance with FASB ASC 740, for the fiscal year ended May 27, 2018, we remeasured our deferred tax balances to reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. The remeasurement resulted in a $79.3 million one-time adjustment of our net deferred tax liabilities reflected in our consolidated balance sheet as of May 27, 2018 and a corresponding income tax benefit reflected in our consolidated statements of earnings for the fiscal year ended May 27, 2018. The SEC staff issued Staff Accounting Bulletin 118 which allows companies to record provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. In fiscal 2019, we concluded our analysis of the accounting impact of the Tax Act pursuant to SEC Staff Accounting Bulletin 118 and recorded immaterial adjustments to the provisional amounts. Total income tax expense was allocated as follows: Fiscal Year Ended May 26, 2019 $ 63.7 May 27, 2018 1.9 $ (in millions) Earnings from continuing operations Earnings from discontinued operations Total consolidated income tax expense (benefit) May 28, 2017 $ 154.8 (4.2) $ 150.6 (1.8) 61.9 (4.8) (2.9) $ $ The components of earnings from continuing operations before income taxes and the provision for income taxes thereon are as follows: Fiscal Year Ended May 26, 2019 May 27, 2018 May 28, 2017 S S 780.7 1.6 602.7 $ 3.0 605.7 $ 632.3 5.0 S 782.3 S 637.3 S $ in millions) Earnings from continuing operations before income taxes: U.S. Foreign Earnings from continuing operations before income taxes Income taxes: Current: Federal State and local Foreign Total current Deferred (principally U.S.): Federal State and local Total deferred Total income taxes (7.2) S 20.3 1.4 10.2 8.9 160.5 22.2 1.3 1.8 S 14.5 S 20.9 $ 184.0 S 44.9 S 4.3 49.2 (25.1) $ 6.1 (19.0) $ 1.9S (24.1) (5.1) (29.2) 154.8 S $ S 63.7 S The following table is a reconciliation of the U.S. statutory income tax rate to the effective income tax rate from continuing operations included in the accompanying consolidated statements of earnings: 69 May 26, 2019 21.0 % 2.4 Fiscal Year Ended May 27, 2018 29.4 % 1.8 (13.1) (12.8) (5.0) May 28, 2017 35.0 % 1.7 U.S. statutory rate State and local income taxes, net of federal tax benefits Enactment of the Tax Act Benefit of federal income tax credits Other, net Effective income tax rate (10.8) (4.5) 8.1 % (9.2) (3.2) 24.3 % 0.3% Nore: Post-EMPLOYMENT BENEFIT PLANS Pension Plans 2019 2018 (in millions) Changes in Projected Benefit Obligation ("PBO") PBO at beginning of year Service cost Interest cost Actuarial (gain) loss Benefits paid Other... $14.484 521 900 1.875 (468) 60 $11,050 417 823 2,607 (391) (22) PBO at end of year. $17.372 $14.484 Change in Plan Assets Fair value of plan assets at beginning of year Actual return on plan assets Company contributions Benefits paid. Other... Fair value of plan assets at end of year $13,295 2.425 557 (468) 32 $10.812 1.994 900 (391) (20) $15.841 $13,295 Net periodic benefit cost for the three years ended December 31 were as follows (in millions): Pension Plans 2019 2018 2017 (in millions) Service cost interest cost Expected return on plan assets Recognized actuarial (gains) losses and other. Net periodic benefit cost... $ 521 900 (1,062) 184 $417 823 (955) 23 S 499 798 (1.059) (61) $ 543 $308 $ 177 Weighted average actuarial assumptions for our primary U.S. pension plans, which represent sub- stantially all of our PBO are as follows: Pension Plans 2019 2018 2017 5.76% 6.37 7.68 (in millions) Discount rate used to determine benefit obligation Rate of increase in future compensation levels used to determine benefit obligation ..... Expected long-term rate of return on assets 4.58 8.00 4.63 8.00 4.42 8.50 The Following pages contain excerpts from a Pension Footnote and an Income Tax Footnote. 1. From the Tax Footnote, answer the following questions: What amount of tax expense is reported in the company's 2019 income statement? a. b. How much of the tax expense is payable, and how much is deferred? C. What is the effective tax rate? d. What factor causes the biggest difference between the statutory and effective tax rates? 2. From the Pension Footnote, answer the following questions: How much Pension Expense does the company report on its 2019 income statement? a b. What is the Actual return on plan assets? c. What is the expected return on plan assets? d. Why is expected return used in the computation of pension expense? e. How much was paid to retirees in 2019? f. How much did the company contribute to the pension plan in 2019? What is the funded status of the pension plan? (State over or under-funded and by how much) h. What amount of asset or liability does the company report on its balance sheet? i. If the company decreases its discount rate, what effect will this have on its balance sheet? j. If the company decreases its discount rate, what effect will this have on its income statement? NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 13 -INCOME TAXES The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017, and includes, among other items, a reduction in the federal corporate income tax rate from 35.0 percent to 21.0 percent effective January 1, 2018. In accordance with FASB ASC 740, for the fiscal year ended May 27, 2018, we remeasured our deferred tax balances to reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. The remeasurement resulted in a $79.3 million one-time adjustment of our net deferred tax liabilities reflected in our consolidated balance sheet as of May 27, 2018 and a corresponding income tax benefit reflected in our consolidated statements of earnings for the fiscal year ended May 27, 2018. The SEC staff issued Staff Accounting Bulletin 118 which allows companies to record provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. In fiscal 2019, we concluded our analysis of the accounting impact of the Tax Act pursuant to SEC Staff Accounting Bulletin 118 and recorded immaterial adjustments to the provisional amounts. Total income tax expense was allocated as follows: Fiscal Year Ended May 26, 2019 $ 63.7 May 27, 2018 1.9 $ (in millions) Earnings from continuing operations Earnings from discontinued operations Total consolidated income tax expense (benefit) May 28, 2017 $ 154.8 (4.2) $ 150.6 (1.8) 61.9 (4.8) (2.9) $ $ The components of earnings from continuing operations before income taxes and the provision for income taxes thereon are as follows: Fiscal Year Ended May 26, 2019 May 27, 2018 May 28, 2017 S S 780.7 1.6 602.7 $ 3.0 605.7 $ 632.3 5.0 S 782.3 S 637.3 S $ in millions) Earnings from continuing operations before income taxes: U.S. Foreign Earnings from continuing operations before income taxes Income taxes: Current: Federal State and local Foreign Total current Deferred (principally U.S.): Federal State and local Total deferred Total income taxes (7.2) S 20.3 1.4 10.2 8.9 160.5 22.2 1.3 1.8 S 14.5 S 20.9 $ 184.0 S 44.9 S 4.3 49.2 (25.1) $ 6.1 (19.0) $ 1.9S (24.1) (5.1) (29.2) 154.8 S $ S 63.7 S The following table is a reconciliation of the U.S. statutory income tax rate to the effective income tax rate from continuing operations included in the accompanying consolidated statements of earnings: 69 May 26, 2019 21.0 % 2.4 Fiscal Year Ended May 27, 2018 29.4 % 1.8 (13.1) (12.8) (5.0) May 28, 2017 35.0 % 1.7 U.S. statutory rate State and local income taxes, net of federal tax benefits Enactment of the Tax Act Benefit of federal income tax credits Other, net Effective income tax rate (10.8) (4.5) 8.1 % (9.2) (3.2) 24.3 % 0.3% Nore: Post-EMPLOYMENT BENEFIT PLANS Pension Plans 2019 2018 (in millions) Changes in Projected Benefit Obligation ("PBO") PBO at beginning of year Service cost Interest cost Actuarial (gain) loss Benefits paid Other... $14.484 521 900 1.875 (468) 60 $11,050 417 823 2,607 (391) (22) PBO at end of year. $17.372 $14.484 Change in Plan Assets Fair value of plan assets at beginning of year Actual return on plan assets Company contributions Benefits paid. Other... Fair value of plan assets at end of year $13,295 2.425 557 (468) 32 $10.812 1.994 900 (391) (20) $15.841 $13,295 Net periodic benefit cost for the three years ended December 31 were as follows (in millions): Pension Plans 2019 2018 2017 (in millions) Service cost interest cost Expected return on plan assets Recognized actuarial (gains) losses and other. Net periodic benefit cost... $ 521 900 (1,062) 184 $417 823 (955) 23 S 499 798 (1.059) (61) $ 543 $308 $ 177 Weighted average actuarial assumptions for our primary U.S. pension plans, which represent sub- stantially all of our PBO are as follows: Pension Plans 2019 2018 2017 5.76% 6.37 7.68 (in millions) Discount rate used to determine benefit obligation Rate of increase in future compensation levels used to determine benefit obligation ..... Expected long-term rate of return on assets 4.58 8.00 4.63 8.00 4.42 8.50

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