August 9, 2006 Chicago Sun-Times
While reporting a fourth-quarter profit Tuesday, Sara Lee lowered its long-term sales growth forecast, cut its regular quarterly dividend in half and said it would not meet its goal of a 12 percent operating margin by 2010.
The Chicago-based maker of frozen desserts, packaged deli meats and Ball Park and Jimmy Dean brands reported a profit of $8 million, or 1 cent per share, in the fourth quarter ending July 1, compared with a loss of $148 million the same period a year prior. Quarterly net sales rose 1.8 percent to $4.1 billion.
For the year, profits declined 22.7 percent to $555 million, or 72 cents per share. Revenue fell 0.5 percent to $15.9 billion.
The company's operations were challenged by "spikes in key commodities such as fuel and wheat," CEO Brenda Barnes said during an analysts' call.
"We are altering our long-term guidance to better reflect our situation," Barnes said. "There's no doubt in my mind that 12 percent is an appropriate longer-term target."
Shares dropped 2.3 percent on Tuesday's report, closing down 39 cents to $16.61.
Sara Lee's food service segment saw a decrease due to higher coffee costs and a loss of some national accounts, and apparel sales are down slightly, due to less hosiery wear.
Bright spots for the company included strong launches of Jimmy Dean Skillets, Sara Lee bread and the Ambi Pur 3Volution air purifier in Britain.
And Sara Lee gained market share in every key meat category, Barnes said.
"Our retail business in North America is considerably better than it was prior to the transformation," Barnes said.
The company projects earnings for 2007 to be between 80 and 88 cents per share, including 6 cents to 8 cents per share from the apparel business through Sept. 5, and a gain of 15 cents per share for the fiscal 1999 sale of its tobacco business, which it got recently. It's projecting $12.5 billion in net sales for fiscal 2007.
Sara Lee is in the midst of restructuring, focusing on areas of food, beverage, and household and body care --shedding businesses outside those core groups.
In June, it agreed to sell its European meats business to Smithfield Foods Inc. for $614 million.
And it will spin off its profitable apparel business to become a stand-alone company, Hanesbrands Inc., which will trade on the New York Stock Exchange starting Sept. 6.
Sara Lee will get a one-time payment of $2.4 billion from Hanesbrands, which is taking on about $2.6 billion in new debt to pay the dividend and fund the spin-off. Apparel brands include Hanes, Champion, Playtex, Bali, Just My Size, barely there and Wonderbra.
Upon completion of the apparel spin-off, Sara Lee will have raised more than $3.7 billion since the beginning of the transformation 18 months ago.
Morningstar analyst Gregg Warren said it was unlikely the company would reach its sales and operating margins goals by the 2010 target date.
"I don't think that anybody thought they would get to $14 billion in annual sales and 12 percent operating margins post spin-off," he said. "It just wasn't realistic based on what they still have left in the portfolio."
St. Louis Business Journal - January 18, 2006
Sara Lee Corp. agreed Jan. 17 to buy Butter-Krust Baking for about $72 million.
Sunbury, Pa.-based Butter-Krust is a privately held, fresh bakery business. It expects 2005 sales to total more than $80 million.
In addition to the Pennsylvania plants and the headquarters office, the acquisition includes 12 distribution depots and about 180 direct-store delivery routes.
Butter-Krust primarily produces white bread and buns and Italian bread at its two plants in Sunbury and Northumberland, Pa. The company markets its products under the Holsum, Butter-Krust Country, Roman Meal and Milano brands in most of Pennsylvania and parts of Maryland, Virginia, West Virginia, New York, New Jersey and Delaware.
Brenda Barnes, chairman and CEO of Sara Lee Corp., said in a statement, "With the acquisition of Butter-Krust Baking, Sara Lee will expand its mid-Atlantic distribution coverage, complementing our recent entry into the Ohio Valley, to better serve our customers and to reach more than 20 million additional consumers."
The Sara Lee brand has become the largest and fastest-growing brand in the U.S. fresh bakery market, according to Barnes' statement.
Chicago-based Sara Lee Corp. (NYSE: SLE) manufactures and markets consumer products. Sara Lee relocated about 200 Bakery Group jobs from Clayton to Chicago last year when the group was reorganized in July under the company's new Food & Beverage and Foodservice divisions. Sara Lee continues to employ about 650 people in St. Louis.
Sara Lee Corp. named a new chief executive and said it plans to shed businesses accounting for 40 percent of its annual revenue including its apparel business that sells Hanes and Playtex and its retail coffee operations that include the Chuck full o' Nuts and Hills Bros. brands as part of a major reorganization.
The company named Brenda Barnes its new chief executive officer, replacing Steve McMillan. Barnes was recruited last year to replace McMillan, who will remain chairman.
The businesses being sold or spun off account for about $8.2 billion in annual revenue, Sara Lee said. It said the reorganization would sharpen its focus on its core food, beverage and household products.
Sara Lee, which announced last month that it was exploring a possible sale of its European apparel business, now also plans to spin off the balance of its $4.5 billion apparel portfolio, which also includes the Champion and Just My Size brands.
The Chicago-based company also said it will sell a $1.1 billion packaged meats business in Europe, a $450 million division that sells cosmetics and household products worldwide, and its retail coffee business.
23 September 2004
Sara Lee Corp. Chairman and CEO C.
Steven McMillan’s total compensation jumped 24% to $8.4 million
in the last fiscal year, thanks mainly to a big restricted stock grant from
the consumer products conglomerate.
The 58-year-old executive’s salary and bonus fell 19% to $3.9 million
in the fiscal year ended July 3, according to Sara Lee’s proxy statement
filed Wednesday with the Securities and Exchange Commission.
Yet a $4.0 million restricted stock award under Sara Lee’s long-term
compensation plan more than made up for the difference. Mr. McMillan only
received $1.5 million in restricted stock in fiscal 2003.
The Chicago-based maker of Hanes underwear and Ball Park Hot dogs said it
stopped using stock options as a “routine element of its long-term compensation
program” and has shifted over to restricted stock instead. But Mr. McMillan
also received 647,402 “restoration stock options”-options granted
to replace options he exercised-that could be worth $5.5 million assuming
Sara Lee shares appreciate 5% annually.
While Mr. McMillan’s salary rose 3% to $1.2 million his bonus fell 26%
to $2.7 million, according to the proxy. His bonus is based mainly on Sara
Lee’s financial performance, including its earnings per share, which
rose 6% in fiscal 2004, and sales, which rose 7%. Including dividends, the
company’s shares delivered a total return of 24%, vs. a 16% return for
the Standard & Poor’s 500 Index.
Mr. McMillan’s compensation also included the use of the corporate jet
for non-company travel, which Sara Lee valued at about $127,000. Starting
this fiscal year, Sara Lee requires its executives to reimburse the company
for personal use of company aircraft, the proxy said.
A Sara Lee spokeswoman didn’t return a phone call seeking comment.
Associated Press
WASHINGTON - Sara Lee Corp. Chairman and Chief Executive C. Steven McMillan
received total compensation, excluding stock options, of $8.4 million for
the fiscal year ended July 3, according to a regulatory filing.
The Chicago-based consumer packaged goods company said McMillan received a
$4.04 million restricted stock award, compared with a $1.54 million award
in the previous fiscal year ended June 28, 2003.
Sara Lee said it paid McMillan a $2.7 million bonus in fiscal 2004, compared
with a $3.7 million bonus in the prior fiscal year. The executive received
a $1.16 million salary in fiscal 2004, compared with a $1.13 million salary
in fiscal 2003, the filing said.
The company also said McMillan realized $1.61 million from the exercise of
693,420 stock options. At July 3, the company said McMillan had "in-the-money"
stock options valued at $1.06 million.
Also in the definitive proxy filed with the Securities and Exchange Commission,
Sara Lee said it granted McMillan 647,402 stock options in fiscal 2004, compared
with a grant of 826,286 options in the prior fiscal year.
Assuming the company's stock appreciates 5 percent each year for the next
six years, the total value of the 647,402 stock options would be $5.5 million,
according to the filing.
Shares of Sara Lee were at $22.14 in late trading Wednesday, down 16 cents,
or 0.7 percent, on the New York Stock Exchange.
The company also said McMillan received other compensation of $498,799 in
fiscal 2004. The latest amount includes some noncash compensation and $127,076
for the executive's personal use of corporate aircraft.
The Sara Lee Bakery in Fort Payne, Ala., where nearly 200 members of BCTGM
Local 25 (formerly Local 611) will end production early next year.
The announcement was the latest in a series of cutbacks, which reduced the
bakery's work force from 800 to 180 in the past 15 months. By October 31st,
only 60 workers will remain, leaving only one pan bread production.
According to the company, the plant is closing because of a sharp decline
in consumer demand for breads, cakes and doughnuts. Sara Lee opened the Fort
Payne facility in the early 1970s and was one of the area's largest employers
at its peak.
“The elimination of union jobs over the last few years and the subsequent
closing of the Fort Payne plant clearly prove that this company operates in
a profit-only atmosphere,” notes BCTGM International President Frank
Hurt.
“It is always profits before people. The lower demand for baked products
combined with employers' efforts to make a higher profit and the outsourcing
of production to non-union lower waged companies-these are the true reasons
for plant closings.”
In an August 24 settlement, Sara Lee Bakery Group was ordered to repay BCTGM Local 232 (Phoenix) retirees for any contributions they made toward the costs of their medical insurance premiums since July 1, 2002.
The settlement is the result of Local 232's lawsuit against the company's unilateral changes to retiree health insurance in U.S. District Court, District of Arizona Ninth Circuit Court of Appeals (Case No. 84-15292).
Sara Lee was further ordered to not require Local 232 retirees from the Phoenix location to contribute towards their medical insurance premiums throughout the life of their current collective bargaining agreement.
This is the third such case that the BCTGM has successfully fought Sara Lee's attempts to change existing retiree health benefit coverage. The BCTGM was also successful in Owensboro, Ky. (Local 280) and Ft. Payne, Ala. (Local 611). For more on those decisions see Arbitrations.
As reported earlier, the BCTGM has had two successful elections at the Sara Lee-Earthgrains Redding French Bakery in Redding California. The International has worked jointly with Local 85 (Sacramento, California) throughout this long campaign.
Sara Lee—via their anti-union lawyers and consultants—have delayed negotiations for a first contract by filing appeals and objections with the National Labor Relations Board (NLRB), hoping to demoralize the workers.
Today the NLRB denied Sara Lee's objections to the election (the second successful election). While this is once again a major victory for the BCTGM, it is fully expected that Sara Lee will continue to delay the desire of their employees for a “voice in their workplace”, by filing an appeal with the NLRB in Washington D.C. However, the BCTGM also fully expects such an appeal to be denied.
Workers at Sara Lee’s Redding French Bakery, in Redding, California, will soon learn if the National Labor Relations Board will uphold their successful vote to join the BCTGM. The Company filed objections with the Board after Redding workers voted to join the BCTGM on December 18, 2003. The Board must decide whether there is any merit to Sara Lee’s objections. The Union believes there is no basis to the Company’s objections and stated so in a Brief to the Board on June 3, 2004. A final ruling is expected soon.
On June 25, 2004, the National Labor Relations Board ruled that the Sara Lee Bakery Group had violated federal labor law during Local 37’s organizing campaign at Sara Lee’s International Bakery, in Vernon, California. The Board ruled on this case after Sara Lee had objected to an administrative law judge’s decision in favor of the Union in December 2003. The Board found that the Company had unlawfully given workers benefits during the organizing drive in an effort to persuade them to vote against the Union. The Board ruled that a new election be scheduled “when the Regional Director deems the circumstances permit the free choice of a bargaining representative.”
In addition, the NLRB has issued new complaints (July 6, 2004) against the Company alleging that an employee was suspended in retaliation for Union activity. The Board also issued complaints against Sara Lee for threatening employees with unspecified reprisals due to their Union activity.
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