TIDMSRL
Sara Lee Corp. (NYSE: SLE) today reported earnings for the
fourth quarter and full year fiscal 2011 and provided an update on
the progress of the spin off transaction.
Strategic Highlights:
-- Significant divestment and restructuring progress towards the creation
of two pure-play companies by the first half of calendar
2012
Intend to divest Spanish bakery and French refrigerated
dough
businesses
Signed agreement to sell North American (N.A.) refrigerated
dough
business to Ralcorp for $545 million
Corporate expenses nearly $100 million lower than fiscal
2010
Fourth Quarter Highlights:
-- 8% increase in adjusted net sales1 from continuing
operations to $2.3 billion; 9% reported net sales increase
-- 40% increase in adjusted operating income to $189 million; reported
operating income increase of 19%
Fiscal 2011 Highlights:
-- Fiscal 2011 results comfortably within the latest updated guidance
ranges2
Key Financial Data
Fourth Quarter ($ millions, except per share) Fiscal Year
2011 2010 % Change Continuing Operations 2011 2010 % Change
2,268 2,103 8 Adjusted Net Sales 8,636 8,231 5
2,297 2,113 9 Reported Net Sales 8,681 8,339 4
189 135 40 Adjusted Operating Income 809 827 (2 )
76 64 19 Reported Operating Income 627 821 (24 )
$0.20 $0.07 186 Adjusted EPS $0.78 $0.67 16
$0.08 $0.16 (50 ) Reported Diluted EPS $0.54 $0.84 (36 )
Perspectives from Executive Chairman & Chief Executive
Officer
"During the last six months, we have made significant strides
toward creating two pure-play companies which are poised for
success," said Sara Lee Executive Chairman, Jan Bennink.
"Our objective of building two simpler, faster and more
entrepreneurial businesses is being realized. We have defined the
organizational framework for our new companies and are continuing
to build and restructure our teams for the future. Through our
strategic divestments, we are achieving our objective of
streamlining the portfolios to provide the best foundation for
strong and focused businesses moving forward. We are heartened by
the fact that we have been able to deliver solid results for fiscal
2011 while managing difficult commodity conditions and the internal
challenges of the spin off. The inherent strength of these two
businesses, combined with a new focus and orientation, give me
confidence that the two companies will be highly successful when
they separate in the first half of calendar 2012," concluded
Bennink.
Chief Executive Officer Marcel Smits added, "Throughout fiscal
2011, our businesses have remained focused on operational
performance. We delivered our updated guidance for adjusted EPS,
adjusted operating income and net sales. We've also maintained a
focus on cost reduction activities, lowering our corporate expenses
bynearly $100 million over our prior fiscal year. We have
introduced new products like Jimmy Dean Jimmy D's and expanded
successful brands like L'OR EspressO and Senseo into new
geographies. I'm excited about the progress that we have made this
year and continue to have great confidence in the long-term
prospects of our businesses."
Portfolio Changes
The company continues to streamline operations as it progresses
toward the spin off. The summary below provides an update on the
decisions made to date.
North American refrigerated dough: On August 9th, the company
announced a signed agreement to sell its North American
refrigerated dough (Store Brands) business to Ralcorp for $545
million. The sale is expected to close by the end of calendar year
2011. This business was classified as a discontinued operation in
the fourth quarter of fiscal 2011.
North American Fresh Bakery: The sale of the North American
Fresh Bakery to Grupo Bimbo is expected to close before the end of
September.
International Bakery: Sara Lee decided in August to divest the
Spanish bakery and French refrigerated dough businesses. For both,
a sales process is underway and numerous bids have been received.
These businesses will be reclassified to discontinued operations in
the first quarter of fiscal 2012. The Australian frozen desserts
business remains under strategic review.
Remaining Household & Body Care: The company has received
98% of the total expected proceeds. The remaining insecticides
divestitures are expected to close in the second half of calendar
year 2011.
Fiscal 2012 Guidance
Continuing operations Fiscal 2012 Guidance FY11 results excl.International Bakery
Net Sales $8.5 - $8.75 billion $8.0 billion
Operating Income ex $875 - $930 million $792 million
significant items3
Net Interest Expense $85 million $85 million
Tax rate 33.4% 33.4%
EPS ex significant items3 $0.89 - $0.95 $0.75
Year-End Cash $0.3 billion $2.1 billion
Year-End Debt $2.3 billion $2.7 billion
Dollar / euro exchange rate $1.44 $1.36
-- The International Bakery segment is excluded from fiscal 2012 guidance
and fiscal 2011 results for comparability (reconciliation to
the
fiscal 2011 reported numbers is provided at the end of this
release).
-- For simplicity, guidance assumes that the spin off will occur on the
last day of fiscal 2012.
-- Guidance for operating income excluding significant items is weighted
toward the back half of the year as a result of investments in
growth,
price increases versus commodity inflation and restructuring
benefits.
-- Year-end cash guidance assumes payment of the $3.00 per share special
dividend and the repatriation tax provision. It also assumes
proceeds
are received for all announced dispositions.
-- Fiscal 2012 guidance does not include projections for significant
items.
1 The term "adjusted net sales" and other "adjusted" financial
measures are explained and reconciled to comparable GAAP measures
at the end of this release.
2Reconciliation from fiscal 2011 results and the latest FY11
guidance is provided under "Additional Information," breaking out
the contribution of N.A. refrigerated dough.
3The "ex significant items" terms are explained and reconciled
to comparable GAAP measures at the end of this release.
Restructuring Activities
In preparation for the spin off, Sara Lee has identified cost
reduction opportunities of $180 million to $200 million, compared
to the fiscal 2011 base, achievable within fiscal 2012 and 2013.
These cost reductions result from the downsizing of corporate
resources, the reduction of overhead within both the North American
Meat business and the International Coffee and Tea business, and
lastly the completion of Project Accelerate initiatives. These
savings will offset $50 million to $60 million of stranded costs
from business divestitures and will also broadly offset corporate
expenses the two business segments will absorb following the split
of Sara Lee into two separate listed entities.
In fiscal 2012, the company expects significant item charges of
approximately $425 million related to these and other actions.
These costs are comprised of $300 million in restructuring
(including the recently announced closure of a plant in Paris,
Texas) and $125 million in transaction-related costs.
Balance Sheet and Operational Structuring
Since the announced spin off in January, the company has made
considerable progress in defining the most efficient and effective
operating and balance sheet structure for the International Coffee
and Tea business once it is spun off as a separate legal entity.
The company has previously guided investors to assume payment of
repatriation taxes of over $800 million and to expect a 35%
effective tax rate for the International Coffee and Tea business
after the spin. Based on work completed to date, we believe that
the effective tax rate will be lower. Further details will be
provided once discussions with the relevant authorities have been
concluded, which the company expects to occur in the fall of this
year.
Fourth Quarter Business Segment Review
North American Retail
Our North American Retail segment reported a 4% increase in
adjusted net sales to $715 million, primarily driven by pricing
actions. The segment reported strong new product performance with
growth fromJimmy Dean Jimmy D's and Hearty Crumbles, and Hillshire
Farm Low Sodium and Family Size. Ball Park maintained its share
leadership behind the successful introduction of New York Deli
Style Beef Franks. These launches were more than offset by the
negative volume impact from early pricing actions taken to offset
commodity cost increases and the rationalization of lower margin
promotional programs. Mix was marginally positive. On a reported
basis, net sales declined 2% largely due to last year's 53rd
week.
Adjusted operating margins improved by 590 basis points over the
prior year's fourth quarter, increasing to 11.4%. Reported
operating margin for the quarter was 10.1%. For the second straight
quarter, commodity cost increases were recovered through cost
savings initiatives and pricing actions. The net commodity recovery
along with lower MAP spending (versus significant investment in the
fourth quarter of last year) and a reduction in SG&A expense
drove an adjusted operating segment income increase of $44 million
versus last year. Reported operating segment income increased $32
million. The implementation of SAP across all meat plants is now
complete and is expected to generate efficiencies and cost savings
in fiscal 2012.
North American Foodservice
In the North American Foodservice segment, adjusted net sales
increased 9% to $400 million, driven largely by pricing actions
taken across the portfolio. This marks the second straight quarter
of strong top-line growth in the segment. Reported net sales grew
by 2.1%. Segment volumes were down as declines in roast and ground
coffee and diversified bakery more than offset volume growth in
meats, frozen bakery and liquid coffee. The segment posted
particularly strong results for Jimmy Dean breakfast sausages,
pre-sliced pies and cakes and branded meats distributed through
convenience stores.
Adjusted operating segment income increased 37% driven by cost
savings and strong business performance in meats, frozen bakery and
liquid coffee. Adjusted operating margin expanded 100 basis points
over the prior year to 5.0% driven by manufacturing efficiencies
and favorable sales mix. This growth was achieved despite the loss
of the low-volume, high-margin liquid coffee contract during last
year's fourth quarter. Reported operating segment income declined
$6 million due to impairment charges and spin off related costs
while the reported operating margin decreased 150 basis points to
0.1%.
International Beverage
Adjusted net sales of the International Beverage segment
increased 14% to $978 million in the fourth quarter. The increase
was driven by pricing and sales mix of 17% and higher green coffee
export sales from Brazil, partially offset by volume softness. The
volume decline mainly reflects the multiple price increases that
were put through in the majority of markets to offset commodity
price increases. Price increases and cost savings are expected to
have fully offset commodity price increases by the second quarter
of fiscal 2012. Volumes were also impacted by a slight decline in
the overall coffee market in the Netherlands and a deliberate
choice to end private label production in France. Reported net
sales increased 24% to $996 million.
L'OR EspressO continues to perform well in France and initial
results from the Netherlands, Spain and Belgium are promising and
reaffirm the growth potential of this product. L'OR EspressO
capsules are now sold through more than 15,000 retail stores in
Europe. In Brazil, Senseo was successfully launched in Rio de
Janeiro following the promising results of the initial introduction
of Senseo in São Paulo. The integration of Brazilian Damasco is
ahead of plan, with better than expected synergies and growth.
Australia successfully launched two new products, Piazza D'Oro and
Moccona Café Classics Frappé, which helped to reach a record-high
value share of 67% in the freeze-dried instant coffee segment. In
Foodservice, the trend in machine placements picked up in the
quarter and the recent successful roll-out of Cafitesse Excellence
contributed to the positive momentum.
The International Beverage business is making good progress in
aligning its organizational structure with its future growth
ambitions. As part of this process, the marketing and R&D
functions are being redesigned to optimize the innovation process
and allow for a faster product to market process.
Adjusted operating segment income decreased 13% to $121 million
resulting in an adjusted operating margin of 12.4% which largely
reflects the time lagging effect between commodity cost increases
and subsequent price increase. MAP spending in the fourth quarter
was below the significant investment in the prior-year period which
in large part is attributable to last year's launch of L'OR
EspressO in France. On a full year basis, MAP investment was up 3%
providing adequate support to the coffee and tea brands. Reported
operating segment income declined 4% to $119 million.
International Bakery
Adjusted net sales declined 8% to $182 million mainly due to
difficult macro-economic and competitive conditions in Spain.
Reported net sales declined 1% to $182 million.
Adjusted operating segment income was $13 million lower than the
prior year while reported operating segment income declined $10
million. In Spain, further price reductions were required to
maintain market share, which led to additional short-term margin
pressure. Restructuring activities to transform the company's sales
force to independent operators are progressing as planned.
Corporate
In the fourth quarter corporate expenses, excluding significant
items, were $33 million lower than the prior-year period. For the
full year, corporate expenses, excluding significant items,
declined $94 million primarily attributable to the impact of
headcount reductions, lower employee benefits costs, the sale of
the company plane and a reduction in franchise taxes.
Additional Information
FY11 Actual Results versus Latest Guidance:
As a result of the classification of N.A. refrigerated dough as
a discontinued operation in the fourth quarter, fiscal 2011 results
are not reported on the same basis as the most recent guidance
issued on May 5, 2011. The table below bridges fiscal 2011 results
for continuing operations and N.A. refrigerated dough to the most
recent guidance.
FY11 N.A. Guidance
Results refrigerateddough fromMay
fromContinuing 5, 2011(incl.
Operations(ex. N.A. refrig.
N.A. refrig. dough)
dough)
Reported net sales $8.68 billion $307 million $8.9 - $9.0
billion
Adjusted operating $809 million $42 million $840 - $870
income million
Adjusted EPS $0.78 $0.04 $0.79 - $0.83
Currency Mark-to-Market and Commodity Costs:
The International Beverage segment results include a favorable
year-over-year currency mark-to-market impact of $6 million in the
fourth quarter and an unfavorable impact of $(55) million for the
full year. In the fourth quarter, total commodity costs for the
corporation increased by $248 million (net of the $6 million of
currency mark-to-market adjustments highlighted above), partially
offset by $223 million in higher prices. For the full year, total
commodity costs for the corporation increased by $646 million
(including the $55 million of currency mark-to-market adjustments
highlighted above), partially offset by $468 million in price
increases.
Update of Pension Funded Status:
As of July 2, 2011, the funded status of the company's global
pension plans related to continuing operations was a surplus of
approximately $40 millionwhich compares to a deficit of
approximately $450 million on July 3, 2010. The improvement in
funded status is driven primarily by the strong performance of the
plans' assets.
Diluted Earnings Per Share:
Reported and adjusted EPS can be summarized as follows:
Fourth Quarter YTD
2011 2010 2011 2010
Diluted EPS as reported $ 0.19 $ 0.28 $ 2.06 $ 0.73
Less:
Gain on sale of 0.22 0.12 1.18 0.12
discontinued
operations
Tax related items (0.14 ) 0.11 0.24 (0.38 )
Other significant items (0.12 ) (0.17 ) (0.39 ) (0.29 )
Contingent sale proceeds - 0.01 - 0.19
Impact of 53rdweek - 0.03 - 0.03
Adjusted EPS* $ 0.24 $ 0.19 $ 1.05 $ 1.08
Of which:
Adjusted EPS from 0.20 0.07 0.78 0.67
continuing
operations
Adjusted EPS from 0.04 0.12 0.27 0.41
discontinued
operations
* Amounts are rounded
and may
not add to the total.
Webcast and Form 10-K
Sara Lee Corporation's review of its results for the fourth
quarter and fiscal year will be broadcast live via the Internet
today at 9:00 a.m. CDT. The live webcast can be accessed in the
Investor Relations section on www.saralee.com and is anticipated to
conclude by 10:00 a.m. CDT. For people who are unable to listen to
the webcast live, a recording will be available on the website at
7:00 p.m. on the day of the webcast until Feb. 10, 2012. Sara Lee
has also provided slides containing additional information that
will be reviewed during its fourth quarter webcast. The slides can
be accessed in the Investor Relations section on www.saralee.com
under Investor News and Events.
Amounts included in the release are unaudited pending the
company's filing of its form 10-K for fiscal 2011 with the
Securities and Exchange Commission. Sara Lee Corporation will file
its Form 10-K on or before August 31, 2011. The Form 10-K will be
available in the Investor Relations section (Financial/SEC
Information page) on www.saralee.com.
About Sara Lee Corporation
Each and every day, Sara Lee (NYSE: SLE) delights millions of
consumers and customers around the world. The company has one of
the world's best-loved and leading portfolios with its innovative
and trusted food and beverage brands, including Ball Park, Douwe
Egberts, Hillshire Farm, Jimmy Dean, Sara Lee and Senseo.
Collectively, our brands generate nearly $9 billion in annual net
sales from continuing operations. Sara Lee has approximately 20,000
employees in its continuing operations worldwide. In January, 2011,
Sara Lee Corp. announced that it will divide the company into two
pure play publicly-traded companies. One company will be focused
around the current International Coffee and Tea business, while the
other company will be focused on the North American Retail Meats
and North American Foodservice businesses. For more information on
this news, and on Sara Lee's brands, please visit
www.saralee.com.
Forward-Looking Statements
This release contains forward-looking statements regarding Sara
Lee's business prospects and future financial results and metrics,
including statements contained under the heading "Fiscal 2012
Guidance." In addition, from time to time, in oral statements and
written reports, the corporation discusses its expectations
regarding the corporation's future performance by making
forward-looking statements preceded by terms such as "anticipates,"
"we are confident," "expects," "likely" or "believes." These
forward-looking statements are based on currently available
competitive, financial and economic data and management's views and
assumptions regarding future events.
Forward-looking statements are inherently uncertain, and
investors must recognize that actual results may differ from those
expressed or implied in the forward-looking statements.
Consequently, the corporation wishes to caution readers not to
place undue reliance on any forward-looking statements. Among the
factors that could cause Sara Lee's actual results to differ from
such forward-looking statements are those described under Item 1A,
Risk Factors, in Sara Lee's most recent Annual Report on Form 10-K
and other SEC Filings, as well as factors relating to:
-- Sara Lee's spin off and separation plans and the special dividend
announced on Jan. 28, 2011, its regular quarterly dividend and
its
share repurchase plans, such as (i) unanticipated developments
that
delay or negatively impact the proposed spin off and capital
plans;
(ii) Sara Lee's ability to obtain an IRS tax ruling and any
other
customary approvals; (iii) Sara Lee's ability to generate
the
anticipated efficiencies and savings from the proposed spin
off
including a lower effective tax rate for the spin off company;
(iv)
the impact of the proposed spin off on Sara Lee's relationships
with
its employees, its major customers and vendors and on Sara
Lee's
credit ratings and cost of funds; (v) changes in market
conditions;
(vi) future opportunities that the Board may determine present
greater
potential value to shareholders than the spin off, special
dividend
and share purchase plans; (vii) the inability to complete the
sale of
Sara Lee's North American Fresh Bakery business, a condition to
the
payment of the special dividend; (viii) disruption to Sara
Lee's
business operations as a result of the proposed spin off; (ix)
future
operating or capital needs that require a more significant
outlay of
cash than currently anticipated; and (x) the ability of the
businesses
to operate independently following the completion of the
proposed spin
off;
-- Sara Lee's relationship with its customers, such as (i) a significant
change in Sara Lee's business with any of its major customers,
such as
Walmart, its largest customer, including changes in how such
customers
manage their suppliers and the level of inventory these
customers
maintain; and (ii) credit and other business risks associated
with
customers operating in a highly competitive retail
environment;
-- The consumer marketplace, such as (i) significant competition,
including advertising, promotional and price competition; (ii)
changes
in consumer behavior due to economic conditions, such as a shift
in
consumer demand toward private label; (iii) fluctuations in the
cost
of raw materials, Sara Lee's ability to increase or maintain
product
prices in response to fluctuations in cost and the impact on
Sara
Lee's profitability; (iv) the impact of various food safety
issues and
regulations on sales and profitability of Sara Lee products; and
(v)
inherent risks in the marketplace associated with new
product
introductions, including uncertainties about trade and
consumer
acceptance;
-- Sara Lee's international operations, such as (i) impacts on reported
earnings from fluctuations in foreign currency exchange
rates,
particularly the euro; (ii) Sara Lee's generation of a high
percentage
of its revenues from businesses outside the United States and
costs to
remit these foreign earnings into the U.S. to fund Sara Lee's
domestic
operations, share repurchase plans, dividends, debt service
and
corporate costs; (iii) difficulties and costs associated
with
complying with U.S. laws and regulations, such as Foreign
Corrupt
Practices Act, applicable to entities with overseas operations,
and
different regulatory structures and unexpected changes in
regulatory
environments overseas, including without limitation
potentially
negative consequences from changes in anti-competition and tax
laws;
and (iv) Sara Lee's ability to continue to source production
and
conduct manufacturing and selling operations in various
countries due
to changing business conditions, political environments, import
quotas
and the financial condition of suppliers;
-- Previous business decisions, such as (i) Sara Lee's ability to
generate margin improvement through cost reduction and
efficiency
initiatives; (ii) Sara Lee's ability to achieve planned cash
flows
from capital expenditures and acquisitions and the impact of
changing
interest rates and the cost of capital on the discounted value
of
those planned cash flows, which could impact future
impairment
analyses; (iii) credit ratings issued by the three major credit
rating
agencies, the impact of Sara Lee's capital plans and targets on
such
credit ratings and the impact these ratings and changes in
these
ratings may have on Sara Lee's cost to borrow funds, access
to
capital/debt markets, and ability to complete the planned
share
repurchase; (iv) the settlement of a number of ongoing reviews
of Sara
Lee's income tax filing positions in various jurisdictions
and
inherent uncertainties related to the interpretation of tax
regulations in the jurisdictions in which Sara Lee transacts
business;
and (v) changes in the expense for and contingent liabilities
relating
to multi-employer pension plans in which Sara Lee
participates.
In addition, Sara Lee's results may also be affected by general
factors, such as economic conditions, political developments,
interest and inflation rates, accounting standards, taxes and laws
and regulations in markets where the corporation competes. Sara Lee
undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Consolidated
Statements
of Income
For the Quarters
and Years ended
July 2, 2011
and July 3,
2010 (in millions,
except per
share data -
unaudited)
Quarter ended Fiscal Year ended
July 2, July 3, July 2, July 3,
2011 2010 2011 2010
Continuing operations
Net sales $ 2,297 $ 2,113 $ 8,681 $ 8,339
Cost of sales 1,603 1,404 5,868 5,356
Selling, general and 540 601 2,060 2,183
administrative
expenses
Net charges for exit 57 33 105 84
activities,
asset and business
dispositions
Impairment charges 21 11 21 28
Contingent sale - - - (133 )
proceeds
Operating income 76 64 627 821
Interest expense 30 36 117 138
Interest income (10 ) (5 ) (32 ) (23 )
Debt extinguishment - - 55 -
costs
Income from continuing 56 33 487 706
operations
before income taxes
Income tax expense 8 (75 ) 149 124
Income from continuing 48 108 338 582
operations
Discontinued
operations:
Income (loss) from
discontinued
operations,
net of tax expense (63 ) 5 222 (139 )
(benefit)
of $125,$53, $(50)
and $481
Gain on sale of
discontinued
operations, net of
tax expense (benefit) 128 78 736 84
of
$(8), $72, $568
and $74
Net income (loss) from 65 83 958 (55 )
discontinued
operations
Net income (loss) 113 191 1,296 527
Less: Income from
noncontrolling
interests, net of tax
Discontinued 2 4 9 21
operations
Net income (loss) $ 111 $ 187 $ 1,287 $ 506
attributable
to Sara Lee
Amounts attributable
to Sara Lee:
Net income from $ 48 $ 108 $ 338 $ 582
continuing
operations
Net income (loss) from 63 79 949 (76 )
discontinued
operations
Earnings per share
of common stock:
Basic
Income from continuing $ 0.08 $ 0.16 $ 0.54 $ 0.85
operations
Net income (loss) $ 0.19 $ 0.28 $ 2.07 $ 0.74
Average shares 588 664 621 688
outstanding
Diluted
Income from continuing $ 0.08 $ 0.16 $ 0.54 $ 0.84
operations
Net income (loss) $ 0.19 $ 0.28 $ 2.06 $ 0.73
Average shares 592 668 625 691
outstanding
Segment Analysis
- as reported
For the Quarters and Years ended July 2, 2011
and July 3, 2010 (in millions - unaudited)
Quarter ended Fiscal Year ended
July 2, July 3, Change July 2, July 3, Change
2011 2010 Dollars % 2011 2010 Dollars %
Continuing
Operations:
Net sales:
North American Retail $ 726 $ 742 $ (16 ) (2.1 ) % $ 2,868 $ 2,818 $ 50 1.8 %
North American Foodservice 400 391 9 2.1 1,566 1,547 19 1.2
International Beverage 996 804 192 23.9 3,548 3,221 327 10.2
International Bakery 182 184 (2 ) (1.2 ) 726 785 (59 ) (7.5 )
Intersegment (7 ) (8 ) 1 (27 ) (32 ) 5
Total net sales $ 2,297 $ 2,113 $ 184 8.7 % $ 8,681 $ 8,339 $ 342 4.1 %
Operating income (loss):
North American Retail $ 74 $ 42 $ 32 74.7 % $ 307 $ 343 $ (36 ) (10.6 ) %
North American Foodservice 1 7 (6 ) (92.2 ) 79 60 19 32.8
International Beverage 119 124 (5 ) (4.0 ) 452 592 (140 ) (23.6 )
International Bakery (28 ) (18 ) (10 ) (55.9 ) (12 ) (14 ) 2 10.9
Operating segment income 166 155 11 6.8 826 981 (155 ) (15.8 )
General corporate expenses (77 ) (76 ) (1 ) (188 ) (259 ) 71
Mark-to-market derivative gain/(loss) (7 ) (10 ) 3 11 (13 ) 24
Amortization (6 ) (5 ) (1 ) (22 ) (21 ) (1 )
Contingent sale proceeds - - - - 133 (133 )
Total operating income $ 76 $ 64 $ 12 19.3 % $ 627 $ 821 $ (194 ) (23.6 ) %
Operating Margin:
North American Retail 10.1 % 5.7 % 4.4 % 10.7 % 12.2 % (1.5 ) %
North American Foodservice 0.1 1.6 (1.5 ) 5.1 3.9 1.2
International Beverage 12.0 15.5 (3.5 ) 12.7 18.4 (5.7 )
International Bakery (15.4 ) (9.7 ) (5.7 ) (1.7 ) (1.8 ) 0.1
Total Sara Lee 3.3 % 3.0 % 0.3 % 7.2 % 9.8 % (2.6 ) %
Discontinued
Operations:
Net sales $ 714 $ 1,171 $ (457 ) (39.0 ) % $ 3,422 $ 4,580 $ (1,158 ) (25.3 ) %
Operating segment income 67 64 3 2.6 185 378 (193 ) (51.3 )
Operating income 64 59 5 11.0 180 348 (168 ) (48.3 )
Operating Margin 9.3 % 5.5 % 3.8 % 5.4 % 8.3 % (2.9 ) %
NM: Not meaningful
Segment Analysis
- as adjusted
For the Quarters and Years ended July 2, 2011
and July 3, 2010 (in millions - unaudited)
Quarter ended Fiscal Year ended
July 2, July 3, Change July 2, July 3, Change
2011 2010 Dollars % 2011 2010 Dollars %
Continuing
Operations:
Adjusted net sales:
North American Retail $ 715 $ 690 $ 25 3.8 % $ 2,857 $ 2,766 $ 91 3.3 %
North American Foodservice 400 366 34 9.3 1,566 1,523 43 2.8
International Beverage 978 857 121 14.1 3,514 3,199 315 9.9
International Bakery 182 198 (16 ) (8.4 ) 726 775 (49 ) (6.4 )
Intersegment (7 ) (8 ) 1 (27 ) (32 ) 5
Adjusted net sales $ 2,268 $ 2,103 $ 165 7.8 % $ 8,636 $ 8,231 $ 405 4.9 %
Adjusted operating income (loss):
North American Retail $ 82 $ 38 $ 44 NM $ 317 $ 335 $ (18 ) (5.2 ) %
North American Foodservice 20 15 5 37.1 102 86 16 19.1
International Beverage 121 138 (17 ) (12.7 ) 489 593 (104 ) (17.5 )
International Bakery - 13 (13 ) NM 16 45 (29 ) (65.0 )
Adjusted operating segment income 223 204 19 9.7 % 924 1,059 (135 ) (12.6 ) %
General corporate expenses (21 ) (54 ) 33 (104 ) (198 ) 94
Mark-to-market derivative gain/(loss) (7 ) (10 ) 3 11 (13 ) 24
Amortization (6 ) (5 ) (1 ) (22 ) (21 ) (1 )
Adjusted operating income $ 189 $ 135 $ 54 40.3 % $ 809 $ 827 $ (18 ) (2.0 ) %
Adjusted Operating Margin:
North American Retail 11.4 % 5.5 % 5.9 % 11.1 % 12.1 % (1.0 ) %
North American Foodservice 5.0 4.0 1.0 6.5 5.6 0.9
International Beverage 12.4 16.2 (3.8 ) 13.9 18.5 (4.6 )
International Bakery (0.1 ) 6.0 (6.1 ) 2.1 5.7 (3.6 )
Total Sara Lee 8.4 % 6.4 % 2.0 % 9.4 % 10.0 % (0.6 ) %
Discontinued
Operations:
Adjusted net sales $ 714 $ 706 $ 8 1.1 % $ 3,422 $ 3,453 $ (31 ) (0.9 ) %
Adjusted operating segment income 58 50 8 12.7 296 298 (2 ) (0.9 )
Adjusted operating income 55 45 10 25.3 291 268 23 8.7
Adjusted operating margin 8.0 % 7.2 % 0.8 % 8.7 % 8.7 % 0.0 %
* Adjusted amounts are
non-GAAP measures.
See the explanation of non-GAAP
financials in this release
NM - Not meaningful
Net Sales Bridge
For the Quarters and Years ended July 2, 2011 and July 3, 2010 (unaudited)
The following table illustrates the components of the change in net sales versus the prior year for each of the four reported business segments
Fourth Quarter ended July 2, 2011
Adjusted Total
Unit Net Sales* Impact of Acq./ Foreign Net Sales
Volume(1) + Mix + Price + Other = Change 53rd Week + Disp. + Exchange = Change
North American Retail (6.9)% 0.2% 8.4% 2.1% 3.8% (7.3)% 1.4% 0.0% (2.1)%
North American Foodservice (2.0) (1.7) 13.1 (0.1) 9.3 (7.3) 0.0 0.1 2.1
International Beverage (9.3) 2.7 14.7 6.0 14.1 (6.1) 2.1 13.8 23.9
International Bakery (1.2) (1.7) (5.1) (0.4) (8.4) (5.4) 0.0 12.6 (1.2)
Total Continuing Business (6.6)% 0.8% 10.5% 3.1% 7.8% (6.7)% 1.3% 6.3% 8.7%
Fiscal Year ended July 2, 2011
Adjusted Total
Unit Net Sales* Impact of Acq./ Foreign Net Sales
Volume(1) + Mix + Price + Other = Change 53rd Week + Disp. + Exchange = Change
North American Retail (3.8)% 1.8% 5.5% (0.2)% 3.3% (1.9)% 0.4% 0.0% 1.8%
North American Foodservice (13.4) 6.8 9.5 (0.1) 2.8 (1.7) 0.0 0.1 1.2
International Beverage (2.2) 2.0 6.0 4.1 9.9 (1.7) 1.1 0.9 10.2
International Bakery (2.5) (0.6) (3.7) 0.4 (6.4) (1.5) 0.0 0.4 (7.5)
Total Continuing Business (4.7)% 2.5% 5.6% 1.5% 4.9% (1.7)% 0.5% 0.4% 4.1%
*Adjusted net sales is a non-GAAP measure that excludes the impact of foreign currency exchange rates and acquisitions/dispositions.
See the explanation of non-GAAP financials in this release
(1) Volume data excludes the impact of the 53rd week and commodity hog volumes as the corporation has exited nearly all of its commodity hog contracts.
Significant
Items
Quarters ended July 2, 2011 and July 3, 2010 (in
millions, except per share data - unaudited)
Quarter ended July 2, 2011 Quarter ended July 3, 2010
Diluted Diluted
Pretax Net EPS Pretax Net EPS
Impact Income Impact (1) Impact Income Impact (1)
Continuing Operations:
Business outsourcing costs $ (8 ) $ (5 ) $ (0.01 ) $ (6 ) $ (4 ) $ (0.01 )
Severance 5 3 - (23 ) (16 ) (0.02 )
Lease exit costs - - - (5 ) (3 ) -
Accelerated depreciation - - - (11 ) (7 ) (0.01 )
Total Project Accelerate (3 ) (2 ) - (45 ) (30 ) (0.05 )
International stranded overhead - severance (26 ) (19 ) (0.03 ) - - -
Pension curtailment gain - - - - - -
Impairment charges (21 ) (14 ) (0.02 ) (11 ) (8 ) (0.01 )
Mexican tax indemnification - - - (11 ) (16 ) (0.02 )
Spin off related costs (66 ) (49 ) (0.08 ) - - -
Impact of significant items on income from continuing operations before income taxes (116 ) (84 ) (0.14 ) (67 ) (54 ) (0.08 )
Tax on unremitted earnings - - - - (19 ) (0.03 )
Belgian tax proceeding - - - - (1 ) -
UK net operating loss utilization - - - - (5 ) (0.01 )
Tax credit adjustment - - - - 7 0.01
Tax audit settlement/reserve adjustments - 19 0.03 - 95 0.14
Tax valuation allowance adjustment - (7 ) (0.01 ) - - -
Deferred tax adjustment on repatriation - - - - 11 0.02
Other tax adjustment - - - - 12 0.02
Impact of significant items on income from continuing operations (116 ) (72 ) (0.12 ) (67 ) 46 0.07
Discontinued operations:
Professional fees/other (16 ) (12 ) (0.02 ) (13 ) (11 ) (0.02 )
Exit activities (3 ) (2 ) - (16 ) (14 ) (0.02 )
Accelerated depreciation (1 ) - - - - -
Pension curtailment gain (loss) (3 ) (2 ) - - - -
Pension partial withdrawal liability charge 5 3 0.01 (16 ) (10 ) (0.01 )
Gain on the sale of discontinued operations 120 128 0.22 150 78 0.12
Licensing agreement termination charge - - - - - -
Antitrust reserve reversal 27 18 0.03 (28 ) (28 ) (0.04 )
Tax on unremitted earnings - - - - (6 ) (0.01 )
Tax basis difference - Fresh Bakery - (105 ) (0.18 ) - - -
Tax basis difference - H&BC - - - - (9 ) (0.01 )
Tax valuation allowance adjustment - 12 0.02 (13 ) (0.02 )
Capital loss carryforward utilization - - - - (5 ) (0.01 )
Deferred tax adjustment on repatriation - - - - 9 0.01
Impact of significant items on income from discontinued operations 129 40 0.07 77 (9 ) (0.01 )
Impact of significant items on net income $ 13 $ (32 ) $ (0.05 ) $ 10 $ 37 $ 0.05
Impact of significant items on income from continuing operations before income taxes
Cost of sales $ - $ (6 )
Selling, general and administrative expenses (37 ) (17 )
Exit and business dispositions (58 ) (33 )
Impairment charges (21 ) (11 )
Debt extinguishment costs - -
Total $ (116 ) $ (67 )
Notes:
(1) EPS amounts are rounded to the nearest $0.01 and may not add to the total.
Significant
Items
Years ended July 2, 2011 and July 3, 2010 (in millions,
except per share data - unaudited)
Fiscal Year ended July 2, 2011 Fiscal Year ended July 3, 2010
Diluted Diluted
Pretax Net EPS Pretax Net EPS
Impact Income Impact (1) Impact Income Impact (1)
Continuing Operations:
Business outsourcing costs $ (20 ) $ (14 ) (0.02 ) $ (27 ) $ (18 ) (0.03 )
Severance (1 ) (1 ) - (46 ) (32 ) (0.05 )
Lease exit costs - - - (14 ) (8 ) (0.01 )
Business disposition costs - - - (20 ) (14 ) (0.02 )
Accelerated depreciation (2 ) (1 ) - (11 ) (7 ) (0.01 )
Total Project Accelerate (23 ) (16 ) (0.02 ) (118 ) (79 ) (0.12 )
International stranded overhead - severance (66 ) (47 ) (0.07 ) - - -
Pension curtailment gain - - - 20 13 0.02
Impairment charges (21 ) (14 ) (0.02 ) (28 ) (19 ) (0.03 )
Mexican tax indemnification - - - (26 ) (26 ) (0.04 )
Debt extinguishment costs (55 ) (35 ) (0.06 ) - - -
Spin off related costs (76 ) (55 ) (0.09 ) - - -
Impact of significant items on income from continuing operations before income taxes (241 ) (167 ) (0.27 ) (152 ) (111 ) (0.16 )
Tax on unremitted earnings - - - - (121 ) (0.18 )
Belgian tax proceeding - - - - (44 ) (0.06 )
UK net operating loss utilization - - - - 11 0.02
Tax audit settlement/reserve adjustments - 27 0.04 - 198 0.29
Tax credit adjustment - - - - 25 0.04
Deferred tax adjustment on repatriation - - - - 11 0.02
Tax valuation allowance adjustment - (7 ) (0.01 ) - (5 ) (0.01 )
Other tax adjustment - - - - 12 0.02
Impact of significant items on income from continuing operations (241 ) (147 ) (0.24 ) (152 ) (24 ) (0.04 )
Discontinued operations:
Professional fees/other (36 ) (28 ) (0.04 ) (35 ) (31 ) (0.04 )
Exit activities (59 ) (42 ) (0.07 ) (17 ) (14 ) (0.02 )
Accelerated depreciation (3 ) (2 ) - (2 ) (2 ) -
Pension curtailment gain (loss) (4 ) (2 ) - (6 ) (5 ) (0.01 )
Pension partial withdrawal liability charge 3 2 - (23 ) (15 ) (0.02 )
Gain on the sale of discontinued operations 1,304 736 1.18 158 84 0.12
Licensing agreement termination charge (39 ) (27 ) (0.04 ) - - -
Antitrust reserve (provision)/reversal 27 18 0.03 (28 ) (28 ) (0.04 )
Tax basis difference - Fresh Bakery - 122 0.20 - - -
Tax basis difference - H&BC - (2 ) - - 2 -
Tax audit settlement - (1 ) - - (3 ) -
Capital loss carryforward utilization - - - - 22 0.03
Valuation allowance adjustment - 10 0.02 - 40 0.06
Deferred tax adjustment on repatriation - - - - 9 0.01
Tax on unremitted earnings - (6 ) (0.01 ) - (427 ) (0.62 )
Impact of significant items on income from discontinued operations 1,193 778 1.25 47 (368 ) (0.53 )
Impact of significant items on net income $ 952 $ 631 $ 1.01 $ (105 ) $ (392 ) $ (0.57 )
Impact of significant items on income from continuing operations before income taxes
Cost of sales $ (2 ) $ -
Selling, general and administrative expenses (58 ) (40 )
Exit and business dispositions (105 ) (84 )
Impairment charges (21 ) (28 )
Debt extinguishment costs (55 ) -
Total $ (241 ) $ (152 )
Notes:
(1) EPS amounts are rounded to the nearest $0.01 and may not add to the total.
EPS
Reconciliation
-
Reported to
Adjusted
Quarters
ended
July 2, 2011
and July 3,
2010 (in
millions,
except
per share
data
- unaudited)
Quarter ended July 2, 2011 Quarter ended July 3, 2010
Impact of Significant Items Impact of Significant Items Contingent
As Continuing Discontinued As Continuing Discontinued Impact of Sale
Reported Operations Operations Adjusted (1) Reported Operations Operations 53rd week Proceeds Adjusted (1)
Continuing
operations:
Income from $ 56 $ (116 ) $ - $ 172 $ 33 $ (67 ) $ - $ 17 $ - $ 83
continuing
operations
before income
taxes
Income tax 8 (44 ) - 52 (75 ) (113 ) - 6 (6 ) 38
(benefit)
expense
Income from 48 (72 ) - 120 108 46 - 11 6 45
continuing
operations
Discontinued
operations:
Income (loss) (63 ) - (88 ) 25 5 - (87 ) 10 - 82
from
discontinued
operations,
net of tax
Gain on sale 128 - 128 - 78 - 78 - - -
of
discontinued
operations,
net of tax
Net income 65 - 40 25 83 - (9 ) 10 - 82
(loss)
from
discont. ops.
Net income 113 (72 ) 40 145 191 46 (9 ) 21 6 127
(loss)
Less: Income
from
noncontrolling
interests,
net of tax
Discontinued 2 - - 2 4 - - - - 4
operations
Net income $ 111 $ (72 ) $ 40 $ 143 $ 187 $ 46 $ (9 ) $ 21 $ 6 $ 123
(loss)
attributable
to Sara Lee
Amounts
attributable
to Sara Lee:
Net income $ 48 $ (72 ) $ - $ 120 $ 108 $ 46 $ - $ 11 $ 6 $ 45
(loss)
from
continuing
operations
Net income 63 - 40 23 79 - (9 ) 10 - 78
(loss)
from
discontinued
operations
Earnings per
share
of common
stock*:
Diluted
Income (loss) $ 0.08 $ (0.12 ) $ - $ 0.20 $ 0.16 $ 0.07 $ - $ 0.02 $ 0.01 $ 0.07
from
continuing
operations
Net income $ 0.19 $ (0.12 ) $ 0.07 $ 0.24 $ 0.28 $ 0.07 $ (0.01 ) $ 0.03 $ 0.01 $ 0.19
(loss)
Effective 14.5 % 30.4 % (223.2 )% 44.5 %
tax rate
- continuing
operations
(1)
Represents
a non-GAAP
financial
measure.
See the
explanation
of
non-GAAP
financials
in
this release
* EPS amounts
are rounded
to
the nearest
$0.01 and may
not add
to the total
EPS Reconciliation - Reported to Adjusted
Years ended July 2, 2011 and July 3, 2010 (in millions,
except per share data - unaudited)
Fiscal Year ended July 2, 2011 Fiscal Year ended July 3, 2010
Impact of Significant Items Impact of Significant Items Contingent
As Continuing Discontinued As Continuing Discontinued Impact of Sale
Reported Operations Operations Adjusted (1) Reported Operations Operations 53rd week Proceeds Adjusted (1)
Continuing operations:
Income from continuing operations $ 487 $ (241 ) $ - $ 728 $ 706 $ (152 ) $ - $ 17 $ 133 $ 708
before income taxes
Income tax (benefit) expense 149 (94 ) - 243 124 (128 ) - 6 - 246
Income from continuing operations 338 (147 ) - 485 582 (24 ) - 11 133 462
Discontinued operations:
Income from discontinued operations, net of tax 222 - 42 180 (139 ) - (452 ) 10 - 303
Gain on sale of discontinued 736 - 736 - 84 - 84 - - -
operations, net of tax
Net income (loss) from discont. ops. 958 - 778 180 (55 ) - (368 ) 10 - 303
Net income 1,296 (147 ) 778 665 527 (24 ) (368 ) 21 133 765
Less: Income from noncontrolling
interests, net of tax
Discontinued operations 9 - - 9 21 - - - - 21
Net income attributable to Sara Lee $ 1,287 $ (147 ) $ 778 $ 656 $ 506 $ (24 ) $ (368 ) $ 21 $ 133 $ 744
Amounts attributable to Sara Lee:
Net income from continuing operations $ 338 $ (147 ) $ - $ 485 $ 582 $ (24 ) $ - $ 11 $ 133 $ 462
Net income from discontinued operations 949 - 778 171 (76 ) - (368 ) 10 - 282
Earnings per share of common stock*:
Diluted
Income from continuing operations $ 0.54 $ (0.24 ) $ - $ 0.78 $ 0.84 $ (0.04 ) $ - $ 0.02 $ 0.19 $ 0.67
Net income $ 2.06 $ (0.24 ) $ 1.25 $ 1.05 $ 0.73 $ (0.04 ) $ (0.53 ) $ 0.03 $ 0.19 $ 1.08
Effective tax rate - continuing operations 30.7 % 33.4 % 17.6 % 34.6 %
(1) Represents a non-GAAP financial measure. See the
explanation of non-GAAP financials in this release
* EPS amounts are rounded to the nearest
$0.01 and may not add to the total.
Explanation of Non-GAAP Financial Measures
Management measures and reports Sara Lee's financial results in
accordance with U.S. generally accepted accounting principles
("GAAP"). In this release, Sara Lee highlights certain items that
have significantly impacted the corporation's financial results and
uses several non-GAAP financial measures to help investors
understand the financial impact of these significant items.
"Significant items" are income or charges (and related tax
impact) that management believes have had or are likely to have a
significant impact on the earnings of the applicable business
segment or on the total corporation for the period in which the
item is recognized, are not indicative of the company's core
operating results and affect the comparability of underlying
results from period to period. Significant items may include, but
are not limited to: charges for exit activities; transformation
program and Project Accelerate costs; impairment charges; pension
partial withdrawal liability charges; benefit plan curtailment
gains (losses); debt extinguishment costs; spin-off related costs;
tax charge on deemed repatriated earnings; tax costs and benefits
resulting from the disposition of a business; impact of tax law
changes; gains on the sale of discontinued operations; changes in
tax valuation allowances and favorable or unfavorable resolution of
open tax matters based on the finalization of tax authority
examinations or the expiration of statutes of limitations.
Management highlights significant items to provide greater
transparency into the underlying sales or profit trends of Sara Lee
or the applicable business segment or discontinued operations and
to enable more meaningful comparability between financial results
from period to period. Additionally, Sara Lee believes that
investors desire to understand the impact of these factors to
better project and assess the longer term trends and future
financial performance of the corporation.
"Contingent sale proceeds" are contingent proceeds from the sale
of the company's tobacco business in fiscal 1999. Under the sales
agreement, Sara Lee received cash payments annually so long as
tobacco continued to be a legal product in the specified countries.
Our last cash payment was received on July 15, 2009. Contingent
sale proceeds are not "significant items," but are identified
separately because the income is not generated by the company's
underlying business and has a finite term.
"Impact of 53rd week" is the financial impact to Sara Lee, in
terms of additional sales, expense or income, resulting from fiscal
2010 having 53 weeks as compared to 52 weeks in the comparable
fiscal years.
This release contains certain non-GAAP financial measures that
exclude from a financial measure computed in accordance with GAAP
the impact of the significant items, the receipt of contingent sale
proceeds, and the impact of acquisitions and dispositions, the 53rd
week and changes in foreign currency exchange rates. Management
believes that these non-GAAP financial measures reflect an
additional way of viewing aspects of Sara Lee's business that, when
viewed together with Sara Lee's financial results computed in
accordance with GAAP, provide a more complete understanding of
factors and trends affecting Sara Lee's historical financial
performance and projected future operating results, greater
transparency of underlying profit trends and greater comparability
of results across periods. These non-GAAP financial measures are
not intended to be a substitute for the comparable GAAP measures
and should be read only in conjunction with our consolidated
financial statements prepared in accordance with GAAP.
In addition, investors frequently have requested information
from management regarding significant items and the impact of the
contingent sale proceeds. Management believes, based on feedback it
has received during earnings calls and discussions with investors,
that these non-GAAP measures enhance investors' ability to assess
Sara Lee's historical and project future financial performance.
Management also uses certain of these non-GAAP financial measures,
in conjunction with the GAAP financial measures, to understand,
manage and evaluate our businesses, in planning for and forecasting
financial results for future periods, and as one factor in
determining achievement of incentive compensation. Two of the three
performance measures under Sara Lee's annual incentive plan are net
sales and operating income, which are the reported amounts as
adjusted for significant items and possibly other items. Operating
income, as adjusted for significant items, also may be used as a
component of Sara Lee's long-term incentive plans. Many of the
significant items will recur in future periods; however, the amount
and frequency of each significant item varies from period to
period. Management also has received inquiries from investors
seeking to better understand and project the corporation's tax
rate, which can be complex given the multiple foreign jurisdictions
in which Sara Lee operates and the numerous tax rules with which it
must comply. The information contained in the tables
"Reconciliation of as Reported to Adjusted" for each fiscal period
includes certain non-GAAP financial measures, and is intended to
help investors better understand Sara Lee's effective tax rate.
The following is an explanation of the non-GAAP financial
measures presented in this release.
In the "EPS Reconciliation of as Reported to Adjusted" tables,
each item in the "Adjusted" column of that table equals the
indicated financial measure computed in accordance with GAAP less
the impact of both significant items and contingent sale proceeds
recognized in the fiscal period presented.
"Adjusted EPS" excludes from diluted EPS, as reported, for total
Sara Lee, for continuing operations or for discontinued operations,
as indicated, the per share impact of significant items and
contingent sale proceeds, and the per share impact of the 53rd week
recognized in the fiscal period presented.
"Adjusted net sales" for continuing operations or discontinued
operations, as indicated, excludes from applicable net sales the
impact of businesses acquired or divested after the start of the
fiscal period and the impact of the 53rd week, and also presents
fiscal 2010 results at fiscal 2011 currency exchange rates.
"Adjusted operating income" for continuing operations or
discontinued operations, as indicated, excludes from applicable
operating income the impact of significant items and contingent
sale proceeds, if any, the impact of the 53rd week and businesses
acquired or divested after the start of the fiscal period, and also
presents fiscal 2010 results at fiscal 2011 currency exchange
rates.
"Adjusted operating margin" for continuing operations, a
specified business segment or discontinued operations, as
indicated, is a non-GAAP financial measure that equals adjusted
operating income for the applicable portion of the business divided
by adjusted net sales of the corporation (in the case of computing
adjusted operating margin for continuing operations) or adjusted
operating segment income for a business segment or discontinued
operations divided by adjusted net sales for that business segment
or discontinued operation (in the case of computing adjusted
operating margin for a specific business segment or discontinued
operations).
"Adjusted operating segment income" for continuing operations, a
specified business segment or discontinued operations, as
indicated, excludes from the operating segment income from
continuing operations, of a specified business segment or from
discontinued operations the impact of significant items and the
impact of the 53rd week recognized by that portion of the business
during the fiscal period and businesses acquired or divested after
the start of the fiscal period, and also presents fiscal 2010
results at fiscal 2011 currency exchange rates.
"EPS ex significant items" for continuing operations excludes
from the non-GAAP measure "Adjusted EPS" for continuing operations
(as defined above) for fiscal 2011 estimated earnings per share
attributable to the International Bakery business segment for the
fiscal period presented.
"Operating Income ex significant items" for continuing
operations starts with the non-GAAP measure "Adjusted operating
income" for continuing operations (as defined above) for fiscal
2011 and (i) adds back operating segment income attributable to
businesses acquired after the start of fiscal 2011, (ii) subtracts
operating segment income attributable to the International Bakery
business segment for fiscal 2011, and (iii) subtracts certain
fiscal 2011 corporate expenses, primarily amortization expenses and
stranded costs, that were allocated to the International Bakery
business segment. Management believes that these adjustments help
present fiscal 2011 actual results on a basis that is comparable to
the basis of presentation of the company's fiscal 2012
guidance.
Operating
Results
by
Business
Segment
For
the Quarters
and Years
ended July
2, 2011
and July
3, 2010
(in millions
- unaudited)
North American
Retail
Fourth Quarter Fiscal Year
Dollar Percent Dollar Percent
2011 2010 Change Change 2011 2010 Change Change
Net sales $ 726 $ 742 $ (16 ) (2.1 )% $ 2,868 $ 2,818 $ 50 1.8 %
Increase/(decrease)
in net sales
from:
Acquisition $ 11 $ - $ 11 $ 11 $ - $ 11
Impact of 53rd - 52 (52 ) - 52 (52 )
week
Adjusted net $ 715 $ 690 $ 25 3.8 % $ 2,857 $ 2,766 $ 91 3.3 %
sales*
Operating $ 74 $ 42 $ 32 74.7 % $ 307 $ 343 $ (36 ) (10.6 )%
segment
income
Operating 10.1 % 5.7 % 4.4 % 10.7 % 12.2 % (1.5 )%
margin %
Increase/(decrease)
in operating
segment income
from:
Project $ - $ (1 ) $ 1 $ (2 ) $ (4 ) $ 2
Accelerate
charges
Spin off (9 ) - (9 ) (9 ) - (9 )
related
costs
Curtailment - - - - 7 (7 )
gain
Acquisition 1 - 1 1 - 1
Impact of 53rd - 5 (5 ) - 5 (5 )
week
Adjusted $ 82 $ 38 $ 44 NM $ 317 $ 335 $ (18 ) (5.2 )%
operating
segment
income*
Adjusted 11.4 % 5.5 % 5.9 % 11.1 % 12.1 % (1.0 )%
operating
margin %*
North American
Foodservice
Net sales $ 400 $ 391 $ 9 2.1 % $ 1,566 $ 1,547 $ 19 1.2 %
Increase/(decrease)
in net sales
from:
Changes in $ - $ (1 ) $ 1 $ - $ (2 ) $ 2
foreign
currency
exchange rates
Impact of 53rd - 26 (26 ) - 26 (26 )
week
Adjusted net $ 400 $ 366 $ 34 9.3 % $ 1,566 $ 1,523 $ 43 2.8 %
sales*
Operating $ 1 $ 7 $ (6 ) (92.2 )% $ 79 $ 60 $ 19 32.8 %
segment
income
Operating 0.1 % 1.6 % (1.5 )% 5.1 % 3.9 % 1.2 %
margin %
Increase/(decrease)
in operating
segment income
from:
Project $ - $ - $ - $ (2 ) $ (10 ) $ 8
Accelerate
charges
Spin off (4 ) - (4 ) (4 ) - (4 )
related
costs
Accelerated - (7 ) 7 (2 ) (7 ) 5
depreciation
Impairment (15 ) (2 ) (13 ) (15 ) (15 ) -
charges
Curtailment - - - - 5 (5 )
gain
Impact of 53rd - 1 (1 ) - 1 (1 )
week
Adjusted $ 20 $ 15 $ 5 37.1 % $ 102 $ 86 $ 16 19.1 %
operating
segment
income*
Adjusted 5.0 % 4.0 % 1.0 % 6.5 % 5.6 % 0.9 %
operating
margin %*
* Adjusted
amounts
are
non-GAAP
measures.
See
the
explanation
non-GAAP
financial
measures
in this
release.
Operating
Results
by
Business
Segment
For
the Quarters
and Years
ended July
2, 2011
and July
3, 2010
(in millions
- unaudited)
International
Beverage
Fourth Quarter Fiscal Year
Dollar Percent Dollar Percent
2011 2010 Change Change 2011 2010 Change Change
Net sales $ 996 $ 804 $ 192 23.9 % $ 3,548 $ 3,221 $ 327 10.2 %
Increase/(decrease)
in net sales
from:
Changes in $ - $ (102 ) $ 102 $ - $ (27 ) $ 27
foreign
currency
exchange rates
Acquisitions 18 1 17 34 1 33
Impact of 53rd - 48 (48 ) - 48 (48 )
week
Adjusted net $ 978 $ 857 $ 121 14.1 % $ 3,514 $ 3,199 $ 315 9.9 %
sales*
Operating $ 119 $ 124 $ (5 ) (4.0 )% $ 452 $ 592 $ (140 ) (23.6 )%
segment
income
Operating 12.0 % 15.5 % (3.5 )% 12.7 % 18.4 % (5.7 )%
margin %
Increase/(decrease)
in operating
segment income
from:
Changes in $ - $ (23 ) $ 23 $ - $ (6 ) $ 6
foreign
currency
exchange rates
Project 2 (8 ) 10 (1 ) (12 ) 11
Accelerate
charges
Spin off (1 ) - (1 ) (1 ) - (1 )
related
costs
Impairment (6 ) - (6 ) (6 ) - (6 )
charges
International 1 - 1 (32 ) - (32 )
stranded
overhead -
severance
Acquisition 2 - 2 3 - 3
Impact of 53rd - 17 (17 ) - 17 (17 )
week
Adjusted $ 121 $ 138 $ (17 ) (12.7 )% $ 489 $ 593 $ (104 ) (17.5 )%
operating
segment
income*
Adjusted 12.4 % 16.2 % (3.8 )% 13.9 % 18.5 % (4.6 )%
operating
margin %*
International
Bakery
Net sales $ 182 $ 184 $ (2 ) (1.2 )% $ 726 $ 785 $ (59 ) (7.5 )%
Increase/(decrease)
in net sales
from:
Changes in $ - $ (27 ) $ 27 $ - $ (3 ) $ 3
foreign
currency
exchange rates
Impact of 53rd - 13 (13 ) - 13 (13 )
week
Adjusted net $ 182 $ 198 $ (16 ) (8.4 )% $ 726 $ 775 $ (49 ) (6.4 )%
sales*
Operating $ (28 ) $ (18 ) $ (10 ) (55.9 )% $ (12 ) $ (14 ) $ 2 10.9 %
segment
income
Operating (15.4 )% (9.7 )% (5.7 )% (1.7 )% (1.8 )% 0.1 %
margin %
Increase/(decrease)
in operating
segment income
from:
Changes in $ - $ (2 ) $ 2 $ - $ - $ -
foreign
currency
exchange rates
Project - (21 ) 21 - (47 ) 47
Accelerate
charges
Impairment - (9 ) 9 - (13 ) 13
charge
International (28 ) - (28 ) (28 ) - (28 )
stranded
overhead -
severance
Impact of 53rd - 1 (1 ) - 1 (1 )
week
Adjusted $ - $ 13 $ (13 ) NM $ 16 $ 45 $ (29 ) (65.0 )%
operating
segment
income*
Adjusted (0.1 )% 6.0 % (6.1 )% 2.1 % 5.7 % (3.6 )%
operating
margin %*
* Adjusted
amounts
are
non-GAAP
measures.
See
the
explanation
non-GAAP
financial
measures
in this
release.
Operating
Results
by
Business
Segment
For
the Quarters
and Years
ended July
2, 2011
and July
3, 2010
(in millions
- unaudited)
Total Sara Lee
- Continuing
Operations
Fourth Quarter Fiscal Year
Dollar Percent Dollar Percent
2011 2010 Change Change 2011 2010 Change Change
Net sales $ 2,304 $ 2,121 $ 183 $ 8,708 $ 8,371 $ 337
- total
operating
segments
Intersegment (7 ) (8 ) 1 (27 ) (32 ) 5
Net sales $ 2,297 $ 2,113 $ 184 8.7 % $ 8,681 $ 8,339 $ 342 4.1 %
Increase/(decrease)
in net sales
from:
Changes in $ - $ (130 ) $ 130 $ - $ (32 ) $ 32
foreign
currency
exchange rates
Acquisitions 29 1 28 45 1 44
Impact of 53rd - 139 (139 ) - 139 (139 )
week
Adjusted net $ 2,268 $ 2,103 $ 165 7.8 % $ 8,636 $ 8,231 $ 405 4.9 %
sales*
Total $ 166 $ 155 $ 11 6.8 % $ 826 $ 981 $ (155 ) (15.8 )%
operating
segment income
Increase/(decrease)
in operating
segment income
from:
Changes in $ - $ (25 ) $ 25 $ - $ (6 ) $ 6
foreign
currency
exchange rates
Project 2 (30 ) 32 (5 ) (73 ) 68
Accelerate
charges
Spin off (14 ) - (14 ) (14 ) - (14 )
related
costs
International (27 ) - (27 ) (60 ) - (60 )
stranded
overhead -
severance
Accelerated - (7 ) 7 (2 ) (7 ) 5
depreciation
Impairment (21 ) (11 ) (10 ) (21 ) (28 ) 7
charges
Pension - - - - 12 (12 )
curtailment
gain
Acquisition 3 - 3 4 - 4
Impact of 53rd - 24 (24 ) - 24 (24 )
week
Total adjusted $ 223 $ 204 $ 19 9.7 % $ 924 $ 1,059 $ (135 ) (12.6 )%
operating
segment
income*
Total $ 166 $ 155 $ 11 6.8 % $ 826 $ 981 $ (155 ) (15.8 )%
operating
segment income
General (77 ) (76 ) (1 ) (188 ) (259 ) 71
corporate
expenses
Mark-to-market (7 ) (10 ) 3 11 (13 ) 24
derivative
gains (losses)
Amortization (6 ) (5 ) (1 ) (22 ) (21 ) (1 )
of
trademarks
and
other
intangibles
Contingent - - - - 133 (133 )
sales
proceeds
Operating $ 76 $ 64 $ 12 19.3 % $ 627 $ 821 $ (194 ) (23.6 )%
income
Operating 3.3 % 3.0 % 0.3 % 7.2 % 9.8 % (2.6 )%
margin %
Increase/(decrease)
in
operating
income
from:
Contingent $ - $ - $ - $ - $ 133 $ (133 )
sale
proceeds
Changes in - (22 ) 22 - (5 ) 5
foreign
currency
exchange rates
Project (3 ) (34 ) 31 (21 ) (107 ) 86
Accelerate
charges
Spin off (66 ) - (66 ) (76 ) - (76 )
related
costs
International (26 ) - (26 ) (66 ) - (66 )
stranded
overhead -
severance
Accelerated - (11 ) 11 (2 ) (11 ) 9
depreciation
Impairment (21 ) (11 ) (10 ) (21 ) (28 ) 7
charges
Pension - - - - 20 (20 )
curtailment
gain
Mexican - (11 ) 11 - (26 ) 26
tax
indemnification
Acquisition 3 - 3 4 - 4
Impact of 53rd - 18 (18 ) - 18 (18 )
week
Adjusted $ 189 $ 135 $ 54 40.3 % $ 809 $ 827 $ (18 ) (2.0 )%
operating
income*
Adjusted 8.4 % 6.4 % 2.0 % 9.4 % 10.0 % (0.6 )%
operating
margin %*
* Adjusted
amounts
are
non-GAAP
measures.
See
the
explanation
non-GAAP
financial
measures
in this
release.
Operating
Results
- Discontinued
Operations
For
the Quarters
and Years
ended July
2, 2011
and July
3, 2010
(in millions
- unaudited)
North American
Fresh
Bakery
Operations
Fourth Quarter Fiscal Year
Dollar Percent Dollar Percent
2011 2010 Change Change 2011 2010 Change Change
Net sales $ 543 $ 587 $ (44 ) (7.6 )% $ 2,037 $ 2,128 $ (91 ) (4.3 )%
Impact of 53rd - 52 (52 ) - 52 (52 )
week
Adjusted net $ 543 $ 535 $ 8 1.5 % $ 2,037 $ 2,076 $ (39 ) (1.9 )%
sales*
Operating $ 40 $ 11 $ 29 NM $ 60 $ 56 $ 4 7.4 %
segment
income
Operating 7.4 % 1.9 % 5.5 % 2.9 % 2.6 % 0.3 %
margin %
Increase/(decrease)
in operating
segment income
from:
Changes in $ - $ - $ - $ - $ - $ -
foreign
currency
exchange rates
Exit - 1 (1 ) (1 ) - (1 )
activities
and business
dispositions
Professional (9 ) - (9 ) (14 ) - (14 )
fees/Other
Pension - - - (5 ) 3 (8 )
curtailment
gain (loss)
Pension 5 (16 ) 21 3 (23 ) 26
partial
withdrawal
liability
charge
Accelerated - - - - (2 ) 2
depreciation
Impact of 53rd - 6 (6 ) - 6 (6 )
week
Adjusted $ 44 $ 20 $ 24 NM $ 77 $ 72 $ 5 7.8 %
operating
segment
income*
Adjusted 8.1 % 3.8 % 4.3 % 3.8 % 3.4 % 0.4 %
operating
margin %*
Operating $ 40 $ 11 $ 29 NM $ 60 $ 56 $ 4 7.4 %
segment
income
Amortization - (5 ) 5 (4 ) (16 ) 12
expense
Mark-to-market (2 ) (1 ) (1 ) 2 (6 ) 8
derivative
gains
and
losses/Other
Adjustment for 2 3 (1 ) 8 7 1
noncontrolling
interests
Operating $ 40 $ 8 $ 32 NM $ 66 $ 41 $ 25 59.3 %
income
Increase/(decrease)
in
operating
income
from:
Changes in $ - $ - $ - $ - $ - $ -
foreign
currency
exchange rates
Exit - 1 (1 ) (1 ) - (1 )
activities
and business
dispositions
Professional (9 ) - (9 ) (14 ) - (14 )
fees/Other
Pension - - - (5 ) 3 (8 )
curtailment
gain (loss)
Pension 5 (16 ) 21 3 (23 ) 26
partial
withdrawal
liability
charge
Accelerated - - - - (2 ) 2
depreciation
Impact of 53rd - 6 (6 ) - 6 (6 )
week
Adjusted $ 44 $ 17 $ 27 NM $ 83 $ 57 $ 26 45.4 %
operating
income *
Operating $ 40 $ 8 $ 32 NM $ 66 $ 41 $ 25 59.3 %
income
Interest (2 ) (2 ) - (8 ) (9 ) 1
income
(expense)
Income before 38 6 32 58 32 26
income taxes
Income taxes 119 2 117 (101 ) 9 (110 )
expense
(benefit)
Income (81 ) 4 (85 ) NM 159 23 136 NM
from
discontinued
operations
Adjustment for (2 ) (3 ) 1 (8 ) (7 ) (1 )
noncontrolling
interests
Income (83 ) 1 (84 ) NM 151 16 135 NM
from
discontinued
operations
attributable
to Sara Lee
Gain on sale - - - - - -
of
discontinued
operations,
net of tax
Net income $ (83 ) $ 1 $ (84 ) NM $ 151 $ 16 $ 135 NM
from
discontinued
operations
attributable
to Sara Lee
* Adjusted
amounts
are
non-GAAP
measures.
See
the explanation
non-GAAP
financial
measures
in this
release.
Operating
Results
- Discontinued
Operations
For
the Quarters
and Years
ended July
2, 2011
and July
3, 2010
(in millions
- unaudited)
North American
Refrigerated
Dough
Operations
Fourth Quarter Fiscal Year
Dollar Percent Dollar Percent
2011 2010 Change Change 2011 2010 Change Change
Net sales $ 63 $ 69 $ (6 ) (7.9 )% $ 307 $ 326 $ (19 ) (5.8 )%
Impact of 53rd - 6 (6 ) - 6 (6 )
week
Adjusted net $ 63 $ 63 $ - 0.1 % $ 307 $ 320 $ (13 ) (4.2 )%
sales*
Operating $ 8 $ 10 $ (2 ) (22.5 )% $ 54 $ 68 $ (14 ) (21.4 )%
segment
income
Operating 12.3 % 14.7 % (2.4 )% 17.6 % 21.0 % (3.4 )%
margin %
Increase/(decrease)
in operating
segment income
from:
Changes in $ - $ - $ - $ - $ - $ -
foreign
currency
exchange rates
Pension - - - - 1 (1 )
curtailment
gain (loss)
Impact of 53rd - 1 (1 ) - 1 (1 )
week
Adjusted $ 8 $ 9 $ (1 ) (16.9 )% $ 54 $ 66 $ (12 ) (19.9 )%
operating
segment
income*
Adjusted 12.7 % 15.3 % (2.6 )% 17.6 % 21.1 % (3.5 )%
operating
margin %*
Operating $ 8 $ 10 $ (2 ) (22.5 )% $ 54 $ 68 $ (14 ) (21.4 )%
segment
income
Amortization (3 ) (3 ) - (12 ) (12 ) -
expense
Mark-to-market (1 ) - (1 ) - - -
derivative
gains
and
losses/Other
Operating $ 4 $ 7 $ (3 ) (36.1 )% $ 42 $ 56 $ (14 ) (25.2 )%
income
Increase/(decrease)
in
operating
income
from:
Changes in $ - $ - $ - $ - $ - $ -
foreign
currency
exchange rates
Pension - - - - 1 (1 )
curtailment
gain (loss)
Impact of 53rd - 1 (1 ) - 1 (1 )
week
Adjusted $ 4 $ 6 $ (2 ) (28.2 )% $ 42 $ 54 $ (12 ) (23.4 )%
operating
income*
Operating $ 4 $ 7 $ (3 ) (36.1 )% $ 42 $ 56 $ (14 ) (25.2 )%
income
Interest - - - - - -
income
(expense)
Income before 4 7 (3 ) 42 56 (14 )
income taxes
Income taxes 2 2 - 15 19 (4 )
expense
(benefit)
Income 2 5 (3 ) (55.6 )% 27 37 (10 ) (27.0 )%
from
discontinued
operations
Adjustment for - - - - - -
noncontrolling
interests
Income 2 5 (3 ) (55.6 )% 27 37 (10 ) (27.0 )%
from
discontinued
operations
attributable
to Sara Lee
Gain on sale - - - - - -
of
discontinued
operations,
net of tax
Net income $ 2 $ 5 $ (3 ) (55.6 )% $ 27 $ 37 $ (10 ) (27.0 )%
from
discontinued
operations
attributable
to Sara Lee
* Adjusted
amounts
are
non-GAAP
measures.
See
the explanation
non-GAAP
financial
measures
in this
release.
Operating
Results
- Discontinued
Operations
For
the Quarters
and Years
ended July
2, 2011
and July
3, 2010
(in millions
- unaudited)
International
Household
and
Body
Care
Businesses
Fourth Quarter Fiscal Year
Dollar Percent Dollar Percent
2011 2010 Change Change 2011 2010 Change Change
Net sales $ 108 $ 515 $ (407 ) (78.9 )% $ 1,078 $ 2,126 $ (1,048 ) (49.3 )%
Changes in - (31 ) 31 - (12 ) 12
foreign
currency
exchange rates
Disposition - 437 (437 ) - 1,080 (1,080 )
Impact of 53rd - 1 (1 ) - 1 (1 )
week
Adjusted net $ 108 $ 108 $ - 0.0 % $ 1,078 $ 1,057 $ 21 2.0 %
sales*
Operating $ 19 $ 43 $ (24 ) (57.3 )% $ 71 $ 254 $ (183 ) (72.2 )%
segment
income
Operating 17.1 % 8.4 % 8.7 % 6.5 % 12.0 % (5.5 )%
margin %
Increase/(decrease)
in operating
segment income
from:
Changes in $ - $ (5 ) $ 5 $ - $ (3 ) $ 3
foreign
currency
exchange rates
Exit (3 ) (17 ) 14 (58 ) (17 ) (41 )
activities
and business
dispositions
Professional (7 ) (13 ) 6 (22 ) (35 ) 13
fees/Other
Pension (3 ) - (3 ) 1 (10 ) 11
curtailment
gain (loss)
Pension - - - - - -
partial
withdrawal
liability
charge
Accelerated (1 ) - (1 ) (3 ) - (3 )
depreciation
License - - - (39 ) - (39 )
termination
cost
Anti-trust 27 (28 ) 55 27 (28 ) 55
provision
Dispositions - 85 (85 ) - 187 (187 )
Impact of 53rd - - - - - -
week
Adjusted $ 6 $ 21 $ (15 ) (75.5 )% $ 165 $ 160 $ 5 3.2 %
operating
segment
income*
Adjusted 4.6 % 18.9 % (14.3 )% 15.3 % 15.1 % 0.2 %
operating
margin %*
Operating $ 19 $ 43 $ (24 ) (57.3 )% $ 71 $ 254 $ (183 ) (72.2 )%
segment
income
Amortization - - - - (4 ) 4
expense
Foreign 1 1 - 1 1 -
currency
transaction
gains/Other
Adjustment for - - - - - -
noncontrolling
interests
Operating $ 20 $ 44 $ (24 ) (54.7 )% $ 72 $ 251 $ (179 ) (71.1 )%
income
Increase/(decrease)
in
operating
income
from:
Changes in $ - $ (5 ) $ 5 $ - $ (3 ) $ 3
foreign
currency
exchange rates
Exit (3 ) (17 ) 14 (58 ) (17 ) (41 )
activities
and business
dispositions
Professional (7 ) (13 ) 6 (22 ) (35 ) 13
fees/Other
Pension (3 ) - (3 ) 1 (10 ) 11
curtailment
gain (loss)
Pension - - - - - -
partial
withdrawal
liability
charge
Accelerated (1 ) - (1 ) (3 ) - (3 )
depreciation
License - - - (39 ) - (39 )
termination
cost
Anti-trust 27 (28 ) 55 27 (28 ) 55
provision
Dispositions - 85 (85 ) - 187 (187 )
Impact of 53rd - - - - - -
week
Adjusted $ 7 $ 22 $ (15 ) (69.9 )% $ 166 $ 157 $ 9 6.7 %
operating
income*
Operating $ 20 $ 44 $ (24 ) (54.7 )% $ 72 $ 251 $ (179 ) (71.1 )%
income
Interest - 1 (1 ) - 3 (3 )
income
(expense)
Income before 20 45 (25 ) 72 254 (182 )
income taxes
Income taxes 4 49 (45 ) 36 453 (417 )
expense
(benefit)
Income 16 (4 ) 20 NM 36 (199 ) 235 NM
from
discontinued
operations
Adjustment for - (1 ) 1 (1 ) (14 ) 13
noncontrolling
interests
Income 16 (5 ) 21 NM 35 (213 ) 248 NM
from
discontinued
operations
attributable
to Sara Lee
Gain on sale 128 78 50 736 84 652
of
discontinued
operations,
net of tax
Net income $ 144 $ 73 $ 71 97.5 % $ 771 $ (129 ) $ 900 NM
from
discontinued
operations
attributable
to Sara Lee
* Adjusted
amounts
are
non-GAAP
measures.
See
the
explanation
non-GAAP
financial
measures
in this
release.
Operating
Results
- Discontinued
Operations
For
the Quarters
and Years
ended July
2, 2011
and July
3, 2010
(in millions
- unaudited)
Total
Discontinued
Operations
Fourth Quarter Fiscal Year
Dollar Percent Dollar Percent
2011 2010 Change Change 2011 2010 Change Change
Net sales $ 714 $ 1,171 $ (457 ) (39.0 )% $ 3,422 $ 4,580 $ (1,158 ) (25.3 )%
Changes in - (31 ) 31 - (12 ) 12
foreign
currency
exchange rates
Disposition - 437 (437 ) - 1,080 (1,080 )
Impact of 53rd - 59 (59 ) - 59 (59 )
week
Adjusted net $ 714 $ 706 $ 8 1.1 % $ 3,422 $ 3,453 $ (31 ) (0.9 )%
sales*
Operating $ 67 $ 64 $ 3 2.6 % $ 185 $ 378 $ (193 ) (51.3 )%
segment
income
Operating 9.3 % 5.5 % 3.8 % 5.4 % 8.3 % (2.9 )%
margin %
Increase/(decrease)
in operating
segment income
from:
Changes in $ - $ (5 ) $ 5 $ - $ (3 ) $ 3
foreign
currency
exchange rates
Exit (3 ) (16 ) 13 (59 ) (17 ) (42 )
activities
and business
dispositions
Professional (16 ) (13 ) (3 ) (36 ) (35 ) (1 )
fees/Other
Pension (3 ) - (3 ) (4 ) (6 ) 2
curtailment
gain (loss)
Pension 5 (16 ) 21 3 (23 ) 26
partial
withdrawal
liability
charge
Accelerated (1 ) - (1 ) (3 ) (2 ) (1 )
depreciation
License - - - (39 ) - (39 )
termination
cost
Anti-trust 27 (28 ) 55 27 (28 ) 55
provision
Dispositions - 85 (85 ) - 187 (187 )
Impact of 53rd - 7 (7 ) - 7 (7 )
week
Adjusted $ 58 $ 50 $ 8 12.7 % $ 296 $ 298 $ (2 ) (0.9 )%
operating
segment
income*
Adjusted 8.0 % 7.2 % 0.8 % 8.7 % 8.7 % 0.0 %
operating
margin %*
Operating $ 67 $ 64 $ 3 2.6 % $ 185 $ 378 $ (193 ) (51.3 )%
segment
income
Amortization (3 ) (8 ) 5 (16 ) (32 ) 16
expense
Foreign (2 ) - (2 ) 3 (5 ) 8
currency
transaction
gains/Other
Adjustment for 2 3 (1 ) 8 7 1
noncontrolling
interests
Operating $ 64 $ 59 $ 5 11.0 % $ 180 $ 348 $ (168 ) (48.3 )%
income
Increase/(decrease)
in
operating
income
from:
Changes in $ - $ (5 ) $ 5 $ - $ (3 ) $ 3
foreign
currency
exchange rates
Exit (3 ) (16 ) 13 (59 ) (17 ) (42 )
activities
and business
dispositions
Professional (16 ) (13 ) (3 ) (36 ) (35 ) (1 )
fees/Other
Pension (3 ) - (3 ) (4 ) (6 ) 2
curtailment
gain (loss)
Pension 5 (16 ) 21 3 (23 ) 26
partial
withdrawal
liability
charge
Accelerated (1 ) - (1 ) (3 ) (2 ) (1 )
depreciation
License - - - (39 ) - (39 )
termination
cost
Anti-trust 27 (28 ) 55 27 (28 ) 55
provision
Dispositions - 85 (85 ) - 187 (187 )
Impact of 53rd - 7 (7 ) - 7 (7 )
week
Adjusted $ 55 $ 45 $ 10 25.3 % $ 291 $ 268 $ 23 8.7 %
operating
income*
Operating $ 64 $ 59 $ 5 11.0 % $ 180 $ 348 $ (168 ) (48.3 )%
income
Interest (2 ) (1 ) (1 ) (8 ) (6 ) (2 )
income
(expense)
Income before 62 58 4 172 342 (170 )
income taxes
Income taxes 125 53 72 (50 ) 481 (531 )
expense
(benefit)
Income (63 ) 5 (68 ) NM 222 (139 ) 361 NM
from
discontinued
operations
Adjustment for (2 ) (4 ) 2 (9 ) (21 ) 12
noncontrolling
interests
Income (65 ) 1 (66 ) NM 213 (160 ) 373 NM
from
discontinued
operations
attributable
to Sara Lee
Gain on sale 128 78 50 736 84 652
of
discontinued
operations,
net of tax
Net income $ 63 $ 79 $ (16 ) (20.3 )% $ 949 $ (76 ) $ 1,025 NM
from
discontinued
operations
attributable
to Sara Lee
* Adjusted
amounts
are
non-GAAP
measures.
See
the
explanation
non-GAAP
financial
measures
in this
release.
Reported Results to Continuing Operations
Excluding International Bakery
(All amounts in millions of dollars,
except per share data)
Fiscal Year ended
July 2, 2011
Net sales from continuing
operations
Net sales from continuing 8,681
operations
International Bakery 726
net sales
Net sales from continuing operations 7,955
excluding International Bakery
Operating Income from continuing operations
ex significant items*
Adjusted operating income from 809
continuing operations
FY11 operating segment income from acquisitions 4
completed in fiscal 2011
International Bakery adjusted (16 )
operating segment income
Estimated allocations of (5 )
corporate expenses
Operating income from continuing operations 792
excluding International Bakery
EPS from continuing operations
ex significant items*
Adjusted EPS from continuing 0.78
operations
Estimated EPS related to (0.03 )
International Bakery
Adjusted EPS from continuing operations 0.75
excluding International Bakery
* Amounts are non-GAAP
measures.
See the explanation non-GAAP financial
measures in this release.
Sara Lee CorporationMedia: Jon Harris, +1.630.598.8661Analysts:
Melissa Napier, +1.630.598.8739
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