Sara Lee 2013 Annual Report Download - page 44

42 The Hillshire Brands Company
NOTES TO FINANCIAL STATEMENTS
INTERNATIONAL OPERATIONS
Australian Bakery In February 2013, the company completed
the sale of its Australian Bakery business. Using foreign currency
exchange rates on the date of the transaction, the company received
cash proceeds of $85 million and reported an after tax gain on
disposition of $42 million.
International Coffee and Tea On June 28, 2012, the company’s
international coffee and tea business was spun off into a new public
company called D.E MASTER BLENDERS 1753 N.V. The separation
was effected as follows: a distribution of all of the common stock of
a U.S. subsidiary that held all of the company’s international coffee
and tea business (“CoffeeCo”) was made to an exchange agent on
behalf of the company’s shareholders of record. Immediately after
the distribution of CoffeeCo common stock, CoffeeCo paid a $3.00
per share dividend, which totaled $1.8 billion. After the payment of
the dividend, CoffeeCo merged with a subsidiary of D.E MASTER
BLENDERS 1753 N.V. As a result of the spin-off, the historical
results of the international coffee and tea business have been
reported as a discontinued operation in the company’s consolidated
financial statements. The company entered into a master separation
agreement that provided for the orderly separation of the business
and transition of various administrative functions and processes
and a separate tax sharing agreement whereby DEMB agreed to
indemnify the company for certain tax liabilities that could result
from the spin-off and certain related transactions. The company
does not have any significant continuing involvement in the busi-
ness and does not expect any material direct cash inflows or
outflows with this business.
European Bakery During the first quarter of 2012, management
decided to divest the Spanish bakery and French refrigerated dough
businesses, collectively referred to as European Bakery, requiring
that these businesses be tested for impairment under the available
for sale model. Based on an estimate of the anticipated proceeds
for these businesses, the company recognized a pretax impairment
charge of $379 million for the Spanish bakery and French refrigerated
dough businesses in 2012. A tax benefit of $38 million was recognized
on these impairment charges. On October 10, 2011, the company
announced that it had signed an agreement to sell the Spanish bakery
business to Grupo Bimbo for €115 million and closed the transaction
in the second quarter of 2012. In the third quarter of 2012, the
company also completed the disposition of its French refrigerated
dough business for €115 million. A $11 million pretax gain was
recognized in 2012 on the sale of both the Spanish bakery and
French refrigerated dough businesses.
Global Body Care and European Detergents In December 2010,
the company completed the disposition of its global body care and
European detergents business. Using foreign currency exchange
rates on the date of the transaction, the company received cash pro-
ceeds of $1.6 billion and reported an after tax gain on disposition
of $488 million. The company entered into a customary transitional
services agreement with the purchaser of this business to provide
for the orderly separation of the business and the orderly transition
of various functions and processes which was completed by the
end of 2011.
Air Care Products Business In July 2010, the company sold a
majority of its air care products business. Using foreign currency
exchange rates on the date of the transaction, the company received
cash proceeds of $411 million, which represented the majority of
the proceeds received on the disposition of the Air Care business, and
reported an after tax gain on disposition of $94 million. When this
business was sold, certain operations were retained in Spain, until
production related to non-air care businesses ceased at the facility.
The sale of the Spanish facility closed in the third quarter of 2012
and the company received $44 million of proceeds and recognized
a pretax loss on the sale of this facility of $10 million.
Australia/New Zealand Bleach In February 2011, the company
completed the sale of its Australia/New Zealand Bleach business.
Using foreign currency exchange rates on the date of the transaction,
the company received cash proceeds of $53 million and reported an
after tax gain on disposition of $31 million.
Shoe Care Business In May 2011, the company completed the sale
of the majority of its shoe care businesses. Using foreign currency
exchange rates on the date of the transaction, the company received
cash proceeds of $276 million and reported an after tax gain on dis-
position of $117 million. Certain other shoe care businesses were to
be sold on a delayed basis. In 2012, the company closed on the sale of
its shoe care business in Malaysia, China and Indonesia and received
$56 million of proceeds, which included working capital adjustments.
Non-Indian Insecticides Business The company entered into
an agreement to sell all of its Non-Indian Insecticides business for
€154 million to SC Johnson and received a deposit of €152 million
in December 2010 on the sale of these businesses. Due to competition
concerns raised by the European Commission, the two parties aban-
doned the transaction as originally agreed but were able to complete
the sale of the insecticides businesses outside the European Union
(Malaysia, Singapore, Kenya and Russia) as well as a limited number
of businesses inside the European Union in 2012. The company also
divested the remaining insecticides businesses inside the European
Union to another buyer and transferred the net proceeds received
from the divestiture of those businesses to SC Johnson. The company
recognized a pretax gain of $255 million on the dispositions in 2012.