Sara Lee Reports Solid Improvement in Underlying Operating Results for Fourth Quarter and Fiscal 2008

08 Aug 2008

08/08/08 Sara Lee Corp. announced that net sales for fiscal 2008, ending June 28, 2008, were $13.2 billion, an increase of 10.3% compared to $12.0 billion in the prior year. The strong overall net sales growth was driven by favorable foreign currency exchange rates, most notably the euro, price increases to cover higher input costs and an increase in consolidated unit volumes. Net sales grew in all six of the business segments with particularly strong growth in international beverage (+22.9%), international bakery (+16.1%), household and body care (+12.2%) and North American retail bakery (+9.2%).

The corporation’s adjusted net sales – which exclude acquisitions/divestitures and present fiscal 2007 net sales at fiscal 2008 foreign currency exchange rates – increased 4.6% in fiscal 2008, primarily driven by strong top-line growth in North American retail bakery (+9.2%) and international beverage (+8.6%). For the fourth quarter of fiscal 2008, Sara Lee reported net sales of $3.5 billion, up 12.2% over the comparable period last year, while adjusted net sales rose 5.5%. “Sara Lee had a very good year.

As anticipated, we had a strong fourth quarter, with virtually every business segment delivering improved underlying business results,” said Brenda C. Barnes, Chairman and Chief Executive Officer of Sara Lee Corp. “I am pleased to report that we met the high-end of our full-year adjusted earnings per share outlook and exceeded our adjusted operating margin guidance. We also are very encouraged that the strength of our brands allowed us to offset the unprecedented levels of commodity and other input costs through pricing and helped deliver market share gains and increased operating margins.”

As announced on July 22, 2008, the corporation incurred non-cash, pre-tax impairment charges of $874 million ($850 million after-tax) in the fourth quarter of fiscal 2008, associated with the goodwill balances at its North American foodservice bakery and Spanish bakery business units and write-downs of certain other assets in North America.

Sara Lee reported operating income of $237 million for fiscal 2008, compared to $562 million for fiscal 2007, a decrease of 57.7%. However, adjusted operating income – which excludes the impact of significant items and acquisitions/divestitures and presents fiscal 2007 results at fiscal 2008 foreign currency exchange rates – increased 13.9% to $1,072 million in fiscal 2008 from $940 million in the prior year.