This excerpt taken from the HBI 10-Q filed Nov 13, 2006.
(12) Relationship with Sara Lee and Related Entities
Effective upon the completion of the spin off, Sara Lee ceased to be a related party to the Company. The Company paid a dividend to Sara Lee of $1,950,000 and repaid a loan in the amount of $450,000 which is reflected in the Condensed Combined and Consolidated Statement of Stockholders or Parent Companies Equity. An additional payment of approximately $26,306 will be paid to Sara Lee in order to satisfy all outstanding payables from the Company to Sara Lee and Sara Lee subsidiaries. The $26,306 is outstanding as of September 30, 2006 and is reported in the Due to Sara Lee Corporation line of the Condensed Combined and Consolidated Balance Sheet.
Historically, the Company participated in a number of Sara Lee administered programs such as cash funding systems, insurance programs, employee benefit programs and workers compensation programs. In connection with the spin off from Sara Lee, the Company assumed $299,000 in unfunded employee benefit liabilities for pension, postretirement and other retirement benefit qualified and nonqualified plans, and $37,554 of liabilities in connection with property insurance, workers compensation, and other programs. These amounts are reflected in the Accrued liabilities and other and Other noncurrent liabilities lines of the Condensed Combined and Consolidated Balance Sheet.
Included in the historical information are costs of certain services such as business insurance, medical insurance, and employee benefit plans and allocations for certain centralized administration costs for treasury, real estate, accounting, auditing, tax, risk management, human resources and benefits administration. Centralized administration costs were allocated to the Company based upon a proportional cost allocation method. These allocated costs are included in the Selling, general and administrative expenses line of the Combined and Consolidated Statement of Income and the Parent companies equity investment line of the Condensed Combined and Consolidated Balance Sheet. For the quarters ended September 30, 2006 and October 1, 2005, the total amount allocated for centralized administration costs by Sara Lee was $0 and $8,100. For the quarter ended September 30, 2006, there were no costs allocated as the Companys infrastructure was in place and did not significantly benefit from these services from Sara Lee.
In connection with the spin off, the Company entered into the following agreements with Sara Lee:
Notes to Condensed Combined and Consolidated Financial Statements (Continued)
(dollars and shares in thousands, except per share data)