Sara Lee 2010 Annual Report Download - page 27

As previously noted, reported SG&A reflects amounts recognized
for actions associated with Project Accelerate, the business trans-
formation program and other significant amounts. These amounts
include the following:
In millions 2010 2009 2008
Transformation costs – IT $÷«– $÷«4 $23
Transformation/Accelerate costs – other 23 17 2
Accelerated depreciation 5––
Curtailment gain (17) (6) –
Gain on property disposition – (14) –
Tax indemnification charge 26––
Pension partial withdrawal
liability charge 22 18 –
Balance sheet corrections – (11) –
Total $«59 $÷«8 $25
Information regarding the transformation/Accelerate costs can
be found in Note 6 to the Consolidated Financial Statements, “Exit,
Disposal and Transformation Activities.”
In 2010 and 2009, the North American Fresh Bakery segment
recognized charges to establish estimated partial withdrawal liabilities
as a result of the cessation of contributions to two multi-employer
pension plans. The corporation also recognized curtailment gains in
2010 and 2009 related to its defined benefit pension plans. Additional
information regarding the pension charges and curtailment gains
can be found in Note 16 to the Consolidated Financial Statements,
“Defined Benefit Pension Plans.”
Exit Activities, Asset and Business Dispositions Exit activities,
asset and business dispositions are as follows:
In millions 2010 2009 2008
Charges for (income from) exit activities
Severance $45 $103 $32
Exit of leased and owned facilities 14 (1) 5
Other 513
Asset and business dispositions 20 – (1)
Total $84 $103 $39
The net charges in 2010 are $19 million lower than 2009
as a result of a $58 million decline in severance costs related to
restructuring actions partially offset by a $20 million charge related
to an asset disposition in Spain.
The net charges in 2009 were $64 million higher than 2008 as
a result of higher severance costs related to restructuring actions
taken in the International Beverage and International Bakery segments.
Sara Lee Corporation and Subsidiaries 25
Amortization of intangibles increased by $2 million in 2010 versus
2009. Total general corporate expenses, which are not allocated to
the individual business segments, increased by $30 million due to
a $32 million increase in other general expenses partially offset by
a $2 million decline in unrealized mark-to-market losses on commodity
derivatives. The increase in other general corporate expenses was
due to a $26 million tax indemnification charge related to a previ-
ously divested business, higher Project Accelerate charges and the
year-over-year negative impact of approximately $22 million of gains
in 2009 – primarily a non-income related foreign tax refund and a
reduction in contingent lease accruals. These increases were partially
offset by a pension curtailment gain and lower benefit plan expenses.
The adjustment for noncontrolling interest represents an offset
to the noncontrolling interest expense that is included in the SG&A
expense reported by the business segments as part of their operating
segment income. See Note 1 to the Financial Statements, “Nature
of Operations and Basis of Presentation,” for additional information
regarding noncontrolling interest.
Total SG&A expenses in 2009 decreased $142 million, or 4.4%.
Changes in foreign currency exchange rates, primarily in the European
euro, decreased SG&A expenses by $125 million, or 3.8%. The
remaining decrease in SG&A expenses was $17 million, or 0.6%.
Measured as a percent of sales, SG&A expenses decreased from
29.5% in 2008 to 28.4% in 2009. SG&A expenses as a percent of
sales declined in each of the business segments, with the exception
of International Bakery, which remained virtually unchanged. The
results reflect the favorable impact of cost saving initiatives and
lower MAP expenses.
Total SG&A expenses reported in 2009 by the business segments
decreased by $140 million, or 4.7%, versus 2008 primarily due to
the impact of changes in foreign currency exchange rates, lower
MAP spending and the benefits of cost savings initiatives partially
offset by the impact of inflation on wages and employee benefits.
Amortization of intangibles decreased by $1 million in 2009 versus
2008. Total general corporate expenses were unchanged. Other
general corporate expenses decreased $27 million versus the prior
year due to lower pension costs and favorable foreign currency trans-
actions partially offset by increased professional fees for consulting
and special project work. General corporate expenses were also
favorably impacted by approximately $22 million of gains – primarily
a non-income related foreign tax refund and a reduction in contingent
lease accruals. The decline in other general corporate expenses
was offset by a $27 million increase in unrealized mark-to-market
losses on commodity derivatives as the corporation reported
$11 million of losses in 2009 compared to gains of $16 million
in the prior year.