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Net Earnings fall, Revenues Up
CHICAGO, Aug 1 (Reuters) - Consumer goods maker Sara Lee Corp. (SLE,Trade) on Thursday said quarterly net earnings fell as the company posted a gain in the year-earlier quarter.
The maker of Ball Park hot dogs, Playtex bras and Kiwi shoe polish said it earned $351 million, or 43 cents a share, in the fiscal fourth quarter ended June 29, compared with $973 million, or $1.19 a share, a year earlier.
Before one-time items, the company earned 42 cents a share in the latest quarter. Chicago-based Sara Lee was expected to earn 40 cents to 43 cents a share, with an average estimate of 42 cents, according to research by Thomson First Call. In April Sara Lee said it expected earnings of 41 cents to 44 cents a share.
Revenue rose to $4.5 billion from $3.9 billion.
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Sara
Sprint PCS... NOT free and NOT clear!
Ten More to Watch by TMF
Sara Lee (NYSE: SLE). There's more than just cheesecake here. Sara Lee brands include Hanes, Hillshire Farm, Playtex, Leggs, Jimmy Dean, Ball Park Franks, Kiwi, Wonderbra, Just My Size, and Champion. Over the past 20 or so years, the company's stock has grown an average of 19% per year. The current P/E is around 8, and the dividend yield a respectable 2.7%. (Fool articles on Sara Lee.)
http://qw2001.quicken.com/investments/news/mf/notemplates/frame.dcg?symbol=SLE&ntlink=http://www...
Sara
SLE Declares 224th consecutive divided!
CHICAGO, Jan 31, 2002 (BUSINESS WIRE) -- Sara Lee Corporation's board of directors today declared a regular quarterly dividend of $.15 per share on the company's common stock, payable on April 1, 2002. The dividend is payable to stockholders of record at the close of business March 1, 2002. This is the 224th consecutive dividend declared by the corporation.
Sara Lee Corporation (www.saralee.com) is one of the world's leading branded consumer packaged goods companies, selling its products in more than 180 countries. The company has three global businesses - Food and Beverage, Intimates and Underwear, and Household Products - through which it manufactures and markets products of exceptional quality and value under leading, well-known brand names such as Sara Lee, Earth Grains, Jimmy Dean, Douwe Egberts, Chock full o' Nuts, Hanes, Playtex, Bali, DIM, Kiwi, Ambi-Pur and Sanex.
CONTACT: Sara Lee Corporation
Media:
Julie Ketay, 312/558-8727
Analysts:
Aaron Hoffman, 312/558-8739
URL: http://www.businesswire.com
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.
Copyright (C) 2002 Business Wire. All rights reserved.
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Sara
a little different view...
CHICAGO, Jan 24, 2002 (BUSINESS WIRE) --
Sara Lee Corporation today announced that sales for the second
quarter of fiscal 2002, ending December 29, 2001, were $5.0 billion,
up 5%, and diluted earnings per share (EPS), excluding unusual items,
were $.37, a decrease of 14% compared to $.43 one year ago. For the
first six months of fiscal 2002, sales were $9.5 billion, up 3% over
the same period a year ago, and diluted EPS, excluding unusual items,
were $.63 versus $.72 for the first half of fiscal 2001, down 13%.
The company's results for the second quarter and the first half
were affected by several unusual items included in a Reshaping program
initiated by Sara Lee in May 2000; these items are outlined in the
Unusual Items section, beginning on page three of this press release,
and details are provided in the notes of the financial statements.
Including unusual items, diluted EPS were $.20 for the quarter and
$.49 for the first half, compared to $.92 and $1.20, respectively, in
fiscal 2001.
In May 2000, Sara Lee Corporation announced a Reshaping program to
focus the company's operations on three business segments - Food and
Beverage, Intimates and Underwear, and Household Products - and a
number of non-core business units were sold or operations ceased
during fiscal 2001 and fiscal 2002 in conjunction with this program.
Excluding these divested businesses, sales increased 14% in the second
quarter and 12% in the first half of fiscal 2002, reflecting the
acquisition of The Earthgrains Company in August 2001, combined with
base business gains at Sara Lee Meats, Household Products and global
Sock operations.
Operating income, excluding divested businesses, fell 4% in the
second quarter and declined 7% for the first six months, due to
difficult retail markets combined with higher media advertising and
promotion spending and increased funding for organizational and
technology improvements throughout the company. Currency had no
material impact on sales or operating income during the quarter.
Corporate unit volumes, excluding acquisitions and divestitures,
declined 1% during the quarter and increased 1% in the first six
months, with the strongest gains in several of the company's key meat
categories as well as its Household Products and global Sock
operations.
"Sara Lee continued its program of accelerated investment in its
brands, its portfolio and its business infrastructure during the
second quarter as our company becomes a more innovative and effective
organization," said C. Steven McMillan, chairman, president and chief
executive officer of Sara Lee Corporation. "In particular, our
Reshaping efforts have allowed each of our business units to focus
increased resources on developing creative new products that meet the
needs of today's consumers. In the last 12 months, for example, we
have launched a number of new products including Jimmy Dean Fresh
Taste. Fast! pre-cooked sausage, Senseo crema in-home coffee system,
Playtex "Only You" seamless bra and Ambi-Pur Car air freshener. To
support these new products, and our other leading brands, we increased
second quarter media advertising by 9%, and total media advertising
and promotion grew 5%.
"We have also made progress in reducing excess production capacity
and improving the effectiveness of our sales organizations," said
McMillan. "As we begin to benefit from these investments, we enjoyed
increased sales in several of our key product categories during the
second quarter, despite difficult global market conditions, and we
expect to report improved earnings beginning with the third quarter of
fiscal 2002."
Unusual Items
The company's results for the second quarter and first half of
fiscal 2002 and 2001 were affected by actions related to the Reshaping
program initiated in May 2000. This ongoing program includes a number
of business dispositions and the closure or sale of certain high-cost
manufacturing and distribution activities. Income from continuing
operations, net income and diluted earnings per share including and
excluding these unusual items are quantified in notes of the financial
statements, which accompany this press release.
Including the impact of unusual items, income from continuing
operations and diluted earnings per share from continuing operations
in the second quarter of 2002 increased 6% and 18%, respectively,
while net income and diluted earnings per share declined by 80% and
78%, respectively. For the first six months of fiscal 2002, including
the impact of unusual items, income from continuing operations and
diluted earnings per share from continuing operations increased 3% and
11%, respectively, while net income and diluted earnings per share
declined by 62% and 59%, respectively. The second quarter results for
fiscal 2001 included a significant gain from the disposition of the
discontinued PYA/Monarch foodservice operation, while the combined
impact of exit costs and losses on business dispositions related to
continuing operations were higher in fiscal 2001 than in 2002.
Unusual Items Recognized in Fiscal 2002
Reshaping actions recognized in the second quarter of 2002 reduced
pre-tax income and net income by $187 million and $143 million,
respectively, or $.17 per diluted share. On a year-to-date basis,
Reshaping actions reduced pre-tax income and net income by $188
million and $114 million, respectively, or $.14 per diluted share. The
actions taken include:
Exit Activities
The Reshaping program includes the closure or sale of certain
high-cost manufacturing, distribution and administrative activities.
These activities reduced second quarter pre-tax earnings, net income
and earnings per share by $174 million, $130 million and $.16 per
share, respectively. $101 million of the pre-tax charge relates to
severance and other employee benefit costs associated with the
previously announced elimination of 6,200 positions; $64 million
relates to the sale or closure of various owned and leased facilities;
and the remainder primarily relates to the termination of certain
third-party contractual obligations.
Exit activities recorded on a year-to-date basis reduced pre-tax
income and net income by $182 million and $137 million, respectively,
or $.17 per diluted share.
Business Dispositions
During fiscal 2001 and the first quarter of 2002, Sara Lee's
management approved plans to dispose of 18 businesses with limited
growth opportunities and low returns. During the second quarter of
fiscal 2002, the expected losses related to these business
dispositions were higher than estimated in fiscal 2001, and resulted
in a $13 million reduction in pre-tax income - or slightly under $.02
per share. On a year-to-date basis, business dispositions reduced
pre-tax income by $6 million and increased net income by $23 million,
or $.03 per share. To date, the company has disposed of 16 of the 18
businesses.
Unusual Items Recognized in Fiscal 2001
The company's Reshaping actions began in the second quarter of
fiscal 2001. Actions included:
-- Sale of Foodservice Operation - The PYA/Monarch foodservice
business was sold for a gain before income taxes of $1,126
million and an after-tax gain of $638 million, or $.73 of
diluted earnings per share in the second quarter.
-- Gain on Initial Public Offering of Coach Business - The
company's Coach subsidiary completed an initial public
offering of 19.5% of its common stock and recognized a
tax-free gain of $105 million or $.12 of diluted earnings per
share in the second quarter.
-- Other Business Disposition and Exit Activities - The company's
management approved a plan to dispose of certain non-core
businesses and sell or close a number of defined business
activities. As a result of these decisions, the Corporation
recognized a $344 million pre-tax charge. $233 million of this
charge related to anticipated losses on the disposition of
businesses, and $111 million of the charge was the cost of the
defined exit activities. The charge reduced net income by $317
million and diluted earnings per share in the second quarter
of fiscal 2001 by $.37.
Accounting Change
Fiscal 2002 net income and EPS reflect the company's decision to
adopt new accounting rules relating to the amortization of goodwill
and intangibles. The new accounting rules prohibit the restatement of
previously issued financial statements, but require separate
disclosure of the affect the new accounting standard would have had on
prior periods' results. The net income and diluted EPS, excluding
unusual items, for the second quarter of fiscal 2001, adjusted to
exclude amortization recognized in that period related to goodwill and
other intangible assets no longer being amortized under the provisions
of the new rules, were $401 million and $.46 per share, respectively.
For the first half of fiscal 2001 the net income and diluted EPS under
this new accounting standard were $683 million and $.78 per share,
respectively.
Performance Review
A performance review for each line of business follows. Unit
volumes exclude acquisitions and divestitures unless otherwise noted.
All results exclude unusual items unless otherwise noted. All dollar
amounts are in millions.
SARA LEE MEATS
Second Quarter Change
-------------------- ----------
2002 2001
Sales $ 1,096 $ 1,087 1% Operating Income $ 102 $ 110 (7)%
Six Months Change
-------------------- ----------
2002 2001
Sales $ 2,121 $ 2,113 0% Operating Income $ 176 $ 196 (10)%
Sara Lee Meats is a leading manufacturer of branded packaged meat products in the United States, Europe and Mexico. Reported sales for the quarter rose 1%, and were flat for the first half. Operating income declined 7% for the second quarter and fell 10% for the first six months due primarily to increased media advertising spending and costs associated with the U.S. meat group Reshaping program. During the second quarter, media advertising to support key brands, such as Jimmy Dean, Ball Park and Hillshire Farm, increased more than 50%, while total media advertising and promotion expenditures increased 8%.
Global unit sales for Sara Lee Meats declined 1% in the second quarter and were flat for the first six months. In both periods, increased unit sales in the United States for breakfast sausages, corn dogs and Sara Lee Deli meat products were offset by declines in smoked sausages and hot dogs, with the latter two categories particularly affected by higher raw material costs. In October 2001, Sara Lee strengthened its position in the fast-growing meat snacks category by acquiring Trail's Best meat snacks. The acquisition supports Sara Lee's strategy to develop leading positions in growth segments of the company's core categories, and the acquisition has already allowed Sara Lee to introduce meat snack products under the Jimmy Dean brand.
By geographic region, U.S. volumes were flat in the second quarter and down 1% for the first six months. European unit volumes fell 6% for both the second quarter and the first half; and Mexican unit volumes grew 5% in the second quarter and 9% in the first six months.
SARA LEE BAKERY
Second Quarter Change
-------------------- ----------
2002 2001
Sales $ 895 $ 290 NM
Operating Income $ 54 $ 4 NM
SARA LEE BAKERY
Six Months Change
-------------------- ----------
2002 2001
Sales $ 1,468 $ 530 NM
Operating Income $ 89 $ (10) NM
Sara Lee Bakery, through its August 2001 acquisition of The Earthgrains Company, is a leading company in the U.S. fresh bread market, with important positions in U.S. and European refrigerated dough and European fresh bread. The company also enjoys leading positions in frozen baked goods in both the United States and Australia. Earthgrains tripled the size of Sara Lee's Bakery operations and substantially increased its profitability. The renamed Sara Lee Bakery Group already has extended Sara Lee branded fresh baked breads and sweet goods into new geographic markets through its extensive direct-store distribution system. Media advertising and promotion expenditures are expected to increase significantly in the second half of fiscal 2002 to support these new product and market initiatives.
Reported results for fiscal 2002 include Earthgrains and exclude bakery operations in Europe that were divested in fiscal 2001. Excluding acquisitions, divestitures and the effects of currency, second quarter Bakery sales fell 5% while operating income almost tripled as the company benefited from an improved product mix and a number of productivity improvements. Through the first six months, base business sales fell 6% while operating income increased substantially.
Unit volumes, excluding Earthgrains, declined 2% in the second quarter and fell 4% in the first six months as the company continued to discontinue low-growth and unprofitable frozen products.
Earthgrains enjoyed increased sales during the second quarter, with particular strength in European Bakery Products and in Refrigerated Dough operations in both the United States and in Europe.
BEVERAGE
Second Quarter Change
-------------------- ----------
2002 2001
Sales $ 713 $ 779 (9)%
Operating Income $ 125 $ 131 (5)%
Six Months Change
-------------------- ----------
2002 2001
Sales $ 1,353 $ 1,491 (9)%
Operating Income $ 219 $ 242 (10)%
Sara Lee's Beverage line of business includes retail and
foodservice coffee and tea sales in markets around the world, with
significant positions in Europe, the United States and Brazil. Green
coffee prices remain at historically low levels, leading to lower
retail prices and resulting in sales and operating income declines
during both the second quarter and the first half of fiscal 2002. A
significant increase in media advertising to support key brands and
new product introductions also affected margins, but management
expects these investments to produce increased volumes beginning in
the second half.
Global unit sales of coffee products fell 5% during the second
quarter as gains in the Netherlands, France and Hungary were offset by
declines in the United States, Brazil and Belgium. By product line,
global retail coffee volumes fell 6% in the second quarter while
out-of-home unit sales fell 4% in the United States and declined 2% in
Europe. Through the first half, global coffee units fell 3%, with
retail volumes down 3%, U.S. out-of-home unit sales down 5% and
European out-of-home units down 3%.
The company's market positions remained strong, as Sara Lee
maintained its number-one positions in the Netherlands, Belgium and
Spain, and increased its leading shares in Denmark, Hungary and
Brazil.
The company enjoyed continued success with its Senseo crema joint
initiative with Philips Electronics. This unique in-home coffee maker
- which uses pads of coffee produced by Sara Lee's Douwe Egberts
business - is available in the Netherlands, and is currently being
introduced in Belgium and France.
In October 2001, Sara Lee signed an agreement for the acquisition
of the Polish coffee business, Prima S.A., which closed earlier this
month. With this acquisition, Sara Lee reinforces its coffee position
in the Central European region, where it already holds leading
positions in Hungary and the Czech Republic, and gains a strong
distribution network that will help drive growth in Central Europe.
HOUSEHOLD PRODUCTS
Second Quarter Change
-------------------- ----------
2002 2001
Sales $ 537 $ 500 7% Operating Income $ 87 $ 86 1%
Six Months Change
-------------------- ----------
2002 2001
Sales $ 1,046 $ 972 8% Operating Income $ 155 $ 152 2%
Household Products, which includes the company's household and
body care businesses and its Direct Selling operations, is Sara Lee's
most global business, selling products in more than 180 countries.
Sales for the second quarter rose 7% and grew 8% for the first half.
Operating income rose less than sales in both periods as media
advertising and promotion spending to support key brands and new
product launches rose a strong 14% in the quarter and increased 15%
through the first six months.
Unit volumes for this segment's four core categories - body care,
air care, insecticides and shoe care - grew 6% in the second quarter
and rose 8% in the first six months, with increased sales in body
care, insecticides and air care during both periods. Unit volumes were
particularly strong in the air care business, with double-digit growth
led by new product offerings such as Ambi-Pur Home Fragrance, which
was recently introduced in the United States and Europe.
Sales for the company's Direct Selling operations, conducted by
more than 800,000 independent representatives who deliver branded
toiletries, cosmetics and fragrances directly to consumers in 17
countries, rose 6% for the second quarter and increased 5% for the
first half of the year. Operating income grew 11% for the second
quarter and increased 9% for the first six months. Results were
particularly strong in Mexico, South Africa and the Philippines.
INTIMATES AND UNDERWEAR
Second Quarter Change
-------------------- ----------
2002 2001
Sales $ 1,752 $ 2,134 (18)% Operating Income $ 155 $ 278 (44)%
Six Months Change
-------------------- ----------
2002 2001
Sales $ 3,525 $ 4fiscal 2001. Fiscal 2002 results reflect the company's adoption of new accounting standards concerning the amortization of goodwill and other intangibles. If the new accounting standards had been applied to last year's results, diluted EPS would have been $.30 for the third quarter of fiscal 2001 and $1.49 for fiscal 2001.
By line of business in the third quarter, management expects a low-to mid-single digit increase in operating income for Sara Lee Meats, reflecting increased unit volume sales and favorable raw material cost comparisons in the United States. Sara Lee Bakery results should continue to benefit from base business gains and the addition of Earthgrains' operating income. Given their significant exposure to foreign currency, reported operating income for Sara Lee's Beverage and Household Products lines of business, the company's two most global operations, will depend on changes in year-over-year foreign currency relationships; in local currency terms, the Beverage group is likely to report operating income declines in line with second half results, while the Household Products line of business is expected to produce mid-to high-single digit operating income gains. While reported operating income comparisons for the Intimates and Underwear line of business should be down modestly in the third quarter, operating income from ongoing operations, excluding divested businesses, should increase at a mid-single digit rate, a significant improvement from first half results.
For the full year, Sara Lee Meats operating income should be flat to down slightly, and Sara Lee Bakery should continue to benefit from improved base business results and the acquisition of Earthgrains. Beverage and Household Products operating income will depend on foreign currency relationships, with reported results likely to be down for Beverage and up for Household Products. Intimates and Underwear is projected to report lower operating income for the year, although, as mentioned above, profitability is expected to improve in the second half.
Janet Bergman, senior vice president, corporate relations, will discuss the second quarter results live via the Internet today at 9:00 a.m. (CST). The live webcast can be accessed at www.saralee.com, and will last approximately one hour. For people who are unable to listen to the webcast live, it will be archived two hours following the completion of the webcast in the Investor Relations section of the Sara Lee corporate Web site for 10 business days.
This news release contains certain forward-looking statements concerning Sara Lee's operations, economic performance and financial condition. These forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements.
Factors that could cause Sara Lee's actual results to differ materially from such forward-looking statements include the following: (i) impacts on reported earnings from fluctuations in foreign currency exchange rates - particularly the euro - given Sara Lee's significant concentration of business in Western Europe; (ii) significant competitive activity, including advertising, promotional and price competition, and changes in consumer demand for Sara Lee's products; (iii) adverse economic trends, including reduced consumer spending, relating in part to incidents of terrorism and the global repercussions from such incidents; (iv) Sara Lee's ability to continue to source production and conduct manufacturing and selling operations in various countries in the world due to changing political environments and the impacts on the related business environment; (v) Sara Lee's ability to successfully integrate acquisitions, particularly Earthgrains, into its existing operations and the availability of new acquisitions, joint ventures and alliance opportunities that build stockholder value; (vi) Sara Lee's ability to complete transactions anticipated in its business Reshaping initiative, and the ability to realize the estimated savings and productivity improvements associated with these programs; (vii) fluctuations in the cost and availability of various raw materials; (viii) the impact of foot-and-mouth viral disease in parts of Europe on the consumption of meat products in general and the cost of raw materials not affected by the disease used in the production of finished goods; (ix) credit and other business risks associated with customers operating in a highly competitive retail environment; and (x) inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance.
In addition, the company's results may also be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes, and laws and regulations in markets where the corporation competes.
Consequently, the company wishes to caution readers not to place undue reliance on any forward-looking statements. We have provided additional information in our Form 10-K for fiscal year 2001 and in our quarterly report on Form 10-Q for the first quarter of fiscal year 2002, which readers are encouraged to review, concerning factors that could cause actual results to differ materially from those in the forward-looking statements. Sara Lee undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Sara Lee Corporation (www.saralee.com) is a global branded consumer packaged goods company marketing leading brands, including Sara Lee, Douwe Egberts, Hillshire Farm, Hanes and Playtex.
Sara Lee Corporation
Executive Summary of Performance
Second quarter fiscal 2002
(All results exclude unusual items)
Percentage change
----------------------------------------------------------------------
Sara Lee
Sara Lee Bakery
Meats(1) Group(2) Beverage(3)
--------- --------- -----------
Reported sales 1% NM (9)%
Sales from ongoing operations(a) 3% NM (9)%
Base sales(b) 2% (5)% (9)%
Reported operating income (7)% NM (5)%
Operating income from ongoing
operations(a) (7)% NM (5)%
Base operating income(b) (8)% NM (6)%
Base unit volumes(c) (1)% (2)% (5)%
Diluted earnings per share - - -
Total advertising and
promotional expense for
ongoing operations(a) 8% NM 0%
Media advertising expense for
ongoing operations(a) 52% NM 12%
Promotional expense for
ongoing operations(a) 2% NM (4)%
--------------------------------
Intimates
Household and
Products(3) Underwear(4) Total SLE
----------- ------------ ---------
Reported sales 7% (18)% 5%
Sales from ongoing operations(a) 7% (4)% 14%
Base sales(b) 8% (7)% (3)%
Reported operating income 1% (44)% (14)%
Operating income from ongoing
operations(a) 1% (27)% (4)%
Base operating income(b) 2% (27)% (11)%
Base unit volumes(c) 6% (2)% (1)%
Diluted earnings per share - - (14)%
Total advertising and
promotional expense for
ongoing operations(a) 14% (1)% 5%
Media advertising expense for
ongoing operations(a) 10% (6)% 9%
Promotional expense for
ongoing operations(a) 16% 1% 3%
--------------------------------
(a) Ongoing operations results exclude divested businesses from FY02
and FY01.
(b) Base business results exclude acquisitions, divestitures and the
effect of currency.
(c) Base unit volumes exclude acquisitions and divestitures.
(1) There were no divestitures in this segment in 1Q02 or 2Q02. The
following businesses were divested in FY01: Ozark Salad and Argal.
(2) The Earthgrains Company was acquired on August 7, 2001. There were
no divestitures in this segment in 1Q02 or 2Q02. The following
businesses were divested in FY01: Nutrine, Brossard, and U.K.
Bakery.
(3) There were no divestitures in this segment in 1Q02, 2Q02 or FY01.
(4) There were no divestitures in this segment in 2Q02. The following
businesses were sold in 1Q02: International Fabrics operations in
France, Italy, Spain, Portugal and the U.K.; Liabel and Vocal. The
following businesses were sold in FY01: Coach, Champion Europe,
Champion Bookstore, Sara Lee Personal Products Australasia, Well
and International Fabrics operations in Thailand, the Philippines
and Germany.
Sara Lee Corporation
Executive Summary of Performance
First six months fiscal 2002
(All results exclude unusual items)
Percentage change
----------------------------------------------------------------------
Sara Lee
Sara Lee Bakery
Meats(1) Group(2) Beverage(3)
--------- --------- -----------
Reported sales 0% NM (9)%
Sales from ongoing operations(a) 3% NM (9)%
Base sales(b) 2% (6)% (8)%
Reported operating Income (10)% NM (10)%
Operating income from ongoing
operations(a) (11)% NM (10)%
Base operating income(b) (11)% NM (9)%
Base unit volumes(c) 0% (4)% (3)%
Diluted earnings per share - - -
Total advertising and
promotional expense for
ongoing operations(a) 3% NM 3%
Media advertising expense for
ongoing operations(a) 44% NM 0%
Promotional expense for
ongoing operations(a) (4)% NM 4%
--------------------------------
Intimates
Household and
Products(3) Underwear(4) Total SLE
---------- ----------- ---------
Reported sales 8% (16)% 3%
Sales from ongoing operations(a) 8% (3)% 12%
Base sales(b) 10% (5)% (1)%
Reported operating Income 2% (41)% (13)%
Operating income from ongoing
operations(a) 2% (29)% (7)%
Base operating income(b) 4% (29)% (14)%
Base unit volumes(c) 8% 1% 1%
Diluted earnings per share - - (13)%
Total advertising and
promotional expense for
ongoing operations(a) 15% (1)% 3%
Media advertising expense for
ongoing operations(a) 8% (2)% 10%
Promotional expense for
ongoing operations(a) 20% (1)% 2%
--------------------------------
(a) Ongoing operations results exclude divested businesses from FY02
and FY01.
(b) Base business results exclude acquisitions, divestitures and the
effect of currency.
(c) Base unit volumes exclude acquisitions and divestitures.
(1) There were no divestitures in this segment in 1Q02 or 2Q02. The
following businesses were divested in FY01: Ozark Salad and Argal.
(2) The Earthgrains Company was acquired on August 7, 2001. There were
no divestitures in this segment in 1Q02 or 2Q02. The following
businesses were divested in FY01: Nutrine, Brossard, and U.K.
Bakery.
(3) There were no divestitures in this segment in 1Q02, 2Q02 or FY01.
(4) There were no divestitures in this segment in 2Q02. The following
businesses were sold in 1Q02: International Fabrics operations in
France, Italy, Spain, Portugal and the U.K.; Liabel and Vocal. The
following businesses were sold in FY01: Coach, Champion Europe,
Champion Bookstore, Sara Lee Personal Products Australasia, Well
and International Fabrics operations in Thailand, the Philippines
and Germany.
Sara Lee Corporation (NYSE)
Consolidated Statements of Income
(in millions except per share amounts)
----------------------------------------------------------------------
Second Quarter Ended
-------------------------------------
Dec. 29, Dec. 30, Percent
2001 2000 Change
---------- --------- ---------
Net sales $ 4,990 $ 4,757 4.9%
---------- ---------
Cost of sales 2,854 2,718
Cost of sales - product line exit (1) 24
Selling, general and
administrative expenses 1,703 1,525
Interest expense 80 69
Interest income (20) (19)
Unusual Items - Business reshaping:
Gain in connection with
initial public offering -- (105)
Business dispositions
and other charges 188 320
---------- ---------
4,804 4,532
---------- ---------
Income from continuing
operations before income taxes 186 225 (16.9)
Income taxes 26 74
---------- ---------
Income from continuing operations 160 151 6.3
Income from discontinued
operations, net of income taxes -- 9
Gain on disposal of discontinued
operations, net of income taxes -- 638
---------- ---------
Net income $ 160 $ 798 (79.9)
========== =========
Income from continuing operations
per common share
Basic $ 0.20 $ 0.18 11.1
========== =========
Diluted $ 0.20 $ 0.17 17.6
========== =========
Net income per common share
Basic $ 0.20 $ 0.96 (79.2)
========== =========
Diluted $ 0.20 $ 0.92 (78.3)
========== =========
Average shares outstanding
Basic 785 830
========== =========
Diluted 819 869
========== =========
--------------------------------
Six Months Ended
-------------------------------------
Dec. 29, Dec. 30, Percent
2001 2000 Change
---------- --------- ---------
Net sales $ 9,508 $ 9,212 3.2%
---------- ---------
Cost of sales 5,531 5,318
Cost of sales - product line exit (4) 24
Selling, general and
administrative expenses 3,230 3,014
Interest expense 154 151
Interest income (43) (39)
Unusual Items - Business reshaping:
Gain in connection with
initial public offering -- (105)
Business dispositions
and other charges 192 320
---------- ---------
9,060 8,683
Income from continuing
operations before income taxes 448 529 (15.1)
Income taxes 46 140
---------- ---------
Income from continuing operations 402 389 3.4
Income from discontinued
operations, net of income taxes -- 25
Gain on disposal of discontinued
operations, net of income taxes -- 638
---------- ---------
Net income $ 402 $ 1,052 (61.8)
========== =========
Income from continuing operations
per common share
Basic $ 0.51 $ 0.46 10.9
========== =========
Diluted $ 0.49 $ 0.44 11.4
========== =========
Net income per common share
Basic $ 0.51 $ 1.25 (59.2)
========== =========
Diluted $ 0.49 $ 1.20 (59.2)
========== =========
Average shares outstanding
Basic 784 836
========== =========
Diluted 818 873
========== =========
Sara Lee Corporation (NYSE)
Operating Results by Industry Segment
Unusual Items not Allocated to Industry Segments
(in millions)
Second Quarter Ended
----------------------------------------------------------------------
Sales Operating Income
-------------------- --------------------
Dec. 29, Dec. 30, Percent Dec. 29, Dec. 30, Percent
2001 2000 Change 2001 2000 Change
--------- --------- ------- --------- --------- -------
Sara Lee
Meats $ 1,096 $ 1,087 0.8% $ 102 $ 110 (6.8)%
Sara Lee
Bakery 895 290 NM 54 4 NM
Beverage 713 779 (8.5) 125 131 (4.6)
Household
Products 537 500 7.4 87 86 1.5
Intimates
and
Underwear 1,752 2,134 (17.9) 155 278 (44.2)
--------- --------- ------- --------- --------- -------
Total
sales and
operating
companies
income 4,993 4,790 4.2 523 609 (14.0)
Intersegment
sales (3) (33) 91.8 -- -- --
Amortization
of goodwill
and
trademarks -- -- -- (17) (48) 63.3
General
corporate
expenses -- -- -- (73) (47) (52.7)
Gain in
connection
with initial
public
offering -- -- -- -- 105 NM
Business
dispositions
and other
charges -- -- -- (187) (344) 45.5
--------- --------- ------- --------- --------- -------
Total net
sales and
operating
income 4,990 4,757 4.9 246 275 (10.1)
Net interest
expense -- -- -- (60) (50) (20.7)
--------- --------- ------- --------- --------- -------
Net sales
and income
from
continuing
operations
before
income
taxes $ 4,990 $ 4,757 4.9% $ 186 $ 225 (16.9)%
========= ========= ======= ========= ========= =======
Six Months Ended
----------------------------------------------------------------------
Sales Operating Income
-------------------- --------------------
Dec. 29, Dec. 30, Percent Dec. 29, Dec. 30, Percent
2001 2000 Change 2001 2000 Change
--------- --------- ------- --------- --------- -------
Sara Lee
Meats $ 2,121 $ 2,113 0.4% $ 176 $ 196 (10.2)%
Sara Lee
Bakery 1,468 530 NM 89 (10) NM
Beverage 1,353 1,491 (9.2) 219 242 (9.7)
Household
Products 1,046 972 7.6 155 152 2.2
Intimates
and
Underwear 3,525 4,182 (15.7) 282 480 (41.1)
--------- --------- ------- --------- --------- -------
Total sales
and
operating
companies
income 9,513 9,288 2.4 921 1,060 (13.1)
Intersegment
sales (5) (76) 93.6 -- -- --
Amortization
of goodwill
and
trademarks -- -- -- (31) (94) 66.9
General
corporate
expenses -- -- -- (143) (86) (65.8)
Gain in
connection
with initial
public
offering -- -- -- -- 105 NM
Business
dispositions
and other
charges -- -- -- (188) (344) 45.3
--------- --------- ------- --------- --------- -------
Total net
sales and
operating
income 9,508 9,212 3.2 559 641 (12.6)
Net interest
expense -- -- -- (111) (112) 0.6
--------- --------- ------- --------- --------- -------
Net sales
and income
from
continuing
operations
before
income
taxes $ 9,508 $ 9,212 3.2% $ 448 $ 529 (15.1)%
========= ========= ======= ========= ========= =======
See accompanying notes to financial statements for information
regarding the unusual items.
Sara Lee Corporation (NYSE)
Operating Results by Industry Segment
Unusual Items Allocated to Industry Segments
(in millions)
Second Quarter Ended
----------------------------------------------------------------------
Sales Operating Income
-------------------- --------------------
Dec. 29, Dec. 30, Percent Dec. 29, Dec. 30, Percent
2001 2000 Change 2001 2000 Change
--------- --------- ------- --------- --------- -------
Sara Lee
Meats $ 1,096 $ 1,087 0.8% $ 73 $ 38 88.9%
Sara Lee
Bakery 895 290 NM 5 (54) NM
Beverage 713 779 (8.5) 116 129 (10.3)
Household
Products 537 500 7.4 86 84 4.1
Intimates
and
Underwear 1,752 2,134 (17.9) 56 173 (67.6)
--------- --------- ------- --------- --------- -------
Total sales
and
operating
companies
income 4,993 4,790 4.2 336 370 (9.0)
Intersegment
sales (3) (33) 91.8 -- -- --
Amortization
of goodwill
and
trademarks -- -- -- (17) (48) 63.3
General
corporate
expenses -- -- -- (73) (47) (52.7)
--------- --------- ------- --------- --------- -------
Total net
sales and
operating
income 4,990 4,757 4.9 246 275 (10.1)
Net interest
expense -- -- -- (60) (50) (20.7)
--------- --------- ------- --------- --------- -------
Net sales
and income
from
continuing
operations
before
income
taxes $ 4,990 $ 4,757 4.9% $ 186 $ 225 (16.9)%
========= ========= ======= ========= ========= =======
Six Months Ended
----------------------------------------------------------------------
Sales Operating Income
-------------------- --------------------
Dec. 29, Dec. 30, Percent Dec. 29, Dec. 30, Percent
2001 2000 Change 2001 2000 Change
--------- --------- ------- --------- --------- -------
Sara Lee
Meats $ 2,121 $ 2,113 0.4% $ 141 $ 124 13.5%
Sara Lee
Bakery 1,468 530 NM 38 (68) NM
Beverage 1,353 1,491 (9.2) 212 240 (11.9)
Household
Products 1,046 972 7.6 154 150 3.3
Intimates
and
Underwear 3,525 4,182 (15.7) 188 375 (49.8)
--------- --------- ------- --------- --------- -------
Total
sales
and
operating
companies
income 9,513 9,288 2.4 733 821 (10.6)
Intersegment
sales (5) (76) 93.6 -- -- --
Amortization
of goodwill
and
trademarks -- -- -- (31) (94) 66.9
General
corporate
expenses -- -- -- (143) (86) (65.8)
--------- --------- ------- --------- --------- -------
Total net
sales and
operating
income 9,508 9,212 3.2 559 641 (12.6)
Net interest
expense -- -- -- (111) (112) 0.6
--------- --------- ------- --------- --------- -------
Net sales
and income
from
continuing
operations
before
income
taxes $ 9,508 $ 9,212 3.2% $ 448 $ 529 (15.1)%
========= ========= ======= ========= ========= =======
See accompanying notes to financial statements for information
regarding the unusual items.
Sara Lee Corporation (NYSE)
Consolidated Balance Sheets
(in millions)
----------------------------------------------------------------------
December 29, June 30, December 30,
2001 2001 2000
------------ ----------- ------------
ASSETS
Cash and equivalents $ 381 $ 548 $ 735
Trade accounts receivable 1,835 1,538 1,812
Inventories 2,475 2,582 2,752
Other current assets 328 321 367
Net assets of businesses
held for sale 2 94 367
------------ ----------- ------------
Total current assets 5,021 5,083 6,033
Other non-current assets 227 264 471
Property, net 2,999 2,146 2,140
Trademarks and other
identifiable intangibles, net 2,032 1,137 1,113
Goodwill, net 3,207 1,537 1,775
------------ ----------- ------------
$ 13,486 $ 10,167 $ 11,532
============ =========== ============
LIABILITIES AND EQUITY
Notes payable $ 707 $ 101 $ 592
Accounts payable 1,317 1,505 1,406
Accrued liabilities 2,982 2,872 2,898
Current maturities of
long-term debt 254 480 283
------------ ----------- ------------
Total current liabilities 5,260 4,958 5,179
Long-term debt 4,768 2,640 3,145
Deferred income taxes 493 244 437
Other non-current
liabilities 972 563 582
Minority interest in
subsidiaries 634 625 650
Preferred stock 9 15 22
Common stockholders' equity 1,350 1,122 1,517
------------ ----------- ------------
$ 13,486 $ 10,167 $ 11,532
============ =========== ============
Notes to the Financial Statements
1.) The Corporation adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets"
(SFAS No. 142) as of July 1, 2001. Under the provisions of
that statement, goodwill is not amortized; however, other
intangible assets are amortized over their useful lives unless
that life is determined to be indefinite. The guidelines
established for determining the useful life of an intangible
asset under SFAS No. 142 differ from those established under
prior accounting standards. The primary other intangible
assets acquired by the Corporation in business combinations
are trademarks, brands and customer relationships. Outside of
business combinations, the primary other amortizable
intangible assets acquired by the Corporation are software and
licenses.
SFAS No. 142 prohibits the restatement of previously issued
financial statements, but requires separate disclosure of the
impact of the new accounting standard on prior periods
results. The net income and diluted earnings per share for the
second quarter ended December 30, 2000, adjusted to exclude
amortization (including any related tax effects) recognized in
that period related to goodwill and other intangible assets no
longer being amortized under the provisions of SFAS No. 142,
were $827 million and $.95 per share, respectively. The net
income and diluted earnings per share for the six months ended
December 30, 2000, adjusted to exclude amortization (including
any related tax effects) recognized in that period related to
goodwill and other intangible assets no longer being amortized
under the new accounting rules, were $1,109 million, and $1.26
per share, respectively. The net income and diluted earnings
per share for fiscal 2001, adjusted to exclude amortization
(including any related tax effects) recognized in that period
related to goodwill and other intangible assets no longer
being amortized under the new accounting rules, were $2,379
million and $2.78, respectively.
2.) The Corporation's results for the second quarter and first
half of fiscal 2002 and 2001 were impacted by actions related
to the Reshaping program initiated in May 2000. This ongoing
program includes a number of business dispositions and the
exit of certain high cost manufacturing and distribution
activities.
Including the impact of unusual items, income from continuing
operations and diluted earnings per share from continuing
operations in the second quarter of 2002 increased 6% and 18%,
respectively, while net income and diluted earnings per share
declined by 80% and 78%, respectively. Including the impact of
unusual items, income from continuing operations and diluted
earnings per share from continuing operations in the first six
months of 2002 increased 3% and 11%, respectively, while net
income and diluted earnings per share declined by 62% and 59%,
respectively. The second quarter results for fiscal 2001
included a significant gain from the disposition of the
discontinued PYA/Monarch foodservice operation, while the
combined impact of exit costs and losses on business
dispositions related to continuing operations were higher in
fiscal 2001 than in 2002.
Unusual Items Recognized in Fiscal 2002
Reshaping actions recognized in the second quarter of 2002 reduced pre-tax income and net income by $187 million and $143 million, respectively, or $.17 per diluted share. On a year-to-date basis, Reshaping actions reduced pre-tax income and net income by $188 million and $114 million, respectively, or $.14 per diluted share. The actions taken include:
Notes to the Financial Statements (continued)
Exit Activities
The Reshaping program includes the exit of certain high-cost manufacturing, distribution and administrative activities. Exit activities recognized in the second quarter of 2002 reduced pre-tax earnings, net income and earnings per share by $174 million, $130 million and $.16 per share, respectively. $101 million of the pre-tax charge relates to severance and other employee benefit costs associated with the elimination of 6,200 positions; $66 million relates to the exit of various owned and leased facilities; and the remainder primarily relates to the exit of certain product distribution arrangements.
Exit activities recorded on a year-to-date basis reduced pre-tax income and net income by $182 million and $137 million, respectively, or $.17 per diluted share.
During fiscal 2001 and the first quarter of 2002, Sara Lee's management approved plans to dispose of 18 businesses with limited growth opportunities and low returns. During the second quarter of fiscal 2002, expected losses related to these business dispositions were higher than estimated in fiscal 2001 and resulted in a $13 million reduction in pre-tax income - or slightly under $.02 per share. On a year-to-date basis, business dispositions reduced pre-tax income by $6 million and increased net income by $23 million, or $.03 per share. To date, 16 of the 18 planned business dispositions have been completed.
The Corporation's Reshaping actions began in the second quarter of fiscal 2001. Actions included:
Sale of Discontinued Foodservice Operation - The PYA/Monarch foodservice business was sold for a gain before income taxes of $1,126 million and an after-tax gain of $638 million, or $.73 of diluted earnings per share in the second quarter.
Gain on Initial Public Offering of Coach Business - The corporation's Coach subsidiary completed an initial public offering of 19.5% of its common stock and recognized a tax-free gain of $105 million or $.12 of diluted earnings per share in the second quarter.
Other Business Disposition and Exit Activities - The Corporation's management approved a plan to dispose of certain non-core businesses and exit a number of defined business activities. As a result of these decisions, the Corporation recognized a $344 million pre-tax charge. $233 million of this charge related to anticipated losses on the disposition of businesses, and $111 million of the charge was the cost of the defined exit activities. The charge reduced net income by $317 million and diluted earnings per share in the second quarter of fiscal 2001 by $.37.
Notes to the Financial Statements (continued)
Impact of Unusual Items and Adoption of New Intangible
Amortization Rules on Net Income and Diluted Earnings Per Share
(In Millions, Except Per Share Data)
Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------- ----------------------
Dec. 29, Dec. 30, % Dec. 29, Dec. 30, %
2001 2000 Change 2001 2000 Change
-------- -------- ------- --------- --------- -------
Net Income $ 160 $ 798 (79.9)% $ 402 $ 1,052 (61.8)%
Exclude
gain on
disposal of
discontinued
operations,
net of tax -- (638) NM -- (638) NM
Exclude
gain in
connection
with initial
public offering,
net of tax -- (105) NM -- (105) NM
Exclude unusual
charges relating
to business
reshaping,
net of tax 143 317 (55.0) 114 317 (64.2)
-------- ------- ------- --------- --------- -------
Net income
excluding
unusual
items 303 372 (18.6)% 516 626 (17.7)%
Adjust
prior year for
change in
accounting for
amortization
of goodwill
and
intangibles -- 29 NM -- 57 NM
-------- ------- ------- --------- --------- -------
Net income
adjusted for
amortization
change and
excluding
unusual
items $ 303 $ 401 (24.3)% $ 516 $ 683 (24.5)%
======== ======= ======= ========= ========= =======
Diluted
EPS(1) $ 0.20 $ 0.92 (78.3)% $ 0.49 $ 1.20 (59.2)%
Exclude gain
on disposal
of discontinued
operations,
net of tax -- (0.73) NM -- (0.73) NM
Exclude gain
in connection
with initial
public
offering -- (0.12) NM -- (0.12) NM
Exclude unusual
charges
relating to
business
reshaping 0.17 0.37 (54.1) 0.14 0.36 (61.1)
-------- ------- ------- --------- --------- -------
Diluted EPS -
excluding
unusual
items 0.37 0.43 (14.0)% 0.63 0.72 (12.5)%
Adjust prior
year for
change in
accounting for
amortization
of goodwill and
intangibles -- 0.03 NM -- 0.06 NM
-------- ------- ------- --------- --------- -------
Diluted EPS -
adjusted for
amortization
change and
excluding
unusual
items $ 0.37 $ 0.46 (19.6)% $ 0.63 $ 0.78 (19.2)%
======== ======= ======= ========= ========= =======
(1) EPS amounts are rounded to nearest cent, and individual amounts
will not necessarily foot.
Notes to the Financial Statements (continued)
Impact of Unusual Items and Adoption of New Intangible Amortization
Rules on Income and Diluted Earnings Per Share from Continuing
Operations
(In Millions, Except Per Share Data)
Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------- ----------------------
Dec. 29, Dec. 30, % Dec. 29, Dec. 30, %
2001 2000 Change 2001 2000 Change
-------- ------- ------- --------- --------- -------
Income from
continuing
operations $ 160 $ 151 6.3% $ 402 $ 389 3.4%
Exclude gain
in connection
with initial
public offering,
net of tax -- (105) NM -- (105) NM
Exclude unusual
charges relating
to business
reshaping,
net of tax 143 317 (55.0) 114 317 (64.2)
-------- ------- ------- --------- --------- -------
Income from
continuing
operations
excluding
unusual items 303 363 (16.6)% 516 601 (14.2)%
Adjust prior
year for change
in accounting
for amortization
of goodwill and
intangibles -- 29 NM -- 57 NM
-------- ------- ------- --------- --------- -------
Income from
continuing
operations
adjusted for
amortization
change and
excluding
unusual
items $ 303 $ 392 (22.6)% $ 516 $ 658 (21.6)%
======== ======= ======= ========= ========= =======
Diluted EPS -
continuing
operations(1) $ 0.20 $ 0.17 17.6% $ 0.49 $ 0.44 11.4%
Exclude gain in
connection with
initial public
offering -- (0.12) NM -- (0.12) NM
Exclude unusual
charges
relating to
business
reshaping 0.17 0.37 (54.1) 0.14 0.36 (61.1)
-------- ------- ------- --------- --------- -------
Diluted EPS -
continuing
operations
excluding
unusual items 0.37 0.42 (11.9)% 0.63 0.69 (8.7)%
Adjust prior
year for change
in accounting
for amortization
of goodwill and
intangibles -- 0.03 NM -- 0.06 NM
-------- ------- ------- --------- --------- -------
Diluted EPS -
continuing
operations
adjusted for
amortization
change and
excluding
unusual
items $ 0.37 $ 0.45 (17.8)% $ 0.63 $ 0.75 (16.0)%
======== ======= ======= ========= ========= =======
(1) EPS amounts are rounded to nearest cent, and individual amounts
will not necessarily foot.
Notes to the Financial Statements (continued)
3.) On August 7, 2001, the Corporation acquired substantially all
of the outstanding common stock of The Earthgrains Company and
began consolidating the results of that company's operations.
Earthgrains is a manufacturer of fresh packaged bread and
refrigerated dough in the United States and Europe. The sales
and operating income of the Earthgrains' business in the
second quarter ended December 29, 2001 were $675 million and
$38 million, respectively. The sales and operating income of
the Earthgrains' business since the date of acquisition were
$1,069 million and $72 million, respectively.
The Earthgrains' business when combined with the Corporation's
existing bakery operations constitutes a reportable segment.
The Corporation's Meat and Bakery businesses were previously
combined in the Sara Lee Foods segment. Under the revised
segment presentation Sara Lee Meats and Sara Lee Bakery are
separate business segments and prior year financial
presentations have been adjusted to reflect this change.
CONTACT: Sara Lee Corporation
Julie Ketay (Media), 312/558-8727
Janet Bergman (Analysts), 312/558-8651
URL: http://www.businesswire.com
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http://clearstation.etrade.com/cgi-bin/bbs?post_id=2859824
Ouch! Sara Lee Profits Fall 80 Percent
Sara Lee Second-Quarter Profits Fall 80 Percent From Previous Year Amid Sales Weakness
By DAVE CARPENTER
AP Business Writer
CHICAGO (AP) -- Sara Lee Corp. said Thursday its second-quarter profits plunged 80 percent from the previous year amid difficult global market conditions and heavy marketing spending to promote new products.
The results fell short of Wall Street's expectations, and the diversified company's stock skidded to a four-month low.
Net earnings were $160 million, or 20 cents a share, down from $798 million, or 92 cents a share, in the same quarter of 2001.
Adjusted for special items, earnings were 37 cents a share, or 2 cents less than estimated by analysts surveyed by the Thomson Financial/First Call marketing research firm.
The company saw overall sales rise 5 percent to $4.99 billion from the previous year's $4.76 billion. But excluding acquisitions and divestitures, corporate unit volumes declined 1 percent.
While households products registered a 7 percent sales gain and the newly acquired Earthgrains products performed well, Sara Lee's U.S. meat sales were flat, coffee was lower and sales of intimates and underwear also were down amid a stiff challenge from discount competitors.
``It's going to take awhile to turn this around,'' Prudential's John McMillin said of the company's 1 1/2-year-old makeover. ``They've still got some issues, though not all of their own doing. Retail apparel is in a difficult environment, and the coffee business was surprisingly bad'' as foodservice sales declined after the Sept. 11 sales, he said.
Sara Lee shares fell 91 cents, or 4 percent, to close at $20.98 on the New York Stock Exchange.
Sara Lee, whose products range from Chock full o'Nuts coffee to Hanes underwear, has been undergoing a reshaping since May 2000 to focus on three core areas: food and beverage, intimates and underwear, and household products.
The company's media advertising costs rose 9 percent in the most recent quarter as it promoted new products launched over the past year, including Jimmy Dean pre-cooked sausage, Senseo Crema in-home coffee system, Playtex seamless bra and Ambi-Pur Car air freshener.
``Sara Lee continued its program of accelerated investment in its brands, its portfolio and its business infrastructure during the second quarter as our company becomes a more innovative and effective organization,'' said C. Steven McMillan, the chairman, president and chief executive officer.
For the first six months of its fiscal year, earnings were $402 million, or 49 cents a share, down from $1.05 billion, or $1.20 a share.
Sales were $9.5 billion, up 3 percent from $9.21 billion a year earlier.
On the Net:
http://www.saralee.com
http://biz.yahoo.com/apf/020124/earns_sara_lee_2.html
RESEARCH ALERT-JP Morgan rates Sara Lee 'market perform'
NEW YORK, Jan 18 (Reuters) - JP Morgan on Friday said it began coverage of food and household goods conglomerate Sara Lee Corp. (NYSE:SLE - news) with a ``market perform'' rating and a $22 a share 12-month price target, citing the company's potential ``to leverage existing brands'' and improve returns.
Chicago-based Sara Lee has ``largely completed the reshaping program that began in May 2000, which resulted in greater-than-expected proceeds in excess of $3 billion, but this represents only the initial stage of a long-term transformation,'' wrote the firm its coverage note.
The stock gained 5 cents to $21.58 in early trade.
http://biz.yahoo.com/rf/020118/n1i258175_2.html
News...
CHICAGO, Oct 31, 2001 (BUSINESS WIRE) -- Sara Lee Corporation today reported that sales for the first quarter of fiscal 2002, ending September 29, 2001, were $4.5 billion, up 1%, and diluted earnings per share (EPS) were $.26, a decrease of 10% compared to $.29 one year ago. All results exclude unusual items unless otherwise noted. In May 2000, Sara Lee Corporation announced a Reshaping program to focus the company's operations on three business segments - Food and Beverage, Intimates and Underwear, and Household Products - and a number of non-core business units were sold or exited during fiscal 2001 and fiscal 2002 in conjunction with this program. Excluding these divested businesses, sales increased 9% in the first quarter of fiscal 2002, reflecting the acquisition of The Earthgrains Company on August 7, 2001, combined with base business gains in Packaged Meats, Knit Products and Household Products. Unit volumes, excluding acquisitions and divestitures, increased 3% during the quarter, with the strongest gains in the company's Knit Products and Household Products operations. Excluding divested businesses, operating income fell 11%, due to higher raw material costs in Packaged Meats combined with increased investments in the form of higher marketing spending and funding for organizational and technology improvements throughout the company. Currency had a minor negative impact on both sales and operating income during the quarter. Fiscal 2002 net income and EPS reflect the company's decision to adopt new accounting rules relating to the amortization of goodwill and intangibles. The new accounting rules prohibit the restatement of previously issued financial statements, but require separate disclosure of the impact the new accounting standard would have had on prior periods' results. The net income and diluted EPS for the first quarter of fiscal 2001, adjusted to exclude amortization recognized in that period related to goodwill and other intangible assets no longer being amortized under the provisions of the new rules, were $282 million and $.32 per share, respectively. "Sara Lee increased marketing spending behind our leading brands and invested in technology, despite some challenging market conditions, as we continued to reshape our business portfolio and consolidate our organization," said C. Steven McMillan, chairman, president and chief executive officer of Sara Lee Corporation. "We are extremely pleased with the strong sales increases in Household Products and Knit Products, and the integration of Earthgrains, our largest acquisition ever, is already producing important gains for Sara Lee Bakery Group. "Fiscal 2002 first quarter results show that our Reshaping program is already producing a more focused and effective organization that is aligned to deliver long-term growth. Toward that end, we recently launched a number of new, innovative products including Jimmy Dean Fresh Taste. Fast! and Jimmy Dean meat snacks; Senseo crema in-home coffee system; a revolutionary seamless bra sold by Playtex and Dim; and a two-in-one toilet bowl cleaner/air freshener under the fast-growing Ambi Pur brand. To support these efforts, first quarter media advertising increased 11% and total advertising and promotion grew 2%." Unusual Items The company's results for the first quarter were affected by the Reshaping program initiated in May 2000. This ongoing program includes a number of business dispositions and the exit of certain high-cost activities. Reshaping actions recognized in the first quarter of 2002 reduced pre-tax income by $1 million and increased net income by $29 million, or $.04 per share. The actions taken include: Business Dispositions During fiscal 2001, Sara Lee's management approved plans to dispose of PYA/Monarch, Coach and 17 other businesses with limited growth opportunities and low returns. At the end of 2001, the disposition of PYA/Monarch, Coach and 10 of 17 other businesses had been completed. During the first quarter of fiscal 2002, the company: -- Completed the disposition of four of the businesses targeted for sale in fiscal 2001. Cash proceeds from these and other business dispositions received in the first quarter were higher than estimated in fiscal 2001 and resulted in a $14 million increase in pre-tax income in the quarter. -- Announced its decision to dispose of Asian-based apparel businesses, which were not included in the original Reshaping plans. These transactions were completed in the first quarter of fiscal 2002 and resulted in a pre-tax loss of $9 million. -- Concluded that it would not be possible to complete the disposition of one of the 17 businesses in a timely manner and, as such, reversed the $2 million pre-tax charge previously recognized for this intended action. Management is currently evaluating alternatives with regard to this business. The net impact of these actions was an increase in pre-tax income of $7 million and an increase in net income of $36 million, or $.04 per share. Exit Activities The Reshaping program includes the exit of certain high-cost manufacturing, distribution and administrative activities. Exit activities recognized in the first quarter of 2002 reduced pre-tax earnings, net income and earnings per share by $8 million, $7 million and less than $.01 per share, respectively. The net pre-tax charge consists of $19 million recognized for exit activities approved by management in the first quarter of fiscal 2002 and the reversal of $11 million of charges recognized in fiscal 2001 as a result of the favorable completion of activities previously initiated. Performance Review A performance review for each line of business follows. Unit volumes exclude acquisitions and divestitures unless otherwise noted. All dollar amounts are in millions. Please note that as a result of the acquisition of The Earthgrains Company in the first quarter of fiscal 2002, meat and bakery results will be reported as separate lines of business.
SARA LEE MEATS
First Quarter Change
--------------------- --------------
2002 2001
Sales $ 1,025 $ 1,026 0% Operating Income 74 86 (14)%
Sara Lee Meats is a leading manufacturer of processed meat products in the United States, Europe and Mexico. While reported sales were flat, base business sales, excluding acquisitions, divestitures and the effects of currency, increased 3%, benefiting from strong Sara Lee deli meat sales and several new product initiatives. Operating income fell 14%, as profits were negatively affected by costs associated with the U.S. meat group Reshaping and by higher commodity costs, especially materials used in the production of hot dogs and smoked sausage. Media advertising to support key brands also rose significantly during the quarter, up 35%.
Unit volumes for Sara Lee Meats were flat in the quarter as strong deli meat and breakfast sausage sales were offset by declines in smoked sausage and hot dogs. The successful launch of Jimmy Dean Fresh Taste. Fast!, a pre-cooked breakfast sausage that can be prepared in less than one minute, and new breakfast sandwich and deli products continued to receive strong consumer acceptance. By geographic region, U.S. volumes fell 1%, although branded unit sales rose 1%; European unit volumes fell 5%; and Mexican unit sales grew 13%. SARA LEE BAKERY First Quarter Change --------------------- -------------- 2002 2001 Sales $ 573 $ 240 NM Operating Income 35 (14) NM Sara Lee Bakery holds the number-one share in frozen baked goods in the United States and Australia, and, through its recent acquisition of The Earthgrains Company, is a leading company in the U.S. fresh bread market, with important positions in U.S. and European refrigerated dough and European fresh bread. The fiscal year 2002 reported figures include the acquisition of Earthgrains on August 7, 2001, and exclude bakery operations in Europe that were divested in the prior year. Excluding acquisitions, divestitures and the effects of currency, sales fell 7% while operating income increased substantially. Improvement at Sara Lee's frozen bakery business in the United States, mostly due to Reshaping activities, led to the increased operating income. The acquisition of Earthgrains, the second largest packaged fresh bread company in the United States, provides Sara Lee with increased exposure to the fast-growing fresh bread category, particularly the premium and super-premium segments, which are growing faster than the overall market. The introduction of the Sara Lee brand to Earthgrains' direct-store distribution system is expected to generate significant incremental sales, and near-term plans include the introduction of Sara Lee bagels and poundcake into Earthgrains' distribution system by the end of calendar 2001. Unit volumes on an ongoing basis, excluding Earthgrains, for Sara Lee Bakery declined 5% as the company continued to exit low-growth and unprofitable frozen products.
BEVERAGE First Quarter Change --------------------- -------------- 2002 2001
Sales $ 640 $ 712 (10)% Operating Income 94 111 (16)% Sara Lee's Beverage line of business includes retail and foodservice coffee and tea sales in markets around the world, with significant positions in Europe, the United States and Brazil. Because this business generates over 50% of its sales outside the United States, it has significant exposure to currency fluctuations. Excluding the impact of currency, sales for this line of business declined 7% and operating income fell 13%. Historically low green coffee prices led to lower retail prices during the quarter producing declines in sales and operating income. A 6% increase in media advertising and promotion spending to support key brands and new product introductions also affected margins. There were no acquisitions or divestitures affecting Beverage results in the quarter. Global unit sales of roasted coffee and coffee concentrate products fell 2% during the quarter as gains in Belgium, Brazil, Norway, Hungary and the United Kingdom were offset by declines in the United States and The Netherlands. Market shares in many major regions showed an increase versus last year. By product line, retail coffee volumes fell 1% on a global basis; out-of-home unit sales fell 5% in both the United States and Europe; and liquid coffee concentrate volumes for the company's innovative coffee systems increased 2%. In new product news, in fiscal 2001, the company successfully launched a joint initiative in The Netherlands with Philips Electronics to sell a unique in-home coffee maker called Senseo crema, which uses pads of coffee produced by Douwe Egberts. Senseo crema continued to enjoy strong consumer acceptance in the first quarter of 2002, and this new product is expected to be rolled out in other parts of Europe in the near future. In the United States, new espresso and cappuccino products were introduced under the Chock full o'Nuts brand.
HOUSEHOLD PRODUCTS First Quarter Change --------------------- -------------- 2002 2001
Sales $ 509 $ 472 8% Operating Income 68 66 3% Household Products includes the company's household and body care businesses and its Direct Selling operations. It is Sara Lee's most global business, selling products in more than 180 countries. The strength of the dollar relative to other currencies had a significant impact on reported results for this line of business; excluding currency, sales grew 12% and operating income rose 6%. Operating income grew less than sales as media advertising and promotion increased 16% to support new product launches and marketing behind key brands. Unit volumes for this segment's four core categories - shoe care, body care, insecticides and air fresheners - grew 11% with increased sales in body care, insecticides and air fresheners. Unit volumes were particularly strong in the air freshener business, led by new product offerings such as Ambi-Pur Flush, a two-in-one toilet bowl cleaner and air freshener that is currently sold in more than 30 countries. The product was successfully introduced under the brand name Ambi-Pur LiquiFresh in the United States in fiscal 2001 and continues to hold the leading market share in its category. Sales from the company's Direct Selling efforts, conducted by 800,000 independent sales representatives who deliver branded toiletries, cosmetics and fragrances directly to consumers in 17 countries, rose 8% over the first quarter of last year, and operating income increased 9%, excluding currency. Results were particularly strong at House of Fuller operations in Mexico.
INTIMATES AND UNDERWEAR First Quarter Change --------------------- -------------- 2002 2001
Sales $ 1,773 $ 2,048 (13)% Operating Income 127 202 (37)%
Sara Lee's Intimates and Underwear line of business includes the company's global Legwear, Knit Products and Intimate Apparel operations. On an ongoing operations basis - excluding divested businesses from the first quarters of fiscal 2001 and 2002 - Intimates and Underwear reported a 1% decrease in sales and a 31% decrease in operating income, reflecting difficult retail markets and continuing pricing pressure from the number-two U.S. men's underwear company. Intimates and Underwear unit volumes rose 6% as strength in the Knit Products segment offset weak hosiery markets.
Unit volumes for worldwide Intimate Apparel declined 1%, mostly due to a soft retail environment. The company did increase its number-one position in the U.S. bra category to a dollar share of 26.1% for the 12-month period ended August 2001. Major new products launched in this quarter included the seamless Barely There Body Revolution and Bali Perfectly Smooth.
Worldwide Knit Products unit volumes grew 13% during the quarter, with gains for both underwear and activewear. Driven by a 50% increase in media advertising spending, unit sales rose at a double-digit rate in the company's U.S. male and female underwear operations while European underwear delivered high single-digit unit growth. In the U.S. underwear category, Hanes and Hanes Her Way maintained their number-one positions in both the male and female underwear categories, with 12-month unit shares as of July 2001 of 36.5% and 36.1%, respectively. Sara Lee also experienced strong casualwear and screen print t-shirt unit volumes in the United States.
Global Legwear unit sales fell 4% during the quarter, as global hosiery markets continued to decline. In the United States, Sara Lee continued to reduce inventory levels and focus its hosiery business on generating strong cash flow. The company retained its number-one position in the U.S. sheer hosiery category with a dollar share of 50.2% as of August 2001, and its leading unit share position in the sock market at 16.9%.
Net interest expense was $51 million for the quarter, compared with $62 million in the first quarter of last year. Interest expense decreased as the company benefited from lower interest rates.
Sara Lee's management currently expects diluted EPS for the second quarter of fiscal 2002 to fall within a range of $.36 to $.40 compared to $.43 from total operations in the year-ago period. Full fiscal year 2002 diluted EPS are expected to fall in a range of $1.37 to $1.43 compared to $1.36 from total operations in fiscal 2001. Fiscal 2002 results reflect the company's adoption of new accounting standards concerning the amortization of goodwill and other intangibles. As a point of comparison, Sara Lee estimates that diluted EPS would have been $.46 for the second quarter of fiscal 2001 and $1.49 for fiscal 2001 under the new accounting standards.
By line of business, management expects fiscal 2002 second quarter operating income performance for Sara Lee Meats and Sara Lee Bakery to be similar to that of the first quarter; higher comodity costs and continued investment spending will impact operating margins in the meat business, while base business gains and the addition of Earthgrains' operating income will positively impact Bakery results. Given their significant exposure to foreign currency, particularly the euro, reported operating income for Sara Lee's Beverage and Household Products lines of business, the company's two most global operations, will depend on changes in year-over-year foreign currency relationships. The Intimates and Underwear line of business is expected to report lower operating income in the second quarter, reflecting challenging market conditions, increased investment spending and the loss of operating income from divested operations.
For the full year, Sara Lee Meats operating income should be flat to up slightly, as this line of business is expected to show improved results in the second half, benefiting from easier commodity cost comparisons. Sara Lee Bakery is expected to benefit from base business gains and the Earthgrains acquisition throughout the year. Beverage and Household Products operating income will depend on foreign currency relationships. Intimates and Underwear is projected to report lower operating income for the year, although profitability is expected to improve in the second half.
Janet Bergman, senior vice president, investor relations and corporate affairs, will discuss the first quarter results live via the Internet today at 9:00 am (CDT). The live webcast can be accessed at www.saralee.com, and will last approximately one hour. For people who are unable to listen to the webcast live, it will be archived two hours following the completion of the webcast in the Investor Relations section of the Sara Lee corporate Web site for 10 business days.
This news release contains certain forward-looking statements concerning Sara Lee's operations, economic performance and financial condition. These forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements.
Factors that could cause Sara Lee's actual results to differ materially from such forward-looking statements include the following: (i) impacts on reported earnings from fluctuations in foreign currency exchange rates - particularly the euro - given Sara Lee's significant concentration of business in Western Europe; (ii) significant competitive activity, including advertising, promotional and price competition, and changes in consumer demand for Sara Lee's products; (iii) adverse economic trends, including reduced consumer spending, relating in part to incidents of terrorism and the global repercussions from such incidents; (iv) Sara Lee's ability to continue to source production and conduct manufacturing and selling operations in various countries in the world due to changing political environments and the impacts on the related business environment; (v) Sara Lee's ability to successfully integrate acquisitions, particularly Earthgrains, into its existing operations and the availability of new acquisitions, joint ventures and alliance opportunities that build stockholder value; (vi) the financial impact of Sara Lee's decision to dispose of certain non-core business units; (vii) fluctuations in the cost and availability of various raw materials; (viii) the impact of foot-and-mouth viral disease in parts of Europe on the consumption of meat products in general and the cost of raw materials not impacted by the disease used in the production of finished goods; (ix) Sara Lee's ability to complete transactions anticipated in its business reshaping programs; (x) Sara Lee's ability to realize forecasted savings, as well as improvements in productivity and efficiency from its business reshaping programs; and (xi) inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance.
In addition, the Corporation's results may also be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes, and laws and regulations in markets where the corporation competes.
Consequently, the corporation wishes to caution readers not to place undue reliance on any forward-looking statements. We have provided additional information in our Form 10-K for fiscal year 2001, which readers are encouraged to review, concerning factors that could cause actual results to differ materially from those in the forward looking statements.
Sara Lee Corporation (www.saralee.com) is a global branded consumer packaged goods company with approximately $20 billion in annual revenues. Its leading brands include Sara Lee, Douwe Egberts, Hillshire Farm, Hanes and Playtex. Sara Lee Corporation Executive Summary of Performance First quarter fiscal 2002 (All results exclude unusual items) Percentage change ---------------------------------------------------------------------- Sara Lee Sara Lee Meats(1) Bakery(2) Beverage(3) ------- -------- ---------- Reported sales 0% NM (10)% Sales from ongoing operations(+) 3% NM (10)% ---------------------------------------------------------------------- Base sales(++) 3% (7)% (7)% ---------------------------------------------------------------------- Reported operating Income (14)% NM (16)% Operating income from ongoing operations(+) (15)% NM (16)% ---------------------------------------------------------------------- Base operating income(++) (15)% NM (13)% ---------------------------------------------------------------------- Base unit volumes(+++) 0% (5)% (2)% ---------------------------------------------------------------------- Diluted earnings per share - - - Total advertising and promotional expense(+) (4)% NM 6% ---------------------------------------------------------------------- Media advertising expense(+) 35% NM (12)% ---------------------------------------------------------------------- Promotional expense(+) (9)% NM 13% Household Intimates Products(3) and Underwear(4) Total SLE ----------- ---------------- --------- Reported sales 8% (13)% 1% Sales from ongoing operations(+) 8% (1)% 9% ---------------------------------------------------------------------- Base sales(++) 12% (4)% 0% ---------------------------------------------------------------------- Reported operating Income 3% (37)% (12)% Operating income from ongoing operations(+) 3% (31)% (11)% ---------------------------------------------------------------------- Base operating income(++) 6% (31)% (17)% ---------------------------------------------------------------------- Base unit volumes(+++) 11% 6% 3% ---------------------------------------------------------------------- Diluted earnings per share - - (10)% Total advertising and promotional expense(+) 16% (2)% 2% ---------------------------------------------------------------------- Media advertising expense(+) 6% 3% 11% ---------------------------------------------------------------------- Promotional expense(+) 23% 0% 1% (+) Ongoing operations reflect results excluding divested businesses from FY02 and FY01 results. (++) Base business results exclude acquisitions, divestitures and the effect of currency. (+++) Base unit volumes exclude acquisitions and divestitures. (1) There were no divestitures in this segment in 1Q02. The following businesses were divested in FY01: Ozark Salad and Argal. (2) The Earthgrains Company was acquired on August 7, 2001. There were no divestitures in this segment in 1Q02. The following businesses were divested in FY01: Nutrine, Brossard, and U.K. Bakery. (3) There were no divestitures in this segment in 1Q02 or in FY01. (4) The following businesses were sold in 1Q02: International Fabrics operations in France, Italy, Spain, Portugal, the U.K., and Courtaulds China; Liabel and Vocal. The following businesses were sold in FY01: Coach, Champion Europe, Champion Bookstore, Sara Lee Personal Products Australasia, Well and International Fabrics operations in Thailand, the Philippines and Germany. Sara Lee Corporation (NYSE) -------------------------- Consolidated Statements of Income (in millions except per share amounts) ---------------------------------------------------------------------- First Quarter Ended ------------------------------------- Sept. 29, Sept. 30, Percent 2001 2000 Change ---------- --------- --------- Net sales $ 4,518 $ 4,455 1.4% ---------- --------- --------- Cost of sales 2,677 2,600 Cost of sales - product line exit (3) -- Selling, general and administrative expenses 1,527 1,489 Interest expense 74 82 Interest income (23) (20) Unusual Items - Business reshaping: Business dispositions and other charges 4 -- ---------- --------- 4,256 4,151 ---------- --------- Income from continuing operations before income taxes 262 304 (13.8) Income taxes 20 66 ---------- --------- Income from continuing operations 242 238 1.6 Income from discontinued operations, net of income taxes -- 16 ---------- --------- Net income $ 242 $ 254 (4.9) ========== ========= Income from continuing operations per common share Basic $ 0.31 $ 0.28 10.7 ========== ========= Diluted $ 0.30 $ 0.27 11.1 ========== ========= Net income per common share Basic $ 0.31 $ 0.30 3.3 ========== ========= Diluted $ 0.30 $ 0.29 3.4 ========== ========= Average shares outstanding Basic 783 841 ========== ========= Diluted 816 877 ========== ========= Sara Lee Corporation (NYSE) --------------------------- Operating Results by Industry Segment Unusual Items not Allocated to Industry Segments (in millions) First Quarter Ended ---------------------------------------------------------------------- Sales Operating Income --------------------- -------------------- Sept. 29, Sept. 30, Percent Sept. 29, Sept. 30, Percent 2001 2000 Change 2001 2000 Change --------- --------- ------- --------- --------- ------- Sara Lee Meats $ 1,025 $ 1,026 (0.1)% $ 74 $ 86 (14.4)% Sara Lee Bakery 573 240 NM 35 (14) NM Beverage 640 712 (10.0) 94 111 (15.7) Household Products 509 472 7.9 68 66 3.1 Intimates and Underwear 1,773 2,048 (13.4) 127 202 (36.9) --------- --------- ------- --------- --------- ------- Total sales and operating companies income 4,520 4,498 0.5 398 451 (11.8) Intersegment sales (2) (43) 94.9 -- -- -- Amortization of goodwill and trademarks -- -- -- (14) (46) 70.6 General corporate expenses -- -- -- (70) (39) (81.7) Business dispositions and other charges (1) -- -- -- (1) -- NM --------- --------- ------- --------- --------- ------- Total net sales and operating income 4,518 4,455 1.4 313 366 (14.5) Net interest expense -- -- -- (51) (62) 17.6 --------- --------- ------- --------- --------- ------- Net sales and income from continuing operations before income taxes $ 4,518 $ 4,455 1.4 % $ 262 $ 304 (13.8)% ========= ========= ======= ========= ========= ======= See accompanying notes to financial statements for information regarding the unusual items. Sara Lee Corporation (NYSE) --------------------------- Operating Results by Industry Segment Unusual Items Allocated to Industry Segments (in millions) First Quarter Ended ---------------------------------------------------------------------- Sales Operating Income --------------------- -------------------- Sept. 29, Sept. 30, Percent Sept. 29, Sept. 30, Percent 2001 2000 Change 2001 2000 Change --------- --------- ------- --------- --------- ------- Sara Lee Meats $ 1,025 $ 1,026 (0.1)% $ 68 $ 86 (20.1)% Sara Lee Bakery 573 240 NM 33 (14) NM Beverage 640 712 (10.0) 96 111 (13.7) Household Products 509 472 7.9 68 66 2.3 Intimates and Underwear 1,773 2,048 (13.4) 132 202 (34.5) --------- --------- ------- --------- --------- ------- Total sales and operating companies income 4,520 4,498 0.5 397 451 (12.0) Intersegment sales (2) (43) 94.9 -- -- -- Amortization of goodwill and trademarks -- -- -- (14) (46) 70.6 General corporate expenses -- -- -- (70) (39) (81.7) --------- --------- ------- --------- --------- ------- Total net sales and operating income 4,518 4,455 1.4 313 366 (14.5) Net interest expense -- -- -- (51) (62) 17.6 --------- --------- ------- --------- --------- ------- Net sales and income from continuing operations before income taxes $ 4,518 $ 4,455 1.4 % $ 262 $ 304 (13.8)% ========= ========= ======= ========= ========= ======= See accompanying notes to financial statements for information regarding the unusual items. Sara Lee Corporation (NYSE) Consolidated Balance Sheets (in millions) ---------------------------------------------------------------------- Sept. 29, June 30, Sept. 30, 2001 2001 2000 ---------- --------- --------- ASSETS Cash and equivalents $ 361 $ 548 $ 225 Trade accounts receivable 1,994 1,538 1,826 Inventories 2,689 2,582 2,999 Other current assets 360 321 392 Net assets of businesses held for sale 5 94 629 ---------- --------- --------- Total current assets 5,409 5,083 6,071 Other non-current assets 331 304 433 Property, net 3,117 2,146 2,290 Trademarks and other identifiable intangibles, net 1,956 1,097 1,099 Goodwill, net 3,124 1,537 1,840 ---------- --------- --------- $ 13,937 $10,167 $11,733 ========== ========= ========= LIABILITIES AND EQUITY Notes payable $ 1,141 $ 101 $ 2,104 Accounts payable 1,439 1,505 1,518 Accrued liabilities 2,848 2,872 2,470 Current maturities of long-term debt 439 480 222 ---------- --------- --------- Total current liabilities 5,867 4,958 6,314 Long-term debt 4,787 2,640 2,966 Deferred income taxes 543 244 208 Other non-current liabilities 839 563 576 Minority interest in subsidiaries 636 625 624 Preferred stock 7 15 19 Common stockholders' equity 1,258 1,122 1,026 ---------- --------- --------- $ 13,937 $ 10,167 $11,733 ========== ========= ========= Notes to the Financial Statements 1.) The Corporation adopted Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" (SFAS No. 142) as of July 1, 2001. Under the provisions of that statement, goodwill is not amortized; however, other intangible assets are amortized over their useful life unless that life is determined to be indefinite. The guidelines established for determining the useful life of an intangible asset under SFAS No. 142 differ from those established under prior accounting standards. The primary other intangible assets acquired by the Corporation in business combinations are trademarks, brands and customer relationships. Outside of business combinations, the primary other amoritizable intangible assets acquired by the Corporation are software and licenses. SFAS 142 prohibits the restatement of previously issued financial statements, but requires separate disclosure of the impact of the new accounting standard on prior periods results. The net income, basic earnings per share and diluted earnings per share for the first quarter of fiscal 2001, adjusted to exclude amortization (including any related tax effects) recognized in that period related to goodwill and other intangible assets no longer being amortized under the provisions of SFAS No. 142, were $282 million, $.33 per share and $.32 per share, respectively. The net income, basic earnings per share and diluted earnings per share for fiscal 2001, adjusted to exclude amortization (including any related tax effects) recognized in that period related to goodwill and other intangible assets no longer being amortized under the new accounting rules, were $2,379 million, $2.89 per share and $2.78 respectively. 2.) The Corporation's results for the first quarter were affected by the reshaping program initiated in May 2000. This ongoing program includes a number of business dispositions and the exit of certain high-cost activities. Reshaping actions recognized in the first quarter of 2002 reduced pre-tax income by $1 million and increased net income by $29 million or $.04 per share. The actions taken include: Business Dispositions- During fiscal 2001, the Corporation's management approved plans to dispose of PYA/Monarch, Coach and 17 other businesses with limited growth opportunities and low returns. At the end of 2001, the disposition of PYA/Monarch, Coach and 10 of 17 other businesses had been completed. During the first quarter of fiscal 2002 the Corporation: -- Completed the disposition of four of the businesses targeted for sale in fiscal 2001. Cash proceeds from these and other business dispositions received in the first quarter were higher than estimated in fiscal 2001 and resulted in a $14 million increase in pre-tax income in the quarter. -- Announced its decision to dispose of Asian-based apparel businesses which were not included in the fiscal 2001 Reshaping Plans. These transactions were completed in the first quarter of fiscal 2002 and resulted in a pre-tax loss of $9 million. -- Concluded that it would not be possible to complete the disposition of one of the 17 businesses in a timely manner and as such, reversed the $2 million pre-tax charge previously recognized for this intended action. Management is currently evaluating alternatives with regard to this business. The net impact of these actions was an increase in pre-tax income of $7 million and an increase in net income of $36 million or $.04 per share. Exit Activities- The reshaping program includes the exit of certain high-cost manufacturing, distribution and administrative activities. Exit activities recognized in the first quarter of 2002 reduced pre-tax earnings, net income and earnings per share by $8 million, $7 million and less than $.01 per share, respectively. The net pre-tax charge consists of $19 million recognized for exit activities approved by management in the first quarter of fiscal 2002 and the reversal of $11 million of charges recognized in fiscal 2001 as a result of the favorable completion of activities previously initiated. 3.) On August 7, 2001, the Corporation acquired substantially all of the outstanding common stock of The Earthgrains Company and began consolidating the results of that company's operations. Earthgrains is a manufacturer of fresh packaged bread and refrigerated dough in the United States and Europe. The sales and operating income of the Earthgrains business in the quarter ended September 29, 2001 were $394 million and $34 million, respectively. The Earthgrains' business when combined with the Corporation's existing bakery operations constitutes a reportable segment. The Corporation's Meat and Bakery businesses were previously combined in the Sara Lee Foods segment. Under the revised segment presentation Sara Lee Meats and Sara Lee Bakery are separate business segments and prior year financial presentations have been adjusted to reflect this change. CONTACT: Sara Lee Corporation Julie Ketay (Media), 312/558-8727 Janet Bergman (Analysts), 312/558-8651 URL: www.saralee.com http://www.businesswire.com Today's News On The Net - Business Wire's full file on the Internet with Hyperlinks to your home page.
Copyright (C) 2001 Business Wire. All rights reserved.
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SLE 3.4% increase in common dividend rate
CHICAGO, Oct 25, 2001 (BUSINESS WIRE) -- Sara Lee Corporation's board of directors today approved a 3.4% increase to the corporation's common dividend rate. Chairman, President and Chief Executive Officer C. Steven McMillan announced the dividend increase, which represents Sara Lee's 26th consecutive year of common dividend rate increases, at the company's 61st annual meeting of stockholders.
The board of directors approved an increase in the annual dividend from $.58 to $.60 per share. Also today, the board of directors declared a regular quarterly dividend of $.15 per share on the company's common stock, payable on January 2, 2002. The dividend is payable to stockholders of record at the close of business on December 3, 2001. This is the 223rd consecutive dividend declared by the corporation.
Sara Lee Corporation is a global branded consumer packaged goods company with approximately $20 billion in annual revenues. Its leading brands include Sara Lee, Douwe Egberts, Jimmy Dean, Hillshire Farm, Kiwi, Hanes and Playtex. CONTACT: Sara Lee Corporation Julie Ketay (Media), 312/558-8727 Aaron Hoffman (Analysts), 312/558-8739 URL: www.saralee.com http://www.businesswire.com Today's News On The Net - Business Wire's full file on the Internet with Hyperlinks to your home page.
Copyright (C) 2001 Business Wire. All rights reserved.
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