LEE SARA CORP, 10-K, 1994-09-30

LEE SARA CORP
10-K, 1994-09-30
SAUSAGES & OTHER PREPARED MEAT PRODUCTS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JULY 2, 1994 COMMISSION FILE NUMBER 1-3344
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SARA LEE CORPORATION
(Exact name of registrant as specified in its charter)

MARYLAND 36-208904
(State of Incorporation) (I.R.S. Employer Identification No.)
THREE FIRST NATIONAL PLAZA 60602-4260
CHICAGO, ILLINOIS (Zip Code)
(Address of principal executive offices)

Registrant's telephone number including area code: (312) 726-2600

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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- - - ---------------------------------- -------------------------------------
Common Stock, $1.33 1/3 par value The Chicago Stock Exchange
The New York Stock Exchange
The Pacific Stock Exchange
Amsterdam Stock Exchange
The Bourse (Paris)
Stock Exchange of Basel
Stock Exchange of Geneva
The Stock Exchange (London)
Stock Exchange of Zurich
Preferred Stock Purchase Rights The Chicago Stock Exchange
The New York Stock Exchange
The Pacific Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE
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Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

State the aggregate market value of the voting stock held by non-affiliates
of the registrant: $11,118,166,220 as of September 1, 1994.

On September 1, 1994, the registrant had outstanding 481,761,768 shares of
common stock of $1.33 1/3 par value, which is registrant's only class of common
stock.

DOCUMENTS INCORPORATED BY REFERENCE

DOCUMENTS FORM 10-K REFERENCE
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Proxy Statement dated Part III. Items 10-13
September 15, 1994

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PART I

Item 1. Business

(A) GENERAL DEVELOPMENT OF BUSINESS

Sara Lee Corporation ("Sara Lee") is a global manufacturer and marketer of
high-quality, brand-name products for consumers throughout the world. It was
incorporated in Baltimore, Maryland in 1939 as the C.D. Kenney Company and
adopted its current name in 1985.

In fiscal 1994, the main focus of Sara Lee's two industry segments,
Packaged Foods and Packaged Consumer Products, was to continue to build brand
equity and improve returns and market share. These objectives were pursued by
the introduction of new products and the expansion of existing products into new
markets.

During the latter part of the fiscal year, Sara Lee announced the
implementation of a worldwide restructuring program designed to accelerate the
achievement of higher returns and lower costs throughout its lines of business.
The restructuring plan involved a fourth quarter charge of $732 million before
tax and affected all four of Sara Lee's lines of business--Packaged Meats and
Bakery, Coffee and Grocery, Personal Products, and Household and Personal
Care--although the majority of the charge was related to worldwide segments of
the Personal Products operations. The charge incorporated severance for
approximately 9,900 employees, as well as the costs of closing, consolidating,
and realigning production and distribution facilities throughout the world.

SARA LEE PACKAGED FOODS

SARA LEE PACKAGED MEATS AND BAKERY

Sara Lee Packaged Meats continued to introduce new food products during
fiscal 1994, with an emphasis on "better-for-you" products and convenience
foods. Several Sara Lee meat brands introduced reduced-fat products in fiscal
1994 and early fiscal 1995, including Ball Park 97, Bryan Juicy 'N Lean, and
Kahn's Extra Lean hot dogs. Hillshire Farm & Kahn's launched the national
distribution of low-fat, regular-sliced luncheon meats, and reformulated
Hillshire Farm Lite Smoked Sausage and Hillshire Farm Lite Polska Kielbasa to be
85% fat-free, while Jimmy Dean Foods introduced three varieties of single-serve
breakfast sandwiches.

Outside the United States, Sara Lee's objective of broadening markets
served was reflected in its joint venture with AXA Alimentos S. A. de C.V.,
which owns Kir Alimentos S. A. de C.V., Mexico's second largest packaged meats
company and a leading manufacturer of hot dogs, lunch meats, sausages, and ham.

Sara Lee Bakery introduced, and/or expanded its distribution of, a number
of new products, including Sara Lee Coffee Crumb Cake and Sara Lee Cream Pies.
In addition, Sara Lee Bakery's foodservice business introduced a new line of
fruit cobbler products, together with a reformulated pumpkin pie that is
shelf-stable for up to three days.

SARA LEE COFFEE AND GROCERY

During fiscal 1994, the Coffee and Grocery line of business introduced such
new items as Piazzo D'Oro espresso products and the Douwe Egberts Grand Cafe
assortment of flavored instant coffees in the Netherlands, and a decaffeinated
version of Maison du Cafe L'Or in France.

Sara Lee also entered the Mexican coffee systems market through
distributors, and significantly increased its interest in Friele, a Norwegian
coffee company that holds a 27% share in the Norwegian roasted coffee market.

In the United States, Superior Coffee and Foods became the exclusive coffee
system service to the MGM Grand Casino and Theme Park in Las Vegas, the world's
largest hotel.

The year saw increased volatility in the price of green coffee due, in
large part, to a general tightening in supply, social and economic conditions in
many producing nations, fluctuation in the commodities market

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caused by investment fund participation, and poor weather conditions in Brazil
in early fiscal 1995. Sara Lee's ability to adjust its inventory and pricing
practices enabled it to respond successfully to these challenges, which are
expected to continue throughout fiscal 1995.

New tea products were launched during the fiscal year. Pickwick Cocktails
tea, with a mixture of three fruit tastes, and Pickwick Ice Tea Lemon in cans
and one-liter bottles were introduced in the Netherlands, while Pickwick black
and fruit-flavored teas were introduced in Russia and are now available in every
major Russian city.

SARA LEE PACKAGED CONSUMER PRODUCTS

SARA LEE PERSONAL PRODUCTS

Sara Lee Hosiery experienced a decline in 1994 sales and earnings in the
United States and Europe due to a number of factors, including changing
fashions, more casual lifestyle trends, and lingering recessionary conditions in
Europe. Worldwide sheer hosiery unit volumes dropped 6%, excluding acquisitions.
Despite these obstacles, Sara Lee Hosiery's leading share in the United States
sheer hosiery market remained strong, while the business continued to gain share
in many European markets. Sara Lee's response to changing market forces in the
hosiery area involved the restructuring of operations to reduce sheer hosiery
capacity. Sara Lee has also expanded its product line to include such casual
products as tights, opaques, and trouser socks. Further enhancement of brand
equity, new product development, and expansion into new markets has also
continued with positive results.

New products introduced in 1994 emphasized value-added qualities and
included L'eggs New Sheer Energy hosiery, with enhanced comfort and fit, Silk
Reflections Soft Touch hosiery--featuring all-microfiber construction, Silk
Reflections Plus hosiery for full-figured women and, under the Hanes brand, two
waist-to-toe figure control products: Smooth Illusions hosiery and the more
moderately priced Profiles brand.

New markets entered included South Africa--through the acquisition of The
South African Hosiery Company (Pty.) Ltd., China--through a joint venture with
Shanghai Vocal Enterprise Ltd., and Japan--through the acquisition of Peri
Shoji. In addition, full distribution of the Hanes and L'eggs brands began in
Canada, while L'eggs and the designer collection of Donna Karan hosiery were
introduced in Japan.

Sara Lee Knit Products continued to show strong results in the United
States, assisted by solid performances in its activewear and underwear segments.
European results were weaker due to heavy competition and a continuing
recession. During the 1994 fiscal year, challenging market conditions,
overcapacity, and low returns necessitated a restructuring program providing for
plant closings and realignments in certain U.S. retail fleece categories and in
European underwear and activewear. Several less profitable lines of merchandise,
including Champion's Spring City private label business, were discontinued.
These adjustments are expected to result in significant savings over the next
several years and should leave Sara Lee poised to pursue its goals of building
business in its core knit products categories through new licensing
opportunities, the introduction of new products, and expansion into new
geographic markets.

Licensing initiatives included those associated with Sara Lee's sponsorship
of the 1994 and 1996 Olympic Games, whereby virtually all licensed T-shirts and
fleece products related to the Games will be either Hanes or Champion products;
the Team Hanes program, which markets licensed college and professional
sportswear; new opportunities in the girls' underwear category to license
products with graphics based on three film, toy, and television properties: The
Lion King, Barbie, and The Flintstones; and a long-term license to distribute a
line of Cacherel brand men's briefs and T-shirts in France, Italy, and Spain.

New product initiatives during the 1994 fiscal year included the
introduction of Hanes Her Way casual leather and canvas shoes for women in the
mass-merchandise market, the national launch of Hanes Cool Comfort briefs for
men, and the debut of Hanes Signature Collection of premium adult activewear.

Sara Lee continues to penetrate new knit product markets as well. New
marketing organizations have been established in South and Central America in
order to actively market Hanes, Hanes Her Way, and

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Rinbros products. Expansion in the Asia-Pacific markets is also being achieved
through Intercon Garments and Upxon, Inc., which were acquired in 1993 and which
market products throughout the Philippines and Japan, respectively.

Sara Lee Intimates and Accessories focused on the introduction of new
products, including the launch of the Wonderbra push-up bra in U. S. department
stores, and the Madison collection of tailored day-to-evening handbags by Coach.

SARA LEE HOUSEHOLD AND PERSONAL CARE

The Sara Lee Household and Personal Care segment continued to grow through
acquisitions, new products, and entry into new markets. The acquisition of the
European bath and body care businesses of SmithKline Beecham gave Sara Lee
powerful branded product lines in a number of key markets, extending the reach
of its personal care business and sharpening manufacturing and operating
efficiencies. In addition, the baby-care line was expanded by the acquisition of
the Fissan and Proderm brands. The Fissan line of products is marketed in Italy
and Germany, while the Proderm line has a strong market presence in Greece. The
Kiwi and Tana shoe care lines strengthened their positions through product
development and strategic partnerships. A joint venture with China's largest
shoe care manufacturer, Golden Rooster, provided an entree into China, while an
increased interest in a similar alliance in India will provide Sara Lee's Kiwi
brand access to that market.

In addition to the entrees into the Chinese and Indian markets provided by
joint ventures, Sara Lee fortified its presence in the Asia-Pacific region
through the introduction of product lines in Malaysia, Hong Kong, and Thailand.
It also continued to establish a foundation in Central and Eastern Europe by
expanding its Hungarian marketing unit and by making preparations for an
expansion program targeting the Czech Republic.

Direct selling activities continued to grow through the acquisition of
Avroy Shlain Cosmetics (Pty.) Ltd., the number-one direct selling organization
in South Africa, and through the expansion of product lines in existing markets
in Indonesia, Mexico, and the Philippines.

(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

Sara Lee's businesses are classified into two industry segments: Sara Lee
Packaged Foods and Sara Lee Packaged Consumer Products. The financial
information about Sara Lee's industry segments can be found on pages F-19
through F-20 of this Report.

SARA LEE PACKAGED FOODS

Sara Lee's Packaged Foods segment is comprised of Sara Lee Packaged Meats and
Bakery, and Sara Lee Coffee and Grocery.

SARA LEE PACKAGED MEATS AND BAKERY

Sara Lee Packaged Meats component of this segment processes and sells pork,
poultry, and beef products to supermarkets, warehouse clubs, national chains,
and institutions throughout the United States, Europe, and Mexico. Sales are
transacted through Sara Lee's own sales force, brokers, and institutional
buyers. Some of the more prominent brands within this category include Ball
Park, Best's, Bryan, Hillshire Farm, Hygrade, Jimmy Dean, Kahn's, Mr. Turkey,
Sara Lee, and Sinai 48. Sara Lee acquired Sara Lee Processed Meats (Europe)
B.V., which markets meats under the Stegeman brand in the Netherlands, Dacor in
Belgium, Argal in Spain, and Nobre in Portugal; and a 49.9% interest in AXA
Alimentos, S.A. de C.V., which owns Kir Alimentos S.A. de C.V., a leading
processed meats company in Mexico, in fiscal 1993 and 1994, respectively.

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The products offered by this line of business include smoked sausage,
bacon, hot dogs, breakfast sausage, breakfast sandwiches, premium deli and
luncheon meats, ham, turkey, and packaged lunch combinations. The
ingredients--pork, turkey, and beef--are purchased by Sara Lee from a variety of
sources. The prices of these raw materials fluctuate, depending primarily on
supply and demand. Sara Lee believes that, because of the range of sources from
which these raw materials are available, it will continue to have access to an
adequate supply.

The Packaged Meats category is highly competitive, with an emphasis on
product quality, price, advertising and promotion, and customer service. Sara
Lee's competitors include international, national, regional, and local
companies. The Packaged Meats category has accounted for 10% or more of Sara
Lee's consolidated revenues during the past three fiscal years. Sara Lee
believes it is one of the three industry leaders in the United States.

Most of Sara Lee's Packaged Meats operations are regulated by the U.S.
Department of Agriculture ("USDA"), whose focus is the quality, sanitation, and
safety of meat products, and, to some extent, by state and local government
agencies. Regulations promulgated by the USDA which took effect in August, 1994,
mandate certain new labeling on meat and poultry food products manufactured in
the United States. These new regulatory requirements have not had a material
adverse impact on Sara Lee's consolidated operations. Sara Lee's Packaged Meats
operations in Europe and Mexico are regulated by local authorities.

Sara Lee Bakery produces a wide variety of fresh and frozen baked and
specialty items. Its core products are pies, cheesecakes, pound cakes, and
Danish. These products are sold through supermarkets, foodservice distributors,
bakery-deli, and direct channels throughout the United States, United Kingdom,
France, Mexico, Australia, and numerous Pacific Rim countries. Sales are
transacted through Sara Lee's sales force and independent wholesalers and
distributors. The key ingredients for these products--butter, milk, sugar,
fruits, eggs, and flour--are purchased from suppliers at prices that are subject
to such influences as supply and demand, weather, and government price controls.
Because of the number of sources from which such raw materials are generally
available, Sara Lee believes it will continue to have access to adequate
supplies.

Competition in this category is keen, with a large number of participants.
Sara Lee seeks to maintain and enhance a leading position in the industry
through marketing efforts that are designed to reinforce and build brand
recognition, and through superior customer service.

In the United States, Sara Lee Bakery products are subject to regulation by
the Food and Drug Administration ("FDA"), the federal agency charged, among
other things, with enforcing laws pertaining to food processing, content, and
labeling, and to a lesser extent, by state and local government agencies. The
Nutrition Labeling and Education Act of 1991, which falls under the jurisdiction
of the FDA, took effect in August, 1994 and mandates certain new labeling on
most food products manufactured in the United States. The statute's labeling
requirements have not had a material adverse impact on Sara Lee's consolidated
operations to date.

Sara Lee Foodservice's business is conducted principally under the
PYA/Monarch name. PYA/Monarch is the nation's fifth largest foodservice company
and the leader in the Southeast United States. This business distributes dry,
refrigerated, and frozen foods, paper products, equipment, and supplies to
institutional and commercial foodservice customers.

The institutional foodservice distribution industry is highly competitive,
with price and service being the major means by which Sara Lee Foodservice
competes. This line of business generates lower margins on sales dollars than
Sara Lee's other businesses.

SARA LEE COFFEE AND GROCERY

Sara Lee is one of the largest coffee roasters in the world, and a leader
in the European coffee market. It has a significant presence in such countries
as the Netherlands, Belgium, France, Denmark, Spain, and Australia, and has
established positions in Central and Eastern Europe through acquisitions and
expanded sales efforts. While Douwe Egberts is its European flagship brand, its
other premium European coffee brands

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include Maison du Cafe, Marcilla, and Merrild. Sara Lee's Pickwick brand, a
leader in the European tea market, is expanding its current lines in an effort
to appeal to younger consumers.

This is a very competitive business with the other participants consisting
primarily of other large multi-national companies. Sara Lee seeks to maintain a
competitive edge by offering its customers superior quality and value.

Sara Lee is also a significant competitor in the out-of-home coffee service
business. Its Douwe Egberts Coffee Systems business provides coffee and
dispensing equipment in Europe, while its Superior Coffee and Foods business
provides similar products and services in the United States.

The significant cost item in the production of coffee products is the price
of green coffee, which varies depending on such factors as weather (which
affects the quality and quantity of available supplies), consumer demand, the
political climate in the producing nations, unilateral pricing policies of
producing nations, speculation on the commodities market, and the relative
valuations and fluctuations of the currencies of producer versus consumer
countries. These factors also generally affect Sara Lee's competitors. During
the final week of fiscal 1994, and the first two weeks of fiscal 1995, Brazil,
the world's largest coffee producer, suffered two major frosts that are expected
to have a negative impact on its crop output over the next two to three years.
The resulting uncertainty over the availability of supplies has resulted in
extreme volatility in the price of green coffee, leading to the highest prices
in eight years. Sara Lee has and expects to continue to offset these price
increases through careful inventory management, cost cutting, and higher prices
for its coffee products. Such price increases are not expected to have a
material impact on Sara Lee's coffee business, however, since most of that
business is located in Europe, where the corporation is a market leader, and
because European coffee drinkers do not appear to be as price-sensitive as their
American counterparts.

The Sara Lee Coffee and Grocery line of business also manufactures rice
products under the Lassie brand in the Netherlands, and snack and nut products
under the Duyvis, Felix, and Duyvis Benenuts brands in the Netherlands, Belgium,
and France, respectively.

The Sara Lee Coffee and Grocery business has accounted for 10% or more of
Sara Lee's consolidated revenues during the past three fiscal years.

SARA LEE PACKAGED CONSUMER PRODUCTS

Sara Lee's Packaged Consumer Products segment is divided into two lines of
business: Personal Products and Household and Personal Care.

SARA LEE PERSONAL PRODUCTS

The Personal Products line of business, which is headquartered in
Winston-Salem, North Carolina, includes the Intimates and Accessories, Knit
Products, and Hosiery business groups.

Sara Lee Intimates business includes bras, panties, and shapewear. These
are manufactured and distributed under such labels as Bali, Hanes Her Way,
Playtex, WonderBra, and Daisyfresh in North America, and Playtex and Dim in
Europe. With the 1993 acquisition of Estelar, a leading Mexican manufacturer of
panties, and the acquisition of Maglificio Bellia, a leading Italian
manufacturer, at the beginning of fiscal 1994, Sara Lee expects to strengthen
its position in those markets as well.

Distribution channels for intimate apparel range from department and
specialty stores for such premium brands as Bali, and some Hanes and Playtex
products, to warehouse clubs and mass-merchandise outlets for some of the
value-priced brands. Sales are effected through Sara Lee's sales force.

The intimate apparel market is a competitive one based on consumer brand
loyalty. Sara Lee endeavors to maintain its competitive edge through increased
marketing and promotional efforts, and by offering consumers value through a
superior combination of quality and price.

Sara Lee Accessories business involves the manufacture and marketing of
men's and women's gloves, slippers, and knitwear through its Aris Isotoner
division under the Aris and Isotoner brands, and the

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manufacture and marketing of premium leather products through its Coach
division, under the Coach and Mark Cross brands. Coach now operates
approximately 110 stores in the United States.

Sara Lee Knit Products' business involves the manufacture and distribution
of men's, women's, and children's underwear and activewear (T-shirts,
fleecewear, and other jersey products for casualwear) in North America, South
and Central America, Europe, and the Pacific Rim. These products are sold
through department stores, mass merchandisers, and discount chains. Principal
brands in this category include Champion, Hanes, Hanes Her Way and Rinbros in
North America, and Abanderado, Princesa, Champion, Hanes, and Dim in Europe.
Sara Lee believes that it has the leading market share in the women's and girls'
panties category in the United States, the second largest share in the heavily
branded category of men's and boys' underwear in the United States, and the
leading position in men's and boys' underwear in Mexico.

Activewear is marketed under Sara Lee's Hanes and Champion lines. In
addition to targeting the public activewear market, Champion also manufactures
and markets authentic uniforms and practicewear for professional and amateur
athletic teams, including such organizations as the National Basketball
Association, the National Football League, Major League Baseball, the Olympics,
and a number of major university sports teams.

The principal raw material in this product category is cotton, which Sara
Lee believes is readily available from a variety of sources.

The knit products business is highly competitive, with products relying on
brand recognition, quality, price, and loyalty. Sara Lee is meeting the
competition by offering superior value, through its megabranding
strategy--marketing various products through common packaging, promotion, and
advertising, by increased marketing activity, and low-cost sourcing. The Knit
Products business has accounted for 10% or more of Sara Lee's consolidated
revenues during the past three fiscal years.

Sara Lee Hosiery is the market leader in hosiery markets in the United
States, Mexico, Western Europe, Australia, New Zealand, and South Africa. It
also continues to establish operations in various Pacific Rim countries, placing
it in a strategic position to capitalize on developing markets in that area. The
European hosiery business is somewhat seasonal in nature in contrast to the
domestic business.

Hosiery products consist of a wide variety of branded, packaged consumer
products, including pantyhose, stockings, combination panty and pantyhose
garments, tights, knee-highs, and socks, many of which are available in both
sheer and opaque styles. These products are sold domestically under such brand
names as Hanes, L'eggs, Donna Karan, DKNY, and Liz Claiborne (the last three
being licensed), and abroad under such labels as Dim, Pretty Polly, Elbeo, Nur
Die, Bellinda, Filodoro, Philippe Matignon, and Omero. Sara Lee's Adams-Millis
Corporation subsidiary is the largest sock manufacturer in the United States.

Hosiery products are sold by Sara Lee's sales force in channels ranging
from department and specialty stores (for premium brands such as Hanes, Donna
Karan, DKNY, and Liz Claiborne in the United States, and Dim abroad), to
supermarkets, warehouse clubs, discount chains, and convenience stores for
brands like L'eggs and some Dim products aimed at the price-conscious consumer.
The Hosiery business has accounted for 10% or more of Sara Lee's consolidated
revenues during the past three fiscal years.

The hosiery business is very competitive in both the United States and
Europe. In the United States, Sara Lee's major competitors are other hosiery
companies, and the primary methods of competition are quality, value, and, with
respect to L'eggs products, service and distribution. In Europe, where most of
Sara Lee's competitors are small companies who compete in the unbranded sector
of the market, the primary focus is on quality.

Raw materials--nylon, spandex, and cotton--for the products in this
category are generally available from a wide variety of suppliers. In addition,
Sara Lee continues to explore opportunities for vertical integration in its
hosiery business in order to decrease its reliance on outside suppliers.

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HOUSEHOLD AND PERSONAL CARE

Sara Lee's Household and Personal Care line of business includes four
primary core categories: shoe care--led by a worldwide line of Kiwi products;
body care items--led by the Sanex brand, but also including Duschdas and
Badedas; insecticides--sold internationally under the Catch, Bloom, Vapona, and
Ridsect brand names; and baby-care products--sold under the Zwitsal, Fissan, and
Proderm names. Ambi-Pur air fresheners, Zendium and Prodent oral care products,
and Biotex and Neutral specialty detergents are also important categories for
Sara Lee.

Sara Lee Direct Selling distributes a wide range of products--cosmetics,
fragrances, toiletries, personal products, and jewelry--through a network of
independent sales representatives. This method of reaching the consumer has been
particularly successful at the House of Fuller business in Mexico, the House of
Sara Lee businesses in Indonesia and the Philippines, and is being introduced in
South Africa through the number-one direct selling organization in that country,
Avroy Shlain Cosmetics (Pty.) Ltd., which was a part of the Kiwi Brands (Pty.)
Ltd. acquisition. While this segment is very fragmented, Sara Lee believes it
has a leading position in many product lines in those countries in which it
competes.

TRADEMARKS

Sara Lee is the owner of over 25,000 trademark registrations in over 180
countries. Trademarks are among Sara Lee's most valuable assets as it pursues
its strategy of building brands globally.

CUSTOMERS

None of Sara Lee's business segments or lines of business is dependent upon
a single customer or a small number of customers, the loss of whom would have a
material adverse effect on Sara Lee's consolidated operations. Sara Lee
considers major mass retailers and supermarket chains in both the United States
and Europe to be significant customers across one or more product categories,
and it has developed team and partnership approaches to working with them.

ENVIRONMENTAL MATTERS

Sara Lee is subject to a number of federal, state, and local statutes,
rules, regulations, and ordinances in the United States and other countries
relating to the discharge of materials into the environment, or otherwise
relating to the protection of the environment ("Environmental Laws").

While Sara Lee expects to make capital and other expenditures in compliance
with Environmental Laws, it does not anticipate that such compliance will have a
material adverse effect on its capital expenditures, earnings, or competitive
position. Sara Lee has implemented a program to monitor compliance with
Environmental Laws and is continually examining its methods of operation and
product packaging to reduce its use of natural resources.

EMPLOYEES

Sara Lee has approximately 145,900 employees worldwide.

(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC
OPERATIONS AND EXPORT SALES

Sara Lee's foreign operations are conducted primarily through wholly or
partially-owned subsidiaries incorporated outside the United States. The foreign
operations of the Packaged Meats line of business within the Packaged Foods
segment are conducted through Sara Lee Processed Meats (Europe) B.V., while the
Sara Lee Bakery business includes Kitchens of Sara Lee U.K. Ltd. and Kitchens of
Sara Lee (Australia) Pty. Ltd. The Coffee and Grocery line of business within
the Packaged Foods segment is conducted by a number of

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subsidiaries, principally European, including Douwe Egberts Nederland B.V.,
Douwe Egberts France S.A., Douwe Egberts Espana S.A., Merrild Kaffe A/S, Douwe
Egberts N.V., Compack Douwe Egberts Rt., Harris/DE Pty. Ltd., and Balirny Douwe
Egberts A.S.

The Personal Products line of business within the Packaged Consumer
Products segment includes numerous foreign businesses, including Dim S.A., Grupo
Sans S. A., Sara Lee Personal Products (Australia) Pty. Ltd., Pretty Polly Ltd.,
Vatter GmbH, the Filodoro Group, Manufacturas Mallorca, S.A. de C.V., Rinbros,
S.A. de C.V., and a 60% interest in Maglificio Bellia S.p.A.

The Household and Personal Care line of business within the Packaged
Consumer Products segment is composed of subsidiaries in over forty countries.
The principal subsidiaries are Kiwi Brands Pty. Ltd., Kiwi France S.A., Kortman
Intradal B.V., A/S Blumoller, Sara Lee/DE Espana S.A., and Sara Lee Household
and Personal Care U.K. Ltd.

The financial information about foreign and domestic operations can be
found on page F-20 of this Report.

Item 2. Properties.

Sara Lee operates 310 food processing and consumer product manufacturing plants,
each containing more than 20,000 square feet in building area, in 27 states and
35 foreign countries. Sara Lee owns 239 and leases 71 of these plants. It also
operates 126 warehouses containing more than 20,000 square feet in building area
in 20 states and 19 foreign countries. Of these warehouses, 51 are owned and 75
are leased. The following table identifies the plants and warehouses presently
operated by Sara Lee that contain at least 250,000 square feet in building
area.*

* In fiscal 1994, Sara Lee announced a restructuring which will result in the
closure of 94 manufacturing and distribution facilities. Sixty-three of the
facilities to be closed are owned and 31 of the facilities are leased.

** These facilities are leased; the remainder are owned by Sara Lee.

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<TABLE>
<CAPTION>
APPROXIMATE
INDUSTRY SEGMENT AND BUILDING AREA
DIVISION OR SUBSIDIARY LOCATION IN SQUARE FEET
- - - ---------------------------------------------- -------------------------------- --------------
<S> <C> <C>
SARA LEE PACKAGED CONSUMER PRODUCTS
Adams-Millis Corporation...................... Kernersville, North Carolina 340,000
Aris Isotoner................................. Edison, New Jersey 253,000**
Canadelle Inc. ............................... Montreal, Canada 261,000
Champion Products, Inc. ...................... Laurel Hill, North Carolina 268,000
Champion Products, Inc. ...................... Gaffney, South Carolina 265,000
Filodoro Calze S.p.A.......................... Casalmoro, Italy 320,000
Kiwi Brands Inc. ............................. Douglassville, Pennsylvania 290,000
L'eggs Products............................... Clarksville, Arkansas 321,000
L'eggs Products............................... Rockingham, North Carolina 440,000
Kiwi Brands Pty. Ltd. ........................ Clayton, Australia 313,000
Playtex Apparel, Inc. ........................ Dover, Delaware 424,000
Sara Lee/DE Espana S.A. ...................... Santiga, Spain 284,000**
Sara Lee/DE Germany........................... Dusseldorf, Germany 333,000**
Sara Lee Direct............................... Rural Hall, North Carolina 657,000**
Sara Lee Hosiery.............................. East Rockingham, North Carolina 330,000**
Sara Lee Hosiery.............................. Winston-Salem, North Carolina 747,000
Sara Lee Hosiery.............................. Darlington, South Carolina 287,000
Sara Lee Household & Personal Care
U.K. Limited................................ Slough, England, United Kingdom 331,000
Sara Lee Knit Products........................ Forest City, North Carolina 340,000
Sara Lee Knit Products........................ Eden, North Carolina 418,000
Sara Lee Knit Products........................ Galax, Virginia 424,000
Sara Lee Knit Products........................ Martinsville, Virginia 704,000**
Sara Lee Knit Products........................ Martinsville, Virginia 628,000
Sara Lee Knit Products........................ Martinsville, Virginia 442,000
Sara Lee Knit Products........................ Mountain City, Tennessee 562,000
Sara Lee Knit Products........................ Rabun Gap, Georgia 256,000
Sara Lee Knit Products........................ Rural Hall, North Carolina 931,000
Sara Lee Knit Products........................ Sanford, North Carolina 275,000
Sara Lee Knit Products........................ Winston-Salem, North Carolina 568,000
Sara Lee Knit Products........................ Greenwood, South Carolina 500,000
Vatter GmbH................................... Augsburg, Germany 297,000
Vatter GmbH................................... Rheine, Germany 482,000
Vatter GmbH................................... Schongau, Germany 256,000
</TABLE>

** These facilities are leased; the remainder are owned by Sara Lee.

Item 3. Legal Proceedings.

On May 17, 1990, the State of Wisconsin issued a Notice of Violation
against Sara Lee's Hillshire Farm & Kahn's division, alleging that the division
had illegally constructed and operated smokehouses in New London, Wisconsin in
violation of air pollution control permits. In July, 1993, the parties
stipulated and agreed that judgment in the amount of $100,000, including a
penalty assessment, environmental assessment, and court costs would be entered
against Sara Lee.

In addition to the foregoing, Sara Lee is a party to several pending legal
proceedings and claims, and environmental actions by governmental agencies.
Although the outcome of such items cannot be determined with certainty, Sara
Lee's General Counsel and management are of the opinion that the final outcomes
should not have a material adverse effect on Sara Lee's results of operations or
financial position.

Item 4. Submission of Matters to a Vote of Security Holders.

Not Applicable

9
<PAGE> 11

EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to General Instruction G(3) of Form 10-K, the following list is
included as an unnumbered Item in Part I of this Report in lieu of being
included in the Proxy Statement for the Annual Meeting of Stockholders to be
held on October 27, 1994.

The following is a list of names and ages of all of the executive officers
of Sara Lee indicating current positions and offices with Sara Lee held by each
such person. All such persons have been elected by, and hold office at the
pleasure of, the Board of Directors. No person other than those listed below has
been chosen to become an executive officer of Sara Lee.

<TABLE>
<CAPTION>
AGE AS OF
OCTOBER 27, OFFICES AND FIRST ELECTED
NAME 1994 POSITIONS HELD AN OFFICER
- - - ---------------------------------------------- ----------- ------------------------ -------------
<S> <C> <C> <C>
John H. Bryan................................. 58 Chairman of the Board, 3/28/74
Chief Executive Officer
and Director
Michael E. Murphy............................. 58 Vice Chairman and Chief 6/28/79
Financial and
Administrative Officer
and Director
Donald J. Franceschini........................ 59 Executive Vice President 8/27/92
and Director
C. Steven McMillan............................ 48 Executive Vice President 3/31/83
and Director
Gary C. Grom.................................. 47 Senior Vice President 10/25/90
Human Resources
Mark J. McCarville............................ 48 Senior Vice President 6/24/82
Corporate Development
Gordon H. Newman.............................. 61 Senior Vice President, 5/28/70
Secretary and General
Counsel
</TABLE>

There are no family relationships between any of the above named executive
officers and directors.

Each of the executive officers listed above has served Sara Lee or its
subsidiaries in various executive capacities for the past five years, except
Donald J. Franceschini, who, prior to his election, served in various executive
capacities at Playtex Apparel, Inc. prior to its acquisition by Sara Lee.

10
<PAGE> 12

PART II

Item 5. Market for Sara Lee's Common Equity and Related Stockholder Matters.

Sara Lee's securities are traded on the exchanges listed on the cover page
of this Form 10-K Report. As of September 1, 1994, Sara Lee had 96,470 holders
of record of its Common Stock. Information about the high and low sales prices
for each full quarterly period and the amount of cash dividends declared on Sara
Lee's Common Stock during the past three fiscal years is set forth on page F-21
of this Report.

Item 6. Selected Financial Data.

The requisite financial information for Sara Lee for the five fiscal years
ending July 2, 1994, is set forth on pages F-2 and F-3 of this Report. Such
information should be read in conjunction with the consolidated financial
statements and notes thereto of Sara Lee included in Item 8, incorporated by
reference from Item 14, of this Report.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

This discussion and analysis of financial condition and results of
operations should be read in conjunction with the General Development of
Business on pages 1 through 3, Narrative Description of Business on pages 3
through 7, and the consolidated Financial Statements and related Notes to
Financial Statements on pages F-4 through F-21 of this Report.

RESULTS OF OPERATIONS

Net sales increased 6.6% to $15.5 billion in 1994, from $14.6 billion in
1993 and $13.2 billion in 1992. The increase in 1994 was principally
attributable to business acquisitions and unit volume growth, offset in part by
the weakening of foreign currencies relative to the U.S. dollar. The increase in
1993 resulted principally from business acquisitions, net of dispositions, unit
volume growth and the strengthening of foreign currencies relative to the U.S.
dollar. Excluding the effects of foreign currencies and acquisitions and
dispositions, sales dollars increased 3% in 1994 and 5% in 1993.

The gross profit margin was 37.6% in 1994, compared with 38.0% in 1993 and
37.3% in 1992. The decrease in 1994 was attributable to margin declines in
European hosiery and knit products businesses, offset in part by improved
margins in the Household and Personal Care and Packaged Meats and Bakery
operations. The improvement in 1993 was attributable to increased operating
efficiencies resulting from business restructuring, tighter cost controls and
benefits resulting from capital expenditures.

Operating income, which is pretax earnings before interest and corporate
expenses, decreased 51.6% to $632 million, from $1,307 million in 1993, while
the 1993 operating income reflected an 8.2% increase over the $1,207 million in
1992.

On June 6, 1994, the corporation announced a restructuring of its worldwide
operations which will result in the closure of 94 manufacturing and distribution
facilities and the severance of 9,900 employees. This restructuring reduced 1994
operating income, net income and primary earnings per share by $732 million,
$495 million and $1.03, respectively. The 1994 operating income includes charges
for restructuring as follows: Personal Products--$630 million; Household and
Personal Care--$55 million; Coffee and Grocery--$25 million; and Packaged Meats
and Bakery--$22 million.

Of the total pretax charge for restructuring, $289 million relates to
anticipated losses associated with the disposal of land, buildings and
improvements, and machinery and equipment; $112 million relates to anticipated
expenditures to close and dispose of the idle facilities; $239 million relates
to anticipated payments to severed employees; $33 million relates to the
recognition of pension benefits associated with the severed employee group; and
$59 million primarily relates to losses associated with the disposal of certain
businesses. As of July 2, 1994, no material actions contemplated in the
restructuring plan have taken place.

11
<PAGE> 13

Restructuring actions are expected to be substantially completed by 1996,
and the corporation expects to fund the costs of the plan from internal sources
and available borrowing capacity.

The corporation expects the restructuring plan to begin lowering operating
costs in 1995 and to generate increasing savings in subsequent years, growing to
an annual savings of approximately $250 million in 1998. Savings from the
planned actions will be used for both business-building initiatives and profit
improvement.

Excluding the effects of the restructuring charge, acquisitions and
fluctuations in foreign exchange rates, operating income in 1994 was virtually
unchanged from 1993 and increased by approximately 2% in 1993. In 1994,
operating income in the Packaged Foods segment increased 2.3% and Packaged
Consumer Products segment decreased 94.5%.

Excluding the restructuring charge, operating income in the Packaged Foods
segment increased 10.5% while the Packaged Consumer Products segment was
virtually unchanged from 1993 results. The increase in the Packaged Foods
segment is primarily attributable to higher unit volumes, operating
efficiencies, cost controls and business acquisitions, offset in part by the
weakening of foreign currencies relative to the U.S. dollar. The flat results in
the Packaged Consumer Products segment were primarily attributable to weak
performances in the European hosiery and knit products operations and the
weakening of foreign currencies relative to the U.S. dollar, offset by the
impact of business acquisitions and strong U.S. knit products and worldwide
intimates results.

Net interest expense was $145 million in 1994, compared with $82 million in
1993 and $94 million in 1992. The increase in 1994 was a result of increased
financing needs for acquisitions and capital expenditures. The reduction in 1993
was primarily a result of lower short-term interest rates and the temporary
refinancing of maturing long-term debt with short-term notes payable.

Unallocated corporate expenses are costs not directly attributable to
specific segment operations. Unallocated corporate expenses were $98 million in
1994 and $143 million in 1993. The reduction in 1994 was primarily attributable
to lower administrative expenses and costs related to hedging foreign currency
movements. Unallocated corporate expenses, excluding the impact of unusual
items, were $161 million in 1992. The unusual items recognized in 1992 consisted
of a $412 million gain from the sale of the corporation's over-the-counter
pharmaceutical business, offset in part by a $190 million provision primarily
related to restructuring the Packaged Foods segment. The restructuring consisted
primarily of the sale of assets, consolidation and reconfiguration of facilities
and certain employee costs.

The effective tax rate was 39.9% in 1994, 34.9% in 1993 and 35.2% in 1992.
Excluding the impact of unusual items in 1994 and 1992, the effective tax rates
were 35.0% and 34.8%, respectively.

In fiscal 1994, the corporation adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." The cumulative effect of this
mandated accounting change was a one-time charge of $35 million, or $.07 per
share.

In 1994, net income decreased 71.8% to $199 million and primary earnings
per share decreased 73.6% to $.37. Excluding the effects of the restructuring
charge and the cumulative effect of the accounting change, net income and
primary earnings per share in 1994 increased 3.5% and 5.0%, respectively. After
giving effect to the two-for-one stock split, which became effective December 1,
1992, primary earnings per share in 1993 decreased 9.1% to $1.40 from $1.54 in
1992. Excluding the unusual items reported in 1992, net income and primary
earnings per share increased 13.5% and 12.9%, respectively, in 1993.

During 1994, the corporation acquired several companies for an aggregate
purchase price of $412 million in cash. The principal acquisitions were the
European personal care businesses of SmithKline Beecham (Household and Personal
Care), Kiwi Brands (Pty.) Ltd. and subsidiaries (Household and Personal Care and
Personal Products) and Maglificio Bellia S.p.A. (Personal Products).

During 1993, the corporation acquired several companies for an aggregate
purchase price of $352 million in cash and the issuance of common stock having a
market value of $69 million. The principal acquisitions were BP Nutrition's
Consumer Food Group (Packaged Meats and Bakery) and the Filodoro Group (Personal
Products). During 1992, the corporation acquired Playtex Apparel, Inc. (Personal
Products), Pretty Polly

12
<PAGE> 14

Limited (Personal Products) and several small companies for a total purchase
price of $657 million and the issuance of common stock with a market value of
$167 million. Also during 1992, the corporation acquired a minority position and
an option to acquire the remaining shares of Playtex FP Group Incorporated for
$40 million and the issuance of common stock with a market value of $23 million.

These transactions are discussed in greater detail in the Acquisitions and
Divestments Note to the financial statements on page F-12. Sales and operating
income of businesses sold are summarized in the Industry Segment Information
Note to the financial statements on pages F-19 through F-20.

During the past three years, the general rate of inflation has averaged
2.4%. Additionally, approximately 39% of the corporation's inventories are
valued on the last-in, first-out basis. As a result, much of the current cost of
production is reflected in operating results and not retained as a component of
inventory.

FINANCIAL POSITION

Cash provided by operations in 1994 of $839 million was comparable to that
provided in 1993 and lower than the $976 million generated in 1992. Net cash
generated from operating activities in 1994 was adversely impacted by lower
gross margins and increased levels of inventory and trade accounts receivable.
The reduction in 1993 versus 1992 resulted from expenditures made in
restructuring the corporation's domestic Packaged Foods and foreign Packaged
Consumer Products segments, offset in part by improved gross margins and
operating profits.

Net cash used in investment activities was $937 million in 1994, $967
million in 1993 and $381 million in 1992. During 1994, capital expenditures of
$628 million decreased from the record level of $728 million in 1993. A
significant portion of these expenditures was for the reduction of manufacturing
and distribution costs, and for expansion of capacity to meet internal growth.
During 1992, expenditures to acquire plant and equipment and businesses were
largely offset by approximately $800 million of proceeds received from the sale
of the corporation's over-the-counter pharmaceutical business. Capital
expenditures are anticipated to decline to between $500 million and $550 million
in 1995. The planned level of capital expenditures is needed primarily to
complete manufacturing and distribution cost reduction initiatives for the
Personal Products businesses and to increase capacity in the Intimates
businesses. The 1995 expenditures will be funded from internal sources and
available borrowing capacity. The corporation retains substantial flexibility to
adjust its spending levels in order to act upon other opportunities, such as
business acquisitions.

During 1994, cash of $42 million was used in financing activities. In 1994,
a domestic subsidiary of the corporation issued $200 million of equity
securities, the proceeds of which were used to purchase shares of the
corporation's common stock. During 1993, cash of $248 million was provided from
financing activities, primarily through the utilization of available short-term
debt capacity. As of July 2, 1994, the total-debt-to-total-capital ratio
increased to 38.9% from 34.9% at July 3, 1993. The current capital structure is
within the corporation's objective of maintaining a total-debt-to-total-capital
ratio of no more than 40% over time and provides sufficient financial
flexibility to pursue business opportunities.

Item 8. Financial Statements and Supplementary Data.

The consolidated Financial Statements and related Notes to Financial
Statements of Sara Lee identified in the Index to Financial Statements appearing
under Item 14, Exhibits, Financial Statement Schedules and Reports on Form 8-K,
are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

Not Applicable

13
<PAGE> 15

PART III

Item 10. Directors and Executive Officers of Sara Lee.

For information with respect to the executive officers of Sara Lee, see
"Executive Officers of Sara Lee" on page 10 of this Report. For information with
respect to the directors of Sara Lee, see "Election of 18 Directors" on pages 2
through 7 of the Proxy Statement for the Annual Meeting of Stockholders to be
held October 27, 1994 ("Proxy Statement"), which is incorporated herein by
reference.

Item 11. Executive Compensation.

The information set forth in the Proxy Statement on pages 10 through 16,
under the caption "Executive Compensation", and on pages 16 through 18, under
the caption "Retirement Plans", is incorporated herein by reference; provided,
however, that the Report of the Compensation and Employee Benefits Committee on
Executive Compensation and the Performance Graph contained therein shall not be
so deemed incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

(a) No person or "group" (as that term is used in Section 3(d)(3) of the
Securities Exchange Act of 1934) is known by Sara Lee to beneficially own more
than five percent of any class of Sara Lee's voting securities, except that
State Street Bank & Trust Company of Boston, as Trustee of the Sara Lee
Corporation Employee Stock Ownership Plan holds, in trust, 78.2% of Sara Lee's
Employee Stock Ownership Plan Convertible Preferred Stock.

(b) Security ownership by management as outlined on page 8 of the Proxy
Statement under the caption "Ownership of Common Stock by Directors, Nominees
and Executive Officers" is incorporated herein by reference.

(c) There are no arrangements known to Sara Lee the operation of which may
at a subsequent date result in a change in control of Sara Lee.

Item 13. Certain Relationships and Related Transactions.

During fiscal 1994, Sara Lee paid fees for legal services performed by the
law firm of Sidley & Austin, to which Newton N. Minow is counsel, and the law
firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P., of which Vernon E. Jordan is
a senior partner. Sara Lee paid fees for investment banking services to The
First National Bank of Chicago, of which Richard L. Thomas is Chairman of the
Board and Chief Executive Officer. Each of the above individuals is a director
of Sara Lee.

14
<PAGE> 16
PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(A) 1. FINANCIAL STATEMENTS
Report of Independent Public Accountants...................................... F-1
Consolidated Statements of Income -- Years ended June 27, 1992, July 3, 1993,
and July 2, 1994.............................................................. F-4
Consolidated Balance Sheets -- June 27, 1992, July 3, 1993, and July 2,
1994.......................................................................... F-5
Consolidated Statements of Common Stockholders' Equity -- Balances at June 27,
1992, July 3, 1993, and July 2, 1994.......................................... F-7
Consolidated Statements of Cash Flows -- Years ended June 27, 1992, July 3,
1993, and July 2, 1994........................................................ F-8
Notes to Financial Statements................................................. F-9

2. FINANCIAL STATEMENT SCHEDULES
Report of Independent Public Accountants...................................... F-22
Schedule V -- Property, Plant and Equipment................................... F-23
Schedule VI -- Accumulated Depreciation
and Amortization of Property, Plant and Equipment............................. F-24
Schedule VIII -- Valuation and Qualifying Accounts............................ F-25
Schedule X -- Supplementary Income Statement Information...................... F-25
</TABLE>

(B) REPORTS ON FORM 8-K

On June 7, 1994, Sara Lee filed a Form 8-K which consisted of a press
release issued June 6, 1994, that announced the worldwide restructuring of
corporate operations and a restructuring charge against earnings.

<TABLE>
<S> <C> <C> <C>
(C) EXHIBITS PAGE/INCORPORATION BY REFERENCE
(3a) Articles of Incorporation as
Amended and Restated
(3b) By-Laws
Exhibit (3b) to Report on Form 10-K for
Fiscal Year ended July 3, 1993
<CAPTION>
(4) Sara Lee, by signing this Report, agrees to furnish the Securities and Exchange
Commission, upon its request, a copy of any instrument which defines the rights
of holders of long-term debt of Sara Lee and all of its subsidiaries for which
consolidated or unconsolidated financial statements are required to be filed,
and which authorizes a total amount of securities not in excess of 10% of the
total assets of Sara Lee and its subsidiaries on a consolidated basis.

<S> <C> <C> <C>
(10) 1. 1979 Stock Option Plan, as amended Exhibit (10) 7 to Report on Form 10-K
for Fiscal Year ended June 27, 1987

2. 1981 Stock Option Plan, as amended Exhibit (10) 11 to Report on Form 10-K
for Fiscal Year ended July 1, 1989

3. 1988 Non-Qualified Stock Option Plan Exhibit (10) 12 to Report on Form 10-K
for Fiscal Year ended July 2, 1988
4. 1989 Incentive Stock Plan, as Exhibit B to 1991 Proxy Statement,
amended dated September 20, 1991

5. Supplemental Benefit Plan, as Exhibit (10) 8 to Report on Form 10-K
amended for Fiscal Year ended June 30, 1990

6. Short-Term (Annual) Incentive Plan Exhibit (10) 15 to Report on Form 10-K
Fiscal Year 1994 for Fiscal Year ended July 3, 1993
</TABLE>

15
<PAGE> 17
<TABLE>
<S> <C> <C> <C>
7. Short-Term (Annual) Incentive Plan
Fiscal Year 1995 (Draft)

8. Accelerated Growth Incentive Plan Exhibit 10 (12) to Report on Form 10-K
Fiscal Years 1990-1994 for Fiscal Year ended June 30, 1990

9. 1991 Non-Qualified Deferred Exhibit 10 (15) to Report on Form 10-K
Compensation Plan (Base Salary) for Fiscal Year ended June 29, 1991

10. 1992 Non-Qualified Deferred Compen- Exhibit 10 (15) to Report on Form 10-K
sation Plan (Base Salary) for Fiscal Year ended June 27, 1992

11. FY '93 Non-Qualified Deferred Com- Exhibit 10 (16) to Report on Form 10-K
pensation Plan (Annual Bonus) for Fiscal Year ended June 27, 1992

12. 1993 Non-Qualified Deferred Compen- Exhibit 10 (19) to Report on Form 10-K
sation Plan (Base Salary) for Fiscal Year ended July 3, 1993

13. FY '94 Non-Qualified Deferred Com- Exhibit 10 (20) to Report on Form 10-K
pensation Plan (Annual Bonus) for Fiscal Year ended July 3, 1993

14. 1994 Non-Qualified Deferred Compen-
sation Plan (Base Salary)

15. FY '95 Non-Qualified Deferred Com-
pensation Plan (Annual Bonus)

16. Long Term Performance Incentive
Plan FY '95-97 (Draft)

17. Non-Qualified Deferred Compensation Exhibit 10 (21) to Report on Form 10-K
Plan for Outside Directors for Fiscal Year ended July 3, 1993

18. Estate Builder Deferred Exhibit (10) 17 to Report on Form 10-K
Compensation Plan for Fiscal Year ended June 29, 1985

19. Severance Plan for Corporate
Officers

20. Stockholder Rights Agreement Exhibit (4) to Report on Form 10-Q for
the quarter ended March 26, 1988

(12) 1. Computation of Ratio of Earnings to
Fixed Charges

2. Computation of Ratio of Earnings to
Fixed Charges and Preferred Stock
Dividend Requirements

(21) List of Subsidiaries

(23) Consent of Arthur Andersen LLP

(24) Powers of Attorney from those directors
whose names appear on pages 17 and 18
hereof followed by an asterisk

(27) Financial Data Schedules
</TABLE>

16
<PAGE> 18

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, Sara Lee Corporation has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

September 30, 1994 SARA LEE CORPORATION

By: /s/ GORDON H. NEWMAN
------------------------------------
Gordon H. Newman
Senior Vice President,
Secretary and General Counsel

Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of Sara Lee
Corporation and in the capacities indicated on September 30, 1994.

SIGNATURE CAPACITY
- - - ---------------------------------------- ------------------------------------
/s/ JOHN H. BRYAN Chairman of the Board, Chief
- - - ---------------------------------------- Executive Officer and Director
John H. Bryan

/s/ MICHAEL E. MURPHY Vice Chairman and Chief Financial and
- - - ---------------------------------------- Administrative Officer and Director
Michael E. Murphy

/s/ DONALD J. FRANCESCHINI Executive Vice President and Director
- - - ----------------------------------------
Donald J. Franceschini

/s/ C. STEVEN MCMILLAN Executive Vice President and Director
- - - ----------------------------------------
C. Steven McMillan

/s/ WAYNE R. SZYPULSKI Vice President and Controller
- - - ----------------------------------------
Wayne R. Szypulski

* Director
- - - ----------------------------------------
Paul A. Allaire

* Director
- - - ----------------------------------------
Frans H.J.J. Andriessen

* Director
- - - ----------------------------------------
Duane L. Burnham

* Director
- - - ----------------------------------------
Charles W. Coker

* Director
- - - ----------------------------------------
Willie D. Davis

* Director
- - - ----------------------------------------
Allen F. Jacobson

17
<PAGE> 19

SIGNATURE CAPACITY
--------- --------

* Director
- - - ----------------------------------------
Vernon E. Jordan, Jr.

* Director
- - - ----------------------------------------
James L. Ketelsen

* Director
- - - ----------------------------------------
Baron Gualtherus Kraijenhoff

* Director
- - - ----------------------------------------
Joan D. Manley

* Director
- - - ----------------------------------------
Newton N. Minow

* Director
- - - ----------------------------------------
Sir Arvi H. Parbo A.C.

* Director
- - - ----------------------------------------
Rozanne L. Ridgway

* Director
- - - ----------------------------------------
Richard L. Thomas

*By Gordon H. Newman as Attorney-in-Fact pursuant to Powers of Attorney
executed by the directors listed above, which Powers of Attorney have been filed
with the Securities and Exchange Commission.

/s/ GORDON H. NEWMAN
--------------------------------------
Gordon H. Newman
As Attorney-in-Fact

18
<PAGE> 20

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders,
SARA LEE CORPORATION

We have audited the accompanying consolidated balance sheets of SARA LEE
CORPORATION (a Maryland corporation) AND SUBSIDIARIES as of July 2, 1994, July
3, 1993, and June 27, 1992, and the related consolidated statements of income,
common stockholders' equity, and cash flows for each of the three years in the
period ended July 2, 1994. These consolidated financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sara Lee
Corporation and Subsidiaries as of July 2, 1994, July 3, 1993, and June 27,
1992, and the results of their operations and their cash flows for each of the
three years in the period ended July 2, 1994 in conformity with generally
accepted accounting principles.

As explained in the Notes to Financial Statements, the Corporation adopted
the requirements of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," effective July 4, 1993.

/s/ Arthur Andersen LLP

Chicago, Illinois,
August 1, 1994.

F-1
<PAGE> 21

SARA LEE CORPORATION AND SUBSIDIARIES

FINANCIAL SUMMARY

<TABLE>
<CAPTION>
YEARS ENDED
----------------------
JULY 2, JULY 3,
1994 (1) 1993 (2)
-------- --------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE DATA)
<S> <C> <C>
RESULTS OF OPERATIONS
Net sales............................................................... $ 15,536 $ 14,580
Operating income........................................................ 632 1,307
Income before income taxes.............................................. 389 1,082
Net income.............................................................. 199 704
Effective tax rate...................................................... 39.9% 34.9%
- - - -------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Total assets............................................................ $ 11,665 $ 10,862
Long-term debt.......................................................... 1,496 1,164
Redeemable preferred stock.............................................. 331 357
Common stockholders' equity............................................. 3,326 3,551
Return on average common stockholders' equity........................... 5.1% 19.6%
- - - -------------------------------------------------------------------------------------------------
PER COMMON SHARE (5)
Net income -- primary................................................... $ .37 $ 1.40
Average shares outstanding (in millions)........................... 480 485
Net income -- fully diluted............................................. .36 1.37
Average shares outstanding (in millions)........................... 498 504
Dividends (6)........................................................... .63 .56
Book value at year-end.................................................. 6.92 7.31
Market value at year-end................................................ 20.63 24.25
- - - -------------------------------------------------------------------------------------------------
OTHER INFORMATION
Capital expenditures.................................................... $ 628 $ 728
Depreciation and amortization........................................... 568 522
Media advertising expense............................................... 371 392
Total advertising and promotion expense................................. 1,498 1,455
Common stockholders of record........................................... 95,600 88,100
Number of employees..................................................... 145,900 138,000
- - - -------------------------------------------------------------------------------------------------
</TABLE>

(1) In 1994, a restructuring provision reduced operating income and income
before income taxes by $732 and net income by $495. In addition, in 1994,
the cumulative effect of adopting a mandated change in the method of
accounting for income taxes reduced net income by $35.

(2) 53-week year.

(3) Fiscal 1992 income before income taxes includes a $412 gain on sale of
business offset by a $190 restructuring provision. These transactions
increased net income by $140.

(4) Fiscal 1989 income before income taxes includes an $87 gain on sales of
businesses offset by a $55 restructuring provision. These transactions
increased net income by $11.

(5) Restated for the 2-for-1 stock splits in fiscal 1993, 1990, 1987 and 1984.

(6) Fiscal 1992 includes a $.12 special dividend.

The Notes to Financial Statements should be read in conjunction with the
Financial Summary.

F-2
<PAGE> 22

SARA LEE CORPORATION AND SUBSIDIARIES

FINANCIAL SUMMARY

<TABLE>
<CAPTION>
YEARS ENDED
------------------------------------------------------------------------------------------------------
JUNE 27 JUNE 29, JUNE 30, JULY 1, JULY 2, JUNE 27, JUNE 28, JUNE 29, JUNE 30,
1992(3) 1991 1990 1989(4) 1988(2) 1987 1986 1985 1984
-------- -------- -------- ------- ------- -------- -------- -------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net sales................. $13,243 $12,381 $11,606 $11,718 $10,424 $9,155 $7,938 $8,117 $7,000
Operating income.......... 1,207 1,085 938 847 753 632 514 474 414
Income before income
taxes................... 1,174 830 713 639 513 448 356 345 314
Net income................ 761 535 470 410 325 267 223 206 188
Effective tax rate........ 35.2 % 35.5 % 34.1 % 35.8% 36.7% 40.4% 37.2% 40.3% 40.1%
- - - ------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Total assets.............. $ 9,989 $ 8,122 $ 7,636 $ 6,523 $ 5,012 $4,192 $3,503 $3,216 $2,822
Long-term debt............ 1,389 1,399 1,524 1,488 893 633 634 464 359
Redeemable preferred
stock................... 351 344 338 182 225 75 75 75 75
Common stockholders'
equity.................. 3,382 2,550 2,292 1,915 1,575 1,416 1,155 991 957
Return on average common
stockholders' equity.... 24.7 % 20.6 % 20.9 % 22.7% 21.1% 20.5% 20.4% 20.5% 19.4%
- - - ------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE (5)
Net income -- primary..... $ 1.54 $ 1.08 $ .96 $ .88 $ .71 $ .59 $ .51 $ .45 $ .41
Average shares
outstanding (in
millions)........... 476 464 460 454 447 447 433 443 453
Net income -- fully
diluted................. 1.50 1.05 .93 .87 .71 .59 .50 .45 .41
Average shares
outstanding (in
millions)........... 497 485 480 456 447 447 434 444 454
Dividends (6)............. .61 .46 .41 .35 .29 .24 .20 .18 .16
Book value at year-end.... 7.05 5.48 4.97 4.21 3.56 3.20 2.70 2.32 2.16
Market value at
year-end................ 24.81 20.19 14.56 13.47 9.22 11.63 8.91 5.39 3.60
- - - ------------------------------------------------------------------------------------------------------------------
OTHER INFORMATION
Capital expenditures...... $ 509 $ 522 $ 595 $ 541 $ 449 $ 287 $ 222 $ 247 $ 155
Depreciation and
amortization............ 472 394 351.... 280 251 202 165 153 136
Media advertising
expense................. 325 288 313.... 303 253 203 195 202 177
Total advertising and
promotion expense....... 1,294 1,067 1,013.. 925 801 637 587 594 513
Common stockholders of
record.................. 75,400 69,400 64,800.. 56,500 52,400 50,000 44,900 42,600 40,500
Number of employees....... 128,000 113,400 107,800... 101,800 85,700 92,400 87,000 92,800 90,900
- - - ------------------------------------------------------------------------------------------------------------------
</TABLE>

(2) 53-week year.

(3) Fiscal 1992 income before income taxes includes a $412 gain on sales of
business offset by a $190 restructuring provision. These transactions
increased net income by $140.

(4) Fiscal 1989 income before income taxes includes an $87 gain on sales of
businesses offset by a $55 restructuring provision. These transactions
increased net income by $11.

(5) Restated for the 2-for-1 stock splits in fiscal 1993, 1990, 1987 and 1984.

(6) Fiscal 1992 includes a $.12 special dividend.

The Notes to Financial Statements should be read in conjunction with the
Financial Summary.

F-3
<PAGE> 23

SARA LEE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED
--------------------------------
JULY 2, JULY 3, JUNE 27,
1994 1993 1992
------- ------- --------
(IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
NET SALES................................................... $15,536 $14,580 $ 13,243
------- ------- --------
Cost of sales............................................... 9,700 9,039 8,306
Selling, general and administrative expenses................ 4,570 4,377 3,891
Interest expense............................................ 188 162 172
Interest income............................................. (43) (80) (78)
UNUSUAL ITEMS
Gain on sale of a business................................ -- -- (412)
Restructuring provision................................... 732 -- 190
------- ------- --------
15,147 13,498 12,069
------- ------- --------
Income before income taxes.................................. 389 1,082 1,174
Income taxes................................................ 155 378 413
------- ------- --------
NET INCOME BEFORE ACCOUNTING CHANGE......................... 234 704 761
Cumulative effect of accounting change...................... (35) -- --
------- ------- --------
NET INCOME.................................................. 199 704 761
Preferred dividends, net of tax............................. (24) (26) (29)
------- ------- --------
Net income available for common stockholders................ $ 175 $ 678 $ 732
======= ======= =======
NET INCOME PER COMMON SHARE -- PRIMARY
Before cumulative effect of accounting change............. $ .44 $ 1.40 $ 1.54
Cumulative effect of accounting change.................... (.07) -- --
------- ------- --------
$ .37 $ 1.40 $ 1.54
======= ======= =======
Average shares outstanding................................ 480 485 476
======= ======= =======
NET INCOME PER COMMON SHARE -- FULLY DILUTED
Before cumulative effect of accounting change............. $ .43 $ 1.37 $ 1.50
Cumulative effect of accounting change.................... (.07) -- --
------- ------- --------
$ .36 $ 1.37 $ 1.50
======= ======= =======
Average shares outstanding................................ 498 504 497
======= ======= =======
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
statements.

F-4
<PAGE> 24

SARA LEE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JULY 2, JULY 3, JUNE 27,
1994 1993 1992
------- ------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Cash and equivalents................................... $ 189 $ 325 $ 198
Trade accounts receivable, less allowances of $164 in
1994 and $154 in 1993 and 1992....................... 1,472 1,171 1,180
Inventories
Finished goods....................................... 1,603 1,413 1,311
Work in process...................................... 361 322 325
Materials and supplies............................... 603 545 524
------- ------- --------
2,567 2,280 2,160
Other current assets................................... 241 200 157
------- ------- --------
Total current assets................................... 4,469 3,976 3,695
------- ------- --------
Investments in associated companies.................... 142 205 186
Trademarks and other assets............................ 492 518 580
Property
Land................................................. 131 129 108
Buildings and improvements........................... 1,746 1,570 1,476
Machinery and equipment.............................. 3,077 2,804 2,594
Construction in progress............................. 283 339 231
------- ------- --------
5,237 4,842 4,409
Accumulated depreciation............................. 2,337 1,964 1,836
------- ------- --------
Property, net.......................................... 2,900 2,878 2,573
Intangible assets, net................................. 3,662 3,285 2,955
------- ------- --------
$11,665 $10,862 $9,989
======= ======= ======
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
balance sheets.

F-5
<PAGE> 25

SARA LEE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JULY 2, JULY 3, JUNE 27,
1994 1993 1992
------- ------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Notes payable.............................................. $ 1,281 $ 843 $ 154
Accounts payable........................................... 1,253 1,151 1,110
Accrued liabilities
Payroll and employee benefits............................ 668 429 408
Advertising and promotion................................ 313 282 214
Taxes other than payroll and income...................... 206 179 182
Income taxes............................................. 13 50 4
Other.................................................... 1,103 909 991
Current maturities of long-term debt....................... 82 426 237
------- ------- --------
Total current liabilities.................................. 4,919 4,269 3,300
------- ------- --------
Long-term debt............................................. 1,496 1,164 1,389
Deferred income taxes...................................... 290 512 488
Other liabilities.......................................... 783 705 776
Minority interest in subsidiaries.......................... 520 304 303
Preferred stock (authorized 13,500,000 shares; no par
value)
Convertible adjustable: Issued and outstanding -- 607,000
shares in 1993 and 1992; redeemable at $50 per
share................................................. -- 30 30
Auction: Issued and outstanding -- 3,000 shares;
redeemable at $100,000 per share...................... 300 300 300
ESOP convertible: Issued and outstanding -- 4,678,857
shares in 1994, 4,755,217 shares in 1993 and 4,792,736
shares in 1992........................................ 339 345 348
Unearned deferred compensation........................... (308) (318) (327)
Common stockholders' equity
Common stock: (authorized 600,000,000 shares; $1.33 1/3
par value)
Issued and outstanding -- 480,765,240 shares in 1994,
485,378,368 shares in 1993 and 239,862,390 shares in
1992.................................................. 641 647 320
Capital surplus.......................................... 76 66 306
Retained earnings........................................ 2,799 3,056 2,649
Translation adjustments.................................. (170) (194) 126
Unearned restricted stock issued for future services..... (20) (24) (19)
------- ------- --------
Total common stockholders' equity.......................... 3,326 3,551 3,382
------- ------- --------
$11,665 $10,862 $9,989
======= ======= ======
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
balance sheets.

F-6
<PAGE> 26

SARA LEE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
UNEARNED
COMMON CAPITAL RETAINED TRANSLATION RESTRICTED
TOTAL STOCK SURPLUS EARNINGS ADJUSTMENTS STOCK
------ ------ ------- -------- ----------- ----------
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JUNE 29, 1991...................... $2,550 $310 $ 68 $2,208 $ (12) $(24)
Net income..................................... 761 -- -- 761 -- --
Cash dividends
Common ($.6125 per share).................... (290) -- -- (290) -- --
Convertible adjustable preferred ($2.75 per
share).................................... (2) -- -- (2) -- --
Auction preferred ($3,824.33 per share)...... (11) -- -- (11) -- --
ESOP convertible preferred ($5.4375 per
share).................................... (26) -- -- (26) -- --
Stock issuances
Business acquisitions........................ 190 6 184 -- -- --
Stock option and benefit plans............... 51 4 47 -- -- --
Restricted stock, less amortization of $6.... 6 -- 2 -- -- 4
Translation adjustments........................ 138 -- -- -- 138 --
ESOP tax benefit............................... 10 -- -- 10 -- --
Other.......................................... 5 -- 5 (1) -- 1
- - - ----------------------------------------------------------------------------------------------------------
BALANCES AT JUNE 27, 1992...................... 3,382 320 306 2,649 126 (19)
Net income..................................... 704 -- -- 704 -- --
Cash dividends
Common ($.56 per share)...................... (270) -- -- (270) -- --
Convertible adjustable preferred ($2.75 per
share).................................... (2) -- -- (2) -- --
Auction preferred ($2,860.33 per share)...... (8) -- -- (8) -- --
ESOP convertible preferred ($5.4375 per
share).................................... (26) -- -- (26) -- --
Two-for-one stock split........................ -- 322 (322) -- -- --
Stock issuances
Business acquisitions........................ 69 3 66 -- -- --
Stock option and benefit plans............... 66 6 60 -- -- --
Restricted stock, less amortization of $4.... 4 -- 8 -- -- (4)
Reacquired shares.............................. (77) (4) (73) -- -- --
Translation adjustments........................ (320) -- -- -- (320) --
ESOP tax benefit............................... 10 -- -- 10 -- --
Other.......................................... 19 -- 21 (1) -- (1)
- - - ----------------------------------------------------------------------------------------------------------
BALANCES AT JULY 3, 1993....................... 3,551 647 66 3,056 (194) (24)
Net income..................................... 199 -- -- 199 -- --
Cash dividends
Common ($.625 per share)..................... (298) -- -- (298) -- --
Auction preferred ($2,732.33 per share)...... (8) -- -- (8) -- --
ESOP convertible preferred ($5.4375 per
share).................................... (26) -- -- (26) -- --
Stock issuances
Stock option and benefit plans............... 69 6 63 -- -- --
Restricted stock, less amortization of $4.... 4 -- 2 -- -- 2
Reacquired shares.............................. (224) (12) (82) (130) -- --
Translation adjustments........................ 24 -- -- -- 24 --
ESOP tax benefit............................... 10 -- -- 10 -- --
Other.......................................... 25 -- 27 (4) -- 2
------ ------ ------ ------ -------- -------
BALANCES AT JULY 2, 1994....................... $3,326 $641 $ 76 $2,799 $(170) $(20)
====== ====== ====== ====== ======== =======
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
statements.

F-7
<PAGE> 27

SARA LEE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED
----------------------------------
JULY 2, JULY 3, JUNE 27,
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
OPERATING ACTIVITIES
Net income.................................................... $ 199 $ 704 $ 761
Adjustments for noncash charges included in net income
Depreciation and amortization of intangibles................ 568 522 472
Unusual items, net.......................................... 732 -- (222)
Cumulative effect of accounting change...................... 35 -- --
(Decrease) increase in deferred taxes....................... (222) 27 48
Other noncash credits, net.................................. (109) (117) (93)
Changes in current assets and liabilities, net of businesses
acquired and sold
(Increase) decrease in trade accounts receivable......... (162) 57 (118)
(Increase) in inventories................................ (224) (124) (288)
(Increase) decrease in other current assets.............. (29) (40) 11
Increase (decrease) in accounts payable.................. 20 (10) 160
Increase (decrease) in accrued liabilities............... 31 (169) 245
------- ------- --------
Net cash from operating activities.......................... 839 850 976
------- ------- --------
INVESTMENT ACTIVITIES
Purchases of property and equipment........................... (628) (728) (509)
Acquisitions of businesses.................................... (412) (352) (657)
Returns from (investments in) associated companies............ 48 5 (60)
Dispositions of businesses.................................... -- 31 805
Sales of property............................................. 49 51 34
Other......................................................... 6 26 6
------- ------- --------
Net cash used in investment activities...................... (937) (967) (381)
------- ------- --------
FINANCING ACTIVITIES
Issuances of common stock..................................... 69 66 51
Purchases of common stock..................................... (224) (77) --
Redemption of preferred stock................................. (30) -- --
Issuance of equity securities by subsidiary................... 200 -- --
Borrowings of long-term debt.................................. 385 256 64
Repayments of long-term debt.................................. (438) (300) (86)
Short-term borrowings (repayments), net....................... 328 609 (232)
Payments of dividends......................................... (332) (306) (329)
------- ------- --------
Net cash from (used in) financing activities................ (42) 248 (532)
------- ------- --------
Effect of changes in foreign exchange rates on cash........... 4 (4) 10
------- ------- --------
Increase (decrease) in cash and equivalents................... (136) 127 73
Cash and equivalents at beginning of year..................... 325 198 125
------- ------- --------
Cash and equivalents at end of year........................... $ 189 $ 325 $ 198
===== ===== ======
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
statements.

F-8
<PAGE> 28

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

(dollars in millions except per share data)
- - - --------------------------------------------------------------------------------

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements include all majority-owned
subsidiaries. All significant intercompany transactions of consolidated
subsidiaries are eliminated. Acquisitions recorded as purchases are included in
the income statement from the date of acquisition.

INVESTMENTS IN ASSOCIATED COMPANIES

Investments in associated companies consist of minority positions in
several companies whose activities are similar to those of the corporation's
operating divisions. The equity method of accounting is used when the
corporation's ownership exceeds 20% and it exercises significant influence over
the investee. Other minority positions are recorded at cost.

FISCAL YEAR

The corporation's fiscal year ends on the Saturday closest to June 30.
Fiscal 1994 and 1992 were 52-week years, while 1993 was a 53-week year. Unless
otherwise stated, references to years relate to fiscal years.

INTANGIBLE ASSETS

The excess of cost over the fair market value of tangible net assets and
trademarks of acquired businesses are amortized on a straight-line basis over
the periods of expected benefit, which range from 10 years to 40 years.
Accumulated amortization of intangible assets amounted to $572 at July 2, 1994,
$457 at July 3, 1993 and $366 at June 27, 1992.

Subsequent to its acquisition, the corporation continually evaluates
whether later events and circumstances have occurred that indicate the remaining
estimated useful life of an intangible asset may warrant revision or that the
remaining balance of an intangible asset may not be recoverable. When factors
indicate that an intangible asset should be evaluated for possible impairment,
the corporation uses an estimate of the related business' undiscounted future
cash flows over the remaining life of the asset in measuring whether the
intangible asset is recoverable.

INVENTORY VALUATION

Inventories are valued at the lower of cost (in 1994, approximately 39% at
last-in, first-out [LIFO] and the remainder at first-in, first-out[FIFO]) or
market. Inventories recorded at LIFO were approximately $24 at July 2, 1994, $38
at July 3, 1993 and $35 at June 27, 1992, lower than if they had been valued at
FIFO. Inventory cost includes material and conversion costs. The corporation
enters into forward foreign exchange contracts to hedge its exposure to currency
fluctuations on certain inventory purchases. Gains and losses on these contracts
are deferred and included in the cost of the inventory.

PROPERTY

Property is stated at cost, and depreciation is computed using principally
the straight-line method at annual rates of 2% to 20% for buildings and
improvements, and 4% to 33% for machinery and equipment. Additions and
improvements that substantially extend the useful life of a particular asset and
interest costs incurred during the construction period of major properties are
capitalized. Repair and maintenance costs are charged to expense. Upon sale, the
cost and related accumulated depreciation are removed from the accounts.

F-9
<PAGE> 29

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

FOREIGN OPERATIONS

Foreign-currency-denominated assets and liabilities are translated into
U.S. dollars at the exchange rates existing at the balance sheet date.
Translation adjustments resulting from fluctuations in exchange rates, and gains
and losses on forward exchange contracts and currency swaps used to hedge
long-term foreign investments, are recorded as a separate component of common
stockholders' equity. Income and expense items are translated at the average
exchange rates during the respective periods.

NET INCOME PER COMMON SHARE

Primary net income per common share is based on the average number of
common shares outstanding and common share equivalents and net income reduced
for preferred dividends, net of the tax benefits related to the ESOP convertible
preferred stock dividends. The fully diluted net income per share calculation
assumes conversion of the ESOP convertible preferred stock into common stock and
further adjusts net income for the additional ESOP compensation expense, net of
tax benefits, resulting from the assumed replacement of the ESOP convertible
preferred stock dividends with common stock dividends.

INCOME TAXES

Income taxes are provided on the income reported in the financial
statements, regardless of when such taxes are payable. U.S. income taxes are
provided on undistributed earnings of foreign subsidiaries that are intended to
be remitted to the corporation. If the permanently reinvested earnings of
foreign subsidiaries were remitted, the U.S. income taxes due under current tax
law would not be material.

ADVERTISING

During 1994, the American Institute of Certified Public Accountants issued
Statement of Position 93-7, "Reporting on Advertising Costs," which will be
effective for the corporation's fiscal 1995 statements. The statement primarily
requires that the cost of advertising be expensed no later than the first time
the advertising takes place. The impact of adopting this statement is not
expected to have a material impact upon the corporation's results of operations
or financial position.

COMMON STOCK

Under the corporation's stock option plans, executive employees may be
granted options to purchase common stock at the market value on the date of
grant. Under the corporation's non-qualified stock option plans, an active
employee will receive a replacement stock option equal to the number of shares
surrendered upon a stock-for-stock exercise. The exercise price of the
replacement option will be 100% of the market value at the date of exercise of
the original option and will remain exercisable for the remaining term of the
original option.

At July 2, 1994, 7,809,751 common shares were available for granting;
options had been granted on 13,018,410 shares at prices ranging from $5.38 to
$31.94 per share. During 1994, options on 3,707,564 shares were granted at
prices ranging from $20.63 to $27.81; options for 2,321,765 shares were
exercised at prices ranging from $3.56 to $25.63; and options for 880,163 shares
expired or were canceled. Options exercisable at year-end were: 1994 --
9,548,858; 1993 -- 10,425,115; and 1992 -- 3,911,336.

Employees may purchase up to twenty-five thousand dollars market value of
common stock annually at 85% of the market value. At July 2, 1994, 2,173,225
shares of common stock were available for issuance under this stock purchase
plan.

F-10
<PAGE> 30

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

The corporation has a restricted stock plan that provides for awards of
common stock to executive employees, subject to forfeiture if employment
terminates prior to the end of prescribed periods. The market value of shares
awarded under the plan is recorded as unearned compensation. The unearned amount
is amortized to compensation expense over the periods the restrictions lapse.

Effective December 1, 1992, the corporation declared a two-for-one stock
split in the form of a 100% stock dividend.

Changes in outstanding common shares for the past three years were:

<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Beginning balances................................ 485,378,368 239,862,390 232,683,861
Stock issuances
Business acquisitions........................... -- 1,924,411 4,334,226
Stock option and benefit plans.................. 4,413,148 4,276,753 2,803,939
Restricted stock plan........................... 87,000 238,700 58,000
Two-for-one stock split......................... -- 241,988,568 --
Stock purchased/retired........................... (9,098,100) (2,922,000) --
Other............................................. (15,176) 9,546 (17,636)
----------- ----------- -----------
Ending balances................................... 480,765,240 485,378,368 239,862,390
=========== =========== ===========
</TABLE>

PREFERRED STOCK

The corporation redeemed its cumulative convertible adjustable preferred
stock on July 26, 1993 for $30. Quarterly dividends were based on the higher of
yields of selected U.S. government securities or a minimum annual rate of 5.5%.

Six series of 500 shares each of nonvoting auction preferred stock are
outstanding. Dividends are cumulative and are determined every 49 days through
specific auction procedures.

The convertible preferred stock sold to the corporation's Employee Stock
Ownership Plan (ESOP) is redeemable at the option of the corporation at any time
after December 15, 2001. Each share is currently convertible into four shares of
the corporation's common stock and is entitled to 5.133 votes. This stock has a
7.5% annual dividend rate, payable semiannually, and has a liquidation value of
$72.50 plus accrued but unpaid dividends. The purchase of the preferred stock by
the ESOP was funded with notes guaranteed by the corporation. The loan is
included in long-term debt and is offset in the corporation's Consolidated
Balance Sheets under the caption Unearned Deferred Compensation. Each year, the
corporation makes contributions that, with the dividends on the preferred stock
held by the ESOP, will be used to pay loan interest and principal. Shares are
allocated to participants based upon the ratio of the current year's debt
service to the sum of the total principal and interest payments over the life of
the loan. Plan expense is recognized in accordance with methods prescribed by
the FASB.

ESOP-related expenses amounted to $11 in 1994, $11 in 1993 and $10 in 1992.
Payments to the ESOP were $38 in 1994, $35 in 1993 and $32 in 1992. Principal
and interest payments by the ESOP amounted to $11 and $27 in 1994, $7 and $28 in
1993, and $4 and $28 in 1992.

The fair value of the auction preferred stock approximated its carrying
value as of July 2, 1994 and July 3, 1993. The fair value of the ESOP preferred
stock was $443 and $530 at July 2, 1994 and July 3, 1993, respectively.

F-11
<PAGE> 31

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

The corporation has a Preferred Stock Purchase Rights Plan. The Rights are
exercisable 10 days after certain events involving the acquisition of 20% or
more of the corporation's outstanding common stock or the commencement of a
tender or exchange offer for at least 25% of the common stock. Upon the
occurrence of such an event, each Right, unless redeemed by the board of
directors, entitles the holder to receive common stock equal to twice the
exercise price of the Right. The exercise price is $140 multiplied by the number
of preferred shares held. There are 3,000,000 shares of preferred stock reserved
for issuance upon exercise of the Rights.

MINORITY INTEREST IN SUBSIDIARIES

A domestic subsidiary of the corporation issued $200 of preferred equity
securities in 1994. No gain or loss was recognized as a result of the
transaction and the corporation owned substantially all of the voting equity of
the subsidiary, both before and after the transaction. The securities issued by
the subsidiary provide the holder a rate of return based upon a specified
inter-bank borrowing rate, are redeemable in 1996, and may be called at any time
by the subsidiary. The subsidiary has the option of redeeming the securities
with either cash, debt or equity of the corporation. The subsidiary used the
cash proceeds received to purchase the common stock of the corporation on the
open market.

A wholly owned foreign subsidiary of the corporation issued preferred
equity securities in fiscal 1990 and 1991 totaling $295. The securities provide
a rate of return based upon specified inter-bank borrowing rates. The securities
are redeemable in 1997 in exchange for common shares of the issuer, which may
then be put to the corporation for preferred stock. The subsidiary may call the
securities at any time.

ACQUISITIONS AND DIVESTMENTS

During 1994, the corporation acquired several companies for an aggregate
purchase price of $412 in cash. The principal acquisitions were the European
personal care businesses of SmithKline Beecham; Kiwi Brands (Pty.) Ltd. and
subsidiaries, a group of South African companies that manufacture and market
personal care products and hosiery; and Maglificio Bellia S.p.A., a manufacturer
and marketer of intimate apparel in Italy.

During 1993, the corporation acquired several companies for an aggregate
purchase price of $352 in cash and the issuance of 1,924,411 shares of common
stock having a market value of $69. The principal acquisitions were BP
Nutrition's Consumer Food Group, a manufacturer and marketer of packaged meat
products in Europe, and the Filodoro Group, a manufacturer and marketer of
hosiery in Italy.

During 1992, the corporation acquired several companies for an aggregate
purchase price of $657 in cash and the issuance of 3,875,622 shares of common
stock having a market value of $167. The principal acquisitions were Playtex
Apparel, Inc., an international manufacturer and distributor of intimate apparel
products, and Pretty Polly Limited, a manufacturer and marketer of hosiery in
the United Kingdom. During the year, the corporation also acquired a minority
position in Playtex FP Group Incorporated, a manufacturer and marketer of
personal care products, for $40 in cash and the issuance of 458,604 shares of
common stock having a market value of $23. During 1994, the corporation disposed
of substantially all of its investment in Playtex FP Group.

During 1992, the corporation sold businesses for proceeds of $805. The most
significant disposition was the corporation's European-based, over-the-counter
pharmaceutical business, Nicholas. The corporation made several divestments in
1993, which did not have a material effect on operating results or financial
position.

F-12
<PAGE> 32

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

COMMITMENTS AND CONTINGENCIES

The corporation enters into interest rate swap agreements to manage
interest rate fluctuations and lower its cost of borrowing. The differential to
be paid or received on these agreements is accrued as interest rates change and
is recognized over the lives of the respective agreements. The terms of swap
agreements, which effectively converted short-term variable-rate debt into
fixed-rate debt at the respective year-end, are shown below:

<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Aggregate notional principal........................................ $150 $161 $13
Weighted average interest rate...................................... 8.8% 8.8% 8.1%
Weighted average maturity in years.................................. .4 1.3 1.4
</TABLE>

The corporation enters into forward foreign exchange contracts to hedge the
foreign currency exposure of its net investments in European subsidiaries,
intercompany loans and firm commitments. The corporation primarily sells
European currencies and purchases U.S. dollars to hedge these foreign currency
positions. As of July 2, 1994, the U.S. dollar equivalent of the primary foreign
currencies sold forward was $242 French francs, $174 German marks, $151 Italian
lira and $104 British pounds. These contracts have maturity dates that are
generally less than one year. Similar arrangements were in place in prior years.

The corporation utilizes currency swaps to hedge the currency exposure of
certain net investments in foreign operations and intercompany loans. The terms
of the currency swaps, which effectively converted U.S. dollar-and Swiss
franc-denominated debt into Dutch guilder-denominated debt, and hedged certain
French franc-denominated intercompany loans at the respective year-end, are
shown below:

<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Aggregate notional principal........................................ $546 $563 $922
Weighted average interest rate...................................... 6.7% 5.8% 6.5%
Weighted average maturity in years.................................. 1.2 1.9 1.8
</TABLE>

A large number of major international financial institutions are
counterparties to the interest rate swaps, currency swaps and forward exchange
contracts. The corporation continually monitors its positions and the credit
ratings of its counterparties and, by policy, limits the amount of agreements or
contracts it enters into with any one party. While the corporation may be
exposed to credit losses in the event of nonperformance by these counterparties,
it does not anticipate losses, because of the control procedures mentioned.

The fair market value of the corporation's interest rate swaps, currency
swaps and forward exchange contracts approximated their carrying value in the
financial statements as of July 2, 1994 and July 3, 1993. Fair value is
estimated based upon the amount that the corporation would receive or pay to
terminate the agreements as of the reporting date, utilizing quoted prices for
comparable contracts and discounted cash flows.

The corporation had third-party guarantees outstanding, aggregating
approximately $28 at July 2, 1994, $22 at July 3, 1993 and $24 at June 27, 1992.
These guarantees relate primarily to financial arrangements to support various
suppliers of the corporation, and are secured by the inventory and fixed assets
of suppliers.

Trade accounts receivable due from highly leveraged customers were $52 at
July 2, 1994, $41 at July 3, 1993 and $48 at June 27, 1992. The financial
position of these businesses has been considered in determining allowances for
doubtful accounts.

F-13
<PAGE> 33

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

Rental expense under operating leases amounted to approximately $207 in
1994, $182 in 1993 and $175 in 1992. Future minimum annual fixed rentals
required during the years ending in 1995 through 1999 under noncancelable
operating leases having an original term of more than one year are $100, $72,
$58, $49 and $39, respectively. The aggregate obligation subsequent to 1999 is
$106.

The corporation is contingently liable for long-term leases on properties
operated by others. The minimum annual rentals under these leases average
approximately $6 for the years ending in 1995-1999, $2 in 2000-2004 and $1 in
2005-2009.

The corporation is a party to several pending legal proceedings and claims,
and environmental actions by governmental agencies. Although the outcome of such
items cannot be determined with certainty, the corporation's general counsel and
management are of the opinion that the final outcome should not have a material
effect on the corporation's results of operations or financial position.

CREDIT FACILITIES

The corporation has numerous credit facilities available, including
revolving credit agreements totaling $1,900 that have an average annual fee of
.1%. These agreements support commercial paper borrowings. Because of their
short maturity, the fair value of notes payable approximates carrying value.
Selected data on the corporation's short-term obligations follow:

<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Maximum period-end borrowings................................ $1,998 $1,484 $1,024
Average borrowings during the year........................... 1,833 1,067 753
Weighted average interest rate during the year............... 4.2% 5.3% 6.2%
Weighted average interest rate at year-end................... 5.0 5.0 12.0
</TABLE>

LONG-TERM DEBT

<TABLE>
<CAPTION>
INTEREST RATE RANGE MATURITY 1994 1993 1992
------------------- --------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
U.S. dollar
obligations: ESOP debt...................... 8.176% 2004 $ 323 $ 334 $ 341
Eurodollar bonds............... -- 150 150
Notes and debentures........... 4.40-9.70 1995-2016 876 548 476
Revenue bonds.................. 2.50-4.40 2001-2019 23 25 28
Zero coupon notes.............. 10.00-14.25 2014-2015 12 11 10
Various other obligations...... 8 17 25
------ ------ ------
1,242 1,085 1,030
------ ------ ------
Foreign currency
obligations: Swiss franc.................... 4.75 1998 96 223 243
Dutch guilder.................. 6.50-8.625 1995-1998 123 177 203
Various other obligations...... 117 105 150
------ ------ ------
336 505 596
------ ------ ------
Total long-term debt.............................. 1,578 1,590 1,626
Less current maturities........................... 82 426 237
------ ------ ------
$1,496 $1,164 $1,389
====== ====== ======
</TABLE>

F-14
<PAGE> 34

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

The ESOP debt is guaranteed by the corporation.

The zero coupon notes are net of unamortized discounts of $112 in 1994,
$113 in 1993 and $114 in 1992. Principal payments of $19 and $105 are due in
2014 and 2015, respectively.

Payments required on long-term debt during the years ending in 1995 through
1999 are $82, $93, $121, $253 and $81, respectively.

The corporation made cash interest payments of $203, $161 and $171 in 1994,
1993 and 1992, respectively.

The estimated fair value of the corporation's long-term debt, including
current maturities, was $1,549 at July 2, 1994 and $1,645 at July 3, 1993. The
fair value of the corporation's long-term debt, including the current portion,
is estimated using discounted cash flows based on the corporation's current
incremental borrowing rates for similar types of borrowing arrangements.

UNUSUAL ITEMS

In the fourth quarter of 1994, the corporation provided for the costs of
restructuring its worldwide operations. This restructuring provision reduced
1994 income before income taxes, net income and net income per common share by
$732, $495 and $1.03, respectively. Of the total pretax charge, $289 relates to
anticipated losses associated with the disposal of land, buildings and
improvements, and machinery and equipment; $112 relates to anticipated
expenditures to close and dispose of the idle facilities; $239 relates to
anticipated payments to severed employees; $33 relates to the recognition of
pension benefits associated with the severed employee group; and $59 primarily
relates to losses associated with the disposal of certain businesses. As of July
2, 1994, no material actions contemplated in the restructuring plan have taken
place. Restructuring actions are expected to be substantially completed by 1996.

In 1992, the corporation sold its European-based over-the-counter
pharmaceutical business, Nicholas, for a pretax gain of approximately $412
(equivalent to $.56 per share). Also in 1992, the board of directors approved a
series of plans primarily related to the Packaged Foods segment designed to
improve operating margins through the elimination of excess capacity and the
disposition of operations that did not meet strategic goals. The restructuring
consisted primarily of the sale of assets, consolidation and reconfiguration of
facilities, and certain employee costs. The provision for this restructuring was
$190. Together, these 1992 unusual items resulted in a net pretax gain of $222,
or $.30 per share.

RETIREMENT PLANS

The corporation has noncontributory defined benefit plans covering certain
of its domestic employees. The benefits under these plans are primarily based on
years of service and compensation levels. The plans are funded in conformity
with the requirements of applicable government regulations. The plans' assets
consist principally of marketable equity securities, corporate and government
debt securities and real estate.

The corporation's foreign subsidiaries have plans for employees consistent
with local practices.

The corporation also sponsors defined contribution pension plans at several
of its subsidiaries. Contributions are determined as a percent of each covered
employee's salary.

Certain employees are covered by union-sponsored, collectively bargained,
multi-employer pension plans. Contributions are determined in accordance with
the provisions of negotiated labor contracts and generally are based on the
number of hours worked.

F-15
<PAGE> 35

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

The annual pension expense for all plans was:

<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Defined benefit plans................................................. $31 $30 $ 8
Defined contribution plans............................................ 11 13 13
Multi-employer plans.................................................. 4 4 4
---- ---- ----
Total pension expense $46 $47 $25
==== ==== ====
</TABLE>

The increase in pension expense from 1992 to 1993 resulted from an increase
in the benefits provided under certain foreign plans, the use of a lower
discount rate in determining plan obligations and the impact of acquisitions.

The components of the defined benefit plan expenses were:

<TABLE>
<CAPTION>
1994 1993 1992
---- ----- -----
<S> <C> <C> <C>
Benefits earned by employees...................................... $ 52 $ 50 $ 41
Interest on projected benefit obligations......................... 92 90 73
Actual investment return on plan assets........................... (99) (131) (108)
Net amortization and deferral..................................... (14) 21 2
---- ----- -----
Net pension expense............................................... $ 31 $ 30 $ 8
==== ===== =====
</TABLE>

The status of defined benefit plans at the respective year-end was:

<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Fair market value of plan assets............................... $1,420 $1,284 $1,244
------ ------ ------
Actuarial present value of benefits for services rendered:
Accumulated benefits based on salaries to date
Vested.................................................... 1,144 989 877
Nonvested................................................. 38 42 38
Additional benefits based on estimated future salary
levels.................................................... 217 222 218
------ ------ ------
Projected benefit obligations................................ 1,399 1,253 1,133
------ ------ ------
Excess of plan assets over projected benefit obligations....... 21 31 111
Unamortized net transitional asset............................. (26) (33) (48)
Unrecognized net gain.......................................... (8) (62) (71)
Unrecognized prior service cost................................ 88 89 75
------ ------ ------
Prepaid pension liability recognized on the Consolidated
Balance Sheets............................................... $ 75 $ 25 $ 67
====== ====== ======
</TABLE>

Weighted average rates used in determining pension expense and related
obligations for defined benefit plans were:

<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate......................................................... 7.5% 7.6% 7.9%
Rate of compensation increase......................................... 5.2 5.3 5.8
Long-term rate of return on plan assets............................... 8.3 8.8 8.8
</TABLE>

F-16
<PAGE> 36

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

Effective July 4, 1993, the corporation adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions," (SFAS 106) for its domestic retiree benefit plans. Under
SFAS 106, the corporation accrues the estimated cost of retiree health care and
life insurance benefits during the employees' active service periods. The
corporation's previous method of accounting for postretirement benefits other
than pensions was similar to that required by SFAS 106, and as of the start of
fiscal 1994, the accumulated benefit obligation for domestic employees had been
accrued.

The corporation provides health care and life insurance benefits to certain
domestic retired employees, their covered dependents and beneficiaries.
Generally, employees who have attained age 55 and who have rendered 10 years of
service are eligible for these postretirement benefits. Certain retirees are
required to contribute to plans in order to maintain coverage. The domestic
postretirement benefit expense was $15 in 1994, $18 in 1993 and $14 in 1992. The
components of the 1994 expense were:

<TABLE>
<CAPTION>
1994
----
<S> <C>
Benefits earned by employees........................................................ $ 4
Interest on accumulated benefit obligations......................................... 11
----
Net postretirement benefit expense.................................................. $15
====
</TABLE>

The status of domestic postretirement benefit plans at July 2, 1994 was:

<TABLE>
<CAPTION>
1994
----
<S> <C>
Actuarial present value of benefits for services rendered:
Retirees........................................................................... $ 87
Fully eligible active plan participants............................................ 19
Other active participants.......................................................... 48
----
Accumulated benefit obligations...................................................... 154
Fair market value of plan assets..................................................... 2
----
Accumulated benefit obligations in excess of plan assets............................. 152
Unrecognized net transitional asset.................................................. 15
Unrecognized net loss................................................................ (4)
Unrecognized prior service cost...................................................... (1)
----
Postretirement benefit obligations recognized on Consolidated Balance Sheet.......... $162
====
</TABLE>

The discount rate used to determine the 1994 accumulated postretirement
benefit obligations was 7.75%. The assumed health care cost trend rate was 15%
in 1994 decreasing to 7% in 2002 and beyond. Increasing the health care cost
trend by one percentage point would have increased the 1994 postretirement
benefit obligations by approximately 8% and the annual plan expense by
approximately 12%.

Employees outside the United States are covered principally by
government-sponsored plans, and the cost of company-provided plans is not
material. The corporation is required to adopt SFAS 106 for its plans outside
the United States in 1996.

INCOME TAXES

Effective July 4, 1993, the corporation adopted Statement of Financial
Accounting Standards No. 109; "Accounting for Income Taxes," (SFAS 109). The
cumulative effect as of July 4, 1993, of adopting

F-17
<PAGE> 37

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

SFAS 109, was a one-time charge of $35, or $.07 per share, primarily due to
adjusting deferred taxes from historical to current rates. Financial statements
for years prior to 1994 have not been restated to reflect the adoption of this
standard. The effect of this new standard on 1994 income tax expense, exclusive
of the cumulative effect adjustment, is not material.

The provisions for income taxes computed by applying the U.S. statutory
rate to income before taxes as reconciled to the actual provisions were:

<TABLE>
<CAPTION>
1994 1993 1992
---------------- ---------------- ----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Income before provision for income taxes
United States................................ $218 56.0% $ 615 56.8% $ 283 24.1%
Foreign...................................... 171 44.0 467 43.2 891 75.9
------ ------- ------ ------- ------ -------
$389 100.0% $1,082 100.0% $1,174 100.0%
====== ===== ====== ===== ====== =====
Taxes at U.S. statutory rates.................. $136 35.0% $ 368 34.0% $ 399 34.0%
State taxes, net of federal benefit............ 24 6.2 22 2.0 17 1.4
Difference between U.S. and foreign rates...... (34) (8.8) (31) (2.8) (28) (2.4)
Nondeductible amortization..................... 46 11.7 44 4.0 37 3.2
Other, net..................................... (17) (4.2) (25) (2.3) (12) (1.0)
------ ------- ------ ------- ------ -------
Taxes at effective worldwide tax rates......... $155 39.9% $ 378 34.9% $ 413 35.2%
====== ===== ====== ===== ====== =====
</TABLE>

Current and deferred tax provisions were:

<TABLE>
<CAPTION>
1994 1993 1992
------------------ ------------------ ------------------
CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
United States................................. $ 200 $ (144) $ 175 $ (7) $ 98 $ 24
Foreign....................................... 143 (61) 159 17 238 27
State......................................... 34 (17) 33 1 21 5
------- -------- ------- --- ------- ---
$ 377 $ (222) $ 367 $ 11 $ 357 $ 56
====== ====== ====== ====== ====== ======
</TABLE>

Following are the components of the deferred tax provisions occurring as a
result of transactions being reported in different years for financial and tax
reporting:

<TABLE>
<CAPTION>
1994 1993 1992
----- ---- ----
<S> <C> <C> <C>
Depreciation........................................................... $ 22 $ 1 $ 8
Unremitted earnings of foreign subsidiaries............................ -- 20 14
Inventory valuation methods............................................ 2 (1) (4)
Restructuring reserves................................................. (230) -- --
Other, net............................................................. (16) (9) 38
----- ---- ----
$(222) $ 11 $ 56
===== ==== ====
Cash payments for income taxes......................................... $ 295 $304 $381
===== ==== ====
</TABLE>

F-18
<PAGE> 38

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

The deferred tax (assets) liabilities as of July 2, 1994, were:

<TABLE>
<CAPTION>
1994
-----
<S> <C>
Deferred tax (assets):
Pension, postretirement and other employee benefits............................... $ (4)
Net operating loss and other tax carryforwards.................................... (15)
Restructuring reserves............................................................ (230)
Reserves not deductible until paid................................................ (243)
Deferred tax liabilities:
Property, plant and equipment..................................................... 230
Other............................................................................. 62
-----
Net deferred tax (assets)........................................................... $(200)
=====
</TABLE>

INDUSTRY SEGMENT INFORMATION

The corporation's business segments are described in the Narrative
Description of Business on pages 3 through 7.

<TABLE>
<CAPTION>
PACKAGED CONSUMER
PACKAGED FOODS PRODUCTS
-------------------- ------------------------
PACKAGED COFFEE HOUSEHOLD
MEATS AND PERSONAL AND INTER-
AND BAKERY GROCERY PRODUCTS PERSONAL CARE CORPORATE SEGMENT TOTAL
---------- ------- -------- ------------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1994
Sales (1)...................... $5,472 $ 2,090 $6,449 $ 1,530 $ -- $(5) $15,536
Pretax income (loss)(2)........ 318 274 (71) 111 (243)(3) -- 389
Assets......................... 1,662 1,776 6,535 1,335 357 (5) -- 11,665
Depreciation and
amortization................. 108 74 289 71 26 -- 568
Capital expenditures........... 108 69 408 41 2 -- 628
1993
Sales (1)...................... $5,148 $ 2,058 $6,098 $ 1,279 $ -- $(3) $14,580
Pretax income.................. 287 292 602 126 (225)(3) -- 1,082
Assets......................... 1,560 1,629 6,209 859 605 (5) -- 10,862
Depreciation and
amortization................. 99 80 265 55 23 -- 522
Capital expenditures........... 99 87 485 42 15 -- 728
1992
Sales (1)...................... $4,703 $ 1,919 $5,398 $ 1,227 $ -- $(4) $13,243
Pretax income.................. 264 254 582 107 (33)(3,4) -- 1,174
Assets......................... 1,253 1,851 5,395 970 520 (5) -- 9,989
Depreciation and
amortization................. 97 68 232 53 22 -- 472
Capital expenditures........... 96 73 271 44 25 -- 509
</TABLE>

- - - ---------------
(1) Includes sales between segments. Such sales are at transfer prices that are
equivalent to market value.

(2) Includes provisions for restructuring reported in the 1994 Consolidated
Statement of Income, as follows: Packaged Meats and Bakery $22; Coffee and
Grocery $25; Personal Products $630; and Household and Personal Care $55.

(3) Includes net interest expense of $145 in 1994, $82 in 1993 and $94 in 1992
incurred primarily in the United States to finance and support consolidated
operations.

(4) Includes unusual items reported in the 1992 Consolidated Statement of
Income. The gain of $412 relates to the Packaged Consumer Products segment.
Restructuring charges of $126 and $64 are related to Packaged Foods and
Packaged Consumer Products, respectively.

(5) Principally cash and equivalents and investments in associated companies and
certain fixed assets.

F-19
<PAGE> 39

SARA LEE CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(dollars in millions except per share data)

Included in sales and operating income in the Industry Segment Information
above are the following sales and pretax income (loss) applicable to businesses
sold prior to July 2, 1994:

<TABLE>
<CAPTION>
1994 1993 1992
--------------- --------------- ---------------
PRETAX PRETAX PRETAX
SALES INCOME SALES INCOME SALES INCOME
----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Packaged Meats and Bakery........................... -- -- $88 $ (1) $ 160 $ (6)
Household and Personal Care......................... -- -- 8 -- 55 3
</TABLE>

GEOGRAPHIC AREA INFORMATION

<TABLE>
<CAPTION>
WESTERN/CENTRAL ASIA-PACIFIC/
UNITED STATES EUROPE LATIN AMERICA OTHER CORPORATE INTER-AREA TOTAL
------------- --------------- ------------- ----- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1994
Sales(1)................ $ 9,782 $ 4,433 $ 1,006 $ 348 $ -- $(33) $15,536
Pretax income(2)........ 330 193 65 44 (243)(3) -- 389
Assets(6)............... 5,558 4,459 984 307 357 (5) -- 11,665
1993
Sales(1)................ $ 9,423 $ 4,114 $ 801 $ 257 $ -- $(15) $14,580
Pretax income........... 763 422 94 28 (225)(3) -- 1,082
Assets(6)............... 5,364 3,880 858 155 605 (5) -- 10,862
1992
Sales(1)................ $ 8,736 $ 3,605 $ 655 $ 265 $ -- $(18) $13,243
Pretax income........... 697 418 65 27 (33)(3,4) -- 1,174
Assets(6)............... 4,731 4,053 597 88 520 (5) -- 9,989
</TABLE>

- - - ---------------
(1) Includes sales between geographic areas. Such sales are at transfer prices
that are equivalent to market value.

(2) Includes provisions for restructuring reported in the 1994 Consolidated
Statement of Income, as follows: United States $483; Western/Central Europe
$200; Asia-Pacific/Latin America $42; and Other $7.

(3) Includes net interest expense of $145 in 1994, $82 in 1993 and $94 in 1992
incurred primarily in the United States to finance and support consolidated
operations.

(4) Includes the unusual items reported in the 1992 Consolidated Statement of
Income. The gain of $412 relates to operating activities outside the United
States, and substantially all restructuring charges of $190 relate to
operating activities within the United States.

(5) Principally cash and equivalents and investment in associated companies and
certain fixed assets.

(6) The tangible net assets of foreign operations included in the accompanying
Consolidated Balance Sheets were $594 at July 2, 1994, $651 at July 3, 1993
and $863 at June 27, 1992.

F-20
<PAGE> 40

SARA LEE CORPORATION AND SUBSIDIARIES

QUARTERLY FINANCIAL DATA
(unaudited)

<TABLE>
<CAPTION>
QUARTER
-----------------------------------
FIRST SECOND THIRD FOURTH
------ ------ ------ ------
<S> <C> <C> <C> <C>
1994
Net sales..................................................... $3,796 $4,010 $3,664 $4,066
Gross profit.................................................. 1,412 1,533 1,388 1,503
Net income (loss)............................................. 120(1) 236 152 (309)(2)
Per common share
Net income (loss)........................................... .24(1) .48 .30 (.65)(2)
Cash dividends declared..................................... .145 .16 .16 .16
Market price -- high........................................ 26.63 28.25 26.00 23.75
-- low......................................... 21.00 23.38 21.00 20.13
- - - ----------------------------------------------------------------------------------------------------
1993
Net sales..................................................... $3,583 $3,840 $3,308 $3,849
Gross profit.................................................. 1,355 1,493 1,259 1,434
Net income.................................................... 142 220 152 190
Per common share(5)
Net income.................................................. .28 .44 .30 .38
Cash dividends declared..................................... .125 .145 .145 .145
Market price -- high........................................ 29.19 32.44 31.88 28.13
-- low......................................... 24.75 27.63 27.00 23.25
- - - ----------------------------------------------------------------------------------------------------
1992
Net sales..................................................... $3,107 $3,594 $3,143 $3,399
Gross profit.................................................. 1,098 1,316 1,195 1,328
Net income.................................................... 263(3) 190 138 170
Per common share(5)
Net income.................................................. .55(3) .38 .27 .34
Cash dividends declared..................................... .118 .245(4) .125 .125
Market price -- high........................................ 22.88 28.38 29.07 26.63
-- low......................................... 20.13 20.63 24.50 23.32
- - - ----------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes cumulative effect of accounting change of $35.

(2) Includes provision for restructuring of $495.

(3) Includes nonrecurring net gain of $140.

(4) Includes $.12 special dividend.

(5) Restated for the 2-for-1 stock split in December 1992.

F-21
<PAGE> 41

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Management
of SARA LEE CORPORATION

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Sara Lee Corporation included in this
Form 10-K, and have issued our report thereon dated August 1, 1994. Our audit
was made for the purpose of forming an opinion on the basic consolidated
financial statements taken as a whole. The supplemental schedules V, VI, VIII,
and X are the responsibility of the Corporation's management and are presented
for purposes of complying with the Securities and Exchange Commission's rules
and are not part of the basic consolidated financial statements. These
supplemental schedules have been subjected to the auditing procedures applied in
the audit of the basic consolidated financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.

/s/ Arthur Andersen LLP

Chicago, Illinois,
August 1, 1994.

F-22
<PAGE> 42

SCHEDULE V

SARA LEE CORPORATION AND SUBSIDIARIES

PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED JUNE 27, 1992, JULY 3, 1993 AND JULY 2, 1994
(IN MILLIONS)

<TABLE>
<CAPTION>
RETIREMENTS,
BALANCE AT PROPERTY OF SALES AND BALANCE
BEGINNING PURCHASED ADDITIONS OTHER AT END
OF YEAR COMPANIES AT COST CHANGES OF YEAR
---------- ----------- --------- ------------- -------
<S> <C> <C> <C> <C> <C>
For the Year Ended June 27, 1992:
Land.................................... $ 93 $ 9 $ 8 $ (2) $ 108
Buildings and improvements.............. 1,253 65 148 10 1,476
Machinery and equipment................. 2,279 66 445 (196) 2,594
Construction in progress................ 323 3 (92) (3) 231
------ ----- ----- ----- -------
$3,948 $ 143 $ 509 $(191) $ 4,409
====== ===== ===== ====== =======
For the Year ended July 3, 1993:
Land.................................... $ 108 $ 5 $ 8 $ 8 $ 129
Buildings and improvements.............. 1,476 60 163 (129) 1,570
Machinery and equipment................. 2,594 80 440 (310) 2,804
Construction in progress................ 231 3 117 (12) 339
------ ----- ----- ----- -------
$4,409 $ 148 $ 728 $(443) $ 4,842
====== ===== ===== ====== =======
For the Year ended July 2, 1994:
Land.................................... $ 129 $ 6 $ 5 $ (9) $ 131
Buildings and improvement............... 1,570 36 177 (37) 1,746
Machinery and equipment................. 2,804 56 504 (287) 3,077
Construction in progress................ 339 3 (58) (1) 283
------ ----- ----- ----- -------
$4,842 $ 101 $ 628 $(334) $ 5,237
====== ===== ===== ====== =======
</TABLE>

- - - ---------------
Refer to "Notes to Financial Statements, Summary of Significant Accounting
Policies" on Page F-9 of this Report for depreciation methods and estimated
useful lives.

F-23
<PAGE> 43

SCHEDULE VI

SARA LEE CORPORATION AND SUBSIDIARIES

ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT
AND EQUIPMENT
FOR THE YEARS ENDED JUNE 27, 1992, JULY 3, 1993 AND JULY 2, 1994
(IN MILLIONS)

<TABLE>
<CAPTION>
BALANCE AT PROVISION RETIREMENTS, BALANCE
BEGINNING CHARGED TO SALES AND AT END
OF YEAR EARNINGS OTHER CHANGES OF YEAR
---------- ---------- ------------- -------
<S> <C> <C> <C> <C>
For the Year Ended June 27, 1992:
Buildings and improvements....................... $ 444 $ 73 $ 103 $ 620
Machinery and equipment.......................... 1,115 281 (180) 1,216
------- ----- ------ -------
$1,559 $354 $ (77) $ 1,836
======= ===== ====== =======
For the Year Ended July 3, 1993:
Buildings and improvements....................... $ 620 $ 81 $ (37) $ 664
Machinery and equipment.......................... 1,216 302 (218) 1,300
------- ----- ------ -------
$1,836 $383 $(255) $ 1,964
======= ===== ====== =======
For the Year Ended July 2, 1994:
Buildings and improvements....................... $ 664 $ 92 $ (19) $ 737
Machinery and equipment.......................... 1,300 322 (22) 1,600
------- ----- ------ -------
$1,964 $414 $ (41) $ 2,337
======= ===== ====== =======
</TABLE>

- - - ---------------
Refer to "Notes to Financial Statements, Summary of Significant Accounting
Policies" on Page F-9 of this Report for depreciation methods and estimated
useful lives.

F-24
<PAGE> 44

SCHEDULE VIII

SARA LEE CORPORATION AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JUNE 27, 1992, JULY 3, 1993 AND JULY 2, 1994
(IN MILLIONS)

<TABLE>
<CAPTION>
BALANCE AT PROVISION WRITE-OFFS(1)/ OTHER BALANCE
BEGINNING CHARGED TO COSTS ALLOWANCES ADDITIONS AT END
OF YEAR AND EXPENSES TAKEN (DEDUCTIONS) OF YEAR
---------- ---------------- -------------- ------------ -------
<S> <C> <C> <C> <C> <C>
For the Year Ended June 27, 1992:
Allowances for bad debts.......... $ 69 $ 34 $ (16) $ 14 $ 101
Other receivable allowances....... 37 97 (101) 20 53
----- ----- ------- ----- ------
Total........................ $106 $131 $ (117) $ 34 $ 154
===== ===== ======= ===== ======
For the Year Ended July 3, 1993:
Allowances for bad debts.......... $101 $ 23 $ (19) $ (6) $ 99
Other receivable allowances....... 53 86 (97) 13 55
----- ----- ------- ----- ------
Total........................ $154 $109 $ (116) $ 7 $ 154
===== ===== ======= ===== ======
For the Year Ended July 2, 1994:
Allowances for bad debts.......... $ 99 $ 30 $ (21) $ 1 $ 109
Other receivable allowances....... 55 78 (81) 3 55
----- ----- ------- ----- ------
Total........................ $154 $108 $ (102) $ 4 $ 164
===== ===== ======= ===== ======
</TABLE>

- - - ---------------
NOTE: (1) Net of collections on accounts previously written off.

SCHEDULE X

SARA LEE CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED JUNE 27, 1992, JULY 3, 1993, AND JULY 2, 1994

<TABLE>
<CAPTION>
CHARGED TO COSTS AND
EXPENSES
------------------------
ITEM 1992 1993 1994
- - - -------------------------------------------------------------------- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Maintenance and repairs............................................. $191 $211 $216
==== ==== ====
Excise Taxes........................................................ $389 $502 $515
==== ==== ====
Media advertising................................................... $325 $392 $371
==== ==== ====
</TABLE>

F-25
<PAGE> 45
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS PAGE/INCORPORATION BY REFERENCE
-------- ----------------------------------------
<S> <C> <C>
(3a) Articles of Incorporation as Amended and
Restated

(3b) By-Laws Exhibit (3b) to Report on Form 10-K for
Fiscal Year ended July 3, 1993
<CAPTION>

(4) Sara Lee, by signing this Report, agrees to furnish the Securities and Exchange
Commission, upon its request, a copy of any instrument which defines the rights of
holders of long-term debt of Sara Lee and all of its subsidiaries for which
consolidated or unconsolidated financial statements are required to be filed, and
which authorizes a total amount of securities not in excess of 10% of the total
assets of Sara Lee and its subsidiaries on a consolidated basis.

<S> <C> <C>
(10) 1. 1979 Stock Option Plan, as amended Exhibit (10) 7 to Report on Form 10-K
for Fiscal Year ended June 27, 1987

2. 1981 Incentive Stock Option Plan, as Exhibit (10) 11 to Report on Form 10-K
amended for Fiscal Year ended July 1, 1989

3. 1988 Non-Qualified Stock Option Plan Exhibit (10) 12 to Report on Form 10-K
for Fiscal Year ended July 2, 1988

4. 1989 Incentive Stock Plan, as amended Exhibit B to 1991 Proxy Statement, dated
September 20, 1991

5. Supplemental Benefit Plan, as amended Exhibit (10) 8 to Report on Form 10-K
for Fiscal Year ended June 30, 1990

6. Short-Term (Annual) Incentive Plan Exhibit (10) 15 to Report on Form 10-K
Fiscal Year 1994 for Fiscal Year ended July 3, 1993

7. Short-Term (Annual) Incentive Plan
Fiscal Year 1995 (Draft)

8. Accelerated Growth Incentive Plan Exhibit 10 (12) to Report on Form 10-K
Fiscal Years 1990-1994 for Fiscal Year ended June 30, 1990

9. 1991 Non-Qualified Deferred Exhibit 10 (15) to Report on Form 10-K
Compensation Plan (Base Salary) for Fiscal Year ended June 29, 1991

10. 1992 Non-Qualified Deferred Exhibit 10 (15) to Report on Form 10-K
Compensation Plan (Base Salary) for Fiscal Year ended June 27, 1992

11. FY '93 Non-Qualified Deferred Exhibit 10 (16) to Report on Form 10-K
Compensation Plan (Annual Bonus) for Fiscal Year ended June 27, 1992

12. 1993 Non-Qualified Deferred Exhibit 10 (19) to Report on Form 10-K
Compensation Plan (Base Salary) for Fiscal Year ended July 3, 1993

13. FY '94 Non-Qualified Deferred Exhibit 10 (20) to Report on Form 10-K
Compensation Plan (Annual Bonus) for Fiscal Year ended July 3, 1993

14. 1994 Non-Qualified Deferred
Compensation Plan (Base Salary)

15. FY '95 Non-Qualified Deferred
Compensation Plan (Annual Bonus)

16. Long Term Performance Incentive Plan
FY '95-97 (Draft)

17. Non-Qualified Deferred Compensation Exhibit 10 (21) to Report on Form 10-K
Plan for Outside Directors for Fiscal Year ended July 3, 1993
</TABLE>
<PAGE> 46

<TABLE>
<CAPTION>
EXHIBITS PAGE/INCORPORATION BY REFERENCE
-------- ----------------------------------------
<S> <C> <C>
18. Estate Builder Deferred Compensation Exhibit (10) 17 to Report on Form 10-K
Plan for Fiscal Year ended June 29, 1985

19. Severance Plan for Corporate
Officers

20. Stockholder Rights Agreement Exhibit (4) to Report on Form 10-Q for
the quarter ended March 26, 1988
(12) 1. Computation of Ratio of Earnings to
Fixed Charges

2. Computation of Ratio of Earnings to
Fixed Charges and Preferred Stock
Dividend Requirements

(21) List of Subsidiaries

(23) Consent of Arthur Andersen LLP

(24) Powers of Attorney from those directors
whose names appear on pages 17 and 18
hereof followed by an asterisk

(27) Financial Data Schedules
</TABLE>

<PAGE> 1
Exhibit (3a)

SARA LEE CORPORATION
ARTICLES OF AMENDMENT

Sara Lee Corporation, a Maryland corporation, having its principal office in
Chicago, Illinois (hereinafter called the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland, that:

FIRST: The charter of the Corporation is hereby amended by striking out
paragraph (a) of ARTICLE FIFTH of the Articles of Incorporation and inserting
the following:

"FIFTH: AUTHORIZED:

The total number of shares of all classes which the Corporation has
authority to issue is Six Hundred Thirteen Million Five Hundred
Thousand (613,500,000), consisting of the following number of shares of
the following classes:

(a) The Common Stock. Six Hundred Million (600,000,000) shares of
Common Stock of the par value of One Dollar and Thirty-three and
One-third Cents ($1.33-1/3) per share, having an aggregate par value,
of $800,000,000 and"

SECOND: The board of directors of the Corporation, at a meeting duly convened
and held on August 27, 1992, adopted a resolution in which set forth the
foregoing amendment to the charter, declaring that the said amendment of the
charter as proposed was advisable and directing that it be submitted for action
thereon by the stockholders of the Corporation at the annual meeting of
stockholders to be held on October 29, 1992.

THIRD: Notice of the said annual meeting setting forth a summary of the
changes to be effected by said amendment of the charter and stating that a
purpose of the said annual meeting of stockholders would be to take action
thereon was given, as required by law, to all stockholders entitled to vote
thereon. The amendment of the charter of the Corporation, as hereinabove set
forth, was approved by the stockholders of the Corporation at said annual
meeting of stockholders by an affirmative vote in excess of two-thirds (2/3) of
all the issued and outstanding shares of Common Stock of the Corporation
entitled to vote thereon.

1
<PAGE> 2
FOURTH: The amendment of the charter of the Corporation, as hereinabove set
forth, has been duly advised by the board of directors and approved by the
stockholders of the Corporation.

FIFTH: (a) The total number of all classes of stock which the Corporation was
heretofore authorized to issue is Three Hundred and Thirteen Million, Five
Hundred Thousand (313,500,000) of capital stock, divided into Three Hundred
Million (300,000,000) shares of Common Stock of the par value one Dollar and
Thirty-Three and One-third Cents ($1.33-1/3) per share, having the aggregate par
value $400,000,000; Twelve Million (12,000,000) shares of Preferred Stock,
without par value, and One Million Five Hundred Thousand (1,500,000) shares of
Convertible Adjustable Preferred Stock, without par value.

(b) The total number of shares as increased and the number and par value of the
shares of each class are as set forth in Article FIFTH of the Articles of
Amendment of the Corporation, as amended by these Articles of Amendment.

(c) The preferences, rights, voting powers, restrictions and qualifications of
the Common Stock as increased are as set forth in the Articles of Incorporation
of the Corporation, as heretofore amended; and the preferences, rights, voting
powers, restrictions and qualifications of, the dividends on, the times and
prices of redemption of, and the conversion rights of, the unclassified shares
of Preferred Stock will be fixed prior to issuance by the board of directors in
conformity with the provisions of the Articles of Incorporation, as amended,
which shall be applicable generally to all such shares, pursuant to the
authority and power therein conferred upon the board of directors and will be
set forth in Articles Supplementary, as provided in the Maryland General
Corporation Law.

(d) The description of the Convertible Adjustable Preferred Stock, with its
preferences, voting powers, restrictions and qualifications thereof, are set
forth in the Articles Supplementary to the Charter of the Corporation dated
September 20, 1983, and filed with and approved for record by the State
Department of Assessments and Taxation on September 22, 1983, and sets forth
the classification by the board of directors of the Corporation a total of One
Million Five Hundred Thousand (1,500,000) shares of the then authorized Four
Million (4,000,000) shares of Preferred Stock, without par value.

SIXTH: The Articles of Amendment shall become effective upon filing.

IN WITNESS WHEREOF, SARA LEE CORPORATION, has caused these presents to be signed
in its name and on its behalf by its Senior Vice President

<PAGE> 3
and its corporate seal to be hereunto affixed and attested by its Assistant
Secretary, on October 30, 1992.

SARA LEE CORPORATION

/s/ Gordon H. Newman
- - - --------------------
Gordon H. Newman
Senior Vice President

ATTEST:

/s/ Ronald L. Scherubel
- - - -----------------------
Ronald L. Scherubel
Assistant Secretary

SEAL

ACKNOWLEDGMENT

The undersigned, Gordon H. Newman, Senior Vice President of Sara Lee
Corporation, who executed on behalf of said corporation the foregoing Articles
of Amendment, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said corporation, the foregoing Articles of Amendment
to be the corporate act of said corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under penalties of perjury.

/s/ Gordon H. Newman
- - - --------------------
Gordon H. Newman
Senior Vice President

VERIFICATION

(State of Illinois)
) ss:
County of Cook )

Gordon H. Newman, being first duly sworn on his oath states that he is
Secretary of Sara Lee Corporation, that as such Secretary he acted as Secretary
of the regular meeting of the Board of Directors of Sara Lee Corporation held
on August 27, 1992, at Three First National Plaza, Chicago, Illinois, at which
meeting a quorum of the said Board of Directors unanimously approved the
foregoing Articles of Amendment, and that he acted as Secretary of the annual
meeting of
<PAGE> 4
stockholders of Sara Lee Corporation on October 29, 1992, at Chicago, Illinois,
at which in excess of 2/3rds of all the outstanding shares of Common Stock
approved the foregoing Articles of Amendment.

Affiant further states that the matters and facts set forth in the foregoing
Articles of Amendment are true and correct in all respects.

/s/ Gordon H. Newman
- - - --------------------
Gordon H. Newman
Secretary

I HEREBY CERTIFY that on this 30th day of October, before me, the subscriber, a
Notary Public, in and for the County of Cook and State of Illinois, personally
appeared Gordon H. Newman, to me known, and acknowledged the foregoing Articles
of Amendment as the corporate act and deed of Sara Lee Corporation.

WITNESS my hand and Notarial Seal the day and year last above written.

/s/ Karen A. French
- - - -------------------
Karen A. French
Notary Public

[SEAL]

<PAGE> 1
EXHIBIT (10.)7

SARA LEE CORPORATION

SHORT-TERM (ANNUAL) INCENTIVE PLAN

Fiscal Year 1995

PLAN DESCRIPTION

<PAGE> 2
PURPOSE

The purpose of the FY95 Short-Term (Annual) Incentive Plan is to advance the
interests of Sara Lee Corporation (hereafter called "SLC") by:

a) achieving consistently superior performance;

b) enabling SLC to attract and retain talented executives by providing
incentive opportunities which are more attractive than those generally
available in the executive labor market;

c) rewarding those executives whose duties and responsibilities provide an
opportunity to make a material and substantial contribution to the
performance of SLC;

d) providing meaningful awards which are directly related to such performance;
and

e) distinguishing among the performance contributions of individual
executives.

DEFINITIONS

a) INCENTIVE YEAR shall be the same as SLC's fiscal year ending July 1, 1995
("FY95").

b) THE BOARD shall mean the Board of Directors of SLC.

c) THE COMMITTEE shall mean the Compensation and Employee Benefits Committee of
the Board.

d) DIVISION shall mean the operating profit centers of SLC.

e) PARTICIPANT in the Plan shall mean an "A", "B" or "C" level executive
throughout the Corporation.

f) EARNINGS PER SHARE ("EPS") shall mean reported primary earnings per share
for FY95.

g) RETURN ON INVESTMENT ("ROI") shall mean Operating Profit as defined below
expressed as a percent of average investment, defined and calculated in
accordance

2
<PAGE> 3
with SLC Finance Manual Policy No. 130 as revised July 1, 1992, subject to
the following adjustments, if any, to the average investment:

Tangible net assets (as defined by Policy No. 130) at the date of
acquisition for acquisitions made during the year and NOT included in the
Annual Operating Plan shall be excluded from the computation of average
investment from the date of acquisition to the end of the fiscal year.

Tangible net assets, as defined, for those businesses divested during the
year and NOT included in the Annual Operating Plan as divestments shall be
included in the computation of average investment from the date of
divestment to the end of the fiscal year at planned amounts.

h) OPERATING PROFIT shall mean operating profits as shown on Line 16 of the
EO-200 income statement, with the following adjustment(s):

Operating Profit of businesses acquired during the year and NOT included
in the Annual Operating Plan shall be EXCLUDED.

Planned Operating Profit of businesses divested and NOT included in the
Annual Operating Plan as divestments shall be INCLUDED from the date of
divestment to the end of the fiscal year.

i) ASSET MANAGEMENT refers to various financial standards used to measure
performance on a consolidated or divisional basis. For operations
participants this may typically include ROI, cash flow or other measures
related to the management of assets.

j) BASE SALARY shall mean base salary earned by the participant during FY95,
regardless of deferral elections, excluding any premiums, allowances,
expense reimbursements, commissions, incentives, amounts paid as severance
or termination pay, payments under deferred salary or incentive agreements
and compensation attributable to the exercise of stock options.

k) TOTAL DISABILITY shall be defined as per the Long-Term Disability Plan of
the Corporation under which the participant is covered.

3
<PAGE> 4
STANDARDS OF PERFORMANCE AND INCENTIVE OPPORTUNITY

Standards of performance will be established early in the plan year for both
financial and individual performance. A summary of suggested incentive
components and the corresponding incentive opportunities are shown in Appendix
I. The following applies to the incentive plan goals:

The financial and individual weightings for Operations Participants may be
adjusted, with the approval of the appropriate SLC Operating Executive Vice
President, to reflect different priorities during the Incentive Year.

Financial and individual goals are established at the beginning of the
fiscal year and approved by the Committee or Corporate Officer, as
appropriate.

The financial standards of performance which have been approved for corporate
earnings per share are listed in Attachment II.

NON-FINANCIAL INDIVIDUAL PERFORMANCE

All participants in the plan must have pre-determined individual standards of
performance. Pre-determined individual standards should be established at the
beginning of the fiscal year by agreement between the participant and the
individual responsible for appraising his/her performance. Approval of
standards should be received from the responsible superior two levels up. The
standards should be as specific and as quantifiable as possible, should
represent the key goals for the individual's responsibility during the
next fiscal year, and should relate to AOP objectives and action plans.
Standards should include seven to 10 objectives (hence, should prioritize
the individual's activities). One objective, worth 5% for A-level individuals
in operating companies, should contain the two Human Resource areas which are
described in the footnote in Attachment I. Standards should be skewed to
longer-term objectives and away from sub-elements of this year's earnings and
asset management goals since these standards are covered in the financial
standards section. The exception would be current operating problems (such as
inventory turns, unit sales volume, etc.).

Generally, there should be three major areas of standards:

(a) Fiscal year operating plan - sales, expenses, working capital, inventory,
market share, unit volume, cost improvement, etc. - those areas which are
problems and/or important to the Long-Range Plan.

4
<PAGE> 5
(b) Consumer Value - include programs and projects that support the company's
focus on delivering value to the consumer, particularly focusing on
meeting or exceeding the expectations of our customers.

(c) Organizational/manpower - strategic diversity, organizational changes,
hiring/replacing key people, turnover, training and development,
affirmative action, safety programs, personnel development, succession
plans and development, etc.

It is within this context that the following performance levels are defined:

OUTSTANDING - performance that demonstrably exceeds the Superior level and
where all goals are met and major goals surpassed. Attainment requires
significant "stretch".

SUPERIOR - the expected level of performance where attainment requires
normal "stretch". Most goals are met or surpassed.

ACCEPTABLE - performance which is acceptable in the short term because it
demonstrates progress relative to goals and to the past, but it falls
below the superior level. Performance where attainment requires
little or no "stretch".

MARGINAL - performance which is judged marginally acceptable in the short
term, but which is unacceptable and requires corrective action in the
longer term.

RANGES OF INCENTIVE AWARDS

Incentive award ratings shall be determined as follows:

<TABLE>
<S> <C> <C>
Outstanding = Maximum
Superior = 67% of Maximum
Acceptable = 33% of Maximum
Marginal = 0%

</TABLE>

Interpolations will be used for results which fall between the various ratings.

5
<PAGE> 6
INCENTIVE DISTRIBUTION

Incentive awards shall be distributed on or about September 1, 1995 after the
final financial results of SLC have been publicly announced and after the
August, 1995 meeting of the Committee. Unless otherwise provided in the plan, a
participant must be an employee at the conclusion of the fiscal year in order
to be eligible to receive an incentive award.

ADMINISTRATION

The Plan shall be administered jointly by the Committee and the Chief Executive
Officer of SLC, whose decisions shall be final. The Senior Vice President,
Human Resources, will be responsible for the administrative procedures
governing the Plan including assuring the existence of approved standards of
performance and presenting the results of the Plan to the Committee for final
approval. The following administrative procedures shall govern:

a) Individual incentive awards for corporate officers will be approved by the
Committee. All other incentive awards shall be approved by the Chief
Executive Officer.

b) All incentive awards shall be made in cash. However, a participant may elect
to partially or totally defer his/her incentive award pursuant to the terms
and conditions of the SLC Non-Qualified Deferred Compensation Plan if
applicable.

c) A new participant who begins participation during the plan year may be
eligible for a pro-rata incentive award from the date of entry into the Plan
with the approval of the Chief Executive Officer or the Senior Vice
President, Human Resources.

d) In the case of death, total disability, or retirement under a SLC retirement
plan, a pro-rata incentive award shall be distributed on or about September
1, 1995, based on actual service during the Incentive Year, unless otherwise
deferred under the SLC Non-Qualified Deferred Compensation Plan.

e) Unless otherwise approved by the Chief Executive Officer, any participant
who resigns or is terminated during the Incentive Year (except as provided
for above) shall not be entitled to any incentive award attributable to the
Incentive Year.

6
<PAGE> 7
f) A participant who is employed as of the end of the Incentive Year shall be
entitled to receive an incentive award regardless of whether the participant
resigns or is terminated between the end of the Incentive Year and the date
the incentive awards are distributed.

g) Nothing herein shall be construed as an agreement or commitment to employ
any participant or to employ a participant for any fixed period of time or
constitute a commitment by SLC that any participant will continue to receive
an incentive award or will continue as a participant in the Plan.

h) The Committee may delegate certain administrative responsibilities to the
Chief Executive Officer except that:

1) The Committee must approve any actions affecting the Chief Executive
Officer, and other elected officers of SLC;

2) The Committee shall approve corporate incentive standards at the beginning
of the fiscal year; and

3) The Committee shall approve any substantive changes or amendments to the
Plan.

7
<PAGE> 8
Attachment I

FY95 SHORT-TERM INCENTIVE COMPONENTS
AND INCENTIVE OPPORTUNITY GUIDELINES

<TABLE>
<CAPTION>
MAXIMUM BONUS AS A PERCENT OF BASE SALARY*
------------------------------------------------------------------
FINANCIAL STANDARDS
---------------------------------------------
TOTAL CORPORATE INDIVIDUAL
EXECUTIVE INCENTIVE OPERATING FINANCIAL PERFORMANCE
LEVEL TITLE OPPORTUNITY EPS PROFITS GOALS STANDARDS
- - - ---------- ------ ------------ ----- ------------- ---------- -------------
CORPORATE STAFF PARTICIPANTS
<S> <C> <C> <C> <C> <C> <C>
A Chairman/CEO 125% 70% -- 30% 25%

A Vice Chairman 120% 60% -- 30% 30%

A Senior 95% 50% -- 20% 25%
Vice Presidents

A Vice 80% 40% -- 20% 20%
Presidents

B Executive 60% 40% -- -- 20%
Directors
C Directors 30% 15% -- -- 15%

<CAPTION>
MAXIMUM BONUS AS A PERCENT OF BASE SALARY*
----------------------------------------------------------------------
FINANCIAL STANDARDS
-----------------------------------------------
TOTAL OPER. UNIT INDIVIDUAL
EXECUTIVE INCENTIVE OPERATING FINANCIAL PERFORMANCE
LEVEL TITLE OPPORTUNITY EPS PROFITS GOALS STANDARDS
- - - --------- ------ ----------- --- --------- --------- -----------
OPERATIONS PARTICIPANTS
<S> <C> <C> <C> <C> <C> <C>
A Executive 110% 30% 30% 30% 20%
Vice Presidents

A Corporate Senior 95% 10% 35% 30% 20%
Vice Presidents

A Corporate 90% 10% 30% 30% 20%
Vice Presidents

A Division Presidents 87.5% -- 35% 32.5% 20%

A Other Designated 80% -- 30% 30% 20%
A-Level Executives

B Operating 60% -- 20% 20% 20%
Executives

C Operating 30% -- 10% 10% 10%
Executives
</TABLE>

Note: "A" level participants should have a 5% minimum weighting for Management
Development/Diversity as an Individual Performance Standard.

* Superior Performance and Acceptable Performance result in payouts of 2/3 and
1/3 of Maximum respectively. Straight line interpolations are used to
determine payout levels between performance levels.

<PAGE> 9
Attachment II

FY95 CORPORATE STANDARDS OF PERFORMANCE

<TABLE>
<CAPTION>
EARNINGS PER SHARE (EPS)
<S> <C> <C>
Outstanding = $1.62
Superior = $1.59
Acceptable = $1.55
Marginal = $1.47

</TABLE>

<PAGE> 1
EXHIBIT (10.)14

SARA LEE CORPORATION
1994 NON-QUALIFIED
DEFERRED COMPENSATION PLAN
(BASE SALARY)

1. Purpose: The purpose of the Sara Lee Corporation 1994 Non-Qualified
Deferred Compensation Plan (Base Salary) ("Plan") is to permit a
Participant, as defined in Section 2 below, to defer the payment of all
or a portion of calendar year 1994 base salary for one or more calendar
years.

2. ELIGIBLE PARTICIPANT: An eligible participant shall mean "A" and "B"
level Executives of Sara Lee Corporation or any of its subsidiaries
incorporated under the laws of any state in the United States (the
"Company") and any other Company employees deemed eligible by general
management ("Participant").

3. ADMINISTRATION OF PLAN: The Plan shall be administered by the
Compensation and Employee Benefits Committee of the Board of Directors
of the Company (the "Committee"). The Committee may delegate certain
administrative authority to employee(s) of the Company, but shall retain
the responsibility for interpretation and modification of the Plan.

4. DEFERRED COMPENSATION: Each Participant shall be permitted to defer an
amount of calendar year 1994 base salary in accordance with the terms of
Paragraphs 5a and 5b of the Plan. ("Deferred Compensation").

5a. ELECTION TO DEFER COMPENSATION: A Participant may elect to defer all or
some portion of his/her calendar year 1994 base salary provided the
deferral amount equals or exceeds $500 per month. The deferral shall be
effected by executing a 1994 Base Salary Deferred Compensation Agreement
("Agreement") as set forth in Exhibit A to this Plan, and filing the
Agreement prior to December 31, 1993, with the Participant's payroll
department or any other department designated by the Company's
management (except as provided for in paragraph 5b).

5b. AGREEMENTS FILED AFTER DECEMBER 31, 1993: A Participant may file an
Agreement after December 31, 1993 to defer calendar year 1994 base
salary not yet earned provided the provisions in paragraph 5a (other
than filing date) are satisfied and further provided the deferral period
is no less than two (2) years.

6. PAVMENT OF DEFERRED COMNENSATION: A Participant may elect to receive the
payments of Deferred Compensation in installments (annual or quarterly)
or in a lump sum, provided that the payment(s) does not commence during
the tax year in which it is earned, and the provisions of paragraph 5b
are met, if applicable. The payments shall be made on the payroll date
closest to the scheduled payment date.

7. CHANGE OF ELECTION: A Participant may prospectively elect to cease or
change his/her deferral election by revoking this Agreement and, where
applicable, executing a new Agreement and submitting the revoked and
executed Agreements to the designated

<PAGE> 2
department of his/her Company. Deferral elections related to amounts
which have already been earned and deferred cannot be terminated or
changed except as provided in Paragraphs 10 and 12 below. Any
Participant who changes his/her deferral election for compensation not
yet earned and executes a new Agreement for calendar year 1994 must
designate a deferral period of at least two (2) years.

8. MAINTENANCE OF DEFERRED COMNENSATION ACCOUNTS: The Company will maintain
a separate Deferred Compensation Account ("Account") for each
Participant. On June 30 and December 31 of each year and on the date of
final payment from the Account, the Company will credit the Account with
interest on the outstanding average balance (principal and accrued
interest to date). The rate of interest for each fiscal year will be set
at the beginning of each fiscal year based on the current cost to Sara
Lee Corporation of issuing five year maturity debt. The rate will be the
average of quotes from two prominent investment banks, but will not be
lower than comparable maturity debt for a company rated comparably to
Sara Lee Corporation.

9. RETIREMENT: In the event that the Participant retires before all the
Deferred Compensation is paid from his/her Account, the Plan shall
remain in effect and each Account shall continue to be maintained by the
Company for the benefit of the Participant and paid in accordance with
the Agreement.

10. DEATH OR TOTAL DISABILITY OF PARTICIPANT: Upon the death or total
disability (as defined below) of a Participant, the payment of Account
balances shall be made as requested by the totally disabled Participant,
designated beneficiary or the Executor/Executrix of the Participant's
estate. This request must be made in writing to the Senior Vice
President - Human Resources of Sara Lee Corporation within 180 days
following the death or total disability of a Participant. If this
request is not made within 180 days following the death or total
disability of a Participant, the deferral amount will be paid in
accordance with the Agreement. Total disability shall mean the inability
to perform each and all of the duties relative to a Participant's
occupation, and his/her not being gainfully employed in another job for
which he/she is qualified.

11. TERMINATION OF EMPLOYMENT: The Plan shall remain in effect and the
Account shall continue to be maintained by the Company for the benefit
of the Participant and paid in accordance with the Agreement in the
event that the Participant terminates employment with the Company for
any reason before all the Deferred Compensation is paid from his or her
Account.

12. FINANCIAL HARDSHIP: Notwithstanding the time and frequency of the date
of payment of Deferred Compensation designated in the Agreement or in
paragraphs 9, 10 and 11 hereof, the Senior Vice President, Human
Resources of Sara Lee Corporation as the representative for the
Committee may authorize, upon written application by the Participant,
his/her designated beneficiary or the Executor/Executrix of the
Participant's estate, the acceleration of Deferred Payments (including a
lump sum payment) provided that it can be substantiated to the
reasonable satisfaction of the Senior Vice President, Human Resources of
Sara Lee Corporation as the representative for the Committee that
adherence to the designated payment form and/or schedule set forth in
the Agreement would result in severe financial hardship to the
Participant, his/her designated beneficiary

<PAGE> 3
or to his/her estate. A bona fide financial hardship must be the
result of an unanticipated event. Such accelerated or lump sum
payment shall not exceed the amount required to meet the financial
need of the Participant, his/her designated beneficiary or his/her
estate.

13. NO RIGHTS OF EMPLOYMENT: Participation in the Plan in no way constitutes
a contract or agreement to continue employment of the Participant by the
Company for any fixed period of time.

14. STATUS OF OBLIGATION: The balances accumulated in the Accounts under the
terms of the Plan shall constitute general contractual obligations of
the Company. The Company shall not segregate assets, create any security
interest, or encumber its assets in order to provide for the payment(s)
of the balance(s) which shall accumulate in the Accounts.
Notwithstanding the preceding sentence, the Company may, in its sole
discretion, establish an irrevocable grantor trust, the assets of which
shall be subject to the claims of the Company's creditors in the event
of the Company's bankruptcy or insolvency, and if so established,
benefits payable under the Plan shall be paid from such trust to the
extent not otherwise paid from the Company's general assets.

15. NON-ASSIGNABILITY: The rights and benefits of a Participant under the
Plan are personal and cannot be pledged, transferred or assigned except
by designation of a beneficiary, will or the laws of descent and
distribution.

16. AMENDMENT(S): Any substantive amendment(s) to the Plan shall be approved
by the Committee. No amendment(s) shall be made which would adversely
affect the tax status of the Deferred Compensation accumulated in the
Accounts.

17. EFFECTIVE DATE: TERMINATION: The Plan shall become effective January 1,
1994. The Committee may terminate the Plan at any time; however, such
termination shall not affect the rights of Participants accrued under
any predecessor Deferred Compensation (Base Salary) Plans. In the event
of a termination, the Committee will comply with a Participant's
election regarding the distribution of the deferred amount(s).

18. PREDECESSOR PLANS: The rights and provisions as described in this
document are applicable to this Plan only and shall not apply to any
other Deferred Compensation Plan of the Company in which a Participant
is a participant.

<PAGE> 4
EXHIBIT A

SARA LEE CORPORATION BASE SALARY DEFERRED COMPENSATION
AGREEMENT FOR CALENDAR YEAR 1994

This Agreement is made and entered into this ________ day of _________, 199_, by
and between Sara Lee Corporation, a Maryland Corporation ("SLC"), and _________
("Employee").
WITNESSETH

WHEREAS, SLC has a 1994 Non-Qualified Deferred Compensation Plan (Base Salary),
a copy of which is attached hereto ("Deferred Compensation Plan"), in
which the Employee is eligible to participate; and
WHEREAS, Employee desires to defer all or a portion of Employee's base salary
to be earned and paid during calendar year 1994 in accordance with the
terms and conditions of the Deferred Compensation Plan and this
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:

1. EMPLOYEE'S ELECTION TO DEFER BASE SALARY. Employee hereby elects to defer
all or a portion of Employee's future base salary payments in calendar year
1994 equal to________________ dollars ($___________) to be deferred on a
( ) WEEKLY; ( ) BI-WEEKLY; ( ) MONTHLY basis, for a total of ______________
dollars ($__________), beginning with the pay period which commences on
____________________, 1994 and ending with the pay period which ends on
_____________________________________, 1994 or (if no ending date is indicated
herein) on the date of the last pay period of calendar year 1994 unless Employee
shall revoke the foregoing election in accordance with Section 7 of the
Deferred Compensation Plan.

2. AGREEMENT OF SLC TO DEFER BASE SALARY. SLC agrees to establish a separate
account on its books for the benefit and in the name of Employee ("Account")
in which the amount of base salary deferred by Employee ("Deferred
Compensation") for each pay period under this Agreement shall be credited. The
Account shall be maintained by SLC in accordance with Section 8 of the Deferred
Compensation Plan.

3. PAYMENT OF DEFERRED COMPENSATION. Employee hereby elects to receive
the payment of, and SLC hereby agrees to pay Employee, the Deferred Compensation
as follows:

(a) ( ) a lump sum payment in _________ [insert month and year] or

(b) equal ( ) QUARTERLY or ( ) ANNUAL installments commencing in
_______________________ [insert month and year] and ending in
_______________________ [insert month and year], together with interest as
determined in Section 4 below.

4. PAYOUT CALCULATION. The amount of each installment payment shall be
computed in accordance with the following formula: (a) the amount of principal
payment of each installment shall be determined by dividing the current
principal balance by the number of remaining installment payments; (b) the
amount of the interest payment of each installment shall be determined by
dividing the current interest balance (at latest interest credit date) by the
number of remaining installment payments. Payments of Deferred Compensation
shall be made at the end of the last pay period of the calendar month.

______________________________________________________________________________
__________________________________________ (fill in name, current address and
social security number of beneficiary).

6. INCORPORATION OF DEFERRED COMPENSATION PLAN. The terms and conditions of the
Deferred Compensation Plan are hereby incorporated by reference and form a part
of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.

ATTEST: SARA LEE CORPORATION

By:______________________ By:______________________
Officer (Operating Unit) Officer (Operating Unit)

_________________________ _________________________
City and state in which Employee Signature
salary earned
_________________________
Employee's Social Security Print Name
Number: __________________
_________________________
Home Address

_________________________
City State Zip Code

__________________________
Division (Company)

<PAGE> 1
EXHIBIT (10.)15

SARA LEE CORPORATION
FY95 NON-QUALIFIED
DEFERRED COMPENSATION PLAN
(ANNUAL BONUS)

1. PURPOSE: The purpose of the Sara Lee Corporation FY95 Non-Qualified
Deferred Compensation Plan (Annual Bonus) (the "Plan") is to permit a
Participant, as defined below, to defer the payment of 25% or more of
his/her FY95 annual bonus award earned under the provisions of an annual
(short-term) bonus plan of Sara Lee Corporation or any of its subsidiaries
incorporated under the laws of any state in the United States (the
"Company").

2. PARTICIPANTS: A Participant shall mean an employee of the Company who is a
participant in a short-term (annual) incentive plan for fiscal year 1995
("Participant").

3. ADMINISTRATION OF THE PLAN: The Plan shall be administered by the
Compensation and Employee Benefits Committee of the Board of Directors of
Sara Lee Corporation (the "Committee"). The Committee may delegate certain
administrative authority to employee(s) of the Company, but shall retain
the responsibility for interpretation and modification of the Plan.

4. DEFERRED COMPENSATION: "Deferred Compensation" shall mean the amount of
the FY95 annual bonus awarded but deferred in accordance with the terms of
Paragraph 5 of the Plan.

5. ELECTION TO DEFER COMPENSATION: A Participant may elect to defer at
least 25% of his/her FY95 bonus award earned under an annual (short-term)
bonus plan. Such deferral shall be effected by executing a FY95 Annual
Bonus Deferred Compensation Agreement ("Agreement"), in the form set forth
in EXHIBIT A of the Plan, and filing the Agreement with the Company's
Human Resources Department prior to July 3, 1994.

6. PAYMENT OF DEFERRED COMPENSATION: A Participant may elect to receive the
payment(s) of Deferred Compensation in annual installments or in a lump
sum, provided that the payment(s) does not commence during the tax year in
which it is earned.

7. IRREVOCABILITY: An election to defer, filed in accordance with paragraph
5, is binding and irrevocable except as specified in paragraphs 10 and 12
below.

8. MAINTENANCE OF DEFERRED COMPENSATION ACCOUNTS: The Company will maintain a
separate Deferred Compensation Account ("Account") for each Participant.
On June 30 and December 31 of each year and on the date of final payment
from the Account, the Company will credit the Account with interest on the
outstanding balance (principal and interest to date). The rate of interest
for each fiscal year will be set at the beginning of each fiscal year
based on the current cost to Sara Lee Corporation of issuing five year
maturity debt. The rate will be the average of quotes from two prominent
investment banks, but will not be lower than five year maturity debt for a
company whose credit rating is comparable to that of Sara Lee Corporation.

<PAGE> 2
9. RETIREMENT: In the event that a Participant retires before all the
Deferred Compensation is paid from his/her Account, the Plan shall remain
in effect and his/her Account shall continue to be maintained by the
Company for the benefit of the Participant and paid in accordance with the
Agreement.

10. DEATH OR TOTAL DISABILITY OF PARTICIPANT: Upon the death or total
disability of a Participant (total disability as defined in the Sara Lee
Corporation Key Executive Disability Income Plan), the payment of the
Account balance shall be made as requested by the totally disabled
Participant, designated beneficiary (or beneficiaries) or the
Executor/Executrix of the Participant's estate. This request must be made
in writing to the Corporate Compensation Department within 180 days
following the death or total disability of a Participant. If this request
is not made within 180 days following the death or total disability of a
Participant, the Deferral Compensation will be paid in accordance with the
Agreement.

11. TERMINATION OF EMPLOYMENT: The Plan shall remain in effect and the
Account shall continue to be maintained by the Company for the benefit of
a Participant and paid in accordance with the Agreement in the event that
the Participant terminates employment with the Company for any reason
before all the Deferred Compensation is paid from his/her Account.

12. FINANCIAL HARDSHIP: Notwithstanding the time and frequency of the date
of payment of Deferred Compensation designated in the Agreement or in
paragraphs 9, 10 and 11 hereof, the Senior Vice President-Human Resources
of Sara Lee Corporation as the representative for the Committee, may
authorize, upon written application to the Corporate Compensation
Department by the Participant, his/her designated beneficiary or the
Executor/Executrix of the Participant's estate, the acceleration of
Deferred Payments (including a lump sum payment). Provided that the
requesting party can substantiate to the reasonable satisfaction of the
Senior Vice President-Human Resources of Sara Lee Corporation as the
representative for the Committee that adherence to the designated payment
form and/or schedule set forth in the Agreement would result in severe
financial hardship to the Participant, his/her designated beneficiary or
to his/her estate. A bonafide financial hardship must be the result of an
unanticipated event. Such accelerated or lump sum payment shall not exceed
the amount required to meet the financial need of the Participant, his/her
designated beneficiary or his/her estate.

13. NO RIGHTS OF EMPLOYMENT: Participation in the Plan in no way
constitutes a contract or agreement to continued employment of the
Participant by the Company for any fixed period of time.

14. STATUS OF OBLIGATION: The balances accumulated in the Accounts under
the terms of the Plan shall constitute general contractual obligations of
the Company. The Company shall not segregate assets, create any security
interest, or encumber its assets in order to provide for the payment(s) of
the balance(s) which shall accumulate in the Accounts. Notwithstanding the
preceding sentence, the Company may, in its sole discretion, establish an
irrevocable grantor trust, the assets of which shall be subject to the
claims of the Company's creditors in the event of the Company's bankruptcy
or insolvency, and if so established, benefits payable under the Plan
shall be paid from such trust to the extent not otherwise paid from the
Company's general assets.

<PAGE> 3
15. NON-ASSIGNABILITY: The rights and benefits of a Participant under the
Plan are personal and cannot be pledged, transferred or assigned except by
designation of a beneficiary (or beneficiaries), will or the laws of
descent and distribution.

16. AMENDMENT(S): Any substantive amendment(s) to the Plan shall be
approved by the Committee. No amendment(s) shall be made which would
adversely affect the tax status of the Deferred Compensation accumulated
in the Accounts.

17. EFFECTIVE DATE; TERMINATION: The Plan shall become effective July 3,
1994, subject to approval by the Committee. The Committee may terminate
the Plan at any time; however, such termination shall not affect the
rights of Participants accrued prior to such termination. In the event of
a termination, the Committee will comply with a Participant's election
regarding the distribution of the Deferred Compensation.

18. PREDECESSOR PLANS: The rights and provisions as described in this
document are applicable to this Plan only and shall not apply to any other
deferred compensation plan of the Company in which a Participant is a
participant.

<PAGE> 4

EXHIBIT A

SARA LEE CORPORATION
DEFERRED COMPENSATION AGREEMENT
FOR THE FISCAL YEAR ENDED JULY 1, 1995

THIS AGREEMENT is made and entered into this _____ day of______, 1994, by and
between Sara Lee Corporation, a Maryland corporation ("SLC") and
____________________________________________________ ("Employee").

WITNESSETH:

WHEREAS SLC has a FY95 Non-Qualified Deferred Compensation Plan (Annual Bonus),
a copy of which is attached hereto ("Deferred Compensation Plan"), in
which the Employee is eligible to participate and
WHEREAS Employee desires to defer the current payment of 25% or more of the
bonus award payable to Employee with respect to the fiscal year of SLC
ending July 1 1995, in accordance with the terms and conditions of the
Deferred Compensation Plan and this Agreement:
NOW, THEREFORE, the parties hereto agree as follows:

1. EMPLOYEE'S ELECTION TO DEFER BONUS AWARD. Employee hereby
irrevocably elects, except as provided for in paragraphs 10 and 12
of the Deferred Compensation Plan to defer payment of ______ % of
the bonus award earned by and payable to Employee with respect to
the fiscal year of SLC ending July 1, 1995.

2. AGREEMENT OF SLC TO DEFER BONUS AWARD. SLC agrees to establish a
separate account on its books for the benefit and in the name of
Employee ("Account") in which the amount of bonus award deferred
by Employee ("Deferred Compensation") under this agreement shall
be credited. The Account shall be maintained by SLC in accordance
with Section 8 of the Deferred Compensation Plan.

3. PAYMENT OF DEFERRED COMPENSATION. Employee hereby elects to
receive the payment of, and SLC hereby agrees to pay Employee the
Deferred Compensation as follows:

A lump sum payment in __________________________ (insert month
and year) or in __________ equal consecutive annual
installments commencing on January 1, ____ (year) and on each
subsequent January 1, until all installments have been paid.
The final installment shall be paid on January 1, ____ (year).
The lump sum payment of each such installment payment shall be
paid together with interest thereon as determined in Paragraph
8 of the Deferred Compensation Plan.

4. CALCULATION OF PAYMENT AMOUNTS. The amount of each installment
payment and the interest thereon shall be computed in accordance
with the following formula; (a) the amount of the principal
payment of each installment shall be determined by dividing the
current principal balance by the number of remaining installment
payments (b) the amount of the interest payment shall be
determined by dividing the current interest balance by the number
of remaining installment payments.

5. DEATH OF EMPLOYEE. In the event that Employee shall die prior to
the payment of the unpaid balance of the Deferred Compensation in
the Employee's Account, such unpaid balance shall be paid to ( )
EMPLOYEE'S ESTATE or to ( ) EMPLOYEE'S BENEFICIARY (OR
BENEFICIARIES). __________________________________________________
__________________________________________________________________
(fill in name, current social security number of beneficiary).

6. INCORPORATION OF DEFERRED COMPENSATION PLAN. The terms and
conditions of the Deferred Compensation Plan are hereby
incorporated by reference and form a part of this agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.

ATTEST: SARA LEE CORPORATION

By_________________________ By_________________________
Officer (Operating Unit) Officer (Operating Unit)

___________________________
Employee's Signature

___________________________
Print Name

___________________________
Home Address
Employee's Social Security Number
___________________________

__________________________________
___________________________
Division (Employer)

<PAGE> 1
EXHIBIT (10.)16

SARA LEE CORPORATION

LONG-TERM PERFORMANCE
INCENTIVE PLAN

FlSCAL YEARS 1995 - 1997
<PAGE> 2
HIGHLIGHTS

This booklet explains the plan provisions of the Sara Lee Corporation Long-Term
Performance Incentive Plan covering fiscal years 1995 through 1997. The pages
which follow provide detailed information relating to the grant you have
received. In the case of any discrepancy between this and the 1989 Stock
Incentive Plan, that plan governs.

The key features of this plan are summarized below. In some countries outside
the United States, variations may occur to comply with local tax provisions.

RESTRICTED PERFORMANCE SHARES

* Shares of Sara Lee stock are issued in your name, and held at Corporate
Office.

* You have voting rights on all shares throughout the Performance Cycle.

* Number of shares actually earned depends on group and corporate
performance.

* An opportunity to earn additional shares if performance exceeds target
is also provided.

DIVIDENDS

* Dividends are accrued on your behalf through the Performance Cycle.

* Interest on accrued dividends is credited at same rate applicable under
the SLC Deferred Compensation Program.

* Dividends and interest on shares originally granted are distributed to
you to the extent shares are earned at the end of the Performance
Cycle.

PERFORMANCE MEASURES

* Operating Group performance is a key measure during this Performance
Cycle.

* One or more of the following measures apply:

=> SLC Earnings Per Share

=> SLC Return on Invested Capital

=> SLC Return on Average Common Equity

=> Group Operating Profit

=> Group Return on Investment

1
<PAGE> 3
PURPOSE

Sara Lee Corporation ("SLC") has adopted the Fiscal Years 1995 - 1997 Long-Term
Performance Incentive Plan (the "LTPIP") for A-level executives employed in one
of the Groups listed in Appendix I as periodically updated to reflect
organizational changes. The LTPIP exists in order to:

* Support the Entrepreneurial Management initiative by recognizing
improvements in operating group performance;

* Create incentives for management actions which will result in the
accomplishment of earnings per share, return on equity and return on
capital targets;

* Focus corporate and operating management's attention on long-term
results;

* Promote cooperation and teamwork among the Operating Companies and
Divisions of the Corporation; and

* Enhance the competitiveness of the Corporation's long-term compensation
program to aid in attracting and retaining highly qualified executives.

RESTRICTED PERFORMANCE SHARES

Under the LTPIP, the awards are authorized by the Sara Lee Corporation 1989
Incentive Stock Plan (the "Stock Plan") and will be issued as restricted shares
of common stock ("Shares"). Dividends which are payable on restricted shares
that are granted will be escrowed on behalf of the Participant and credited
with interest at the same rate paid on balances under SLC's non-qualified
deferred compensation plans, subject to the conditions described below.

These shares have special restrictions which are based on both continued
service and performance against financial targets which have been established.
These restrictions prohibit the transfer of these shares during the Performance
Cycle. The financial measures and weightings are contained in Appendix II.

SLC may substitute alternative incentives, such as restricted cash units or
stock options with special provisions, in the event it determines that tax
regulations in some countries outside the United States provide more favorable
treatment for these alternatives.

2
<PAGE> 4
DIVIDENDS

During the Performance Cycle, dividends paid on restricted shares will be
escrowed on behalf of each Participant. Interest will be credited annually on
the escrowed amounts at the rate in effect under SLC's non-qualified deferred
compensation plans at the time.

Amounts credited to the escrowed dividend account at the end of the
Performance Cycle will be distributed in the same proportion as the
restrictions on the shares lapse. For example, if 75% of the restricted shares
are earned, then 75% of the balance in the escrowed dividend account will be
paid as soon as possible after the end of FY97. Any remaining balance in the
dividend account will be forfeited.

PERFORMANCE STANDARDS

Performance under the LTPIP will be measured using one or more of the
following financial measures depending on the Participant's position and
executive level within SLC.

* Cumulative SLC Earnings Per Share during the Performance Period

* Average SLC Return on Capital during the Performance Period

* Average SLC Return on Average Common Equity during the Performance
Period

* Cumulative Group Operating Profit during the Performance Period

* Average Group Return on Investment during the Performance Period

Definitions of these measures are included in Appendix III.

For each measure, performance levels have been defined. Corporate EPS and ROC
targets have been included in Appendix II. Group Operating Profit targets have
or will be communicated to the appropriate Participants.

The performance levels and the percentage of shares which will be distributed
are as follows:

PERFORMANCE LEVEL % OF SHARES DISTRIBUTED
------------------ -----------------------
<S> <C>
THRESHOLD 25%
TARGET 100%
MAXIMUM 125%
</TABLE>

Interpolations will be used for results which fall between threshold, target
and maximum. For performance above target, additional shares will be issued
after the end of the

3
<PAGE> 5
Performance Cycle. No dividends will be paid on any additional shares issued
for performance above target. No shares will be earned for performance below
threshold.

AWARD AGREEMENT

Each Participant will receive an Award Agreement specifying the number of
shares which has been granted, and the specific terms and conditions applicable
to this grant. This Agreement is executed by the Corporation and must be signed
by the Participant to receive the shares. Additionally, this Agreement serves
as power of attorney for the Corporation to facilitate the re-issuance of the
Shares at the end of the Performance Cycle or in the event that the terms and
conditions of the grant are not fulfilled.

TAX CONSEQUENCES

United States

Under current United States tax legislation, a Participant receives no taxable
income from shares awarded, dividends escrowed or interest credited until the
restrictions on the shares lapse (vesting). When the shares are earned, both
the market value of the shares on the date of vesting as well as the dividends
and interest distributed are credited as income and subject to applicable
federal, state and local withholding. Amounts necessary to settle this
withholding obligation may be withheld from the cash or stock amounts due the
Participant.

Within thirty days of the award date, as specified in the Agreement, the
Participant may elect immediate taxation under Section 83(b) of the Internal
Revenue Code for the value of the shares awarded. This election is effected by
filing an election form with the Internal Revenue Service within the applicable
time frame. A copy of this election must be sent to the Chief Accounting
Officer of SLC, and the applicable withholding taxes on the value of the award
must be paid to the appropriate payroll department. If this election is made,
the Participant is responsible for all taxes at the time of grant, which will
not be refunded if some or all shares are not eventually distributed. Dividends
will continue to be escrowed, and will result in no income until distributed.

If a Section 83(b) election is made, the basis of the shares for determination
of capital gains under current tax law is the Fair Market Value, as defined in
the Stock Plan, on the award date. If this election is not made, the basis
of the shares will be Fair Market Value on the date the restrictions lapse.

4
<PAGE> 6
COUNTRIES OTHER THAN THE UNITED STATES

Tax laws vary significantly from country to country, so advice should be
obtained from appropriate counsel concerning the effect of this grant in that
country. In most cases, a Participant receives no taxable income from shares
awarded, dividends escrowed or interest credited until the restrictions on the
shares lapse (vesting). When the shares are earned, both the market value of
the shares on the date of vesting as well as the dividends and interest
distributed are credited as income. No amounts will be withheld related to any
tax withholding obligation which may arise. The Participant is responsible for
compliance with the relevant legal and tax regulations in the appropriate
jurisdiction.

IMPACT ON OTHER BENEFITS

Shares, dividends or interest earned under the LTPIP are not considered
compensation for purposes of any retirement plan or other benefit plan for
which the Participant may be eligible.

ADMINISTRATIVE GUIDELINES

The following will serve as guidelines for administering the LTPIP:

* The Committee has final approval of the LTPIP and functions as the Plan
Administrator.

* The SLC Controller's Department will be responsible for providing
financial results under the LTPIP. The awards for all Corporate Officers
will be approved by the Committee.

* The portion of the restricted shares earned along with the related
balance of the escrowed dividend account will be distributed on or about
September 1, 1997, after the financial results of SLC for FY97 have been
publicly announced.

* The number of Shares distributed to Participants who change operating
groups during the Performance Cycle will be adjusted pro-rata reflecting
the number of full months under performance standards for each operating
group in which they participated.

* Performance standards may be restated during the Performance Cycle to
reflect reorganizations provided that after Adjustments and Exclusions
aggregate pre-established performance goals remain unchanged; the number
of shares distributed to Participants will be adjusted pro-rata as
described above.

5
<PAGE> 7

* The results of acquisitions will be included in and divestitures
excluded from Operating Profit and ROI if they were included in the
goals at the beginning of the Performance Cycle.

* Awards may be made to new Participants during the first year of the
Performance Cycle. The number of shares awarded may be adjusted to
reflect that the executive is not a Participant for the entire
Performance Cycle.

* Adjustment awards may be made to Participants who change positions
during the first year of the Performance Cycle, if such a change would
have resulted in qualifying for an increased level of award.

* In the event of death, disability or retirement under an SLC retirement
plan on or prior to the last day of fiscal year 1997, the restrictions
may lapse on a pro-rata number of the restricted shares which are EARNED
under the provisions described earlier in this plan. If applicable, the
shares and related dividends and interest will be distributed at the
normal payout time (i.e., on or about September 1, 1997).

* Unless otherwise approved in writing by the Committee, a Participant who
resigns or is terminated during the Performance Cycle forfeits the
rights to all shares and any dividends or interest which have been
accrued.

* Should a change in control occur (as defined in the Stock Plan), the
Committee will decide what effect, if any, this should have on the
awards which are outstanding under this plan.

* Nothing in the LTPIP shall confer on a Participant any right to continue
in the employ of SLC or in any way affect SLC's right to terminate the
Participant's employment without prior notice at any time for any or no
reason.

* The Comittee may adjust final results to include any amounts
automatically excluded if it determines that management is accountable
for those items, provided that these result only in "negative
discretion."

* The Committee may make additional changes which it deems appropriate to
the effective administration of the LTPIP, including the establishment
of appropriate performance measure weights for newly created executive
levels. However, other than as described above, these changes may not
reduce the benefits to which Participants are entitled under the LTPIP,
nor change the pre-established performance measures and goals which have
been approved.

6
<PAGE> 8
APPENDIX I

OPERATING GROUPS

CORPORATE SL|DE/PACKAGED MEATS & BAKERY
* Overall Group
PERSONAL PRODUCTS * SL/DE
* Overall Group * Coffee & Grocery
* SLKP and Direct * Household & Personal Care
* Hosiery Group * Direct Selling
* SLPP Pacific Rim * Packaged Meats
* Accessories/NA Intimate * Bakery
Apparel/Champion
* SLPP Europe * PYA/Monarch

<PAGE> 9
Appendix II

PERFORMANCE MEASURES AND WEIGHTS

<TABLE>
<CAPTION>
FULLY GROUP
DILUTED OPERATING GROUP
EPS ROC ROE PROFIT ROI
------- ------- ------- ---------- -------
<S> <C> <C> <C> <C> <C>
Corporate Staff 50.0% 25.0% 25.0% -- --

Executive Vice
President 25.0% 12.5% 12.5% 25.0% 25.0%

SLC Sr. Vice
Presidents 10.0% 45.0% 45.0%
(Operating Groups)

SLC Vice Presidents
(Operating Groups) 10.0% -- -- 45.0% 45.0%

Division Presidents
and other A - level -- -- -- 50.0% 50.0%
Operating Executives

CORPORATE PERFORMANCE GOALS

<CAPTION>
THREE YEAR
CUMULATIVE FULLY
DILUTED EARNINGS RETURN ON
PER SHARE CAPITAL RETURN ON EQUITY
------------------- ----------- -------------------
<S> <C> <C> <C>
Threshold $4.86 12.5% 19.5%
Target $5.36 14.0% 21.5%
Maximum $5.64 15.0% 22.0%
</TABLE>
<PAGE> 10
Appendix III

DEFINITIONS

a) PERFORMANCE CYCLE is the three year period consisting of SLC's
fiscal years 1995 through 1997.

b) THE COMMITTEE means the Compensation and Employee Benefits Committee of
the Board of Directors of SLC

c) AGREEMENT means the document executed by both SLC and the
Participant specifying the number of shares granted and the terms
and conditions under which this grant is being made

d) DIVISION means the operating profit centers of SLC.

e) GROUP means designated combinations of Divisions which are
specified in Appendix II of this plan or may be specified by the
Senior Vice President of Human Resources from time to time.

f) PARTICIPANT means an executive of the SLC who has received and
executed a grant Agreement specifying the terms of participation
in this plan

g) EARNINGS PER SHARE ("EPS") means reported primary earnings per
share for the fiscal years in the Performance Cycle subject to
applicable Adjustments and Exclusions as defined below

h) ADJUSTMENTS means changes to the goal to appropriately reflect the
effect of stock splits or combinations, stock dividends and
spin-offs or special distributions to stockholders other than
normal cash dividends

i) EXCLUSIONS means the automatic exclusion of the following from
relevant financial data for purposes of measuring performance
against the goal:

-- extraordinary or unusual charges (accounting definition)
-- revisions to the U.S Internal Revenue Code
-- changes in generally accepted accounting principles
-- losses from discontinued operations (accounting
definition)
-- changes in definition of primary EPS
-- restructuring charges
-- any other extraordinary or unusual charges that are
quantified and identified separately in the Management
Discussion and Analysis section of the Annual Report or in
footnotes to the audited financial statements

j) RETURN ON AVERAGE EQUITY ("ROE") MEANS the ratio of SLC net income
available for common stock to SLC average common equity; average common
equity is the sum of beginning year equity and ending year equity, which
is then divided by 2; AVERAGE ROE is calculated as the simple average of
ROE for each of the three fiscal years in the Performance Cycle, subject
to the applicable Adjustments and Exclusions defined above.

k) EARNINGS BEFORE INTEREST AND AMORTIZATION (EBIA) means SLC pre-tax
income adjusted to add back the following: after-tax interest expense,
non-cash amortization including that on goodwill and trademarks, and the
change in deferred taxes from the consolidated statement of cash flow;
this value is then reduced by the tax provision on the consolidated
income statement.

l) RETURN ON CAPITAL ("ROC") means the ratio of SLC EBIA to SLC average
total capital (on a two point basis) as defined by First Boston; AVERAGE
ROC is calculated as the simple average of ROC for each of the three
fiscal years in the Performance Cycle, subject to the applicable
Adjustments and Exclusions defined above.

m) OPERATING PROFIT means FIFO operating profits as shown on Line 16 of the
EO-200 income subject to applicable Exclusions defined above; this will
include line 15 calculated consistent with provisions under Finance Policy
610 in effect in FY95; Operating Profit will be denominated in U.S. dollars
using AOP pegged rates in effect for each fiscal year.

n) RETURN ON AVERAGE INVESTMENT ("ROI") is set forth in Finance Policy 130;
AVERAGE ROI is calculated as the simple average of ROI for each of the
three fiscal years in the Performance Cycle, subject to the applicable
Exclusions defined above.

o) TOTAL DISABILITY is defined per the Long-Term Disability Plan of SLC
under which the Participant is covered

<PAGE> 1
EXHIBIT (10.)19

SARA LEE CORPORATION
SEVERANCE POLICY FOR CORPORATE OFFICERS
Effective February 1, 1994

1. Introduction. This document sets forth the policy of Sara Lee
Corporation ("Corporation") governing severance payments and benefits
("Severance") to be made in the event of the involuntary termination of
employment with the Corporation of an officer of the Corporation elected by the
Board of Directors and eligible to participate in the Corporation's Long-Term
Performance Incentive Plans ("Officer" or "Terminated Officer").

2. Statement of General Policy. It is the policy of the Corporation
that an Officer whose employment with the Corporation has been involuntarily
terminated for any reason other than for "Cause" (as defined in Section 3(i)
below), death, disability or retirement shall be entitled to specified
Severance. This Policy duly recognizes the circumstances of termination, years
of service with the Corporation and age on the date of termination as factors
to be considered in the determination of the amount of Severance to be paid to
a Terminated Officer. The objectives of this Policy are to: (1) provide a
Terminated Officer with reasonable compensation to bridge the Terminated
Officer until reemployment or normal retirement, and (2) provide reasonable
consideration for the release of the Corporation of all claims against it by a
Terminated Officer.

This Policy is inapplicable to a Terminated Officer in circumstances
where (i) the Officer is relieved of his or her responsibility and is
immediately offered new employment with the Corporation or is transferred to a
subsidiary or affiliate of the Corporation, with the consent of the Officer,
(ii) the Corporation divests itself of a subsidiary, division or operation as a
going concern which employed the Officer and the employment of the Officer by
such division, subsidiary or operation is continued by the new or acquiring
entity either on substantially the same financial terms and conditions as prior
to the disposition of such division, subsidiary or operation or on such
financial terms and conditions acceptable to the Officer, or (iii) the
Terminated Officer voluntarily resigns.

3. Categories of Termination of Employment. The categories of
termination, which shall determine the amount of Severance to be paid to a
Terminated Officer, are:

(i) Termination for Cause ("Category I Termination").
Termination for Cause is a ter-

<PAGE> 2
mination of employment by the Corporation when the Officer has
willfully engaged in conduct demonstrably and materially injurious to
the Corporation or is convicted of or confesses to a crime involving
dishonesty, moral turpitude or other disreputable behavior.

(ii) Termination for Good Reason ("Category II Termination").
Termination for Good Reason is a termination of employment when (a)
the Officer is terminated because of unacceptable performance, (b)
the Officer's employment is terminated involuntarily due to an
organization restructuring which results in the elimination of the
Officer's position or function, or (c) the Officer terminates his or
her employment at the request of the Corporation.

The characterization of an Officer's termination under this Policy shall be
made by the Corporation's Senior Vice President-Human Resources.

4. Severance Benefits Payable.

Category I Termination. An Officer terminated under the
circumstances of a Category I Termination shall receive no Severance from the
Corporation under this Policy.

Category II Termination. An Officer terminated under the
circumstances of a Category II Termination shall:

(A) receive, for each full year of employment with the
Corporation or any subsidiary or affiliate of the Corporation
(including the years of employment with a corporation acquired by the
Corporation), three (3) months' salary (in effect on the date of
termination), if he or she is an Executive Vice President or an
officer senior thereto and a Director of the Corporation; two (2)
months' salary (in effect on the date of termination), if he or she
is a Senior Vice President; or one (1) month's salary (in effect on
the date of termination), if he or she is a Vice President, but in no
event shall this Salary Portion of Severance be less than twelve (12)
months' salary or more than twenty four (24) months' salary;

(B) be paid a pro-rata amount (to the effective date of
termination of employment) of

-2-
<PAGE> 3
(i) the annual bonus payable under the Annual Bonus Plan of
the Corporation in effect with respect to the fiscal year in which
the termination of employment shall occur, assuming a Superior level
of performance with respect to the non-discretionary portion of such
bonus; and

(ii) the long-term bonus payable under the Long-Term
Performance Bonus Plan of the Corporation terminating at the end of
the fiscal year closest to the date of termination (forfeiting
participation in any long-term bonus plans ending thereafter); and

(C) at the discretion of the Chief Executive Officer of the
Corporation, be paid an additional Salary Portion of Severance up to
three (3) additional months' salary if the Officer is age 40 years or
older but less than age 50 on the date of termination of employment
or up to six (6) additional months' salary if the Officer is age 50
or older on the date of termination of employment.

Termination of Benefits. All Severance shall cease on the earliest of (1) the
Terminated Officer's 62nd birthday, provided that he or she is eligible to
begin to receive pension benefits under the Sara Lee Corporation Consolidated
Pension and Retirement Plan or any other qualified retirement plan of the
Corporation (a "Retirement Plan") at age 62, (2) the date the Terminated
Officer becomes employed by a competitor of the Corporation or any of its
subsidiaries or becomes reemployed by the Corporation and (3) the date the
Terminated Officer begins to receive benefits from a Retirement Plan.

Health Coveraqe. If a Terminated Officer eligible for Severance elects to
continue health insurance coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), the period such coverage will be offered
will not be less than the Severance Period (i.e. the period the Terminated
Officer is expected to receive the Salary Portion of Severance) and the
Corporation will subsidize the premium for such continuation coverage during
the Severance Period to the extent that the Terminated Officer would otherwise
be required to pay more for such coverage during that period than a similarly
situated active employee would be required to pay for comparable coverage.
After the end of the Severance Period, the Terminated Officer will be required
to pay the full COBRA premium. If the Terminated Officer is eligible for early
retirement under the terms of the Sara Lee Corporation Consolidated Pension and
Retirement Plan (or would become eligible if the Severance Period is considered
as

-3-
<PAGE> 4
employment) the Terminated Officer may elect to receive retiree health care
coverage.

Participation in Other Plans. Except as otherwise provided herein,
participation in all other plans available to the Executive Benefit Group,
including but not limited to, qualified pension plans, stock purchase plans,
401(k) plans and ESOPs, personal accident insurance, travel accident insurance,
short and long term disability insurance and accidental death and dismemberment
insurance, shall cease on the Officer's date of termination. Non-qualified
supplemental ESOP and pension benefits will be provided to a Terminated Officer
eligible for Severance through the Corporation's Supplemental Benefit Plan by
treating the Severance Period as a period of employment with the Corporation.
The Corporation shall continue to pay premiums during the Severance Period on
any policy purchased by such a Terminated Officer under the Executive Life
Insurance Program and will continue to pay premiums after the Severance Period
pursuant to the Executive Life Insurance Program if the Terminated Officer is
eligible for early retirement or becomes eligible for early retirement during
the Severance Period. Any stock option awards such Terminated Officer received
prior to the date of termination shall continue to vest during the Severance
Period pursuant to the terms of the stock option plan. Any stock option awards
that vest prior to the end of the Severance Period must be exercised by the
Terminated Officer within the applicable periods specified in the option plan.
A Terminated Officer who continues to be eligible for Severance shall continue
to participate in the Estate Builder Plan at the Target Rate. The Terminated
Officer can surrender the Corporation car at termination of employment or
purchase the car from the Corporation at the car's then fair market value.
Reimbursement of club memberships and expenses incurred after the Terminated
Officer terminates employment shall cease on the termination of employment and
the Matching Grant Program shall also terminate at termination of employment.

6. Mode of Payment of Severance. The Salary Portion of the Severance shall
be paid bi-weekly in accordance with the Corporation's Corporate Office pay
schedule, unless the Chief Executive Officer of the Corporation, at his sole
discretion, shall elect to pay the Salary Portion in a lump sum payment or a
combination of bi-weekly payments and a lump sum payment. The bonus payment
segment, if any, of the Severance shall be paid to the Terminated Officer on
the same date the active participants under the bonus plans are paid.

7. Release Aqreement. No benefits under this Policy shall be payable to any
Terminated Officer until the Terminated Officer and the Corporation have
executed a release (in a form approved by the Corporation) of all of such
Terminated Officer's then existing rights and legal claims against the
Corporation and

-4-
<PAGE> 5
the payment of benefits under this Policy shall be subject to the terms and
conditions of such release agreement.

8. Death of Terminated Officer. In the event that the Terminated Officer
shall die prior to the completion of the payments of the Salary Portion and
prior to the payment of the bonus payment segment of the Severance, the
Terminated Officer's estate or beneficiary, whichever is applicable, shall be
paid the remaining payments of the Salary Portion and the unpaid bonus payment.
Such payments shall not affect or reduce any other death benefits which the
Terminated Officer's estate or beneficiary shall be entitled to receive under
other plans of the Corporation.

9. Policy Interpretations and Variations. The Compensation and Employee
Benefits Committee of the Corporation shall administer this Policy, the
Committee or its representative shall decide any issues and disputes arising
under this Policy, and the decision of the Committee shall be binding and
conclusive on the Terminated Officer and the Corporation. Any variations from
the Policy may only be made by the Committee in its sole discretion.

- - - ------------
As revised by the Compensation and Employee Benefits Committee on January 27,
1994.

-5-

<PAGE> 1
EXHIBIT (12.)1

SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions except ratios)

<TABLE>
<CAPTION>
Year Ended
-------------------
July 2, July 3,
1994 1993
-------- -------
<S> <C> <C>
Fixed charges:
Interest expense $188 $162
Interest portion of rental expense 60 53
---- ------
Total fixed charges before capitalized interest 248 215
Capitalized interest 21 20
---- ------
Total fixed charges $269 $235
==== ======

Earnings available for fixed charges:
Income before income taxes $389 $1,082
Less undistributed income in minority owned companies (8) (7)
Add minority interest in majority-owned subsidiaries 25 25
Add amortization of capitalized interest 19 18
Add fixed charges before capitalized interest 248 215
---- ------
Total earnings available for fixed charges $673 $1,333
==== ======
Ratio of earnings to fixed charges 2.5 5.7
==== ======

</TABLE>

(1) During the fourth quarter of fiscal 1994, the corporation recorded a
pretax charge of $732 million in connection with various restructuring
actions.

<PAGE> 1
EXHIBIT (12.)2

SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(IN MILLIONS EXCEPT RATIOS)

<TABLE>
<CAPTION>
Year Ended
----------------------------
July 2, July 3,
1994 1993
--------- ---------
<S> <C> <C>
Fixed charges and preferred stock dividend requirements:
Interest expense $188 $162
Interest portion of rental expense 60 53
------- -------
Total fixed charges before capitalized interest 248 215
and preferred stock dividend requirements
Capitalized interest 21 20
Preferred stock dividend requirements (2) 38 42
------- -------
Total fixed charges and preferred stock
dividend requirements 307 277
======= =======

Earnings available for fixed charges and preferred stock
stock dividend requirements:
Income before income taxes $389 $1,082
Less undistributed income in minority owned companies (8) (7)
Add minority interest in majority-owned subsidiaries 25 25
Add amortization of capitalized interest 19 18
Add fixed charges before capitalized interest and
preferred stock dividend requirements 248 215
------- -------
Total earnings available for fixed charges and
preferred stock dividend requirements $673 $1,333
======= =======

Ratio of earnings to fixed charges and preferred stock
dividend requirements 2.2 4.8
======= =======

</TABLE>
(1) During the fourth quarter of fiscal 1994, the corporation recorded a
pretax charge of $732 million in connection with various restructuring
actions.

(2) Preferred stock dividends in the computation have been increased to an
amount representing the pretax earnings that would have been required
to cover such dividends.

<PAGE> 1

EXHIBIT (21)
SUBSIDIARIES
OF
SARA LEE CORPORATION
The following is a list of all active subsidiary corporations of Sara Lee.
Subsidiaries which are inactive or exist solely to protect the business names,
but conduct no business, have been omitted; such omitted subsidiaries
considered in the aggregate do not constitute a significant subsidiary.

Domestic Subsidiaries

PLACE OF
NAME INCORPORATION
- - - ---- -------------
Adams-Millis Corporation North Carolina

Bali Company Delaware

Bali Foundations, Inc. Delaware

Bessin Corporation Illinois

BG Marketing Corp. Delaware

Bil Mar Farms, Inc. Delaware

Bil Mar Foods, Inc. Delaware

Bryan Foods, Inc. Delaware

Canadelle Intimate Fashions, Inc. Nevada

Champion Products Inc. New York

Coach Distribution Company Delaware

Coach Stores, Inc. Delaware

Coach Leatherware Company, Inc. New Jersey

Coach Leatherware International, Inc. Delaware
<PAGE> 2
DEA Leasing Corporation Delaware

D.E. Direct, Inc. Delaware

Douwe Egberts/Van Nelle, Inc. Kentucky

Frigid Freeze Foods, Inc. Delaware

The Fuller Brush Company Connecticut

GPI Corp. Nebraska

Hanes Menswear, Inc. Delaware

Hanes Puerto Rico, Inc. Delaware

Hygrade Food Products Corporation New York

International Baking Co., Inc. Delaware

Jimmy Dean Manufacturing Company Delaware

Kiwi Brands Inc. Delaware

Kiwi (Europe) Corporation Delaware

L'eggs Brands, Inc. Delaware

Milky Way Products Company Delaware

Ozark Salad Company, Inc. Delaware

Playtex Apparel, Inc. Delaware

Playtex Dorado Corporation Delaware

Playtex Holding Company Delaware

<PAGE> 3

Playtex Industries, Inc. Delaware

PYA General Partner Corp. Delaware

PYA Holding, Inc. Delaware

PYA Limited Partner Corp. Delaware

PYA/Monarch, Inc. Delaware

Rice Hosiery Corporation North Carolina

Sara Lee Bond Investment Corp. Delaware

Sara Lee Champion Europe Inc. Delaware

Sara Lee/DE Asia, Inc. Delaware

Sara Lee French Investment Company, Inc. Delaware

Sara Lee International Corporation Delaware

Sara Lee Investments, Inc. Delaware

Sara Lee-Kiwi Holdings, Inc. Delaware

Sara Lee Corporation Asia, Inc. Delaware

Sara Lee U.K. Holdings, Inc. Delaware

Saramar Corporation Delaware

Schloss & Kahn, Inc. Delaware

Scotch Maid, Inc. Delaware

Seitz Foods, Inc. Delaware

SLE, Inc. Delaware

Smoky Hollow Foods, Inc. Delaware

<PAGE> 4
Southern Belle, Inc. Delaware

Spring City Knitting Co., Inc. Delaware

State Fair Foods, Inc. Texas

Super Products, Inc. Delaware

Sweet Sue Kitchens, Inc. Delaware

Tailby-Nason Company, Inc. Delaware

Wolferman's, Inc. Delaware
<PAGE> 5
Foreign Subsidiaries

Abel Bonnex S. A, France

ACP B.V. Netherlands

Agepal SarL Luxemburg

Allende International, S.A. de C.V. Mexico

Aris Isotoner S.A. France

Aris Isotoner U.K. Limited England

Aris Isotoner Handschuhe GmbH Germany

Aris (Philippines) Inc. Philippines

Arno Leasing B.V. Netherlands

Ashe Limited England

Ashe Pension Trustees Ltd. England

Auragate Pty. Ltd. Australia

Avroy Shlain Cosmetics (Pty.) Ltd. South Africa

Balirny Douwe Egberts AS. Czechoslovakia

Ballograf Bic Austria Vertriebs Ges. mbh Austria

Bal-Mex S.A. de C.V. Mexico

Beheersmaatschappij Bevem B.V. Netherlands

Beleggingsmaatschappij Argona B.V. Netherlands

Beviston Pty. Ltd. Australia

A/S Blumoller Denmark

Boers Groothandel B.V. Netherlands

Boers Vleeswaren B.V. Netherlands

<PAGE> 6
Buhler Fontaine S.A. France

Butress B.V. Netherlands

Cafes de l'Elephant Noir S.A. France

Caitlin Financial Corporation N.V. Netherlands
Antilles

Canadelle Incorporated Canada

Casual Wear de Mexico, S.A. de C.V. Mexico

Charter de Mexico, S.A. Mexico

Coach Leatherwear GmbH Germany

Coach (UK) Limited England

Coffenco International GmbH Germany

Cofico N.V. Netherland
Antilles

Comercial de Puntillas, S.A. Spain

Comercial Rin-bros, S.A. de C.V. Mexico

Commandant B.V. Netherlands

Compack Douwe Egberts Rt Hungary

Confeccionadora Canarias, S.A. de C.V. Mexico

Confecciones de Monclova, S.A. de C.V. Mexico

Confecciones de Montrerrey, S.A. de C.V. Mexico

Confecciones de Nueva Rosita, S.A. de C.V. Mexico

Confecciones El Pedregal S.A. de C.V. El Salvador

Conoplex Insurance Company Bermuda

Corjan, S.A. Panama

<PAGE> 7
Corporacion H.M., S.A. de C.V. Mexico

Cruz Verde Portugal - Productos de Consumo Lda. Portugal

Dacor N.V. Belgium

DEA (Bermuda) Ltd. Bermuda

Decaf B.V. Netherlands

Decaf N.V. Belgium

Decem B.V. Netherlands

Decotrade A.G. Switzerland

Defacto B.V. Netherlands

DEF Finance S.A. France

DEF Holding S.A. France

Defico N.V. Netherland
Antilles

Detrex B.V. Netherlands

Difan S.A.M. Monaco

Dim S.A. France

Dim-Rosy AB Sweden

Dim-Rosy AG Switzerland

Dim-Rosy A/S Denmark

Dim-Rosy Benelux N.V. Belgium

Dim-Rosy GmbH Germany

Dim-Rosy Inc. Canada

Dim-Rosy Portugal Lda Portugal

Dim-Rosy S.p.A. Italy

<PAGE> 8
Dim-Rosy Textiles, Inc. Canada

Dimtex S.A. France

Douwe Egberts N.V. Belgium

Douwe Egberts Agio GmbH Germany

Douwe Egberts Coffee & Tea International B.V. Netherlands

Douwe Egberts Coffee Systems France S.A. France

Douwe Egberts Coffee Systems Ltd. Canada

Douwe Egberts Coffee Systems Ltd. England

Douwe Egberts Coffee Systems International B.V. Netherlands

Douwe Egberts Coffee Systems Nederland N.V. Netherlands

Douwe Egberts Compack Kft. Hungary

Douwe Egberts Espana S.A. Spain

Douwe Egberts France S.A. France

Douwe Egberts Kaffee Systeme GmbH Germany

Douwe Egberts Kaffee Systeme GmbH & Co., K.G Germany

Douwe Egberts GmbH Germany

Douwe Egberts Kaffee B.V. Netherlands

Douwe Egberts Limited Canada

Douwe Egberts Nederland B.V. Netherlands

Douwe Egberts (P) B.V. Netherlands

Douwe Egberts (Portugal) Produtos Almentares Lda. Portugal

Douwe Egberts Van Nelle Diensten B.V. Netherlands

Douwe Egberts Van Nelle Tabaksmaatschappij B.V. Netherlands

<PAGE> 9
Douwe Egberts Van Nelle Tabaksproduktiemaatschappij B.V. Netherlands

Douwe Egberts Van Nelle Tobacco Belgium N.V. Belgium

Douwe Egberts Van Nelle Tobacco International B.V. Netherlands

Douwe Egberts UK Limited England

Douwe Egberts (Z) B.V. Netherlands

Duyvis B.V. Netherlands

Elbeo Ltd. England

Era Expeditie B.V. Netherlands

Eri Feine Schuhpflege Vertriebs GmbH Germany

Esa Eppinger GmbH Germany

F. Whitlock & Sons Ltd. New Zealand

AB Fenom Sweden

Filati Calze S.p.A. Italy

De Freische Erven B.V. Netherlands

Fujian Sara Lee Consumer Products Company Ltd. People's Republic
of China

Grada B.V. Netherlands

Grup Industrial Pemsa S.A. de C.V. Mexico

Hanes Caribe Ltd. Cayman Islands

Hanes Choloma Ltd. Cayman Islands

Hanes de Centroamerica S.A. Guatemala

Hanes (Deutschland) GmbH Germany

Hanes Foreign Sales Company B.V. Netherlands

<PAGE> 10
Hanes France S.A. France

Hanes International N.V. Belgium

Hanes de Mexico, S.A. de C.V. Mexico

Hanes Panama, Inc. Panama

Hanes Jamaica Limited Jamaica

Hanes Tejidos Costa Rica Ltd. Costa Rica

Hanes U.K. Limited England

Harris/DE Pty. Ltd. Australia

Hesperia de Alimentacion S.A. Spain

Hesperia Sur S.A. Spain

Hesperia Noroeste S.A. Spain

Hesperia Levante S.A. Spain

Hesperia Centro S.A. Spain

Hilton Bonds N.Z. (1991) Limited New Zealand

House of Fuller, S.A. de C.V. Mexico

Household & Personal Care Research B.V. Netherlands

International Food Service B.V. Netherlands

Internacional Manufacturas, S.A. de C.V. Mexico

Inco Hellas A.E. Cosmetics, Dietetics and Greece
Pharmaceutical Products Industry

Industrias Carnicas Navarras S.A. Spain

Industrias de Carnes Nobre S.A. Portugal

Industrias Internacionales de San Pedro, S.A. de C.V. Mexico

Inmobiliaria Meck-Mex, S.A. de C.V. Mexico

<PAGE> 11
Intec B.V. Netherlands

Inter Food Service Ltd. England

INTEX Dessous GmbH Germany

INTEX Textil-Vertriebsgesellscaft GmbH Germany

Internacional Manufacturera, S.A. Mexico

International Underwear Ltd. Morocco

Intradal Produktie Belgium N.V. Belgium

I. Tas Ezn B.V. Netherlands

Itesa B.V. Netherlands

Kaffehuset Friele A/S Norway

King Gee Clothing Company Pty. Ltd. Australia

Kitchens of Sara Lee (Australia) Pty. Ltd. Australia

Kitchens of Sara Lee U.K. Limited England

Kiwi Brands Ltd. Kenya

Kiwi Brands Ltd. Malawi

Kiwi Brands (Pty.) Ltd. South Africa

Kiwi Brands Ltd. Zambia

Kiwi Brands Pty. Ltd. Australia

Kiwi Brands (Malaysia) Sdn. Bhd. Malaysia

Kiwi Brands (N.Z.) Ltd. New Zealand

Kiwi Brands (Private) Limited Zimbabwe

Kiwi Caribbean Limited England

P.T. Kiwi Distribution Company Indonesia

<PAGE> 12
Kiwi (EA) Ltd. England

Kiwi European Holdings B.V. Netherlands

Kiwi France S.A. France

Kiwi Holding S.A. France

Kiwi Holdings Limited England

Kiwi Hong Kong Ltd. Hong Kong

P.T. Kiwi Indonesia Indonesia

Kiwi International Pte. Ltd. Singapore

Kiwi Korea Ltd. Korea

Kiwi (Manufacturing) Sdn Bhd Malaysia

Kiwi (Nigeria) Limited Nigeria

Kiwi (Thailand) Limited Thailand

Kiwi TTK Limited India

Kiwi United Taiwan Co. Ltd. Republic of China

De Koffiewacht B.V. Netherlands

Koffie en Theehandel De Hanze B.V. Netherlands

Koffiebranderijen-Theehandel Kanis & Gunnik B.V. Netherlands

Koninklijke Douwe Egberts B.V. Netherlands

Kortman Intradal B.V. Netherlands

Kortman Nederland B.V. Netherlands

N.V. Kortman Intradal S.A. Belgium

Lassie B.V. Netherlands

Maglificio Bellia S.p.A. Italy

<PAGE> 13
Marcilla Coffee System S.A. Spain

Manufacturera de Cartago, S.A. Costa Rica

Manufacturera Libra, S.A. de C.V. Mexico

Manufacturas Mallorca, S.A. de C.V. Mexico

Marander Assurantie Compagnie B.V. Netherlands

Marketing-en Verkoopmaatschappij Stegeman B.V. Netherlands

Merrild Coffee Systems AB Sweden

Merrild Kaffe A/S Denmark

Nicholas Manufacturing Limited England

Nihon Kiwi K.K. Japan

Nihon Sara Lee K.K. Japan

Opus Chemical AB Sweden

Oxwall Tools B.V. Netherlands

Palas de Mexico, S.A. de C.V. Mexico

Pessi Guttalin S.p.A. Italy

Playtex Cadereyta, S.A. de C.V. Mexico

Playtex Dominicana, S.A. Dominican
Republic

Playtex Espana, S.A. Spain

Playtex France S.A. France

Playtex Holdings Limited England

Playtex Investments Europe S.A. France

Playtex Limited England

<PAGE> 14
Playtex Mexicana, S.A. de C.V. Mexico

Playtex Pty. Limited Australia

Playtex Trading Limited England

PLUSTEX B.V. Netherlands

PLUSTEX S.A. Belgium

Pretty Polly Limited England

Pretty Polly (Killarney) Limited Ireland

Pretty Polly Pension Trustees Ltd. England

Probemex S.A. de C.V. Mexico

P.T. Prodenta Indonesia Indonesia

Playtex Tunisia Tunisia

Product Suppliers A.G. Switzerland

Raycass S.A. Chile

Rinbros, S.A. de C.V. Mexico

Sagepar SaRL France

Sans & Sportwear S.A. Spain

Sara Lee Bakery Company Limited Hong Kong

Sara Lee (Bakery Employees) Ltd. England

Sara Lee Champion France S.A. France

Sara Lee Charcuterie, S.A. France

Sara Lee Corporation of Canada Ltd. Canada

Sara Lee de Costa Rica, S.A. Costa Rica

Sara Lee/DE N.V. Netherlands

<PAGE> 15
Sara Lee/DE Espana S.A. Spain

Sara Lee/DE Finance B.V. Netherlands

Sara Lee/DE Italia S.p.A. Italy

Sara Lee/DE Italy S.p.A. Italy

Sara Lee Europe Direct Marketing S.A. France

Sara Lee Europe Finance S.A. France

Sara Lee France SNC France

Sara Lee Germany GmbH Germany

Sara Lee Holdings (Australia) Pty. Ltd. Australia

Sara Lee (Hong Kong) Limited Partnership Hong Kong

Sara Lee Hosiery Canada Ltd. Canada

Sara Lee Household & Personal Care UK Limited England

Sara Lee International B.V. Netherlands

Sara Lee Intimates de Mexico, S.A. de C.V. Mexico

Sara Lee Mexicana S.A. de C.V. Mexico

Sara Lee Overseas Finance N.V. Netherlands
Antilles

Sara Lee Personal Products S.A. France

Sara Lee Personal Products (Argentina) S.A. Argentina

Sara Lee Personal Products (Australia) Pty. Ltd. Australia

Sara Lee Personal Products (Columbia) S.A. Columbia

Sara Lee Personal Products Espana S.A. Spain

Sara Lee Personal Products (Venezuela) S.A. Venezuela

Sara Lee Philippines Inc. Philippines

<PAGE> 16

Sara Lee Processed Meats (Europe) B.V. Netherlands

Sara Lee Spain S.A. France

Sara Lee (Taiwan) Ltd. Republic of
China/Delaware

Sara Lee Trading Ltd. Thailand

Sara Lee (UK) Holdings Limited England

Sara Lee (UK Investments) Limited England

Siamcom (Thailand) Ltd. Thailand

Simon H. Taconis Tabakscompagnie, B.V. Netherlands

South African Hosiery Company (Pty.) Ltd. South Africa

Spantex, S.A. de C.V. Mexico

Spring City de El Salvador, S.A. de C.V. Honduras

Spring City de Honduras, S.A. Honduras

Stegeman, B.V. Netherlands

The Stubbies Clothing Company Pty. Ltd. Australia

Tana B.V. Netherlands

Tana Canada Inc. Canada

Tana France S.A. France

Tana Schuhpflege AG Switzerland

Tejidos Flex Corporation Dominican
Republic

Telec S.A. Switzerland

Temana Ges. mbH Austria

Temana International Ltd. England

<PAGE> 17
Temana Verkaufs-AG Switzerland

Tomten A/S Norway

Tuxan Schuhpflegemittel GmbH Austria

UFIMA S.A. France

Underwear Ltd. Malta

Valma B.V. Netherlands

Van Nelle Foodservices Nederland B.V. Netherlands

Van Nelle Holding (Germany) GmbH Germany

Van Nelle International B.V. Netherlands

Van Nelle Produktie B.V. Netherlands

Vatter GmbH Germany

B.V. Vereenigde Sneeker Tabaksfabrieken Netherlands

Verpakkingsindustrie Boers B.V. Netherlands

NV Zwarte Ket/Cle d'Or Belgium

<PAGE> 1

Exhibit (23)

Consent of Independent Public Accountants

To the Board of Directors and Management
of Sara Lee Corporation

As independent public accountants, we hereby consent to the incorporation of
our reports dated August 1, 1994, included in this Form 10-K, into the
Corporation's previously filed Form S-8 registration statement Nos. 33-33245,
33-35760 and the first and second amendments thereto, 33-37575, 33-41487,
33-49212, and 33-59002, and Form S-3 registration statement Nos. 33-44190,
33-51715, 33-56190, and 33-58046.

/s/ Arthur Andersen LLP

Chicago, Illinois,
September 30, 1994.

<PAGE> 1
EXHIBIT (24)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints John H. Bryan and Gordon H. Newman,
each of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, to act for him and in his name, place and
stead, in any and all capabilities to sign the Annual Report on Form 10-K of
Sara Lee Corporation for the fiscal year ending July 2, 1994, and any and all
amendments thereto and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute, may lawfully do or cause to be
done by virtue himself.

Dated: August 24,1994

/s/ Paul A. Allaire
---------------------------
Paul A. Allaire
<PAGE> 2

POWER OF ATTORNEY

Dated: August 24, 1994

/s/ Frans H. J. J. Andriessen
-----------------------------
Frans H. J. J. Andriessen
<PAGE> 3

POWER OF ATTORNEY

Dated: August 24, 1994

/s/ Duane L. Burnham
---------------------------
Duane L. Burnham
<PAGE> 4

POWER OF ATTORNEY

Dated: August 24,1994

/s/ Charles W. Coker
---------------------------
Charles W. Coker
<PAGE> 5

POWER OF ATTORNEY

Dated: August 24, 1994

/s/ Willie D. Davis
---------------------------
Willie D. Davis
<PAGE> 6

POWER OF ATTORNEY

Dated: August 24, 1994

/s/ Allen F. Jacobson
---------------------------
Allen F. Jacobson

<PAGE> 7

POWER OF ATTORNEY

Dated: August 24, 1994

/s/ Vernon E. Jordan, Jr.
---------------------------
Vernon E. Jordan, Jr.
<PAGE> 8

POWER OF ATTORNEY

Dated: August 24, 1994

/s/ James L. Ketelsen
---------------------------
James L. Ketelsen
<PAGE> 9

POWER OF ATTORNEY

Dated: August 23,1994

/s/ Baron Gualtherus Kraijenhoff
-------------------------------------
Baron Gualtherus Kraijenhoff
<PAGE> 10

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints John H. Bryan and Gordon H. Newman,
each of them, her true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, to act for her and in her name, place and
stead, in any and all capabilities to sign the Annual Report on Form 10-K of
Sara Lee Corporation for the fiscal year ending July 2, 1994, and any and all
amendments thereto and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute, may lawfully do or cause to be
done by virtue himself.

Dated: August 24, 1994

/s/ Joan D. Manley
---------------------------
Joan D. Manley
<PAGE> 11

POWER OF ATTORNEY

Dated: August 24,1994

/s/ Newton N. Minow
---------------------------
Newton N. Minow
<PAGE> 12

POWER OF ATTORNEY

Dated: August 23,1994

/s/ Sir Arvi H. Parbo
---------------------------
Sir Arvi H. Parbo A.C.
<PAGE> 13

POWER OF ATTORNEY

Dated: August 25, 1994

/s/ Rozanne L. Ridgway
---------------------------
Rozanne L. Ridgway
<PAGE> 14

POWER OF ATTORNEY

Dated: August 24, 1994

/s/ Richard L. Thomas
---------------------------
Richard L. Thomas

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of income and consolidated balance sheet and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-02-1994
<PERIOD-END> JUL-02-1994
<CASH> 164
<SECURITIES> 25
<RECEIVABLES> 1,636
<ALLOWANCES> 164
<INVENTORY> 2,567
<CURRENT-ASSETS> 4,469
<PP&E> 5,237
<DEPRECIATION> 2,337
<TOTAL-ASSETS> 11,665
<CURRENT-LIABILITIES> 4,919
<BONDS> 1,496
<COMMON> 641
0
331
<OTHER-SE> 2,685
<TOTAL-LIABILITY-AND-EQUITY> 11,665
<SALES> 15,536
<TOTAL-REVENUES> 15,536
<CGS> 9,700
<TOTAL-COSTS> 9,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 108
<INTEREST-EXPENSE> 145
<INCOME-PRETAX> 389
<INCOME-TAX> 155
<INCOME-CONTINUING> 234
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (35)
<NET-INCOME> 199
<EPS-PRIMARY> .37
<EPS-DILUTED> .36

</TABLE>