Sara Lee 2009 Annual Report Download - page 36

Financial review
During 2009, the corporation completed the disposition of its
DSD foodservice operations and received $42 million. It also
received 95 million euros or $150 million in contingent proceeds
from the previous sale of the corporation’s tobacco product line.
The increase versus the prior year was due to a change in foreign
currency exchange rates.
During 2008, the corporation completed the disposition of its
meat operations in Mexico and received $55 million. It also
received 95 million euros or $130 million in contingent proceeds
from the previous sale of the corporation’s tobacco product line.
The increase versus the prior year was due to a change in foreign
currency exchange rates.
During 2007, the corporation completed the disposition of
Hanesbrands and the European Meats businesses. The net assets
of businesses disposed of included certain intercompany loans
payable which were paid shortly after the businesses were disposed
of. The corporation received $688 million of cash in total from the
settlement of these notes receivable - $450 million of cash received
was related to the Hanesbrands disposition and $238 million was
related to the European Meats disposition. The corporation also
received $346 million in proceeds primarily related to the disposition
of the European Meats business and received 95 million euros or
$120 million in contingent proceeds from the sale of the corporation’s
tobacco product line.
Cash from Financing Activities The total cash used in financing
activities was $767 million in 2009, $1,811 million in 2008 and
$913 million in 2007. The net cash (used in) received from financing
activities is split between continuing and discontinued operations
as follows:
2009 2008 2007
Cash from (used in) financing activities
Continuing operations $(767) $(1,806) $(857)
Discontinued operations – (5) (56)
Total $(767) $(1,811) $(913)
Significant items impacting the cash used in financing activities
are discussed below.
Purchases of Common Stock The corporation expended $103 million
to repurchase shares of its common stock in 2009 versus $315 million
in 2008 and $686 million in 2007. An ongoing share repurchase
program is in place that allows the repurchase of the corporation’s
common stock at times management deems appropriate, given
current market valuations. During 2009, the corporation repurchased
11.4 million shares of its common stock. At June 27, 2009, the
corporation had approximately 13.5 million shares remaining on its
existing share authorization. The corporation has not determined
the amount of share buybacks, if any, that will be made during 2010.
The corporation will continue to look at any future share buybacks
opportunistically, balancing our share price with the state of the
financial markets and other factors.
Other Borrowings The corporation had net repayments of other debt
of $102 million during 2009 and $1,456 million during 2008. During
2007, the corporation had net borrowings of long-term debt of
$2,479 million. As noted below, prior to its 2007 spin off, Hanesbrands
borrowed $2,558 million, which is included in the $2,479 million of
net borrowings in 2007. The corporation has utilized a combination
of cash on hand, short-term borrowings and new borrowings of
long-term debt to repay maturing long-term debt. The long-term debt
maturing during 2009 was repaid using cash on hand and a new
2-year financing arrangement for 285 million euros at EURIBOR plus
1.75% that was entered into in January 2009.
Prior to being spun off by the corporation, Hanesbrands bor-
rowed $2,600 million from a group of banks. Net of loan origination
fees, Hanesbrands received $2,558 million of cash proceeds, and
this amount is included in the corporation’s borrowings of long-term
debt. Using a portion of the proceeds received from the borrowing,
Hanesbrands paid a dividend of $1,950 million to the corporation.
Immediately following this dividend, the corporation distributed to
stockholders of record one share of Hanesbrands common stock for
every eight shares of Sara Lee common stock held. A total of $650
million of cash was transferred to Hanesbrands at the spin off date.
Short-Term Borrowings The corporation had net short-term repay-
ments of $261 million in 2009 and $1,720 million in 2007 versus
short-term borrowings of $251 million during 2008. In 2009 and
2007, the corporation utilized a combination of cash on hand and
the proceeds from the borrowing of long-term debt noted above to
fund the repayments.
34 Sara Lee Corporation and Subsidiaries