Sara Lee 2009 Annual Report Download - page 64

Notes to financial statements
Dollars in millions except per share data
The following table summarizes the net charges taken for the
exit, disposal and transformation activities approved during 2008
and the related status as of June 27, 2009. The accrued amounts
remaining as of the end of 2009 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 2008 actions.
62 Sara Lee Corporation and Subsidiaries
Non-cancelable
Employee Lease and Asset and Transfor-
Termination Other Business mation
and Other Contractual Disposition Costs – IT
In millions Benefits Obligations Actions and Other Total
Exit and disposal costs recognized during 2008 $«36 $3 $(1) $«51 $«89
Cash payments (7) – – (33) (40)
Non-cash charges – – – (16) (16)
Asset and business disposition gains (losses) ––1–1
Accrued costs as of June 28, 2008 293–234
Cash payments (15) – – (2) (17)
Change in estimate (2) – – – (2)
Foreign exchange impacts (1) – – – (1)
Accrued costs as of June 27, 2009 $«11 $3 $«– $«««– $«14
The following table summarizes the employee terminations
by location and business segment.
North International
North American North Household
American Fresh American International International and
Number of employees Retail Bakery Foodservice Beverage Bakery Body Care Corporate Total
United States 24230157–––56485
Europe ––––14––14
Australia ––––26––26
242 30 157 – 40 – 56 525
2007 Actions During 2007, the corporation approved certain
actions related to exit, disposal and transformation activities and
recognized net charges of $219 related to these actions. Each of
these actions was to be completed within a 12-month period after
being approved. During 2009, certain of these actions were com-
pleted 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. All of these actions have
been completed.
•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 International Household and Body Care facili-
ties 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.
•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 busi-
ness 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 infor-
mation systems across the organization.