Tyson Foods 2009 Annual Report Download - page 47

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47
NOTE 4: DISCONTINUED OPERATION
In June 2008, we executed a letter of intent with XL Foods to sell the beef processing, cattle feed yard and fertilizer assets of three of
our Alberta, Canada subsidiaries (collectively, Lakeside), which were part of our Beef segment. On March 13, 2009, we completed
the sale and sold these assets and related inventories for total consideration of $145 million, based on exchange rates then in effect.
This included (a) cash received at closing of $43 million, (b) $78 million of collateralized notes receivable from either XL Foods or
an affiliated entity to be collected throughout the two years following closing, and (c) $24 million of XL Foods Preferred Stock to be
redeemed over the next five years.
We recorded a pretax loss on sale of Lakeside of $10 million in fiscal 2009, which included an allocation of beef reporting unit
goodwill of $59 million and cumulative currency translation adjustment gains of $41 million.
The following is a summary of Lakeside’s operating results (in millions):
2009
2008
2007
Sales
$
461
$
1,268
$
1,171
Pretax income from discontinued operation
$
20
$
-
$
-
Loss on sale of discontinued operation
(10
)
-
-
Income tax expense
11
-
-
Loss from discontinued operation
$
(1
)
$
-
$
-
The carrying amounts of Lakeside’s assets held for sale included the following (in millions):
September 27, 2008
Assets of discontinued operation held for sale:
Inventories
$
82
Net property, plant and equipment
77
Total assets of discontinued operation held for sale
$
159
NOTE 5: DISPOSITIONS AND OTHER CHARGES
In March 2009, we announced the decision to close our Ponca City, Oklahoma, processed meats plant. The plant ceased operations in
August 2009. The closing resulted in the elimination of approximately 600 jobs. During fiscal 2009, we recorded charges of $15
million, which included $14 million for impairment charges and $1 million of employee termination benefits. The charges are
reflected in the Prepared Foods segment’s Operating Income and included in the Consolidated Statements of Income in Other
Charges. No material adjustments to the accrual are anticipated.
In fiscal 2008, we recorded charges of $10 million related to intangible asset impairments. Of this amount, $8 million is reflected in
the Beef segment’s Operating Income and $2 million in the Prepared Foods segment’s Operating Income, and both are recorded in the
Consolidated Statements of Income in Cost of Sales. We recorded charges of $7 million related to flood damage at our Jefferson,
Wisconsin, plant. This amount is reflected in the Prepared Foods segment’s Operating Income and included in the Consolidated
Statements of Income in Cost of Sales. We also recorded a charge of $6 million related to the impairment of unimproved real property
in Memphis, Tennessee. This amount is reflected in the Chicken segment’s Operating Income (Loss) and included in the Consolidated
Statements of Income in Cost of Sales. Additionally, we recorded an $18 million non-operating gain as the result of a private equity
firm’s purchase of a technology company in which we held a minority interest. This gain was recorded in Other Income in the
Consolidated Statements of Income.
In February 2008, we announced discontinuation of an existing product line and closing of one of our three poultry plants in
Wilkesboro, North Carolina. The Wilkesboro cooked products plant ceased operations in April 2008. The closure resulted in
elimination of approximately 400 jobs. In fiscal 2008, we recorded charges of $13 million for impairment charges. This amount is
reflected in the Chicken segment’s Operating Income (Loss) and included in the Consolidated Statements of Income in Other
Charges.
In January 2008, we announced the decision to restructure operations at our Emporia, Kansas, beef plant. Beef slaughter operations
ceased during the second quarter of fiscal 2008. However, the facility is still used to process certain commodity, specialty cuts and
ground beef, as well as a cold storage and distribution warehouse. This restructuring resulted in elimination of approximately 1,700
jobs at the Emporia plant. In fiscal 2008, we recorded charges of $10 million for impairment charges and $7 million of other closing
costs, consisting of $6 million for employee termination benefits and $1 million in other plant-closing related liabilities. These
amounts were reflected in the Beef segment’s Operating Income (Loss) and included in the Consolidated Statements of Income in
Other Charges. We have fully paid employee termination benefits and other plant-closing related liabilities.