(Source: Business Wire)SaraLeeCorp. (NYSE: SLE) reported net sales of $3.2 billion for the fourth quarter of fiscal 2009, ending June 27, 2009, a decline of 9.8% compared to $3.5 billion in the comparable period last year. For fiscal 2009, net sales were $12.9billion, a decrease of2.5% compared to $13.2billion in the prior year. Net sales increased in the NorthAmerican fresh bakeryand retail segments, up 8.5% and 5.9% respectively, but these increases were more than offset by the impact of unfavorable foreign currency exchange rates, most notably the euro, and divestitures made during the year.

Adjusted net sales¹ decreased 1.3% in the fourth quarter, but increased2.7% in fiscal2009. Adjusted net sales exclude acquisitions/divestitures and present fiscal 2008 net sales at fiscal 2009 foreign currency exchange rates.

"I am pleased to report that we've just completed our second consecutive year of strong overall performance, despite tough economic and competitive headwinds," said Brenda C. Barnes, chairman and chief executive officer of Sara Lee Corp. "Our 2009 results reflect the significant progress we have made in transforming Sara Lee and focusing the company on core businesses with large and growing brands in important categories. We've dramatically improved efficiencies and productivity across the board, while fostering a culture of innovation and collaboration. We've built a solid foundation and will continue to invest in the future. We are confident that we will continue to execute our growth strategy in fiscal 2010 and in the years to come," she added.

Sara Lee reported fourth quarter operating income of $65million, compared to an operating loss of $506million for the year-ago period, while adjusted operating income was $331 million, down 6.2% compared to the year-ago period. In the fourth quarter of fiscal 2009, the company incurred non-cash, pre-tax impairment charges of$207million associated with goodwill balances and other long-lived assets at the Spanishbakery business, as well as $61 million of other charges for significant items (as detailed in the table "Impact of Significant Items on Income from Continuing Operations and Net Income").

For the fiscal year, the company reported operating income of $713million in fiscal 2009, up significantly from $260million in fiscal 2008. Adjusted operating income was $1.02 billion in fiscal 2009, compared to $1.0 billion in the prior year, an increase of 1.9%. Adjusted operating income excludes the impact of significant items, contingent sale proceeds and acquisitions/divestitures and presents fiscal 2008 results at fiscal 2009 foreign currency exchange rates.

Fourth quarter results were a net loss of $14 million in fiscal 2009 compared to a net loss of $672 million last year primarily due to significant impairment charges in both years. Diluted EPS as reported were a loss of $(.02) in the fourth quarter of fiscal 2009 versus a loss of $(.95) in the year-ago period.

For the fiscal year, the company reported net income per diluted share of $.52, compared to a loss of $(.11)per share in the prior year. Fiscal 2009 diluted EPS as reported, included several significant items that had a net negative impact of $.53 per share, as shown in the table "Impact of Significant Items on Income from Continuing Operations and Net Income", while significant items in fiscal 2008 had a net negative impact of $1.12 per share.

Adjusted EPS were $.84 in fiscal 2009, compared to $.82 per share in fiscal 2008.

1 The financial measures referred to as "adjusted" are reconciled to each item's most comparable U.S. generally accepted accounting principles measure at the end of this release.

Other Highlights

Net cash from operating activities was $900million in fiscal2009, compared to $606million in fiscal2008. This year-over-year increase was primarily driven by improvements in working capital, partially offset by higher pension contributions.

Media advertising and promotion (MAP) spending decreased 15.4% in fiscal2009, partially due to a shift from MAP spending to trade spending in the challenging economic environment, as well as the impact of foreign currency exchange rates and lower media and agency costs.

Net interest expense was$125million for fiscal2009, an increase of $25million compared to fiscal2008, primarily due to lower interest income.

General corporate expenses were $256million in fiscal2009, compared to $232million in fiscal2008, an increase primarily due to $18 million in unrealized mark-to-market losses on commodity derivative contracts in fiscal 2009 compared to gains of $22 million in fiscal 2008.

In fiscal2009, the corporation repurchased11.4million shares of its common stock at an average price of$9.01 per share, for a total cost of$103 million. The company did not repurchase any shares of its common stock in the fourthquarter. At the end of fiscal2009, approximately 13.5million shares remained authorized by the board of directors for repurchase.

The effective tax rate for fiscal2009 was38.1%, compared to 125.6% in fiscal2008. For further detail on the tax rate, see table "Fiscal 2009 Tax Rate Reconciliation" of this release.

On March 30, 2009, Sara Lee announced that it is reviewing strategic options for its international household and body care business after receiving expressions of interest. The company is currently considering all alternatives for the segment, including the option to divest the business.

Project Accelerate, the company's series of global cost reduction and efficiency projects, is well under way. As Sara Lee evaluated many efficiency initiatives over the past couple of months, it has found additional opportunities. As a result, the company now expects more than $300 million of one-time charges, predominantly front-end loaded in fiscal 2009 and 2010, and anticipates annualized savings in the range of $350 to $400 million by fiscal 2012.

Business Performance Review

NorthAmerican Retail

Net sales increased1.7% to $695million in the fourth quarter of fiscal2009, primarily driven by favorable sales mix at retail and pricing actions, which were slightly offset by lower non-retail commodity meat sales. Adjusted net sales also increased1.7%.

Operating segment income was $63million in the fourth quarter, compared to $44million in the year-ago period. The increase was primarily the result of much lower significant items versus a year-ago, improved retail sales mix, pricing actions and continuous improvements savings, which more than offset higher MAP spending and consumer research investments. Adjusted operating segment income was $64million in the fourth quarter, compared to$77million in the prior year's period.

Net sales for the full year increased5.9% to $2.8billion. Adjusted net sales also increased5.9%.

Operating segment income for the full year was $260million, compared to $155 million last year, an increase of 67.9%, while adjusted operating segment income increased 37.7%.

Unit volumes decreased1.9% in the fourth quarter, consisting of 2.0% lower volumes for retail and 1.3% lower volumes for non-retail commodity meats (see footnote in table "Net Sales Bridge"). Strong unit volumes for Hillshire Farm smoked sausage, Jimmy Dean breakfast sausage and State Fair cocktail sausage were more than offset by the impact of the phasing out of the commodity meats business and the exit of the kosher meats business, as well as SKU rationalization and the impact of re-sizing of certain products to deliver more consumer preferred price points. For the full year, unit volumes for the segment decreased2.0%.

NorthAmerican Fresh Bakery

Net sales increased1.0% to $560million in the fourth quarter of fiscal2009, driven by higher selling prices and unit volume growth. Adjusted net sales also rose1.0%.

Operating segment income was $24million in the fourth quarter, compared to $29million in the year-ago period. The decrease was primarily driven by severance costs, the costs to close a bakery and unfavorable sales mix. Adjusted operating segment income was $30million, compared to $32million in the prior year.

Net sales for the full year increased8.5% to $2.2billion. Adjusted net sales also rose8.5%.

Operating segment income for the full year was $33million, compared to $60million in fiscal 2008, a decrease primarily driven by a $31 million charge in the second quarter for a partial withdrawal liability relating to a multi-employer pension plan. Adjusted operating segment income was $70million, compared to $63million in the prior year.

Unit volumes increased0.7% in the fourth quarter, primarily driven by volume growth in non-branded bakery products due to the gain of non-branded business in additional retail stores, as well as consumer trade-down to private label breads. Unit volumes for the segment were up3.2% for the full year.

North American Foodservice

Net sales of $454million were 15.5% lower in the fourth quarter of fiscal2009, primarily due to the divestiture of both the DSD foodservice coffee and the sauces and dressings businesses earlier in the year, as well as lower unit volumes in the weak foodservice market, which were partially offset by higher pricing. Adjusted net sales were down3.3%.

Operating segment income was $38million in the fourth quarter versus a loss of $408 million in the year-ago period, the latter primarily due to impairment charges. Fiscal 2009 fourth quarter results were driven by continuous improvement savings and lower commodity costs. Adjusted operating segment income increased30.8% to $39million.

Net sales for the full year were $2.1billion, down 4.3%. Adjusted net sales increased0.9%.

Operating segment income for the full year was $54million, compared to a loss of $302 million last year. Adjusted operating segment income increased 21.2% for the year.

Unit volumes decreased5.1% in the fourth quarter, as strong growth in private label refrigerated dough products could not fully offset volume softness in other categories due to the weak economy and planned business exits in foodservice meats. Unit volumes were down 4.2% for the year.

International Beverage

Net sales decreased13.6% to $761million in the fourth quarter of fiscal2009, primarily due to unfavorable foreign currency exchange rates and lower unit volumes, which were partially offset by the impact of the Café Moka acquisition in Brazil earlier in fiscal 2009. Adjusted net sales declined 1.3%.

Operating segment income was $110million, a decrease of 36.1% compared to $172million in the fourth quarter of fiscal2008, primarily due to unfavorable foreign currency exchange rates, higher charges for restructuring actions and lower unit volumes. Adjusted operating segment income decreased10.7% to $140million.

Net sales for the full year decreased5.4% to $3.0billion. Adjusted net sales rose2.5%.

Operating segment income for the full year decreased 10.8% to $488million from $547million, while adjusted operating segment income declined0.7% for the year.

Unit volumes, excluding acquisitions/divestitures, decreased1.8% in the fourth quarter, as strong roast and ground coffee volumes in Brazil and instant coffee volumes in the United Kingdom, Australia and Thailand could not fully offset lower unit volumes in Europe due to competition from private label and hard discounters. International beverage unit volumes were down 2.8% for the year.

International Bakery

Net sales decreased22.8% to $187 million in the fourth quarter of fiscal2009, primarily driven by unfavorable foreign currency exchange rates and significantly lower unit volumes in the Spanish fresh bakery business, which were partially offset by the impact of earlier price increases. Adjusted net sales declined9.1%.

The segment reported an operating segment loss of $200 million in the fourth quarter, primarily due to $207 million in non-cash impairment charges for goodwill balances and other long-lived assets at the Spanish bakery business. The segment reported a loss of $385million in the year-ago period due to $400 million in impairment charges. Adjusted operating segment income was $15million, compared to $14 million in the prior-year period.

Net sales for the full year decreased14.9% to $790million, while adjusted net sales decreased6.5%.

The segment reported an operating segment loss of $193million for the full year, compared to a loss of $346million for fiscal2008. Adjusted operating segment income for the full year was $52million, down 13.9% compared to $60 million in fiscal2008.

Unit volumes decreased11.3% in the fourth quarter, primarily resulting from significantly lower unit volumes in the Spanish fresh bakery business as consumers continued to trade down to private label breads in the very challenging economy, as well as from loss of business from a large customer and lower refrigerated dough exports. Unit volumes for the year were down 11.6%.

International Household and Body Care

Net sales decreased16.6% to $514million in the fourth quarter of fiscal2009, due to unfavorable foreign currency exchange rates and lower unit volumes, partially offset by pricing. Adjusted net sales decreased 3.1%.

Operating segment income decreased30.1% to $82million in the fourth quarter, primarily driven by unfavorable foreign currency exchange rates and lower unit volumes, which were partially offset by lower MAP spending and other SG&A costs. Adjusted operating segment income decreased21.4% in the fourth quarter to $83million.

Net sales for the full year decreased11.6% to $2.0billion, while adjusted net sales decreased 2.0%.

Operating segment income for the full year decreased23.1% to $242million, while adjusted operating segment income decreased12.7% to $252million in that period.

Unit volumes decreased5.4% in the fourth quarter, primarily driven by soft unit volumes in air care due to the discretionary nature of this product category. Unit volumes for deodorants were strong, driven by new product launches such as Sanex NaturProtect in the United Kingdom, France and Spain. In fiscal2009, unit volumes for the segment decreased 3.2%.

Guidance

SaraLee currently expects full-year fiscal2010 diluted EPS from continuing operations to be in the range of$1.03to$1.09 per share, which includes$.19per share of contingent sale proceeds received in the first quarter of fiscal2010 from the sale of its tobacco business in fiscal1999. Looking at the business segments, Sara Lee currently expects five out of six businesses to show an increase in adjusted operating segment income in fiscal 2010. The single exception to this is North American foodservice as a result of continuing industry-wide pressure affecting most foodservice manufacturers and operators. The guidance does not include any significant items that may occur in fiscal 2010, such as one-time expenses related to Project Accelerate. Actual results may differ from this guidance due to future significant events that may occur, the nature, timing and financial impact of which are not yet known.

 Exception caught in main. 

(1) Fiscal 2010 has an extra, 53rd week.

(2) Fiscal 2009 significant items as originally reported included $21 million of software amortization expense related to our transformation program. Beginning in fiscal 2010, software amortization expense will no longer be reported as a significant item. In the column titled "Fiscal 2009 Preliminary, as revised," the significant items, net and adjusted EPS present software amortization expense on a basis consistent with fiscal 2010. Please see tables "Adjusted Earnings per Share, as Revised" through "Impact of Significant Items on Operating Income (Loss), as Revised" for additional information regarding this revision.

Form 10-K and Webcast

The company expects to file its Form 10-K for fiscal2009 with the Securities and Exchange Commission on Wednesday,Aug.26,2009. Please note that the financial information in this release is preliminary and subject to change pending the company's filing of its Form 10-K. SaraLeeCorporation's review of its results for fiscal2009 will be broadcast live via the Internet today at 9a.m.CDT. During the webcast, the company will discuss fiscal2009 results and provide an outlook for fiscal2010. The live webcast can be accessed in the Investor Relations section on www.saralee.com and is anticipated to conclude by 10a.m.CDT. For people who are unable to listen to the webcast live, a replay will be available at 7p.m.CDT today, in the Investor Relations section of the Sara Lee corporate Website (www.saralee.com) through the close of business on Feb. 12,2010.

Forward-Looking Statements

This release contains forward-looking statements regarding SaraLee's business prospects, costs and operating results, including statements contained under the heading "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 "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. 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 SaraLee's actual results to differ from such forward-looking statements are factors relating to:

SaraLee's relationship with its customers, such as (i)a significant change in SaraLee's business with any of its major customers, such as Wal-Mart, its largest customer, including changes in the level of inventory these customers maintain; (ii)credit and other business risks associated with customers operating in a highly competitive retail environment;

The consumer marketplace, such as (iii)significant competition, including advertising, promotional and price competition; (iv) changes in consumer behavior due to economic conditions, such as a shift in consumer demand toward private label; (v)fluctuations in the cost of raw materials, SaraLee's ability to increase or maintain product prices in response to fluctuations in cost and the impact on SaraLee's profitability; (vi)the impact of various food safety issues and regulations on sales and profitability of SaraLee products; and (vii)inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance;

SaraLee's international operations, such as (viii)impacts on reported earnings from fluctuations in foreign currency exchange rates, particularly the European euro, given SaraLee's significant concentration of business in Western Europe; (ix)SaraLee's generation of a high percentage of its revenues from businesses outside the United States and costs to remit these foreign earnings into the United States to fund SaraLee's domestic operations; (x) the impact on Sara Lee's business of its announcement that it is reviewing strategic options for its international household and body care business and any decision made as a result of such review; and (xi)SaraLee'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 (xii)SaraLee'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 applications development and maintenance, and global indirect procurement activities; (xiii)SaraLee'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; (xiv)credit ratings issued by the three major credit rating agencies and the impact these ratings have on SaraLee's cost to borrow funds and access to capital/debt markets; (xv)the settlement of a number of ongoing reviews of SaraLee's income tax filing positions in various jurisdictions and inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which SaraLee transacts business; and (xvi)changes in the expense for and contingent liabilities relating to multi-employer pension plans in which SaraLee participates.