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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Sara Lee Corp | LSE:SRL | London | Ordinary Share | COM STK US$1.33 1/3 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 13.82 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMSRL
Sara Lee Corp. (NYSE: SLE) today reported earnings for the second quarter and first half of fiscal 2012 and updated the progress of the spin-off of the company's international Coffee & Tea business.
Second Quarter Highlights (continuing operations):
-- Adjusted1 and reported net sales increased 6%
Coffee & Tea: adjusted net sales up 12%; reported net sales up 11%
Meat2: adjusted net sales up 1%; reported net sales up
2%
-- Adjusted operating income increased 18%; reported operating income
declined 42%
Coffee & Tea: adjusted operating segment income up 2%; reported
operating segment income up 29%
Meat: adjusted operating segment income down 2%; reported
operating segment income down 7%
-- Adjusted EPS increased six cents to $0.27; reported EPS decreased nine
cents to $0.05
-- Reiterating guidance despite negative impact from currency Key Financial Data, Continuing Operations Second Quarter ($ millions, except per share) First Half 2012 2011 % Change Continuing Operations 2012 2011 % Change 2,044 1,932 5.8 Adjusted Net Sales 3,944 3,730 5.8 2,081 1,958 6.3 Reported Net Sales 4,024 3,685 9.2 256 216 18.4 Adjusted Operating Income 438 391 12.0 101 175 (42.4) Reported Operating Income 212 332 (36.3) $0.27 $0.21 28.6 Adjusted EPS $0.45 $0.33 36.4 $0.05 $0.14 (64.3) Reported Diluted EPS $0.00 $0.23 NM
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.
2 Meat is the summation of the N.A. Retail and N.A. Foodservice & Specialty Meats segments
Perspectives from Executive Chairman & Chief Executive Officer
"We continue to see solid progress in our businesses as we head into the second half of our fiscal year", said Executive Chairman Jan Bennink. "We remain on track to complete the spin-off during the fourth quarter of the fiscal year. We have closed all announced business divestitures and have supplemented our core businesses with acquisitions that will strengthen our long-term growth profile. Each business now has the CEO and CFO in place and they are assessing further changes to strengthen the organization. Finally, as we announced last week, we now have full control over the Senseo trademark and look forward to a continued partnership with Philips to leverage Senseo's strong brand equity into new products and geographic market expansion."
Chief Executive Officer Marcel Smits added, "The meat business showed a marked improvement in volume and mix trends in the quarter in response to course corrections. We made brisk improvement on the meat categories in the retail and foodservice businesses, while the bakery categories lagged. Coffee and Tea continued its upward trend and, importantly, operations in the key Western European countries continue to perform well. We are confident that we now have the market fundamentals in line to deliver on our guidance for the full year."
Fiscal 2012 Guidance
The company reiterates guidance despite a negative impact from currency
-- Adjusted EPS: $0.89-$0.95 -- Net sales: $7.9 - $8.15 billion -- Adjusted operating income (including acquisitions): $875-$930 million -- Net interest expense: $80 million -- Tax rate: 33.4% -- Year-end cash: $300 million -- Year-end debt updated from $2.1 billion to $2.4 billion -- Average Dollar/Euro exchange rate updated from $1.39 to $1.35 Coffee & Tea Second Quarter ($ millions) First Half 2012 2011 % Change Continuing Operations 2012 2011 % Change 988 886 11.6 Adjusted Net Sales 1,894 1,679 12.9 998 899 11.0 Reported Net Sales 1,920 1,627 18.0 63 53 19.5 MAP 104 84 24.1 144 142 1.8 Adjusted Op. Seg. Inc. 265 243 9.1 140 109 28.7 Reported Op. Seg. Inc. 254 199 27.7
In the second quarter, Coffee and Tea continued its strong performance. Adjusted net sales grew 12%, driven by pricing and strong mix. This positive performance was partially offset by volume declines which can be attributed largely to the complete shutdown of our Thai business during massive flooding and the deliberate withdrawal from private label business in France. Adjusted operating margin increased for the second consecutive quarter, to 14.6%, despite a 20% increase in MAP spending. Pricing has now fully covered raw material increases for the first time since the beginning of the spike in raw material prices.
The business is performing particularly well in our key Western European countries: the Netherlands, France and Spain. Market shares showed compelling trends in all three countries, with France and Spain reaching record levels. The Netherlands is showing significant progress as it has started to reverse the downward trend of the past few years. The growth of capsules has contributed to success in these three countries, combined with strengthened category management and stronger focus on the base business.
The strong growth in retail sales was partially offset by a more moderate growth in the out-of-home segment, which grew by 2%.
The company is implementing a new innovation strategy to address unmet consumer needs through preference mapping. Within the Senseo line, the company has launched richer variants for those who like espresso-type products. For those who prefer a larger and milder "long" coffee, "Lungo" variants have been introduced to the L'OR range and have met great success in the countries in which it has been launched (France, the Netherlands and Belgium). To capitalize on the consumer interest in optimal freshness, we have also launched a complete range of "bean" products in the Netherlands.
In the first six months, adjusted net sales increased 13%, MAP spend was up 24% and adjusted operating segment income increased by 9%. For the remainder of the fiscal year, we expect the pricing effect to wind down and volume/mix to pick up, combined with some tailwinds from commodity costs. Energy in Motion innovations will start rolling out as of April, followed by major re-launches in the summer.
Meat
Total Meats Business - North American Retail and North American Foodservice & Specialty Meats Second Quarter ($ millions) First Half 2012 2011 % Change Continuing Operations 2012 2011 % Change 1,028 1,018 0.9 Adjusted Net Sales 1,992 1,987 0.2 1,055 1,031 2.3 Reported Net Sales 2,046 2,000 2.3 30 34 (12.0) MAP 77 73 6.3 118 121 (2.5) Adjusted Op. Seg. Inc. 201 207 (3.1) 114 122 (6.7) Reported Op. Seg. Inc. 183 205 (11.0)
The Meats business showed encouraging progress in the second quarter as selective pricing actions were effective in reversing volume loss trends in key categories. After a volume decline of 5.7% in the first quarter, the second quarter showed a decline of 3.5%, with trends improving as the quarter progressed. Volume and share improvement in the company's core meat categories was diluted by weak performance in bakery categories. A portion of the volume decline can be attributed to short-term disruption related to the transition of accounts to a third party broker. The long-term benefit of this strategic move is expected to greatly outweigh the near-term volume impact. Mix declined 0.4% in the first quarter but increased 1.0% in the second quarter.
North American Retail
Second Quarter ($ millions) First Half 2012 2011 % Change Continuing Operations 2012 2011 % Change 741 741 (0.1) Adjusted Net Sales 1,425 1,436 (0.8) 741 741 (0.1) Reported Net Sales 1,425 1,436 (0.8) 26 32 (19.8) MAP 67 69 (2.4) 88 84 4.8 Adjusted Op. Seg. Inc. 144 145 (0.8) 81 84 (3.5) Reported Op. Seg. Inc. 123 144 (14.8)
In the second quarter, adjusted and reported net sales were flat versus the prior year period, as volume declines of 4.9% were offset by a positive mix effect of 1.5% as well as pricing. The North American Retail segment implemented selective strategic pricing actions in the second quarter in order to address competitive price gaps in certain categories. As a result, the company saw volume and share trends improve in core categories. The overall result was a quarter-over-quarter volume/mix improvement of 390 basis points (from -7.3% in the first quarter to -3.4% in the second quarter). Adjusted operating segment income increased 5% as a result of lower SG&A, operations productivity and lower MAP spend. Commodity price increases were not fully recovered in the quarter.
Market share trends showed meaningful improvements in each of the segment's core categories. The best performance in the quarter came from the Jimmy Dean business which continues to deliver positive trends on volume, revenue and operating profit, driven by innovation. Meanwhile, extensive resources are being put behind plans to improve the innovation and positioning of the Hillshire Farm brand. The bakery business underperformed during the holiday season in a very competitive market, impacting quarterly results and diluting the impact of positive trends in meat.
In the first six months, adjusted and reported net sales declined 1% to $1,425 million. Pricing and sales mix virtually offset volume declines, the exit of the final hog resale contract and slotting fees on new items. Adjusted operating segment income declined 1% as the impact of volume declines more than offset lower SG&A and operations productivity.
In the second half of the year, the company will continue to balance pricing and MAP spend while remaining focused on innovation.
North American Foodservice & Specialty Meats
Second Quarter ($ millions) First Half 2012 2011 % Change Continuing Operations 2012 2011 % Change 287 277 3.6 Adjusted Net Sales 567 551 2.8 314 290 8.3 Reported Net Sales 621 564 10.1 4 2 NM MAP 10 4 NM 30 37 (19.0) Adjusted Op. Seg. Inc. 57 62 (8.5) 33 38 (13.6) Reported Op. Seg. Inc. 60 61 (2.2)
In the second quarter, adjusted net sales grew 4% to $287 million, as positive pricing more than offset unit volume declines. The segment showed mixed results as strong sales and mid-single-digit volume growth in meats were offset by mid-single-digit volume declines in bakery, resulting from market declines in out-of-home desserts as well as reductions in military sales. The specialty meats business performed well, driven by the strong performance of Aidells, which continues to grow volume, revenue and operating profit. Adjusted operating segment income declined 19%, with prices increases lagging commodity cost increases.
In the first six months, adjusted net sales increased 3% to $567 million, driven by higher prices. Adjusted operating segment income declined 9% as volume declines and commodity increases more than offset higher prices and lower SG&A costs.
Additional Information
Corporate Expenses
Second Quarter ($ millions, excluding significant items) First Half 2012 2011 2012 2011 (21) (41) General corporate expenses (31) (64) 15 (2) Commodity MTM gains/(losses) 4 10 (3) (3) Amortization of trademarks and intangibles (6) (6) (9) (46) Total corporate expenses (33) (60)
The company continues to make progress in reducing general corporate expenses while preparing for the spin-off. Excluding significant items, general corporate expenses were $21 million for the quarter, a decline of $20 million from the prior year. The reduction was primarily due to lower corporate headcount costs and pension expenses. We now expect full year general corporate expenses (including amortization) to be $85-$95 million.
Australian Bakery
The Australian Bakery business has been taken off strategic review and will remain with the North American Meat business post-spin.
Commodity Costs (including Currency Mark-to-Market)
For the second quarter, the company's total commodity costs increased by $169 million, partially offset by $151 million in higher prices. For the first half, the company's total commodity costs increased by $323 million, partially offset by $311 million in higher prices. The $323 million increase in FY12 commodity costs includes a $37 million favorable variance in currency mark-to-market adjustments, comprised of a $21 million first-half gain in FY12 versus a $16 million first-half loss in FY11. This year-over-year benefit is included in the Coffee and Tea results.
Cash from Operations
Net cash from operating activities for the second quarter was $253 million versus $205 million in the prior year. For the first half, net cash from operating activities was $33 million compared to $233 million in the prior year. The decrease was primarily due to a significant decline in the cash generated by discontinued operations as divestitures were completed, a one-time EUR60 million payment to the Netherlands pension plan in the first quarter and higher cash payments for significant items.
Significant Items
For the quarter, significant items, excluding impairment charges and gains or losses on the sale of businesses, were $170 million, primarily resulting from the renegotiation of global IT contracts and spin-related advisory fees. For the full year, we now expect total significant items, excluding impairment charges and gains or losses on the sale of businesses, to be $525-$550 million. Included in this amount is approximately EUR50 million related to the previously announced termination of an existing agreement with Royal Philips Electronics.
Timing of Payment of the $3.00 Special Dividend
The company expects to declare and pay the $3.00 special dividend in the fourth quarter of fiscal 2012.
Diluted Earnings Per Share
Second Quarter Continuing Operations Total Company 2012 2011 2012 2011 Diluted EPS as reported $ 0.05 $ 0.14 $ 0.79 $ 1.30 Less: Gain on sale of - - 0.62 0.77 discontinued operations Tax related items (0.04 ) - 0.09 0.35 Other significant items (0.18 ) (0.07 ) (0.22 ) (0.11 ) Adjusted EPS* $ 0.27 $ 0.21 $ 0.30 $ 0.31 * Amounts are rounded and may not add to the total. First Half Continuing Operations Total Company 2012 2011 2012 2011 Diluted EPS as reported $ 0.00 $ 0.23 $ 0.42 $ 1.58 Less: Gain on sale of - - 0.78 0.89 discontinued operations Tax related items (0.18 ) 0.01 0.03 0.35 Other significant items (0.27 ) (0.11 ) (0.89 ) (0.16 ) Adjusted EPS* $ 0.45 $ 0.33 $ 0.51 $ 0.51 * Amounts are rounded and may not add to the total.
Webcast and Form 10-K
Sara Lee Corporation's review of its results for the second quarter will be broadcast live via the Internet today at 10:00 a.m. CST. The live webcast can be accessed in the Investor Relations section on www.saralee.com and is anticipated to conclude by 11:00 a.m. CST. For people who are unable to listen to the webcast live, a recording will be available on the website at 7:00 p.m. on the day of the webcast until August 3, 2012. Sara Lee has also provided slides containing additional information that will be reviewed during its second quarter webcast. The slides can be accessed in the Investor Relations section on www.saralee.com under Investor News and Events.
Amounts included in the release are preliminary, pending Sara Lee Corporation's filing of its Form 10-Q with the Securities and Exchange Commission on or before February 9, 2012. The Form 10-Q will be available in the Investor Relations section (Financial/SEC Information page) on www.saralee.com.
About Sara Lee Corporation
Sara Lee Corp. (NYSE: SLE) and it's leading portfolio of food and beverage brands, including Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Pickwick Teas, Sara Lee and Senseo, generate nearly $8 billion in annual net sales from continuing operations and employ approximately 20,000 people worldwide. In January 2011, Sara Lee Corp. announced that it will divide the company into two pure-play publicly-traded companies, one focused on the international coffee and tea market and the other on North American meats. For more information on the company, please visit www.saralee.com.
Forward-Looking Statements
This release contains forward-looking statements regarding Sara Lee's business prospects and future financial results and metrics, including statements contained under the heading "Fiscal 2012 Guidance." In addition, from time to time, in oral statements and written reports, the corporation discusses its expectations regarding the corporation's future performance by making forward-looking statements preceded by terms such as "anticipates," "we are confident," "expects," "likely" or "believes." These forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events and are inherently uncertain.
Investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements, and the corporation wishes to caution readers not to place undue reliance on any forward-looking statements. Among the factors that could cause Sara Lee's actual results to differ from such forward-looking statements are those described under Item 1A, Risk Factors, in Sara Lee's most recent Annual Report on Form 10-K and other SEC Filings, as well as factors relating to:
-- Sara Lee's proposed spin-off plans and the special dividend announced
on Jan. 28, 2011, such as (i) unanticipated developments that delay or
negatively impact the proposed spin-off and capital plans; (ii) Sara
Lee's ability to obtain an IRS tax ruling and any other customary
approvals; (iii) Sara Lee's ability to generate the anticipated
efficiencies and savings from the spin-off including a lower effective
tax rate for the spin-off company; (iv) the impact of the spin-off on
Sara Lee's relationships with its employees, major customers and
vendors and on Sara Lee's credit ratings and cost of funds; (v)
changes in market conditions; (vi) future opportunities that the Board
may determine present greater potential value to shareholders than the
spin-off and special dividend; (vii) disruption to Sara Lee's business
operations as a result of the spin-off; (viii) future operating or
capital needs that require a more significant outlay of cash than
currently anticipated; and (ix) the ability of the businesses to
operate independently following the completion of the spin-off;
-- Sara Lee's relationship with its customers, such as (i) a significant
change in Sara Lee's business with any of its major customers, such as
Walmart, its largest customer; and (ii) credit and other business
risks associated with customers operating in a highly competitive
retail environment;
-- The consumer marketplace, such as (i) intense competition, including
advertising, promotional and price competition; (ii) changes in
consumer behavior due to economic conditions, such as a shift in
consumer demand toward private label; (iii) fluctuations in raw
material costs, Sara Lee's ability to increase or maintain product
prices in response to cost fluctuations and the impact on Sara Lee's
profitability; (iv) the impact of various food safety issues and
regulations on sales and profitability of Sara Lee products; and (v)
inherent risks in the marketplace associated with product innovations,
including uncertainties about trade and consumer acceptance;
-- Sara Lee's international operations, such as (i) impacts on reported
earnings from fluctuations in foreign currency exchange rates,
particularly the euro; (ii) Sara Lee's generation of a high percentage
of its revenues from businesses outside the United States and costs to
remit these foreign earnings into the U.S. to fund Sara Lee's domestic
operations, dividends, debt service and corporate costs; (iii)
difficulties and costs associated with complying with U.S. laws and
regulations, such as Foreign Corrupt Practices Act, applicable to
global corporations, and different regulatory structures and
unexpected changes in regulatory environments overseas; and (iv) Sara
Lee's ability to continue to source production and conduct operations
in various countries due to changing business conditions, political
environments, import quotas and the financial condition of suppliers;
-- Previous business decisions, such as (i) Sara Lee's ability to
generate margin improvement through cost reduction and efficiency
initiatives; (ii) Sara Lee's credit ratings, the impact of Sara Lee's
capital plans on such credit ratings and the impact these ratings and
changes in these ratings may have on Sara Lee's cost to borrow funds
and access to capital/debt markets; (iii) the settlement of a number
of ongoing reviews of Sara Lee's income tax filing positions in
various jurisdictions and inherent uncertainties related to the
interpretation of tax regulations in the jurisdictions in which Sara
Lee transacts business; and (iv) changes in the expense for and
contingent liabilities relating to multi-employer pension plans in
which Sara Lee participates.
In addition, Sara Lee's results may also be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes and laws and regulations in markets where the corporation competes. Sara Lee undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Financial Summary - As Adjusted For the Quarter and Six Months ended Dec. 31, 2011 and Jan. 1, 2011 (in millions, except per share data - unaudited) Quarter ended Six Months ended Dec. 31, Jan. 1, % Dec. 31, Jan. 1, % 2011 2011 Change 2011 2011 Change Continuing operations: Adjusted net sales: N.A. $ 741 $ 741 (0.1 )% $ 1,425 $ 1,436 (0.8 )% Retail N.A. 287 277 3.6 567 551 2.8 FS & Specialty Meats Coffee 988 886 11.6 1,894 1,679 12.9 & Tea Australian 35 35 0.2 73 77 (4.9 ) Bakery Intersegment (7 ) (7 ) (15 ) (13 ) Total $ 2,044 $ 1,932 5.8 % $ 3,944 $ 3,730 5.8 % adjusted net sales Adjusted operating income N.A. $ 88 $ 84 4.8 % $ 144 $ 145 (0.8 )% Retail N.A. 30 37 (19.0 ) 57 62 (8.5 ) FS & Specialty Meats Coffee 144 142 1.8 265 243 9.1 & Tea Australian 3 (1 ) NM 5 1 NM Bakery Adjusted 265 262 1.4 % 471 451 4.3 % operating segment income General (21 ) (41 ) (31 ) (64 ) corporate expenses Mark-to 15 (2 ) 4 10 market derivatives gains/(losses) Amortization (3 ) (3 ) (6 ) (6 ) of trademarks & intangibles Total $ 256 $ 216 18.4 % $ 438 $ 391 12.0 % adjusted operating income Adjusted $ 158 $ 134 18.4 % $ 266 $ 215 24.5 % income from continuing operations Adjusted $ 177 $ 198 (11.1 )% $ 306 $ 335 (9.0 )% net income Adjusted net Income attributable to Sara Lee: Continuing $ 158 $ 134 18.4 % $ 266 $ 215 24.5 % operations Discontinued $ 18 $ 62 (71.7 )% $ 37 $ 116 (69.4 )% operations Adjusted diluted earnings per share: Income $ 0.27 $ 0.21 28.6 % $ 0.45 $ 0.33 36.4 % from continuing operations Net $ 0.30 $ 0.31 (3.2 )% $ 0.51 $ 0.51 0.0 % income Adjusted operating margin: N.A. 11.9 % 11.4 % 0.5 % 10.1 % 10.1 % 0.0 % Retail N.A. 10.4 13.3 (2.9 ) 10.0 11.2 (1.2 ) FS & Specialty Meats Coffee 14.6 16.0 (1.4 ) 14.0 14.5 (0.5 ) & Tea Australian 9.0 (2.6 ) 11.6 7.5 2.2 5.3 Bakery Total 12.5 % 11.2 % 1.3 % 11.1 % 10.5 % 0.6 % Sara Lee NM = Not meaningful Financial Summary - As Reported For the Quarter and Six Months ended Dec. 31, 2011 and Jan. 1, 2011 (in millions, except per share data - unaudited) Quarter ended Six Months ended Dec. 31, Jan. 1, % Dec. 31, Jan. 1, % 2011 2011 Change 2011 2011 Change Continuing operations: Net sales: N.A. $ 741 $ 741 (0.1 )% $ 1,425 $ 1,436 (0.8 )% Retail N.A. 314 290 8.3 621 564 10.1 FS & Specialty Meats Coffee 998 899 11.0 1,920 1,627 18.0 & Tea Australian 35 35 1.7 73 71 3.6 Bakery Intersegment (7 ) (7 ) (15 ) (13 ) Total net $ 2,081 $ 1,958 6.3 % $ 4,024 $ 3,685 9.2 % sales Operating income N.A. $ 81 $ 84 (3.5 )% $ 123 $ 144 (14.8 )% Retail N.A. 33 38 (13.6 ) 60 61 (2.2 ) FS & Specialty Meats Coffee 140 109 28.7 254 199 27.7 & Tea Australian 3 (1 ) NM 5 1 NM Bakery Operating 257 230 11.7 % 442 405 8.9 % segment income General (168 ) (50 ) (228 ) (77 ) corporate expenses Mark-to 15 (2 ) 4 10 market derivatives gains/(losses) Amortization (3 ) (3 ) (6 ) (6 ) of trademarks & intangibles Total $ 101 $ 175 (42.4 )% $ 212 $ 332 (36.3 )% operating income Income $ 33 $ 88 (63.0 )% $ (1 ) $ 149 NM (loss) from continuing operations Net $ 469 $ 833 (43.8 )% $ 254 $ 1,027 (75.3 )% income Net income (loss) attributable to Sara Lee: Continuing $ 33 $ 88 (63.0 )% $ (1 ) $ 149 NM operations Discontinued $ 435 $ 743 (41.4 )% $ 252 $ 874 (71.2 )% operations Diluted earnings per share: Income $ 0.05 $ 0.14 (64.3 )% $ - $ 0.23 NM (loss) from continuing operations Net $ 0.79 $ 1.30 (39.2 )% $ 0.42 $ 1.58 (73.4 )% income Operating margin: N.A. 11.0 % 11.4 % (0.4 )% 8.6 % 10.1 % (1.5 )% Retail N.A. 10.3 13.0 (2.7 ) 9.6 10.8 (1.2 ) FS & Specialty Meats Coffee 14.1 12.1 2.0 13.2 12.2 1.0 & Tea Australian 8.8 (2.0 ) 10.8 7.5 2.2 5.3 Bakery Total 4.9 % 9.0 % (4.1 )% 5.3 % 9.0 % (3.7 )% Sara Lee NM = Not meaningful Consolidated Statements of Income For the Quarters and Six Months ended Dec. 31, 2011 and Jan. 1, 2011 (in millions, except per share data - unaudited) Quarter ended Six Months ended December 31, January 1, December 31, January 1, 2011 2011 2011 2011 Continuing operations Net sales $ 2,081 $ 1,958 $ 4,024 $ 3,685 Cost of sales 1,385 1,281 2,712 2,438 Selling, general and administrative expenses 497 463 952 872 Net charges for exit activities, asset and business dispositions 84 39 116 43 Impairment charges 14 - 32 - Operating income 101 175 212 332 Interest expense 29 28 59 62 Interest income (11 ) (7 ) (20 ) (12 ) Debt extinguishment costs - 25 - 55 Income from continuing operations before income taxes 83 129 173 227 Income tax expense 50 41 174 78 Income/(loss) from continuing operations 33 88 (1 ) 149 Discontinued operations: Income (loss) from discontinued operations, net of tax (benefit) of $(70), $(199), $(132) and $(174) 65 255 (208 ) 299 Gain on sale of discontinued operations, net of tax expense of $169, $396, $339 and $562 371 490 463 579 Net income from discontinued operations 436 745 255 878 Net income 469 833 254 1,027 Less: Income from noncontrolling interests, net of tax Discontinued operations 1 2 3 4 Net income attributable to Sara Lee $ 468 $ 831 $ 251 $ 1,023 Amounts attributable to Sara Lee: Net income/(loss) from continuing operations $ 33 $ 88 $ (1 ) $ 149 Net income from discontinued operations 435 743 252 874 Earnings per share of common stock: Basic Income from continuing operations $ 0.06 $ 0.14 $ - $ 0.23 Net income $ 0.79 $ 1.30 $ 0.42 $ 1.58 Average shares outstanding 592 638 592 646 Diluted Income from continuing operations $ 0.05 $ 0.14 $ - $ 0.23 Net income $ 0.79 $ 1.30 $ 0.42 $ 1.58 Average shares outstanding 595 642 592 649 Cash dividends declared per share of common stock $ 0.115 $ 0.115 $ 0.115 $ 0.115 Net Sales Bridge For the Quarter and Six Months ended Dec. 31, 2011 (unaudited) The following table illustrates the components of the change in net sales versus the prior year for each of the four reported business segments Second Quarter ended December 31, 2011 Adjusted Total Unit Net Sales* Acq./ Foreign Net Sales Volume Mix + Price + Other = Change + Disp. + Exchange = Change N.A. Retail (4.9 )% 1.5 % 4.4 % (1.1 )% (0.1 )% 0.0 % 0.0 % (0.1 )% N.A. FS and Specialty Meats (0.4 ) 0.1 3.5 0.4 3.6 4.7 0.0 8.3 Coffee & Tea (6.5 ) 5.1 11.8 1.2 11.6 0.9 (1.5 ) 11.0 Australian Bakery (5.0 ) (0.4 ) 5.3 0.3 0.2 0.0 1.5 1.7 Total Continuing Business (4.9 )% 2.9 % 7.7 % 0.1 % 5.8 % 1.1 % (0.6 )% 6.3 % First Six Months ended December 31, 2011 Adjusted Total Unit Net Sales* Acq./ Foreign Net Sales Volume + Mix + Price + Other = Change + Disp. + Exchange = Change N.A. Retail (6.0 )% 0.8 % 5.3 % (0.9 )% (0.8 )% 0.0 % 0.0 % (0.8 )% N.A. FS and Specialty Meats (1.4 ) (0.1 ) 4.4 (0.1 ) 2.8 7.2 0.1 10.1 Coffee & Tea (5.1 ) 4.5 12.7 0.8 12.9 1.4 3.7 18.0 Australian Bakery (9.0 ) (1.2 ) 5.0 0.3 (4.9 ) 0.0 8.5 3.6 Total Continuing Business (4.9 )% 2.2 % 8.5 % 0.0 % 5.8 % 1.7 % 1.7 % 9.2 % *Adjusted net sales is a non-GAAP measure that excludes the impact of foreign currency exchange rates and acquisitions/dispositions. See detailed explanation of this and other non-GAAP measures in this release. Condensed Consolidated Balance Sheet Data At Dec. 31, 2011 and July 2, 2011 (in millions - unaudited) December 31, July 2, 2011 2011 Assets Cash $ 2,751 2,066 and equivalents Trade accounts receivable, 760 828 less allowances Inventories 917 884 Current deferred 26 42 income taxes Other current 349 261 assets Receivable for proceeds 376 - on disposition Assets held 78 503 for sale Total current 5,257 4,584 assets Property, net of accumulated depreciation 1,291 1,380 of $2,036 and $2,057, respectively Trademarks and other identifiable 247 282 intangibles Goodwill 592 624 Deferred income 145 260 taxes Pension 354 265 asset Other noncurrent 223 236 assets Noncurrent assets 77 1,902 held for sale $ 8,186 $ 9,533 Liabilities and Equity Notes $ 122 238 payable Accounts 728 875 payable Income taxes payable and 594 468 current deferred taxes Other accrued 1,176 1,576 liabilities Current maturities 390 473 of long-term debt Liabilities held 70 492 for sale Total current 3,080 4,122 liabilities Long-term 1,935 1,935 debt Pension 240 216 obligation Deferred income 212 179 taxes Other 712 823 liabilities Noncurrent liabilities 3 284 held for sale Equity Sara Lee common stockholders' 2,004 1,945 equity Noncontrolling - 29 interest Total 2,004 1,974 Equity $ 8,186 $ 9,533 Consolidated Statements of Cash Flows For the Six Months Ended Dec. 21, 2011 and Jan. 1, 2011 (in millions - unaudited) Six Months ended Dec. 31, Jan. 1, 2011 2011 Operating activities - Net income $ 254 $ 1,027 Adjustments to reconcile net income/(loss) to net cash from operating activities: Depreciation 122 155 Amortization 20 42 Impairment charges 417 - Net (gain) loss on business dispositions (802 ) (1,141 ) Pension contributions, net of expense (127 ) (6 ) Increase in deferred income taxes 33 227 for unremitted earnings Increase (decrease) in deferred income 80 (227 ) taxes for tax basis differences Debt extinguishment costs - 55 Other 45 (19 ) Changes in current assets and liabilities, net of businesses acquired and sold: Trade accounts receivable (60 ) 8 Inventories (115 ) (115 ) Other current assets 35 (60 ) Accounts payable (10 ) 16 Accrued liabilities (7 ) (12 ) Accrued taxes 148 283 Net cash from operating activities 33 233 Investing activities - Purchases of property and equipment (128 ) (151 ) Purchases of software and other intangibles (19 ) (11 ) Acquisitions of businesses (29 ) (31 ) Dispositions of businesses and investments 1,451 1,988 Cash received from derivative transactions 25 36 Sales of assets 1 9 Net cash received from investing activities 1,301 1,840 Financing activities - Issuances of common stock 36 2 Purchases of common stock - (645 ) Borrowings of other debt 142 935 Repayments of other debt and derivatives (242 ) (1,278 ) Net change in financing with (197 ) 216 less than 90-day maturities Purchase of noncontrolling interest (10 ) - Payments of dividends (135 ) (217 ) Net cash used in financing activities (406 ) (987 ) Effect of changes in foreign (243 ) 110 exchange rates on cash Increase in cash and equivalents 685 1,196 Add: Cash balances of discontinued - - operations at beginning of year Less: Cash balances of discontinued - - operations at end of period Cash and equivalents at beginning of year 2,066 955 Cash and equivalents at end of quarter $ 2,751 $ 2,151 Supplemental cash flow data: Cash paid for restructuring actions $ 146 $ 51 Cash contributions to pension plans 121 34 Cash paid for income taxes 120 183 Operating Results by Business Segment For the Quarters ended Dec. 31, 2011 and Jan. 1, 2011 (in millions - unaudited) Changes in Foreign Currency As Exchange Acquisitions/ As Reported Rates Dispositions Adjusted Second Quarter 2012 Net sales: N.A. Retail $ 741 $ - $ - 741 N.A. FS & Specialty Meats 314 - 27 287 Coffee & Tea 998 - 10 988 Australian Bakery 35 - - 35 Intersegment (7 ) - - (7 ) Total net sales $ 2,081 $ - $ 37 2,044 Second Quarter 2011 Net sales: N.A. Retail $ 741 $ - $ - 741 N.A. FS & Specialty Meats 290 - 13 277 Coffee & Tea 899 12 1 886 Australian Bakery 35 - - 35 Intersegment (7 ) - - (7 ) Total net sales $ 1,958 $ 12 $ 14 1,932 Changes in Foreign Currency Other Second Quarter 2012 As Exchange Acquisitions/ Restructuring Impairment Significant As Reported Rates Dispositions Actions Charges Items Adjusted Operating income: N.A. Retail $ 81 $ - $ - $ (7 ) $ - $ - $ 88 N.A. FS & Specialty Meats 33 - 3 - - - 30 Coffee & Tea 140 - - (4 ) - - 144 Australian Bakery 3 - - - - - 3 Total operating segment income 257 - 3 (11 ) - - 265 General corporate expenses (168 ) - - (120 ) (14 ) (13 ) (21 ) Mark-to-market derivative 15 - - - - - 15 gains/(losses) Amortization (3 ) - - - - - (3 ) of trademarks/intangibles Operating income $ 101 $ - $ 3 $ (131 ) $ (14 ) $ (13 ) $ 256 Operating margin 4.9 % 12.5 % Second Quarter 2011 Operating income: N.A. Retail $ 84 $ - $ - $ - $ - $ - $ 84 N.A. FS & Specialty Meats 38 - 1 - - - 37 Coffee & Tea 109 (1 ) 1 (33 ) - - 142 Australian Bakery (1 ) - - - - - (1 ) Total operating segment income 230 (1 ) 2 (33 ) - - 262 General corporate expenses (50 ) 1 - (10 ) - - (41 ) Mark-to-market derivative (2 ) - - - - - (2 ) gains/(losses) Amortization (3 ) - - - - - (3 ) of trademarks/intangibles Operating income $ 175 $ - $ 2 $ (43 ) $ - $ - $ 216 Operating margin 9.0 % 11.2 % Operating Results by Business Segment For the Six Months ended Dec. 31, 2011 and Jan. 1, 2011 (in millions - unaudited) Changes in Foreign Currency As Exchange Acquisitions/ As Reported Rates Dispositions Adjusted First Six Months 2012 Net sales: N.A. Retail $ 1,425 $ - $ - 1,425 N.A. FS & Specialty Meats 621 - 54 567 Coffee & Tea 1,920 - 26 1,894 Australian Bakery 73 - - 73 Intersegment (15 ) - - (15 ) Total net sales $ 4,024 $ - $ 80 3,944 First Six Months 2011 Net sales: N.A. Retail $ 1,436 $ - $ - 1,436 N.A. FS & Specialty Meats 564 - 13 551 Coffee & Tea 1,627 (54 ) 2 1,679 Australian Bakery 71 (6 ) - 77 Intersegment (13 ) - - (13 ) Total net sales $ 3,685 $ (60 ) $ 15 3,730 Changes in Foreign Currency Other First Six Months 2012 As Exchange Acquisitions/ Restructuring Impairment Significant As Reported Rates Dispositions Actions Charges Items Adjusted Operating income: N.A. Retail $ 123 $ - $ - $ (21 ) $ - $ - $ 144 N.A. FS & Specialty Meats 60 - 4 (1 ) - - 57 Coffee & Tea 254 - 2 (13 ) - - 265 Australian Bakery 5 - - - - - 5 Total operating segment income 442 - 6 (35 ) - - 471 General corporate expenses (228 ) - - (170 ) (32 ) 5 (31 ) Mark-to-market derivative 4 - - - - - 4 gains/(losses) Amortization (6 ) - - - - - (6 ) of trademarks/intangibles Operating income $ 212 $ - $ 6 $ (205 ) $ (32 ) $ 5 $ 438 Operating margin 5.3 % 11.1 % First Six Months 2011 Operating income: N.A. Retail $ 144 $ - $ - $ (1 ) $ - $ - $ 145 N.A. FS & Specialty Meats 61 - 1 (2 ) - - 62 Coffee & Tea 199 (10 ) 1 (35 ) - - 243 Australian Bakery 1 - - - - - 1 Total operating segment income 405 (10 ) 2 (38 ) - - 451 General corporate expenses (77 ) - - (13 ) - - (64 ) Mark-to-market derivative 10 - - - - - 10 gains/(losses) Amortization (6 ) - - - - - (6 ) of trademarks/intangibles Operating income $ 332 $ (10 ) $ 2 $ (51 ) $ - $ - $ 391 Operating margin 9.0 % 10.5 % Significant Items Quarters ended Dec. 31, 2011 and Jan. 1, 2011 (in millions, except per share data - unaudited) Quarter ended Dec. 31, 2011 Quarter ended Jan. 1, 2011 Diluted Diluted Pretax Net EPS Pretax Net EPS (In millions except per share data) Impact Income/(loss) Impact (1) Impact Income/(loss) Impact (1) Continuing Operations: Restructuring actions: Severance/ retention costs $ (7 ) $ (5 ) $ (0.01 ) $ (39 ) $ (29 ) $ (0.04 ) Lease and contractual obligation exit costs (81 ) (55 ) (0.09 ) - - - Consulting/advisory costs (37 ) (30 ) (0.05 ) (4 ) (3 ) - Accelerated depreciation (6 ) (3 ) (0.01 ) - - - Total restructuring actions (131 ) (93 ) (0.16 ) (43 ) (32 ) (0.05 ) Gain on HBI tax settlement - 5 0.01 - - - Impairment charges (14 ) (11 ) (0.02 ) - - - Litigation accrual (11 ) (7 ) (0.01 ) - - - Thailand flood loss (2 ) (1 ) - - - - Tax indemnification accrual adjustment - 2 - - - - Debt extinguishment costs - - - (25 ) (16 ) (0.02 ) Impact of significant items on income/(loss) from continuing operations before income taxes (158 ) (105 ) (0.18 ) (68 ) (48 ) (0.07 ) Tax on unremitted earnings - (21 ) (0.04 ) - - - Tax audit settlement/reserve adjustments - (1 ) - - 2 - Tax valuation allowance adjustment - 2 - - - - Impact of significant items on income/(loss) from continuing operations (158 ) (125 ) (0.22 ) (68 ) (46 ) (0.07 ) Discontinued operations: Restructuring actions: Severance/ retention costs (16 ) (11 ) (0.02 ) (39 ) (28 ) (0.04 ) Consulting/advisory costs (7 ) (6 ) (0.01 ) - - - Accelerated depreciation - - - (1 ) (1 ) - Impairment charges (14 ) (9 ) (0.02 ) - - - Gain on the sale of discontinued operations 540 371 0.62 886 490 0.77 Pension curtailment/withdrawal (3 ) (2 ) - (1 ) - - Tax basis differences - 71 0.12 - 223 0.35 Tax audit settlement/reserve adjustments - - - - 1 - Tax valuation allowance adjustment - - - - (3 ) - Tax on unremitted earnings - 3 0.01 - (1 ) - Impact of significant items on income/(loss) from discontinued operations 500 417 0.70 845 681 1.06 Impact of significant items on net income $ 342 $ 292 $ 0.49 $ 777 $ 635 $ 0.99 Impact of significant items on income from continuing operations before income taxes Cost of sales $ (6 ) $ - Selling, general and administrative expenses (54 ) (4 ) Exit and business dispositions (84 ) (39 ) Impairment charges (14 ) - Debt extinguishment costs - (25 ) Total $ (158 ) $ (68 ) Notes: (1) EPS amounts are rounded to the nearest $0.01 and may not add to the total. Significant Items Six Months ended Dec. 31, 2011 and Jan. 1, 2011 (in millions, except per share data - unaudited) Six Months ended Dec. 31, 2011 Six Months ended Jan. 1, 2011 Diluted Diluted Pretax Net EPS Pretax Net EPS (In millions except per share data) Impact Income/(loss) Impact (1) Impact Income/(loss) Impact (1) Continuing Operations: Restructuring actions: Severance/ retention costs $ (35 ) $ (24 ) $ (0.04 ) $ (43 ) $ (31 ) $ (0.05 ) Lease and contractual obligation exit costs (87 ) (59 ) (0.10 ) - - - Consulting/advisory costs (71 ) (57 ) (0.10 ) (6 ) (5 ) (0.01 ) Accelerated depreciation (12 ) (7 ) (0.01 ) (2 ) (1 ) - Total restructuring actions (205 ) (147 ) (0.25 ) (51 ) (37 ) (0.06 ) Gain on HBI tax settlement 15 15 0.02 - - - Impairment charges (32 ) (22 ) (0.04 ) - - - Litigation accrual (11 ) (7 ) (0.01 ) - - - Thailand flood loss (2 ) (1 ) - - - - Tax indemnification accrual adjustment 3 4 0.01 - - - Debt extinguishment costs - - - (55 ) (35 ) (0.05 ) Impact of significant items on income/(loss) from continuing operations before income taxes (232 ) (158 ) (0.27 ) (106 ) (72 ) (0.11 ) Tax on unremitted earnings - (105 ) (0.18 ) - - - Tax audit settlement/reserve adjustments - 69 0.12 - 6 0.01 Tax valuation allowance adjustment - (73 ) (0.12 ) - - - Impact of significant items on income/(loss) from continuing operations (232 ) (267 ) (0.45 ) (106 ) (66 ) (0.10 ) Discontinued operations: Restructuring actions: Severance/ retention costs (17 ) (12 ) (0.02 ) (49 ) (35 ) (0.05 ) Consulting/advisory costs (14 ) (11 ) (0.02 ) (3 ) (2 ) - Accelerated depreciation - - - (1 ) (1 ) - Impairment charges (385 ) (345 ) (0.58 ) - - - Gain on the sale of discontinued operations 802 463 0.78 1,141 579 0.89 Pension curtailment/withdrawal (3 ) (2 ) - (1 ) - - Tax basis differences - 189 0.32 - 225 0.35 Tax audit settlement/reserve adjustments - - - - 1 - Tax valuation allowance adjustment - - - - (3 ) - Tax on unremitted earnings - (67 ) (0.11 ) - (6 ) (0.01 ) Impact of significant items on income/(loss) from discontinued operations 383 215 0.36 1,087 758 1.17 Impact of significant items on net income $ 151 $ (52 ) $ (0.09 ) $ 981 $ 692 $ 1.07 Impact of significant items on income from continuing operations before income taxes Cost of sales $ (12 ) $ (2 ) Selling, general and administrative expenses (72 ) (6 ) Exit and business dispositions (116 ) (43 ) Impairment charges (32 ) - Debt extinguishment costs - (55 ) Total $ (232 ) $ (106 ) Notes: (1) EPS amounts are rounded to the nearest $0.01 and may not add to the total. EPS Reconciliation - Reported to Adjusted Quarters ended Dec. 31, 2011 and Jan. 1, 2011 (in millions, except per share data - unaudited) Quarter ended December 31, 2011 Quarter ended January 1, 2011 Impact of Impact of As Significant As Significant Reported Items Adjusted (1) Reported Items Adjusted (1) Continuing operations: Income from continuing operations before income taxes $ 83 $ (158 ) $ 241 $ 129 $ (68 ) $ 197 Income tax expense (benefit) 50 (33 ) 83 41 (22 ) 63 Income from continuing operations 33 (125 ) 158 88 (46 ) 134 Discontinued operations: Income from discontinued operations, net of tax 65 46 19 255 191 64 Gain on sale of discontinued 371 371 - 490 490 - operations, net of tax Net income from discontinued operations 436 417 19 745 681 64 Net income 469 292 177 833 635 198 Less: Income from noncontrolling interests, net of tax Discontinued operations 1 - 1 2 - 2 Net income attributable to Sara Lee $ 468 $ 292 $ 176 $ 831 $ 635 $ 196 Amounts attributable to Sara Lee: Net income from continuing operations $ 33 $ (125 ) $ 158 $ 88 $ (46 ) $ 134 Net income from discontinued operations 435 417 18 743 681 62 Earnings per share of common stock: Diluted Income from continuing operations $ 0.05 $ (0.22 ) $ 0.27 $ 0.14 $ (0.07 ) $ 0.21 Net income $ 0.79 $ 0.49 $ 0.30 $ 1.30 $ 0.99 $ 0.31 Effective tax rate - continuing operations 60.5 % 34.3 % 31.6 % 32.0 % (1) Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at end of this release. EPS Reconciliation - Reported to Adjusted Six Months ended Dec. 31, 2011 and Jan. 1, 2011 (in millions, except per share data - unaudited) Six Months ended December 31, 2011 Six Months ended January 1, 2011 Impact of Impact of As Significant As Significant Reported Items Adjusted (1) Reported Items Adjusted (1) Continuing operations: Income/(loss) from continuing operations before income taxes $ 173 $ (232 ) $ 405 $ 227 $ (106 ) $ 333 Income tax expense (benefit) 174 35 139 78 (40 ) 118 Income/(loss) from continuing operations (1 ) (267 ) 266 149 (66 ) 215 Discontinued operations: Income/(loss) from discontinued (208 ) (248 ) 40 299 179 120 operations, net of tax Gain on sale of discontinued 463 463 - 579 579 - operations, net of tax Net income from discontinued operations 255 215 40 878 758 120 Net income 254 (52 ) 306 1,027 692 335 Less: Income from noncontrolling interests, net of tax Discontinued operations 3 - 3 4 - 4 Net income attributable to Sara Lee $ 251 $ (52 ) $ 303 $ 1,023 $ 692 $ 331 Amounts attributable to Sara Lee: Net income/(loss) from continuing operations $ (1 ) $ (267 ) $ 266 $ 149 $ (66 ) $ 215 Net income/(loss) from discontinued operations 252 215 37 874 758 116 Earnings per share of common stock: Diluted Income/(loss) from continuing operations $ - $ (0.45 ) $ 0.45 $ 0.23 $ (0.10 ) $ 0.33 Net income $ 0.42 $ (0.09 ) $ 0.51 $ 1.58 $ 1.07 $ 0.51 Effective tax rate - continuing operations 100.5 % 34.1 % 34.4 % 35.5 % (1) Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at end of this release.
Explanation of Non-GAAP Financial Measures
Management measures and reports Sara Lee's financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). In this release, Sara Lee highlights certain items that have significantly impacted the corporation's financial results and uses several non-GAAP financial measures to help investors understand the financial impact of these significant items.
"Significant items" are income or charges (and related tax impact) that management believes have had or are likely to have a significant impact on the earnings of the applicable business segment or on the total corporation for the period in which the item is recognized, are not indicative of the company's core operating results and affect the comparability of underlying results from period to period. Significant items may include, but are not limited to: charges for exit activities; consulting and advisory costs, transformation program and Project Accelerate costs; impairment charges; pension partial withdrawal liability charges; debt extinguishment costs; spin-off related costs; tax charge on deemed repatriated earnings; tax costs and benefits resulting from the disposition of a business; impact of tax law changes; gains on the sale of discontinued operations; changes in tax valuation allowances and favorable or unfavorable resolution of open tax matters based on the finalization of tax authority examinations or the expiration of statutes of limitations. Management highlights significant items to provide greater transparency into the underlying sales or profit trends of Sara Lee or the applicable business segment or discontinued operations and to enable more meaningful comparability between financial results from period to period. Additionally, Sara Lee believes that investors desire to understand the impact of these factors to better project and assess the longer term trends and future financial performance of the corporation.
This release contains certain non-GAAP financial measures that exclude from a financial measure computed in accordance with GAAP the impact of the significant items and the impact of acquisitions and dispositions, and changes in foreign currency exchange rates. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of Sara Lee's business that, when viewed together with Sara Lee's financial results computed in accordance with GAAP, provide a more complete understanding of factors and trends affecting Sara Lee's historical financial performance and projected future operating results, greater transparency of underlying profit trends and greater comparability of results across periods. These non-GAAP financial measures are not intended to be a substitute for the comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
In addition, investors frequently have requested information from management regarding the impact of significant items. Management believes, based on feedback it has received during earnings calls and discussions with investors, that these non-GAAP measures enhance investors' ability to assess Sara Lee's historical and project future financial performance. Management also uses certain of these non-GAAP financial measures, in conjunction with the GAAP financial measures, to understand, manage and evaluate our businesses, in planning for and forecasting financial results for future periods, and as one factor in determining achievement of incentive compensation. Two of the three performance measures under Sara Lee's annual incentive plan are net sales and operating income, which are the reported amounts as adjusted for significant items and possibly other items. Operating income, as adjusted for significant items, also may be used as a component of Sara Lee's long-term incentive plans. Many of the significant items will recur in future periods; however, the amount and frequency of each significant item varies from period to period.
Management also has received inquiries from investors seeking to better understand and project the corporation's tax rate, which can be complex given the multiple foreign jurisdictions in which Sara Lee operates and the numerous tax rules with which it must comply. The information contained in the tables "Reconciliation of as Reported to Adjusted" for each fiscal period includes certain non-GAAP financial measures, and is intended to help investors better understand Sara Lee's effective tax rate.
The following is an explanation of the non-GAAP financial measures presented in this release.
In the "EPS Reconciliation of as Reported to Adjusted" tables each item in the "Adjusted" column of that table equals the indicated financial measure computed in accordance with GAAP less the impact of significant items recognized in the fiscal period presented.
"Adjusted EPS" excludes from diluted EPS, as reported, for total Sara Lee, for continuing operations or for discontinued operations, as indicated, the per share impact of significant items recognized in the fiscal period presented.
"Adjusted net sales" for continuing operations or discontinued operations, as indicated, excludes from applicable net sales the impact of businesses acquired or divested after the start of the fiscal period and also presents fiscal 2011 results at fiscal 2012 currency exchange rates.
"Adjusted operating income" for continuing operations or discontinued operations, as indicated, excludes from applicable operating income the impact of significant items and businesses acquired or divested after the start of the fiscal period, and also presents fiscal 2011 results at fiscal 2012 currency exchange rates.
"Adjusted operating margin" for continuing operations, a specified business segment or discontinued operations, as indicated, is a non-GAAP financial measure that equals adjusted operating income for the applicable portion of the business divided by adjusted net sales of the corporation (in the case of computing adjusted operating margin for continuing operations) or adjusted operating segment income for a business segment or discontinued operations divided by adjusted net sales for that business segment or discontinued operation (in the case of computing adjusted operating margin for a specific business segment or discontinued operations).
"Adjusted operating segment income" for continuing operations, a specified business segment or discontinued operations, as indicated, excludes from the applicable operating segment income measure the impact of significant items recognized by that portion of the business during the fiscal period presented and the results of businesses acquired or divested after the start of the fiscal period presented, and also presents fiscal 2011 results at fiscal 2012 currency exchange rates.
"Adjusted operating income (including acquisitions)" for continuing operations excludes from operating income from continuing operations the impact of significant items recognized during the fiscal period presented; this measure does not exclude the results of businesses acquired or divested after the start of the fiscal period presented and does not present fiscal 2011 results at fiscal 2012 currency exchange rates.
Sara Lee Corp. Media: Jon Harris, +1.630.598.8661 Analysts: Melissa Napier, +1.630.598.8739 Robin Jansen, +31.30.292.7455
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