sara lee: a compelling value...

Sara Lee: A Compelling Value PropositionBrenda BarnesChairman and CEO

February 17, 2009

Forward-looking statement

We caution you that our remarks this morning contain forward-looking statements about SLE’s future operations, financial performance and business conditions. These forward-looking statements are based on currently available competitive, financial and economic data, as well as 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 orimplied in these statements. Consequently, I need to caution you not to place undue reliance on forward-looking statements. We have provided additional information in our latest earnings press release and Form 10-K for fiscal 2008 that I encourage you to review concerning factors that could cause actual results to differ materially from these forward-looking statements

Sara Lee: a compelling value proposition

•Clear growth strategy •Disciplined approach to capital allocation•Strong and growing brands serving large,

expanding markets•Improving operational performance•Significant cost savings achieved, with more

to come from Project Accelerate•Improved execution will deliver strong

performance

Transformation goals

•Dramatically improve performance and better position Sara Lee for long-term growth

•Key pillars:

Organize around consumers, customers and geographic markets

Achieve operational efficiency to fund growth

Focus business portfolio

Our strategic Transformation: actions

•Sold or spun off 40% of the business•Generated $3.8 billion; redeployed to growth

businesses•Repurchased $1.9 billion in shares•Reduced debt by $2 billion

Our strategic Transformation: benefits

•Single, focused company•Common vision and strategy•Simplified organizational structure•Improved business processes and

operational efficiencies•Culture of continuous improvement

Sara Lee’s Transformation journey

•Consolidated NA operations and corporate

•Reorganized business segments

•Developed centralized infrastructure and continuous improvement

•Divested non-core businesses

•Streamlined organization

•Improved sales and marketing

•Innovation/new products pipeline

•Spun-off Hanesbrands

•Simplified international structure

•Grew investment in key emerging markets

FY05 FY06 FY07

FY08: accelerating our pace

•Significantly enhanced key customer partnerships

•Sales force focused on providing greater value add to customers

consumer and category insights and innovationsin-store merchandising

•Strong growth in our top 10 retail customers in the North American Retail and Fresh Bakery segments

•Over 25,000 displays in-store during the program

•Soft & Smooth bread penetration +43%

•Volume Sales +22%•Dollars Sales +26% •YTD Soft & Smooth +20% in

lb sales

Sara Lee Soft & Smooth and Disney

Video in Progress

Sara Lee High School MusicalWinner HSM video contest

FY08: accelerating our pace

•Successful implementation of SAP yielding savings

•Accelerated benefits from process discipline•Exited low to no margin businesses•Completed “Kitchens of Sara Lee” NA R&D

facility•Continued investment in product innovation

FY08 highlights

•Strong sales growth of 10.3%•Adjusted operating margin up 70 bps to 8.1%•Net cash flow from operating activities of

$596 million•Sara Lee brand exceeded $1 billion in sales

for the first time•Achieved share gains in most key markets•Offset commodity inflation through pricing

Note: Financial amounts only include results for businesses reported in continuing operations.Please see slides at the end of this presentation for reconciliation of non-GAAP items.

Sara Lee: then and now

$ in millions, except per employee data FY05 FY08Net sales $19,254 $13,212

Total assets $14,412 $10,830

Total debt $4,754 $3,188

Employees 137,000 44,000

Sales/employee $140,540 $300,272

Note: FY05 shown as reported prior to any acquisitions or divestitures; FY08 reflects restatement made in October 2008.

Today’s Sara Lee: a strong portfolio

17%

15%17%

20%

24%

7%

FY08 Net Sales of $13.2 billion

International Beverage

International Household and

Body Care

NA Retail

NA Fresh BakeryNA Foodservice

International Bakery

Delivering Transformation on budget

Total charges between $900 million and$1.1 billion (half cash, half non-cash)

February 2005 forecast

Total charges of $1.04 billion(66% cash)

Actual as of December 2008

Transformation delivered incremental EBIT of $214 million

Note: Excludes acquisitions/divestitures and significant items.

FY05-08

103

196

628

267

91

49

(140)

(550)9

282

(721)

0

500

1000

1500

Vo lume C entral.Infrastruct . M A P P ricingC o mmo dit iesSales M ix Lean Inf lat io n Other F X

(EBI

T)

($ in millions)

Margin Improvement

214

Sales MixPricing Commodities

Improving ability to cover commodity costs

$0

$100

$200

$300

$400

$500

FY06 FY07 FY08 1H FY09

$ in millions

Commodity price increases

Incremental pricing

Transformation helped offset impact of higher inflation

FY06-08Actual

Pricing (net of commodities) $(93)

Sales mix +$49

Lean savings/other +$267

Non-commodity inflation $(550)

Other $(140)

Total cost increase $(467)

Note: All amounts are incremental to FY05 base.

($ in millions)

Exceeded our commitment, but benefits offset by inflation

FY06-08Commitment

FY06-08Actual Variance

Margin improvementInflation

$175 $(467)$1,306

$(642)

CentralizationITShared servicesProcurement

$115 $282 +$167

Infrastructure Rationalization/

N.A. consolidation$115 $196 +$81

Total $405 $11 $(394)

($ in millions)

Note: All amounts are incremental to FY05 base

Exceeded our

commitment

2Q09: a mixed performance

•Strong North American performanceRetail net sales grew 8.4%Fresh bakery net sales increased 10.6%Food service net sales up slightlyHigher adjusted operating segment margins

•International performance impacted by weak economic environment and currency

•$(184) million of significant items•Commodity derivatives mark-to-market

losses of $(23) million

$0

$100

$200

$300

$400

$500

1H08 1H09$6,000

$6,200

$6,400

$6,600

$6,800

1H08 1H09

+ 5.0%

1H09 affected by weakening economy, currency

Adj. Net Sales($ in millions) ($ in millions) Adj. Operating Income

- 5.9%

Note: Please see slides at the end of this presentation for reconciliation of non-GAAP items.

Commodity derivative mark-to-market has impact on adjusted operating income

1H09 1H08 Change

Operating Income $386 $524 (26.4)%

Less:Foreign currencySignificant ItemsAcquisitions/Divestitures

–(23)

5

788

–

Adj. Operating Income $404 $429 (5.9)%

1H09 1H08 ChangeCommodity derivative mark-to-market $(58) $10 $(68)

NA adjusted net sales continue to grow

$300

$400

$500

$600

$700

$800

2Q08 2Q09$300

$400

$500

$600

$700

$800

2Q08 2Q09

Retail Fresh Bakery

$300

$400

$500

$600

$700

$800

2Q08 2Q09

Foodservice($ in millions) ($ in millions) ($ in millions)

+ 8.4% + 10.6% + 3.0%


NA adjusted operating segment income strong

$0

$10

$20

$30

$40

$50

$60

$70

$80

2Q08 2Q09$0

$10

$20

$30

$40

$50

$60

$70

$80

2Q08 2Q09$0

$10

$20

$30

$40

$50

$60

$70

$80

2Q08 2Q09

($ in millions) ($ in millions) ($ in millions)

+ 61.2% + 433.3% + 22.3%

Retail Fresh Bakery Foodservice


Market share continues to grow in NA Retail and Fresh Bakery

TOTAL PACKAGED MEATS CATEGORY:12 weeks = 21.5%, +1.0 share point, #152 weeks = 20.1%, +0.8 share point, #1

Note: IRI, January 11, 2009. Total packaged meats category includes lunchmeat, smoked sausage, cocktail links, hot dogs, corn dogs, breakfast sausage, bacon, protein breakfast; fresh bread share is for Sara Lee brand only.

TOTAL FRESH BREAD CATEGORY:12 weeks = 8.2%, +0.1 share point, #152 weeks = 8.4%, +0.2 share point, #1

NA foodservice growing with key accounts across channels

Weakening European economy affecting International adjusted net sales

$100

$200

$300

$400

$500

$600

$700

$800

2Q08 2Q09$100

$200

$300

$400

$500

$600

$700

$800

2Q08 2Q09$100

$200

$300

$400

$500

$600

$700

$800

2Q08 2Q09

($ in millions)

+ 4.1% - 4.9% - 3.9%

Beverage Bakery Household and Body Care


($ in millions) ($ in millions)

Declining International adjusted operating segment income due to economic challenges

$0

$20

$40

$60

$80

$100

$120

2Q08 2Q09$0

$20

$40

$60

$80

$100

$120

2Q08 2Q09$0

$20

$40

$60

$80

$100

$120

2Q08 2Q09

- 11.1% - 23.0% - 7.6%

Beverage Bakery Household andBody Care


($ in millions) ($ in millions) ($ in millions)

Outstanding single-serve performancein International Beverage

Eurodough business delivering

International Household and Body Care innovation strong globally

Macro issues facing our business

Increased competitive pressures

Increased in-home consumption

Growth ofprivate label

Declining Western European economy

Macro issues: our response

Project Accelerate

Pricing architecture

Shift promotional spend

Emphasize value proposition

InnovationIncreased competitive pressures

Increased in-home consumption

Growth ofprivate label

Declining Western European economy

Immediate plans to address Europe

Initiatives Beverage Bakery H&BC

Pricing architecture

Affordable innovation

Additional channels

Shift MAP spending to trade and promotions

SKU rationalization

Cost reduction

High priority Priority Low priority


•Positioning SenseoAt new distributions channelsAs the affordable coffee house experience at home As a multi-beverage system

•Launched Maison du CaféPepite D’Arome with heavy in-store support

•Emphasizing Cafitesse’slow labor costs and minimal waste to foodservice customers


•Expanded EuroDough refrigerated dough portfolio

•Executing pricing actions and promotions for Bimbo bread

•Launched new products with heavy in-store support

•Aggressively attacking operating costs

A BOTTLE OF OLIVE

OIL

FOR TWO BAR

CODES

International Household and Body Care

•Launching “affordable”product innovations

•Focusing on price architecture

•Shifting MAP to trade and promotional spending

•Rationalizing SKUs and lowering costs

•Air care partnerships with Henkel/Dial and Clorox

Deploy investments where we have:#1 or #2 position (or can establish)Sustainable economic model (or can establish)

• Define clear roles for each unitProfitable growthMargin focus

• Streamline the cost base and drive efficiency

Our growth and value creation strategy

Our investment priorities

MAP CapEx M&AInternational Beverage

Int. Household and Body Care


N.A. Retail

N.A. Foodservice

N.A. Fresh Bakery

High priority Priority Low priority

Leading NA market positions

Brand Category Share Rank

Hot Dogs 21.0% #1

Lunch Meat 11.2% #2

Smoked Sausage 28.4% #1

Protein Breakfast 52.4% #1

Breakfast Sausage 28.4% #1

Corn Dogs 47.4% #1

Frozen Pies/Desserts 23.7% #1*

Single-serve Coffee 50.0% #1

*Brand

Note: IRI, 12 months ending January 11, 2009.

Leading international market positions

Brand Category Country Share Rank

Air CareNetherlands

Spain38.8%21.0%

#1#1

Bakery Spain 42.8% #1

Body CareSpainU.K.

12.9%22.5%

#1#1

Roast & ground coffee

NetherlandsFranceSpainBrazil

58.5%22.9%21.6%20.7%

#1#2#1#1

Single-serve coffeeNetherlands

France41.9%42.1%

#1#1

Note: IRI and AC Nielsen, 12 months ending November 2008; ending January 2009 for coffee and Senseo

Strong pipeline of product innovation

Brand New Product IntroductionsRenov’AirTender Bakery BreadsWhite Bread with Olive OilPre-sliced Pies

Deli Select Ultra Thin and Hearty Slices (new varieties)

Breakfast Entrees

L’OR Pepites d’Arome IntenseCheesecake BitesOrganic Puff Pastry and Pizza DoughNaturProtect deodorantGodiva Coffee PodsHot ChocoLatte Select (coffee maker with Philips)

Jimmy Dean: a successful breakfast platform

Senseo continues to deliver strong results

Sanex NaturProtect appeals to green consumers

Video in Progress

Jimmy Dean Breakfast EntreesSenseo Latte SelectSanex NaturProtect

• Deploy investments where we have:#1 or #2 position (or can establish)Sustainable economic model (or can establish)

Define clear roles for each unitProfitable growthMargin focus

• Streamline the cost base and drive efficiency


Strong North American foundation

#1 or #2Position

Economic Model

NA Retail

NA Foodservice Mixed Mixed

NA Fresh Bakery National Brand

Locally Mixed

KnowHow To

Advantaged Niches

Role

Margin Near-TermGrowth Long-Term

Fix Mix: Margin

Margin

Upside!

Strong International foundation

#1 or #2Position

Economic Model

InternationalBeverage

InternationalHousehold and Body Care


In country-category combinations

Role

Growth in Depth and Breadth

Growth in Depth

Margin(Spain) Upside!

• Deploy investments where we have:#1 or #2 position (or can establish)Sustainable economic model (or can establish)

• Define clear roles for each unitProfitable growthMargin focus

Streamline the cost base and drive efficiency


Project Accelerate: building on the successes of the Transformation

Building on our Transformation, Project Accelerate will continue to drive sustainable advantage and deliver value to shareholders

Project Accelerate has company-wide initiatives with segment-specific execution

Business Process Outsourcing: Indirect

Procurement

Supply ChainSG&A Reduction

Business Process Outsourcing: IT &

Finance

BPO is progressing rapidly

• Data centers managed by HP• Telecommunications consolidated with AT&T• IBM to handle application development &

maintenance• Go live in FY09, complete in FY10• Anticipated reduction of 700 FTEs• Leverages standardized processes and IT

infrastructure• Savings in the millions of dollars

BPO indirect procurement benefits

• $2.9 billion of indirect spend• Transactional procurement and strategic

sourcing• Will cover 90%+ of all indirect spend• Significant cost reductions• Improved visibility on spending

• Changed schedules, processes and shift patterns

• Capacity increased by 25% at Claryville, KY meat plant with no additional capital outlay

• Plan to roll out to other facilities: potential capacity increases of 10 – 30%

Supply chain: driving production capacity

Other supply chain initiatives

North America• Eliminated low/no margin SKUs• Took pricing to improve margin• Re-balanced production between Foodservice and

RetailInternational• Reduced SKUs, standardized processes • European green coffee hub driving efficiencies• Targeting cost reductions of 15% in Beverage and

30% in Household and Body Care

Company-wide SG&A reduction

• Headcount• Compensation/benefits• Facilities and other assets• Continuous improvement• Process improvement

Project Accelerate improves business processes and cuts costs

• 20% reduction in reports through standardization

• 71% reduction in intercompany transactions• 61% reduction in global IT applications• 65% reduction in supplier base• 163 bank accounts closed in FY08; expect

to eliminate another 200• 45% fewer legal entities by FY10

Project Accelerate: early costs deliver significant savings

FY09 FY10 FY11

One-Time Costs

Front-end loaded$150 million over 3 years

Cost Savings $200 million – $250 million annually by FY11

Sara Lee: a compelling value proposition

• Clear growth strategy • Disciplined approach to capital allocation• Strong and growing brands serving large,

expanding markets• Improving operational performance• Significant cost savings achieved, with more

to come from Project Accelerate• Improved execution will deliver strong

performance

Long-term guidance

Note: Actual results will be impacted by future currency exchange rates, significant items or acquisitions/divestitures

Long-termNet Sales

Long-term Op. Income

NA Fresh Bakery 2-4% 10-15%

NA Retail 2-4% 6-8%

NA Foodservice 1-3% 4-6%

International Beverage 5-7% 6-8%

International Bakery 3-4% 4-6%

International Household andBody Care 5-7% 7-9%

Total Sara Lee 3-5% 8-10%

Questions & Answers

Non-GAAP ReconciliationsCAGNY 2009

64

FY08 Adjusted Sales, Adjusted Operating Income, and Adjusted Operating Margin*

FY08Net Sales $13,212Less:Foreign currencyAcquisitions/Divestitures

–2

Adj. Net Sales $13,210

Operating Income $260Less:

Tobacco proceedsForeign currency

Impairment chargesOther significant items, net

130–

(874)(98)

Adj. Operating Income $1,072Adjusted Operating Margin % 8.1%

*These adjusted measures are not impacted by foreign currency fluctuations because they show results at a single moment in time.

65

North American Retail

66

North American Fresh Bakery

67

North American Foodservice

68


69


70

International Household and Body Care

71

Total Sara Lee

sara lee: a compelling value...

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