Milling & Baking News - November 15, 2005 - 38

F I N A N C I A L

R E S U L T S

Sara Lee finds pluses in baking
results despite earnings decline
CHICAGO - A mixture of positive and
negative characterized first-quarter results
of Sara Lee Bakery Group in financial results issued Nov. 3 by Sara Lee Corp.
The baking group of Sara Lee sustained an operating loss of $4 million in
the quarter ended Oct. 1, compared with
a $9 million profit in the first quarter last
year. Sales were $460 million, down 2%.
The $4 million loss was attributed
principally to restructuring charges and
transformation costs, the effects of a nonrecurring curtailment gain in the prior
year and higher commodity costs.
Overall, the North American retail
bakery segment showed a unit volume
decline in the quarter of 5%.
Still, the company identified a number
of positives in its baking business results.
Driven by the successful launch of Sara
Lee Soft & Smooth bread, sales of baked
products under the Sara Lee brand were
up 30% from the first quarter last year.
On a combined basis in the categories
in which it competes (bread, buns and

bagels), the company said Sara Lee is the
nation's leading brand, based on Information Resources, Inc. data. The brands'
share during the quarter climbed to 6.5%.
"However, unit volumes and sales
for other fresh bakery businesses declined, primarily due to softness in
traditional white bread, planned exits
from low-margin regional bread business and weakness in the Earth Grains
brand," the company said.
Net income of Sara Lee Corp. in the
first quarter was $67 million, equal to
9c per share on the common stock,
down 80% from $352 million, or 45c
per share. Net sales were $4,305 million, down 2% from $4,395 million.
Operating income in the quarter was
$253 million, down 26%.
Net income was adversely affected
by charges related to the company's
transformation plan, business exit
costs and accelerated depreciation.
Results also included a gain of 2c per
share from business dispositions.

J&J Snack Foods posts record
sales, earnings in fiscal 2005
PENNSAUKEN, N.J. - Net income of
J&J Snack Foods Corp. in the year ended
Sept. 24 was $26,043,000, equal to $2.86 per
share on the common stock, up 15% from
$22,710,000, or $2.55 per share, in fiscal
2004. Sales were $457,112,000, up 10%.
In the fourth quarter, J&J Snack net income was $9,892,000, or $1.08 per share,
up 12% from $8,838,000, or 98c per share,
in the last period of fiscal 2004. Sales were
$129,789,000, up 6%.
"In achieving our record year we benefited from solid sales in our fourth quarter and

In an update on the transformation
plan, Sara Lee reviewed a number of
previously announced transactions
and executive hirings.
"The organization design and staffing
for the two continuing North American
businesses and the corporate functions
are now 90% complete," the company
said. "The plan for relocating the management of these groups to a single
headquarters in Downers Grove, Ill., is
on track for completion in the fall of 2006.
As of the end of the first quarter, Sara Lee
Food & Beverage already had consolidated its management team from several
different cities into the new location."
The company has begun implementation of operating efficiency initiatives,
including centralized procurement, common information technology systems
and Lean Enterprise and the Process
Improvement to Excellence programs.
"The new global procurement organization is off to a strong start with
80% of its positions filled and is developing significant cost reduction initiatives initially focused on packaging,
co-packing, commodities and indirect
spending," the company said. MBN

continued strong performance in our food
service group," said Gerald B. Shreiber,
president and chief executive officer.
Adjusting for sales stemming from the
acquisitions of Country Home Bakers
in January 2004 and Snackworks, L.L.C.
earlier this year, sales increased approximately 5%, or $22 million.
Sales to food service customers increased
$29,600,000, or 12%, to $280,123,000 in fiscal
2005. Excluding Country Home Bakers and
Snackworks, sales increased $11,230,000, or
4%. During the year, soft pretzel sales to

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the food service segment increased 8% to
$87,308,000, primarily due to the acquisition of Snackworks. Excluding Snackworks,
pretzel sales increased less than 1%.
Bakery
product
sales
increased
$16,048,000, or 14%, for the year. Excluding Country Home Bakers, sales of bakery
products increased 3%, primarily because
of private label and industrial business customers. Churro sales rose 12% to $14,777,000
with three customers accounting for more
than half of the increased sales.
Sales of products to retail supermarkets
increased $3,504,000, or 9%, to $42,347,000
in fiscal 2005. Total soft pretzel sales to
retail supermarkets were $21,839,000, an
improvement of 19% from fiscal 2004. MBN

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38 / Milling & Baking News, November 15, 2005

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Milling & Baking News - November 15, 2005

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