Sara Lee Delivers Solid Results in Challenging Environment Spin off Process Progressing as Planned.
DOWNERS GROVE, Ill. (August 11, 2011) – Sara Lee Corp. (NYSE: SLE) today reported earnings for the
fourth quarter and full year fiscal 2011 and provided an update on the progress of the spin off transaction.
Strategic Highlights:
Significant divestment and restructuring progress towards the creation of two pure-play companies by the
first half of calendar 2012
o Intend to divest Spanish bakery and French refrigerated dough businesses
o Signed agreement to sell North American (N.A.) refrigerated dough business to Ralcorp for $545 million
o Corporate expenses nearly $100 million lower than fiscal 2010
Fourth Quarter Highlights:
8% increase in adjusted net sales1 from continuing operations to $2.3 billion; 9% reported net sales increase
40% increase in adjusted operating income to $189 million; reported operating income increase of 19%
Fiscal 2011 Highlights:
Fiscal 2011 results comfortably within the latest updated guidance ranges2
Key Financial Data
Fourth Quarter ($ millions, except per share) Fiscal Year
2011 2010 % Change Continuing Operations 2011 2010 % Change
2,268 2,103 8 Adjusted Net Sales 8,636 8,231 5
2,297 2,113 9 Reported Net Sales 8,681 8,339 4
189 135 40 Adjusted Operating Income 809 827 (2)
76 64 19 Reported Operating Income 627 821 (24)
$0.20 $0.07 186 Adjusted EPS $0.78 $0.67 16
$0.08 $0.16 (50) Reported Diluted EPS $0.54 $0.84 (36)
Perspectives from Executive Chairman & Chief Executive Officer
"During the last six months, we have made significant strides toward creating two pure-play companies which
are poised for success,” said Sara Lee Executive Chairman, Jan Bennink.
“Our objective of building two simpler, faster and more entrepreneurial businesses is being realized. We have
defined the organizational framework for our new companies and are continuing to build and restructure our
teams for the future. Through our strategic divestments, we are achieving our objective of streamlining the
portfolios to provide the best foundation for strong and focused businesses moving forward. We are heartened
by the fact that we have been able to deliver solid results for fiscal 2011 while managing difficult commodity
conditions and the internal challenges of the spin off. The inherent strength of these two businesses, combined
with a new focus and orientation, give me confidence that the two companies will be highly successful when
they separate in the first half of calendar 2012," concluded Bennink.
Chief Executive Officer Marcel Smits added, “Throughout fiscal 2011, our businesses have remained focused
on operational performance. We delivered our updated guidance for adjusted EPS, adjusted operating income
and net sales. We’ve also maintained a focus on cost reduction activities, lowering our corporate expenses by
notes
1 The term “adjusted net sales” and other “adjusted” financial measures are explained and reconciled to comparable GAAP measures at the end of this release.
nearly $100 million over our prior fiscal year. We have introduced new products like Jimmy Dean Jimmy D’s
and expanded successful brands like L’OR EspressO and Senseo into new geographies. I’m excited about the
progress that we have made this year and continue to have great confidence in the long-term prospects of our
businesses.”
Portfolio Changes
The company continues to streamline operations as it progresses toward the spin off. The summary below
provides an update on the decisions made to date.
North American refrigerated dough: On August 9th, the company announced a signed agreement to sell its
North American refrigerated dough (Store Brands) business to Ralcorp for $545 million. The sale is expected
to close by the end of calendar year 2011. This business was classified as a discontinued operation in the fourth
quarter of fiscal 2011.
North American Fresh Bakery: The sale of the North American Fresh Bakery to Grupo Bimbo is expected to
close before the end of September.
International Bakery: Sara Lee decided in August to divest the Spanish bakery and French refrigerated dough
businesses. For both, a sales process is underway and numerous bids have been received. These businesses will
be reclassified to discontinued operations in the first quarter of fiscal 2012. The Australian frozen desserts
business remains under strategic review.
Remaining Household & Body Care: The company has received 98% of the total expected proceeds. The remaining insecticides divestitures are expected to close in the second half of calendar year 2011.
Fiscal 2012 Guidance
Continuing operations Fiscal 2012 Guidance
FY11 results excl.
International Bakery
Net Sales $8.5 – $8.75 billion $8.0 billion
Operating Income ex significant items3 $875 - $930 million $792 million
Net Interest Expense $85 million $85 million
Tax rate 33.4% 33.4%
EPS ex significant items3 $0.89 - $0.95 $0.75
Year-End Cash ~$0.3 billion $2.1 billion
Year-End Debt ~$2.3 billion $2.7 billion
Dollar / euro exchange rate $1.44 $1.36
The International Bakery segment is excluded from fiscal 2012 guidance and fiscal 2011
results for comparability (reconciliation to the fiscal 2011 reported numbers is provided at the
end of this release).
For simplicity, guidance assumes that the spin off will occur on the last day of fiscal 2012.
Guidance for operating income excluding significant items is weighted toward the back half of
the year as a result of investments in growth, price increases versus commodity inflation and
restructuring benefits.
Year-end cash guidance assumes payment of the $3.00 per share special dividend and the
repatriation tax provision. It also assumes proceeds are received for all announced
dispositions.
Fiscal 2012 guidance does not include projections for significant items.
3The “ex significant items” terms are explained and reconciled to comparable GAAP measures at the end of this release.
2Reconciliation from fiscal 2011 results and the latest FY11 guidance is provided on page 5, breaking out the contribution of N.A. refrigerated dough.
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