Sara Lee Corporation says Transformation Plan on expected lines
20 Jul '05
3 min read
Global apparel manufacturer & marketer Sara Lee Corporation said that it was making good progress on its transformation plan announced on Feb. 10, 2005, and that it expects to take related charges in the fourth quarter of fiscal 2005, ended June 30, 2005, to streamline continuing operations and recognize impairments of certain assets that the company has announced it is in the process of selling.
In the fourth quarter of fiscal 2005, Sara Lee will take a pretax charge of $122 million related to exit and disposal activities, which includes $113 million in severance related to the termination of 1,956 employees, the majority of which are from reductions in the Branded Apparel, Beverage and Household Products businesses previously announced, and $9 million for the exit of leases and other contracts. All of these actions will result in cash expenditures and are expected to be completed in fiscal 2006. The after-tax impact of this charge is $81 million.
As part of its transformation plan, the company is exploring the disposition of its European branded apparel, European packaged meats, U.S. retail coffee (except for Senseo) and direct selling businesses. The company also said it would pursue a spin-off of its $4.6 billion Branded Apparel Americas/Asia business.
After receiving non-binding indications of interest for the European apparel business and a third party valuation of the U.S. retail coffee operations, the company conducted an impairment reviewof both businesses, which was completed on July 15.
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