Sara Lee 2011 Annual Report Download - page 97

The impact of these actions on the corporation’s business
segments and unallocated corporate expenses is summarized as follows:
In millions 2011 2010 2009 North American Retail $÷11 $÷÷4 $÷««– North American Foodservice 6 10 (1) International Beverage 34 12 53 International Bakery 28 47 38 Decrease in business segment income 79 73 90 Increase in general corporate expenses 84 34 28
Total $163 $107 $118
The following discussion provides information concerning
the exit, disposal and transformation/Project Accelerate/spin-off activities for each year where actions were initiated and material reserves exist. 2011 Actions During 2011, the corporation approved certain actions related to exit, disposal, Project Accelerate and spin-off activities and recognized charges of $171 million related to these actions. Each of these activities is expected to be completed within a 12-month period after being approved and include the following: • Recognized a charge to implement a plan to terminate approximately 1,500 employees, related to the European beverage, North American Retail and North American Foodservice businesses and the corporate office operations and provide them with severance benefits in accordance with benefit plans previously communicated to the affected employee group or with local employment laws. Of the 1,500 targeted employees, approximately 200 have been termi- nated. The remaining employees are expected to be terminated within the next 12 months. • Recognized costs associated with the transition of services to an outside third party vendor as part of a business process outsourcing initiative. • Recognized third party and employee costs associated with the planned spin-off of the corporation’s International Beverage operations.
The corporation also recognized $97 million of charges in
discontinued operations primarily related to restructuring actions taken to eliminate stranded overhead associated with the house- hold and body care businesses.
The nature of the costs incurred under these plans includes
the following:
Exit Activities, Asset and Business Disposition Actions These amounts primarily relate to: • Employee termination costs • Lease and contractual obligation exit costs • Gains or losses on the disposition of assets or asset groupings that do not qualify as discontinued operations Transformation/Project Accelerate/spin-off costs recognized in
Cost of Sales and Selling, General and Administrative Expenses
These amounts primarily relate to: • Expenses associated with the installation of new information systems • Costs to retain and relocate employees • Consulting costs • Costs associated with the transition of services to an outside third party vendor as part of a business process outsourcing initiative
Transformation/Project Accelerate/spin-off costs are recognized
in Cost of Sales or Selling, General and Administrative Expenses in the Consolidated Statements of Income as they do not qualify for treatment as an exit activity or asset and business disposition pursuant to the accounting rules for exit and disposal activities. However, management believes that the disclosure of these trans- formation/Project Accelerate/spin-off related charges provides the reader with greater transparency to the total cost of the initiatives.
The following is a summary of the (income) expense associated
with new and ongoing actions, which also highlights where the costs are reflected in the Consolidated Statements of Income along with the impact on diluted EPS: In millions 2011 2010 2009 Exit and business dispositions $«105 $÷«84 $«÷98 Selling, general and
administrative expenses 58 23 20
Reduction in income from continuing
operations before income taxes 163 107 118
Income tax benefit (46) (35) (31) Reduction in income from
continuing operations $«117 $÷«72 $÷«87
Impact on diluted EPS from
continuing operations $0.19 $0.11 $0.13
94/95 Sara Lee Corporation and Subsidiaries