Sara Lee 2010 Annual Report Download - page 66

Notes to financial statements
North American Foodservice Property and Goodwill In 2008, the
corporation received a non-binding offer for its U.S. direct store
delivery foodservice beverage business (DSD) which was part of the
North American Foodservice segment. Utilizing the net purchase price,
which was less than the carrying value, the corporation conducted
an impairment review of DSD and recognized a pretax impairment
charge of $49 million in the fourth quarter of 2008, of which $38 mil-
lion related to property and $11 million related to goodwill. The
remaining assets of this business were classified as held for sale
at the end of 2008. During 2009, the corporation completed the
disposition of the DSD business and received $42 million.
Note 5 – Discontinued Operations
In 2010, the corporation received binding offers for the sale of
its global body care and European detergents businesses for
€1.275 billion; its air care business for €320 million; and its non-
Indian insecticides business for €154 million. These proposed
transactions are subject to certain customary closing conditions
and regulatory approvals. Together these businesses represent over
70% of the net sales of the international household and body care
businesses. The corporation is also actively marketing for sale its
remaining household and body care businesses and, as a result, the
businesses that formerly comprised the International Household and
Body Care segment – air care, body care, shoe care and insecticides –
are classified as discontinued operations and are presented in a
separate line in the Consolidated Statements of Income for all periods
presented. The assets and liabilities of these businesses to be
sold meet the accounting criteria to be classified as held for sale
and have been aggregated and reported on separate lines of the
Consolidated Balance Sheets for all periods presented.
In 2010, the corporation disposed of its Godrej Sara Lee joint
venture, an insecticide business in India, which had been part of the
household and body care businesses. The corporation completed
the disposition of its air care business in July 2010 and anticipates
closing on the sale of the body care, European detergents, and
insecticides business during calendar 2010. In 2008, the corporation
disposed of its Mexican Meats operations, and realized a loss from
its European Branded Apparel business which was sold in 2006.
Results of Discontinued Operations The amounts in the tables
below reflect the operating results of the businesses reported as
discontinued operations. The amounts of any gains or losses related
to the disposal of these discontinued operations are excluded.
Pretax
Income Income
In millions Net Sales (Loss) (Loss)
2010
International Household
and Body Care businesses $2,126 $254 $(199)
2009
International Household
and Body Care businesses $2,000 $245 $«155
2008
International Household
and Body Care businesses $2,264 $330 $«250
European Branded Apparel – (15) (15)
Mexican Meats 23821
Total $2,502 $317 $«236
A full year of results for the Godrej Sara Lee joint venture business
was not included in 2010 as the business was sold in the fourth
quarter of 2010; and a full year of results for the Mexican meats
business was not included in 2008 as the business was sold in the
third quarter of 2008.
As a result of the planned disposition of the body care, European
detergents and air care businesses, the corporation anticipates a
significant reduction in the expected years of future service for the
employees associated with a defined benefit pension plan in the
Netherlands. Although the business dispositions have not as yet
been completed, a pretax curtailment loss of $10 million was recog-
nized because the loss was both probable and reasonably estimable.
The curtailment loss, which relates to the previously unamortized
prior service cost associated with this benefit plan, was recognized
in the results of discontinued operations.
The $453 million tax expense related to the results of the
discontinued operations reported in 2010 includes the following
significant tax amounts: i) a $428 million tax charge related to the
company’s third quarter decision to no longer reinvest overseas
earnings attributable to overseas cash and the net assets of the
household and body care businesses; ii) a $40 million tax benefit
related to the reversal of a tax valuation allowance on United Kingdom
net operating loss carryforwards as a result of the anticipated gain
from the household and body care business dispositions; and iii) a
$22 million tax benefit related to the anticipated utilization of U.S.
capital loss carryforwards available to offset the capital gain result-
ing from the household and body care business dispositions.
In 2008, the $15 million charge associated with the European
Branded Apparel business, which was sold in 2006, related to the
settlement of a pension plan in the U.K.
64 Sara Lee Corporation and Subsidiaries