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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) May 30, 2000
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 May 30, 2000, Sara Lee Corporation issued the following press release:
SARA LEE CORPORATION
Three First National Plaza
Chicago, IL 60602-4260
FOR IMMEDIATE RELEASE
Media: Theresa Herlevsen, 312.558.8489
Analysts: Janet Bergman, 312.558.8651
SARA LEE CORPORATION RESHAPES PORTFOLIO TO TIGHTEN GLOBAL BUSINESS FOCUS
COMPANY ANNOUNCES PLANS FOR DISPOSITION OF COACH, PYA/MONARCH FOODSERVICE
UNIT, CHAMPION AND OTHER NON-CORE BUSINESSES
THREE ACQUISITIONS STRENGTHEN GLOBAL POSITIONS IN COFFEE, UNDERWEAR AND MEATS
COMPANY PROVIDES INSIGHT FOR FISCAL YEAR 2001 RESULTS
CHICAGO (MAY 30, 2000) -- Sara Lee Corporation announced today the first steps
of a significant reshaping of its business portfolio that will tighten the
company's focus on a smaller number of global branded consumer packaged goods
segments. Both acquisitions and dispositions will be used to concentrate the
company's resources on three business segments: Food and Beverage, Intimates
and Underwear, and Household Products.
Business disposition plans announced today include initial public
offerings and subsequent dispositions for Coach, a leading global leather
goods business, and PYA/Monarch, the country's fourth-largest, full-service
foodservice distributor. In addition, the company announced its intent to
sell Champion, a global manufacturer and marketer of high-quality athletic
apparel, and the International Fabrics division of Courtaulds. These
businesses do not fit with Sara Lee's renewed focus on branded consumer
packaged goods segments in which the company can enjoy leading category
positions around the world. These dispositions are designed to streamline the
company's structure and create increased value for Sara Lee shareholders.
"We have a new vision for Sara Lee, a vision that will focus our
business portfolio and resources on a smaller number of more powerful global
growth platforms," said C. Steve McMillan, president and chief operating
officer. McMillan will assume the role of president and chief executive
officer July 1. "What we have begun today allows us to preserve the benefits
of diversification while improving the consistency and sustainability of our
company's growth prospects and performance over the long term."
Several acquisitions and investments also were announced that will
strengthen Sara Lee's global position in its Food and Beverage, and Intimates
and Underwear segments. These include:
- Uniao's coffee business, which is the largest coffee company in Brazil.
Uniao gives Sara Lee a number-one position in that country, which is the
world's second-largest coffee consuming market after the United States.
- Sol y Oro, the number-one branded intimate apparel and men's underwear
company in Argentina. This packaged apparel business, combined with the
Uniao coffee acquisition, provides an important platform for further
expansion in Latin America's large Mercosur trading bloc.
- A minority investment in Johnsonville Sausage Company, the leading
manufacturer of premium fresh sausage products in the United States.
This investment provides Sara Lee's meat companies exposure to a
fast-growing meat category in which the company's product line is
currently underrepresented.
Sara Lee's portfolio shift solidifies its mission to build leadership
brands in markets around the world and underscores its focus on products and
businesses that:
- Are global, or have the potential to expand globally
- Hold leading brand positions (#1 or #2)
- Reach consumers through multiple distribution channels
- Benefit from innovative product development efforts
- Can achieve "breakthrough economics," which is defined as a cost structure
that is not easily matched by the competition
"This reshaping will increase Sara Lee's opportunities to leverage our
global presence, marketing expertise, manufacturing scale and proprietary
production processes to yield significant competitive advantages, high
returns and superior growth," McMillan said. "We are confident that the
program we have announced today benefits our employees and customers, and
provides increased value for our shareholders."
The initial public offerings for Coach and PYA/Monarch are expected to
take place before December 31, 2000. Subsequent to the IPOs, Sara Lee will
own at least 80.1% of each business. Although no specific timetable or
transaction format has been established, the company anticipates, subject to
market conditions, that the remaining ownership in Coach and PYA/Monarch will
be disposed of within 18 months. The company will negotiate separately the
sale of Champion and International Fabrics.
"All of these businesses hold leadership positions in their categories,
but they do not fit within our new, more focused vision on branded consumer
products with global opportunities," McMillan said. "In some cases we also
saw greater prospects for the companies separate from Sara Lee. We are
confident that these businesses will continue to deliver value as independent
entities or as part of another company."
Coach is a $550 million global designer, producer and marketer of
high-quality leather goods.
PYA/Monarch is a $2.7 billion regional foodservice distributor operating
in the southeastern United States. It is the fourth-largest foodservice
distributor in the country.
Champion is a $500 million global manufacturer, marketer and distributor
of high-quality athletic, recreational and casual apparel.
International Fabrics is a $400 million division of Courtaulds, a
U.K.-based apparel manufacturer that Sara Lee recently acquired. It produces
and sells raw components to makers of intimate apparel and underwear.
FISCAL YEAR 2001
A number of one-time events, including transactions related to the
company's reshaping efforts, are likely to affect reported earnings per share
in fiscal 2001, which begins on July 2, 2000. The exact timing and financial
proceeds or outlays from dispositions and acquisitions are not definitive at
this point, nor is their likely effect on results for fiscal 2001, although
management expects the net impact to be modestly accretive. Additionally,
while individual transactions will result in one-time gains or losses,
management believes that the net effect will be an overall one-time gain.
From an operations perspective, the company is projecting strong growth
in local currency terms for its core businesses. However, like most
multinationals, Sara Lee's reported sales and profits are affected by the
strength of the U.S. dollar against the Euro. The effect of adverse currency
movements will be partly offset by a reduction in Sara Lee's tax rate to a
long-term sustainable level of between 23% and 24%. The combined effect of
these two items will be to offset a portion of Sara Lee's underlying constant
currency profit growth. If currency rates remain at recent levels, the
company anticipates that it will deliver reported earnings per share growth
in the mid-single digits for fiscal 2001, as many of the benefits of the
reshaping plan will not enhance earnings until after next year.
Sara Lee Corporation (WWW.SARALEE.COM) is a global consumer packaged
goods company with more than $20 billion in annual revenues. Its leading
brands include SARA LEE, DOUWE EGBERTS, HILLSHIRE FARM, HANES and PLAYTEX.
NOTE: This news release does not constitute an offering of any securities
for sale. Any offering would be made only by means of a prospectus.
FORWARD-LOOKING STATEMENTS: This news release contains certain
forward-looking statements concerning Sara Lee's operations, economic
performance and financial condition. These forward-looking statements are
based on currently available competitive, financial and economic data and
management's views and assumptions regarding future events. Such
forward-looking statements 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. We have provided additional information in our Form 10-K for
fiscal year 1999 and Forms 10-Q for the first, second and third quarters of
fiscal 2000, which readers are encouraged to review, concerning factors that
could cause actual results to differ materially from those in the
forward-looking statements.
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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)
May 30, 20000 By: /s/ Wayne R. Szypulski
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Wayne R. Szypulski
Vice President - Controller
