Sara Lee 2013 Annual Report Download - page 46

44 The Hillshire Brands Company
NOTES TO FINANCIAL STATEMENTS
The cash used in financing activities primarily represents the
net transfers of cash with the corporate office. The net assets of
the discontinued operations includes only the cash noted above
as most of the cash of those businesses, with the exception of the
international coffee and tea business, has been retained as a
corporate asset.
There were no assets held for sale or disposition as of June 29,
2013. The assets held for sale of $5 million as of June 30, 2012
represented property, plant and equipment.
NOTE 6 – EXIT, DISPOSAL
AND RESTRUCTURING ACTIVITIES
The company has incurred exit, disposition and restructuring
charges for initiatives designed to improve its operational perform-
ance and reduce cost. Details on exited businesses is provided in
Note 5 – Discontinued Operations, of these financial statements.
In addition, in June 2012, the company completed the spin-off of
its international coffee and tea operations into a new public com-
pany, which resulted in the company incurring certain costs in
conjunction with the spin-off. These costs include restructuring
actions such as employee termination costs and costs related to
renegotiating contractual agreements; third-party professional fees
for consulting and other services that are directly related to the
spin-off; and the costs of employees solely dedicated to activities
directly related to the spin-off.
The nature of the costs incurred 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
Restructuring/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 information systems
• Consulting costs
• Costs associated with the renegotiation of contracts for
services with outside third-party vendors as part of the spin-off
of the international coffee and tea operations
Certain of these 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, manage-
ment believes that the disclosure of these 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 these actions, and also highlights where the costs are reflected
in the Consolidated Statements of Income:
In millions 2013 2012 2011
Exit and business dispositions $÷9 $÷81 $38
Selling, general and
administrative expenses 39 115 36
Total $48 $196 $74
The impact of these actions on the company’s business segments
and unallocated corporate expenses is summarized as follows:
In millions 2013 2012 2011
Retail $«(1) $÷14 $11
Foodservice/Other (2)43
(Increase) Decrease in business segment income (3) 18 14
Increase in general corporate expenses 51 178 60
Total $48 $196 $74
The following table summarizes the activity during 2013 related to
exit, disposal and restructuring related actions and the status of the
related accruals as of June 29, 2013. The accrued amounts remaining
represent the estimated 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 12 months.
Non-
Employee cancellable Asset and
Termination IT and Leases/ Business
and Other Other Contractual Disposition
In millions Benefits Costs Obligations Actions Total
Accrued costs as of
June 30, 2012 $«42 $«16 $«21 $«– $«79
Exit, disposal and
other costs (income)
recognized during 2013 6 40 12 (6) 52
Cash payments (28) (44) (27) – (99)
Non-cash charges (5) (8) 17 – 4
Charges (income) in
discontinued operations (2) 2 – – –
Change in estimate (3) (1) – – (4)
Asset and business
disposition action –– – 66
Accrued costs as of
June 29, 2013 $«10 $÷«5 $«23 $«– $«38