<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934
(Fee Required)
FOR THE FISCAL YEAR ENDED JUNE 30, 1994 COMMISSION FILE NUMBER 1-3344
SARA LEE CORPORATION 401(k) SUPPLEMENTAL
SAVINGS PLAN
(Full title of the plan)
--------------------
SARA LEE CORPORATION
THREE FIRST NATIONAL PLAZA
SUITE 4600
CHICAGO, ILLINOIS 60602
(Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office)
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[ARTHUR ANDERSEN LLP LETTERHEAD]
SARA LEE CORPORATION
401(k) SUPPLEMENTAL SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF JUNE 30, 1994 AND 1993
TOGETHER WITH AUDITORS' REPORT
EMPLOYER IDENTIFICATION NUMBER 36-2089049
PLAN NUMBER 401
<PAGE> 3
[ARTHUR ANDERSEN LLP LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Sara Lee Corporation
Pension and Employee Benefits Committee:
We have audited the accompanying statements of net assets available for Plan
benefits of the SARA LEE CORPORATION 401(k) SUPPLEMENTAL SAVINGS PLAN as of
June 30, 1994 and 1993, and the related statement of changes in net assets
available for Plan benefits for the year ended June 30, 1994. These financial
statements are the responsibility of Sara Lee Corporation's management. Our
responsibility is to express an opinion on these 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in Note 2, these financial statements were prepared on a modified
cash basis of accounting, which is a comprehensive basis of accounting other
than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for Plan benefits of the Sara
Lee Corporation 401(k) Supplemental Savings Plan as of June 30, 1994 and 1993,
and the changes in its net assets available for Plan benefits for the year
ended June 30, 1994, on the basis of accounting described in Note 2.
/s/ Arthur Andersen LLP
Chicago, Illinois,
December 15, 1994
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SARA LEE CORPORATION
401(k) SUPPLEMENTAL SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF JUNE 30, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
ASSETS:
Value of interest in Master Trust-
Interest Income Fund $138,545,651 $131,463,294
Sara Lee Stock Fund 21,226,391 23,904,551
Diversified Equity Fund 13,799,865 9,111,745
Aggressive Equity Fund - 11,203,728
Small Stock Fund 16,219,562 -
Traveler's (Hygrade) Fund 2,758,974 2,641,289
International Fund 3,029,707 -
Balanced Fund 4,547,077 -
Loan Fund 7,779,381 7,343,775
Barfield Mortgage Fund 630,483 630,483
------------ ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $208,537,091 $186,298,865
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 5
SARA LEE CORPORATION
401(k) SUPPLEMENTAL SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
Traveler's
Interest Sara Lee Diversified Aggressive Small Stock (Hygrade)
Income Fund Stock Fund Equity Fund Equity Fund Fund Fund
------------ ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year $131,463,294 $23,904,551 $ 9,111,745 $11,203,728 $ -- $2,641,289
------------ ----------- ----------- ----------- ----------- ----------
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income-
Interest 9,760,591 12,224 577 -- 2,005 186,358
Dividends -- 586,674 350,414 -- 787,118 --
Realized gain -- 440,517 117,301 -- 28,573 --
Unrealized gain (loss) -- (3,750,360) (427,624) -- (610,330) --
Net change in accrued
income (15,945) 19,020 10 -- (1,016) 653
Other income 9,297 -- -- -- -- --
Contributions-
Participant 13,939,598 4,646,951 3,120,436 -- 3,477,644 --
------------ ----------- ----------- ----------- ----------- ----------
Total additions 23,693,541 1,955,026 3,161,114 -- 3,683,994 187,011
------------ ----------- ----------- ----------- ----------- ----------
DEDUCTIONS TO NET ASSETS
ATTRIBUTED TO:
Benefits paid to
participants (13,760,639) (1,802,424) (886,083) -- (747,648) (92,244)
Other (112,998) (143,652) (68,120) -- (80,334) (524)
------------ ----------- ----------- ----------- ----------- ----------
Total deductions (13,873,637) (1,946,076) (954,203) -- (827,982) (92,768)
------------ ----------- ----------- ----------- ----------- ----------
Net increase 9,819,904 8,950 2,206,911 -- 2,856,012 94,243
------------ ----------- ----------- ----------- ----------- ----------
INTERFUND TRANSFERS, net (6,921,416) (2,748,344) 1,942,054 (11,203,728) 13,274,621 23,442
------------ ----------- ----------- ----------- ----------- ----------
TRANSFERS TO THE PLAN 4,183,869 61,234 539,155 -- 88,929 --
------------ ----------- ----------- ----------- ----------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $138,545,651 $21,226,391 $13,799,865 $ -- $16,219,562 $2,758,974
============ =========== =========== =========== =========== ==========
<CAPTION>
International Balanced Barfield
Equity Fund Fund Loan Fund Mortgage Fund Total
------------ ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year $ -- $ -- $7,343,775 $630,483 $186,298,865
---------- ---------- ---------- -------- ------------
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income-
Interest 322 196 -- -- 9,962,273
Dividends 18,424 136,468 -- -- 1,879,098
Realized gain 2,437 (1,137) -- -- 587,691
Unrealized gain (loss) 153,247 (233,824) -- -- (4,868,891)
Net change in accrued
income (3) 17 -- -- 2,736
Other income -- -- -- -- 9,297
Contributions-
Participant 723,182 1,198,007 -- -- 27,105,818
---------- ---------- ---------- -------- ------------
Total additions 897,609 1,099,727 -- -- 34,678,022
---------- ---------- ---------- -------- ------------
DEDUCTIONS TO NET ASSETS
ATTRIBUTED TO:
Benefits paid to
participants (26,322) (136,328) -- (17,451,688)
Other (6,503) (14,889) 435,606 -- 8,586
---------- ---------- ---------- -------- ------------
Total deductions (32,825) (151,217) 435,606 -- (17,443,102)
---------- ---------- ---------- -------- ------------
Net increase 864,784 948,510 435,606 -- 17,234,920
---------- ---------- ---------- -------- ------------
INTERFUND TRANSFERS, net 2,131,402 3,501,969 -- -- --
---------- ---------- ---------- -------- ------------
TRANSFERS TO THE PLAN 33,521 96,598 -- -- 5,003,306
---------- ---------- ---------- -------- ------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $3,029,707 $4,547,077 $7,779,381 $630,483 $208,537,091
========== ========== ========== ======== ============
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 6
SARA LEE CORPORATION
401(k) SUPPLEMENTAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994 AND 1993
1. DESCRIPTION OF PLAN:
The following brief description of the Sara Lee Corporation 401(k) Supplemental
Savings Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
General
The Plan is a defined contribution 401(k) plan covering eligible employees who
have completed one year of service and are members of a participating division
or subsidiary of Sara Lee Corporation (the "Company"). It is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Contributions
Participants may elect to contribute between 1% and 10% of their compensation
to the Plan as limited by the Internal Revenue Service. Participants have the
option to invest in one or more of the six investment funds of the Plan in 10%
increments. Participants that were in the Hygrade Plan that merged into the
Plan in 1992 may also elect to invest in the Traveler's (Hygrade) Fund. There
are no employer contributions to the Plan. Participants may change their
contribution percentage as often as once per quarter. The investment funds
consist of:
Interest Income Fund--The Interest Income Fund seeks to provide
stability of principal and a positive rate of return. The Interest
Income Fund invests primarily in investment contracts issued by
insurance companies and banks of high credit quality. The investment
contracts held by the fund are obligations of the issuing insurance
companies or banks and are not guaranteed as to principal or interest
by an agency of the federal government. A small portion of the fund
will be invested in money market instruments to facilitate daily cash
flow into and out of the fund.
Sara Lee Stock Fund--The Sara Lee Stock Fund is designed to provide
employees with the opportunity to share in the potential growth of the
Company's stock. The Sara Lee Stock Fund invests in the common stock
of Sara Lee Corporation. A small portion of the fund will be invested
in money market instruments to facilitate daily cash flow into and out
of the fund.
Diversified Equity Fund--The Diversified Equity Fund attempts to
achieve growth of principal and modest current income. The
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Diversified Equity Fund invests proportionately in all of the stocks
included in the Standard & Poor's 500 Composite Stock Price Index, a
widely recognized benchmark of stock market performance.
Aggressive Equity Fund--The Aggressive Equity Fund seeks long-term
growth of capital and invests primarily in common stock and securities
convertible into common stock.
Small Stock Fund--The Small Stock Fund seeks long-term growth of
capital. The Small Stock Fund attempts to provide investment results
paralleling those of the Russell 2000 Index, a broadly diversified
index of small company stocks.
Traveler's (Hygrade) Fund--The Traveler's (Hygrade) Fund seeks to
provide stability of principal and a positive rate of return. The
Traveler's (Hygrade) Fund invests primarily in investment contracts
issued by insurance companies and banks. The investment contracts
held by the fund are obligations of the issuing insurance companies or
banks and are not guaranteed as to principal or interest by an agency
of the federal government. A small portion of the fund will be
invested in money market instruments to facilitate daily cash flow
into and out of the fund.
International Equity Fund--The International Equity Fund seeks
long-term growth of capital by investing in stocks of companies
located outside the United States.
Balanced Fund--The Balanced Fund attempts to provide current income
and the potential for long-term growth of income and capital. The
Balanced Fund invests 60% of its assets in a portfolio of stocks that
is expected to parallel the returns of the Wilshire 5000 Stock Index
and 40% of its assets in a fixed income portfolio that is structured
to track the Lehman Brothers Aggregate Bond Index.
Loan Fund--The participants may take a loan from their Plan accounts.
Loans may be taken only at the end of a month at an amount equal to
the lesser of 50% of a participant's account balance or $50,000.
Loans will bear interest at a fixed rate based on the prevailing prime
rate as published in The Wall Street Journal. Loans must be repaid
-----------------------
within four years unless loan is to purchase a primary residence which
must be paid back within ten years.
Participant Accounts
As of each accounting date (September 30, December 31, March 31 and the last
day of each Plan year), each of the participant's accounts is adjusted as
follows:
a. First, charge to the proper accounts one half of all
prepaid loan payments or hardship withdrawals made since
the last preceding accounting date and before the current
accounting date that have not been charged previously, and
adjust the subaccounts under such accounts accordingly;
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b. Next, credit the balances in the tax-deferred 401(k)
contribution accounts of all participants with one half of
the tax-deferred 401(k) contributions made on their behalf
for the accounting period ending on that accounting date,
and adjust the subaccounts under such accounts
accordingly;
c. Next, adjust the credit balances in the subaccounts of all
participants invested in each investment fund upward or
downward, pro rata, to reflect the appreciation,
depreciation, income or losses attributable to the
investment fund so that the total of the credit balances
will equal the then Adjusted Net Worth (as defined below)
of that investment fund;
d. Next, charge to the proper accounts the remaining one half
of all prepaid loan payments and hardship withdrawals made
since the last preceding accounting date and before the
current accounting date that have not been charged
previously, and adjust the subaccounts under such accounts
accordingly;
e. Next, credit the balances in the tax-deferred 401(k)
contribution accounts of all participants with the
remaining one half of the tax-deferred 401(k)
contributions made on their behalf for the accounting
period ending on that accounting date, and adjust the
subaccounts under such accounts accordingly; and,
f. Finally, charge to the proper accounts all loan payments,
withdrawals or distributions which are to be made as of
the current accounting date, and adjust the subaccounts
under such accounts accordingly.
Administrative Fees and Expenses
Administrative fees and expenses associated with the Plan are paid by the
Company.
Vesting
All participants' accounts are fully vested and nonforfeitable at all times.
Benefit Payments
Upon termination of service, distribution of the balance in the participant's
account will be made to the participant or, in the case of the participant's
death, to his/her beneficiary by payment in cash or stock if invested in the
Sara Lee Stock Fund.
A participant's settlement date will be the date on which his employment with
the Company is terminated due to one of the following (the first to occur):
a. Normal or late retirement--The date of the participant's
retirement on or after attaining age 65.
b. Early retirement--The date of the participant's retirement
on or after attaining age 55 but before attaining age 65.
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c. Death--The date of the participant's death.
d. Resignation or dismissal--The date the participant resigns
or is dismissed from the Company before attaining age 55.
e. Total disability retirement--The date the participant
becomes totally disabled.
2. SUMMARY OF ACCOUNTING POLICIES:
Basis of Accounting
The accompanying statements of net assets available for Plan benefits are
presented on the modified cash basis of accounting, which is a comprehensive
basis of accounting other than generally accepted accounting principles. Under
the modified cash basis of accounting, cash investments are recorded at accrued
fair market value per Wachovia Bank and Trust Company, N.A. (the "Trustee") and
payments and contributions are recorded as the cash is paid or received by the
Trustee.
Valuation of Investments
Investments are stated at aggregate market value.
The assets of the Plan are commingled in the Sara Lee Corporation Investment
Trust at the Wachovia Bank & Trust Company, N.A. The Investment Trust had
investments totaling $321,865,969 at June 30, 1994. The composition of these
investments is as follows:
<TABLE>
<S> <C>
Non-interest-bearing cash $ 58,541
Employer contribution receivable 86,757
Participant contribution receivable 75,023
Income receivable 1,518,691
Other receivables 183,136
Corporate stock common 29,702,040
Nonparticipant loans secured by mortgage 630,483
Participant loans 14,331,821
Investment in common/collective trust 9,425,127
Investment in registered investment company 67,941,912
Unallocated insurance contract investments 197,912,438
------------
Total $321,865,969
============
</TABLE>
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Master Trust income allocated to the participating plans for the year ended
June 30, 1994, is as follows:
<TABLE>
<S> <C>
Employer contributions $ 5,765,875
Participant contributions 30,724,966
Noncash contributions 1,779,832
Interest income 14,605,649
Common stock dividends 867,797
Realized gain on sale of assets (103,634)
Net investment gain from common/collective trusts
523,233
Net investment gain from registered investment companies
1,760,769
-----------
Net investment income $55,924,487
===========
</TABLE>
The Plan assets represent approximately 64.9% and 61.10% of the Investment
Trust assets as of June 30, 1994 and 1993, respectively. The schedule of
assets held for investment purposes and the schedule of 5% reportable
transactions are disclosed in the Wachovia Master Trust filing.
3. PLAN TERMINATION:
Although it has not expressed any intent to do so, the Company may terminate
the Plan, subject to the provisions of ERISA. In the event of the termination
of the Plan, participants will receive their full account balance.
4. FEDERAL INCOME TAX STATUS:
The Plan obtained its latest determination letter on October 20, 1989, in which
the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the requirements of the Internal Revenue Code. The Plan has
been amended since receiving the determination letter. Although the plan
administrator believes that the Plan is currently designed and operated in
compliance with the requirements of the Internal Revenue Code, a new
determination letter has been filed to ensure that the amendments and revisions
that have occurred after October 20, 1989, are included. Therefore, the plan
administrator believes that the Plan was qualified and the trust was tax-exempt
as of the financial statement date.
5. CURRENT-YEAR EVENTS:
Effective July 1, 1993, two additional investment fund choices, the Balanced
Fund and the International Equity Fund, were made available to participants.
The Aggressive Equity Fund was changed to the Small Stock Fund.
Effective July 1, 1993, a portion of the Spring City Knitting 401(k) Plan
merged into the Plan.
Effective January 1, 1994, the Bessin Corporation Profit Sharing and Incentive
Savings Plan merged into the Plan.
<PAGE> 11
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6. RECONCILIATION TO FORM 5500:
As of June 30, 1994, the Plan had approximately $17,172,204 of pending
distributions to participants who elected to withdraw from the operations and
earnings of the Plan. This amount is recorded as a liability in the Plan's
Form 5500; however, this amount is not recorded as a liability in accordance
with generally accepted accounting principles.
The following table reconciles net assets available for benefits per the
financial statements to the Form 5500 as filed by the Company for the year
ended June 30, 1994:
<TABLE>
<CAPTION>
Benefits Net Assets
Payable to Benefits Available for
Participants Paid Plan Benefits
----------------------------------------------------
<S> <C> <C> <C>
Per financial statements $ - $17,451,688 $208,537,091
Accrued benefit payments 17,172,204 17,172,204 (17,172,204)
----------- ----------- ------------
Per Form 5500 $17,172,204 $34,623,892 $191,364,887
=========== =========== ============
</TABLE>
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 11-K, into the Sara Lee
Corporation 401(k) Supplemental Savings Plan previously filed Registration
Statement File No. 33-35760.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois,
December 15, 1994
<PAGE> 13
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 21, 1994
SARA LEE CORPORATION 401(k)
SUPPLEMENTAL SAVINGS PLAN
By: SARA LEE CORPORATION 401(k)
SUPPLEMENTAL SAVINGS PLAN
COMMITTEE
By: /s/ Michael E. Murphy
---------------------------------
Michael E. Murphy, As a Committee
Member on Behalf of the Committee
