Sara Lee 2009 Annual Report Download - page 35

Financial Condition
The corporation’s cash flow statements include amounts related to
discontinued operations through the date of disposal. The discontinued
operations had a significant impact on the cash flows from operating,
investing and financing activities in 2007.
Cash from Operating Activities The total cash generated from
operating activities was $900 million in 2009, $606 million in
2008 and $492 million in 2007.
The cash from operating activities generated by continuing and
discontinued operations is summarized in the following table:
2009 2008 2007
Cash from operating activities
Continuing operations $900 $596 $404
Discontinued operations – 10 88
Total $900 $606 $492
The increase in cash from operating activities of $294 million
in 2009 was due to a $451 million improvement in the cash used
to fund working capital needs. In 2009, $119 million of cash was
generated from lower working capital levels as opposed to $332 mil-
lion of cash used in the prior year to fund working capital needs. The
year-over-year improvements were in accounts receivable, invento-
ries, accrued liabilities as well as a reduction in cash tax payments,
partially offset by an increase in cash used for accounts payable.
The overall improvement in working capital was due in part to a
strong focus on minimizing working capital levels. The benefits gen-
erated from lower working capital levels were partially offset by a
$131 million increase in cash contributions to pension plans as
compared to the prior year.
The increase in cash from operating activities of $114 million
in 2008 was due to an increase in earnings, after adjusting for
the non-cash impairment and other charges and a $22 million
decrease in cash used to fund working capital requirements. The
primary changes in working capital which impacted cash flow from
operations in 2008 were a $143 million decline in accrued liabilities
due to cash expenditures exceeding expenses for various operating
expenses; a $117 million increase in inventories and a $92 million
increase in accounts receivable during the year due in part to the
general growth in the business, as well as higher commodity costs
with respect to inventories; and a $18 million increase in accrued
taxes as a result of a tax provision of $468 million which was
partially offset by $459 million of cash tax payments.
Cash from Investment Activities Cash used in investment activities
was $286 million in 2009 and $196 million in 2008, while $568 million
was received from investment activities in 2007.
Net cash (used in) received from investment activities is split
between continuing and discontinued operations as follows:
2009 2008 2007
Cash from (used in) investment activities
Continuing operations $(286) $(188) $615
Discontinued operations – (8) (47)
Total $(286) $(196) $568
The corporation spent $379 million, $515 million and $631 million
for the purchase of property, equipment, computer software and
intangibles in 2009, 2008 and 2007, respectively. The higher level
of spending in 2007 was due in part to an increase in expenditures
for certain information technology assets and for certain costs for the
corporation’s new headquarters facility in Downers Grove, Illinois
and other facilities that are being used to centralize management.
The corporation expects capital expenditures for property and
equipment to be approximately $450 to $475 million in 2010, an
increase over 2009 due to an increase in projected expenditures
related to information technology assets and expanded plant capacity
in North American Retail.
In 2009, $138 million of cash was used for derivative transactions,
as compared to $96 million of cash received from derivative trans-
actions in 2008. The increase in cash used related to these derivative
transactions was due in part to an increase in the number of mark-
to-market derivative transactions and an increase in cash paid on
the settlement of foreign exchange contracts, the majority of which
were related to hedges of foreign currency balance sheet exposures.
In 2007, $25 million of cash was used in derivative transactions.
In 2009, the corporation expended $10 million as part of the
consideration paid for the acquisition of a coffee business in Brazil.
In 2008 and 2007, the corporation did not expend any funds to
make any business acquisitions.
A significant amount of cash was received from the disposition
of businesses and assets as well as the cash received from the
collection of loans receivable related to prior business dispositions.
In total, $241 million, $223 million and $1,224 million were
received in 2009, 2008 and 2007, respectively.
Sara Lee Corporation and Subsidiaries 33