Discontinued Operations

6 Months Ended

Jul. 03, 2011

Discontinued Operations

Note 4. Discontinued Operations

We evaluate our businesses and product lines periodically for their strategic fit within our operations. In 2011, we decided to sell our Capsugel business. In connection with the decision to sell this business, for all periods presented, the operating results associated with this business have been reclassified into Discontinued operations–– net of tax in the Condensed Consolidated Statements of Income, and the assets and liabilities associated with this business have been reclassified into Assets of discontinued operations and other assets held for sale and Liabilities of discontinued operations, as appropriate, in the Condensed Consolidated Balance Sheets.

On April 4, 2011, we announced that we had entered into an agreement to sell Capsugel to an affiliate of Kohlberg Kravis Roberts & Co. L.P. for $2.375 billion in cash. The transaction closed on August 1, 2011.

The following amounts, substantially all of which relate to our Capsugel business, have been segregated from continuing operations and included in Discontinued operations—net of tax in our Condensed Consolidated Statements of Income:

	Three Months Ended						Six Months Ended
(millions of dollars)	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Revenues	$	214		$	195		$	391		$	369
Pre-tax income from discontinued operations	$	44		$	47		$	72		$	77
Provision for taxes		(14	)		(16	)		(32	)		(27	)
Income from discontinued operations––net of tax		30			31			40			50
Pre-tax gain on sale of discontinued operations		––			––			––			3
Provision for income taxes		––			––			––			(1	)
Discontinued operations––net of tax	$	30		$	31		$	40		$	52

The following assets and liabilities, which include assets and liabilities held for sale related to our Capsugel business, and other assets held for sale, have been segregated and included in Assets of discontinued operations and other assets held for sale and Liabilities of discontinued operations, as appropriate, in our Condensed Consolidated Balance Sheets:

(millions of dollars)	July 3, 2011		Dec. 31, 2010
Accounts receivable	$	193	$	186
Inventories		149		130
Taxes and other current assets		25		47
Property, plant and equipment		1,041		1,009
Goodwill		20		19
Identifiable intangible assets		6		3
Taxes and other noncurrent assets		44		45
Assets of discontinued operations and other assets held for sale	$	1,478	$	1,439
Current liabilities	$	154	$	124
Other liabilities		27		27
Liabilities of discontinued operations	$	181	$	151

Net cash flows of our discontinued operations from each of the categories of operating, investing and financing activities were not significant.