Sara Lee 2008 Annual Report Download - page 55

third-party offers received for the business and involved a number
of judgments including estimates of the fair value of the property
and amortizable intangible assets of the business. As a result of the
evaluation, the corporation recognized a $125 goodwill impairment
charge with no tax benefit. In June 2006, the corporation entered
into a definitive agreement to sell this business to Smithfield Foods,
and in August 2006, the transaction closed.
Note 4 – Discontinued Operations
In 2008, the corporation disposed of its Mexican meats operations. At
the end of 2007, as part of the corporation’s transformation plan, eight
businesses have been disposed of. The results of these businesses
have been reported as discontinued operations. The amounts in the
tables below reflect the operating results of the businesses reported
as discontinued operations. The impact of the impairments discussed
in Note 3 to the Consolidated Financial Statements, “Impairment
Charges”, is included in these operating results. Gains and losses
related to the disposal of these discontinued operations are excluded
from the following tables; however, they are discussed further below.
Pretax
Income Income
Net Sales (Loss) (Loss)
2008
European Branded Apparel $«««««««– $««(15) $««(15)
Mexican Meats 23811
Total $÷«238 $««(14) $««(14)
2007
European Meats $«««114 $«««««7 $«««««3
Branded Apparel Americas/Asia 787 85 59
Mexican Meats 296 (10) (14)
Total $1,197 $«««82 $«««48
2006
Direct Selling $«««202 $«««14 $«««54
U.S. Retail Coffee 122 (46) (39)
European Branded Apparel 641 (186) (153)
European Nuts and Snacks 5483
U.K. Apparel 437 (69) (71)
U.S. Meat Snacks 25 (14) (9)
European Meats 1,114 (57) (41)
Branded Apparel Americas/Asia 4,484 491 379
Mexican Meats 2853–
Total $7,364 $«144 $«123
Results of Discontinued Operations Net sales of discontinued
operations were $238 in 2008, $1,197 in 2007 and $7,364 in 2006;
a full year of results for the Mexican meats business was not included
in 2008 as the business was sold in the third quarter of 2008; and
a full year of results for the European Meats and Branded Apparel
Americas/Asia businesses was not included in 2007 as each of the
businesses was sold in the first quarter of that fiscal year. The 2006
results also did not include a full year of results as the corporation
completed the sale of the remaining discontinued operations during
that year.
The corporation reported income (loss) from discontinued
operations of $(14) in 2008, $48 in 2007 and $123 in 2006. In
2008, the corporation recognized a $15 charge related to the settle-
ment of a pension plan in the U.K. associated with the European
Branded Apparel business, which was sold in 2006. The corporation
recognized after tax impairment charges of $338 in 2006, which
reduced income from discontinued operations and are more fully
described in Note 3 to the Consolidated Financial Statements,
“Impairment Charges.”
Gain (Loss) on the Sale of Discontinued Operations The gains
(losses) recognized in 2008, 2007 and 2006 are summarized in the
following tables. A further discussion of each disposition follows.
Pretax Tax
Gain (Loss) (Charge)/ After Tax
on Sale Benefit Gain (Loss)
2008
Mexican Meats $«(23) $««««(1) $«(24)
2007
European Meats $««18 $««««(1) $««17
Branded Apparel Americas/Asia (23) 6 (17)
Philippines portion of European
Branded Apparel 8(2) 6
Other 2810
Total $««««5 $«««11 $««16
2006
Direct Selling $327 $(107) $220
U.S. Retail Coffee 5(2) 3
European Branded Apparel 45 41 86
European Nuts and Snacks 66 4 70
U.K. Apparel 22 – 22
U.S. Meat Snacks 1(1) –
Total $466 $««(65) $401
Business Sold in 2008
Mexican Meats In March 2008, the corporation completed the
disposition of its investment in its Mexican meats operation as it
wanted to more closely focus on its core brands in the U.S. The
corporation recognized a pretax loss of $23 and an after tax loss
of $24. A total of $55 million of cash proceeds was received from
the disposition of the business. The Mexican meats operation had
been reported in the North American Retail Meats segment.
Businesses Sold in 2007
European Meats In June 2006, the corporation entered into a
definitive agreement to sell its European Meats business. The
transaction closed in August 2006 after receiving European regulatory
approval and the corporation recognized a pretax and after tax gain
of $18 and $17, respectively. The capital gain related to this transac-
tion was offset by capital losses on other disposition transactions.
A total of $337 of cash proceeds was received from the disposition
of the business and an additional $238 was received from the
repayment of an obligation to the corporation, which was included
in the net assets sold.
The sale agreement provided for working capital and other
customary postclosing adjustments relating to the assets transferred.
The final resolution of these items may impact the gain recognized.
The corporation has not had any significant continuing involvement
in the business after the disposal date and does not expect any
material direct cash inflows or outflows with the sold entity.
Sara Lee Corporation and Subsidiaries 53