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<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 December 31, 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 December 31, 1994, the Registrant had 478,887,031 outstanding shares of
common stock $1.33 1/3 par value, which is registrant's only class of common
stock.
The document contains 19 pages.
Page 1
<PAGE> 2
SARA LEE CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<S> <C>
PART I -
FINANCIAL STATEMENTS -
Preface 3
Condensed Consolidated Balance Sheets -
At December 31, 1994 and July 2, 1994 4
Consolidated Statements of Income -
For the thirteen and twenty-six weeks ended
December 31, 1994 and January 1, 1994 5
Consolidated Statements of Common Stockholders' Equity -
For the period July 3, 1993 to December 31, 1994 6
Consolidated Statements of Cash Flows -
For the twenty-six weeks ended
December 31, 1994 and January 1, 1994 7
Notes to Consolidated Financial Statements 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION 9
PART II -
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 17
EXHIBIT 12.2 - Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend Requirements 18
EXHIBIT 27 - Financial Data Schedule 19
</TABLE>
Page 2
<PAGE> 3
PART I
SARA LEE CORPORATION AND SUBSIDIARIES
Preface
The consolidated financial statements for the thirteen and twenty-six weeks
ended December 31, 1994 and January 1, 1994 and the balance sheet as of
December 31, 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 December 31, 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 December
31, 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 December 31, 1994 and July 2, 1994
(in millions)
<TABLE>
<CAPTION>
Dec. 31, July 2,
1994 1994
------------ ----------
<S> <C> <C>
ASSETS
Cash and Equivalents $ 312 $ 189
Trade Accounts Receivable, less Allowances 1,617 1,472
Inventories:
Finished Goods 1,533 1,603
Work in Process 343 361
Materials and Supplies 649 603
-------- -------
2,525 2,567
Other Current Assets 222 241
-------- -------
Total Current Assets 4,676 4,469
Investments in Associated Companies 103 142
Trademarks and Other Assets 490 492
Property, Net 2,861 2,900
Intangible Assets 3,836 3,662
-------- -------
$ 11,966 $11,665
======== =======
LIABILITIES AND EQUITY
Notes Payable $ 1,314 $ 1,281
Accounts Payable 1,024 1,253
Accrued Liabilities 2,516 2,303
Current Maturities of Long-Term Debt 100 82
-------- -------
Total Current Liabilities 4,954 4,919
Long-Term Debt 1,617 1,496
Deferred Income Taxes 335 290
Other Liabilities 716 783
Minority Interest in Subsidiaries 519 520
Auction Preferred Stock 300 300
ESOP Convertible Preferred Stock 336 339
Unearned Deferred Compensation (303) (308)
Common Stockholders' Equity 3,492 3,326
-------- -------
$ 11,966 $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 and Twenty-Six Weeks Ended
December 31, 1994 and January 1, 1994
(in millions, except per share data)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
------------------------- ----------------------
Dec. 31, Jan. 1, Dec. 31, Jan. 1,
1994 1994 1994 1994
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net Sales $ 4,648 $ 4,010 $ 8,938 $ 7,806
------- ------- ------- -------
Cost of Sales 2,884 2,477 5,556 4,861
Selling, General and Administrative Expenses 1,330 1,141 2,649 2,279
Interest Expense 60 42 115 84
Interest Income (14) (9) (24) (19)
------- ------- ------- ------
4,260 3,651 8,296 7,205
------- ------- ------- ------
Income Before Income Taxes 388 359 642 601
Income Taxes 136 123 225 210
------- ------- ------- ------
Net Income Before Accounting Change 252 236 417 391
Cumulative Effect of Accounting Change -- -- -- (35)
------- ------- ------- ------
Net Income 252 236 417 356
Preferred Dividend Requirements, Net of Tax 7 6 13 12
------- ------- ------- ------
Net Income Available for Common Stockholders $ 245 $ 230 $ 404 $ 344
======= ======= ======= ======
Net Income Per Common Share - Primary
Before Cumulative Effect of Accounting Change $ 0.51 $ 0.48 $ 0.84 $ 0.79
Cumulative Effect of Accounting Change -- -- -- (0.07)
------- ------- ------- ------
$ 0.51 $ 0.48 $ 0.84 $ 0.72
======= ======= ======= ======
Average Shares Outstanding 479 478 480 480
======= ======= ======= ======
Net Income Per Common Share - Fully Diluted
Before Cumulative Effect of Accounting Change $ 0.50 $ 0.47 $ 0.82 $ 0.77
Cumulative Effect of Accounting Change -- -- -- (0.07)
------- ------- ------- ------
$ 0.50 $ 0.47 $ 0.82 $ 0.70
======= ======= ======= ======
Average Shares Outstanding 498 497 498 499
======= ======= ======= ======
Cash Dividends Per Common Share $ 0.17 $ 0.16 $ 0.33 $ 0.305
======= ======= ======= ======
</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 December 31, 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 356 -- -- 356 -- --
Cash Dividends -
Common ($.305 per share) (146) -- -- (146) -- --
Auction preferred
($1,301.67 per share) (4) -- -- (4) -- --
ESOP convertible preferred
($2.72 per share) (13) -- -- (13) -- --
Stock Issuances -
Stock option and benefit plans 33 3 30 -- -- --
Restricted Stock Amortization 2 -- -- -- -- 2
Reacquired Shares (224) (12) (82) (130) -- --
Translation Adjustments (82) -- -- -- (82) --
ESOP Tax Benefit 5 -- -- 5 -- --
Other 1 -- -- (1) -- 2
------ ------ ------ -------- -------- --------
Balances at January 1, 1994 3,479 638 14 3,123 (276) (20)
Net Income (157) -- -- (157) -- --
Cash Dividends -
Common ($.32 per share) (152) -- -- (152) -- --
Auction preferred
($1,430.66 per share) (4) -- -- (4) -- --
ESOP convertible preferred
($2.72 per share) (13) -- -- (13) -- --
Stock Issuances -
Stock option and benefit plans 36 3 33 -- -- --
Restricted stock, less
amortization of $2 2 -- 2 -- -- --
Translation Adjustments 106 -- -- -- 106 --
ESOP Tax Benefit 5 -- -- 5 -- --
Other 24 -- 27 (3) -- --
------ ------ ------ -------- -------- --------
Balances at July 2, 1994 3,326 641 76 2,799 (170) (20)
Net Income 417 -- -- 417 -- --
Cash Dividends -
Common ($.33 per share) (158) -- -- (158) -- --
Auction preferred
($1,885.33 per share) (5) -- -- (5) -- --
ESOP convertible preferred
($2.72 per share) (13) -- -- (13) -- --
Stock Issuances -
Stock option and benefit plans 26 2 24 -- -- --
Restricted stock, less
amortization of $3 3 -- 10 -- -- (7)
Reacquired Shares (93) (5) (88) -- -- --
Translation Adjustments (21) -- -- -- (21) --
ESOP Tax Benefit 5 -- -- 5 -- --
Other 5 -- 5 (1) -- 1
------ ------ ------ -------- -------- --------
Balances at December 31, 1994 $3,492 $ 638 $ 27 $ 3,044 $ (191) $ (26)
====== ====== ====== ======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 6
<PAGE> 7
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Twenty-Six Weeks Ended December 31, 1994 and January 1, 1994
(in millions)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
-------------------------------------
Dec. 31, Jan. 1,
1994 1994
---------- -----------
<S> <C> <C>
OPERATING ACTIVITIES -
Net income $ 417 $ 356
Adjustments for non-cash charges included in net income:
Depreciation and amortization of intangibles 299 281
Increase in deferred income taxes 42 2
Cumulative effect of accounting change -- 35
Other (57) (85)
Changes in current assets and liabilities, excluding
businesses acquired and sold (172) (302)
---------- ---------
Net cash from operating activities 529 287
---------- ---------
INVESTING ACTIVITIES -
Purchases of property and equipment (186) (319)
Acquisitions of businesses (112) (371)
Dispositions of businesses 11 --
Returns from (investments in) associated companies 43 (8)
Sales of property 26 21
Other 2 4
---------- ---------
Net cash used in investing activities (216) (673)
---------- ---------
FINANCING ACTIVITIES -
Issuances of common stock 26 33
Purchases of common stock (93) (224)
Issuance of equity securities by subsidiary -- 200
Redemption of preferred stock (3) (30)
Borrowings of long-term debt 261 254
Repayments of long-term debt (228) (260)
Short-term borrowings, net 24 464
Payments of dividends (176) (163)
---------- ---------
Net cash (used in) from financing activities (189) 274
---------- ---------
Effect of changes in foreign exchange rates on cash (1) (3)
---------- ---------
Increase (decrease) in cash and equivalents 123 (115)
Cash and equivalents at beginning of year 189 325
---------- ---------
Cash and equivalents at end of quarter $ 312 $ 210
========== =========
COMPONENTS OF THE CHANGES IN CURRENT ASSETS
AND LIABILITIES:
(Increase) in trade accounts receivable $ (92) $ (117)
Decrease (increase) in inventories 107 (43)
Decrease in other current assets 26 --
(Decrease) in accounts payable (268) (222)
Increase in accrued liabilities 55 80
---------- ---------
Changes in current assets and liabilities $ (172) $ (302)
========== =========
</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.
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 second
quarter and first half of fiscal 1995 compared to the comparable periods of
fiscal 1994 and a discussion of the changes in financial condition during the
first half of fiscal 1995.
RESULTS OF OPERATIONS
Comparison of Second Quarter 1995 to Second Quarter 1994
Current quarter sales of $4.65 billion were $638 million or 15.9% above the
$4.01 billion reported in the second quarter of last year. Packaged Foods
sales increased 19.7% to $2.32 billion while Packaged Consumer Products sales
increased 12.4% to $2.33 billion.
Businesses acquired net of businesses sold subsequent to the start of the
second quarter of last year increased sales by approximately 5.7 percentage
points. The weakening of the U.S. dollar relative to foreign currencies had
the effect of increasing sales in 1995 by approximately 3.0 percentage points.
Thus, on a comparable basis, sales increased approximately 7.2%. After
adjusting for business acquisitions and dispositions as well as foreign
currency fluctuations, comparable Packaged Foods sales increased 5.6% while
comparable Packaged Consumer Products sales increased 8.7% as compared to the
second quarter of last year.
Cost of sales increased by $407 million or 16.4% while the gross profit margin
was 37.9% in the current quarter compared to 38.2% in the second quarter of
last year. Packaged Foods gross profit margins declined and the mix of sales
was more heavily weighted toward Packaged Foods which have lower gross profit
margins than Packaged Consumer Products.
Selling, general and administrative expenses of $1.33 billion were $189 million
or 16.5% higher than the second 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. Net
interest expense increased from $33 million last year to $46 million in the
current year primarily as a result of higher interest rates and increased long
term debt levels.
The effective tax rate increased from 34.3% to 35.0% of income before income
taxes. This increase was largely due to the impact of higher foreign taxes.
Net income increased 6.9% to $252 million. Net income per share increased 6.3%
to $.51 per share from the $.48 per share reported last year. The lower
percentage increase in earnings per share compared to net income is primarily
attributable to higher preferred dividends.
Page 9
<PAGE> 10
Comparison of First Half of 1995 to First Half of 1994
Net sales for the first half of 1995 were $8.94 billion or 14.5% higher than
the $7.81 billion reported last year. Packaged Foods sales increased 16.0% to
$4.37 billion and Packaged Consumer Products sales increased 13.2% to $4.57
billion. Adjusting sales for businesses sold and acquired subsequent to the
start of fiscal 1994 and foreign currency fluctuations, sales increased by
approximately 7.5%. After adjusting for business acquisitions and dispositions
as well as foreign currency fluctuations, comparable Packaged Foods sales
increased 5.4% while comparable Packaged Consumer Products sales increased 9.5%
as compared to the first half of last year. Cost of sales increased by $695
million or 14.3% while the gross profit margin percentage was 37.8% in the
first half of 1995 and 37.7% in the comparable period last year. The increase
in the gross profit margin is attributable to Packaged Foods.
Selling, general and administrative expenses of $2.65 billion were $370 million
or 16.2% higher than the first six months 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 was $91 million
compared to $65 million in the prior year. The $26 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 of 1994. The effect of this
new standard on income tax expense, exclusive of the cumulative effect
adjustment, for the six months ended January 1, 1994 was not material.
The effective tax rate, excluding the cumulative impact of adopting SFAS 109,
was 35% in the first six months of 1995 and 1994.
Excluding the cumulative impact of the accounting change, net income increased
6.7% to $417 million while net income per share increased 6.3% to $.84 from
$.79 last year. The lower percentage increase in earnings per share compared
to net income is attributable to higher preferred dividends. Including the
cumulative impact of the accounting change, net income increased 17.2% and net
income per share increased 16.7%.
FINANCIAL CONDITION
During the first six months of fiscal 1995, cash and equivalents increased by
$123 million while borrowings increased by $172 million.
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 December
31, 1994, 31 facilities have been closed and 5,181
Page 10
<PAGE> 11
employees severed. Severance benefits are being paid over time as opposed to a
lump sum distribution. A reconciliation of the restructuring reserves through
December 31, 1994 is presented on page 12 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.
Through the first half of fiscal 1995, savings from the restructuring have
totaled $30 million; however, a significant portion of this benefit has been
used for business building initiatives and profit improvements.
Page 11
<PAGE> 12
SARA LEE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF RESTRUCTURING RESERVES
AS OF DECEMBER 31, 1994
(in millions)
<TABLE>
<CAPTION>
WRITEDOWN
OF PROPERTY RECOGNITION OF
AND INVESTMENTS CURTAILMENT RESTRUCTURING
FISCAL 1994 TO NET LOSS AND SPECIAL FOREIGN RESERVES
RESTRUCTURING REALIZABLE TERMINATION CASH EXCHANGE AS OF
RESERVES VALUE BENEFITS PAYMENTS IMPACTS DECEMBER 31, 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 -- -- (9) -- 103
ANTICIPATED SEVERANCE BENEFITS 239 -- -- (47) -- 192
PENSION BENEFITS ASSOCIATED WITH SEVERED
EMPLOYEE GROUP 33 -- (33) -- -- --
ANTICIPATED LOSSES ASSOCIATED WITH THE
DISPOSAL OF CERTAIN BUSINESSES 59 (15) -- (29) -- 15
------ ---------- -------- -------- --------- ------
732 (304) (33) (85) -- 310
FOREIGN EXCHANGE IMPACTS -- -- -- -- 13 13
------ ---------- -------- -------- --------- ------
TOTAL RESTRUCTURING RESERVES $ 732 $ (304) $ (33) $ (85) $ 13 $ 323
====== ========== ======== ======== ========= ======
</TABLE>
Page 12
<PAGE> 13
PART II
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
PAGE NUMBER OR
EXHIBIT INCORPORATED HEREIN
NUMBER DESCRIPTION BY REFERENCE TO
------ --------------------------- ---------------------------
<S> <C> <C>
11 Computation of Net Income 15
Per Common Share
12.1 Computation of Ratio of
Earnings to Fixed Charges 17
12.2 Computation of Ratio of
Earnings to Fixed Charges
and Preferred Stock Dividend
Requirements 18
27 Financial Data Schedule 19
</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: February 13, 1995
Page 14
<PAGE> 1
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 DECEMBER 31, 1994
--------------------------------------------
PRIMARY FULLY DILUTED
---------------------- --------------------
Thirteen Twenty-Six Thirteen Twenty-Six
Weeks Weeks Weeks Weeks
-------- ---------- -------- -----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income $ 252 $ 417 $ 252 $ 417
Less: Dividends on Preferred Stocks, (7) (13) (3) (6)
net of tax benefits
Adjustment attributable to conversion of
ESOP Convertible Preferred Stock -- -- (2) (4)
------ ------ ------ ------
Net Income Available for Common Stockholders $ 245 $ 404 $ 247 $ 407
====== ====== ====== ======
SHARES:
Average Shares Outstanding 477 478 477 478
Add: Common Stock Equivalents -
Stock options 1 1 1 1
ESOP Convertible Preferred Stock -- -- 19 19
Restricted stock and other 1 1 1 --
------ ------ ------ ------
Adjusted Weighted Average Shares Outstanding 479 480 498 498
====== ====== ====== ======
NET INCOME PER COMMON SHARE: $ 0.51 $ 0.84 $ 0.50 $ 0.82
====== ====== ====== ======
</TABLE>
Page 15
<PAGE> 2
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 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>
Page 16
<PAGE> 1
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1
(in millions except ratios)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
-----------------------------------
Dec. 31, Jan. 1,
1994 1994
-------------- ------------
<S> <C> <C>
Fixed charges:
Interest expense $ 115 $ 84
Interest portion of rental expense 33 31
-------------- ------------
Total fixed charges before capitalized interest 148 115
Capitalized interest 6 13
-------------- ------------
Total fixed charges $ 154 $ 128
============== ============
Earnings available for fixed charges:
Income before income taxes $ 642 $ 601
Less undistributed income in minority owned companies (6) (5)
Add minority interest in majority-owned subsidiaries 18 13
Add amortization of capitalized interest 10 9
Add fixed charges before capitalized interest 148 115
-------------- ------------
Total earnings available for fixed charges $ 812 $ 733
============== ============
Ratio of earnings to fixed charges 5.3 5.7
============== ============
</TABLE>
Page 17
<PAGE> 1
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.2
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(in millions except ratios)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
-----------------------------------
Dec. 31, Jan. 1,
1994 1994
-------------- ------------
<S> <C> <C>
Fixed charges and preferred stock dividend requirements:
Interest expense $ 115 $ 84
Interest portion of rental expense 33 31
-------------- ------------
Total fixed charges before capitalized interest
and preferred stock dividend requirements 148 115
Capitalized interest 6 13
Preferred stock dividend requirements (1) 21 19
-------------- ------------
Total fixed charges and preferred stock
dividend requirements $ 175 $ 147
============== ============
Earnings available for fixed charges and preferred
stock dividend requirements:
Income before income taxes $ 642 $ 601
Less undistributed income in minority owned companies (6) (5)
Add minority interest in majority-owned subsidiaries 18 13
Add amortization of capitalized interest 10 9
Add fixed charges before capitalized interest and
preferred stock dividend requirements 148 115
-------------- ------------
Total earnings available for fixed charges and
preferred stock dividend requirements $ 812 $ 733
============== ============
Ratio of earnings to fixed charges and preferred stock
dividend requirements 4.6 5.0
============== ============
</TABLE>
(1) Preferred stock dividends in the computation have been increased to an
amount representing the pretax earnings that would have been required to
cover such dividends.
Page 18
<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>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 286
<SECURITIES> 26
<RECEIVABLES> 1,848
<ALLOWANCES> 231
<INVENTORY> 2,525
<CURRENT-ASSETS> 4,676
<PP&E> 5,388
<DEPRECIATION> 2,527
<TOTAL-ASSETS> 11,966
<CURRENT-LIABILITIES> 4,954
<BONDS> 1,617
<COMMON> 638
0
333
<OTHER-SE> 2,854
<TOTAL-LIABILITY-AND-EQUITY> 11,966
<SALES> 8,938
<TOTAL-REVENUES> 8,938
<CGS> 5,556
<TOTAL-COSTS> 5,556
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 95
<INTEREST-EXPENSE> 91
<INCOME-PRETAX> 642
<INCOME-TAX> 225
<INCOME-CONTINUING> 417
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 417
<EPS-PRIMARY> .84
<EPS-DILUTED> .82
</TABLE>
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