Sara Lee 2009 Annual Report Download - page 48

Financial review
effective for fiscal years beginning after December 15, 2008, which
for us is fiscal 2010. Early adoption is not allowed. The corporation
is currently evaluating the provisions of this new staff position and
has not determined the impact of adoption at this time.
Consolidation of Variable Interest Entities In June 2009, the FASB
issued SFAS 167, “Consolidation of Variable Interest Entities, An
Amendment of FASB Interpretation No. 46 (revised)” (SFAS 167).
This statement amends FIN 46(R) by updating the guidance for
determining whether an entity is a variable interest entity (VIE)
and who is the primary beneficiary of the VIE. SFAS 167 will also
require ongoing reassessments of the primary beneficiary of a
VIE and new expanded disclosures surrounding the nature of the
VIE and an entity’s involvement with the VIE. SFAS 167 is effective
for the corporation in the first quarter of fiscal 2011. The corporation
is currently evaluating the provisions of SFAS 167 and has not
determined the impact of adoption at this time.
Forward-Looking Information
This document contains certain forward-looking statements, including
the anticipated costs and benefits of restructuring, transformation
and Project Accelerate actions, access to credit markets and the
corporation’s credit ratings, the planned extinguishment of debt, the
funding of pension plans, potential payments under guarantees and
amounts due under future contractual obligations and commitments,
projected capital expenditures, cash tax payments, pension settlement
amounts and effective tax rates. 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,” “projects,” “anticipates” or “believes.” These forward-
looking statements are based on currently available competitive,
financial and economic data, as well as management’s views and
assumptions regarding future events. Such forward-looking state-
ments 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 Lee’s actual
results to differ from such forward-looking statements are factors
relating to:
•Sara Lee’s relationship with its customers, such as (i) a significant
change in Sara Lee’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, Sara Lee’s ability to increase or maintain
product prices in response to fluctuations in cost and the impact
on Sara Lee’s profitability; (vi) the impact of various food safety
issues and regulations on sales and profitability of Sara Lee products;
and (vii) inherent risks in the marketplace associated with new
product introductions, including uncertainties about trade and
consumer acceptance;
•Sara Lee’s international operations, such as (viii) impacts on
reported earnings from fluctuations in foreign currency exchange rates,
particularly the European euro, given Sara Lee’s significant concen-
tration of business in Western Europe; (ix) Sara Lee’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 Sara Lee’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) Sara Lee’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) Sara Lee’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) Sara Lee’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 Sara Lee’s cost to borrow funds and access to capital/debt
markets; (xv) the settlement of a number of ongoing reviews of
Sara Lee’s income tax filing positions in various jurisdictions and
inherent uncertainties related to the interpretation of tax regula-
tions in the jurisdictions in which Sara Lee transacts business;
and (xvi) changes in the expense for and contingent liabilities relating
to multi-employer pension plans in which Sara Lee participates.
In addition, the corporation’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.
46 Sara Lee Corporation and Subsidiaries