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This excerpt taken from the HBI 8-K filed Nov 29, 2006. Sale of
Accounts Receivable
Historically, we participated in a Sara Lee program to sell
trade accounts receivable to a limited purpose subsidiary of
Sara Lee. The subsidiary, a separate bankruptcy remote corporate
entity, is consolidated in Sara Lee’s results of operations
and statement of financial position. This subsidiary held trade
accounts receivable that it purchased from the operating units
and sold participating interests in those receivables to
financial institutions, which in turn purchased and received
ownership and security interests in those receivables. During
fiscal 2005, Sara Lee terminated its receivable sale program and
no receivables were sold under this program at the end of fiscal
2005. The amount of receivables sold under this program was
$22.3 million at the end of fiscal 2004. Changes in the
balance of receivables sold are a component of net cash from
operating activities (“(Increase) decrease in trade
accounts receivable”) with an offset to a change in
“Decrease (increase) in due to and from related
entities” in our Combined and Consolidated Statement of
Cash Flows. As collections reduced accounts receivable included
in the pool, the operating units sold new receivables to the
limited purpose subsidiary. The limited purpose subsidiary had
the risk of credit loss on the sold receivables.
The proceeds from the sale of the receivables were equal to the
face amount of the receivables less a discount. The discount was
based on a floating rate and was accounted for as a cost of the
receivable sale program. This cost has been included in
“Selling, general and administrative expenses” in our
Combined and Consolidated Statements of Income. The calculated
discount rate for 2004 and 2005 was 1.2%, resulting in
aggregated costs of $5.0 million and $4.0 million in
fiscal 2004, and 2005, respectively. We retained collection and
administrative responsibilities for the participating interests
in the defined pool.
This excerpt taken from the HBI 10-K filed Sep 28, 2006. Sale of
Accounts Receivable
Historically, we participated in a Sara Lee program to sell
trade accounts receivable to a limited purpose subsidiary of
Sara Lee. The subsidiary, a separate bankruptcy remote corporate
entity, is consolidated in Sara Lee’s results of operations
and statement of financial position. This subsidiary held trade
accounts receivable that it purchased from the operating units
and sold participating interests in those receivables to
financial institutions, which in turn purchased and received
ownership and security interests in those receivables. During
fiscal 2005, Sara Lee terminated its receivable sale program and
no receivables were sold under this program at the end of fiscal
2005. The amount of receivables sold under this program was
$22.3 million at the end of fiscal 2004. Changes in the
balance of receivables sold are a component of net cash from
operating activities (“(Increase) decrease in trade
accounts receivable”) with an offset to a change in
“Decrease (increase) in due to and from related
entities” in our Combined and Consolidated Statement of
Cash Flows. As collections reduced accounts receivable included
in the pool, the operating units sold new receivables to the
limited purpose subsidiary. The limited purpose subsidiary had
the risk of credit loss on the sold receivables.
The proceeds from the sale of the receivables were equal to the
face amount of the receivables less a discount. The discount was
based on a floating rate and was accounted for as a cost of the
receivable sale program. This cost has been included in
“Selling, general and administrative expenses” in our
Combined and Consolidated Statements of Income. The calculated
discount rate for 2004 and 2005 was 1.2%, resulting in
aggregated costs of $5.0 million and $4.0 million in
fiscal 2004, and 2005, respectively. We retained collection and
administrative responsibilities for the participating interests
in the defined pool.
Table of Contents
This excerpt taken from the HBI 8-K filed Sep 5, 2006. Sale of Accounts Receivable Historically, we participated in a Sara Lee program to sell trade accounts receivable to a limited purpose subsidiary of Sara Lee. The subsidiary, a separate bankruptcy remote corporate entity, is consolidated in Sara Lee’s results of operations and statement of financial position. This subsidiary held trade accounts receivable that it purchased from the operating units and sold participating interests in those receivables to financial institutions, which in turn purchased and received ownership and security interests in those receivables. During fiscal 2005, Sara Lee terminated its receivable sale program and no receivables were sold under this program at the end of fiscal 2005. The amount of receivables sold under this program was $22.5 million at the end of fiscal 2003 and $22.3 million at the end of fiscal 2004. Changes in the balance of receivables sold are a component of net cash from operating activities (“(Increase) decrease in trade accounts receivable”) with an offset to a change in “Decrease (increase) in due to and from related entities” in our Combined and Consolidated Statements of Cash Flows. As collections reduced accounts receivable included in the pool, the operating units sold new receivables to the limited purpose subsidiary. The limited purpose subsidiary had the risk of credit loss on the sold receivables. The proceeds from the sale of the receivables were equal to the face amount of the receivables less a discount. The discount was based on a floating rate and was accounted for as a cost of the receivable sale program. This cost has been included in “Selling, general and administrative expenses” in our Combined and Consolidated Statements of Income. The calculated discount rate for fiscal 2003, 2004 and 2005 was 1.6%, 1.2% and 1.2%, respectively, resulting in aggregated costs of $52.4 million, $5.0 million and $4.0 million in fiscal 2003, 2004, and 2005, respectively. We retained collection and administrative responsibilities for the participating interests in the defined pool.
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