<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1994
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-3344
--------------------------------------------------
Sara Lee Corporation
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 36-2089049
-------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Three First National Plaza, Suite 4600, Chicago, Illinois 60602-4260
-------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(312) 726-2600
----------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required 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
----- -----
On April 2, 1994, the Registrant had 479,396,649 outstanding shares of
common stock $1.33 1/3 par value, which is registrant's only class of common
stock.
The document contains 18 pages.
Page 1
<PAGE> 2
SARA LEE CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I -
<S> <C>
FINANCIAL STATEMENTS -
Preface 3
Consolidated Balance Sheets -
At April 2, 1994 and July 3, 1993 4
Consolidated Statements of Income -
For the thirteen and thirty-nine weeks ended
April 2, 1994 and March 27, 1993 5
Consolidated Statements of Common Stockholders' Equity -
For the period June 27, 1992 to April 2, 1994 6
Consolidated Statements of Cash Flows -
For the thirty-nine weeks ended April 2, 1994
and March 27, 1993 7
Notes to Consolidated Financial Statements 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION 10
PART II -
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 14
EXHIBIT 11 - Computation of Net Income Per Common Share 15
EXHIBIT 12.1 - Computation of Ratio of Earnings to Fixed Charges 17
EXHIBIT 12.2 - Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend Requirements 18
</TABLE>
Page 2
<PAGE> 3
PART I
SARA LEE CORPORATION AND SUBSIDIARIES
Preface
The consolidated financial statements for the thirteen and thirty-nine weeks
ended April 2, 1994 and March 27, 1993 and the balance sheet as of April 2,
1994 included herein have not been examined by independent public accountants,
but, in the opinion of Sara Lee Corporation ("Corporation"), all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position at April 2, 1994 and the results of operations and the
cash flows for the periods presented herein have been made. The results of
operations for the thirteen and thirty-nine weeks ended April 2, 1994 are not
necessarily indicative of the operating results for the full fiscal year.
The consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Although the Corporation believes that the disclosures made are
adequate to make the information presented not misleading, certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such regulations. These consolidated financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Corporation's Form 10-K for the year ended July 3,
1993.
Page 3
<PAGE> 4
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets at April 2, 1994 and July 3, 1993
(in millions)
<TABLE>
<CAPTION>
April 2, July 3,
1994 1993
-------- --------
<S> <C> <C>
ASSETS
Cash and Equivalents $ 175 $ 325
Trade Accounts Receivable, less Allowances 1,357 1,171
Inventories:
Finished Goods 1,654 1,413
Work in Process 352 322
Materials and Supplies 554 545
-------- --------
2,560 2,280
Other Current Assets 213 200
-------- --------
Total Current Assets 4,305 3,976
Investments in Associated Companies 158 205
Trademarks and Other Assets 511 518
Property, Net 3,090 2,878
Intangible Assets 3,565 3,285
-------- --------
$11,629 $10,862
-------- --------
-------- --------
LIABILITIES AND EQUITY
Notes Payable $ 1,423 $ 843
Accounts Payable 974 1,151
Accrued Liabilities 1,866 1,849
Current Maturities of Long-Term Debt 231 426
-------- --------
Total Current Liabilities 4,494 4,269
Long-Term Debt 1,462 1,164
Deferred Income Taxes 525 512
Other Liabilities 682 705
Minority Interest in Subsidiaries 543 304
Convertible Adjustable Preferred Stock -- 30
Auction Preferred Stock 300 300
ESOP Convertible Preferred Stock 342 345
Unearned Deferred Compensation (313) (318)
Common Stockholders' Equity 3,594 3,551
-------- --------
$11,629 $10,862
-------- --------
-------- --------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4
<PAGE> 5
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
For the Thirteen and Thirty-Nine Weeks Ended April 2, 1994 and March 27, 1993
(in millions, except per share data)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
-------------------- -----------------------
April 2, Mar. 27, April 2, Mar. 27,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 3,664 $ 3,308 $11,470 $10,731
-------- -------- -------- --------
Cost of Sales 2,276 2,049 7,137 6,624
Selling, General and Administrative Expenses 1,119 1,007 3,398 3,267
Interest Expense 47 37 131 109
Interest Income (12) (19) (31) (60)
-------- -------- -------- --------
3,430 3,074 10,635 9,940
-------- -------- -------- --------
Income Before Income Taxes 234 234 835 791
Income Taxes 82 82 292 277
-------- -------- -------- --------
Net Income Before Accounting Change 152 152 543 514
Cumulative Effect of Accounting Change -- -- (35) --
-------- -------- -------- --------
Net Income 152 152 508 514
Preferred Dividend Requirements, Net of Tax 6 6 18 19
-------- -------- -------- --------
Net Income Available for Common Stockholders $ 146 $ 146 $ 490 $ 495
-------- -------- -------- --------
-------- -------- -------- --------
Net Income Per Common Share - Primary
Before Cumulative Effect of Accounting Change $ 0.30 $ 0.30 $ 1.09 $ 1.02
Cumulative Effect of Accounting Change -- -- (0.07) --
-------- -------- -------- --------
$ 0.30 $ 0.30 $ 1.02 $ 1.02
-------- -------- -------- --------
-------- -------- -------- --------
Average Shares Outstanding 479 487 480 485
-------- -------- -------- --------
-------- -------- -------- --------
Net Income Per Common Share - Fully Diluted
Before Cumulative Effect of Accounting Change $ 0.29 $ 0.30 $ 1.06 $ 1.00
Cumulative Effect of Accounting Change -- -- (0.07) --
-------- -------- -------- --------
$ 0.29 $ 0.30 $ 0.99 $ 1.00
-------- -------- -------- --------
-------- -------- -------- --------
Average Shares Outstanding 498 506 499 504
-------- -------- -------- --------
-------- -------- -------- --------
Cash Dividends Per Common Share $ 0.16 $ 0.145 $ 0.465 $ 0.415
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See accompanying Notes to Consolidated Financial Statements. Page 5
<PAGE> 6
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Common Stockholders' Equity
For the Period June 27, 1992 to April 2, 1994
(in millions, except per share data)
<TABLE>
<CAPTION>
UNEARNED
COMMON CAPITAL RETAINED TRANSLATION RESTRICTED
TOTAL STOCK SURPLUS EARNINGS ADJUSTMENTS STOCK
------- ------- -------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balances at June 27, 1992 $3,382 $ 320 $ 306 $ 2,649 $ 126 $ (19)
Net Income 514 -- -- 514 -- --
Cash Dividends -
Common ($.415 per share) (200) -- -- (200) -- --
Convertible adjustable
preferred
($2.06 per share) (1) -- -- (1) -- --
Auction preferred
($2,176.66 per share) (6) -- -- (6) -- --
ESOP convertible
preferred
($4.0781 per share) (19) -- -- (19) -- --
Stock Issuances -
Two-for-one stock split -- 322 (322) -- -- --
Business acquisitions 65 2 63 -- -- --
Stock option and benefit plans 48 4 44 -- -- --
Restricted stock, less
amortization of $3 3 -- 5 -- -- (2)
Reacquired Shares (43) (2) (41) -- -- --
Translation Adjustments (222) -- -- -- (222) --
ESOP Tax Benefit 7 -- -- 7 -- --
Other (2) 1 (3) (1) -- 1
------- ------- -------- --------- ----------- ----------
Balances at March 27, 1993 3,526 647 52 2,943 (96) (20)
Net Income 190 -- -- 190 -- --
Cash Dividends -
Common ($.145 per share) (70) -- -- (70) -- --
Convertible adjustable
preferred
($.69 per share) (1) -- -- (1) -- --
Auction preferred
($683.67 per share) (2) -- -- (2) -- --
ESOP convertible preferred
($1.3594 per share) (7) -- -- (7) -- --
Stock Issuances -
Business acquisitions 4 1 3 -- -- --
Stock option and benefit plans 18 2 16 -- -- --
Restricted stock, less
amortization of $1 1 -- 3 -- -- (2)
Reacquired Shares (34) (2) (32) -- -- --
Translation Adjustments (98) -- -- -- (98) --
ESOP Tax Benefit 3 -- -- 3 -- --
Other 21 (1) 24 -- -- (2)
------- ------- -------- --------- ----------- ----------
Balances at July 3, 1993 3,551 647 66 3,056 (194) (24)
Net Income 508 -- -- 508 -- --
Cash Dividends -
Common ($.465 per share) (222) -- -- (222) -- --
Auction preferred
($1,962.00 per share) (6) -- -- (6) -- --
ESOP convertible preferred
($4.0781 per share) (19) -- -- (19) -- --
Stock Issuances -
Stock option and benefit plans 48 4 44 -- -- --
Restricted stock, less
amortization of $2 2 -- 1 -- -- 1
Reacquired Shares (224) (12) (82) (130) -- --
Translation Adjustments (51) -- -- -- (51) --
ESOP Tax Benefit 7 -- -- 7 -- --
Other -- -- -- (2) -- 2
------- ------- -------- --------- ----------- ----------
Balances at April 2, 1994 $3,594 $ 639 $ 29 $ 3,192 $ (245) $ (21)
------- ------- -------- --------- ----------- ----------
------- ------- -------- --------- ----------- ----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 6
<PAGE> 7
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Thirty-Nine Weeks Ended April 2, 1994 and March 27, 1993
(in millions)
<TABLE>
THIRTY-NINE WEEKS ENDED
---------------------------
April 2, Mar. 27,
1994 1993
----------- ------------
<S> <C> <C>
OPERATING ACTIVITIES -
Net income $ 508 $ 514
Adjustments for non-cash charges included in net income:
Depreciation and amortization of intangibles 440 383
Increase in deferred income taxes 4 31
Cumulative effect of accounting change 35 --
Other (102) (74)
Changes in current assets and liabilities, excluding
businesses acquired and sold (575) (365)
----------- ------------
Net cash from operating activities 310 489
----------- ------------
INVESTING ACTIVITIES -
Purchases of property and equipment (458) (456)
Acquisitions of businesses (404) (156)
Returns from associated companies 48 5
Sales of businesses -- 31
Sales of property 36 23
Other 5 28
----------- ------------
Net cash used in investing activities (773) (525)
----------- ------------
FINANCING ACTIVITIES -
Issuances of common stock 48 48
Purchases of common stock (224) (43)
Issuance of equity securities by subsidiary 200 --
Redemption of preferred stock (30) --
Borrowings of long-term debt 366 9
Repayments of long-term debt (276) (241)
Short-term borrowings, net 476 514
Payments of dividends (247) (226)
----------- ------------
Net cash from financing activities 313 61
----------- ------------
Effect of changes in foreign exchange rates on cash -- (6)
----------- ------------
Increase (decrease) in cash and equivalents (150) 19
Cash and equivalents at beginning of year 325 198
----------- ------------
Cash and equivalents at end of quarter $ 175 $ 217
----------- ------------
----------- ------------
COMPONENTS OF THE CHANGES IN CURRENT ASSETS
AND LIABILITIES:
(Increase) decrease in trade accounts receivable $ (150) $ 25
(Increase) in inventories (224) (63)
(Increase) in other current assets (10) (33)
(Decrease) in accounts payable (196) (255)
Increase (decrease) in accrued liabilities 5 (39)
----------- ------------
Changes in current assets and liabilities $ (575) $ (365)
----------- ------------
----------- ------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 7
<PAGE> 8
SARA LEE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. During the first quarter of fiscal 1994, the Corporation adopted
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." The statement primarily requires revaluing deferred tax
assets and liabilities at the time of enacted tax rate changes. The
cumulative effect of adopting this change as of the beginning of the period
of change was $35 million, or $.07 per share. Prior year financial
statements have not been restated to reflect the new accounting method.
The effect of this new standard on income tax expense, exclusive of the
cumulative effect adjustment, for the thirty-nine weeks ended April 2, 1994
is not material.
The tax effects of temporary differences that gave rise to significant
portions of deferred tax (assets) and liabilities as of the beginning of
fiscal 1994 consist of the following:
Deferred tax (assets):
Liabilities and reserves $(187)
Benefit plans (36)
Other (38)
------
(261)
------
Deferred tax liabilities:
Depreciation and amortization 186
Other 91
------
277
------
Net deferred tax liability $ 16
------
------
2. The Corporation provides postretirement health care benefits to certain
domestic and foreign employees who retire after attaining specified age and
service requirements. Certain retirees are required to share in the cost
of the plans in order to maintain coverage. Employees outside the United
States are covered principally by government-sponsored plans, and the cost
of company-provided plans is not material.
At the beginning of fiscal 1994, the Corporation adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
for its domestic operations. This standard requires the Corporation to
accrue the cost of domestic postretirement health care benefits over the
employees' active service periods. The Corporation's previous method of
accounting for these benefits was similar to that required by SFAS No. 106,
and as of the end of fiscal 1993 the entire domestic obligation had been
accrued. The actuarial present value of the domestic postretirement
benefit obligation as of the start of fiscal 1994 is as follows:
Retirees $ 84
Fully eligible active plan participants 19
Other active plan participants 41
-----
Postretirement benefit obligation recognized
on the Consolidated Balance Sheet $ 144
-----
-----
Page 8
<PAGE> 9
This obligation was determined using a 7.75% discount rate. The
assumed health care cost trend rate was 15% in fiscal 1994 decreasing to 7%
in fiscal 2002 and beyond. Increasing the health care cost trend by one
percentage point would increase the accumulated postretirement obligation
by approximately 10% and the aggregate service and interest cost by
approximately 12%. The plans have no assets.
3. In July 1993, a domestic subsidiary issued $200 million of equity
securities which provide a rate of return to the holder based upon a
specified inter-bank borrowing rate. No gain or loss was recognized on the
issuance of the securities. This investment is recognized under the
caption Minority Interest in Subsidiaries on the Consolidated Balance
Sheets. The securities are redeemable in fiscal 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
proceeds received by the subsidiary were used to purchase the Corporation's
common stock on the open market.
Page 9
<PAGE> 10
SARA LEE CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Results of Operations
and Financial Condition
The following is a discussion of the results of operations for the third
quarter and first nine months of 1994 compared to the comparable periods of
1993 and a discussion of the changes in financial condition during the first
nine months of 1994.
RESULTS OF OPERATIONS
COMPARISON OF THIRD QUARTER 1994 TO THIRD QUARTER OF 1993
Current quarter sales of $3.66 billion were $356 million or 10.8% above
the $3.31 billion reported in the third quarter of last year. Businesses
acquired net of businesses sold subsequent to the start of the third
quarter of last year increased sales by approximately 5.1 percentage
points. The strengthening of the U.S. dollar relative to foreign
currencies had the effect of decreasing sales in 1994 by approximately
1.8 percentage points. Thus, on a comparable basis, sales increased
approximately 7.5%. After adjusting for business acquisitions and
dispositions as well as foreign currency fluctuations, comparable
Packaged Foods sales increased 8.1% and comparable Packaged Consumer
Products sales increased 6.9% as compared to the third quarter of last
year.
Cost of sales increased $227 million or 11.1% while the gross profit
margin was 37.9% in the current quarter compared to 38.0% in the
third quarter of last year. Declines in Packaged Consumer Products
gross margins were offset in part by higher Packaged Foods gross
margins.
Selling, general and administrative expenses of $1.12 billion increased
$112 million or 11.1% above the $1.01 billion reported in the third
quarter last year. Increased marketing and administrative costs, and the
impact of acquisitions were offset in part by the strengthening of the
U.S. dollar relative to foreign currencies.
Net interest expense increased $17 million from $18 million last year
to $35 million in the current year. The increase in interest expense is
primarily due to financing costs associated with acquisitions and capital
expenditures.
The effective tax rate was 35.0% as compared to the 34.8% reported in
the third quarter of last year. The impact of the increase in the U.S.
statutory tax rate was largely offset by lower effective rates for
certain European businesses.
Net income and primary earnings per share of $152 million and $.30
per share, respectively, were equivalent to amounts reported last year.
Page 10
<PAGE> 11
COMPARISON OF FIRST NINE MONTHS OF 1994 TO FIRST NINE MONTHS OF 1993
Net sales for the first nine months of 1994 were $11.47 billion or 6.9%
higher than the $10.73 billion reported last year. Adjusting sales
for businesses sold and acquired subsequent to the start of fiscal 1993
and foreign currency fluctuations, sales increased by approximately 4.4%.
Cost of sales increased by $513 million or 7.8% while the gross
profit margin percentage was 37.8% in the first nine months of 1994
and 38.3% in the comparable period last year. Packaged Consumer Products
and Packaged Foods gross margins declined.
Selling, general and administrative expenses of $3.40 billion
were $131 million or 4.0% higher than the first nine months of last year.
Increased marketing and administrative costs, and the impact of
acquisitions were offset in part by the strengthening of the U.S. dollar
relative to foreign currencies. Net interest was $100 million compared
to $49 million in the prior year. The $51 million increase resulted
primarily from the factors noted in the third quarter results of
operations.
The Corporation adopted Statement of Financial Accounting Standards No.
109 (SFAS 109) "Accounting for Income Taxes" at the start of fiscal 1994.
The cumulative effect of initially applying this statement resulted in a
charge of $35 million or $.07 per share in the first quarter. See note 1
on page 8 for details.
The effective tax rate, excluding the cumulative impact of adopting
SFAS 109, was 35.0% in the first nine months of 1994 and the comparable
period of 1993. The impact of the increase in the U.S. statutory tax
rate was largely offset by lower effective rates for certain European
businesses.
Excluding the cumulative impact of the accounting change, net income
increased 5.5% to $543 million while net income per share increased 6.9%
to $1.09 from $1.02 last year. The higher percentage increase in
earnings per share compared to net income is attributable to the
Corporation's purchase of its outstanding common shares, a lower level of
shares related to stock options and lower preferred dividends. Including
the cumulative impact of the accounting change, net income decreased 1.3%
while earnings per share remained the same as in the comparable period
last year.
FUTURE TRENDS
The Corporation expects results for the fourth quarter of fiscal 1994
to approximate those of the fourth quarter of 1993. Ongoing softness in
the Corporation's European hosiery and knit products operations is the
primary cause of the flat earnings projection. Results for the full
year are, however, expected to exceed those reported in fiscal 1993.
Page 11
<PAGE> 12
FINANCIAL CONDITION
During the first nine months of 1994, cash and equivalents decreased by
$150 million while short-term borrowings (notes payable) increased by $580
million and long-term debt increased by $103 million. These changes are
primarily attributable to acquisitions of businesses and capital
expenditures.
Minority interest in subsidiaries increased in the first quarter of
fiscal 1994 as a result of the issuance of $200 million of equity
securities by a domestic subsidiary of the Corporation. The
proceeds received by the subsidiary were used to purchase the Corporation's
common stock on the open market. See note 3 on page 9 for details.
Page 12
<PAGE> 13
PART II
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
PAGE NUMBER OR
EXHIBIT INCORPORATED HEREIN
NUMBER DESCRIPTION BY REFERENCE TO
------ ----------------------------- ---------------------------
<S> <C> <C>
11 Computation of Net Income 15
Per Common Share
12.1 Computation of Ratio of
Earnings to Fixed Charges 17
12.2 Computation of Ratio of
Earnings to Fixed Charges
and Preferred Stock Dividend
Requirements 18
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant during the
quarter for which this report is filed.
Page 13
<PAGE> 14
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SARA LEE CORPORATION
--------------------
(Registrant)
By: /s/ Michael E. Murphy
---------------------------
Michael E. Murphy
Vice Chairman and Chief
Financial and Administrative
Officer
By: /s/ Wayne R. Szypulski
------------------------------
Wayne R. Szypulski
Controller
DATE: May 13, 1994
Page 14
<PAGE> 15
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE EXHIBIT 11
(in millions except per share data)
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED APRIL 2, 1994
---------------------------------------------
PRIMARY FULLY DILUTED
-------------------- ---------------------
Thirteen Thirty-Nine Thirteen Thirty-Nine
Weeks Weeks Weeks Weeks
------- ------- ------- -----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income before accounting change $ 152 $ 543 $ 152 $ 543
Cumulative effect of accounting change -- (35) -- (35)
------- ------- ------- -----------
Net income 152 508 152 508
Less: Dividends on Preferred Stocks,
net of tax benefits (6) (18) (2) (7)
Adjustment attributable to conversion
of ESOP Convertible Preferred Stock
-- -- (2) (6)
------- ------- ------- -----------
Net Income Available for Common Stockholders $ 146 $ 490 $ 148 $ 495
------- ------- ------- -----------
------- ------- ------- -----------
SHARES:
Average Shares Outstanding 477 478 477 478
Add: Common Stock Equivalents -
Stock options 1 1 1 1
ESOP Convertible Preferred Stock -- -- 19 19
Restricted stock and other 1 1 1 1
------- ------- ------- -----------
Adjusted Weighted Average Shares Outstanding 479 480 498 499
------- ------- ------- -----------
------- ------- ------- -----------
NET INCOME PER COMMON SHARE:
Before cumulative effect of accounting $ 0.30 $ 1.09 $ 0.29 $ 1.06
change
Cumulative effect of accounting change -- (0.07) -- (0.07)
------- ------- ------- -----------
$ 0.30 $ 1.02 $ 0.29 $ 0.99
------- ------- ------- -----------
------- ------- ------- -----------
</TABLE>
Page 15
<PAGE> 16
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE EXHIBIT 11
(in millions except per share data) (continued)
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED MARCH 27, 1993
--------------------------------------------
PRIMARY FULLY DILUTED
--------------------- ---------------------
Thirteen Thirty-Nine Thirteen Thirty-Nine
Weeks Weeks Weeks Weeks
------- ------- ------- ----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income $ 152 $ 514 $ 152 $ 514
Less: Dividends on Preferred Stocks,
net of tax benefits (6) (19) (2) (8)
Adjustment attributable to
conversion of ESOP Convertible
Preferred Stock -- -- (1) (4)
------- ------- ------- -------
Net Income Available for Common
Stockholders $ 146 $ 495 $ 149 $ 502
------- ------- ------- -------
------- ------- ------- -------
SHARES:
Average Shares Outstanding 483 481 483 481
Add: Common Stock Equivalents -
Stock options 3 3 3 3
ESOP Convertible Preferred Stock -- -- 19 19
Restricted stock and other 1 1 1 1
------- ------- ------- -------
Adjusted Weighted Average
Shares Outstanding 487 485 506 504
------- ------- ------- -------
------- ------- ------- -------
NET INCOME PER COMMON SHARE: $ 0.30 $ 1.02 $ 0.30 $ 1.00
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Page 16
<PAGE> 17
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1
(In millions except ratios)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
-----------------------
April 2, Mar. 27,
1994 1993
---------- ----------
<S> <C> <C>
Fixed charges:
Interest expense $ 131 $ 109
Interest portion of rental expense 46 43
---------- ----------
Total fixed charges before capitalized interest 177 152
Capitalized interest 17 16
---------- ----------
Total fixed charges $ 194 $ 168
---------- ----------
---------- ----------
Earnings available for fixed charges:
Income before income taxes $ 835 $ 791
Less undistributed income in minority owned companies (5) (5)
Add minority interest in majority-owned subsidiaries 19 18
Add amortization of capitalized interest 14 13
Add fixed charges before capitalized interest 177 152
---------- ----------
Total earnings available for fixed charges $ 1,040 $ 969
---------- ----------
---------- ----------
Ratio of earnings to fixed charges 5.4 5.8
---------- ----------
---------- ----------
</TABLE>
Page 17
<PAGE> 18
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.2
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(In millions except ratios)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
-----------------------
April 2, Mar. 27,
1994 1993
--------- --------
<S> <C> <C>
Fixed charges and preferred stock dividend requirements:
Interest expense $ 131 $ 109
Interest portion of rental expense 46 43
--------- --------
Total fixed charges before capitalized interest
and preferred stock dividend requirements 177 152
Capitalized interest 17 16
Preferred stock dividend requirements (1) 29 31
--------- --------
Total fixed charges and preferred stock
dividend requirements $ 223 $ 199
--------- --------
--------- --------
Earnings available for fixed charges and preferred
stock dividend requirements:
Income before income taxes $ 835 $ 791
Less undistributed income in minority owned companies (5) (5)
Add minority interest in majority-owned subsidiaries 19 18
Add amortization of capitalized interest 14 13
Add fixed charges before capitalized interest and
preferred stock dividend requirements 177 152
--------- --------
Total earnings available for fixed charges and
preferred stock dividend requirements $ 1,040 $ 969
--------- --------
--------- --------
Ratio of earnings to fixed charges and preferred stock
dividend requirements 4.7 4.9
--------- --------
--------- --------
</TABLE>
(1) 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 18
