Sara Lee 2008 Annual Report Download - page 65

Sara Lee Corporation and Subsidiaries 63
Note 14 – Credit Facilities
The corporation has a $1.85 billion credit facility that had an
annual fee of 0.08% as of June 28, 2008. This agreement supports
commercial paper borrowings and other financial instruments. This
facility, along with certain other debt instruments, contain a number
of typical debt covenants, including a requirement to maintain an
interest coverage ratio of at least 2.0 to 1.0, which the corporation
is in compliance with. Selected data on the corporation’s short-term
obligations follow:
2008 2007 2006
Maximum month-end borrowings $280 $1,348 $1,928
Average borrowings during the year 56 271 1,648
Year-end borrowings 280 23 1,776
Weighted average interest rate during the year 3.9% 5.2% 4.3%
Weighted average interest rate at year-end 3.1 3.9 5.2
Note 15 – Intangible Assets and Goodwill Intangible Assets
The primary components of the corporation’s intangible assets
reported in continuing operations and the related amortization
expense are as follows:
Accumulated Net Book
Gross Amortization Value
2008
Intangible assets subject to amortization
Trademarks and brand names $÷«864 $331 $÷«533
Customer relationships 440 208 232
Computer software 394 244 150
Other contractual agreements 32 21 11
$1,730 $804 926
Trademarks and brand names
not subject to amortization 95
Net book value of intangible assets $1,021
2007
Intangible assets subject to amortization
Trademarks and brand names $÷«793 $263 $÷«530
Customer relationships 420 165 255
Computer software 338 221 117
Other contractual agreements 28 15 13
$1,579 $664 915
Trademarks and brand names
not subject to amortization 87
Net book value of intangible assets $1,002
The amortization expense reported in continuing operations for
intangible assets subject to amortization was $120 in 2008, $112
in 2007 and $106 in 2006. The estimated amortization expense
for the next five years, assuming no change in the estimated useful
lives of identifiable intangible assets or changes in foreign exchange
rates, is as follows: $120 in 2009, $110 in 2010, $106 in 2011,
$62 in 2012 and $39 in 2013.
During 2008, the corporation recognized impairment charges
of $13 related to certain trademarks that are related to the North
American Retail Meats segment. These charges are more fully
described in Note 3 to the Consolidated Financial Statements,
“Impairment Charges.” In addition, as a result of a proposed sale
of a certain business in the Foodservice segment, trademarks of
$7 were reclassified as net assets held for sale.
During 2007, the corporation recognized impairment charges
of $26 and $16 related to certain trademarks that are used in the
International Beverage and North American Retail Bakery segments,
respectively. These charges are more fully described in Note 3 to
the Consolidated Financial Statements, “Impairment Charges.” In
addition, as a result of the annual impairment review, the corporation
concluded that certain trademarks were no longer indefinite-lived
and amortization was initiated. Trademarks of $28 and certain other
intangible assets of $2 were acquired in 2007 in the Household
and Body Care segment.
During 2006, the corporation recognized a $193 impairment
charge related to certain trademarks that are used in the North
American Retail Bakery and International Bakery segments. These
charges are more fully described in Note 3 to the Consolidated
Financial Statements, “Impairment Charges.”
Goodwill In 2008, the corporation determined that the amount of
goodwill attributed to certain reporting units needed to be revised.
Goodwill has been reallocated based upon the relative fair value of
the reporting units that existed at the time the corporation realigned
its business units into new segments during 2006. During 2006
and through the first quarter of 2008, the goodwill allocated to the
International Bakery segment had been denominated in U.S. dol-
lars. In the second quarter of 2008, the corporation determined
that goodwill allocated to its International Bakery segment should
have been denominated in European euros and subject to transla-
tion into the company’s reporting currency from 2006 to present.
While the adjustment related to the reallocation of goodwill had
no impact on the corporation’s total goodwill value, the adjustment
related to the redenomination of goodwill had the impact of increas-
ing the corporation’s total value of goodwill and increasing the total
currency translation adjustment included in the accumulated other
comprehensive income section of stockholders’ equity and other
comprehensive income.
The goodwill redenomination of $106 presented below represents
the cumulative adjustment up to the end of 2007. As the error was
discovered and corrected in the second quarter of 2008, the impact
of this error on the currency translation adjustment in the first
quarter of 2008 was $41, and the cumulative error amount was
$147 through the end of the first quarter of 2008, an amount
which management believes to be immaterial to the consolidated
quarterly and annual financial statements.