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UNITED STATES
SECURITY AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) September 15, 1997
SARA LEE CORPORATION
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(Exact name of registrant as specified in charter)
MARYLAND 1-3344 36-2089049
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
Suite 4600, Three First National Plaza, Chicago, Illinois 60602-4260
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 312/726-2600
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ITEM 5. OTHER EVENTS
On September 15, 1997, Sara Lee Corporation issued the following press
release:
SARA LEE CORPORATION ANNOUNCES MAJOR
$1.6 BILLION RESTRUCTURING PROGRAM
COMPANY TO GENERATE $3 BILLION BY DE-VERTICALIZING OPERATIONS;
ALSO PLANS TO SELL BUSINESSES, REDUCE COSTS AND
REPURCHASE $3 BILLION IN COMMON STOCK
CHICAGO (September 15, 1997) -- Sara Lee Corporation announced today that it
is considering the adoption of a three-year strategic program to more tightly
focus its business activity and make the corporation more competitive. The
program is designed to improve the company's financial returns and its sales
and earnings growth rates, thereby increasing shareholder value.
The key element of this program is a plan to de-verticalize the operations
of the corporation to the extent practical and possible. The company is
targeting to raise $3 billion in cash over the next three years through the
divestment of operating assets and further cost reduction programs, including
outsourcing. In addition, certain business units may be sold. With these
proceeds, Sara Lee intends to significantly accelerate the repurchase of its
common stock, spending at least $3 billion over the next three years to
re-acquire its stock in the open market.
"The restructuring program is aimed at fundamentally reshaping Sara Lee
Corporation for the future," said John H. Bryan, chairman and chief executive
officer. "While Sara Lee is currently operating at record levels by every
measure of financial performance, we always seek to further improve results
and enhance shareholder value."
-more-
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Sara Lee Corporation Announces
Major $1.6 Billion Restructuring Program -- Page 2
Mr. Bryan went on to say, "The business of Sara Lee Corporation has been
and will continue to be the building of branded leadership positions. The
size and strength of these positions today, coupled with rapidly advancing
globalization and specialization in our marketplace, lead us to
de-verticalize our operations. This program will significantly reduce the
capital demands on our company, enhance our competitiveness and let us focus
even more sharply on our mission of building brands."
For the program's first phase, Sara Lee is in discussions to divest
substantially all of the company's U.S. yarn and textile operations related
to knit products. Total cash flow benefits to Sara Lee from this transaction
are expected to approximate $500 million over the next three years. The
divestiture of these assets will allow Sara Lee to reduce its manufacturing
presence while increasing its focus on the more profitable business of
building and marketing its leading brands. Profits, margins and returns are
expected to improve through lower fixed expenses and reduced operating costs.
Top-line growth will benefit from savings achieved through restructuring and
cost reduction efforts that will be targeted toward investment spending
behind brand building and marketing initiatives.
Other assets, relating both to Sara Lee's food and non-food businesses,
are expected to be included in subsequent transactions over the next three
years.
Sara Lee's management in also considering the divestiture of certain
businesses with revenues of less than $1 billion. While the sale of these
business units would increase the focus of Sara Lee's remaining operations,
no business unit will be sold unless Sara Lee receives an economically
attractive valuation.
-more-
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Sara Lee Corporation Announces
Major $1.6 Billion Restructuring Program -- Page 3
The three-year strategic program will result in a fiscal 1998 after-tax
charge, which is currently estimated to be approximately $1.6 billion,
related primarily to the sale and write-down of assets that the company has
determined it does not need to own in order to fulfill its primary mission of
building brands on a global basis. The company anticipates that the charge
will be predominantly non-cash. The size and composition of the write-off
have not yet been fully determined, although this process is expected to be
completed by the end of the company's third fiscal quarter.
After-tax savings from the restructuring program and cost reduction
efforts are estimated to be $25 million to $50 million in fiscal 1998, rising
to $100 million to $125 million by the year 2000. While the company projects
a higher earnings growth rate as a result of these savings, a significant
percentage of the additional funds will be used to increase sales through
enhanced investment spending and marketing programs.
Lastly, in connection with the restructuring, Sara Lee plans to repurchase
at least $3 billion in Sara Lee common stock in the open market over the next
three years. This stock buyback activity would represent the most aggressive
share repurchase plan in the company's history.
Sara Lee Corporation, a global food and consumer products company with
$19.7 billion in sales, markets a wide variety of products under leading
brand names, including SARA LEE, BALL PARK, HILLSHIRE FARM, JIMMY DEAN,
AOSTE, DOUWE EGBERTS, HANES, HANES HER WAY, L'EGGS, BALI, PLAYTEX, CHAMPION,
COACH, DIM, SANEX and KIWI.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SARA LEE CORPORATION
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(Registrant)
September 15, 1997 By: /s/ Wayne R. Szypulski
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Wayne R. Szypulski
Vice President - Controller
