Sara Lee Reports Third Quarter Earnings

Raw material benefits will begin to be realized in Q4, with coverage of lower prices until October.

Meat Co.

North American Retail and North American Foodservice & Specialty Meats
Third Quarter							($ millions)		First Nine Months
2012		2011		% Change			Continuing Operations		2012		2011		% Change
906		895		1.3			Adjusted Net Sales		2,898		2,882		0.6
935		913		2.4			Reported Net Sales		2,981		2,913		2.3
32		25		28.8			MAP		109		98		12.0
96		103		(7.1	)		Adjusted Op. Seg. Inc.		297		310		(4.4	)
89		103		(13.5	)		Reported Op. Seg. Inc.		272		308		(11.8	)

The total Meat Co. business continues to show positive progress. For the first time in the fiscal year, pricing net of commodities was positive in both the Retail and Foodservice & Specialty Meats segments. Total volumes have begun to stabilize and were slightly down (less than 1%) for the quarter, showing sequential improvement from a 5.7% decline over the prior year in Q1 and a 3.5% decline over the prior year in Q2, assisted by the timing of the Easter holiday as well as higher commodity turkey sales. Bakery categories in both segments continue to perform below expectations, diluting the stronger performance of the meat categories.

North American Retail
Third Quarter							($ millions)		First Nine Months
2012		2011		% Change			Continuing Operations		2012		2011		% Change
675		670		0.8			Adjusted Net Sales		2,100		2,106		(0.3	)
675		670		0.8			Reported Net Sales		2,100		2,106		(0.3	)
26		24		8.8			MAP		93		93		0.5
78		83		(7.0	)		Adjusted Op. Seg. Inc.		222		228		(3.1	)
72		82		(12.6	)		Reported Op. Seg. Inc.		195		226		(14.0	)

Third quarter reported and adjusted net sales showed a slight increase of almost 1% over the prior year third quarter as positive pricing offset a weaker sales mix. Unit volumes were flat for the quarter, continuing a sequential improvement from volume declines of 7.3% over the prior year in Q1 and a 4.9% decline over the prior year in Q2. Volume declines from the transition to third party brokers have shown improvement. Adjusted and reported operating segment income declined, as a result of discounts to move aged inventory and higher MAP spend.

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