Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Hillshire Brands Co | d271371d8k.htm |
| Sara Lee Corporation
Financial Summary - As Reported
(in millions, except per share data - unaudited) |
Exhibit 99 |
| Fiscal | ||||||||||||||||||||||||
| Fiscal 2011 | 2010 | |||||||||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Total Year |
Total Year |
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| Continuing operations: |
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| Net sales: |
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| N. A. Retail |
$ | 695 | $ | 741 | $ | 670 | $ | 704 | $ | 2,810 | $ | 2,771 | ||||||||||||
| N. A. FS & Specialty Meats |
274 | 290 | 243 | 279 | 1,086 | 1,082 | ||||||||||||||||||
| Coffee & Tea |
728 | 899 | 925 | 996 | 3,548 | 3,221 | ||||||||||||||||||
| Australian Bakery |
36 | 35 | 29 | 35 | 135 | 129 | ||||||||||||||||||
| Intersegment |
(6 | ) | (7 | ) | (7 | ) | (7 | ) | (27 | ) | (32 | ) | ||||||||||||
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| Total net sales |
$ | 1,727 | $ | 1,958 | $ | 1,860 | $ | 2,007 | $ | 7,552 | $ | 7,171 | ||||||||||||
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| Operating income (loss): |
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| N. A. Retail |
$ | 60 | $ | 84 | $ | 82 | $ | 71 | $ | 297 | $ | 333 | ||||||||||||
| N. A. FS & Specialty Meats |
23 | 38 | 21 | 9 | 91 | 60 | ||||||||||||||||||
| Coffee & Tea |
90 | 109 | 134 | 119 | 452 | 592 | ||||||||||||||||||
| Australian Bakery |
2 | (1 | ) | — | (3 | ) | (2 | ) | 5 | |||||||||||||||
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| Operating segment income |
175 | 230 | 237 | 196 | 838 | 990 | ||||||||||||||||||
| General corporate expenses |
(27 | ) | (50 | ) | (47 | ) | (79 | ) | (203 | ) | (272 | ) | ||||||||||||
| Mark-to-market derivative gain/(loss) |
12 | (2 | ) | 8 | (7 | ) | 11 | (13 | ) | |||||||||||||||
| Amortization |
(3 | ) | (3 | ) | (4 | ) | (4 | ) | (14 | ) | (12 | ) | ||||||||||||
| Contingent sale proceeds |
— | — | — | — | — | 133 | ||||||||||||||||||
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| Total operating income |
$ | 157 | $ | 175 | $ | 194 | $ | 106 | $ | 632 | $ | 826 | ||||||||||||
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| Income from continuing operations |
$ | 61 | $ | 88 | $ | 124 | $ | 78 | $ | 351 | $ | 589 | ||||||||||||
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| Net income |
$ | 194 | $ | 833 | $ | 156 | $ | 113 | $ | 1,296 | $ | 527 | ||||||||||||
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| Amounts attributable to Sara Lee: |
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| Net income (loss) from continuing operations |
$ | 61 | $ | 88 | $ | 124 | $ | 78 | $ | 351 | $ | 589 | ||||||||||||
| Net income (loss) from discontinued operations |
$ | 131 | $ | 743 | $ | 29 | $ | 33 | $ | 936 | $ | (83 | ) | |||||||||||
| Diluted earnings per share: |
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| Continuing operations |
$ | 0.09 | $ | 0.14 | $ | 0.20 | $ | 0.13 | $ | 0.56 | $ | 0.85 | ||||||||||||
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| Net income |
$ | 0.29 | $ | 1.30 | $ | 0.25 | $ | 0.19 | $ | 2.06 | $ | 0.73 | ||||||||||||
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| Operating margin: |
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| N. A. Retail |
8.7 | % | 11.4 | % | 12.2 | % | 10.0 | % | 10.6 | % | 12.0 | % | ||||||||||||
| N. A. FS & Specialty Meats |
8.5 | 13.0 | 8.5 | 3.4 | 8.4 | 5.5 | ||||||||||||||||||
| Coffee & Tea |
12.3 | 12.1 | 14.5 | 12.0 | 12.7 | 18.4 | ||||||||||||||||||
| Australian Bakery |
6.2 | (2.0 | ) | (2.0 | ) | (9.5 | ) | (1.7 | ) | 3.2 | ||||||||||||||
| Total Sara Lee |
9.1 | % | 9.0 | % | 10.4 | % | 5.3 | % | 8.4 | % | 11.5 | % | ||||||||||||
Page 1
Financial Summary - As Adjusted 1
(in millions, except per share data - unaudited)
| Fiscal | ||||||||||||||||||||||||
| Fiscal 2011 | 2010 | |||||||||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Total Year |
Total Year |
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| Continuing operations: |
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| Adjusted net sales: |
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| N. A. Retail |
$ | 695 | $ | 741 | $ | 670 | $ | 704 | $ | 2,810 | $ | 2,719 | ||||||||||||
| N. A. FS & Specialty Meats |
274 | 290 | 243 | 268 | 1,075 | 1,064 | ||||||||||||||||||
| Coffee & Tea |
728 | 896 | 912 | 978 | 3,514 | 3,199 | ||||||||||||||||||
| Australian Bakery |
36 | 35 | 29 | 35 | 135 | 142 | ||||||||||||||||||
| Intersegment |
(6 | ) | (7 | ) | (7 | ) | (7 | ) | (27 | ) | (32 | ) | ||||||||||||
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| Total adjusted net sales |
$ | 1,727 | $ | 1,955 | $ | 1,847 | $ | 1,978 | $ | 7,507 | $ | 7,092 | ||||||||||||
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| Adjusted operating income (loss): |
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| N. A. Retail |
$ | 61 | $ | 84 | $ | 83 | $ | 80 | $ | 308 | $ | 325 | ||||||||||||
| N. A. FS & Specialty Meats |
25 | 38 | 22 | 25 | 110 | 84 | ||||||||||||||||||
| Coffee & Tea |
92 | 142 | 134 | 121 | 489 | 593 | ||||||||||||||||||
| Australian Bakery |
2 | (1 | ) | — | (3 | ) | (2 | ) | 5 | |||||||||||||||
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| Adjusted operating segment income |
180 | 263 | 239 | 223 | 905 | 1,007 | ||||||||||||||||||
| General corporate expenses |
(24 | ) | (40 | ) | (33 | ) | (22 | ) | (119 | ) | (211 | ) | ||||||||||||
| Mark-to-market derivative gain/(loss) |
12 | (2 | ) | 8 | (7 | ) | 11 | (13 | ) | |||||||||||||||
| Amortization |
(3 | ) | (3 | ) | (4 | ) | (4 | ) | (14 | ) | (12 | ) | ||||||||||||
| Contingent sale proceeds |
— | — | — | — | — | — | ||||||||||||||||||
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| Total adjusted operating income |
$ | 165 | $ | 218 | $ | 210 | $ | 190 | $ | 783 | $ | 771 | ||||||||||||
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| Adjusted income from continuing operations |
$ | 81 | $ | 134 | $ | 132 | $ | 123 | $ | 470 | $ | 429 | ||||||||||||
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| Adjusted net income |
$ | 137 | $ | 198 | $ | 185 | $ | 145 | $ | 665 | $ | 765 | ||||||||||||
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| Amounts attributable to Sara Lee: |
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| Adjusted net income from continuing operations |
$ | 81 | $ | 134 | $ | 132 | $ | 123 | $ | 470 | $ | 429 | ||||||||||||
| Adjusted net income from discontinued operations |
$ | 54 | $ | 62 | $ | 50 | $ | 20 | $ | 186 | $ | 315 | ||||||||||||
| Adjusted diluted earnings per share: |
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| Continuing operations |
$ | 0.12 | $ | 0.21 | $ | 0.22 | $ | 0.21 | $ | 0.75 | $ | 0.62 | ||||||||||||
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| Net income |
$ | 0.21 | $ | 0.31 | $ | 0.30 | $ | 0.24 | $ | 1.05 | $ | 1.08 | ||||||||||||
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| Adjusted operating margin: |
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| N. A. Retail |
8.7 | % | 11.4 | % | 12.5 | % | 11.3 | % | 11.0 | % | 11.9 | % | ||||||||||||
| N. A. FS & Specialty Meats |
9.2 | 13.0 | 8.9 | 9.5 | 10.2 | 8.0 | ||||||||||||||||||
| Coffee & Tea |
12.7 | 15.8 | 14.7 | 12.4 | 13.9 | 18.5 | ||||||||||||||||||
| Australian Bakery |
6.2 | (2.0 | ) | (2.0 | ) | (7.5 | ) | (1.2 | ) | 2.9 | ||||||||||||||
| Total Sara Lee |
9.6 | % | 11.2 | % | 11.4 | % | 9.6 | % | 10.4 | % | 10.9 | % | ||||||||||||
| (1) | The “adjusted” financial results are non-GAAP financial measures which are explained and reconciled to comparable US GAAP measures at the end of this report. |
Page 2
Consolidated Statements of Income
For the Fiscal Years ended July 2, 2011 and July 3, 2010 (in millions, except per share data - unaudited)
| Year ended | ||||||||
| July 2, 2011 |
July 3, 2010 |
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| Continuing operations |
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| Net sales |
$ | 7,552 | $ | 7,171 | ||||
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| Cost of sales |
5,046 | 4,555 | ||||||
| Selling, general and administrative expenses |
1,777 | 1,874 | ||||||
| Net charges for exit activities, asset and business dispositions |
76 | 34 | ||||||
| Impairment charges |
21 | 15 | ||||||
| Contingent sales proceeds |
— | (133 | ) | |||||
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| Operating income |
632 | 826 | ||||||
| Interest expense |
117 | 138 | ||||||
| Interest income |
(31 | ) | (23 | ) | ||||
| Debt extinguishment costs |
55 | — | ||||||
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| Income from continuing operations before income taxes |
491 | 711 | ||||||
| Income tax expense (benefit) |
140 | 122 | ||||||
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| Income from continuing operations |
351 | 589 | ||||||
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| Discontinued operations: |
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| Income (loss) from discontinued operations, net of tax expense (benefit) of $(41) and $484 |
209 | (146 | ) | |||||
| Gain on sale of discontinued operations, net of tax expense of $568 and $74 |
736 | 84 | ||||||
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| Net income (loss) from discontinued operations |
945 | (62 | ) | |||||
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| Net income |
1,296 | 527 | ||||||
| Less: Income from noncontrolling interests, net of tax |
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| Discontinued operations |
9 | 21 | ||||||
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| Net income attributable to Sara Lee |
$ | 1,287 | $ | 506 | ||||
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| Amounts attributable to Sara Lee: |
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| Net income (loss) from continuing operations |
$ | 351 | $ | 589 | ||||
| Net income (loss) from discontinued operations |
936 | (83 | ) | |||||
| Earnings per share of common stock: |
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| Basic |
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| Income from continuing operations |
$ | 0.56 | $ | 0.86 | ||||
| Net income |
$ | 2.07 | $ | 0.74 | ||||
| Average shares outstanding |
621 | 688 | ||||||
| Diluted |
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| Income from continuing operations |
$ | 0.56 | $ | 0.85 | ||||
| Net income |
$ | 2.06 | $ | 0.73 | ||||
| Average shares outstanding |
625 | 691 | ||||||
| Cash dividends declared per share of common stock |
$ | 0.46 | $ | 0.44 | ||||
Page 3
Consolidated Statements of Income
For the Quarters ended October 2, 2010, January 1, 2011, April 2, 2011 and July 2, 2011 (in millions, except per share data - unaudited)
| Quarter ended | ||||||||||||||||
| Oct. 2, 2010 |
Jan. 1, 2011 |
Apr. 2, 2011 |
July 2, 2011 |
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| Continuing operations |
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| Net sales |
$ | 1,727 | $ | 1,958 | $ | 1,860 | $ | 2,007 | ||||||||
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| Cost of sales |
1,157 | 1,281 | 1,226 | 1,382 | ||||||||||||
| Selling, general and administrative expenses |
409 | 463 | 436 | 469 | ||||||||||||
| Net charges for exit activities, asset and business dispositions |
4 | 39 | 4 | 29 | ||||||||||||
| Impairment charges |
— | — | — | 21 | ||||||||||||
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| Operating income |
157 | 175 | 194 | 106 | ||||||||||||
| Interest expense |
34 | 28 | 25 | 30 | ||||||||||||
| Interest income |
(5 | ) | (7 | ) | (9 | ) | (10 | ) | ||||||||
| Debt extinguishment costs |
30 | 25 | — | — | ||||||||||||
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| Income from continuing operations before income taxes |
98 | 129 | 178 | 86 | ||||||||||||
| Income tax expense (benefit) |
37 | 41 | 54 | 8 | ||||||||||||
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| Income from continuing operations |
61 | 88 | 124 | 78 | ||||||||||||
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| Discontinued operations: |
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| Income (loss) from discontinued operations, net of tax expense (benefit) of $25, $(199), $8 and $125 |
44 | 255 | 3 | (93 | ) | |||||||||||
| Gain on sale of discontinued operations, net of tax expense (benefit) of $166, $396, $14 and $(8) |
89 | 490 | 29 | 128 | ||||||||||||
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| Net income from discontinued operations |
133 | 745 | 32 | 35 | ||||||||||||
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| Net income |
194 | 833 | 156 | 113 | ||||||||||||
| Less: Income from noncontrolling interests, net of tax |
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| Discontinued operations |
2 | 2 | 3 | 2 | ||||||||||||
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| Net income attributable to Sara Lee |
$ | 192 | $ | 831 | $ | 153 | $ | 111 | ||||||||
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| Amounts attributable to Sara Lee: |
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| Net income from continuing operations |
$ | 61 | $ | 88 | $ | 124 | $ | 78 | ||||||||
| Net income from discontinued operations |
131 | 743 | 29 | 33 | ||||||||||||
| Earnings per share of common stock: |
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| Basic |
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| Income from continuing operations |
$ | 0.09 | $ | 0.14 | $ | 0.21 | $ | 0.13 | ||||||||
| Net income |
$ | 0.29 | $ | 1.30 | $ | 0.25 | $ | 0.19 | ||||||||
| Average shares outstanding |
653 | 638 | 605 | 588 | ||||||||||||
| Diluted |
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| Income from continuing operations |
$ | 0.09 | $ | 0.14 | $ | 0.20 | $ | 0.13 | ||||||||
| Net income |
$ | 0.29 | $ | 1.30 | $ | 0.25 | $ | 0.19 | ||||||||
| Average shares outstanding |
655 | 642 | 609 | 592 | ||||||||||||
| Cash dividends declared per share of common stock |
$ | — | $ | 0.115 | $ | 0.115 | $ | 0.23 | ||||||||
Page 4
Significant Items
(in millions, except per share data - unaudited)
| Fiscal 2011 | Fiscal 2010 | |||||||||||||||||||||||
| (In millions except per share data) |
Pretax Income |
Net Income |
Diluted EPS Impact (1) |
Pretax Income |
Net Income |
Diluted EPS Impact (1) |
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| Continuing Operations: |
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| Restructuring actions: |
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| Severance/ retention costs |
$ | (77 | ) | $ | (52 | ) | $ | (0.08 | ) | $ | (22 | ) | $ | (16 | ) | $ | (0.02 | ) | ||||||
| Lease and contractual obligation exit costs |
— | — | — | (12 | ) | (7 | ) | (0.01 | ) | |||||||||||||||
| Consulting/ advisory costs |
(55 | ) | (43 | ) | (0.07 | ) | (22 | ) | (15 | ) | (0.02 | ) | ||||||||||||
| Accelerated depreciation |
(2 | ) | (1 | ) | — | (10 | ) | (6 | ) | (0.01 | ) | |||||||||||||
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| Total Restructuring Actions |
(134 | ) | (96 | ) | (0.15 | ) | (66 | ) | (44 | ) | (0.06 | ) | ||||||||||||
| Impairment charges |
(21 | ) | (14 | ) | (0.02 | ) | (15 | ) | (10 | ) | (0.01 | ) | ||||||||||||
| Tax indemnification charge |
— | — | — | (26 | ) | (26 | ) | (0.04 | ) | |||||||||||||||
| Pension curtailment gain |
— | — | — | 17 | 11 | 0.02 | ||||||||||||||||||
| Debt extinguishment costs |
(55 | ) | (35 | ) | (0.06 | ) | — | — | — | |||||||||||||||
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| Impact of significant items on income from continuing operations before income taxes |
(210 | ) | (145 | ) | (0.23 | ) | (90 | ) | (69 | ) | (0.10 | ) | ||||||||||||
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| UK net operating loss utilization |
— | — | — | — | 11 | 0.02 | ||||||||||||||||||
| Tax on unremitted earnings |
— | — | — | — | (121 | ) | (0.18 | ) | ||||||||||||||||
| Tax audit settlement/reserve adjustments |
— | 26 | 0.04 | — | 197 | 0.29 | ||||||||||||||||||
| Belgian tax proceedings |
— | — | — | — | (44 | ) | (0.06 | ) | ||||||||||||||||
| Tax valuation allowance adjustment |
— | — | — | — | (5 | ) | (0.01 | ) | ||||||||||||||||
| Tax credit adjustment |
— | — | — | — | 25 | 0.04 | ||||||||||||||||||
| Deferred tax adjustment on repatriation |
— | — | — | — | 11 | 0.02 | ||||||||||||||||||
| Other tax adjustments, net |
— | — | — | — | 12 | 0.02 | ||||||||||||||||||
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| Impact of significant items on income from continuing operations |
(210 | ) | (119 | ) | (0.19 | ) | (90 | ) | 17 | 0.02 | ||||||||||||||
| Discontinued operations: |
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| Restructuring actions: |
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| Severance/ retention costs |
(99 | ) | (70 | ) | (0.11 | ) | (36 | ) | (25 | ) | (0.04 | ) | ||||||||||||
| Consulting/ advisory costs |
(27 | ) | (21 | ) | (0.04 | ) | (36 | ) | (31 | ) | (0.04 | ) | ||||||||||||
| Business disposition/ exit activities |
— | — | — | (30 | ) | (23 | ) | (0.03 | ) | |||||||||||||||
| Accelerated depreciation |
(3 | ) | (2 | ) | — | (2 | ) | (2 | ) | — | ||||||||||||||
| Lease and contractual obligation exit costs |
— | — | — | (2 | ) | (1 | ) | — | ||||||||||||||||
| Impairment charges |
— | — | — | (13 | ) | (9 | ) | (0.01 | ) | |||||||||||||||
| 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 (provision)/ reversal |
27 | 18 | 0.03 | (28 | ) | (28 | ) | (0.04 | ) | |||||||||||||||
| Pension curtailment/withdrawal liability |
(1 | ) | (1 | ) | — | (26 | ) | (18 | ) | (0.03 | ) | |||||||||||||
| Tax basis differences |
— | 120 | 0.19 | — | 2 | — | ||||||||||||||||||
| Tax audit settlement/reserve adjustments |
— | 1 | — | — | (2 | ) | — | |||||||||||||||||
| Tax valuation allowance adjustment |
— | 2 | — | — | 40 | 0.06 | ||||||||||||||||||
| Tax on unremitted earnings |
— | (6 | ) | (0.01 | ) | — | (427 | ) | (0.62 | ) | ||||||||||||||
| Capital loss carryforward benefit |
— | — | — | — | 22 | 0.03 | ||||||||||||||||||
| Deferred tax adjustment on repatriation |
— | — | — | — | 9 | 0.01 | ||||||||||||||||||
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| Impact of significant items on income (loss) from discontinued operations |
1,162 | 750 | 1.20 | (15 | ) | (409 | ) | (0.59 | ) | |||||||||||||||
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| Impact of significant items on net income |
$ | 952 | $ | 631 | $ | 1.01 | $ | (105 | ) | $ | (392 | ) | $ | (0.57 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Notes:
| (1) | EPS amounts are rounded to the nearest $0.01 and may not add to the total. |
Page 5
Significant Items
(in millions, except per share data - unaudited)
| Quarter ended Oct. 2, 2010 | Quarter ended Jan. 1, 2011 | |||||||||||||||||||||||
| (In millions except per share data) |
Pretax Income |
Net Income |
Diluted EPS Impact (1) |
Pretax Income |
Net Income |
Diluted EPS Impact (1) |
||||||||||||||||||
| Continuing Operations: |
||||||||||||||||||||||||
| Restructuring actions: |
||||||||||||||||||||||||
| Severance/ retention costs |
$ | (4 | ) | $ | (2 | ) | $ | — | $ | (39 | ) | $ | (29 | ) | $ | (0.04 | ) | |||||||
| Consulting/ advisory costs |
(2 | ) | (2 | ) | — | (4 | ) | (3 | ) | — | ||||||||||||||
| Accelerated depreciation |
(2 | ) | (1 | ) | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Restructuring Actions |
(8 | ) | (5 | ) | (0.01 | ) | (43 | ) | (32 | ) | (0.05 | ) | ||||||||||||
| Impairment charges |
— | — | — | — | — | — | ||||||||||||||||||
| Debt extinguishment costs |
(30 | ) | (19 | ) | (0.03 | ) | (25 | ) | (16 | ) | (0.02 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Impact of significant items on income from continuing operations before income taxes |
(38 | ) | (24 | ) | (0.04 | ) | (68 | ) | (48 | ) | (0.07 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Tax audit settlement/reserve adjustments |
— | 4 | 0.01 | — | 2 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Impact of significant items on income from continuing operations |
(38 | ) | (20 | ) | (0.03 | ) | (68 | ) | (46 | ) | (0.07 | ) | ||||||||||||
| Discontinued operations: |
||||||||||||||||||||||||
| Restructuring actions: |
||||||||||||||||||||||||
| Severance/ retention costs |
(10 | ) | (7 | ) | (0.01 | ) | (39 | ) | (28 | ) | (0.04 | ) | ||||||||||||
| Consulting/ advisory costs |
(3 | ) | (2 | ) | — | — | — | — | ||||||||||||||||
| Accelerated depreciation |
— | — | — | (1 | ) | (1 | ) | — | ||||||||||||||||
| Gain on the sale of discontinued operations |
255 | 89 | 0.14 | 886 | 490 | 0.77 | ||||||||||||||||||
| Licensing agreement termination charge |
— | — | — | — | — | — | ||||||||||||||||||
| Antitrust reversal |
— | — | — | — | — | — | ||||||||||||||||||
| Pension curtailment/withdrawal |
— | — | — | (1 | ) | — | — | |||||||||||||||||
| Tax basis differences |
— | 2 | — | — | 223 | 0.35 | ||||||||||||||||||
| Tax audit settlement/reserve adjustments |
— | — | — | — | 1 | — | ||||||||||||||||||
| Tax valuation allowance adjustment |
— | — | — | — | (3 | ) | — | |||||||||||||||||
| Tax on unremitted earnings |
— | (5 | ) | (0.01 | ) | — | (1 | ) | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Impact of significant items on income from discontinued operations |
242 | 77 | 0.12 | 845 | 681 | 1.06 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Impact of significant items on net income |
$ | 204 | $ | 57 | $ | 0.08 | $ | 777 | $ | 635 | $ | 0.99 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Notes:
| (1) | EPS amounts are rounded to the nearest $0.01 and may not add to the total. |
Page 6
Significant Items
(in millions, except per share data - unaudited)
| Quarter ended Apr. 2, 2011 | Quarter ended July 2, 2011 | |||||||||||||||||||||||
| (In millions except per share data) |
Pretax Income |
Net Income |
Diluted EPS Impact (1) |
Pretax Income |
Net Income |
Diluted EPS Impact (1) |
||||||||||||||||||
| Continuing Operations: |
||||||||||||||||||||||||
| Restructuring actions: |
||||||||||||||||||||||||
| Severance/ retention costs |
$ | (4 | ) | $ | (2 | ) | $ | — | $ | (30 | ) | $ | (19 | ) | $ | (0.03 | ) | |||||||
| Consulting/ advisory costs |
(13 | ) | (8 | ) | (0.01 | ) | (36 | ) | (30 | ) | (0.05 | ) | ||||||||||||
| Accelerated depreciation |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Restructuring Actions |
(17 | ) | (10 | ) | (0.02 | ) | (66 | ) | (49 | ) | (0.08 | ) | ||||||||||||
| Impairment charges |
— | — | — | (21 | ) | (14 | ) | (0.02 | ) | |||||||||||||||
| Debt extinguishment costs |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Impact of significant items on income from continuing operations before income taxes |
(17 | ) | (10 | ) | (0.02 | ) | (87 | ) | (63 | ) | (0.11 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Tax audit settlement/reserve adjustments |
— | 2 | — | — | 18 | 0.03 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Impact of significant items on income from continuing operations |
(17 | ) | (8 | ) | (0.02 | ) | (87 | ) | (45 | ) | (0.08 | ) | ||||||||||||
| Discontinued operations: |
||||||||||||||||||||||||
| Restructuring actions: |
||||||||||||||||||||||||
| Severance/ retention costs |
(17 | ) | (12 | ) | (0.02 | ) | (33 | ) | (23 | ) | (0.04 | ) | ||||||||||||
| Consulting/ advisory costs |
(9 | ) | (7 | ) | (0.01 | ) | (15 | ) | (12 | ) | (0.02 | ) | ||||||||||||
| Accelerated depreciation |
(1 | ) | (1 | ) | — | (1 | ) | — | — | |||||||||||||||
| Gain on the sale of discontinued operations |
43 | 29 | 0.05 | 120 | 128 | 0.22 | ||||||||||||||||||
| Licensing agreement termination charge |
(39 | ) | (27 | ) | (0.04 | ) | — | — | — | |||||||||||||||
| Antitrust reversal |
— | — | — | 27 | 18 | 0.03 | ||||||||||||||||||
| Pension curtailment/withdrawal |
(2 | ) | (2 | ) | — | 2 | 1 | — | ||||||||||||||||
| Tax basis differences |
— | — | — | — | (105 | ) | (0.18 | ) | ||||||||||||||||
| Tax audit settlement/reserve adjustments |
— | (1 | ) | — | — | 1 | — | |||||||||||||||||
| Tax valuation allowance adjustment |
— | — | — | — | 5 | 0.01 | ||||||||||||||||||
| Tax on unremitted earnings |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Impact of significant items on income from discontinued operations |
(25 | ) | (21 | ) | (0.03 | ) | 100 | 13 | 0.02 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Impact of significant items on net income |
$ | (42 | ) | $ | (29 | ) | $ | (0.05 | ) | $ | 13 | $ | (32 | ) | $ | (0.05 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Notes:
| (1) | EPS amounts are rounded to the nearest $0.01 and may not add to the total. |
Page 7
EPS Reconciliation - Reported to Adjusted
(in millions, except per share data - unaudited)
| Fiscal year ended July 2, 2011 | Fiscal year ended July 3, 2010 | |||||||||||||||||||||||||||||||
| As Reported |
Impact of Significant Items |
Adjusted (1) | As Reported |
Impact of Significant Items |
Contingent Sale Proceeds |
Impact of 53rd Week |
Adjusted (1) | |||||||||||||||||||||||||
| Continuing operations: |
||||||||||||||||||||||||||||||||
| Income from continuing operations before income taxes |
$ | 491 | $ | (210 | ) | $ | 701 | $ | 711 | $ | (90 | ) | $ | 133 | $ | 15 | $ | 653 | ||||||||||||||
| Income tax (benefit) expense |
140 | (91 | ) | 231 | 122 | (107 | ) | — | 5 | 224 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Income from continuing operations |
351 | (119 | ) | 470 | 589 | 17 | 133 | 10 | 429 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Discontinued operations: |
||||||||||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax |
209 | 14 | 195 | (146 | ) | (493 | ) | — | 11 | 336 | ||||||||||||||||||||||
| Gain on sale of discontinued operations, net of tax |
736 | 736 | — | 84 | 84 | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income (loss) from discontinued operations |
945 | 750 | 195 | (62 | ) | (409 | ) | — | 11 | 336 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income (loss) |
1,296 | 631 | 665 | 527 | (392 | ) | 133 | 21 | 765 | |||||||||||||||||||||||
| Less: Income from noncontrolling interests, net of tax |
||||||||||||||||||||||||||||||||
| Discontinued operations |
9 | — | 9 | 21 | — | — | — | 21 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income (loss) attributable to Sara Lee |
$ | 1,287 | $ | 631 | $ | 656 | $ | 506 | $ | (392 | ) | $ | 133 | $ | 21 | $ | 744 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Amounts attributable to Sara Lee: |
||||||||||||||||||||||||||||||||
| Net income (loss) from continuing operations |
$ | 351 | $ | (119 | ) | $ | 470 | $ | 589 | $ | 17 | $ | 133 | $ | 10 | $ | 429 | |||||||||||||||
| Net income (loss) from discontinued operations |
936 | 750 | 186 | (83 | ) | (409 | ) | — | 11 | 315 | ||||||||||||||||||||||
| Earnings per share of common stock: |
||||||||||||||||||||||||||||||||
| Diluted |
||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations |
$ | 0.56 | $ | (0.19 | ) | $ | 0.75 | $ | 0.85 | $ | 0.02 | $ | 0.19 | $ | 0.01 | $ | 0.62 | |||||||||||||||
| Net income (loss) |
$ | 2.06 | $ | 1.01 | $ | 1.05 | $ | 0.73 | $ | (0.57 | ) | $ | 0.19 | $ | 0.03 | $ | 1.08 | |||||||||||||||
| Effective tax rate - continuing operations |
28.5 | % | 33.0 | % | 17.1 | % | 34.2 | % | ||||||||||||||||||||||||
| (1) | Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at end of this report. |
Page 8
EPS Reconciliation - Reported to Adjusted
(in millions, except per share data - unaudited)
| Quarter ended October 2, 2010 | Quarter ended January 1, 2011 | |||||||||||||||||||||||
| As Reported |
Impact of Significant Items |
Adjusted (1) | As Reported |
Impact of Significant Items |
Adjusted (1) | |||||||||||||||||||
| Continuing operations: |
||||||||||||||||||||||||
| Income from continuing operations before income taxes |
$ | 98 | $ | (38 | ) | $ | 136 | $ | 129 | $ | (68 | ) | $ | 197 | ||||||||||
| Income tax (benefit) expense |
37 | (18 | ) | 55 | 41 | (22 | ) | 63 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from continuing operations |
61 | (20 | ) | 81 | 88 | (46 | ) | 134 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Discontinued operations: |
||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax |
44 | (12 | ) | 56 | 255 | 191 | 64 | |||||||||||||||||
| Gain on sale of discontinued operations, net of tax |
89 | 89 | — | 490 | 490 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) from discontinued operations |
133 | 77 | 56 | 745 | 681 | 64 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income |
194 | 57 | 137 | 833 | 635 | 198 | ||||||||||||||||||
| Less: Income from noncontrolling interests, net of tax |
||||||||||||||||||||||||
| Discontinued operations |
2 | — | 2 | 2 | — | 2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) attributable to Sara Lee |
$ | 192 | $ | 57 | $ | 135 | $ | 831 | $ | 635 | $ | 196 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Amounts attributable to Sara Lee: |
||||||||||||||||||||||||
| Net income (loss) from continuing operations |
$ | 61 | $ | (20 | ) | $ | 81 | $ | 88 | $ | (46 | ) | $ | 134 | ||||||||||
| Net income (loss) from discontinued operations |
131 | 77 | 54 | 743 | 681 | 62 | ||||||||||||||||||
| Earnings per share of common stock: |
||||||||||||||||||||||||
| Diluted |
||||||||||||||||||||||||
| Income (loss) from continuing operations |
$ | 0.09 | $ | (0.03 | ) | $ | 0.12 | $ | 0.14 | $ | (0.07 | ) | $ | 0.21 | ||||||||||
| Net income (loss) |
$ | 0.29 | $ | 0.08 | $ | 0.21 | $ | 1.30 | $ | 0.99 | $ | 0.31 | ||||||||||||
| Effective tax rate - continuing operations |
38.0 | % | 40.6 | % | 31.6 | % | 32.0 | % | ||||||||||||||||
| (1) | Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at end of this release. |
Page 9
EPS Reconciliation - Reported to Adjusted
(in millions, except per share data - unaudited)
| Quarter ended April 2, 2011 | Quarter ended July 2, 2011 | |||||||||||||||||||||||
| As Reported |
Impact of Significant Items |
Adjusted (1) | As Reported |
Impact of Significant Items |
Adjusted (1) | |||||||||||||||||||
| Continuing operations: |
||||||||||||||||||||||||
| Income from continuing operations before income taxes |
$ | 178 | $ | (17 | ) | $ | 195 | $ | 86 | $ | (87 | ) | $ | 173 | ||||||||||
| Income tax (benefit) expense |
54 | (9 | ) | 63 | 8 | (42 | ) | 50 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from continuing operations |
124 | (8 | ) | 132 | 78 | (45 | ) | 123 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Discontinued operations: |
||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax |
3 | (50 | ) | 53 | (93 | ) | (115 | ) | 22 | |||||||||||||||
| Gain on sale of discontinued operations, net of tax |
29 | 29 | — | 128 | 128 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) from discontinued operations |
32 | (21 | ) | 53 | 35 | 13 | 22 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) |
156 | (29 | ) | 185 | 113 | (32 | ) | 145 | ||||||||||||||||
| Less: Income from noncontrolling interests, net of tax |
||||||||||||||||||||||||
| Discontinued operations |
3 | — | 3 | 2 | — | 2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income (loss) attributable to Sara Lee |
$ | 153 | $ | (29 | ) | $ | 182 | $ | 111 | $ | (32 | ) | $ | 143 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Amounts attributable to Sara Lee: |
||||||||||||||||||||||||
| Net income (loss) from continuing operations |
$ | 124 | $ | (8 | ) | $ | 132 | $ | 78 | $ | (45 | ) | $ | 123 | ||||||||||
| Net income (loss) from discontinued operations |
29 | (21 | ) | 50 | 33 | 13 | 20 | |||||||||||||||||
| Earnings per share of common stock: |
||||||||||||||||||||||||
| Diluted |
||||||||||||||||||||||||
| Income (loss) from continuing operations |
$ | 0.20 | $ | (0.02 | ) | $ | 0.22 | $ | 0.13 | $ | (0.08 | ) | $ | 0.21 | ||||||||||
| Net income (loss) |
$ | 0.25 | $ | (0.05 | ) | $ | 0.30 | $ | 0.19 | $ | (0.05 | ) | $ | 0.24 | ||||||||||
| Effective tax rate - continuing operations |
30.0 | % | 31.9 | % | 10.0 | % | 29.2 | % | ||||||||||||||||
| (1) | Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at end of this report. |
Page 10
Operating Results by Business Segment
(in millions - unaudited)
| As Reported |
Changes in Foreign Currency Exchange Rates |
Acq./ Disp. |
Impact of 53rd Week |
As Adjusted (1) |
||||||||||||||||
| Fiscal 2011 |
||||||||||||||||||||
| Net sales: |
||||||||||||||||||||
| N. A. Retail |
$ | 2,810 | $ | — | $ | — | $ | — | $ | 2,810 | ||||||||||
| N. A. FS & Specialty Meats |
1,086 | — | 11 | — | 1,075 | |||||||||||||||
| Coffee & Tea |
3,548 | — | 34 | — | 3,514 | |||||||||||||||
| Australian Bakery |
135 | — | — | — | 135 | |||||||||||||||
| Intersegment |
(27 | ) | — | — | — | (27 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total net sales |
$ | 7,552 | $ | — | $ | 45 | $ | — | $ | 7,507 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Fiscal 2010 |
||||||||||||||||||||
| Net sales: |
||||||||||||||||||||
| N. A. Retail |
$ | 2,771 | $ | — | $ | — | $ | 52 | $ | 2,719 | ||||||||||
| N. A. FS & Specialty Meats |
1,082 | (1 | ) | — | 19 | 1,064 | ||||||||||||||
| Coffee & Tea |
3,221 | (27 | ) | 1 | 48 | 3,199 | ||||||||||||||
| Australian Bakery |
129 | (15 | ) | — | 2 | 142 | ||||||||||||||
| Intersegment |
(32 | ) | — | — | — | (32 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total net sales |
$ | 7,171 | $ | (43 | ) | $ | 1 | $ | 121 | $ | 7,092 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| As Reported |
Changes in Foreign Currency Exchange Rates |
Acq./ Disp. |
Restructuring Actions |
Impairment Charges |
Curtailment Gain/ Tax Indemnifcation |
Contingent Sale Proceeds |
Impact of 53rd Week |
As Adjusted (1) |
||||||||||||||||||||||||||||
| Fiscal 2011 |
||||||||||||||||||||||||||||||||||||
| Operating income: |
||||||||||||||||||||||||||||||||||||
| N. A. Retail |
$ | 297 | $ | — | $ | — | $ | (11 | ) | $ | — | $ | — | — | $ | — | $ | 308 | ||||||||||||||||||
| N. A. FS & Specialty Meats |
91 | — | 1 | (5 | ) | (15 | ) | — | — | — | 110 | |||||||||||||||||||||||||
| Coffee & Tea |
452 | — | 3 | (34 | ) | (6 | ) | — | — | — | 489 | |||||||||||||||||||||||||
| Australian Bakery |
(2 | ) | — | — | — | — | — | — | — | (2 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total operating segment income |
838 | — | 4 | (50 | ) | (21 | ) | — | — | — | 905 | |||||||||||||||||||||||||
|
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|
|
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|
|
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|
|
|
|
|
|
|
|
|||||||||||||||||||
| General corporate expenses |
(203 | ) | — | — | (84 | ) | — | — | — | — | (119 | ) | ||||||||||||||||||||||||
| Mark-to-market derivative gains/(losses) |
11 | — | — | — | — | — | — | — | 11 | |||||||||||||||||||||||||||
| Amortization of trademarks and other intangibles |
(14 | ) | — | — | — | — | — | — | — | (14 | ) | |||||||||||||||||||||||||
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Operating income |
$ | 632 | $ | — | $ | 4 | $ | (134 | ) | $ | (21 | ) | $ | — | — | $ | — | $ | 783 | |||||||||||||||||
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|
|||||||||||||||||||
| Fiscal 2010 |
||||||||||||||||||||||||||||||||||||
| Operating income: |
||||||||||||||||||||||||||||||||||||
| N. A. Retail |
$ | 333 | $ | — | $ | — | $ | (4 | ) | $ | — | $ | 7 | — | $ | 5 | $ | 325 | ||||||||||||||||||
| N. A. FS & Specialty Meats |
60 | — | — | (12 | ) | (15 | ) | 2 | — | 1 | 84 | |||||||||||||||||||||||||
| Coffee & Tea |
592 | (6 | ) | — | (12 | ) | — | — | — | 17 | 593 | |||||||||||||||||||||||||
| Australian Bakery |
5 | — | — | — | — | — | — | — | 5 | |||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total operating segment income |
990 | (6 | ) | — | (28 | ) | (15 | ) | 9 | — | 23 | 1,007 | ||||||||||||||||||||||||
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|
|
|
|||||||||||||||||||
| General corporate expenses |
(272 | ) | 1 | — | (38 | ) | — | (18 | ) | — | (6 | ) | (211 | ) | ||||||||||||||||||||||
| Mark-to-market derivative gains/(losses) |
(13 | ) | — | — | — | — | — | — | — | (13 | ) | |||||||||||||||||||||||||
| Amortization of trademarks and other intangibles |
(12 | ) | — | — | — | — | — | — | — | (12 | ) | |||||||||||||||||||||||||
| Contingent sale proceeds |
133 | — | — | — | — | — | 133 | — | — | |||||||||||||||||||||||||||
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|
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|
|
|
|
|
|||||||||||||||||||
| Operating income |
$ | 826 | $ | (5 | ) | $ | — | $ | (66 | ) | $ | (15 | ) | $ | (9 | ) | 133 | $ | 17 | $ | 771 | |||||||||||||||
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|||||||||||||||||||
| (1) | Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at end of this report. |
Page 11
Operating Results by Business Segment - Net Sales
(in millions - unaudited)
| As Reported |
Acquisitions/ Dispositions |
As Adjusted (1) |
||||||||||
| First Quarter 2011 |
||||||||||||
| Net sales: |
||||||||||||
| N. A. Retail |
$ | 695 | $ | — | $ | 695 | ||||||
| N. A. FS & Specialty Meats |
274 | — | 274 | |||||||||
| Coffee & Tea |
728 | — | 728 | |||||||||
| Australian Bakery |
36 | — | 36 | |||||||||
| Intersegment |
(6 | ) | — | (6 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total net sales |
$ | 1,727 | $ | — | $ | 1,727 | ||||||
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|
|
|
|||||||
| Second Quarter 2011 |
||||||||||||
| Net sales: |
||||||||||||
| N. A. Retail |
$ | 741 | $ | — | $ | 741 | ||||||
| N. A. FS & Specialty Meats |
290 | — | 290 | |||||||||
| Coffee & Tea |
899 | 3 | 896 | |||||||||
| Australian Bakery |
35 | — | 35 | |||||||||
| Intersegment |
(7 | ) | — | (7 | ) | |||||||
|
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|
|
|
|
|||||||
| Total net sales |
$ | 1,958 | $ | 3 | $ | 1,955 | ||||||
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|
|
|||||||
| Third Quarter 2011 |
||||||||||||
| Net sales: |
||||||||||||
| N. A. Retail |
$ | 670 | $ | — | $ | 670 | ||||||
| N. A. FS & Specialty Meats |
243 | — | 243 | |||||||||
| Coffee & Tea |
925 | 13 | 912 | |||||||||
| Australian Bakery |
29 | — | 29 | |||||||||
| Intersegment |
(7 | ) | — | (7 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total net sales |
$ | 1,860 | $ | 13 | $ | 1,847 | ||||||
|
|
|
|
|
|
|
|||||||
| Fourth Quarter 2011 |
||||||||||||
| Net sales: |
||||||||||||
| N. A. Retail |
$ | 704 | $ | — | $ | 704 | ||||||
| N. A. FS & Specialty Meats |
279 | 11 | 268 | |||||||||
| Coffee & Tea |
996 | 18 | 978 | |||||||||
| Australian Bakery |
35 | — | 35 | |||||||||
| Intersegment |
(7 | ) | — | (7 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total net sales |
$ | 2,007 | $ | 29 | $ | 1,978 | ||||||
|
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|
|
|
|
|||||||
| (1) | Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at end of this report. |
Page 12
Operating Results by Business Segment - Operating Income
(in millions - unaudited)
| First Quarter 2011 |
As Reported |
Restructuring Actions |
Acq./ Disp. |
Impairment Charges |
As Adjusted (1) |
|||||||||||||||
| Operating income: |
||||||||||||||||||||
| N. A. Retail |
$ | 60 | $ | (1 | ) | $ | — | $ | — | $ | 61 | |||||||||
| N. A. FS & Specialty Meats |
23 | (2 | ) | — | — | 25 | ||||||||||||||
| Coffee & Tea |
90 | (2 | ) | — | — | 92 | ||||||||||||||
| Australian Bakery |
2 | — | — | — | 2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating segment income |
175 | (5 | ) | — | — | 180 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| General corporate expenses |
(27 | ) | (3 | ) | — | — | (24 | ) | ||||||||||||
| Mark-to-market derivative gains/(losses) |
12 | — | — | — | 12 | |||||||||||||||
| Amortization of trademarks and other intangibles |
(3 | ) | — | — | — | (3 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income |
$ | 157 | $ | (8 | ) | $ | — | $ | — | $ | 165 | |||||||||
|
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|
|
|
|
|
|
|
|||||||||||
| Second Quarter 2011 |
||||||||||||||||||||
| Operating income: |
||||||||||||||||||||
| N. A. Retail |
$ | 84 | $ | — | $ | — | $ | — | $ | 84 | ||||||||||
| N. A. FS & Specialty Meats |
38 | — | — | — | 38 | |||||||||||||||
| Coffee & Tea |
109 | (33 | ) | — | — | 142 | ||||||||||||||
| Australian Bakery |
(1 | ) | — | — | — | (1 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating segment income |
230 | (33 | ) | — | — | 263 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| General corporate expenses |
(50 | ) | (10 | ) | — | — | (40 | ) | ||||||||||||
| Mark-to-market derivative gains/(losses) |
(2 | ) | — | — | — | (2 | ) | |||||||||||||
| Amortization of trademarks and other intangibles |
(3 | ) | — | — | — | (3 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income |
$ | 175 | $ | (43 | ) | $ | — | $ | — | $ | 218 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Third Quarter 2011 |
||||||||||||||||||||
| Operating income: |
||||||||||||||||||||
| N. A. Retail |
$ | 82 | $ | (1 | ) | $ | — | $ | — | $ | 83 | |||||||||
| N. A. FS & Specialty Meats |
21 | (1 | ) | — | — | 22 | ||||||||||||||
| Coffee & Tea |
134 | (1 | ) | 1 | — | 134 | ||||||||||||||
| Australian Bakery |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating segment income |
237 | (3 | ) | 1 | — | 239 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| General corporate expenses |
(47 | ) | (14 | ) | — | — | (33 | ) | ||||||||||||
| Mark-to-market derivative gains/(losses) |
8 | — | — | — | 8 | |||||||||||||||
| Amortization of trademarks and other intangibles |
(4 | ) | — | — | — | (4 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income |
$ | 194 | $ | (17 | ) | $ | 1 | $ | — | $ | 210 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Fourth Quarter 2011 |
||||||||||||||||||||
| Operating income: |
||||||||||||||||||||
| N. A. Retail |
$ | 71 | $ | (9 | ) | $ | — | $ | — | $ | 80 | |||||||||
| N. A. FS & Specialty Meats |
9 | (2 | ) | 1 | (15 | ) | 25 | |||||||||||||
| Coffee & Tea |
119 | 2 | 2 | (6 | ) | 121 | ||||||||||||||
| Australian Bakery |
(3 | ) | — | — | — | (3 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating segment income |
196 | (9 | ) | 3 | (21 | ) | 223 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| General corporate expenses |
(79 | ) | (57 | ) | — | — | (22 | ) | ||||||||||||
| Mark-to-market derivative gains/(losses) |
(7 | ) | — | — | — | (7 | ) | |||||||||||||
| Amortization of trademarks and other intangibles |
(4 | ) | — | — | — | (4 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income |
$ | 106 | $ | (66 | ) | $ | 3 | $ | (21 | ) | $ | 190 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at end of this report. |
Page 13
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; consulting and advisory costs, transformation program and Project Accelerate costs; impairment charges; pension partial withdrawal liability charges; 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 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, the impact of acquisitions and dispositions, the impact of 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 the impact of significant items. 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 that reconcile the as adjusted to the as reported amounts 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 - 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 significant items, contingent sales proceeds and the impact of the 53rd week 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, contingent sales proceeds and the impact of the 53rd week recognized in the fiscal period presented.
Page 14
“Adjusted income from continuing operations” and “Adjusted net income (loss)” for continuing operations, for discontinued operations or for total Sara Lee, as indicated, excludes from the applicable net income (loss) the impact of significant items, contingent sale proceeds and the impact of the 53rd week.
“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, businesses acquired or divested after the start of the fiscal period, the impact of the 53rd week 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 applicable operating segment income measure the impact of significant items recognized by that portion of the business during the fiscal period presented, the results of businesses acquired or divested after the start of the fiscal period presented and the impact of the 53rd week, and also presents fiscal 2010 results at fiscal 2011 currency exchange rates.
Page 15