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Sara Lee Corporation and Subsidiaries 15
This Financial Review discusses the corporation's results of operations,
financial condition and liquidity, risk management activities, and
significant accounting policies and critical estimates. This discussion
should be read in conjunction with the Consolidated Financial
Statements and related notes thereto contained elsewhere in this
annual report. The corporation’s fiscal year ends on the Saturday
closest to June 30. Fiscal years 2009, 2008 and 2007 were 52-week
years. Unless otherwise stated, references to years relate to fiscal
years. The following is an outline of the analysis included herein:
•Business Overview
•Summary of Results
•Review of Consolidated Results
•Operating Results by Business Segment
•Financial Condition
•Liquidity
•Risk Management
•Critical Accounting Estimates
•Issued But Not Yet Effective Accounting Standards
•Forward-Looking Information
Business Overview
Our Business Sara Lee is a global manufacturer and marketer of
high-quality, brand name products for consumers throughout the world
focused primarily in the meats, bakery, beverage, and household
products categories. Our major brands include
Ambi Pur, Ball Park,
Douwe Egberts, Hillshire Farm, Jimmy Dean, Kiwi, Sanex, Senseo
and our namesake,
Sara Lee
.
In North America, the company sells a variety of packaged meat
products that include hot dogs, corn dogs, breakfast sausages, dinner
sausages and deli meats as well as a variety of fresh and frozen
baked products and specialty items that include bread, buns, bagels,
cakes and cheesecakes. These products are sold through the retail
channel to supermarkets, warehouse clubs and national chains. The
company also sells a variety of meat, bakery and beverage products
to foodservice customers in North America. Internationally, the
company sells coffee and tea products in Europe, Brazil, Australia
and Asia through the retail and foodservice channels as well as
a variety of bakery and dough products to retail and foodservice
customers in Europe and Australia. It also sells body care, air care,
shoe care and insecticides to retail customers primarily in the U.S.,
Europe, India and the Asia Pacific region.
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 this segment, including
the option to divest the business.
The company is focused on building sustainable, profitable growth
over the long term by achieving share leadership in its core cate-
gories; innovating around its core products and product categories;
expanding into high opportunity geographic markets and strategic
joint ventures/partnerships; delivering superior quality and value
to our customers; and driving operating efficiencies.
Challenges and Risks As an international consumer products
company, we face certain risks and challenges that impact our
business and financial performance. The risks and challenges
described below have impacted our performance and are likely
to impact our future results as well.
The food and consumer products businesses are highly
competitive. In many product categories, we compete not only with
widely advertised branded products, but also with private label
products that are generally sold at lower prices. As a result, from
time to time, we may need to reduce the prices for some of our
products to respond to competitive pressures. In addition, the
turmoil in the financial markets has led to general economic weak-
ness, which has negatively impacted our business. The continued
economic uncertainty may also result in increased pressure to reduce
the prices for some of our products, limit our ability to increase
or maintain prices or lead to a continued shift toward private label
products. Any reduction in prices or our inability to increase prices
when raw material costs increase could negatively impact profit
margins and the overall profitability of our reporting units, which
could potentially trigger a goodwill impairment.
Financial review