Sara Lee 2008 Annual Report Download - page 59

Non-cancelable
Employee Lease and Asset and
Termination Other Business Transformation
and Other Contractual Disposition Accelerated Costs – IT
In millions Benefits Obligations Actions Depreciation and Other Total
Exit and disposal costs recognized during 2008 $36 $3 $(1) $«1 $«51 $«90
Charges against assets and other non-cash charges – – – (1) (16) (17)
Asset and business disposition gains (losses) ––1––1
Cash payments (7) – – – (33) (40)
Accrued costs as of June 28, 2008 $29 $3 $«– $«– $«««2 $«34
The following table summarizes the employee terminations
by location and business segment.
North North
American American Household
Retail Retail International International and
Number of employees Meats Bakery Foodservice Beverage Bakery Body Care Corporate Total
United States 26632167–––88553
Europe –––123––24
Australia ––––26––26
266 32 167 1 49 – 88 603
As of June 28, 2008
Actions completed 59 25 122 – 27 – 10 243
Actions remaining 207 7 45 1 22 – 78 360
266 32 167 1 49 – 88 603
2007 Actions During 2007, the corporation approved certain actions
related to exit, disposal and transformation activities and recognized
net charges of $251 related to these actions. Each of these actions
was to be completed within a 12-month period after being approved.
During 2008, certain of these actions were completed for amounts
that differed from those originally estimated. A description of these
activities includes the following:
•Implemented a plan to terminate 2,512 employees and provide
them with severance benefits in accordance with benefit plans pre-
viously communicated to the affected employee group or with local
employment laws. The specific location of these employees is sum-
marized in a table contained in this note. Of the 2,512 targeted
employees, 37 have not yet been terminated. A majority of these
actions are expected to be completed by the first quarter of 2009.
•Incurred costs to exit certain leased space and other contractual
obligations, including those costs related to the relocation of the
corporation’s headquarters to Downers Grove, Illinois.
•Recognized a loss related to the decision to abandon certain
capitalized software in the International Beverage segment.
•Recognized net gains associated with the disposal of several
asset groupings, the largest of which was a net $19 gain related
to the disposition of two Household and Body Care facilities offset
by charges related to various disposition costs primarily associated
with the spin off of the Branded Apparel business. Total proceeds
from these disposals were $31.
•Recognized accelerated depreciation primarily on domestic meat
processing facilities and equipment. All of the facilities were closed
by the end of 2007.
•Incurred transformation costs as a result of management’s
decision to centralize the management of its North American and
European operations. Costs were incurred to relocate employees,
recruit new employees, and pay retention bonuses to preserve
business continuity. The corporation also incurred consulting costs
to assist in the development of strategic operating and financial
plans and employee training. Certain information technology costs
were also incurred and related to the implementation of common
information systems across the organization.
The following table summarizes the net charges taken for the exit,
disposal and transformation activities approved during 2007 and the
related status as of June 28, 2008. The accrued amounts remaining
as of the end of 2008 represent those cash expenditures necessary
to satisfy remaining obligations. The majority of the cash payments
to satisfy the accrued costs are expected to be paid in the next year.
The corporation does not anticipate any additional material future
charges related to the 2007 actions.
Sara Lee Corporation and Subsidiaries 57