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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934
(Fee Required)
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<S> <C>
FOR THE FISCAL YEAR ENDED JULY 1, 1994 COMMISSION FILE NUMBER 1-3344
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SPRING CITY KNITTING CO., INC.
RETIREMENT SAVINGS PLAN
(Full title of the plan)
--------------------
SARA LEE CORPORATION
Three First National Plaza
Suite 4600
Chicago, Illinois 60602
(Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office)
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ARTHUR ANDERSEN LLP
Spring City Knitting Co., Inc. Retirement Savings Plan
Financial Statements as of December 31,1993 and 1992
Together with Auditors' Report
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ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To the Retirement Committee of
Spring City Knitting Co., Inc.:
We were engaged to audit the accompanying statements of net assets available
for plan benefits of the Spring City Knitting Co., Inc. Retirement Savings Plan
as of December 31, 1993 and 1992, the related statement of changes in net
assets available for plan benefits for the year ended December 31, 1993. These
financial statements are the responsibility of the Plan's management.
As permitted by 29 CFR 2520.103-8 of the Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, the plan administrator instructed us not to perform, and
we did not perform, any auditing procedures with respect to the information
summarized in Note 3, which was certified by Trust Company Bank and Wachovia
Bank of North Carolina, N.A., the Trustees of the Plan, except for comparing
the information with the related information included in the 1993 and 1992
financial statements. We have been informed by the plan administrator that the
Trustee holds the Plan's investment assets and executes investment
transactions. The plan administrator has obtained a certification from the
Trustees as of and for the years ended December 31, 1993 and 1992, that the
information provided to the plan administrator by the Trustees is complete and
accurate.
Because of the significance of the information that we did not audit, we are
unable to, and do not, express an opinion on the accompanying financial
statements taken as a whole. The form and content of the information included
in the financial statements, other than that derived from the information
certified by the Trustees, have been audited by us in accordance with generally
accepted auditing standards and, in our opinion, are presented in compliance
with the Department of Labor Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974.
Arthur Andersen LLP
Greensboro, North Carolina,
September 1, 1994.
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Spring City Knitting Co., Inc.
Retirement Savings Plan
Statements of Net Assets Available for Plan Benefits
December 31,1993 and 1992
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<CAPTION>
1993 1992
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ASSETS:
<S> <C> <C>
Contributions-
Employer contributions receivable (Note 4) $ 233,876 $ 173,801
Employee contributions receivable (Note 5) 152,482 30,510
Refunds receivable 17,187 0
Income receivable (Note 6) 5,230 0
Accrued interest income 21,999 27,910
Investment in master trust 2,648,655 4,531,112
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3,079,429 4,763,333
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LIABILITIES - Benefits payable 0 8,868
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $3,079,429 $4,754,465
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The accompanying notes to financial statements
are an integral part of these statements.
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Spring City Knitting Co., Inc.
Retirement Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31,1993
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<CAPTION>
INTEREST DIVERSIFIED MONEY
INCOME EQUITY PURCHASE
FUND FUND PLAN TOTAL
---------- -------- ----------- ---------
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
beginning of year $3,244,626 $497,812 $1,012,027 $4,754,465
---------- -------- ---------- ----------
ADDITIONS TO NET ASSETS:
Investment income-
Interest 248,193 0 77,187 325,380
Other income 0 51,287 0 51,287
Contributions-
Employer 130,919 3,876 165,287 300,082
Employee 338,068 39,848 0 377,916
Interfund transfer 7,160 0 0 7,160
---------- -------- ---------- ----------
Total additions 724,340 95,011 242,474 1,061,825
DEDUCTIONS TO NET ASSETS: ---------- -------- ---------- ----------
Benefits paid to participants 579,576 39,363 90,232 709,171
Administrative expenses 28,486 4,129 0 32,615
Transfer to another plan 1,511,397 425,962 50,556 1,987,915
Interfund transfer 0 7,160 0 7,160
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Total deductions 2,119,459 476,614 140,788 2,736,861
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Net increase (decrease) in plan assets (1,395,119) (381,603) 101,686 (1,675,036)
Net assets available for plan benefits, end ---------- -------- ---------- ----------
of year $1,849,507 $116,209 $1,113,713 $3,079,429
========== ========= ========== ==========
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The accompanying notes to financial statements
are an integral part of this statement.
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Spring City Knitting Co., Inc.
Retirement Savings Plan
Notes to Financial Statements
December 31, 1993 and 1992
1. Summary of Significant Accounting Policies:
A brief summary of the significant accounting and reporting policies followed
by the Retirement Savings Plan (the Plan) of Spring City Knitting Co., Inc.
(the Company) in the preparation of its financial statements is presented
below.
BASIS OF ACCOUNTING
The Plan's financial statements are presented on the accrual basis of
accounting.
INVESTMENT VALUATION
Investments of the Plan are stated at current market value as determined by the
plan trustee as of the balance sheet date. Securities traded in public markets
are valued at their quoted market prices. Purchases and sales of securities are
reflected on a trade-date basis. Investments in insurance contracts are stated
at fair market value which represents purchases made under the contracts plus
accumulated interest at the contract rates.
TAX STATUS
The Plan was amended May 30, 1990, in order to bring the Plan into compliance
with statutory and regulatory changes affecting all qualified retirement plans.
The Plan, as amended, is qualified under the Internal Revenue Code as exempt
from federal income taxes and has received a favorable determination letter
from the Internal Revenue Service (IRS) dated June 14, 1990, and, accordingly,
no provision for federal income taxes has been made in the accompanying
financial statements.
EXPENSES
Trustee's fees are paid by the Plan; all other administrative expenses are paid
by the Company.
2. Description and Administration of the Plan:
The Plan is a contributory defined contribution plan covering all hourly and
salaried employees of Spring City Knitting Co., Inc. (the Company), a
subsidiary of Sara Lee Corporation except those employees who participate in a
collective bargaining unit. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). The Plan is composed
of seven funds, the Interest Income Fund (IIF), Diversified Equity Fund,
International Equity Fund, the Balanced Fund, Small Stock Fund, Sara Lee
Corporate Stock Fund and the Employer Money Purchase Contribution Fund (EMPCF).
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2
For all funds except the EMPCF, employees may contribute up to 15% of
applicable earnings per pay period. For hourly participants, the Company will
contribute 40% of the participants' contributions up to a maximum of 2% of
applicable earnings per pay period. On July 1, 1993, all salaried employees
were transferred from the Plan into the Sara Lee Supplemental Retirement Plan.
For the six months prior to the transfer, the Company contributed 50% of the
salaried participants' contributions up to a maximum of 3% of applicable
earnings per pay period. In addition, the Company will contribute any amounts
required to restore the nonvested account balance of any reemployed participant
provided the participant repays to the Plan the full amount of the distribution
within five years following his date of reemployment. Employees who are not
highly compensated as defined in the Plan are fully vested in the IIF and Stock
Fund at all times. Highly compensated employees become fully vested in the IIF
and Stock Fund upon the earlier of completion of two years of service,
attainment of normal retirement date, total and permanent disability, or death.
As of year-end, there were no highly compensated employees in the Plan.
Under the EMPCF, the Company will pay to the Trustee for each plan year an
amount to be allocated among the participant accounts of hourly employees who
have completed 1,000 hours or more of service and who were employed as of the
plan year-end. The amounts to be credited to each individual employer money
purchase contribution account are the lesser of 1 1 /2% of the employee's basic
earnings for the plan year or the maximum annual addition allowable for the
plan year as defined in the Plan and are included in employer contributions in
the statements of changes in net assets available for plan benefits.
Participants in this fund become fully vested after five years of service or
upon the attainment of normal retirement date, total and permanent disability,
or death.
A separate account is maintained for each participant, and the account balances
are adjusted monthly for company contributions. Investment income is allocated
to accounts annually in proportion to the participant's share of the Plan's net
assets available for plan benefits as of the later of the last day of June or
last day of December in the respective year ("preceding valuation date").
Forfeitures are applied as a credit to subsequent company contributions, thus
reducing the amount deposited to the trust.
The Company has the right under the Plan, although it has not expressed any
intent to do so, to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of discontinuance of
the Plan, all participants' accounts become fully vested.
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3. Information Certified by the Trustee:
The assets of the Plan are held in the Sara Lee Corporation Investment Trust
(the Investment Trust) at Wachovia Bank of North Carolina, N.A. (Wachovia).
The plan assets included in the Investment Trust represent 2% of the total
Investment Trust assets at December 31, 1993. The following table summarizes
the net value of the Plan's interest (including accrued income) in each
investment account of the Investment Trust at the end of the plan year:
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<CAPTION>
VALUE AT
INVESTMENT ACCOUNT DECEMBER 31, 1993
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<S> <C>
Interest Income Fund $1,582,801
Diversified Fund 123,863
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$1,706,664
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The total cost, market value and detail of the Investment Trust assets, as well
as the schedule of reportable transactions, are disclosed in a separate filing
as of June 30, 1993.
The information in the financial statements was summarized from information
supplied and certified by Trust Company Bank and Wachovia, except for
contributions and contribution receivables. The information was not audited in
accordance with generally accepted auditing standards by independent public
accountants, as permitted by 29 CFR 2520.103-8 of the Department of Labor Rules
and Regulations for Reporting and Disclosure under ERISA.
4. Employer Contnbutions Receivables:
Employer contributions for the period from July 1993 to December 31, 1993, were
contributed to the trust after the end of the plan year. As a result, as of
December 31, 1993, the Plan reflects a receivable from the Company of $233,676
for employer contributions receivable.
5. Employee Contribution Receivable:
Employee contributions for the period from July 1993 to December 31, 1993, were
not contributed to the trust. As a result, as of December 31, 1993, the Plan
reflects a receivable from the Company of $152,462 for unremitted participant
contributions.
The Company has taken necessary corrective action in 1994 to make the required
contributions to the trust. The failure to make participant contributions to
the trust in a timely manner could be viewed by the Department of Labor and
Internal Revenue Service as a prohibited party-in-interest transaction as
defined by ERISA. However, in no case will the Plan be subject to penalties or
taxation from the Department of Labor or from the IRS as a result of this
transaction.
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4
6. Income Receivable:
Subsequent to year-end and retroactive to July 1993, the Plan was amended to
permit participants to invest in four new investment options within the Sara
Lee Corporation Master Trust. For administrative reasons, these investment
options were not established for the Plan in 1993. As a result, existing
account balances in the original two investment funds, which had been
designated by the participants to be transferred to the four new options,
remained in the previous investment funds.
The Company calculated the investment income that would have been earned by the
participants during the period from July 1993 to December 31, 1993, had the
employee contributions and existing balances been invested according to the
applicable participants' elections. The amount of income that would have been
earned by the participants, as calculated by the Company, in excess of actual
earnings on existing balances which remained in original investment funds was
$5,230 for the period from July 1993 to December 31, 1993. This amount has been
reflected as a receivable on the accompanying statements of net assets
available for plan benefits. The Company has taken the necessary corrective
action in 1994 to make the contribution of this amount to the trust.
7. Reconciliation to Form 5500:
As of December 31, 1993, the Plan had approximately $36,400 of pending
distributions to participants who elected to withdraw from the operation and
earnings of the Plan. These amounts are recorded as a liability in the Plan's
Form 5500; however, these amounts are not recorded as a liability in accordance
with generally accepted accounting principles.
The following table reconciles net assets available for benefits as reported in
the financial statements to the Form 5500 as filed by the Company for the year
ended December 31, 1993:
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<CAPTION>
BENEFIT NET ASSETS
CLAIMS BENEFITS PAID AVAILABLE FOR
PAYABLE TO PARTICIPANTS PLAN BENEFITS
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<S> <C> <C> <C>
As reported in the financial statements $ 0 $(709,171) $3,079,429
Accrued benefit payments - End of year (36,400) (36,400) (36,400)
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As filed in the Form 5500 $(36,400) $ 745,571 $3,043,029
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8. SUBSEQUENT EVENT:
Subsequent to year-end, Spring City Knitting Company, Inc. announced
restructuring plans which will result in the shut-down of several manufacturing
facilities and the related termination of employees. Upon termination, all
participants will become 100% vested in their respective participant account
balances. These terminated participants may elect to leave their account
balances within the Trust or receive a distribution of their accumulated
benefits.
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 11-K, into the Spring City Knitting Co.,
Inc. Retirement Savings Plan previously filed Registration Statement File No.
33-35760.
Arthur Andersen LLP
Chicago, Illinois,
January 20, 1995
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
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<S> <C>
Date: February 21, 1995 SPRlNG ClTY KNITTING CO, INC.
RETIREMENT SAVINGS PLAN
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/s/ Michael E. Murphy
---------------------------------
Michael E. Murphy, As a Committee
Member on Behalf of the Committee
