Sara Lee 2011 Annual Report Download - page 65

62/63 Sara Lee Corporation and Subsidiaries 2011 versus 2010
Net sales decreased by $59 million, or 7.5%.
The change in sales was impacted by changes in foreign currency exchange rates and the 53rd week in the prior year. The impact of foreign currency changes, particularly the Australian dollar, increased reported net sales by $3 million. Adjusted net sales decreased $49 million, or 6.4% due to the negative impact of price reductions in response to competitive pressures, which decreased net sales by 3.7% and lower unit volumes. Unit volumes decreased 2.5% due to a decline in fresh bread volumes in Spain, as a result of a reduction in branded sales due in part to economic and competitive pressures and volume declines in Australia. These volume declines were par- tially offset by increased refrigerated dough volumes in Europe.
Operating segment income increased by $2 million, or 10.9%.
The net change in foreign currency exchange rates, business restruc- turing costs, Project Accelerate charges, impairment charges and the 53rd week increased operating segment income by $31 million. Adjusted operating segment income decreased by $29 million, or 65.0% due to the negative impact of pricing actions, lower unit volumes, higher commodity costs and an unfavorable sales mix shift to lower margin products partially offset by continuous improvement savings. International Bakery
Dollar Percent Dollar Percent
In millions 2011 2010 Change Change 2010 2009 Change Change Net sales $726 $785 $(59) (7.5) % $785 $«795 $«(10) (1.3) % Less: increase/(decrease) in net sales from
Changes in foreign currency exchange rates $÷÷– $÷«(3) $÷«3 $÷÷– $÷(25) $÷25 Impact of 53rd week – 13 (13) 13 – 13 Adjusted net sales $726 $775 $(49) (6.4) % $772 $«820 $«(48) (5.8) %
Operating segment income (loss) $«(12) $«(14) $÷«2 10.9 % $«(14) $(194) $180 92.9 % Less: Increase/(decrease) in
operating segment income (loss) from
Changes in foreign currency exchange rates $÷÷– $÷÷– $÷«– $÷÷– $÷÷(1) $÷÷1 Project Accelerate/transformation charges – (47) 47 (47) (38) (9) Impairment charge – (13) 13 (13) (207) 194 International stranded overhead charges (28) – (28) – – – Impact of 53rd week –1(1) 1–1 Adjusted operating segment income $««16 $««45 $(29) (65.0) % $««45 $÷«52 $«÷(7) (13.0) % Gross margin % 35.0 % 38.6 % (3.6) % 38.6 % 37.5 % 1.1 %
2010 versus 2009
Net sales decreased by $10 million, or 1.3%.
The impact of changes in foreign currency exchange rates in the European euro and Australian dollar increased reported net sales by $25 million, while the impact of the 53rd week increased net sales by $13 million. Adjusted net sales decreased by $48 million, or 5.8%, as a result of the negative impact of price reductions in response to lower commodity costs and competitive pressures, which decreased net sales by approximately 4%. Sales were also negatively impacted by lower unit volumes and an unfavorable sales mix. Net unit volumes decreased 2.3% due to a decline in branded fresh bread volumes in Spain due in part to the weak economic conditions and competitive pressures. These volume declines were partially offset by increased volumes in Australia and increased refrigerated dough volumes in Europe.
Operating segment loss decreased by $180 million, or 92.9%.
The net change in foreign currency exchange rates, exit activities, asset and business dispositions, impact of the 53rd week and impairment charges increased operating segment income by $187 million. Adjusted operating segment income decreased by $7 million, or 13.0%, due to the negative impact of pricing actions, lower unit volumes, and an unfavorable sales mix shift to lower margin products partially offset by lower commodity costs and continuous improvement savings.