Refer to the financial statements of Quaker Oats

Company in Problem $9-6$ along with the following

footnotes.

SUPPLEMENTARY EXPENSE DATA

$($$ millions$)$ Year $11$ Year $10$ Year $9$

Advertising, media and production $...............................$ $ $277\mathrm{.}5$ $ $282\mathrm{.}8$ $ $256\mathrm{.}5$

Merchandising $..............................................................1,129\mathrm{.}9912\mathrm{.}5886\mathrm{.}2$

Total advertising and merchandising $.......................$ $$1,407\mathrm{.}4$ $$1,195\mathrm{.}3$ $$1,142\mathrm{.}7$

Maintenance and repairs $..............................................$ $ $96\mathrm{.}1$ $ $96\mathrm{.}6$ $ $93\mathrm{.}8$

Depreciation expense $....................................................$ $ $125\mathrm{.}2$ $ $103\mathrm{.}5$ $ $94\mathrm{.}5$

Research and development $...........................................$ $ $44\mathrm{.}3$ $ $43\mathrm{.}3$ $ $39\mathrm{.}3$

INTEREST $($INCOME$)$ EXPENSE

$($$ millions$)$ Year $11$ Year $10$ Year $9$

Total interest expense...................................................... $$101\mathrm{.}9$ $$120\mathrm{.}2$ $ $75\mathrm{.}9$

Total interest income......................................................... $(9\mathrm{.}0)(11\mathrm{.}0)(12\mathrm{.}4)$

Net interest allocated to discontinued operations............. $(6\mathrm{.}7)(7\mathrm{.}4)(7\mathrm{.}1)$

Year $11$ Year $10$ Year $9$

$\%$ of $\%$ of $\%$ of

Pretax Pretax Pretax

$($$ millions$)$ Amount Income Amount Income Amount Income

Tax provision based on the

federal statutory rate $................$ $$139\mathrm{.}934\mathrm{.}0\%$ $$130\mathrm{.}034\mathrm{.}0\%$ $$81\mathrm{.}334\mathrm{.}0\%$

State and local income

taxes, net of federal

income tax benefit...................... $16\mathrm{.}74\mathrm{.}111\mathrm{.}93\mathrm{.}17\mathrm{.}73\mathrm{.}2$

ANC benefit $....................................(1\mathrm{.}7)(\mathrm{.}7)$

Repatriation of foreign earnings $....4\mathrm{.}31\mathrm{.}04\mathrm{.}81\mathrm{.}3(2\mathrm{.}1)(\mathrm{.}9)$

Non$-$U$.$S$.$ tax rate differential.......... $8\mathrm{.}22\mathrm{.}09\mathrm{.}82\mathrm{.}58\mathrm{.}83\mathrm{.}7$

U$.$S$.$ tax credits $...............................(\mathrm{.}2)(\mathrm{.}1)(\mathrm{.}7)(\mathrm{.}3)$

Miscellaneous items$$net $.............6\mathrm{.}81\mathrm{.}6(2\mathrm{.}9)(\mathrm{.}8)(3\mathrm{.}1)(1\mathrm{.}3)$

Actual tax provision $.......................$ $$175\mathrm{.}742\mathrm{.}7\%$ $$153\mathrm{.}540\mathrm{.}1\%$ $$90\mathrm{.}237\mathrm{.}7\%$

OTHER $($INCOME$)$ EXPENSE

$($$ millions$)$ Year $11$ Year $10$ Year $9$

Foreign exchange $($gains$)$ losses$$net$...............................$ $ $(5\mathrm{.}1)$ $ $25\mathrm{.}7$ $ $14\mathrm{.}8$

Amortization of intangibles $................................................22\mathrm{.}422\mathrm{.}218\mathrm{.}2$

Losses $($gains$)$ from plant closings and

operations sold or to be sold$$net $................................8\mathrm{.}8(23\mathrm{.}1)119\mathrm{.}4$

Miscellaneous$$net$...........................................................6\mathrm{.}5(8\mathrm{.}4)(2\mathrm{.}8)$

Net other expense............................................................... $$32\mathrm{.}6$ $ $16\mathrm{.}4$ $$149\mathrm{.}6$

Required:

a$.$ Recast Quaker Oats$$ income statements through Income from Continuing Operations for Years $11,10,$ and $9$

$($estimate federal income tax at $34\%).$

b$.$ Interpret trends revealed by the recasted income statements.