Sara Lee Provides Strategic Overview at Annual Analyst Conference

Published in House and Home on Tuesday, September 14th 2010 at 10:15 GMT by Market Wire
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DOWNERS GROVE, Ill.--([ BUSINESS WIRE ])--Sara Lee Corp. (NYSE: SLE) today hosted its annual aMeet the Managementa analyst meeting in New York. Marcel Smits, interim chairman and chief executive officer, and other members of senior management provided an overview of fiscal 2010 results and discussed long-term strategies and growth opportunities.

Smits began the meeting by demonstrating how Sara Lee has delivered value to its shareholders over the last few years and is building a foundation for the future through strategic investments, such as increased innovation and geographic expansion.

Looking forward, Smits discussed that fiscal 2011 should be another year of growth. In addition, in fiscal 2012, the elimination of more than half of the fiscal 2011 Household and Body Care-related stranded overhead, a decline in amortization of $35 million and further share repurchases will lead to an anticipated positive earnings per share impact of $.15 to $.20. Smits also said Sara Lee Corp. has bought back $360 million of shares of common stock in the first quarter of fiscal 2011.

Smits also noted that today Sara Lee officially informed its employees and the European Works Council about intentions to bring the corporate functions and shared services organization in line with the needs of the International Beverage and Bakery business. As a result, approximately 390 positions will become redundant in the next three years, leading to a total labor cost reduction of approximately a'30 million by fiscal 2013. This action is a consequence of the sale of the Household and Body Care business, and is being pursued in order to maintain the necessary competitive position for the International Beverage and Bakery business.

Following Smits was Mark Garvey, interim chief financial officer, who provided an overview of Sara Leea�s Project Accelerate, a company-wide cost savings and productivity initiative. He noted that Project Accelerate has provided cumulative benefits of approximately $180 million to date, and is expected to drive a cumulative benefit of $350-$400 million by the end of fiscal 2012.

International Beverage and Bakery chief executive officer Frank van Oers and chief financial officer Buster Kennett teamed with Marleen Vaesen, senior vice president, International Beverage, to provide an update on the International Beverage and Bakery business. They noted the International Bakery, the refrigerated business is doing well, the frozen business has improved and they are fixing the fresh business by focusing on cost structure and pricing as well as innovation.

Kennett outlined the International Beverage businessa� three growth drivers:

Premiumization a" such as the recent successful launch of La�OR Espresso in France, as this high-margin product has sold more than 50 million capsules through the end of August, 2010. Sara Leea�s Senseo platform continues its leadership position, with more that 26 million appliances and 26 billion coffee pads sold globally. Also, the company is bringing its successful La�OR Pepites da�Aromea" bean-shaped doses of compressed coffee that allow for easy measuring and great taste a" to new markets in the near future.
Geographic focus a" the company is consolidating its coffee stronghold in the Benelux region, creating new profit engines in France and Spain and laying a foundation for future growth in the United Kingdom and Brazil. Sara Lee will soon introduce Senseo in Brazil.
Process optimization and continuing working capital improvement a" this focus has helped the business reduce its average inventory by 22 percent over the last two years.

CJ Fraleigh, chief executive officer, North America, provided an overview of the North American Retail, Foodservice and Fresh Bakery segments, and how they are driving value creation through sustainable competitive advantage. Fraleigh said that North American Fresh Bakery recently launched a more disciplined approach to simplify its business and standardize pricing and LEAN efforts. Fresh Bakerya�s additional investment in marketing, people and price competitiveness started in the fourth quarter of fiscal 2010 and continues through the first quarter of fiscal 2011. He noted that the first quarter of fiscal 2011 should be a very strong investment quarter for Fresh Bakery, and overall fiscal 2011 should show improvement over fiscal 2010.

Fraleigh also said that the North American Foodservice business has delivered strong profit performance despite the challenging economy.

Monty Pooley, president, North American Retail, outlined the strategies that have led to this businessa� impressive recent performance, including a 34-percent increase in adjusted operating segment income in fiscal 2010. These include:

Focusing on building the best brands a" such as Ball Park, Hillshire Farm, Jimmy Dean and Sara Leea" which has led to strong and growing No. 1 and No. 2 positions in most key categories.
Increased focus on wellness and nutrition a" such as offering products with lower sodium, fat and calories.
Multi-cultural marketing a" The segment is focusing on marketing to Hispanic and African-American audiences.

Tom Hayes, chief supply chain officer, North American Retail and Foodservice, provided an update on the companya�s supply chain and its business benefits. Hayes noted that the companya�s Kansas City, Kan., state-of-the-art meat processing plant is on schedule to start shipping products in early 2011.

A webcast replay of todaya�s meeting will be available at 7 p.m. CDT on Sept. 14, 2010, in the Investor Relations section of the Sara Lee corporate Web site ([ www.saralee.com ]) through the close of business on March 14, 2011.

Forward-Looking Statements

This release contains forward-looking statements regarding Sara Leea�s business prospects and future financial results. In addition, from time to time, in oral statements and written reports, the corporation discusses its expectations regarding the corporationa�s future performance by making forward-looking statements preceded by terms such as aanticipates,a awe are confident,a aexpects,a alikelya or abelieves.a These forward-looking statements are based on currently available competitive, financial and economic data and managementa�s views and assumptions regarding future events. 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. Consequently, the corporation wishes to caution readers not to place undue reliance on any forward-looking statements. Among the factors that could cause Sara Leea�s actual results to differ from such forward-looking statements are those described under Item 1A, Risk Factors, in Sara Leea�s most recent Annual Report on Form 10-K and other SEC Filings, as well as factors relating to:

Sara Leea�s share repurchase and other capital plans, such as (i) future opportunities that the Board may determine present greater potential value to shareholders than the current capital plans and targets, including without limitation potential acquisitions, joint ventures or other corporate transactions, and investments in Sara Leea�s business; (ii) future operating or capital needs that require a more significant outlay of cash than currently anticipated; or (iii) future changes in facts or circumstances that may impact the anticipated accounting treatment of such activities;
Sara Leea�s relationship with its customers, such as (iv) a significant change in Sara Leea�s business with any of its major customers, such as Walmart, its largest customer, including changes in how such customers manage their suppliers and the level of inventory these customers maintain; and (v) credit and other business risks associated with customers operating in a highly competitive retail environment;
The consumer marketplace, such as (vi) significant competition, including advertising, promotional and price competition; (vii) changes in consumer behavior due to economic conditions, such as a shift in consumer demand toward private label; (viii) fluctuations in the cost of raw materials, Sara Leea�s ability to increase or maintain product prices in response to fluctuations in cost and the impact on Sara Leea�s profitability; (ix) the impact of various food safety issues and regulations on sales and profitability of Sara Lee products; and (x) inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance;
Sara Leea�s international operations, such as (xi) impacts on reported earnings from fluctuations in foreign currency exchange rates, particularly the euro; (xii) Sara Leea�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 Leea�s domestic operations, share repurchase plans, dividends, debt service and corporate costs; (xiii) the impact on Sara Leea�s business of its receipt of binding offers to purchase a large portion of its H&BC business, its intent to divest the remainder of that business and any inability to complete these transactions or to divest the remaining H&BC businesses on favorable terms; and (xiv) difficulties and costs associated with complying with U.S. laws and regulations, such as Foreign Corrupt Practices Act, applicable to entities with overseas operations, and different regulatory structures and unexpected changes in regulatory environments overseas, including without limitation potentially negative consequences from changes in anti-competition and tax laws; and (xv) Sara Leea�s ability to continue to source production and conduct manufacturing and selling operations in various countries due to changing business conditions, political environments, import quotas and the financial condition of suppliers;
Previous business decisions, such as (xvi) Sara Leea�s ability to generate margin improvement through cost reduction and efficiency initiatives, including Project Accelerate and the outsourcing of significant portions of our financial transaction processing, global IT, and global indirect procurement activities; (xvii) Sara Leea�s ability to achieve planned cash flows from capital expenditures and acquisitions and the impact of changing interest rates and the cost of capital on the discounted value of those planned cash flows, which could impact future impairment analyses; (xviii) credit ratings issued by the three major credit rating agencies, the impact of Sara Leea�s capital plans and targets on such credit ratings and the impact these ratings and changes in these ratings may have on Sara Leea�s cost to borrow funds, access to capital/debt markets, and ability to complete the planned share repurchase; (xix) Sara Leea�s plan to refinance significant outstanding indebtedness in the next two years and the impact of potential changes in the credit environment; (xx) Sara Leea�s plan to repurchase a significant amount of its common stock and the impact of such repurchases on its earnings, cash flow and credit ratings; (xxi) the settlement of a number of ongoing reviews of Sara Leea�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 (xxii) changes in the expense for and contingent liabilities relating to multi-employer pension plans in which Sara Lee participates; and
Uncertainty relating to the chief executive officer position and the fact that Sara Leea�s board has initiated a process to identify a permanent successor.

In addition, Sara Leea�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.

About Sara Lee Corporation

Each and every day, Sara Lee (NYSE: SLE) delights millions of consumers and customers around the world. The company has one of the worlda�s best-loved and leading portfolios with its innovative and trusted food and beverage brands, including Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Sara Lee and Senseo. Collectively, our brands generate nearly $11 billion in annual net sales. Sara Lee has approximately 33,000 employees in its continuing operations worldwide. Please visit [ www.saralee.com ] for the latest news and in-depth information about Sara Lee and its brands.

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Sara Lee Provides Strategic Overview at Annual Analyst Conference