<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 October 1, 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 October 1, 1994, the Registrant had 481,169,421 outstanding shares
of common stock $1.33 1/3 par value, which is registrant's only class of common
stock.
The document contains 17 pages.
Page 1
<PAGE> 2
SARA LEE CORPORATION AND SUBSIDIARIES
INDEX
PART I -
FINANCIAL STATEMENTS -
Preface 3
Condensed Consolidated Balance Sheets -
At October 1, 1994 and July 2, 1994 4
Consolidated Statements of Income -
For the thirteen weeks ended October 1, 1994
and October 2, 1993 5
Consolidated Statements of Common Stockholders' Equity -
For the period July 3, 1993 to October 1, 1994 6
Consolidated Statements of Cash Flows -
For the thirteen weeks ended October 1, 1994
and October 2, 1993 7
Notes to Consolidated Financial Statements 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION 9
PART II -
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 12
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURE 14
EXHIBIT 11 - Computation of Net Income Per Common Share 15
EXHIBIT 12.1 - Computation of Ratio of Earnings to Fixed Charges 16
EXHIBIT 12.2 - Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend Requirements 17
Page 2
<PAGE> 3
PART I
SARA LEE CORPORATION AND SUBSIDIARIES
Preface
The consolidated financial statements for the thirteen weeks ended October 1,
1994 and October 2, 1993 and the balance sheet as of October 1, 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 October 1, 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 weeks ended October 1, 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 2,
1994.
Page 3
<PAGE> 4
SARA LEE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets at October 1, 1994 and July 2, 1994
(in millions)
<TABLE>
<CAPTION>
Oct. 1, July 2,
1994 1994
ASSETS ------- -------
<S> <C> <C>
Cash and Equivalents $ 219 $ 189
Trade Accounts Receivable, less Allowances 1,774 1,472
Inventories:
Finished Goods 1,609 1,603
Work in Process 382 361
Materials and Supplies 637 603
----------- -----------
2,628 2,567
Other Current Assets 228 241
----------- -----------
Total Current Assets 4,849 4,469
Investments in Associated Companies 143 142
Trademarks and Other Assets 493 492
Property, Net 2,863 2,900
Intangible Assets 3,684 3,662
----------- -----------
$ 12,032 $ 11,665
=========== ===========
LIABILITIES AND EQUITY
Notes Payable $ 1,465 $ 1,281
Accounts Payable 1,050 1,253
Accrued Liabilities 2,445 2,303
Current Maturities of Long-Term Debt 199 82
----------- -----------
Total Current Liabilities 5,159 4,919
Long-Term Debt 1,497 1,496
Deferred Income Taxes 318 290
Other Liabilities 774 783
Minority Interest in Subsidiaries 528 520
Auction Preferred Stock 300 300
ESOP Convertible Preferred Stock 336 339
Unearned Deferred Compensation (308) (308)
Common Stockholders' Equity 3,428 3,326
----------- -----------
$ 12,032 $ 11,665
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4
<PAGE> 5
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
For the Thirteen Weeks Ended October 1, 1994 and October 2, 1993
(in millions, except per share data)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
---------------------------------
Oct. 1, Oct. 2,
1994 1993
----------- ------------
<S> <C> <C>
Net Sales $ 4,290 $ 3,796
----------- ------------
Cost of Sales 2,672 2,384
Selling, General and Administrative Expenses 1,319 1,138
Interest Expense 55 42
Interest Income (10) (10)
----------- ------------
4,036 3,554
----------- ------------
Income Before Income Taxes 254 242
Income Taxes 89 87
----------- ------------
Net Income Before Accounting Change 165 155
Cumulative Effect of Accounting Change -- (35)
----------- ------------
Net Income 165 120
Preferred Dividend Requirements, Net of Tax 6 6
----------- ------------
Net Income Available for Common Stockholders $ 159 $ 114
=========== ============
Net Income Per Common Share - Primary
Before Cumulative Effect of Accounting Change $ 0.33 $ 0.31
Cumulative Effect of Accounting Change -- (0.07)
----------- ------------
$ 0.33 $ 0.24
=========== ============
Average Shares Outstanding 481 481
=========== ============
Net Income Per Common Share - Fully Diluted
Before Cumulative Effect of Accounting Change $ 0.32 $ 0.30
Cumulative Effect of Accounting Change -- (0.07)
----------- ------------
$ 0.32 $ 0.23
=========== ============
Average Shares Outstanding 499 500
=========== ============
Cash Dividends Per Common Share $ 0.16 $ 0.145
=========== ============
</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 July 3, 1993 to October 1, 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 July 3, 1993 $3,551 $ 647 $ 66 $ 3,056 $ (194) $ (24)
Net Income 120 -- -- 120 -- --
Cash Dividends -
Common ($.145 per share) (69) -- -- (69) -- --
Auction preferred
($637 per share) (2) -- -- (2) -- --
ESOP convertible preferred
($1.359 per share) (6) -- -- (6) -- --
Stock Issuances -
Stock option and benefit plans 17 1 16 -- -- --
Restricted Stock Amortization 1 -- -- -- -- 1
Reacquired Shares (224) (12) (82) (130) -- --
Translation Adjustments 6 -- -- -- 6 --
ESOP Tax Benefit 2 -- -- 2 -- --
Other -- -- -- (1) -- 1
------ --------- --------- ----------- --------- ---------
Balances at October 2, 1993 3,396 636 -- 2,970 (188) (22)
Net Income 79 -- -- 79 -- --
Cash Dividends - --
Common ($.48 per share) (229) -- -- (229) -- --
Auction preferred
($2,095.33 per share) (6) -- -- (6) -- --
ESOP convertible preferred
($4.0785 per share) (20) -- -- (20) -- --
Stock Issuances -
Stock option and benefit plans 52 5 47 -- -- --
Restricted stock, less
amortization of $3 3 -- 2 -- -- 1
Translation Adjustments 18 -- -- -- 18 --
ESOP Tax Benefit 8 -- -- 8 -- --
Other 25 -- 27 (3) -- 1
------ --------- --------- ----------- --------- ---------
Balances at July 2, 1994 3,326 641 76 2,799 (170) (20)
Net Income 165 -- -- 165 -- --
Cash Dividends -
Common ($.16 per share) (77) -- -- (77) -- --
Auction preferred
($877.33 per share) (3) -- -- (3) -- --
ESOP convertible preferred
($1.359 per share) (6) -- -- (6) -- --
Stock Issuances -
Stock option and benefit plans 13 1 12 -- -- --
Restricted stock, less
amortization of $1 1 -- 9 -- -- (8)
Reacquired Shares (17) (1) (16) -- -- --
Translation Adjustments 22 -- -- -- 22 --
ESOP Tax Benefit 3 -- -- 3 -- --
Other 1 -- 1 (1) -- 1
------ --------- --------- ----------- --------- ---------
Balances at October 1, 1994 $3,428 $ 641 $ 82 $ 2,880 $ (148) $ (27)
====== ========= ========= =========== ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 6
<PAGE> 7
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Thirteen Weeks Ended October 1, 1994 and October 2, 1993
(in millions)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------
Oct. 1, Oct. 2,
1994 1993
------ ------
<S> <C> <C>
OPERATING ACTIVITIES -
Net income $ 165 $ 120
Adjustments for non-cash charges included in net income:
Depreciation and amortization of intangibles 149 144
Increase (decrease) in deferred income taxes 25 (9)
Cumulative effect of accounting change -- 35
Other (7) (29)
Changes in current assets and liabilities, excluding
businesses acquired and sold (380) (496)
------ ------
Net cash used in operating activities (48) (235)
------ ------
INVESTING ACTIVITIES -
Purchases of property and equipment (96) (154)
Acquisitions of businesses (27) (349)
Sale of businesses 11 --
Returns from (investments in) associated companies 3 (8)
Sales of property 11 11
Other 1 2
------ ------
Net cash used in investing activities (97) (498)
------ ------
FINANCING ACTIVITIES -
Issuances of common stock 13 17
Purchases of common stock (17) (224)
Issuance of equity securities by subsidiary -- 200
Redemption of preferred stock (3) (30)
Borrowings of long-term debt 127 153
Repayments of long-term debt (21) (235)
Short-term borrowings, net 159 716
Payments of dividends (86) (77)
------ ------
Net cash from financing activities 172 520
------ ------
Effect of changes in foreign exchange rates on cash 3 3
------ ------
Increase (decrease) in cash and equivalents 30 (210)
Cash and equivalents at beginning of year 189 325
------ ------
Cash and equivalents at end of quarter $ 219 $ 115
====== ======
COMPONENTS OF THE CHANGES IN CURRENT ASSETS
AND LIABILITIES:
(Increase) in trade accounts receivable $ (277) $ (274)
(Increase) in inventories (14) (66)
Decrease (increase) in other current assets 16 (1)
(Decrease) in accounts payable (216) (247)
Increase in accrued liabilities 111 92
------ ------
Changes in current assets and liabilities $ (380) $ (496)
====== ======
</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 1995 the Corporation adopted Statement
of Position 93-7 "Reporting on Advertising Costs" (SOP 93-7) as issued by
the American Institute of Certified Public Accountants. The statement
primarily requires that the cost of advertising be expensed no later than
the first time the advertising takes place. The Corporation's previous
method of accounting for advertising was consistent with SOP 93-7 and its
adoption had no material impact on the results of operations.
2. A domestic subsidiary of the Corporation issued $200 million of preferred
equity securities in July 1993. 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 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 subsidiary used the cash proceeds received to
purchase the common stock of the Corporation on the open market.
Page 8
<PAGE> 9
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 first
quarter of fiscal 1995 compared to the first quarter of fiscal 1994 and the
changes in financial condition during the first three months of fiscal 1995.
RESULTS OF OPERATIONS
Current quarter sales of $4.29 billion were $494 million or 13% above the $3.80
billion reported in the first quarter of last year. The Packaged Foods segment
and the Packaged Consumer Products segment had sales increases of 12.1% and
14.0%, respectively. Businesses acquired net of businesses sold subsequent to
the first quarter of last year increased sales by approximately 2 percentage
points. The weakening of the U.S. dollar relative to foreign currencies had
the effect of increasing sales by 3 percentage points. Thus, on a comparable
basis, sales increased by approximately 8%. Cost of sales increased by $288
million or 12.1% while the gross profit margin was 37.7% in the current quarter
compared to 37.2% in the first quarter of last year. The improvement was
primarily attributable to increased gross profit margins in the Packaged Foods
Segment.
Selling, general and administrative expenses of $1.32 billion were $181 million
or 15.9% higher than the first quarter of last year. The increase was
primarily due to acquisitions, the weakening of the U.S. dollar relative to
foreign currencies and increases in advertising and promotion expense in all of
the Corporation's lines of business. Net interest expense increased from $32
million last year to $45 million in the current year primarily as a result of
higher interest rates and increased long-term debt levels.
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 adopting this change as of the beginning of the period of
change was $35 million or $.07 per share. The effect of this new standard on
income tax expense, exclusive of the cumulative effect adjustment, for the
thirteen weeks ended October 2, 1993, was not material.
The effective tax rate, excluding the cumulative impact of adopting SFAS 109,
decreased from 36.0% to 35.0% of income before income taxes. This decrease was
largely due to the impact of lower foreign taxes.
Excluding the cumulative impact of the accounting change from the first quarter
of last year, net income increased 6.5% to $165 million while net income per
share increased 6.5% to $.33 from $.31 last year. Including the cumulative
impact of the accounting change, net income and net income per share both
increased 37.5% from the first quarter of last year.
Page 9
<PAGE> 10
FINANCIAL CONDITION
During the first quarter of fiscal 1995, cash and equivalents increased by $30
million while borrowings increased by $302 million. The increase in borrowings
is primarily attributable to seasonal changes in working capital requirements.
RESTRUCTURING
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. Through October
1, 1994, 16 facilities have been closed and 2,905 employees severed. A
reconciliation of the restructuring reserves through October 1, 1994 is
presented on p. 11 of this document.
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 fiscal 1995 and to generate increasing savings in subsequent years,
growing to an annual savings of approximately $250 million in fiscal 1998.
Savings from the planned actions will be used for both business building
initiatives and profit improvements. Due to the timing of the actions taken to
date, no material benefit has been recognized in operating results.
Page 10
<PAGE> 11
SARA LEE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF RESTRUCTURING RESERVES
AS OF OCTOBER 1, 1994
(in millions)
<TABLE>
<CAPTION>
WRITEDOWN RECOGNITION OF
OF PROPERTY CURTAILMENT RESTRUCTURING
FISCAL 1994 TO NET LOSS AND SPECIAL FOREIGN RESERVES
RESTRUCTURING REALIZABLE TERMINATION CASH EXCHANGE AS OF
RESERVES VALUE BENEFITS PAYMENTS IMPACTS OCTOBER 1, 1994
------------- ----------- ---------------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ANTICIPATED LOSSES ASSOCIATED WITH
DISPOSAL OF LAND, BUILDINGS AND
IMPROVEMENTS, AND MACHINERY AND EQUIPMENT $ 289 $ (289) $ -- $ -- $ -- $ --
ANTICIPATED EXPENDITURES TO CLOSE AND
DISPOSE OF IDLE FACILITIES - INCLUDES
$33 OF NON-CANCELABLE LEASE OBLIGATIONS 112 -- -- (5) -- 107
ANTICIPATED SEVERANCE BENEFITS 239 -- -- (25) -- 214
PENSION BENEFITS ASSOCIATED WITH SEVERED
EMPLOYEE GROUP 33 -- (33) -- -- --
ANTICIPATED LOSSES ASSOCIATED WITH THE
DISPOSAL OF CERTAIN BUSINESSES 59 -- -- (19) -- 40
------ ------ ------- ------- ----- -------
732 (289) (33) (49) -- 361
FOREIGN EXCHANGE IMPACTS -- -- -- -- 14 14
------ ------ ------- ------- ----- -------
TOTAL RESTRUCTURING RESERVES $ 732 $ (289) $ (33) $ (49) $ 14 $ 375
====== ====== ======= ======= ===== =======
</TABLE>
Page 11
<PAGE> 12
PART II
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant's 1994 Annual Meeting of Stockholders was held on October
27, 1994, in Chicago, Illinois ("Annual Meeting").
(b) Not applicable.
(c) (i) A total of 427,541,012 votes (84.6% of all votes entitled to
vote at the Annual Meeting) were represented by proxy or ballot at
the Annual Meeting. The stockholders of the Registrant were
requested to elect 18 directors as nominated by management. All
nominees were elected as indicated by the following voting
tabulation:
<TABLE>
<CAPTION>
NAME FOR WITHHELD
- - ------------------ ----------- --------
<S> <C> <C>
Paul A. Allaire 424,291,947 3,249,065
Frans H.J.J. Andriessen 419,815,123 7,725,889
John H. Bryan 424,033,785 3,507,227
Duane L. Burnham 424,191,559 3,349,453
Charles W. Coker 424,226,202 3,314,810
Willie D. Davis 424,186,924 3,354,088
Donald J. Franceschini 424,048,653 3,492,359
Allen F. Jacobson 424,114,583 3,426,429
Vernon E. Jordan, Jr. 423,178,469 4,362,543
James L. Ketelsen 424,252,197 3,288,815
Hans B. van Liemt 424,303,633 3,237,379
Joan D. Manley 424,249,704 3,291,308
C. Steven McMillan 424,189,541 3,351,471
Newton N. Minow 424,183,251 3,357,761
Michael E. Murphy 424,346,270 3,194,742
Sir Arvi H. Parbo A.C. 419,895,419 7,645,593
Rozanne L. Ridgway 424,031,390 3,509,622
Richard L. Thomas 424,349,888 3,191,124
</TABLE>
(ii) The stockholders were requested to consider and vote upon proposed
amendments to the Employee Stock Purchase Plan, as amended (the
"Plan"). The proposed amendments included increasing the number of
shares of common stock of the Registrant available for purchase
under the Plan and clarifying those divisions and subsidiaries of
the Registrant which participate in the Plan. The amendments were
ratified by the stockholders, as 404,381,923 votes were cast for the
proposal, 16,886,473 votes were cast against the proposal, 6,159,655
votes abstained, and 112,961 votes were broker non-votes.
Page 12
<PAGE> 13
(iii) The stockholders were requested to ratify the appointment of
Arthur Andersen LLP as the independent public accountants of the
Registrant for its fiscal year 1995. The appointment of Arthur
Andersen LLP was ratified by the stockholders, as 420,437,265 votes
were cast for the proposal, 2,785,126 votes were cast against the
proposal, 4,205,659 votes abstained, and 112,962 votes were broker
non-votes.
(iv) The stockholders were requested to consider and vote upon a
stockholder proposal concerning annual executive compensation.
The proposal recommended that the Corporation not pay any
compensation to its five highest-compensated officers which is not
deductible under current law and that the Corporation not allow
compensation to be deferred to avoid the $1,000,000 tax deduction
cap. This stockholder proposal was not ratified by the
stockholders, as 60,100,462 votes were cast for the proposal,
298,410,951 votes were cast against the proposal, 12,902,895 votes
abstained, and 56,126,704 votes were broker non-votes.
(v) The stockholders were requested to consider and vote upon a
stockholder proposal concerning the Registrant's executive severance
policy. The proposal recommended that absent stockholder approval
of such a policy at a single regular annual stockholders' meeting,
severance pay should not be paid to executive officers terminated
for poor performance, change in control or violating company
policies. This stockholder proposal was not ratified by the
stockholders, as 78,471,483 votes were cast for the proposal,
275,543,096 votes were cast against the proposal, 17,399,729 votes
abstained, and 56,126,704 votes were broker non-votes.
(d) Not applicable.
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 16
12.2 Computation of Ratio of
Earnings to Fixed Charges
and Preferred Stock Dividend
Requirements 17
</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
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/ Wayne R. Szypulski
____________________________
Wayne R. Szypulski
Vice President and Controller
DATE: November 14, 1994
Page 14
<PAGE> 15
EXHIBIT 11
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(in millions except per share data)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTEEN WEEKS ENDED
OCTOBER 1, 1994 OCTOBER 2, 1993
-------------------- ------------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
------- ------- ------- -------
EARNINGS:
<S> <C> <C> <C> <C>
Net income before accounting change $ 165 $ 165 $ 155 $ 155
Cumulative effect of accounting change -- -- (35) (35)
------ ------ ------ -------
Net income 165 165 120 120
Less: Dividends on Preferred Stocks,
net of tax benefits (6) (3) (6) (2)
Adjustment attributable to conversion of
ESOP Convertible Preferred Stock -- (2) -- (1)
------ ------ ------ -------
Net Income Available for Common Stockholders $ 159 $ 160 $ 114 $ 117
====== ====== ====== =======
SHARES:
Average Shares Outstanding 479 479 479 479
Add: Common Stock Equivalents --
Stock options 1 1 1 1
ESOP Convertible Preferred Stock -- 18 -- 19
Restricted stock and other 1 1 1 1
------ ------ ------ -------
Adjusted Weighted Average Shares Outstanding 481 499 481 500
====== ====== ====== =======
Net Income Per Common Share:
Before cumulative effect of accounting change $ 0.33 $ 0.32 $ 0.31 $ 0.30
Cumulative effect of accounting change -- -- (0.07) (0.07)
------ ------ ------ -------
$ 0.33 $ 0.32 $ 0.24 $ 0.23
====== ====== ====== =======
</TABLE>
Page 15
<PAGE> 16
EXHIBIT 12.1
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in millions except ratios)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
Oct. 1, Oct. 2,
1994 1993
---------- --------
<S> <C> <C>
Fixed charges:
Interest expense $ 55 $ 42
Interest portion of rental expense 21 16
------- --------
Total fixed charges before capitalized interest 76 58
Capitalized interest 3 6
------- --------
Total fixed charges $ 79 $ 64
======= ========
Earnings available for fixed charges:
Income before income taxes $ 254 $ 242
Less undistributed income in minority owned companies (3) (3)
Add minority interest in majority-owned subsidiaries 10 6
Add amortization of capitalized interest 5 5
Add fixed charges before capitalized interest 76 58
------- --------
Total earnings available for fixed charges $ 342 $ 308
======= ========
Ratio of earnings to fixed charges 4.3 4.8
======= ========
</TABLE>
<PAGE> 17
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>
Thirteen Weeks Ended
--------------------
Oct. 1, Oct. 2,
1994 1993
------- --------
<S> <C> <C>
Fixed charges and preferred stock dividend requirements:
Interest expense $ 55 $ 42
Interest portion of rental expense 21 16
----- -----
Total fixed charges before capitalized interest
and preferred stock dividend requirements 76 58
Capitalized interest 3 6
Preferred stock dividend requirements (1) 10 9
----- -----
Total fixed charges and preferred stock
dividend requirements $ 89 $ 73
===== =====
Earnings available for fixed charges and preferred
stock dividend requirements:
Income before income taxes $ 254 $ 242
Less undistributed income in minority owned companies (3) (3)
Add minority interest in majority-owned subsidiaries 10 6
Add amortization of capitalized interest 5 5
Add fixed charges before capitalized interest and
preferred stock dividend requirements 76 58
----- -----
Total earnings available for fixed charges and
preferred stock dividend requirements $ 342 $ 308
===== =====
Ratio of earnings to fixed charges and preferred stock
dividend requirements 3.8 4.2
===== =====
</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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE 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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> OCT-01-1994
<CASH> 192
<SECURITIES> 27
<RECEIVABLES> 1,963
<ALLOWANCES> 189
<INVENTORY> 2,628
<CURRENT-ASSETS> 4,849
<PP&E> 5,280
<DEPRECIATION> 2,417
<TOTAL-ASSETS> 12,032
<CURRENT-LIABILITIES> 5,159
<BONDS> 1,497
<COMMON> 641
0
328
<OTHER-SE> 2,787
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<INCOME-TAX> 89
<INCOME-CONTINUING> 165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 165
<EPS-PRIMARY> .33
<EPS-DILUTED> .32
</TABLE>
