<PAGE>
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 January 1, 1994
--------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-3344
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Sara Lee Corporation
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(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
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(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 January 1, 1994, the Registrant had 478,438,735 outstanding shares of
common stock $1.33 1/3 par value, which is registrant's only class of common
stock.
The document contains 38 pages.
Page 1
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SARA LEE CORPORATION AND SUBSIDIARIES
-------------------------------------
INDEX
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PART I -
FINANCIAL STATEMENTS -
Preface 3
Consolidated Balance Sheets -
At January 1, 1994 and July 3, 1993 4
Consolidated Statements of Income -
For the thirteen and twenty-six weeks ended
January 1, 1994 and December 26, 1992 5
Consolidated Statements of Common Stockholders' Equity -
For the period June 27, 1992 to January 1, 1994 6
Consolidated Statements of Cash Flows -
For the twenty-six weeks ended January 1, 1994
and December 26, 1992 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 10 - Retirement Agreement with Cornelis Boonstra 15
EXHIBIT 11 - Computation of Net Income Per Common Share 35
EXHIBIT 12.1 - Computation of Ratio of Earnings to Fixed Charges 37
EXHIBIT 12.2 - Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend Requirements 38
Page 2
<PAGE>
PART I
------
SARA LEE CORPORATION AND SUBSIDIARIES
-------------------------------------
Preface
-------
The consolidated financial statements for the thirteen and twenty-six weeks
ended January 1, 1994 and December 26, 1992 and the balance sheet as of January
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 January 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 and twenty-six weeks ended January 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 3, 1993.
Page 3
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AT JANUARY 1, 1994 AND JULY 3, 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
Jan. 1, July 3,
ASSETS 1994 1993
------ ---------- ----------
<S> <C> <C>
Cash and Equivalents $ 210 $ 325
Trade Accounts Receivable, less Allowances 1,270 1,171
Inventories:
Finished Goods 1,496 1,413
Work in Process 336 322
Materials and Supplies 498 545
---------- ----------
2,330 2,280
Other Current Assets 199 200
---------- ----------
Total Current Assets 4,009 3,976
Investments in Associated Companies 212 205
Trademarks and Other Assets 501 518
Property, Net 2,995 2,878
Intangible Assets 3,527 3,285
---------- ----------
$ 11,244 $ 10,862
---------- ----------
---------- ----------
LIABILITIES AND EQUITY
----------------------
Notes Payable $ 1,331 $ 843
Accounts Payable 918 1,151
Accrued Liabilities 1,891 1,849
Current Maturities of Long-Term Debt 205 426
---------- ----------
Total Current Liabilities 4,345 4,269
Long-Term Debt 1,368 1,164
Deferred Income Taxes 523 512
Other Liabilities 687 705
Minority Interest in Subsidiaries 513 304
Convertible Adjustable Preferred Stock -- 30
Auction Preferred Stock 300 300
ESOP Convertible Preferred Stock 342 345
Unearned Deferred Compensation (313) (318)
Common Stockholders' Equity 3,479 3,551
---------- ----------
$ 11,244 $ 10,862
---------- ----------
---------- ----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4
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SARA LEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED JANUARY 1, 1994 AND
DECEMBER 26, 1992
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
---------------------- ----------------------
Jan. 1, Dec. 26, Jan. 1, Dec. 26,
1994 1992 1994 1992
------- -------- ------- --------
<S> <C> <C> <C> <C>
Net Sales $ 4,010 $ 3,840 $ 7,806 $ 7,423
----- ----- ----- -----
Cost of Sales 2,477 2,347 4,861 4,575
Selling, General and Administrative Expenses 1,141 1,146 2,279 2,260
Interest Expense 42 29 84 72
Interest Income (9) (20) (19) (41)
----- ----- ----- -----
3,651 3,502 7,205 6,866
----- ----- ----- -----
Income Before Income Taxes 359 338 601 557
Income Taxes 123 118 210 195
----- ----- ----- -----
Net Income Before Accounting Change 236 220 391 362
Cumulative Effect of Accounting Change -- -- (35) --
----- ----- ----- -----
Net Income 236 220 356 362
Preferred Dividend Requirements, Net of Tax 6 7 12 14
----- ----- ----- -----
Net Income Available for Common Stockholders $ 230 $ 213 $ 344 $ 348
----- ----- ----- -----
----- ----- ----- -----
Net Income Per Common Share - Primary
Before Cumulative Effect of Accounting Change $ 0.48 $ 0.44 $ 0.79 $ 0.72
Cumulative Effect of Accounting Change -- -- (0.07) --
----- ----- ----- -----
$ 0.48 $ 0.44 $ 0.72 $ 0.72
----- ----- ----- -----
----- ----- ----- -----
Average Shares Outstanding 478 485 480 484
----- ----- ----- -----
----- ----- ----- -----
Net Income Per Common Share - Fully Diluted
Before Cumulative Effect of Accounting Change $ 0.47 $ 0.43 $ 0.77 $ 0.70
Cumulative Effect of Accounting Change -- -- (0.07) --
----- ----- ----- -----
$ 0.47 $ 0.43 $ 0.70 $ 0.70
----- ----- ----- -----
----- ----- ----- -----
Average Shares Outstanding 497 504 499 503
----- ----- ----- -----
----- ----- ----- -----
Cash Dividends Per Common Share $ 0.16 $ 0.145 $ 0.305 $ 0.27
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
See accompanying Notes to Consolidated Financial Statements. Page 5
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
FOR THE PERIOD JUNE 27, 1992 TO JANUARY 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 June 27, 1992 $ 3,382 $ 320 $ 306 $ 2,649 $ 126 $ (19)
Net Income 362 -- -- 362 -- --
Cash Dividends -
Common ($.27 per share) (130) -- -- (130) -- --
Convertible adjustable preferred
($1.36 per share) (1) -- -- (1) -- --
Auction preferred
($1,496 per share) (4) -- -- (4) -- --
ESOP convertible preferred
($2.72 per share) (13) -- -- (13) -- --
Stock Issuances -
Two-for-one stock split -- 322 (322) -- -- --
Business acquisitions 30 1 29 -- -- --
Stock option and benefit plans 29 3 26 -- -- --
Restricted stock, less
amortization of $2 2 -- 4 -- -- (2)
Translation Adjustments (182) -- -- -- (182) --
ESOP Tax Benefit 5 -- -- 5 -- --
Other (4) -- (4) (1) -- 1
------ ------ ------ ------ ------ ------
Balances at December 26, 1992 3,476 646 39 2,867 (56) (20)
Net Income 342 -- -- 342 -- --
Cash Dividends -
Common ($.29 per share) (140) -- -- (140) -- --
Convertible adjustable preferred
($1.39 per share) (1) -- -- (1) -- --
Auction preferred
($1,364.33 per share) (4) -- -- (4) -- --
ESOP convertible preferred
($2.72 per share) (13) -- -- (13) -- --
Stock Issuances -
Business acquisitions 39 2 37 -- -- --
Stock option and benefit plans 37 3 34 -- -- --
Restricted stock, less
amortization of $2 2 -- 4 -- -- (2)
Reacquired Shares (77) (4) (73) -- -- --
Translation Adjustments (138) -- -- -- (138) --
ESOP Tax Benefit 5 -- -- 5 -- --
Other 23 -- 25 -- -- (2)
------ ------ ------ ------ ------ ------
Balances at July 3, 1993 3,551 647 66 3,056 (194) (24)
Net Income 356 -- -- 356 -- --
Cash Dividends -
Common ($.305 per share) (146) -- -- (146) -- --
Auction preferred
($1,301.67 per share) (4) -- -- (4) -- --
ESOP convertible preferred
($2.72 per share) (13) -- -- (13) -- --
Stock Issuances -
Stock option and benefit plans 33 3 30 -- -- --
Restricted Stock Amortization 2 -- -- -- -- 2
Reacquired Shares (224) (12) (82) (130) -- --
Translation Adjustments (82) -- -- -- (82) --
ESOP Tax Benefit 5 -- -- 5 -- --
Other 1 -- -- (1) -- 2
------ ------ ------ ------ ------ ------
Balances at January 1, 1994 $ 3,479 $ 638 $ 14 $ 3,123 $ (276) $ (20)
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 6
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JANUARY 1, 1994 AND DECEMBER 26, 1992
(IN MILLIONS)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
------------------------------
Jan. 1, Dec. 26,
1994 1992
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES -
Net income $ 356 $ 362
Adjustments for non-cash charges included in net income:
Depreciation and amortization of intangibles 281 250
Increase in deferred income taxes 2 15
Cumulative effect of accounting change 35 --
Other (85) (48)
Changes in current assets and liabilities, excluding
businesses acquired and sold (302) (211)
---------- ----------
Net cash from operating activities 287 368
---------- ----------
INVESTING ACTIVITIES -
Purchases of property and equipment (319) (286)
Acquisitions of businesses (371) (40)
Returns from (investments in) associated companies (8) 29
Sales of businesses -- 6
Sales of property 21 17
Other 4 27
---------- ----------
Net cash used in investing activities (673) (247)
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FINANCING ACTIVITIES -
Issuances of common stock 33 29
Purchases of common stock (224) --
Issuance of equity securities by subsidiary 200 --
Redemption of preferred stock (30) --
Borrowings of long-term debt 254 4
Repayments of long-term debt (260) (198)
Short-term borrowings (repayments), net 464 287
Payments of dividends (163) (148)
---------- ----------
Net cash from (used in) financing activities 274 (26)
---------- ----------
Effect of changes in foreign exchange rates on cash (3) (9)
---------- ----------
Increase (decrease) in cash and equivalents (115) 86
Cash and equivalents at beginning of year 325 198
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Cash and equivalents at end of quarter $ 210 $ 284
---------- ----------
---------- ----------
COMPONENTS OF THE CHANGES IN CURRENT ASSETS
AND LIABILITIES:
(Increase) in trade accounts receivable $ (117) $ (84)
(Increase) decrease in inventories (43) 124
Decrease in other current assets -- 2
(Decrease) in accounts payable (222) (259)
Increase in accrued liabilities 80 6
---------- ----------
Changes in current assets and liabilities $ (302) $ (211)
---------- ----------
---------- ----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements. Page 7
<PAGE>
SARA LEE CORPORATION
--------------------
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 twenty-six weeks ended January 1, 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:
<TABLE>
<S> <C>
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
-----
-----
</TABLE>
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
Page 8
<PAGE>
postretirement benefit obligation as of the start of fiscal 1994 is as
follows:
<TABLE>
<S> <C>
Retirees $ 84
Fully eligible active plan participants 19
Other active plan participants 41
----
Postretirement benefit obligation recognized
on the Consolidated Balance Sheet $144
----
----
</TABLE>
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>
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 second
quarter and first half of fiscal 1994 compared to the comparable periods of
fiscal 1993 and a discussion of the changes in financial condition during the
first half of 1994.
RESULTS OF OPERATIONS
Comparison of Second Quarter 1994 to Second Quarter 1993
--------------------------------------------------------
Current quarter sales of $4.01 billion were $170 million or 4.4% above the
$3.84 billion reported in the second quarter of last year. Businesses
acquired net of businesses sold subsequent to the start of the second
quarter of last year increased sales by approximately 6.5 percentage
points. The strengthening of the U.S. dollar relative to foreign
currencies had the effect of decreasing sales in 1994 by approximately 3.1
percentage points. Thus, on a comparable basis, sales increased
approximately 1%. After adjusting for business acquisitions and
dispositions as well as foreign currency fluctuations, comparable Packaged
Food sales increased 5.8% while comparable Packaged Consumers Products
sales decreased 3.1% as compared to the second quarter of last year.
Cost of sales increased by $130 million or 5.6% while the gross profits
margin was 38.2% in the current quarter compared to 38.9% in the second
quarter of last year. Packaged Consumer Products gross margins declined
and the mix of sales was more heavily weighted toward Packaged Foods which
have lower margins than Packaged Consumer Products.
Selling general and administrative expenses of $1.14 billion remained
approximately the same as in the second quarter of last year. Increased
advertising and promotion expenditures were offset by the strengthening of
the U.S. dollar relative to foreign currencies and greater operating
efficiencies.
Net interest expense increased $24 million from $9 million last year to $33
million in the current year. The increase in interest expense is primarily
due to financing costs associated with acquisitions and capital
expenditures. In addition, net interest expense in the second quarter of
last year was favorably impacted by lower costs associated with an interest
rate swap transaction.
The effective tax rate decreased from 35.0% to 34.3%. This was primarily
due to lower effective tax rates for certain European businesses.
Net income increased 7.4% to $236 million. Net income per share increased
9.1% to $.48 per share from the $.44 per share reported last year. The
higher percentage increase in earnings per share compared to net income is
primarily attributable to the company's repurchase of its outstanding
common shares and a lower level of shares relating to stock options.
Page 10
<PAGE>
Comparison of First Half of 1994 to First Half of 1993
------------------------------------------------------
Net sales for the first half of 1994 were $7.81 billion or 5.2% higher than
the $7.42 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 3.0%. Cost of sales
increased by $286 million or 6.3% while the gross profit margin percentage
was 37.7% in the first half of 1994 and 38.4% in the comparable period last
year. Packaged Consumer Products gross margins declined and the mix of
sales in the first half of fiscal 1994 was more heavily weighted toward
Packaged Foods which have lower margins than consumer products.
Selling, general and administrative (SG&A) expenses of $2.28 billion were
$19 million or .8% higher than the first six months of last year. The
impact of acquisitions and an increase in advertising and promotion expense
on SG&A expenses was largely offset by the strengthening of the U.S.
dollar relative to foreign currencies and by cost reduction programs. Net
interest was $65 million compared to $31 million in the prior year. The
$34 million increase resulted primarily from the factors noted in the
second 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% in the first six months of 1994 which approximated the
effective tax rate in 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 8.1% to $391 million while net income per share increased 9.7% to
$.79 from $.72 last year. The higher percentage increase in earnings per
share compared to net income is attributable to the company'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 1.6% while earnings per share
remained the same as in the comparable period last year.
Future Trends
-------------
In a January 27, 1994 press release, the Corporation indicated that results
for the third quarter of fiscal 1994 are expected to approximate those of
the third quarter of fiscal 1993. Ongoing softness in the Corporation's
European hosiery and knit products operations combined with weaker than
expected trends for U.S. hosiery and knit products are the factors causing
the flat earnings projection. Results for the full year are, however,
expected to exceed those reported in fiscal 1993.
Page 11
<PAGE>
FINANCIAL CONDITION
During the first six months of 1994, cash and equivalents decreased by $115
million while short term borrowings (notes payable) increased by $488 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>
PART II
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Page Number or
Exhibit Incorporated herein
Number Description by Reference to
------- -------------------------- ------------------
10 Retirement Agreement
with Cornelis Boonstra 15
11 Computation of Net Income
Per Common Share 35
12.1 Computation of Ratio of
Earnings to Fixed Charges 37
12.2 Computation of Ratio of
Earnings to Fixed Charges
and Preferred Stock
Dividend Requirements 38
(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>
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 Szypulski
---------------------------------
Wayne Szypulski
Controller
DATE: February 11, 1994
Page 14
<PAGE>
FORM 10-Q
EXHIBIT 10
RETIREMENT AGREEMENT
THIS RETIREMENT AGREEMENT made as of the 30th day of December, 1993 (hereinafter
referred to as the "Retirement Agreement"), by and between Cornelis Boonstra
(hereinafter referred to as "Executive") and Sara Lee Corporation (hereinafter
referred to as the "Company").
W I T N E S S E T H :
WHEREAS, Executive has been employed by the Company as its President
and Chief Operating Officer, a director of the Company and Chairman of the Board
of Management of Douwe Egberts, B.V. ("Subsidiary"), a subsidiary of the Compa-
ny;
WHEREAS, Executive and the Company have agreed that Executive's
employment with the Company will terminate on December 31, 1993; and
WHEREAS, Executive and the Company have negotiated and reached an
agreement with respect to all rights, duties and obligations arising between
them, including, but in no way limited to, any rights, duties and obligations
that have arisen or might arise out of or are in any way related to Executive's
employment with the Company or the Subsidiary and the conclusion of that employ-
ment.
NOW, THEREFORE, in consideration of the covenants and mutual promises
herein contained, it is agreed as follows:
FIRST: Executive hereby resigns as a director of the Company and his
employment and all appointments he holds with the Company and its affiliates and
will submit a letter of resignation in the form attached hereto as Exhibit A
upon the signing of this Retirement Agreement and, upon the Company's request,
Executive will execute any additional documents necessary to effect such resig-
nations. Executive understands and agrees that, with the exception of Subsid-
iary, his employment with the Company, its subsidiaries and affiliates will con-
clude on the close of business December 31, 1993 (the "Retirement Date"), and as
of the Retirement Date he is no longer authorized to incur any expenses, obliga-
tions or liabilities on behalf of the Company, unless specifically authorized
herein or directed by an executive officer of
15
<PAGE>
FORM 10-Q
EXHIBIT 10
the Company. Executive's employment with Subsidiary will conclude immediately
following the meeting of the Supervisory Board of the Subsidiary currently
scheduled to be held on January 3, 1994. After such meeting, Executive is no
longer authorized to incur any expenses, obligations or liabilities on behalf
of Subsidiary, unless specifically authorized herein or directed by an
executive officer of the Company. Unless otherwise specified, as used in this
Retirement Agreement, the term "affiliates" shall include any subsidiary,
joint venture, division or organization with respect to which Executive serves
at the request of or in connection with the business of the Company, including
without limitation, Subsidiary.
SECOND: The Company hereby agrees to pay Executive from January 1,
1994 through December 31, 1996 (the "Salary Continuation Period"), the amount of
$670,000 annually in equal monthly installments in accordance with the Company's
normal payroll practices (collectively, the "Salary Continuation Payments"),
less all applicable withholding taxes, subject to the provisions of Paragraph
Twenty-Fifth herein. The Salary Continuation Payments will commence on the
first payroll date following the Retirement Date. In the event of the Execu-
tive's death prior to December 31, 1996, the Salary Continuation Payments shall
be payable to Executive's designated beneficiary, or if none, to his estate in a
single discounted (at the rate of interest yield on the date of Executive's
death earned on one-year U.S. treasury bills) lump sum payment and, except to
the extent benefits contemplated herein are provided by their terms to heirs and
beneficiaries, the Company shall have no further obligations to Executive's
beneficiaries under this Retirement Agreement.
THIRD: Executive acknowledges and agrees that other than as specifi-
cally set forth in this Retirement Agreement, he is not due any compensation,
including compensation for unpaid salary (except for amounts, if any, unpaid and
owing for Executive's employment with the Company and its affiliates prior to
the Retirement Date), unpaid bonus, or accrued or unused vacation time or
vacation pay from the Company or any of its affiliates (including, but not
limited to, Subsidiary) and as of the Retirement Date, except as provided
herein, he will not be eligible to participate in any of the benefit plans of
the Company or any of its affiliates, including without limitation, the Compa-
ny's Deferred Compensation Plan and Stock Purchase Plan, travel accident
insurance, personal
16
<PAGE>
FORM 10-Q
EXHIBIT 10
accident insurance, accidental death and dismemberment insurance, short-term and
long-term disability insurance and the 401(K) plan, except that Executive will
be entitled to receive benefits pursuant to plans of the Company not otherwise
addressed herein to the extent retirees of the Company are entitled to such
benefits in the ordinary course. In addition, Executive will be entitled to
receive benefits which are vested and accrued prior to the Retirement Date
pursuant to plans of the Company or its affiliates.
FOURTH: The Company agrees to pay Executive a bonus for the Company's
fiscal year 1994 of $418,750, less all applicable withholding taxes. This bonus
shall be in lieu of, not in addition to, any other bonus for fiscal year 1994
previously contemplated by Executive and shall be paid to Executive within 5
business days following the Retirement Date.
FIFTH: The Company agrees to pay to Executive under the Conditional
Cash Payout Agreement between Executive and the Company, dated August 30, 1990,
as amended on August 28, 1991 and March 9, 1993 (the "Conditional Payout
Agreement"), the amount of $1,211,458, less all applicable withholding taxes,
within 5 business days following the Retirement Date.
SIXTH: Executive shall continue to accrue credited service and
benefits through the Salary Continuation Period under the Sara Lee Corporation
Consolidated Pension Plan and the Sara Lee Corporation Supplemental Benefit Plan
with respect to the Salary Continuation Payments. Following the Salary Continu-
ation Period, Executive shall be eligible for benefits under such plans and
benefits under the pension plan of Subsidiary in accordance with the terms
thereof and the Company represents that such plans are the only retirement plans
of the Company and its affiliates under which Executive is eligible to receive
benefits.
SEVENTH: Executive shall not be granted any stock options during the
Salary Continuation Period. Effective as of the Retirement Date, Executive's
existing stock options as set forth on Exhibit B attached hereto will become
fully vested and remain exercisable until the dates specified in Exhibit B.
Effective as of the Retirement Date, the Company will release 9/10ths (pro rated
on the basis of 54 out of 60 months duration of the AGIP (as defined)) of the
distribution of shares, interest and dividends, if any, which will be made to
Execu-
17
<PAGE>
FORM 10-Q
EXHIBIT 10
tive in June 1994 pursuant to the FY90-94 Accelerated Growth Incentive Plan (the
"AGIP"). The Company will release and deliver to Executive an additional 61,200
restricted shares of Company common stock payable pursuant to the AGIP in July
1999 which, at the time of release and delivery, shall be fully vested and free
of any restrictions on transfer other than any restrictions imposed by applica-
ble securities laws. Except as set forth in the previous sentence, Executive
shall not participate in the AGIP following the Retirement Date.
EIGHTH: The Company shall promptly reimburse Executive for business
expenses incurred in the ordinary course of Executive's employment on or before
the Retirement Date, but not previously reimbursed, provided the Company's
policies of documentation and approval are satisfied. However, Executive is not
authorized to be reimbursed for any business expenses incurred after the
Retirement Date, except for reasonable expenses incurred by Executive in
connection with his attendance at the meeting of the Supervisory Board of
Subsidiary referred to in Paragraph First above, unless specifically set forth
elsewhere herein or specifically authorized in advance by an executive officer
of the Company. The Company agrees to provide Executive with routine secretari-
al services until March 31, 1994 at the offices of the Company or Subsidiary.
NINTH: The Company agrees to pay for Executive's continuing partici-
pation in the Company's group health (medical and dental) insurance benefit plan
presently available to the Company's Category A executives, on the same terms
and conditions available to such Category A executives, until the earlier of (a)
the date on which Executive obtains other full time employment with an employer
which provides the same or substantially similar coverage and Executive becomes
a participant therein or (b) December 31, 1996. The Company further agrees to
maintain in effect, until the earlier of such dates, at its expense, the life
insurance coverage presently made available to Executive. Commencing on Janu-
ary 1, 1997, Executive will be entitled, at his election, to retiree group
health (medical and dental) benefits and life insurance benefits as in effect on
such date with respect to either (a) executives of Subsidiary or (b) executives
of the Company, in either case, on the same terms and conditions available to
such executives.
TENTH: The Company agrees to pay to Executive $36,711 within 5
business days of the Retirement Date,
18
<PAGE>
FORM 10-Q
EXHIBIT 10
less all applicable withholding taxes, for financial counseling services (in-
cluding tax advisory services) previously available to Executive at the
Company's expense.
ELEVENTH: The Company agrees to purchase Executive's residence,
including all improvements, fixtures and customized decorating related to such
residence, located at 950 North Michigan Avenue, Unit 3306, Chicago, Illinois
(the "Chicago Residence") as soon as reasonably practicable following the
Retirement Date for a purchase price of $1,380,000, subject to the following
sentence. The Executive represents that the purchase price of the Chicago
Residence was $1,025,000 and will provide the Company with appropriate documen-
tation of such purchase price and Executive further represents that the cost of
improvements, fixtures and customized decorating related to such residence
equalled or exceeded $355,000. Executive will be permitted to occupy the Chica-
go Residence without the payment of rent to the Company until March 31, 1994.
The Company will pay the cost of moving the Executive's furniture and posses-
sions located at the Chicago Residence to either Nassau or Holland, at Execu-
tive's election, pursuant to the Company's currently existing standard relo-
cation policy. Additionally, the Company will pay Executive $200,000, less all
applicable withholding taxes, within 5 business days following the Retirement
Date to defray any additional costs incurred by Executive in connection with
such relocation. In order to arrange for the relocation of Executive from
Chicago, the Company will pay for travel costs for Executive and his spouse from
Chicago to and from Nassau until March 31, 1994.
TWELFTH: Executive will continue to have access to the Company's
aircraft, subject to the same terms and conditions applicable prior to the
Retirement Date, until January 31, 1994.
THIRTEENTH: Executive may continue to use the automobile provided to
him by the Company in accordance with the terms of the Company's leased automo-
bile policy until March 31, 1994. Thereafter, Executive shall, at his election,
either purchase such automobile pursuant to the terms of the Company's leased
automobile policy or return the automobile to the Company.
FOURTEENTH: At all times hereafter, Executive will maintain the
confidentiality of all information in whatever form concerning the Company or
any of its affil-
19
<PAGE>
FORM 10-Q
EXHIBIT 10
iates or subsidiaries relating to its or their businesses, customers, finances,
strategic or other plans, marketing, employees, trade practices, trade secrets,
know-how or other matters which are not generally known outside the Company, and
Executive will not, directly or indirectly, make any disclosure thereof to
anyone, or make any use thereof, on his own behalf or on behalf of any third
party, unless specifically requested by or agreed to in writing by an executive
officer of the Company. Executive has returned or will immediately return to
the Company all reports, files, memoranda, records and software, credit cards,
cardkey passes, door and file keys, computer access codes or disks and in-
structional manuals, and other physical or personal property which he received
or prepared or helped prepare in connection with his employment with the Compa-
ny, its subsidiaries and affiliates, and Executive has not retained and will not
retain any copies, duplicates, reproductions or excerpts thereof. Executive
agrees to take all necessary actions, if required by and at the cost of the
Company, to vest such property rights in the Company.
FIFTEENTH: Executive acknowledges that (i) the business in which the
Company is engaged is intensely competitive and that Executive's employment by
the Company has required Executive to have access to and knowledge of highly
confidential information of the Company including, but not limited to, certain
of the Company's confidential business plans, strategies and objectives, which
are of vital importance to the success of the Company's business; (ii) the
direct or indirect disclosure of any such confidential information to existing
or potential competitors of the Company would place the Company at a competitive
disadvantage and would do material damage, financial and otherwise to the Compa-
ny's business; and (iii) Executive's services to the Company have been special
and unique.
Therefore, in consideration of the terms and conditions of this
Retirement Agreement, including the compensation to be paid hereunder, Executive
agrees that during the Salary Continuation Period, Executive will not engage in
any competitive activity. For purposes of this Paragraph Fifteenth, "competi-
tive activity" shall mean Executive's participation in the management (with or
without pay) of, or his acting as a consultant (with or without pay) for or
employee of, any business operation of any enterprise if such operation or
business competes with (a) the Household and Personal Care businesses of the
Company or (b) the Coffee and Grocery businesses of
20
<PAGE>
FORM 10-Q
EXHIBIT 10
the Company in any areas of the world in which the Company or any affiliate is
currently engaged in such business; PROVIDED that Executive's beneficial owner-
ship of equity securities of a public company not in excess of 10% of the total
voting power of the outstanding equity securities of such public company shall
not be considered to be competitive activity; and PROVIDED FURTHER that Execu-
tive shall be permitted to participate in the management of or act as consultant
for or employee of (i) any business or operation that engages in DE MINIMIS
amounts of competition with the Company in the areas described in (a) and (b)
above as agreed to in writing by the Company or (ii) such companies as have been
designated in Exhibit D attached hereto. It is the desire and intent of the
parties that the provisions of this Paragraph Fifteenth shall be enforceable to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly, if any portion
of this Paragraph Fifteenth is adjudicated unenforceable in any jurisdiction,
such adjudication shall apply only in the particular jurisdiction in which such
adjudication is made.
SIXTEENTH: During the Salary Continuation Period, Executive will not,
directly or indirectly, solicit, entice, persuade or induce (or authorize or
assist in the taking of any such actions by any third party) any employee of the
Company or its affiliates with a view to inducing or encouraging such employee
to leave the employ of the Company or its affiliates for the purpose of being
hired by Executive or any other person.
SEVENTEENTH: During the period from December 23, 1993 through
December 31, 1996, the Company shall have the option to permanently discontinue
the Salary Continuation Payments and all other obligations of the Company to
Executive hereunder (except for the payment of vested and accrued pension
benefits under applicable Company plans) if the Compensation Committee of the
Board of Directors of the Company determines that Executive has:
(a) engaged in the activities prohibited by Paragraphs Fifteenth and
Sixteenth above;
(b) divulged or discussed, orally or in writing, the circumstances of
Executive's retirement and resignation from employment with the
Company and the Subsidiary or his resignation as a director of
the Company
21
<PAGE>
FORM 10-Q
EXHIBIT 10
to or with any person other than, on a confidential basis, Execu-
tive's spouse, his legal and financial advisers or those direc-
tors and officers of the Company who were informed by the Company
of the circumstances of Executive's retirement and resignation;
(c) divulged or discussed, orally or in writing, proprietary finan-
cial data or information, strategic plans or trade secrets of the
Company or its affiliates to or with any person other than those
directors and officers of the Company who have knowledge of such
information without the prior written consent of an executive
officer of the Company;
(d) disparaged or criticized, orally or in writing, the performance
of the Board of Directors or any director of the Company or of
any specific former or current officer of the Company or any
operating company or group president or the Company's management
as a group to any person; or
(e) initiated or participated in discussions of Company business
matters with officers of the Company or its affiliates other than
at the request of an officer of the Company;
PROVIDED, however, that Executive may divulge or discuss or provide the informa-
tion described in clauses (a) through (e) above to the extent Executive is
compelled by law to do so and, in such event, Executive shall notify the Company
immediately upon any request or demand for information so that the Company may
seek a protective order or other appropriate remedy or, in the Company's sole
discretion, waive compliance with certain terms of this Paragraph Seventeenth;
and PROVIDED FURTHER that, if and to the extent there has been a violation of
Paragraph Eighteenth herein, Executive, after written notice to the Company may
respond to such violation by communicating with the person with whom the Company
communicated to the same extent and in the same manner as the Company commu-
nicated with such person, and in such event such response shall not be a
violation of any of the provisions of this Retirement Agreement.
22
<PAGE>
FORM 10-Q
EXHIBIT 10
The Company hereby represents to Executive that as of the date hereof
the Company knows of no violation of this Paragraph Seventeenth.
The foregoing shall be in addition to, and not in lieu of any legal or
equitable rights and remedies to which the Company may be entitled as a result
of such conduct by Executive.
EIGHTEENTH: During the period from December 23, 1993 through December
31, 1996, neither the Company nor any directors, officers, employees or other
representatives of the Company or its affiliates will:
(a) divulge or discuss, orally or in writing, the circumstances of
Executive's retirement and resignation from employment with the
Company and the Subsidiary or his resignation as a director of
the Company to or with any person other than, on a confidential
basis, with Executive, Executive's legal and financial advisers
or those directors and officers of the Company who have reason to
know of such circumstances; or
(b) disparage or criticize, orally or in writing, the performance of
Executive as an employee of the Company or its affiliates to any
other person;
PROVIDED, however, that the Company may divulge or discuss or provide the
information described in clauses (a) and (b) above to the extent the Company is
compelled by law to do so and, in such event, the Company shall notify Executive
immediately upon any request or demand for information so that Executive may
seek a protective order or other appropriate remedy or, in Executive's sole
discretion, waive compliance with the terms of this Paragraph Eighteenth except
that this Paragraph Eighteenth shall not in any way restrict the Company from
(i) issuing the press release attached hereto as Exhibit D and making any
statements not inconsistent with such press release, (ii) filing this Retirement
Agreement and the press release with the Securities and Exchange Commission (the
"SEC") to the extent required by law or (iii) disclosing or describing the
existence and terms of this Retirement Agreement and the press release in a
manner not inconsistent with the terms of this Retirement Agreement in any docu-
ment filed with the SEC or in the
23
<PAGE>
FORM 10-Q
EXHIBIT 10
Company's annual or quarterly reports to shareholders; and PROVIDED FURTHER
that, if and to the extent there has been a violation of Paragraph Seventeenth
herein, the Company, after written notice to Executive, may respond to such
violation by communicating with the same person with whom Executive communicated
to the same extent and in the same manner as Executive communicated with such
person, and in such event such response shall not be a violation of any of the
provisions of this Retirement Agreement.
Executive hereby represents to the Company that as of the date hereof
Executive knows of no violation of this Paragraph Eighteenth.
The foregoing shall be in addition to, and not in lieu of any legal or
equitable rights and remedies to which Executive may be entitled as a result of
such conduct by the Company.
NINETEENTH: The Company shall issue a press release regarding
Executive's retirement substantially in the form attached hereto as Exhibit D or
in a form mutually agreeable to the parties hereto, and Executive represents and
agrees that he shall not make any statements to the media regarding the subject
matter herein, except that Executive may respond to direct inquiries by the
media, PROVIDED that Executive may only provide information not inconsistent
with such press release.
TWENTIETH:
(a) Executive and the Company, on behalf of themselves, their heirs,
executors, administrators, and assigns and affiliates, employees and agents do
hereby knowingly and voluntarily release, acquit and forever discharge each
other and any affiliates, legal representatives, successors and assigns, past,
present and future directors, officers, employees, trustees and shareholders
from and against any and all charges, complaints, claims, cross-claims, third-
party claims, counterclaims, contribution claims, liabilities, obligations,
promises, agreements, controversies, damages, actions, causes of action, suits,
rights, demands, costs, losses, debts and expenses of any nature whatsoever,
known or unknown, suspected or unsuspected, foreseen or unforeseen, matured or
unmatured, which, at any time up to and including the date hereof, exists, have
existed, or may arise from any matter whatsoever occurring, including, but not
limited to, any claims arising out of or in any way related to
24
<PAGE>
FORM 10-Q
EXHIBIT 10
Executive's employment with the Company or its affiliates and the conclusion
thereof, which Executive or the Company, or any of their heirs, executors,
administrators and assigns and affiliates, employees and agents ever had, now
has or at any time hereafter may have, own or hold against each other or any
affiliates, legal representatives, successors and assigns, past, present and
future directors, officers, employees, trustees and shareholders. Executive
acknowledges that, in exchange for this release, the Company is providing
Executive with a total consideration, financial and otherwise, which exceeds
what Executive would have received had Executive not given this release. By
executing this Retirement Agreement, Executive is waiving all claims against the
Company and its related persons arising under federal, state and local labor and
anti-discrimination laws and any other restriction on the right to terminate
employment, including without limitation the Age Discrimination in Employment
Act ("ADEA"), Title VII of the Civil Rights Act, and the Illinois Fair Employ-
ment Act. Nothing herein shall release any party from any obligation under this
Retirement Agreement. In addition, (i) Executive does not hereby waive any
benefits vested and accrued prior to the Retirement Date under applicable plans
of the Company or its affiliates and Executive is not required to sign this
Retirement Agreement in order to receive such vested benefits and (ii) Executive
does not hereby waive any benefits under any plans of the Company not specifi-
cally addressed elsewhere herein under which retirees of the Company are
entitled to benefits in the ordinary course pursuant to the terms of such plans.
(b) Executive and the Company each agree that he or it will not com-
mence any action or proceeding of any nature whatsoever, and that he or it will
not seek or be entitled to any award of equitable or monetary relief in any
action or proceeding brought on his or its behalf, that arises out of the
matters released by Executive or the Company under this Retirement Agreement.
TWENTY-FIRST: Each party represents to the other than in executing
this Retirement Agreement he or it does not rely and has not relied upon any
representation or statement not set forth herein made by the other party or by
any of the other party's agents, representatives, or attorneys with regard to
the subject matter, basis or effect of this Retirement Agreement or otherwise.
25
<PAGE>
FORM 10-Q
EXHIBIT 10
TWENTY-SECOND: The Company has advised Executive to consult with an
attorney of his choosing prior to the signing of this Retirement Agreement and
Executive hereby represents to the Company that he has consulted with an
attorney prior to the execution of this Retirement Agreement. Executive shall
have twenty-one (21) days to consider the waiver of his rights under the ADEA
and once he has signed this Retirement Agreement, Executive shall have seven (7)
additional days from the date of execution to revoke his consent to the waiver
of his rights under the ADEA. If no such revocation occurs, Executive's waiver
of rights under the ADEA shall become effective seven (7) days from the date of
execution by the parties. In the event that Executive revokes his waiver of
rights under the ADEA, the Company shall have the right to not pay the Salary
Continuation Payments set forth in Paragraph Second and to not pay or provide
the other benefits set forth in this Retirement Agreement in which case all
provisions of this Retirement Agreement shall immediately become void and of no
effect and any benefits previously paid to Executive pursuant to this Retirement
Agreement prior to the date of such revocation shall be immediately repaid to
the Company. Neither Executive, on the one hand, nor the Company, on the other
hand, shall have any obligation toward the other under any other agreement
except for this Retirement Agreement.
TWENTY-THIRD: This Retirement Agreement will be governed by and
construed and enforced under the laws of the State of Illinois, without regard
to its conflict of laws rules. Any proceeding relating to this Retirement
Agreement shall be brought in a state or federal court located in Cook County,
Illinois. The Company and Executive hereby consent to personal jurisdiction in
any such action and to service of process by mail at the address set forth in
Paragraph Twenty-Eighth herein and waive any objection to venue in any such
Illinois court. If Executive prevails in an action against the Company to
enforce the terms of this Retirement Agreement, the Company agrees to pay
Executive's reasonable attorney's fees.
TWENTY-FOURTH: In the event that any one or more of the provisions of
this Retirement Agreement is held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired thereby. Moreover, if any one or more of the
provisions contained in this Retirement Agreement is held to be excessively
broad as to duration, scope, activity or subject,
26
<PAGE>
FORM 10-Q
EXHIBIT 10
such provisions will be construed by limiting and reducing them so as to be
enforceable to the maximum extent compatible with applicable law.
Executive acknowledges and agrees that the Company will or would
suffer irreparable injury in the event of a breach or violation or threatened
breach or violation of the provisions set forth in Paragraphs Fourteenth, Fif-
teenth, Sixteenth and Seventeenth herein and Executive agrees that, in the event
of an actual or threatened breach or violation of such provisions, the Company
shall be awarded injunctive relief in a court of appropriate jurisdiction to
prohibit or remedy any such violation or breach or threatened violation or
breach, without the necessity of posting any bond or security, and such right to
injunctive relief shall be in addition to any other right or remedy available to
the Company.
The Company acknowledges and agrees that Executive will or would
suffer irreparable injury in the event of a breach or violation or threatened
breach or violation of the provisions set forth in Paragraph Eighteenth herein
and the Company agrees that, in the event of an actual or threatened breach or
violation of such provisions, Executive shall be awarded injunctive relief in a
court of appropriate jurisdiction to prohibit or remedy any such violation or
breach or threatened violation or breach, without the necessity of posting any
bond or security, and such right to injunctive relief shall be in addition to
any other right or remedy available to Executive.
TWENTY-FIFTH: The Company will make all reasonable efforts to
cooperate with Executive to minimize the taxes and tax withholding to be
incurred by Executive as a result of the payments to be made pursuant to this
Retirement Agreement, PROVIDED that the Company shall not be obligated to incur
any additional costs or suffer any detriment as a result of the Company's
compliance with this Paragraph Twenty-Fifth.
TWENTY-SIXTH: The Company will pay all reasonable legal expenses
incurred by Executive in connection with the negotiation and preparation of this
Retirement Agreement.
TWENTY-SEVENTH: This Retirement Agreement is subject to the approval
of the Compensation Committee of the Board of Directors of the Company, PROVIDED
that if Executive has not been notified by the Company by Janu-
27
<PAGE>
FORM 10-Q
EXHIBIT 10
ary 7, 1994 that the Compensation Committee has disapproved this Retirement
Agreement, this Retirement Agreement shall be deemed to have been approved and
this Paragraph Twenty-Seventh shall be of no further force and effect. If the
Compensation Committee disapproves this Retirement Agreement, this Retirement
Agreement and any resignations tendered by Executive pursuant hereto shall be
void and of no force and effect.
TWENTY-EIGHTH: Any notice to be given hereunder shall be in writing
and shall be deemed given when mailed by certified mail, return receipt request-
ed, addressed as follows:
To Executive at:
Palmyre Bay Water Drive
Lyford Cay, Nassau
New Providence Island, Bahamas
with a copy to:
Roger C. Siske, Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606-6404
To the Company at:
Sara Lee Corporation
Three First National Plaza
Chicago, Illinois 60602-4260
Attention: General Counsel
TWENTY-NINTH: This Retirement Agreement sets forth the entire
agreement between the parties hereto and may not be changed without the written
consent of the parties. This Retirement Agreement supersedes all prior agree-
ments and understandings concerning the subject matter hereof including, but not
limited, the Conditional Payout Agreement, the Employment Agreement between
Executive and the Company, dated July 1, 1985, and agreements between Executive
and Subsidiary and Executive's Supplemental Retirement Agreement, dated February
23, 1982, as amended. The parties may execute this Retirement Agreement in
counterparts.
THIRTIETH: This Retirement Agreement is intended to be binding upon
and shall inure to the benefit
28
<PAGE>
FORM 10-Q
EXHIBIT 10
of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Retirement Agree-
ment as of the date first written above.
CORNELIS BOONSTRA SARA LEE CORPORATION
____________________________ By: /s/ Gary C. Grom
____________________
Name: Gary C. Grom
Title: Senior Vice President -
Human Resourses
29
<PAGE>
FORM 10-Q
EXHIBIT 10
of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Retirement Agree-
ment as of the date first written above.
CORNELIS BOONSTRA SARA LEE CORPORATION
/s/ Cornelis Boonstra By:
_________________________ ____________________
Name:
Title:
30
<PAGE>
FORM 10-Q
EXHIBIT 10
EXHIBIT A
December 30, 1993
Sara Lee Corporation
Three First National Plaza
Chicago, Illinois 60602-4260
Re: LETTER OF RESIGNATION
Gentlemen:
Effective December 31, 1993, I am resigning as a director of Sara Lee
Corporation (the "Corporation") and from all offices, titles and positions I
have been appointed to at the Corporation, and any of its subsidiaries, divi-
sions or affiliates, except for my position as Chairman of the Board of Manage-
ment of Douwe Egberts, B.V. ("SLDE"). Effective immediately following the meet-
ing of the Supervisory Board of SLDE, currently scheduled to be held on Janu-
ary 3, 1994, I am resigning from my position as Chairman of the Board of
Management of SLDE.
Very truly yours,
Cornelis Boonstra
31
<PAGE>
FORM 10-Q
EXHIBIT 10
EXHIBIT B
CORNELIS BOONSTRA
NIEUWE'S GRAVELANDSEWEG 79
1406 NC BUSSUM
THE NETHERLANDS,
Sara Lee Corporation OPTIONEE STATEMENT Run Date 12/14/93
As of 12/31/93 Page No. 1
<TABLE>
<CAPTION>
Date of Type of Grant Options Options Option Date of Availability
Grant Granted Outst. Price Expir. Options Vested For Exercise
- -------- ------------- ------- ------- -------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
03/02/92 NQO RSO 35,022 35,022 $26.8800 03/02/97 35,022 (CURRENT) 35,022
03/02/92 NQO RSO 24,614 24,614 $26.8800 03/02/97 24,614 (CURRENT) 24,614
03/25/92 NQO RSO 2,684 2,684 $25.9700 03/25/97 2,684 (CURRENT) 2,684
07/01/92 NON-QUAL 44,400 34,400 $25.6300 07/01/97 34,400 (CURRENT) 34,400
06/23/93 NON-QUAL 30,000 30,000 $24.6900 06/23/03 0 (CURRENT) 0
10,000 ON 06/23/94
10,000 ON 06/23/95
10,000 ON 06/23/96
08/25/93 NON-QUAL 60,300 60,300 $26.0600 08/25/03 0 (CURRENT) 0
20,100 ON 08/25/94
20,100 ON 08/25/95
20,100 ON 08/25/96
------- -------
Shares 197,020 187,020
</TABLE>
32
<PAGE>
FORM 10-Q
EXHIBIT 10
EXHIBIT C
NONE
33
<PAGE>
FORM 10-Q
EXHIBIT 10
Confidential 2:03 PM December 30, 1993
For Immediate Release
Lynn McHugh (Analysts) Anne M. McCarthy (Media)
1 312 558 8464 1 312 558 8727
SARA LEE CORPORATION ANNOUNCES
RETIREMENT OF CORNELIS BOONSTRA
Chicago, (January 4, 1993) -- Sara Lee Corporation today announced the retire-
ment of Cornelis Boonstra, president and a director of the corporation, effec-
tive December 31, 1993.
Boonstra said, "I value very highly my career at Sara Lee Corporation and
wish the company much success in the future."
Boonstra joined Sara Lee in 1974 as the general manager of the
corporation's Intradal division in the Netherlands. He was named a senior vice
president in 1986. Boonstra was elected a director and appointed executive vice
president in 1988, with responsibility for the corporation's Coffee and Grocery
and Household and Personal Care businesses. He served as president of the
corporation since July 1993.
Commenting on Boonstra's retirement, John H. Bryan, chairman and chief
executive officer, said, "Mr. Boonstra leaves a highly important legacy to the
corporation. Over the past two decades he has been one of the major figures in
the development of our international presence."
Boonstra's responsibilities will be assumed by C. Steven McMillan, execu-
tive vice president and Donald J. Franceschini, senior vice president. They will
report to John H. Bryan.
Sara Lee Corporation, with annual sales of $14.6 billion in fiscal 1993, is
a global food and consumer products company that markets a wide variety of
products under leading brand names, including HANES, HANES HER WAY, L'EGGS, DIM,
BALI, PLAYTEX, CHAMPION, KIWI, HILLSHIRE FARM, BALL PARK, JIMMY DEAN, DOUWE
EGBERTS AND SARA LEE.
# # #
34
<PAGE>
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 JANUARY 1, 1994
------------------------------------------------------
PRIMARY FULLY DILUTED
------------------------ ------------------------
Thirteen Twenty-Six Thirteen Twenty-Six
Weeks Weeks Weeks Weeks
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income before accounting change $ 236 $ 391 $ 236 $ 391
Cumulative effect of accounting change -- (35) -- (35)
----- ----- ----- -----
Net income 236 356 236 356
Less: Dividends on Preferred Stocks,
net of tax benefits (6) (12) (2) (4)
Adjustment attributable to conversion of
ESOP Convertible Preferred Stock -- -- (1) (2)
----- ----- ----- -----
Net Income Available for Common Stockholders $ 230 $ 344 $ 233 $ 350
----- ----- ----- -----
----- ----- ----- -----
SHARES:
Average Shares Outstanding 476 477 476 477
Add: Common Stock Equivalents -
Stock options 1 2 1 2
ESOP Convertible Preferred Stock -- -- 19 19
Restricted stock and other 1 1 1 1
----- ----- ----- -----
Adjusted Weighted Average Shares Outstanding 478 480 497 499
----- ----- ----- -----
----- ----- ----- -----
NET INCOME PER COMMON SHARE:
Before cumulative effect of accounting change $ 0.48 $ 0.79 $ 0.47 $ 0.77
Cumulative effect of accounting change -- (0.07) -- (0.07)
----- ----- ----- -----
$ 0.48 $ 0.72 $ 0.47 $ 0.70
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
35
<PAGE>
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 DECEMBER 26, 1992
------------------------------------------------------
PRIMARY FULLY DILUTED
------------------------ ------------------------
Thirteen Twenty-Six Thirteen Twenty-Six
Weeks Weeks Weeks Weeks
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income before accounting change $ 220 $ 362 $ 220 $ 362
Cumulative effect of accounting change -- -- -- --
----- ----- ----- -----
Net income 220 362 220 362
Less: Dividends on Preferred Stocks,
net of tax benefits (7) (14) (2) (5)
Adjustment attributable to conversion of
ESOP Convertible Preferred Stock -- -- (2) (3)
----- ----- ----- -----
Net Income Available for Common Stockholders $ 213 $ 348 $ 216 $ 354
----- ----- ----- -----
----- ----- ----- -----
SHARES:
Average Shares Outstanding 481 480 481 480
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 485 484 504 503
----- ----- ----- -----
----- ----- ----- -----
NET INCOME PER COMMON SHARE: $ 0.44 $ 0.72 $ 0.43 $ 0.70
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
36
<PAGE>
EXHIBIT 12.1
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions except ratios)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
----------------------
Jan 1, Dec. 26,
1994 1992
--------- ---------
<S> <C> <C>
Fixed charges:
Interest expense $ 84 $ 72
Interest portion of rental expense 31 29
--------- ---------
Total fixed charges before capitalized interest 115 101
Capitalized interest 13 12
--------- ---------
Total fixed charges $ 128 $ 113
--------- ---------
--------- ---------
Earnings available for fixed charges:
Income before income taxes $ 601 $ 557
Less undistributed income in minority owned companies (5) (4)
Add minority interest in majority-owned subsidiaries 13 13
Add amortization of capitalized interest 9 9
Add fixed charges before capitalized interest 115 101
--------- ---------
Total earnings available for fixed charges $ 733 $ 676
--------- ---------
--------- ---------
Ratio of earnings to fixed charges 5.7 6.0
--------- ---------
--------- ---------
</TABLE>
37
<PAGE>
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>
Twenty-Six Weeks Ended
----------------------
Jan 1, Dec. 26,
1994 1992
--------- ---------
<S> <C> <C>
Fixed charges and preferred stock dividend requirements:
Interest expense $ 84 $ 72
Interest portion of rental expense 31 29
--------- ---------
Total fixed charges before capitalized interest
and preferred stock dividend requirements 115 101
Capitalized interest 13 12
Preferred stock dividend requirements (1) 19 21
--------- ---------
Total fixed charges and preferred stock
dividend requirements $ 147 $ 134
--------- ---------
--------- ---------
Earnings available for fixed charges and preferred
stock dividend requirements:
Income before income taxes $ 601 $ 557
Less undistributed income in minority owned companies (5) (4)
Add minority interest in majority-owned subsidiaries 13 13
Add amortization of capitalized interest 9 9
Add fixed charges before capitalized interest and
preferred stock dividend requirements 115 101
--------- ---------
Total earnings available for fixed charges and
preferred stock dividend requirements $ 733 $ 676
--------- ---------
--------- ---------
Ratio of earnings to fixed charges and preferred stock
dividend requirements 5.0 5.0
--------- ---------
--------- ---------
<FN>
(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>
38
