Discontinued Operations and Divestitures

12 Months Ended

May 27, 2012

Discontinued Operations and Divestitures [Abstract]

DISCONTINUED OPERATIONS AND DIVESTITURES

2. DISCONTINUED OPERATIONS AND DIVESTITURES

Frozen Handhelds Operations

During fiscal 2011, we completed the sale of substantially all of the assets of our frozen handhelds operations for $8.8 million in cash. We recognized impairment and related charges totaling $21.7 million ($14.2 million after-tax) in fiscal 2011. We reflected the results of these operations as discontinued operations for all periods presented.

Gilroy Foods & Flavors^TM Operations

During fiscal 2011, we completed the sale of substantially all of the assets of Gilroy Foods & Flavors ^TM dehydrated garlic, onion, capsicum and Controlled Moisture^TM , GardenFrost^®, Redi-Made ^TM , and fresh vegetable operations for $245.7 million in cash. Based on our estimate of proceeds from the sale of this business, we recognized impairment and related charges totaling $59.2 million ($39.9 million after-tax) in fiscal 2010. We reflected the results of these operations as discontinued operations for all periods presented.

In connection with the sale of this business, we entered into agreements to purchase certain ingredients, at prices approximating market rates, from the divested business for a period of five years. The continuing cash flows related to these agreements are not significant, and, accordingly, are not deemed to be direct cash flows of the divested business.

The results of the aforementioned businesses which have been divested are included within discontinued operations. The summary comparative financial results of discontinued operations were as follows:

	2012		2011			2010
Net sales	$	0.5	$	92.4		$	355.2
Long-lived asset impairment charge		—		(21.7	)		(58.3	)
Income (loss) from operations of discontinued operations before income taxes		0.1		(18.6	)		(38.9	)
Income (loss) before income taxes		0.1		(18.6	)		(38.9	)
Income tax benefit		—		7.1			19.6
Income (loss) from discontinued operations, net of tax	$	0.1	$	(11.5	)	$	(19.3	)

The effective tax rate for discontinued operations varies significantly from the statutory rate in certain years due to the non-deductibility of a portion of the goodwill of divested businesses and changes in estimates of income taxes.

Other Divestitures

In February 2010, we completed the sale of our Luck’s ^® brand for proceeds of approximately $22.0 million, resulting in a pre-tax gain of approximately $14.3 million ($9.0 million after-tax), reflected in selling, general and administrative expenses.