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Previous: CONSOLIDATED EDISON CO OF NEW YORK INC, 10-Q, 1995-11-13 |
Next: CONSOLIDATED FREIGHTWAYS INC, 10-Q, 1995-11-13 |
<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 September 30, 1995
------------------
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 September 30, 1995, the Registrant had 483,861,001 outstanding
shares of common stock $1.33 1/3 par value, which is the registrant's only
class of common stock.
The document contains 18 pages.
Page 1
<PAGE> 2
SARA LEE CORPORATION AND SUBSIDIARIES
INDEX
PART I -
FINANCIAL STATEMENTS -
Preface 3
Condensed Consolidated Balance Sheets -
At September 30, 1995 and July 1, 1995 4
Consolidated Statements of Income -
For the thirteen weeks ended September 30, 1995
and October 1, 1994 5
Consolidated Statements of Common Stockholders' Equity -
For the period July 2, 1994 to September 30, 1995 6
Consolidated Statements of Cash Flows -
For the thirteen weeks ended September 30, 1995
and October 1, 1994 7
Note to Consolidated Financial Statements 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION 9
PART II -
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 12
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURE 14
EXHIBIT 11 - Computation of Net Income Per Common Share 15
EXHIBIT 12.1 - Computation of Ratio of Earnings to Fixed Charges 16
EXHIBIT 12.2 - Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend Requirements 17
EXHIBIT 27 - Financial Data Schedule 18
Page 2
<PAGE> 3
PART I
SARA LEE CORPORATION AND SUBSIDIARIES
Preface
The consolidated financial statements for the thirteen weeks ended September
30, 1995 and October 1, 1994 and the balance sheet as of September 30, 1995
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 September 30, 1995 and the results of operations and the
cash flows for the periods presented herein have been made. The results of
operations for the thirteen weeks ended September 30, 1995 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 1,
1995.
Page 3
<PAGE> 4
SARA LEE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets at September 30, 1995 and July 1, 1995
(in millions)
<TABLE>
<CAPTION>
Sept. 30, July 1,
1995 1995
------------ ------------
<S> <C> <C>
ASSETS
Cash and Equivalents $ 222 $ 202
Trade Accounts Receivable, less Allowances 1,882 1,653
Inventories:
Finished Goods 1,898 1,782
Work in Process 407 423
Materials and Supplies 643 625
------- -------
2,948 2,830
Other Current Assets 235 243
------- -------
Total Current Assets 5,287 4,928
Investments in Associated Companies 93 109
Trademarks and Other Assets 456 506
Property, Net 2,938 2,964
Intangible Assets 3,861 3,924
------- -------
$12,635 $12,431
======= =======
LIABILITIES AND EQUITY
Notes Payable $ 1,019 $ 559
Accounts Payable 1,244 1,436
Accrued Liabilities 2,566 2,628
Current Maturities of Long-Term Debt 84 221
------- -------
Total Current Liabilities 4,913 4,844
Long-Term Debt 1,873 1,817
Deferred Income Taxes 258 273
Other Liabilities 689 705
Minority Interest in Subsidiaries 526 519
Auction Preferred Stock 300 300
ESOP Convertible Preferred Stock 327 331
Unearned Deferred Compensation (297) (297)
Common Stockholders' Equity 4,046 3,939
------- -------
$12,635 $12,431
======= =======
</TABLE>
See accompanying Note to Consolidated Financial Statements.
Page 4
<PAGE> 5
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
For the Thirteen Weeks Ended September 30, 1995 and October 1, 1994
(in millions, except per share data)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
---------------------------------
Sept. 30, Oct. 1,
1995 1994
----------- -----------
<S> <C> <C>
Net Sales $ 4,656 $ 4,290
------- ---------
Cost of Sales 2,931 2,672
Selling, General and Administrative Expenses 1,396 1,319
Interest Expense 59 55
Interest Income (12) (10)
------- ---------
4,374 4,036
------- ---------
Income Before Income Taxes 282 254
Income Taxes 96 89
------- ---------
Net Income 186 165
Preferred Dividend Requirements, Net of Tax 7 6
------- ---------
Net Income Available for Common Stockholders $ 179 $ 159
======= =========
Net Income Per Common Share - Primary $ 0.37 $ 0.33
======= =========
Average Shares Outstanding 483 481
======= =========
Net Income Per Common Share - Fully Diluted $ 0.36 $ 0.32
======= =========
Average Shares Outstanding 502 499
======= =========
Cash Dividends Per Common Share $ 0.17 $ 0.16
======= =========
</TABLE>
See accompanying Note to Consolidated Financial Statements.
Page 5
<PAGE> 6
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Common Stockholders' Equity
For the Period July 2, 1994 to September 30, 1995
(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 2, 1994 $3,326 $ 641 $ 76 $2,799 $ (170) $ (20)
Net Income 165 -- -- 165 -- --
Cash Dividends -
Common ($.16 per share) (77) -- -- (77) -- --
Auction preferred
($877.33 per share) (3) -- -- (3) -- --
ESOP convertible preferred
($1.359 per share) (6) -- -- (6) -- --
Stock Issuances -
Stock option and benefit plans 13 1 12 -- -- --
Restricted stock, less
amortization of $1 1 -- 9 -- -- (8)
Reacquired Shares (17) (1) (16) -- -- --
Translation Adjustments 22 -- -- -- 22 --
ESOP Tax Benefit 3 -- -- 3 -- --
Other 1 -- 1 (1) -- 1
------- ------- --------- --------- ---------- ----------
Balances at October 1, 1994 3,428 641 82 2,880 (148) (27)
Net Income 639 -- -- 639 -- --
Cash Dividends -
Common ($.51 per share) (243) -- -- (243) -- --
Auction preferred
($3,310.67 per share) (10) -- -- (10) -- --
ESOP convertible preferred
($4.0785 per share) (19) -- -- (19) -- --
Stock Issuances -
Stock option and benefit plans 44 3 41 -- -- --
Restricted stock, less
amortization of $6 6 -- 4 -- -- 2
Reacquired Shares (76) (4) (72) -- -- --
Translation Adjustments 151 -- -- -- 151 --
ESOP Tax Benefit 7 -- -- 7 -- --
Other 12 -- 12 (2) -- 2
------- ------- --------- --------- ---------- ----------
Balances at July 1, 1995 3,939 640 67 3,252 3 (23)
Net Income 186 -- -- 186 -- --
Cash Dividends -
Common ($.17 per share) (82) -- -- (82) -- --
Auction preferred
($1,091.33 per share) (3) -- -- (3) -- --
ESOP convertible preferred
($1.359 per share) (6) -- -- (6) -- --
Stock Issuances -
Business acquisition 55 3 52 -- -- --
Stock option and benefit plans 19 1 18 -- -- --
Restricted stock, less
amortization of $3 3 1 14 -- -- (12)
Reacquired Shares (28) (1) (27) -- -- --
ESOP Share Redemption 4 -- 4 -- -- --
Translation Adjustments (52) -- -- -- (52) --
ESOP Tax Benefit 2 -- -- 2 -- --
Other 9 1 8 -- -- --
------- ------- --------- --------- ---------- ----------
Balances at September 30, 1995 $ 4,046 $ 645 $ 136 $3,349 $ (49) $ (35)
======== ======= ========= ========= ========== ==========
</TABLE>
See accompanying Note to Consolidated Financial Statements.
Page 6
<PAGE> 7
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Thirteen Weeks Ended September 30, 1995 and October 1, 1994
(in millions)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
----------------------
Sept. 30, Oct. 1,
1995 1994
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES -
Net income $ 186 $ 165
Adjustments for non-cash charges included in net
income:
Depreciation and amortization of intangibles 159 149
Increase in deferred income taxes 2 25
Other 3 (10)
Changes in current assets and liabilities, excluding
businesses acquired and sold (574) (380)
-------- -------
Net cash used in operating activities (224) (51)
-------- -------
INVESTING ACTIVITIES -
Purchases of property and equipment (83) (96)
Acquisitions of businesses (23) (27)
Dispositions of businesses -- 11
Returns from associated companies 14 3
Sales of property 12 11
Other 3 1
-------- -------
Net cash used in investing activities (77) (97)
-------- -------
FINANCING ACTIVITIES -
Issuances of common stock 19 13
Purchases of common stock (28) (17)
Borrowings of long-term debt 84 127
Repayments of long-term debt (140) (21)
Short-term borrowings, net 483 159
Payments of dividends (91) (86)
-------- -------
Net cash from financing activities 327 175
-------- -------
Effect of changes in foreign exchange rates on cash (6) 3
-------- -------
Increase in cash and equivalents 20 30
Cash and equivalents at beginning of year 202 189
-------- -------
Cash and equivalents at end of quarter $ 222 $ 219
======== =======
COMPONENTS OF THE CHANGES IN CURRENT ASSETS
AND LIABILITIES:
(Increase) in trade accounts receivable $ (249) $ (277)
(Increase) in inventories (141) (14)
(Increase) decrease in other current assets (10) 16
(Decrease) in accounts payable (179) (216)
Increase in accrued liabilities 5 111
-------- -------
Changes in current assets and liabilities $ (574) $ (380)
======== =======
</TABLE>
See accompanying Note to Consolidated Financial Statements.
Page 7
<PAGE> 8
SARA LEE CORPORATION AND SUBSIDIARIES
Note to Consolidated Financial Statements
1. During the first quarter of fiscal 1996, the Corporation issued common
stock having a value of $55,181,000 in settlement of a deferred purchase
price obligation associated with the fiscal 1995 acquisition of the
Consolidated Foodservice Companies.
Page 8
<PAGE> 9
SARA LEE CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Results of Operations
and Financial Condition
The following is a discussion of the results of operations for the first
quarter of fiscal 1996 compared to the first quarter of fiscal 1995 and the
changes in financial condition during the first three months of fiscal 1996.
RESULTS OF OPERATIONS
Current quarter sales of $4.66 billion were $366 million or 8.5% above the
$4.29 billion reported in the first quarter of last year. Packaged Foods sales
increased 14.0% to $2.34 billion while Packaged Consumer Products sales
increased 3.4% to $2.32 billion.
Businesses acquired net of businesses sold subsequent to the start of the first
quarter of last year increased sales by approximately 4.1 percentage points.
The weakening of the U.S. dollar relative to foreign currencies had the effect
of increasing sales in fiscal 1996 by approximately 1.4 percentage points.
Thus, on a comparable basis sales increased approximately 3.0%. After
adjusting for business acquisitions and dispositions as well as foreign
currency fluctuations, comparable Packaged Foods sales increased 1.3% while
comparable Packaged Consumer Products sales increased 4.5% as compared to the
first quarter of last year.
Cost of sales increased by $259 million or 9.7% while the gross profit margin
was 37.1% in the current quarter compared to 37.7% in the first quarter of last
year. Packaged Foods gross margin percentages declined and the mix of sales
was more heavily weighted toward Packaged Foods which have lower gross profit
margins than Packaged Consumer Products. Gross margin percentages for Packaged
Consumer Products increased as compared to the first quarter of fiscal 1995.
Selling, general and administrative expenses of $1.40 billion were $77 million
or 5.8% higher than the first quarter of last year. The increase was primarily
due to acquisitions, the weakening of the U.S. dollar relative to foreign
currencies and increases in advertising and promotion expense. Net interest
expense increased from $45 million last year to $47 million in the current year
primarily as a result of higher interest rates.
The effective tax rate decreased from 35.0% to 34.0% of income before income
taxes. This decrease was largely due to the impact of lower foreign taxes.
Net income increased 12.6% to $186 million. Net income per share increased
12.1% to $.37 per share from the $.33 reported last year. The lower percentage
increase in earnings per share compared to net income is primarily attributable
to higher preferred dividends and average shares outstanding.
Page 9
<PAGE> 10
FINANCIAL CONDITION
During the first quarter of fiscal 1996, cash and equivalents increased by $20
million while borrowings increased by $379 million. The increase in borrowing
is primarily attributable to seasonal changes in working capital requirements.
RESTRUCTURING
On June 6, 1994, the Corporation announced a restructuring of its worldwide
operations which will result in the closure of 94 manufacturing and
distribution facilities and the severance of 9,900 employees. Through
September 30, 1995, 46 facilities have been closed and 6,349 employees severed.
A reconciliation of the restructuring reserves through September 30, 1995, is
presented on page 11 of this document.
Restructuring actions are expected to be substantially completed by 1996, and
the Corporation expects to fund the costs of the plan from internal sources and
available borrowing capacity.
Actions taken as part of the restructuring plan lowered operating costs by $38
million in the first quarter of fiscal 1996; however, a significant portion of
this benefit has been used for business building and profit improvement
initiatives. The Corporation expects the restructuring plan to generate
increasing savings in subsequent years, growing to an annual savings of
approximately $250 million in fiscal 1998. Savings from the planned actions
will be used for both business building initiatives and profit improvements.
Page 10
<PAGE> 11
SARA LEE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF RESTRUCTURING RESERVES
AS OF SEPTEMBER 30, 1995
(in millions)
<TABLE>
<CAPTION>
WRITEDOWN
OF PROPERTY RECOGNITION OF
AND INVESTMENTS CURTAILMENT RESTRUCTURING
ORIGINAL TO NET LOSS AND SPECIAL FOREIGN RESERVES
RESTRUCTURING REALIZABLE TERMINATION CASH EXCHANGE AS OF
RESERVES VALUE BENEFITS PAYMENTS IMPACTS SEPTEMBER 30,1995
------------- ----------- ---------------- -------- ---------- ------------------
<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 -- -- (33) -- 79
ANTICIPATED SEVERANCE BENEFITS 239 -- -- (116) -- 123
PENSION BENEFITS ASSOCIATED WITH
SEVERED EMPLOYEE GROUP 33 -- (33) -- -- --
ANTICIPATED LOSSES ASSOCIATED
WITH THE DISPOSAL OF CERTAIN
BUSINESSES 59 (15) -- (44) -- --
---------- ------- --------- ------- ----- ---------
732 (304) (33) (193) -- 202
FOREIGN EXCHANGE IMPACTS -- -- -- -- 18 18
---------- ------- --------- -------- ----- ---------
TOTAL RESTRUCTURING RESERVES $ 732 $ (304) $ (33) $ (193) $ 18 $ 220
========== ======= ========= ======= ===== =========
</TABLE>
Page 11
<PAGE> 12
PART II
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant's 1995 Annual Meeting of Stockholders was held on October
26, 1995, in Chicago, Illinois ("Annual Meeting").
(b) Not applicable.
(c) (i) A total of 410,870,683 votes (81.0% of all votes entitled to
vote at the Annual Meeting) were represented by proxy or ballot at
the Annual Meeting. The stockholders of the Registrant were
requested to elect 18 directors as nominated by management. All
nominees were elected as indicated by the following voting
tabulation:
<TABLE>
<CAPTION>
NAME FOR WITHHELD
--------------------------- ------------- -----------
<S> <C> <C>
Paul A. Allaire 408,619,686 2,250,997
Frans H.J.J. Andriessen 408,675,010 2,195,673
John H. Bryan 408,569,200 2,301,483
Duane L. Burnham 408,731,296 2,139,387
Charles W. Coker 408,695,854 2,174,829
Willie D. Davis 408,474,288 2,396,395
Donald J. Franceschini 408,634,281 2,236,402
Allen F. Jacobson 408,518,493 2,352,190
Vernon E. Jordan, Jr. 408,226,832 2,643,851
James L. Ketelsen 408,686,855 2,183,828
Hans B. van Liemt 408,674,336 2,196,347
Joan D. Manley 408,654,338 2,216,345
C. Steven McMillan 408,543,272 2,327,411
Newton N. Minow 408,667,527 2,203,156
Michael E. Murphy 408,752,994 2,117,689
Sir Arvi H. Parbo A.C. 408,604,239 2,266,444
Rozanne L. Ridgway 408,409,510 2,461,173
Richard L. Thomas 408,749,101 2,121,582
</TABLE>
(ii) The stockholders were requested to consider and vote upon the
adoption of the Sara Lee Corporation Performance-Based Annual
Incentive Plan (the "Annual Incentive Plan"). The purpose of the
Annual Incentive Plan is to advance the interests of Sara Lee and
its stockholders by providing certain of Sara Lee's key executives
with annual incentive compensation which is tied to the achievement
of preestablished and objective performance goals. The proposal was
ratified by stockholders, as 395,156,790 votes were cast for
adoption of the plan, 10,718,615 were cast against adoption of the
plan, and 4,995,278 votes abstained.
Page 12
<PAGE> 13
(iii) The stockholders were requested to consider and vote upon the
adoption of the Sara Lee Corporation 1995 Long-Term Incentive Stock
Plan (the "1995 Plan"). The 1995 Plan would replace the 1989
Incentive Stock Plan ("Prior Plan"). The 1995 Plan is designed to
permit the granting of long-term incentive stock-based awards in
different forms, including stock options, stock appreciation rights,
and other stock awards. The 1995 Plan authorizes the issuance of up
to 25,000,000 shares of Sara Lee Corporation common stock ("Common
Stock"), plus any shares of Common Stock remaining available under
the Prior Plan. The proposal was ratified by stockholders, as
288,707,879 votes were cast for adoption of the plan, 69,048,037
votes were cast against adoption of the plan, 6,441,290 votes
abstained, and 46,673,477 votes were broker non-votes.
(iv) The stockholders were requested to consider and vote upon the
adoption of the Sara Lee Corporation 1995 Non-Employee Director
Stock Plan (the "Director Stock Plan"). The Director Stock Plan is
designed to facilitate the ownership of Common Stock by outside
directors by providing for the grant of stock options to outside
directors, and by permitting such directors to elect to receive all
or a portion of their annual retainer in Common Stock, options to
purchase Common Stock or a combination thereof. The proposal was
ratified by stockholders, as 286,273,026 votes were cast for
adoption of the plan, 71,141,538 votes were cast against adoption of
the plan, 6,787,678 votes abstained, and 46,668,441 votes were
broker non-votes.
(v) The stockholders were requested to ratify the appointment of Arthur
Andersen LLP as the independent public accountants of the
Corporation for its fiscal year 1996. The appointment of Arthur
Andersen LLP was ratified by the stockholders, as 406,934,529 votes
were cast for the proposal, 1,879,856 votes were cast against the
proposal, and 2,056,298 votes abstained.
(d) Not applicable.
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
PAGE NUMBER OR
EXHIBIT INCORPORATED HEREIN
NUMBER DESCRIPTION BY REFERENCE TO
------ --------------------------- ---------------------------
<S> <C> <C>
11 Computation of Net Income 15
Per Common Share
12.1 Computation of Ratio of
Earnings to Fixed Charges 16
12.2 Computation of Ratio of
Earnings to Fixed Charges
and Preferred Stock Dividend
Requirements 17
27 Financial Data Schedule 18
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Corporation during the
quarter for which this report is filed.
Page 13
<PAGE> 14
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SARA LEE CORPORATION
(Registrant)
By: /s/Wayne R. Szypulski
____________________________
Wayne R. Szypulski
Vice President and Controller
DATE: November 13, 1995
Page 14
<PAGE> 1
EXHIBIT 11
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(in millions except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirteen Weeks Ended
September 30, 1995 October 1, 1994
--------------------- ---------------------
Fully Fully
Primary Diluted Primary Diluted
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income $ 186 $ 186 $ 165 $ 165
Less: Dividends on Preferred Stocks,
net of tax benefits (7) (3) (6) (3)
Adjustment attributable to conversion of
ESOP Convertible Preferred Stock -- (2) -- (2)
------ ------ ------ ------
Net Income Available for Common Stockholders $ 179 $ 181 $ 159 $ 160
====== ====== ====== ======
SHARES:
Average Shares Outstanding 480 480 479 479
Add: Common Stock Equivalents -
Stock options 2 2 1 1
ESOP Convertible Preferred Stock -- 18 -- 18
Restricted stock and other 1 2 1 1
------ ------ ------ ------
Adjusted Weighted Average Shares Outstanding 483 502 481 499
====== ====== ====== ======
Net Income Per Common Share: $ 0.37 $ 0.36 $ 0.33 $ 0.32
====== ====== ====== ======
</TABLE>
Page 15
<PAGE> 1
EXHIBIT 12.1
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in millions except ratios)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-----------------------
Sept. 30, Oct. 1,
1995 1994
---------- -----------
<S> <C> <C>
Fixed charges:
Interest expense $ 59 $ 55
Interest portion of rental expense 21 21
--------- --------
Total fixed charges before capitalized interest 80 76
Capitalized interest 3 3
--------- --------
Total fixed charges $ 83 $ 79
========= ========
Earnings available for fixed charges:
Income before income taxes $ 282 $ 254
Less undistributed income in minority owned companies (2) (3)
Add minority interest in majority-owned subsidiaries 10 10
Add amortization of capitalized interest 5 5
Add fixed charges before capitalized interest 80 76
--------- ---------
Total earnings available for fixed charges $ 375 $ 342
========= =========
Ratio of earnings to fixed charges 4.5 4.3
========= =========
</TABLE>
Page 16
<PAGE> 1
EXHIBIT 12.2
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(in millions except ratios)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-----------------------
Sept. 30, Oct. 1,
1995 1995
---------- -----------
<S> <C> <C>
Fixed charges and preferred stock dividend requirements:
Interest expense $ 59 $ 55
Interest portion of rental expense 21 21
---------- -----------
Total fixed charges before capitalized interest
and preferred stock dividend requirements 80 76
Capitalized interest 3 3
Preferred stock dividend requirements (1) 11 10
---------- -----------
Total fixed charges and preferred stock
dividend requirements $ 94 $ 89
========== ===========
Earnings available for fixed charges and preferred
stock dividend requirements:
Income before income taxes $ 282 $ 254
Less undistributed income in minority owned companies (2) (3)
Add minority interest in majority-owned subsidiaries 10 10
Add amortization of capitalized interest 5 5
Add fixed charges before capitalized interest and
preferred stock dividend requirements 80 76
---------- -----------
Total earnings available for fixed charges and
preferred stock dividend requirements $ 375 $ 342
========== ===========
Ratio of earnings to fixed charges and preferred stock
dividend requirements 4.0 3.8
========== ===========
</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 17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED BALANCE SHEET AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> SEP-30-1995
<CASH> 191
<SECURITIES> 31
<RECEIVABLES> 2,097
<ALLOWANCES> 215
<INVENTORY> 2,948
<CURRENT-ASSETS> 5,287
<PP&E> 5,747
<DEPRECIATION> 2,809
<TOTAL-ASSETS> 12,635
<CURRENT-LIABILITIES> 4,913
<BONDS> 1,873
<COMMON> 645
0
330
<OTHER-SE> 3,401
<TOTAL-LIABILITY-AND-EQUITY> 12,635
<SALES> 4,656
<TOTAL-REVENUES> 4,656
<CGS> 2,931
<TOTAL-COSTS> 2,931
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 45
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 282
<INCOME-TAX> 96
<INCOME-CONTINUING> 186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 186
<EPS-PRIMARY> .37
<EPS-DILUTED> .36
</TABLE>
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