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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 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 December 30, 1995, the Registrant had 484,049,061 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
PART I -
FINANCIAL STATEMENTS - 3
Preface
Condensed Consolidated Balance Sheets -
At December 30, 1995 and July 1, 1995 4
Consolidated Statements of Income -
For the thirteen and twenty-six weeks ended
December 30, 1995 and December 31, 1994 5
Consolidated Statements of Common Stockholders' Equity -
For the period July 2, 1994 to December 30, 1995 6
Consolidated Statements of Cash Flows -
For the twenty-six weeks ended
December 30, 1995 and December 31, 1994 7
Note 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
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 30, 1995 and December 31, 1994 and the balance sheet as of
December 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 December
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 and twenty-six weeks ended December 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 December 30, 1995 and July 1, 1995
(in millions)
<TABLE>
<CAPTION>
Dec. 30, July 1,
1995 1995
---------- ----------
ASSETS
<S> <C> <C>
Cash and Equivalents $ 251 $ 202
Trade Accounts Receivable, less Allowances 1,761 1,653
Inventories:
Finished Goods 1,894 1,782
Work in Process 383 423
Materials and Supplies 588 625
---------- ----------
2,865 2,830
Other Current Assets 207 243
---------- ----------
Total Current Assets 5,084 4,928
Investments in Associated Companies 95 109
Trademarks and Other Assets 449 506
Property, Net 2,892 2,964
Intangible Assets 3,869 3,924
---------- ----------
$ 12,389 $ 12,431
========== ==========
LIABILITIES AND EQUITY
Notes Payable $ 645 $ 559
Accounts Payable 1,128 1,436
Accrued Liabilities 2,444 2,628
Current Maturities of Long-Term Debt 87 221
---------- ----------
Total Current Liabilities 4,304 4,844
Long-Term Debt 2,068 1,817
Deferred Income Taxes 290 273
Other Liabilities 673 705
Minority Interest in Subsidiaries 520 519
Auction Preferred Stock 300 300
ESOP Convertible Preferred Stock 327 331
Unearned Deferred Compensation (292) (297)
Common Stockholders' Equity 4,199 3,939
---------- ----------
$ 12,389 $ 12,431
========== ==========
</TABLE>
See accompanying Note to Consolidated Financial Statements.
Page 4
<PAGE> 5
<TABLE>
<CAPTION>
SARA LEE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
For the Thirteen and Twenty-Six Weeks Ended December 30, 1995 and December 31,1994
(in millions, except per share data)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
------------------------ ------------------------
Dec. 30, Dec. 31, Dec. 30, Dec. 31,
1995 1994 1995 1994
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 4,898 $ 4,648 $ 9,554 $ 8,938
-------- --------- -------- ---------
Cost of Sales 3,020 2,884 5,951 5,556
Selling, General and Administrative Expenses 1,403 1,330 2,799 2,649
Interest Expense 60 60 119 115
Interest Income (14) (14) (26) (24)
-------- --------- -------- ---------
4,469 4,260 8,843 8,296
-------- --------- -------- ---------
Income Before Income Taxes 429 388 711 642
Income Taxes 146 136 242 225
-------- --------- -------- ---------
Net Income 283 252 469 417
Preferred Dividend Requirements, Net of Tax 7 7 14 13
-------- --------- -------- ---------
Net Income Available for Common Stockholders $ 276 $ 245 $ 455 $ 404
======== ========= ======== =========
Net Income Per Common Share - Primary $ 0.57 $ 0.51 $ 0.94 $ 0.84
======== ========= ======== =========
Average Shares Outstanding 485 479 484 480
======== ========= ======== =========
Net Income Per Common Share - Fully Diluted $ 0.55 $ 0.50 $ 0.91 $ 0.82
======== ========= ======== =========
Average Shares Outstanding 504 498 503 498
======== ========= ======== =========
Cash Dividends Per Common Share $ 0.19 $ 0.17 $ 0.36 $ 0.33
======== ========= ======== =========
</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 December 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 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 $3 3 -- 10 -- -- (7)
Reacquired Shares (93) (5) (88) -- -- --
Translation Adjustments (21) -- -- -- (21) --
ESOP Tax Benefit 5 -- -- 5 -- --
Other 5 -- 5 (1) -- 1
------- ----- ----- ------- ------ -----
Balances at December 31, 1994 3,492 638 27 3,044 (191) (26)
Net Income 387 -- -- 387 -- --
Cash Dividends -
Common ($.34 per share) (162) -- -- (162) -- --
Auction preferred
($2,302.67 per share) (8) -- -- (8) -- --
ESOP convertible preferred
($2.72 per share) (12) -- -- (12) -- --
Stock Issuances -
Stock option and benefit plans 31 2 29 -- -- --
Restricted stock, less
amortization of $4 4 -- 3 -- -- 1
Translation Adjustments 194 -- -- -- 194 --
ESOP Tax Benefit 5 -- -- 5 -- --
Other 8 -- 8 (2) -- 2
------- ----- ----- ------- ------ -----
Balances at July 1, 1995 3,939 640 67 3,252 3 (23)
Net Income 469 -- -- 469 -- --
Cash Dividends -
Common ($.36 per share) (174) -- -- (174) -- --
Auction preferred
($2,172.67 per share) (6) -- -- (6) -- --
ESOP convertible preferred
($2.72 per share) (12) -- -- (12) -- --
Stock Issuances -
Business acquisition 55 3 52 -- -- --
Stock option and benefit plans 44 3 41 -- -- --
Restricted stock, less
amortization of $7 7 1 16 -- -- (10)
Reacquired Shares (58) (3) (55) -- -- --
Translation Adjustments (89) -- -- -- (89) --
ESOP Tax Benefit 5 -- -- 5 -- --
ESOP Share Redemption 4 -- 4 -- -- --
Other 15 1 14 (1) -- 1
------- ----- ----- ------- ------ -----
Balances at December 30, 1995 $ 4,199 $ 645 $ 139 $ 3,533 $ (86) $ (32)
======= ===== ===== ======= ====== =====
</TABLE>
See accompanying Note 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 30, 1995 and December 31, 1994
(in millions)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
----------------------
Dec. 30, Dec. 31,
1995 1994
-------- -------
<S> <C> <C>
OPERATING ACTIVITIES -
Net income $ 469 $ 417
Adjustments for non-cash charges included in net income:
Depreciation and amortization of intangibles 310 299
Increase in deferred income taxes 42 42
Other (2) (60)
Changes in current assets and liabilities, excluding
businesses acquired and sold (557) (172)
------- -------
Net cash from operating activities 262 526
------- -------
INVESTING ACTIVITIES -
Purchases of property and equipment (201) (186)
Acquisitions of businesses (72) (112)
Dispositions of businesses -- 11
Returns from associated companies 14 43
Sales of property 21 26
Other 4 2
------- -------
Net cash used in investing activities (234) (216)
------- -------
FINANCING ACTIVITIES -
Issuances of common stock 44 26
Purchases of common stock (58) (93)
Borrowings of long-term debt 297 261
Repayments of long-term debt (159) (228)
Short-term borrowings, net 96 24
Payments of dividends (192) (176)
------- -------
Net cash from (used in) financing activities 28 (186)
------- -------
Effect of changes in foreign exchange rates on cash (7) (1)
------- -------
Increase in cash and equivalents 49 123
Cash and equivalents at beginning of year 202 189
------- -------
Cash and equivalents at end of quarter $ 251 $ 312
======= =======
COMPONENTS OF THE CHANGES IN CURRENT ASSETS
AND LIABILITIES:
(Increase) in trade accounts receivable $ (134) $ (92)
(Increase) decrease in inventories (66) 107
Decrease in other current assets 23 26
(Decrease) in accounts payable (295) (268)
(Decrease) increase in accrued liabilities (85) 55
------- -------
Changes in current assets and liabilities $ (557) $ (172)
======= =======
See accompanying Note to Consolidated Financial Statements.
</TABLE>
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 second
quarter and first half of fiscal 1996 compared to the comparable periods of
fiscal 1995 and a discussion of the changes in financial condition during the
first half of fiscal 1996.
RESULTS OF OPERATIONS
Comparison of Second Quarter 1996 to Second Quarter 1995
Current quarter sales of $4.90 billion were $250 million or 5.4% above the
$4.65 billion reported in the second quarter of last year. Packaged Foods
sales increased 8.4% to $2.51 billion while Packaged Consumer Products sales
increased 2.3% to $2.39 billion.
Businesses acquired net of businesses sold subsequent to the start of the
second quarter of last year increased sales by approximately .8 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 3.2%. After
adjusting for business acquisitions and dispositions as well as foreign
currency fluctuations, comparable Packaged Foods sales increased 3.4% while
comparable Packaged Consumer Products sales increased 2.9% as compared to the
second quarter of last year.
Cost of sales increased by $136 million or 4.7% while the gross profit margin
was 38.3% in the current quarter compared to 37.9% in the second quarter of
last year. The increase in Packaged Consumer Products gross profit margins
more than offset the slightly lower Packaged Foods gross margins and a sales
mix which was more heavily weighted toward Packaged Foods which has lower gross
profit margins than Packaged Consumer Products.
Selling, general and administrative expenses of $1.40 billion were $73
million or 5.5% higher than the second quarter of last year. The increase was
primarily due to increased advertising and promotion expense, the weakening of
the U.S. dollar relative to foreign currencies, and acquisitions offset in part
by savings associated with the Corporation's restructuring actions. Net
interest expense was $46 million in both fiscal 1996 and fiscal 1995.
The effective tax rate declined 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 12.4% to $283 million. Net income per share increased
11.8% to $.57 per share from the $.51 reported last year. The lower percentage
increase in earnings per share compared to net income is primarily attributable
to a greater number of outstanding shares.
Page 9
<PAGE> 10
Comparison of First Half of Fiscal 1996 to First Half of Fiscal 1995
Net sales for the first half of fiscal 1996 were $9.55 billion or 6.9%
higher than the $8.94 billion reported last year. Packaged Foods sales
increased 11.1% to $4.85 billion and Packaged Consumer Products sales increased
2.9% to $4.71 billion. Adjusting sales for businesses sold and acquired
subsequent to the start of fiscal 1995 and foreign currency fluctuations, sales
increased by approximately 3.1%. After adjusting for business acquisitions and
dispositions as well as foreign currency fluctuations, comparable Packaged
Foods sales increased 2.4% while comparable Packaged Consumer Products sales
increased 3.6% as compared to the first half of last year. Cost of sales
increased by $395 million or 7.1% while the gross profit margin percentage was
37.7% in the first half of fiscal 1996 and 37.8% in the comparable period last
year. Packaged Foods gross profit margins declined and the mix of sales was
more heavily weighted toward Packaged Foods which has lower gross profit
margins than Packaged Consumer Products.
Selling, general and administrative expenses of $2.80 billion were $150 million
or 5.7% higher than the first six months of last year. The increase was
primarily due to increased advertising and promotion expense, the weakening of
the U.S. dollar relative to foreign currencies, and acquisitions offset in part
by savings associated with the Corporation's restructuring actions.
The effective tax rate was 34.0% as compared to 35.0% in the first six months of
fiscal 1995. This decrease was largely due to the impact of lower foreign taxes.
Net income increased 12.5% to $469 million while net income per share increased
11.9% to $.94 from $.84 last year. The lower percentage increase in earnings
per share compared to net income is attributable to higher shares outstanding.
.
FINANCIAL CONDITION
During the first six months of fiscal 1996, cash and equivalents increased by
$49 million while borrowings increased by $203 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 December
30, 1995, 48 facilities have been closed and 6,406 employees severed. A
reconciliation of the restructuring reserves through December 30, 1995 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.
Page 10
<PAGE> 11
Actions taken as part of the restructuring plan lowered operating costs by $79
million through the first half 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 11
<PAGE> 12
SARA LEE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF RESTRUCTURING RESERVES
AS OF DECEMBER 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 DECEMBER 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 -- -- (38) -- 74
ANTICIPATED SEVERANCE BENEFITS 239 -- -- (135) -- 104
PENSION BENEFITS ASSOCIATED WITH SEVERED
EMPLOYEE GROUP 33 -- (33) -- -- --
ANTICIPATED LOSSES ASSOCIATED WITH THE
DISPOSAL OF CERTAIN BUSINESSES 59 (15) -- (44) -- --
--------- --------- -------- -------- -------- ---------
732 (304) (33) (217) -- 178
FOREIGN EXCHANGE IMPACTS -- -- -- -- 17 17
--------- --------- -------- -------- -------- ---------
TOTAL RESTRUCTURING RESERVES $ 732 $ (304) $ (33) $ (217) $ 17 $ 195
========= ========= ======== ======== ======== =========
</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 12, 1996
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>
FOR THE PERIOD ENDED DECEMBER 30, 1995
---------------------------------------------------
PRIMARY FULLY DILUTED
---------------------- -----------------------
Thirteen Twenty-Six Thirteen Twenty-Six
Weeks Weeks Weeks Weeks
--------- ---------- -------- ----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income $ 283 $ 469 $ 283 $ 469
Less: Dividends on Preferred Stocks, (7) (14) (3) (7)
net of tax benefits
Adjustment attributable to conversion of
ESOP Convertible Preferred Stock -- -- (2) (3)
-------- --------- -------- ---------
Net Income Available for Common Stockholders $ 276 $ 455 $ 278 $ 459
======== ========= ======== =========
SHARES:
Average Shares Outstanding 481 481 481 481
Add: Common Stock Equivalents -
Stock options 2 2 3 3
ESOP Convertible Preferred Stock -- -- 18 18
Restricted stock and other 2 1 2 1
-------- --------- -------- ---------
Adjusted Weighted Average Shares Outstanding 485 484 504 503
======== ========= ======== =========
NET INCOME PER COMMON SHARE: $ 0.57 $ 0.94 $ 0.55 $ 0.91
======== ========= ======== =========
</TABLE>
Page 15
<PAGE> 2
EXHIBIT 11
(continued)
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(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 16
<PAGE> 1
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
-----------------------
Dec. 30, Dec. 31,
1995 1994
-------- ---------
<S> <C> <C>
Fixed charges:
Interest expense $ 119 $ 115
Interest portion of rental expense 36 33
-------- --------
Total fixed charges before capitalized interest 155 148
Capitalized interest 6 6
-------- --------
Total fixed charges $ 161 $ 154
======== ========
Earnings available for fixed charges:
Income before income taxes $ 711 $ 642
Less undistributed income in minority owned companies (3) (6)
Add minority interest in majority-owned subsidiaries 19 18
Add amortization of capitalized interest 11 10
Add fixed charges before capitalized interest 155 148
-------- --------
Total earnings available for fixed charges $ 893 $ 812
======== ========
Ratio of earnings to fixed charges 5.5 5.3
======== ========
</TABLE>
Page 17
<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>
Twenty-Six Weeks Ended
-----------------------
Dec. 30, Dec. 31,
1995 1994
--------- ---------
<S> <C> <C>
Fixed charges and preferred stock dividend requirements:
Interest expense $ 119 $ 115
Interest portion of rental expense 36 33
--------- ---------
Total fixed charges before capitalized interest
and preferred stock dividend requirements 155 148
Capitalized interest 6 6
Preferred stock dividend requirements (1) 22 21
--------- ---------
Total fixed charges and preferred stock
dividend requirements $ 183 $ 175
========= =========
Earnings available for fixed charges and preferred
stock dividend requirements:
Income before income taxes $ 711 $ 642
Less undistributed income in minority owned companies (3) (6)
Add minority interest in majority-owned subsidiaries 19 18
Add amortization of capitalized interest 11 10
Add fixed charges before capitalized interest and
preferred stock dividend requirements 155 148
--------- ---------
Total earnings available for fixed charges and
preferred stock dividend requirements $ 893 $ 812
========= =========
Ratio of earnings to fixed charges and preferred stock
dividend requirements 4.9 4.6
========= =========
(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>
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>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> JUL-02-1995
<PERIOD-END> DEC-30-1995
<CASH> 223
<SECURITIES> 28
<RECEIVABLES> 1,983
<ALLOWANCES> 222
<INVENTORY> 2,865
<CURRENT-ASSETS> 5,084
<PP&E> 5,723
<DEPRECIATION> 2,831
<TOTAL-ASSETS> 12,389
<CURRENT-LIABILITIES> 4,304
<BONDS> 2,068
0
335
<COMMON> 645
<OTHER-SE> 3,554
<TOTAL-LIABILITY-AND-EQUITY> 12,389
<SALES> 9,554
<TOTAL-REVENUES> 9,554
<CGS> 5,951
<TOTAL-COSTS> 5,951
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 77
<INTEREST-EXPENSE> 93
<INCOME-PRETAX> 711
<INCOME-TAX> 242
<INCOME-CONTINUING> 469
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 469
<EPS-PRIMARY> .94
<EPS-DILUTED> .91
</TABLE>
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