Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

WhiteWave and Morningstar

We separated The WhiteWave Foods Company ("WhiteWave") from the Company in a series of three transactions: an initial public offering for 13.3% of the WhiteWave common stock in the fourth quarter of 2012 (the "WhiteWave IPO"); a tax-free spin-off of 66.8% of the WhiteWave common stock in the second quarter of 2013; and a tax-free debt-for-equity exchange of 19.9% of the WhiteWave common stock in the third quarter of 2013. Refer to our 2013 Annual Report on Form 10-K for more information about the WhiteWave separation. While we are a party to a separation and distribution agreement and various other agreements relating to the separation, including a transitional services agreement, an amended and restated tax matters agreement, an employee matters agreement and certain other commercial agreements, we have determined that the continuing cash flows generated by these agreements (which are not expected to extend beyond June 2015) did not constitute significant continuing involvement in the operations of WhiteWave. Accordingly, the net assets, operating results and cash flows of WhiteWave have been separately reflected as discontinued operations for the three and nine months ended September 30, 2013. WhiteWave is a stand-alone public company which separately reports its financial results.

During the three months ended September 30, 2013, as a result of the tax-free disposition of our 19.9% investment in WhiteWave common stock, we recorded a gain in continuing operations of $415.8 million, which included $385.6 million of unrealized holding gains that were previously recorded as a component of accumulated other comprehensive income in the second quarter of 2013. The gain was recorded in the gain on disposition of WhiteWave common stock line item in our unaudited Condensed Consolidated Statements of Operations.

In January 2013, we completed the sale of Morningstar Foods ("Morningstar") to a third party for net proceeds of approximately $1.45 billion. During the nine months ended September 30, 2013, we recorded a gain of $871.3 million ($492.1 million, net of tax) on the sale of Morningstar in January of 2013. The operating results of Morningstar have been included in discontinued operations for the three and nine months ended September 30, 2013.

The following is a summary of operating results and certain other directly attributable expenses, including interest expense, which are included in discontinued operations for the nine months ended September 30, 2013. There were no discontinued operations for the three months ended September 30, 2013.

	Nine Months Ended September 30, 2013
	WhiteWave				Morningstar			Total
	(In thousands)
Operations:
Net sales	$	940,431			$	5,919		$	946,350
Income before income taxes	57,126				109			57,235
Income tax	(54,306		)	(1)	(38		)	(54,344		)
Net income	$	2,820			$	71		$	2,891

(1) The income tax expense attributable to WhiteWave during the nine months ended September 30, 2013 includes approximately $31.1 million related to certain deferred intercompany transactions which were recognized upon the completion of the WhiteWave spin-off. Because these liabilities arose as a direct result of the spin-off of WhiteWave, we have reflected the income statement impact of such liabilities as a component of discontinued operations.

The following is a summary of directly attributable transaction expenses which are included in discontinued operations:

	Nine Months Ended   September 30, 2013
	(In thousands)
WhiteWave	$	12,464
Morningstar	300
Total	$	12,764

There were no transaction expenses directly attributable to discontinued operations during the three and nine months ended September 30, 2014.

During the three and nine months ended September 30, 2014, we recognized net losses from discontinued operations of $0.8 million from the finalization of certain pre-separation tax items related to WhiteWave.

During the nine months ended September 30, 2014, we recognized net gains on the sale of discontinued operations, net of tax, of $1.2 million, from favorable taxing authority settlements related to Morningstar and other prior discontinued operations.