Sara Lee 2010 Annual Report Download - page 52

Financial review
•Sara Lee’s share repurchase and other capital plans, such as (i)
future opportunities that the Board may determine present greater
potential value to shareholders than the current capital plans and
targets, including without limitation potential acquisitions, joint ven-
tures or other corporate transactions, and investments in Sara Lee’s
business; (ii) future operating or capital needs that require a more
significant outlay of cash than currently anticipated; or (iii) future
changes in facts or circumstances that may impact the anticipated
accounting treatment of such activities;
•Sara Lee’s relationship with its customers, such as (iv) a
significant change in Sara Lee’s business with any of its major
customers, such as Walmart, its largest customer, including changes
in how such customers manage their suppliers and the level of
inventory these customers maintain; and (v) credit and other
business risks associated with customers operating in a highly
competitive retail environment;
•The consumer marketplace, such as (vi) significant competition,
including advertising, promotional and price competition; (vii) changes
in consumer behavior due to economic conditions, such as a shift
in consumer demand toward private label; (viii) 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; (ix) the impact of various food safety
issues and regulations on sales and profitability of Sara Lee prod-
ucts; and (x) inherent risks in the marketplace associated with
new product introductions, including uncertainties about trade and
consumer acceptance;
•Sara Lee’s international operations, such as (xi) impacts on
reported earnings from fluctuations in foreign currency exchange
rates, particularly the euro; (xii) Sara Lee’s generation of a high per-
centage of its revenues from businesses outside the United States
and costs to remit these foreign earnings into the U.S. to fund
Sara Lee’s domestic operations, share repurchase plans, dividends,
debt service and corporate costs; (xiii) the impact on Sara Lee’s
business of its receipt of binding offers to purchase a large portion
of its H&BC business, its intent to divest the remainder of that
business and any inability to complete these transactions or to
divest the remaining H&BC businesses on favorable terms; and
(xiv) difficulties and costs associated with complying with U.S. laws
and regulations, such as Foreign Corrupt Practices Act, applicable
to entities with overseas operations, and different regulatory struc-
tures and unexpected changes in regulatory environments overseas,
including without limitation potentially negative consequences from
changes in anti-competition and tax laws; and (xv) 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 (xvi) Sara Lee’s ability to
generate margin improvement through cost reduction and efficiency
initiatives, including Project Accelerate and the outsourcing of signif-
icant portions of our financial transaction processing, global IT, and
global indirect procurement activities; (xvii) Sara Lee’s ability to
achieve planned cash flows from capital expenditures and acquisi-
tions 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; (xviii) credit ratings issued
by the three major credit rating agencies, the impact of Sara Lee’s
capital plans and targets on such credit ratings and the impact
these ratings and changes in these ratings may have on Sara Lee’s
cost to borrow funds, access to capital/debt markets, and ability
to complete the planned share repurchase; (xix) Sara Lee’s plan
to refinance significant outstanding indebtedness in the next two
years and the impact of potential changes in the credit environ-
ment; (xx) Sara Lee’s plan to repurchase a significant amount of its
common stock and the impact of such repurchases on its earnings,
cash flow and credit ratings; (xxi) 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 regulations in the jurisdictions in which Sara Lee transacts
business; and (xxii) changes in the expense for and contingent lia-
bilities relating to multi-employer pension plans in which Sara Lee
participates; and
•Uncertainty relating to our chief executive officer position and
the fact that Sara Lee’s board has initiated a process to identify
a permanent successor.
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.
50 Sara Lee Corporation and Subsidiaries