Earnings Preview: Sara Lee to report fiscal 4Q

OVERVIEW: The maker of Jimmy Dean sausages, Hillshire Farm deli meats and Sara Lee breads is struggling with rising costs for wheat and a weak economy.

Like many food makers, Sara Lee has been forced to raise prices, but costs are rising too rapidly to keep up.

These steep costs are slowing down turnaround plans at the Downers Grove, Ill.-based company. Sara Lee has been trying to restructure its operations after years of lackluster results.

The company said two weeks ago it plans to record a non-cash impairment charge of $1.17 to $1.32 per share in the fiscal fourth quarter because of the weakening economy and wheat costs.

The company said the bulk of the goodwill impairment charge in the fourth quarter is for its Spanish bakery and North American Foodservice bakery operations.

The company will also record a non-cash write-down of $65 million to $75 million, before taxes, for certain other assets in North America.

BY THE NUMBERS: Analysts polled by Thomson Financial expect earnings, excluding items, of 26 per share on revenue of nearly $3.48 billion for the June quarter. The company didn't issue guidance for the quarter.

ANALYST TAKE: The non-cash charge shows that the Spanish bakery and North American Foodservice bakery operations didn't show the level of improvement management expected in the second half of Sara Lee's fiscal year, Lehman Brothers analyst Andrew Lazar wrote in a research note.

He also said that since the company didn't choose to pre-announce its earnings, that means the poor performance of those segments probably didn't affect the company's fiscal 2008 earnings.