-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EFm9doWSbqggytP3RIOhxyiBiDzyeLad3y8w7UVcTegGcaCwGT2+kLyIY/u05geY fRuSFMwQHF6ZNXSnrhz1IQ== 0001193125-09-215956.txt : 20091028 0001193125-09-215956.hdr.sgml : 20091028 20091028140032 ACCESSION NUMBER: 0001193125-09-215956 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20091028 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20091028 DATE AS OF CHANGE: 20091028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Sara Lee Corp CENTRAL INDEX KEY: 0000023666 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 362089049 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03344 FILM NUMBER: 091141262 BUSINESS ADDRESS: STREET 1: 3500 LACEY ROAD CITY: DOWNERS GROVE STATE: IL ZIP: 60515 BUSINESS PHONE: 6305986000 MAIL ADDRESS: STREET 1: 3500 LACEY ROAD CITY: DOWNERS GROVE STATE: IL ZIP: 60515 FORMER COMPANY: FORMER CONFORMED NAME: LEE SARA CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED FOODS CORP DATE OF NAME CHANGE: 19850402 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED GROCERD CORP DATE OF NAME CHANGE: 19731220 8-K 1 d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2009

 

 

Sara Lee Corporation

(Exact name of registrant as specified in charter)

 

 

 

Maryland   1-3344   36-2089049

(State or Other Jurisdiction

of Incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification Number)

3500 Lacey Road, Downers Grove, Illinois 60515

(Address of principal executive offices)

Registrant’s telephone number, including area code: (630) 598-6000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 7.01 Regulation FD Disclosure

This Current Report describes certain changes made by Sara Lee Corporation (the “corporation”) in how certain expenses are reflected in the corporation’s financial statements beginning in fiscal 2010. Exhibit 99 to this Current Report shows the corporation’s financial results for fiscal 2009 and 2008, on a quarterly and full year basis, both as reported and as revised to reflect the prior period results consistent with the changes made beginning in fiscal 2010.

The corporation incurs various information technology (IT) and human resource (HR) costs related to its business segments. The IT costs include amortization of software used directly by the business segments, intranet website management costs, systems support, maintenance and project costs. The HR costs include benefits administration, organizational development, labor relations and recruiting costs incurred by the corporate human resource function on behalf of the business segments. Prior to fiscal 2010, these costs were included in Other general corporate expenses. Beginning in fiscal 2010, the corporation now includes these IT and HR costs in the operating results of the business segments. The reason for this change is that the integration of our operations over the past several years has resulted in more centralized services which in many cases are conducted directly for the benefit of the business segments. Management believes these costs should be reflected in operating segment income in order to provide better information regarding the actual results of the business segment. Business segment information has been revised to be consistent with the new basis of presentation. The total amount of these costs that is now included in operating segment income is $34 million in fiscal 2009, $35 million in fiscal 2008 and $27 million in fiscal 2007. Of the amount in fiscal 2007, $17 million related to North American Foodservice, $6 million to North American Fresh Bakery, $2 million to North American Retail, and $1 million each to International Beverage and International Household and Body Care.

Management measures and reports Sara Lee’s financial results in accordance with U.S. generally accepted accounting principles (GAAP). The company also 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. The significant items in fiscal 2009 and 2008, as originally reported, included $21 million and $15 million, respectively, of software amortization expense related to new computer systems that were put into use in fiscal 2008 as part of our transformation program. This amortization expense was previously reported on the Transformation/Accelerate charges line in tables that reconciled adjusted operating segment income and operating income to reported operating segment income and operating income. Beginning in fiscal 2010, software amortization expense will be reported as a normal operating expense item, rather than a significant item.

We will report the results of operations under this new format beginning with the first quarter of fiscal 2010. Attached as Exhibit 99 to this Form 8-K, are unaudited financial schedules which provide information regarding operating segment income (loss), operating income and adjusted operating segment income (loss) and adjusted operating income for fiscal 2009 and 2008 and each of the four quarters of fiscal 2009 and 2008 on the new reporting basis.

In its fiscal 2009 year-end earnings release dated August 12, 2009, the corporation included business segment financial results for fiscal 2009 and 2008 as revised to reflect some of the IT-related changes described in this Current Report. The revised financial results included in Exhibit 99 reflect additional IT-related changes and the other changes described above.

The information disclosed in this Current Report, including Exhibit 99 which is incorporated herein by this reference hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

 

99    Financial Schedules

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: October 28, 2009

 

SARA LEE CORPORATION
(Registrant)
By:   /S/    THOMAS S. SHILEN, JR.        
 

Corporate Controller and Senior Vice President

(Principal Accounting Officer)

 EX-99 2 dex99.htm FINANCIAL SCHEDULES Financial Schedules

Exhibit 99

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Reported

(In millions)

 

     Fiscal 2009  
     First
Quarter		    Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

North American Retail

            

Operating segment income

    $ 57    $ 74      $ 66      $ 63      $ 260   
                                       

Increase/(decrease) in operating segment income from:

            

Exit activities, asset and business dispositions

    $ 1    $ —        $ —        $ (1 )    $ —     
                                       

Adjusted operating segment income (1)

    $ 56    $ 74      $ 66      $ 64      $ 260   
                                       
     Fiscal 2009  
     First
Quarter		    Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

North American Fresh Bakery

            

Operating segment income (loss)

    $ 19    $ (14 )    $ 4      $ 24      $ 33   
                                       

Increase/(decrease) in operating segment income (loss) from:

            

Exit activities, asset and business dispositions

    $ —      $ —        $ —        $ (5 )    $ (5 ) 

Transformation/Accelerate charges

      —        —          —          (1 )      (1 ) 

Pension partial withdrawal liability

      —        (30 )      (1 )      —          (31 ) 
                                       

Adjusted operating segment income (1)

    $ 19    $ 16      $ 5      $ 30      $ 70   
                                       
     Fiscal 2009  
     First
Quarter		    Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

North American Foodservice

            

Operating segment income (loss)

    $ 30    $ (43 )    $ 29      $ 38      $ 54   
                                       

Increase/(decrease) in operating segment income (loss) from:

            

Exit activities, asset and business dispositions

    $ 3    $ 1      $ (2 )    $ (1 )    $ 1   

Impairment charges

      —        (107 )      —          —          (107 ) 
                                       

Adjusted operating segment income (1)

    $ 27    $ 63      $ 31      $ 39      $ 160   
                                       

(1) Adjusted operating segment income is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

 

1

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Reported

(In millions)

 

     Fiscal 2009  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Beverage

           

Operating segment income

    $ 141      $ 107      $ 130      $ 110      $ 488   
                                        

Increase/(decrease) in operating segment income from:

           

Exit activities, asset and business dispositions

    $ (1 )    $ (1 )    $ (4 )    $ (44 )    $ (50 ) 

Transformation/Accelerate charges

      (3 )      (1 )      (2 )      (2 )      (8 ) 

Curtailment gain

      12        —          —          —          12   

Gain on property disposition

      —          —          —          14        14   

Acquisition/disposition

      —          5        (5 )      2        2   
                                        

Adjusted operating segment income (1)

    $ 133      $ 104      $ 141      $ 140      $ 518   
                                        
     Fiscal 2009  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Bakery

           

Operating segment income (loss)

    $ 15      $ (19 )    $ 11      $ (200 )    $ (193 ) 
                                        

Increase/(decrease) in operating segment income (loss) from:

           

Exit activities, asset and business dispositions

    $ 1      $ (29 )    $ (1 )    $ (8 )    $ (37 ) 

Transformation/Accelerate charges

      (1 )      —          —          —          (1 ) 

Impairment charges

      —          —          —          (207 )      (207 ) 
                                        

Adjusted operating segment income (1)

    $ 15      $ 10      $ 12      $ 15      $ 52   
                                        
     Fiscal 2009  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Household and Body Care

           

Operating segment income

    $ 58      $ 45      $ 57      $ 82      $ 242   
                                        

Increase/(decrease) in operating segment income from:

           

Exit activities, asset and business dispositions

    $ —        $ (6 )    $ (5 )    $ —        $ (11 ) 

Transformation/Accelerate charges

      (2 )      —          (1 )      (1 )      (4 ) 

Curtailment gain

      5        —          —          —          5   
                                        

Adjusted operating segment income (1)

    $ 55      $ 51      $ 63      $ 83      $ 252   
                                        

(1) Adjusted operating segment income is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

 

2

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Reported

(In millions)

 

     Fiscal 2009  
   First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

Total Sara Lee

           

Total operating segment income

    $ 320      $ 150      $ 297      $ 117      $ 884   

Amortization of trademarks and other intangibles

      (17 )      (15 )      (16 )      (17 )      (65 ) 

General corporate expenses:

           

Other

      (65 )      (79 )      (38 )      (56 )      (238 ) 

Derivative gains/(losses)

      (35 )      (23 )      19        21        (18 ) 

Contingent sales proceeds

      150        —          —          —          150   
                                        

Operating income

    $ 353      $ 33      $ 262      $ 65      $ 713   
                                        

Increase/(decrease) in operating income from:

           

Contingent sale proceeds

    $ 150      $ —        $ —        $ —        $ 150   

Exit activities, asset and business dispositions

      4        (40 )      (16 )      (62 )      (114 ) 

Transformation/Accelerate charges

      (10 )      (7 )      (11 )      (16 )      (44 ) 

Curtailment gain

      17        —          —          —          17   

Pension partial withdrawal liability

      —          (30 )      (1 )      —          (31 ) 

Gain on property disposition

      —          —          —          14        14   

Balance sheet corrections

      —          —          8        3        11   

Impairment charges

      —          (107 )      —          (207 )      (314 ) 

Acquisitions/Dispositions

      —          5        (5 )      2        2   
                                        

Adjusted operating income (1)

    $ 192      $ 212      $ 287      $ 331      $ 1,022   
                                        

(1) Adjusted operating income is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

 

3

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Revised

(In millions)

 

     Fiscal 2009  
     First
Quarter		    Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

North American Retail

            

Operating segment income (2)

    $ 55    $ 73      $ 64      $ 61      $ 253   
                                       

Increase/(decrease) in operating segment income from:

            

Exit activities, asset and business dispositions

    $ 1    $ —        $ —        $ (1 )    $ —     
                                       

Adjusted operating segment income, revised (1) (3)

    $ 54    $ 73      $ 64      $ 62      $ 253   
                                       
     Fiscal 2009  
     First
Quarter		    Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

North American Fresh Bakery

            

Operating segment income (loss) (2)

    $ 17    $ (16 )    $ 2      $ 23      $ 26   
                                       

Increase/(decrease) in operating segment income (loss) from:

            

Exit activities, asset and business dispositions

    $ —      $ —        $ —        $ (5 )    $ (5 ) 

Transformation/Accelerate charges

      —        —          —          (1 )      (1 ) 

Pension partial withdrawal liability

      —        (30 )      (1 )      —          (31 ) 
                                       

Adjusted operating segment income, revised (1) (3)

    $ 17    $ 14      $ 3      $ 29      $ 63   
                                       
     Fiscal 2009  
     First
Quarter		    Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

North American Foodservice

            

Operating segment income (loss) (2)

    $ 25    $ (48 )    $ 25      $ 34      $ 36   
                                       

Increase/(decrease) in operating segment income (loss) from:

            

Exit activities, asset and business dispositions

    $ 3    $ 1      $ (2 )    $ (1 )    $ 1   

Impairment charges

      —        (107 )      —          —          (107 ) 
                                       

Adjusted operating segment income, revised (1) (3)

    $ 22    $ 58      $ 27      $ 35      $ 142   
                                       

(1) Adjusted operating segment income, revised, is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

(2) Fiscal 2009 Other general corporate expenses, as reported, included $34 million of information technology and human resource costs which are now included in the operating results of the business segments.

(3) Fiscal 2009 significant items, as reported, included $21 million of software amortization expense related to new computer systems that were put into use in fiscal 2008 as part of our transformation program. Beginning in fiscal 2010, software amortization will be reported as a normal operating expense item, rather than a significant item. The table above presents software amortization expense on a basis consistent with fiscal 2010.

 

4

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Revised

(In millions)

 

     Fiscal 2009  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Beverage

           

Operating segment income (2)

    $ 141      $ 107      $ 129      $ 110      $ 487   
                                        

Increase/(decrease) in operating segment income from:

           

Exit activities, asset and business dispositions

    $ (1 )    $ (1 )    $ (4 )    $ (44 )    $ (50 ) 

Transformation/Accelerate charges

      (1 )      —          (1 )      (1 )      (3 ) 

Curtailment gain

      12        —          —          —          12   

Gain on property disposition

      —          —          —          14        14   

Acquisition/disposition

      —          5        (5 )      2        2   
                                        

Adjusted operating segment income, revised (1) (3)

    $ 131      $ 103      $ 139      $ 139      $ 512   
                                        
     Fiscal 2009  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Bakery

           

Operating segment income (loss) (2)

    $ 15      $ (19 )    $ 11      $ (201 )    $ (194 ) 
                                        

Increase/(decrease) in operating segment income (loss) from:

           

Exit activities, asset and business dispositions

    $ 1      $ (29 )    $ (1 )    $ (8 )    $ (37 ) 

Transformation/Accelerate charges

      (1 )      —          —          —          (1 ) 

Impairment charges

      —          —          —          (207 )      (207 ) 
                                        

Adjusted operating segment income, revised (1) (3)

    $ 15      $ 10      $ 12      $ 14      $ 51   
                                        
     Fiscal 2009  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Household and Body Care

           

Operating segment income (2)

    $ 58      $ 45      $ 57      $ 82      $ 242   
                                        

Increase/(decrease) in operating segment income from:

           

Exit activities, asset and business dispositions

    $ —        $ (6 )    $ (5 )    $ —        $ (11 ) 

Transformation/Accelerate charges

      (2 )      —          —          —          (2 ) 

Curtailment gain

      5        —          —          —          5   
                                        

Adjusted operating segment income, revised (1) (3)

    $ 55      $ 51      $ 62      $ 82      $ 250   
                                        

(1) Adjusted operating segment income, revised, is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

(2) Fiscal 2009 Other general corporate expenses, as reported, included $34 million of information technology and human resource costs which are now included in the operating results of the business segments.

(3) Fiscal 2009 significant items, as reported, included $21 million of software amortization expense related to new computer systems that were put into use in fiscal 2008 as part of our transformation program. Beginning in fiscal 2010, software amortization will be reported as a normal operating expense item, rather than a significant item. The table above presents software amortization expense on a basis consistent with fiscal 2010.

 

5

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Revised

(In millions)

 

     Fiscal 2009  
   First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

Total Sara Lee

           

Total operating segment income (2)

    $ 311      $ 142      $ 288      $ 109      $ 850   

Amortization of trademarks and other intangibles

      (17 )      (15 )      (16 )      (17 )      (65 ) 

General corporate expenses:

           

Other (2)

      (56 )      (71 )      (29 )      (48 )      (204 ) 

Derivative gains/(losses)

      (35 )      (23 )      19        21        (18 ) 

Contingent sale proceeds

      150        —          —          —          150   
                                        

Operating income

    $ 353      $ 33      $ 262      $ 65      $ 713   
                                        

Increase/(decrease) in operating income from:

           

Contingent sale proceeds

    $ 150      $ —        $ —        $ —        $ 150   

Exit activities, asset and business dispositions

      4        (40 )      (16 )      (62 )      (114 ) 

Transformation/Accelerate charges

      (5 )      (2 )      (6 )      (10 )      (23 ) 

Curtailment gain

      17        —          —          —          17   

Pension partial withdrawal liability

      —          (30 )      (1 )      —          (31 ) 

Gain on property disposition

      —          —          —          14        14   

Balance sheet corrections

      —          —          8        3        11   

Impairment charges

      —          (107 )      —          (207 )      (314 ) 

Acquisitions/Dispositions

      —          5        (5 )      2        2   
                                        

Adjusted operating income, revised (1) (3)

    $ 187      $ 207      $ 282      $ 325      $ 1,001   
                                        

(1) Adjusted operating income, revised, is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

(2) Fiscal 2009 Other general corporate expenses, as reported, included $34 million of information technology and human resource costs which are now included in the operating results of the business segments.

(3) Fiscal 2009 significant items, as reported, included $21 million of software amortization expense related to new computer systems that were put into use in fiscal 2008 as part of our transformation program. Beginning in fiscal 2010, software amortization will be reported as a normal operating expense item, rather than a significant item. The table above presents software amortization expense on a basis consistent with fiscal 2010.

 

6

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Reported

(In millions)

 

     Fiscal 2008  
     First
Quarter		     Second
Quarter		    Third
Quarter		    Fourth
Quarter		     Total
Year		  

North American Retail

             

Operating segment income

    $ 19      $ 46    $ 46    $ 44      $ 155   
                                      

Increase/(decrease) in operating segment income from:

             

Exit activities, asset and business dispositions

    $ —        $ —      $ 1    $ (14 )    $ (13 ) 

Transformation charges

      (2 )      —        —        1        (1 ) 

Impairment charges

      —          —        —        (20 )      (20 ) 
                                      

Adjusted operating segment income (1)

    $ 21      $ 46    $ 45    $ 77      $ 189   
                                      
     Fiscal 2008  
     First
Quarter		     Second
Quarter		    Third
Quarter		    Fourth
Quarter		     Total
Year		  

North American Fresh Bakery

             

Operating segment income

    $ 14      $ 3    $ 14    $ 29      $ 60   
                                      

Increase/(decrease) in operating segment income from:

             

Exit activities, asset and business dispositions

    $ —        $ —      $ —      $ (3 )    $ (3 ) 
                                      

Adjusted operating segment income (1)

    $ 14      $ 3    $ 14    $ 32      $ 63   
                                      
     Fiscal 2008  
     First
Quarter		     Second
Quarter		    Third
Quarter		    Fourth
Quarter		     Total
Year		  

North American Foodservice

             

Operating segment income (loss)

    $ 21      $ 53    $ 32    $ (408 )    $ (302 ) 
                                      

Increase/(decrease) in operating segment income (loss) from:

             

Exit activities, asset and business dispositions

    $ —        $ —      $ 1    $ (6 )    $ (5 ) 

Impairment charges

      —          —        —        (431 )      (431 ) 

Disposition

      —          1      1      —          2   
                                      

Adjusted operating segment income (1)

    $ 21      $ 52    $ 30    $ 29      $ 132   
                                      

(1) Adjusted operating segment income is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

 

7

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Reported

(In millions)

 

     Fiscal 2008  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Beverage

           

Operating segment income

    $ 121      $ 125      $ 129      $ 172      $ 547   
                                        

Increase/(decrease) in operating segment income from:

           

Changes in foreign currency exchange rates

    $ (12 )    $ 13      $ 18      $ 21      $ 40   

Exit activities, asset and business dispositions

      (1 )      (1 )      1        (3 )      (4 ) 

Transformation charges

      (2 )      (2 )      (2 )      (4 )      (10 ) 

Accelerated depreciation

      —          (1 )      —          —          (1 ) 
                                        

Adjusted operating segment income (1)

    $ 136      $ 116      $ 112      $ 158      $ 522   
                                        
     Fiscal 2008  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Bakery

           

Operating segment income (loss)

    $ 13      $ 9      $ 17      $ (385 )    $ (346 ) 
                                        

Increase/(decrease) in operating segment income (loss) from:

           

Changes in foreign currency exchange rates

    $ (2 )    $ 2      $ 2      $ 2      $ 4   

Exit activities, asset and business dispositions

      (3 )      (4 )      —          —          (7 ) 

Transformation charges

      —          (1 )      —          (1 )      (2 ) 

Impairment charges

      —          —          —          (400 )      (400 ) 

Disposition

      —          (1 )      —          —          (1 ) 
                                        

Adjusted operating segment income (1)

    $ 18      $ 13      $ 15      $ 14      $ 60   
                                        
     Fiscal 2008  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Household and Body Care

           

Operating segment income

    $ 57      $ 64      $ 77      $ 117      $ 315   
                                        

Increase/(decrease) in operating segment income from:

           

Changes in foreign currency exchange rates

    $ (2 )    $ 11      $ 12      $ 13      $ 34   

Exit activities, asset and business dispositions

      —          —          —          1        1   

Transformation charges

      (1 )      (2 )      (3 )      (2 )      (8 ) 
                                        

Adjusted operating segment income (1)

    $ 60      $ 55      $ 68      $ 105      $ 288   
                                        

(1) Adjusted operating segment income is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

 

8

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Reported

(In millions)

 

     Fiscal 2008  
   First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

Total Sara Lee

           

Total operating segment income (loss)

    $ 245      $ 300      $ 315      $ (431 )    $ 429   

Amortization of trademarks and other intangibles

      (16 )      (16 )      (17 )      (18 )      (67 ) 

General corporate expenses:

           

Other

      (68 )      (61 )      (66 )      (59 )      (254 ) 

Derivative gains/(losses)

      2        8        10        2        22   

Contingent sales proceeds

      130        —          —          —          130   
                                        

Operating income (loss)

    $ 293      $ 231      $ 242      $ (506 )    $ 260   
                                        

Increase/(decrease) in operating income (loss) from:

           

Contigent sales proceeds

    $ 130      $ —        $ —        $ —        $ 130   

Changes in foreign currency exchange rates

      (15 )      22        27        33        67   

Exit activities, asset and business dispositions

      (4 )      (7 )      3        (30 )      (38 ) 

Transformation charges

      (18 )      (12 )      (10 )      (11 )      (51 ) 

Accelerated depreciation

      —          (1 )      —          —          (1 ) 

Impairment charges

      —          —          —          (851 )      (851 ) 

Acquisitions/Dispositions

      —          —          1        —          1   
                                        

Adjusted operating income (1)

    $ 200      $ 229      $ 221      $ 353      $ 1,003   
                                        

(1) Adjusted operating income is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

 

9

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Revised

(In millions)

 

     Fiscal 2008  
   First
Quarter		     Second
Quarter		    Third
Quarter		    Fourth
Quarter		     Total
Year		  

North American Retail

             

Operating segment income (2)

    $ 18      $ 45    $ 44    $ 42      $ 149   
                                      

Increase/(decrease) in operating segment income from:

             

Exit activities, asset and business dispositions

    $ —        $ —      $ 1    $ (14 )    $ (13 ) 

Transformation charges

      (2 )      —        —        1        (1 ) 

Impairment charges

      —          —        —        (20 )      (20 ) 
                                      

Adjusted operating segment income, revised (1) (3)

    $ 20      $ 45    $ 43    $ 75      $ 183   
                                      
     Fiscal 2008  
     First
Quarter		     Second
Quarter		    Third
Quarter		    Fourth
Quarter		     Total
Year		  

North American Fresh Bakery

             

Operating segment income (2)

    $ 12      $ 2    $ 13    $ 28      $ 55   
                                      

Increase/(decrease) in operating segment income from:

             

Exit activities, asset and business dispositions

    $ —        $ —      $ —      $ (3 )    $ (3 ) 
                                      

Adjusted operating segment income, revised (1) (3)

    $ 12      $ 2    $ 13    $ 31      $ 58   
                                      
     Fiscal 2008  
     First
Quarter		     Second
Quarter		    Third
Quarter		    Fourth
Quarter		     Total
Year		  

North American Foodservice

             

Operating segment income (loss) (2)

    $ 17      $ 46    $ 27    $ (414 )    $ (324 ) 
                                      

Increase/(decrease) in operating segment income from:

             

Exit activities, asset and business dispositions

    $ —        $ —      $ 1    $ (6 )    $ (5 ) 

Impairment charges

      —          —        —        (431 )      (431 ) 

Disposition

      —          1      1      —          2   
                                      

Adjusted operating segment income, revised (1) (3)

    $ 17      $ 45    $ 25    $ 23      $ 110   
                                      

(1) Adjusted operating segment income, revised, is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

(2) Fiscal 2008 Other general corporate expenses, as reported, included $35 million of information technology and human resource costs which are now included in the operating results of the business segments.

(3) Fiscal 2008 significant items as reported included $15 million of software amortization expense related to new computer systems that were put into use in fiscal 2008 as part of our transformation program. Beginning in fiscal 2010, software amortization will be reported as a normal operating expense item, rather than a significant item. The table above presents software amortization expense on a basis consistent with fiscal 2010.

 

10

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Revised

(In millions)

 

     Fiscal 2008  
   First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Beverage

           

Operating segment income (2)

    $ 121      $ 125      $ 128      $ 172      $ 546   
                                        

Increase/(decrease) in operating segment income from:

           

Changes in foreign currency exchange rates

    $ (12 )    $ 13      $ 18      $ 21      $ 40   

Exit activities, asset and business dispositions

      (1 )      (1 )      1        (3 )      (4 ) 

Transformation charges

      (2 )      (2 )      (2 )      (3 )      (9 ) 

Accelerated depreciation

      —          (1 )      —          —          (1 ) 
                                        

Adjusted operating segment income, revised (1) (3)

    $ 136      $ 116      $ 111      $ 157      $ 520   
                                        
     Fiscal 2008  
   First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Bakery

           

Operating segment income (loss) (2)

    $ 13      $ 9      $ 17      $ (385 )    $ (346 ) 
                                        

Increase/(decrease) in operating segment income (loss) from:

           

Changes in foreign currency exchange rates

    $ (2 )    $ 2      $ 2      $ 2      $ 4   

Exit activities, asset and business dispositions

      (3 )      (4 )      —          —          (7 ) 

Transformation charges

      —          (1 )      —          (1 )      (2 ) 

Impairment charges

      —          —          —          (400 )      (400 ) 

Disposition

      —          (1 )      —          —          (1 ) 
                                        

Adjusted operating segment income, revised (1) (3)

    $ 18      $ 13      $ 15      $ 14      $ 60   
                                        
     Fiscal 2008  
   First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

International Household and Body Care

           

Operating segment income (2)

    $ 57      $ 63      $ 77      $ 117      $ 314   
                                        

Increase/(decrease) in operating segment income from:

           

Changes in foreign currency exchange rates

    $ (2 )    $ 11      $ 12      $ 13      $ 34   

Exit activities, asset and business dispositions

      —          —          —          1        1   

Transformation charges

      (1 )      (2 )      (3 )      (1 )      (7 ) 
                                        

Adjusted operating segment income, revised (1) (3)

    $ 60      $ 54      $ 68      $ 104      $ 286   
                                        

(1) Adjusted operating segment income, revised, is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

(2) Fiscal 2008 Other general corporate expenses, as reported, included $35 million of information technology and human resource costs which are now included in the operating results of the business segments.

(3) Fiscal 2008 significant items as reported included $15 million of software amortization expense related to new computer systems that were put into use in fiscal 2008 as part of our transformation program. Beginning in fiscal 2010, software amortization will be reported as a normal operating expense item, rather than a significant item. The table above presents software amortization expense on a basis consistent with fiscal 2010.

 

11

Sara Lee Corporation

Impact of Significant Items on Operating Segment Income (Loss), as Revised

(In millions)

 

     Fiscal 2008  
   First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total
Year		  

Total Sara Lee

           

Total operating segment income (loss) (2)

    $ 238      $ 290      $ 306      $ (440 )    $ 394   

Amortization of trademarks and other intangibles

      (16 )      (16 )      (17 )      (18 )      (67 ) 

General corporate expenses:

           

Other (2)

      (61 )      (51 )      (57 )      (50 )      (219 ) 

Derivative gains/(losses)

      2        8        10        2        22   

Contingent sale proceeds

      130        —          —          —          130   
                                        

Operating income (loss)

    $ 293      $ 231      $ 242      $ (506 )    $ 260   
                                        

Increase/(decrease) in operating income (loss) from:

           

Contigent sale proceeds

    $ 130      $ —        $ —        $ —        $ 130   

Changes in foreign currency exchange rates

      (15 )      22        27        33        67   

Exit activities, asset and business dispositions

      (4 )      (7 )      3        (30 )      (38 ) 

Transformation charges

      (16 )      (8 )      (6 )      (6 )      (36 ) 

Accelerated depreciation

      —          (1 )      —          —          (1 ) 

Impairment charges

      —          —          —          (851 )      (851 ) 

Acquisitions/Dispositions

      —          —          1        —          1   
                                        

Adjusted operating income, revised (1) (3)

    $ 198      $ 225      $ 217      $ 348      $ 988   
                                        

(1) Adjusted operating income, revised, is a non-GAAP measure. See pages 13 and 14 for an explanation of this and other non-GAAP measures used in this release.

(2) Fiscal 2008 Other general corporate expenses, as reported, included $35 million of information technology and human resource costs which are now included in the operating results of the business segments.

(3) Fiscal 2008 significant items as reported included $15 million of software amortization expense related to new computer systems that were put into use in fiscal 2008 as part of our transformation program. Beginning in fiscal 2010, software amortization will be reported as a normal operating expense item, rather than a significant item. The table above presents software amortization expense on a basis consistent with fiscal 2010.

 

12

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 report, 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; tax costs and benefits resulting from the disposition of a business; tax provision corrections; impact of tax law changes; 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 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.

This report 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 divestitures 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 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 incentive compensation. Many of the significant items will recur in future periods; however, the amount and frequency of each significant item varies from period to period.

 

13

The following is an explanation of the non-GAAP financial measures presented in this report.

“Adjusted operating income” excludes from the corporation’s operating income, the impact of significant items, net, contingent sale proceeds, and businesses acquired or divested after the start of the fiscal period and presents fiscal 2008 results at fiscal 2009 currency exchange rates.

“Adjusted operating income, revised” excludes from the corporation’s operating income, the impact of significant items, net, recognized during the fiscal period presented, contingent sale proceeds and businesses acquired or divested after the start of the fiscal period and presents fiscal 2008 results at fiscal 2009 currency exchange rates; however, for purposes of this calculation, software amortization expense related to our transformation program is not treated as a significant item. Beginning in fiscal 2010, software amortization expense will be reported as a normal operating expense item, and not as a significant item. We are presenting adjusted operating income, as revised, to assist comparability of fiscal 2009 and 2008 results with fiscal 2010 results.

“Adjusted operating segment income” excludes from the operating segment income of a specified business segment, the impact of significant items, net, recognized by that business segment during the fiscal period and businesses acquired or divested after the start of the fiscal period and presents fiscal 2008 results at fiscal 2009 currency exchange rates.

“Adjusted operating segment income, revised” excludes from the operating segment income of a specified business segment, the impact of significant items, net, recognized by that business segment during the fiscal period presented and businesses acquired or divested after the start of the fiscal period and presents fiscal 2008 results at fiscal 2009 currency exchange rates; however, for purposes of this calculation, software amortization expense related to our transformation program is not treated as a significant item. Beginning in fiscal 2010, software amortization expense will be reported as a normal operating expense item, and not as a significant item. We are presenting adjusted operating segment income, as revised, to assist comparability of fiscal 2009 and 2008 results with fiscal 2010 results.

 

14

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