Sara Lee Corporation yesterday announced results for the fourth quarter and fiscal year 2001 ended June 30, 2001. All results exclude unusual items unless otherwise noted.
Go deeper with GlobalData
For the fiscal year, Sara Lee reported revenues of $17.7 billion, up 1%, and diluted earnings per share from total operations of $1.36, compared to $1.34 in fiscal 2000, an increase of 1%. In the fourth quarter, reported revenues fell 5% versus last year to $4.2 billion, and diluted earning per share from total operations increased 6% to $.37 from $.35.
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 in conjunction with this program. Excluding these divested businesses from both fiscal 2000 and fiscal 2001, sales from ongoing operations increased 4% in fiscal 2001 to $16.8 billion and operating income fell slightly, down 2%, to just under $2 billion. Unit volumes from ongoing operations increased 8% with acquisitions and fell 1% excluding acquisitions. For the fourth quarter, sales from ongoing operations were flat and operating income fell slightly, down 1%. Unit volumes from ongoing operations increased 3% with acquisitions and fell 2% excluding acquisitions. Contributions to sales and operating income from acquisitions for both the fourth quarter and the full year were significantly offset by the negative impact of a stronger dollar.
“Sara Lee completed an important transition year in fiscal 2001. In the 13 months since we announced our reshaping plans, we have successfully divested 12 non-core operations resulting in proceeds of nearly $3 billion, and our business portfolio today is significantly more focused and considerably better poised for growth,” said C. Steven McMillan, president and CEO of Sara Lee Corporation. “We also began a significant reorganization within several of our business units, including U.S. Meats and European Apparel, to improve our ability to compete effectively in the current business environment.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“Looking ahead, fiscal 2002 will be a year of investment for Sara Lee, and we’ve taken an important step with our agreement to purchase The Earthgrains Company, Sara Lee’s largest acquisition to date. The combination of our powerful Sara Lee brand with Earthgrains’ state-of-the-art direct store distribution system will allow us to build a large and growing bakery business on a national scale,” McMillan added. “For our base businesses, we intend to continue investing aggressively in our systems and infrastructure to create a more efficient and potent organization, and we will significantly increase marketing for our largest brands. Total marketing spending for our company is expected to rise at least 8% in fiscal 2002, with our strongest brand franchises receiving the majority of the additional funds.”
Unusual Items
Sara Lee’s results for the quarter and year ended June 30, 2001 were affected by a number of unusual items related to the ongoing reshaping program announced in May 2000. That plan includes the divestiture of non-core operations that do not fit with the company’s strategy to establish leading branded positions in Food and Beverage, Intimates and Underwear, and Household Products, and the restructuring of a number of defined business activities. The unusual items recognized in the fiscal 2001 financial statements follow.
In December 2000, the company sold PYA/Monarch, its foodservice distribution business, and received cash proceeds of nearly $1.6 billion. The disposition resulted in a gain before income taxes of $1.1 billion, and an after-tax gain of $638 million, or $.75 per share on a diluted basis for the full year. PYA/Monarch constituted a reportable segment of the company, and this gain and the business have been recognized as a discontinued operation in the corporation’s financial statements.
Coach, a designer, producer and marketer of handbags and accessories, was disposed of in a tax-free transaction that resulted in a gain of $967 million, or $1.13 per share on a diluted basis for the full year. Of the total gain, $105 million was recognized in the second quarter of the year when an initial public offering of 19.5% of the Coach shares was completed. Cash proceeds of $122 million were received as a result of the IPO. In April 2001, the company received 41.4 million shares of Sara Lee stock in exchange for its remaining 80.5% ownership interest in Coach and recognized a gain of $862 million.
During the year, actions were taken to dispose of 17 non-core business operations. The pre-tax impact, the after-tax impact on net income and the impact on diluted earnings per share for fiscal 2001 were $341 million, $352 million and $.41, respectively. At the end of fiscal 2001, 10 of those business dispositions had been completed and the remainder are expected to close in the first half of fiscal 2002. The transactions completed include the disposition of two European Bakery operations, the Argal meat business in Spain, the Australasian Intimates and Underwear business, the Champion Europe operations and certain components of the Courtaulds operation. The transactions targeted for closure in fiscal 2002 primarily consist of several off-strategy European Intimates and Underwear operations. In the fourth quarter of fiscal 2001, the pre-tax impact, the after-tax impact and the impact on diluted earnings per share of these actions were $130 million, $124 million and $.15 per share, respectively.
Business reorganization actions initiated during the year resulted in a pre-tax charge of $213 million, and an after-tax charge of $148 million, or $.17 of diluted earnings per share for the year. $124 million of the pre-tax charge relates to severance and other employee benefit costs associated with the elimination of 13,200 positions; $61 million relates to the exit of various owned and leased facilities; and substantially all of the remaining portion of the charge are costs related to the exit of certain licensed products produced by the corporation. During the fourth quarter, the pre-tax business reorganization charge was $92 million, and the after-tax charge was $64 million, or $.08 per share on a diluted basis.
After reflecting these unusual items, including the gain on the disposition of the Coach business, and the gain from the sale of the foodservice business, fourth quarter and full year net income is $973 million and $2.3 billion, respectively – resulting in quarter and full year diluted earnings per share of $1.19 and $2.65, respectively.
Performance Review
A performance review for each line of business follows. Unit volumes reflect ongoing operations and exclude acquisitions unless otherwise noted.
-0-
SARA LEE FOODS
Fourth Quarter Change Fiscal Year Change
—————- ——- —————- ——-
2001 2000 2001 2000
Sales $ 1,247 $ 1,291 (3.3)% $ 5,081 $ 5,088 (0.1)%
Operating Income $ 104 $ 73 42.0 % $ 363 $ 370 (2.0)%
Sara Lee Foods includes the company’s worldwide packaged meats and bakery businesses. While reported figures are shown above, on an ongoing operations basis – excluding divested operations from both fiscal 2000 and fiscal 2001 – these businesses produced a 1% increase in sales in the fourth quarter and a 3% sales gain for fiscal 2001. Operating income from ongoing operations rose 20% in the fourth quarter, but fell 5% for the year. In the fourth quarter, both the meat and bakery businesses enjoyed double-digit operating income gains; the meat business benefited from increased sales of higher margin products, lower commodity prices in the United States and cost savings relating to ongoing supply chain improvement initiatives, while the bakery operations enjoyed increased operating efficiencies and an improved product mix.
Unit volumes for worldwide packaged meats declined 2% in the fourth quarter and fell 1% for the full year. During both periods, increased sales of branded meat products in the United States were offset by weak unit volumes in Europe resulting from higher commodity costs and animal safety concerns.
New product development efforts in Sara Lee’s meat business continued to focus on convenience and added value during fiscal 2001. New products introduced during the year included Jimmy Dean meat snacks, Jimmy Dean Fresh Taste. Fast! breakfast sausages and Ball Park Kosher hot dogs in the United States and sliced meat items from Stegeman in Europe. Marketing spending to support key brands and new products increased 6% during the quarter and rose 13% for the full year
Fourth-quarter global bakery units fell 9% while units declined 2% for fiscal 2001, as the company continued to exit lower margin product lines. During the year, the bakery added Sara Lee Brownie Bites to its successful Cheesecake Bites offerings.
-0-
BEVERAGE
Fourth Quarter Change Fiscal Year Change
—————- ——- —————- ——-
2001 2000 2001 2000
Sales $ 674 $ 714 (5.7)% $ 2,889 $ 2,827 2.2 %
Operating Income $ 120 $ 115 4.5 % $ 485 $ 472 2.8 %
Sara Lee’s Beverage business was unaffected by divestitures in fiscal 2001, so reported results, shown in the table above, also reflect ongoing operations. While acquisitions contributed to increased sales and profits in fiscal 2001, the stronger dollar negatively affected reported results. Excluding both of these factors, base business Beverage sales decreased 6% in the fourth quarter, with operating income up 6%; on the same basis, full year sales were down 3% while operating income grew 4%. Significantly lower global market coffee costs and modest unit volume declines led to lower dollar sales for this business, while operating income and margins benefited from the low commodity costs as well as improved operating efficiencies and increased sales of higher-margin products.
From a market perspective, the company maintained its leading retail position in several major European roasted coffee markets, including the Netherlands, Belgium, Spain, Denmark, the United Kingdom and Hungary. Product innovation is important for this business, and Sara Lee/Douwe Egberts successfully launched an innovative in-home coffee concept in the Netherlands called Senseo, which uses proprietary filter packets, filled with Douwe Egberts coffee, to quickly brew one or two cups of high quality coffee. The company also held its number-one position in the large Brazilian coffee market. In the United States, the company continued to consolidate its retail position behind four well-known regional brands – Chock full o’Nuts, Hills Bros., MJB and Chase & Sanborn. Sara Lee also continued to strengthen its leading U.S. foodservice coffee position through expanded distribution of its proprietary Cafitesse coffee system.
Unit sales for roasted coffee and coffee concentrates, including acquisitions in Brazil and the United States, rose 22% for the fourth quarter and increased 30% for the year. Excluding the impact of acquisitions, unit sales fell 1% in the fourth quarter and 2% for the full year.
-0-
HOUSEHOLD PRODUCTS
Fourth Quarter Change Fiscal Year Change
—————- ——- —————- ——-
2001 2000 2001 2000
Sales $ 583 $ 591 (1.5)% $ 2,088 $ 2,154 (3.1)%
Operating Income $ 113 $ 112 0.7 % $ 345 $ 355 (2.9)%
Sara Lee’s Household Products – the company’s most global line of business – includes traditional household and personal care items as well as the company’s Direct Selling operations. The Household Products business was unaffected by divestitures in fiscal 2001, so reported results, shown in the table above, also reflect ongoing operations. There were no acquisitions relating to this line of business in fiscal 2001, but currency did have a major negative impact on reported results; on a local-currency basis, fourth-quarter sales grew 6%, with operating income up 9%, while full-year sales and operating income both increased 6%.
More than 80% of the sales from the company’s household and personal care operations came from four core categories in fiscal 2001. Total unit volume for these categories – shoe care, body care, insecticides and air fresheners – grew 4% for both the quarter and the full year. The air freshener business, in particular, posted double-digit unit gains in both periods, reflecting the success of product introductions in new markets, including Sara Lee’s entry into the U.S. air freshener market with Ambi-Pur LiquiFresh, a two-in-one toilet bowl cleaner and air freshener. In addition, Sara Lee continued the expansion of its Sanex body care brand, with introductions in Australia and Malaysia. The company currently markets Sanex in more than 30 countries.
For the year, sales for the Direct Selling operations within Household Products rose on the strength of improved business in a number of developing nations in Latin America and Asia plus continued growth at Fuller Mexico.
-0-
INTIMATES AND UNDERWEAR
Fourth Quarter Change Fiscal Year Change
—————- ——- —————- ——-
2001 2000 2001 2000
Sales $ 1,725 $ 1,910 (9.6)% $ 7,767 $ 7,598 2.2 %
Operating Income $ 195 $ 226 (13.9)% $ 844 $ 844 0.0 %
Sara Lee’s Intimates and Underwear line of business includes the company’s global Intimate Apparel, Knit Products, and Legwear operations. While reported results are shown above, on an ongoing operations basis – which excludes divested businesses from both fiscal 2000 and fiscal 2001 – sales for this line of business fell 1% in the fourth quarter and rose 5% for the fiscal year. Operating income from ongoing operations fell 12% for the quarter and was down 4% for the year.
On a geographic basis, operating income during both the fourth quarter and the full year was especially strong in Europe, benefiting from systems and reorganization efforts, new product introductions and the successful integration of core operations from the U.K. apparel company Courtaulds. By product line, the company’s global intimate apparel operations reported double-digit operating income gains in the fourth quarter, with higher profits in both the United States and Europe, and the fast-growing U.S. sock business continued its exceptional growth record. These strong results, however, were more than offset by weakness in global sheer hosiery markets and lower U.S. knit product profits due to aggressive competitive activity, weak retail sales and lower consumer demand.
Overall, unit volumes for global Intimates and Underwear declined 3% in the quarter and fell 1% for the full year.
By product category, global Knit Products unit sales declined 6% in the fourth quarter and fell 2% for the full year, primarily reflecting strong price and promotional competition in the United States for both the underwear and screenprint operations. Increased marketing support behind its key Hanes and Hanes Her Way brands, however, allowed Sara Lee to maintain its leading position in the men’s and boys’ underwear segment over the most recent 12-month period with a 36.4% share; in the women’s and girls’ segment, Sara Lee’s leading share grew by over two points to 35.8%. In Europe, the company maintained its leading men’s and women’s underwear positions in Spain and Italy as a result of continued product innovation.
Global Intimate Apparel unit volumes rose 1% in the quarter and increased 2% for the full year, as strong results from the Bali brand balanced a difficult year for Playtex, particularly in the department store channel. In the United States, Sara Lee maintained its leading position in the bra category with a 27.1% dollar share, and the company continues to hold leading market positions in France, Italy and the United Kingdom.
Legwear unit volumes were flat for the fourth quarter and down 4% for the full year, as lower sheer hosiery volumes were offset by increased sock unit sales in both periods. From a market perspective, Sara Lee increased its leading unit share of the total U.S. sock market by over three points to 15.8% for the most recent 12-month period. Over the same period, Sara Lee maintained its leading position in the U.S. sheer hosiery category with a dollar share of 52.7%.
Corporate Items
For the corporation, goodwill and trademark amortization of $49 million in the fourth quarter and $191 million for the full year compares with $44 million and $171 million in the same periods last year. Net interest expense was $31 million for the quarter and $180 million for the fiscal year compared with $56 million and $176 million, respectively, for the year-ago period. The lower interest costs for the fourth quarter reflect the company’s decision to reduce debt levels using cash proceeds from divestitures made during the year.
In the fourth quarter, Sara Lee Corporation repurchased almost 7 million shares of its common stock for a total of $133 million. For the full year, Sara Lee bought back 31 million shares for a total of $643 million. In addition to repurchasing its shares, the company also received 41.4 million shares in an exchange offer that led to the divestiture of Coach. The company currently has approximately 24 million shares remaining in its repurchase authorization.
Outlook
A number of factors, in addition to on-going results, are likely to impact Sara Lee’s diluted earnings per share in fiscal 2002, including the timing of the completion of the Earthgrains acquisition and the adoption of new accounting rules for amortization of goodwill and intangibles. In addition to the base business guidance detailed below, Sara Lee’s management currently expects the Earthgrains acquisition to dilute reported earnings per share by about $.03 in the first twelve months, and the new accounting rules to add approximately $.08 to full-year reported earnings per share.
Excluding these two items, Sara Lee’s management currently expects diluted earnings per share for fiscal 2002 to fall within the range of $1.25 to $1.35, compared with $1.36 in fiscal 2001. For the first quarter, excluding the impact of the Earthgrains acquisition and the adoption of new accounting rules, diluted earnings per share are expected to fall within the range of $.21 to $.24, compared with $.29 in the first quarter of fiscal 2001. Actual results will also depend to a large extent on both future euro-dollar exchange rates and U.S. retail market conditions for the company’s Intimates and Underwear business.
By line of business, management expects first-quarter and full-year operating income for Sara Lee Foods to increase versus year-ago periods. Reported operating income for Beverage and for Household Products, the company’s two most European-based lines of business, will depend, to some extent, on the euro-dollar exchange rate. In local currency terms, first quarter Beverage profits may decline, reflecting continued investment spending in this business, while full-year results should be flat. Household Products’ local currency profits should increase during both the first quarter and for the full year. Operating income for Intimates and Underwear is expected to decline in both the first quarter and for the full year due to continued weakness in the U.S. retail environment and on-going competitive pricing pressures.
Forward-looking statements
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. 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 2000 and Forms 10-Q for the first, second and third quarters of fiscal 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 is a global consumer packaged goods company with approximately $17.7 billion in annual revenues. Its leading brands include Sara Lee, Douwe Egberts, Hillshire Farm, Hanes and Playtex.
-0-
Sara Lee Corporation (NYSE)
Consolidated Statements of Income
(in millions except per share amounts)
———————————————————————-
Fourth Quarter Ended Twelve Months Ended
———————— ————————
June 30, July 1, Percent June 30, July 1, Percent
2001 2000 Change 2001 2000 Change
——– ——- ——- ——– ——- ——
Net sales $ 4,227 $ 4,463 (5.3)% $ 17,747 $17,511 1.3 %
——– ——- ——– ——-
Cost of sales 2,435 2,622 10,264 10,100
Cost of sales –
product line exit 2 — 26 —
Selling, general and
administrative
expenses 1,391 1,389 5,865 5,668
Interest expense 59 77 270 252
Interest income (28) (21) (90) (76)
Unusual Items –
Business reshaping:
Gain on disposal
of Coach business (862) — (967) —
Business dispositions
and other charges 220 — 528 —
——– ——- ——– ——-
3,217 4,067 15,896 15,944
——– ——- ——– ——-
Income from continuing
operations before
income taxes 1,010 396 NM 1,851 1,567 18.1
Income taxes 37 103 248 409
——– ——- ——– ——-
Income from
continuing operations 973 293 NM 1,603 1,158 38.4
Income from
discontinued operations,
net of income taxes — 20 25 64
Gain on disposal of
discontinued operations,
net of income taxes — — 638 —
——– ——- ——– ——-
Net income $ 973 $ 313 NM $ 2,266 $ 1,222 85.5
======== ======= ======== =======
Income from continuing
operations per common share
Basic $ 1.24 $ 0.33 NM $ 1.94 $ 1.31 48.1
======== ======= ======== =======
Diluted $ 1.19 $ 0.33 NM $ 1.87 $ 1.27 47.2
======== ======= ======== =======
Net income per common share
Basic $ 1.24 $ 0.36 NM $ 2.75 $ 1.38 99.3
======== ======= ======== =======
Diluted $ 1.19 $ 0.35 NM $ 2.65 $ 1.34 97.8
======== ======= ======== =======
Average shares outstanding
Basic 785 858 819 875
======== ======= ======== =======
Diluted 819 895 854 912
======== ======= ======== =======
Sara Lee Corporation (NYSE)
Operating Results by Industry Segment
Unusual Items not Allocated to Industry Segments
(in millions) Fourth Quarter Ended
———————————————————————-
Sales Operating Income
———————— ————————
June 30, July 1, Percent June 30, July 1, Percent
2001 2000 Change 2001 2000 Change
——– ——- ——- ——– ——- ——-
Food and Beverage:
Sara Lee Foods $ 1,247 $ 1,291 (3.3)% $ 104 $ 73 42.0 %
Beverage 674 714 (5.7) 120 115 4.5
Household Products 583 591 (1.5) 113 112 0.7
Intimates and
Underwear 1,725 1,910 (9.6) 195 226 (13.9)
——– ——- ——- ——– ——- ——-
Total sales and
operating
companies income 4,229 4,506 (6.1) 532 526 1.0
Intersegment sales (2) (43) 95.7 — — —
Amortization of
goodwill and trademarks — — — (49) (44) (9.1)
General
corporate expenses — — — (82) (30) NM
Gain on disposal
of Coach business (2) — — — 862 — NM
Business dispositions
and other charges (3)(4) — — — (222) — NM
——– ——- ——- ——– ——- ——
Total net sales
and operating income 4,227 4,463 (5.3) 1,041 452 NM
Net interest expense — — — (31) (56) 44.6
——– ——- ——- ——– ——- ——
Net sales and income
from continuing
operations before
income taxes $ 4,227 $ 4,463 (5.3)% $ 1,010 $ 396 NM %
======== ======= ======= ======== ======= ======
Twelve Months Ended
———————————————————————-
Sales Operating Income
———————— ————————
June 30, July 1, Percent June 30, July 1, Percent
2001 2000 Change 2001 2000 Change
——– ——- ——- ——– ——- ——
Food and Beverage:
Sara Lee Foods $ 5,081 $ 5,088 (0.1)% $ 363 $ 370 (2.0)%
Beverage 2,889 2,827 2.2 485 472 2.8
Household Products 2,088 2,154 (3.1) 345 355 (2.9)
Intimates
and Underwear 7,767 7,598 2.2 844 844 —
——– ——- ——- ——– ——- ——
Total sales and
operating
companies income 17,825 17,667 0.9 2,037 2,041 (0.2)
Intersegment sales (78) (156) 50.0 — — —
Amortization of
goodwill and trademarks — — — (191) (171) (11.2)
General
corporate expenses — — — (228) (127) (78.7)
Gain on disposal of
Coach business (2) — — — 967 — NM
Business dispositions
and other charges (3)(4) — — — (554) — NM
——– ——- ——- ——– ——- ——
Total net sales
and operating income 17,747 17,511 1.3 2,031 1,743 16.6
Net interest expense — — — (180) (176) (2.8)
——– ——- ——- ——– ——- ——
Net sales and income
from continuing
operations before
income taxes $ 17,747 $17,511 1.3 % $ 1,851 $ 1,567 18.1 %
======== ======= ======= ======== ======= ======
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) Fourth Quarter Ended
———————————————————————-
Sales Operating Income
———————— ————————
June 30, July 1, Percent June 30, July 1, Percent
2001 2000 Change 2001 2000 Change
——– ——- ——- ——– ——- ——-
Food and Beverage:
Sara Lee Foods $ 1,247 $ 1,291 (3.3)% $ 84 $ 73 15.0 %
Beverage 674 714 (5.7) 114 115 (1.3)
Household Products 583 591 (1.5) 113 112 0.6
Intimates
and Underwear 1,725 1,910 (9.6) 864 226 NM
——– ——- ——- ——– ——- ——-
Total sales
and operating
companies income 4,229 4,506 (6.1) 1,175 526 NM
Intersegment sales (2) (43) 95.7 — — —
Amortization of
goodwill and trademarks — — — (49) (44) (9.1)
General
corporate expenses — — — (85) (30) NM
——– ——- ——- ——– ——- ——-
Total net sales
and operating income 4,227 4,463 (5.3) 1,041 452 NM
Net interest expense — — — (31) (56) 44.6
——– ——- ——- ——– ——- ——-
Net sales and income
from continuing
operations before
income taxes $ 4,227 $ 4,463 (5.3)% $ 1,010 $ 396 NM %
======== ======= ======= ======== ======= =======
Twelve Months Ended
———————————————————————-
Sales Operating Income
———————— ————————
June 30, July 1, Percent June 30, July 1, Percent
2001 2000 Change 2001 2000 Change
——– ——- ——- ——– ——- ——-
Food and Beverage:
Sara Lee Foods $ 5,081 $ 5,088 (0.1)% $ 234 $ 370 (36.8)%
Beverage 2,889 2,827 2.2 477 472 0.9
Household Products 2,088 2,154 (3.1) 342 355 (3.8)
Intimates
and Underwear 7,767 7,598 2.2 1,400 844 66.0
——– ——- ——- ——– ——- ——-
Total sales
and operating
companies income 17,825 17,667 0.9 2,453 2,041 20.1
Intersegment sales (78) (156) 50.0 — — —
Amortization of
goodwill and trademarks — — — (191) (171) (11.2)
General
corporate expenses — — — (231) (127) (80.9)
——– ——- ——- ——– ——- ——-
Total net sales and
operating income 17,747 17,511 1.3 2,031 1,743 16.6
Net interest expense — — — (180) (176) (2.8)
——– ——- ——- ——– ——- ——-
Net sales and income
from continuing
operations before
income taxes $ 17,747 $17,511 1.3 % $ 1,851 $ 1,567 18.1 %
======== ======= ======= ======== ======= =======
See accompanying notes to financial statements for information
regarding the unusual items.
Notes To Financial Statements
1. In December 2000, the corporation sold PYA/Monarch, its
foodservice distribution business, and received cash proceeds of
$1.6 billion. The disposition resulted in a gain before income
taxes of $1.1 billion, and an after-tax gain of $638 million, or
$.75 per share on a diluted basis for the full year. PYA/Monarch
constituted a reportable segment of the corporation and this gain
has been recognized as a discontinued operation in the
corporation’s financial statements.
2. Coach, a designer, producer and marketer of handbags and
accessories, was disposed of in a tax-free transaction that
resulted in a gain of $967 million, or $1.13 per share on a
diluted basis for the full year. Of the total gain, $105 was
recognized in the second quarter of the year when an initial
public offering of 19.5% of the Coach shares was completed. Cash
proceeds of $122 million were received as a result of the IPO. In
April 2001, the corporation received 41.4 million shares of Sara
Lee stock in exchange for its remaining 80.5% ownership interest
in Coach and recognized a gain of $862 million.
3. During the year actions were taken to dispose of 17 non-core
business operations. The pre-tax impact, the after-tax impact on
net income and the impact on diluted earnings per share for fiscal
2001 were $341 million, $352 million and $.41 respectively. At the
end of fiscal 2001, 10 of those business dispositions had been
completed and the remainder are expected to close in the first
half of fiscal 2002. The transactions completed include the
disposition of two European Bakery operations, the Argal meat
business in Spain, the Australasian Intimates and Underwear
business, the Champion Europe operations and certain components of
the Courtaulds operation. The transactions targeted for closure in
2002 primarily consist of a number of off-strategy European
Intimates and Underwear operations. In the fourth quarter of
fiscal 2001, the pre-tax impact, the after-tax impact and the
impact on diluted earnings per share of these actions were $130
million, $124 million and $.15 per share, respectively.
4. Business reorganization actions initiated during the year resulted
in a pre-tax charge of $213 million and an after-tax charge of
$148 million, or $.17 per share on a diluted basis for the year.
$124 million of the pre-tax charge relates to severance and other
employee benefit costs associated with the elimination of 13,200
positions; $61 million relates to the exit of various owned and
leased facilities; and substantially all of the remaining portion
of the charge are costs related to the exit of certain licensed
products produced by the corporation. During the fourth quarter
the pre-tax business reorganization charge was $92 million and the
after-tax charge was $64 million or $.08 per share on a diluted
basis.
To view related research reports, please follow the links below:- The European Frozen Dessert Market |
