<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 29, 1997
--------------
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 March 29, 1997, the Registrant had 480,322,075 outstanding shares of common
stock $ 1.33 1/3 par value, which is the Registrant's only class of common
stock.
This document contains 20 pages.
Page 1
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
-------------------------------------
INDEX
PART I -
FINANCIAL STATEMENTS -
Preface 3
Condensed Consolidated Balance Sheets -
At March 29, 1997 and June 29, 1996 4
Consolidated Statements of Income -
For the thirteen and thirty-nine weeks ended
March 29, 1997 and March 30, 1996 5
Consolidated Statements of Common Stockholders' Equity -
For the period July 1, 1995 to March 29, 1997 6
Consolidated Statements of Cash Flows -
For the thirty-nine weeks ended
March 29, 1997 and March 30, 1996 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 14
SIGNATURE 15
EXHIBIT 11 - Computation of Net Income Per Common Share 16
EXHIBIT 12.1 - Computation of Ratio of Earnings to Fixed Charges 18
EXHIBIT 12.2 - Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend Requirements 19
EXHIBIT 27 - Financial Data Schedule 20
Page 2
<PAGE>
PART I
SARA LEE CORPORATION AND SUBSIDIARIES
-------------------------------------
PREFACE
--------
The consolidated financial statements for the thirteen and thirty-nine weeks
ended March 29, 1997 and March 30, 1996 and the balance sheet as of March 29,
1997 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 March 29, 1997 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 thirty-nine weeks ended March 29, 1997 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 June 29, 1996.
Page 3
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AT MARCH 29, 1997 AND JUNE 29, 1996
(IN MILLIONS)
March 29, June 29,
1997 1996
--------- ---------
ASSETS
Cash and equivalents $ 230 $ 243
Trade accounts receivable, less allowances 1,944 1,728
Inventories:
Finished goods 1,725 1,802
Work in process 471 381
Materials and supplies 634 624
--------- ---------
2,830 2,807
Other current assets 301 303
--------- ---------
Total current assets 5,305 5,081
Trademarks and other assets 515 636
Property, net 3,033 3,007
Intangible assets 4,051 3,878
--------- ---------
$ 12,904 $ 12,602
--------- ---------
--------- ---------
LIABILITIES AND EQUITY
Notes payable $ 857 $ 319
Accounts payable 1,324 1,592
Accrued liabilities 2,628 2,596
Current maturities of long-term debt 153 135
--------- ---------
Total current liabilities 4,962 4,642
Long-term debt 1,943 1,842
Deferred income taxes 335 333
Other liabilities 558 604
Minority interest in subsidiaries 528 523
Auction preferred stock 300 300
ESOP convertible preferred stock 318 324
Unearned deferred compensation (279) (286)
Common stockholders' equity 4,239 4,320
--------- ---------
$ 12,904 $ 12,602
--------- ---------
--------- ---------
See accompanying Note to Consolidated Financial Statements
Page 4
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THIRTEEN AND THIRTY-NINE WEEKS ENDED MARCH 29, 1997 AND MARCH 30, 1996
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
----------------------- ------------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 4,649 $ 4,443 $ 14,804 $ 13,997
-------- -------- --------- ---------
Cost of Sales 2,892 2,724 9,218 8,675
Selling, General and Administrative Expenses 1,416 1,396 4,388 4,195
Interest Expense 48 56 156 175
Interest Income (9) (17) (30) (43)
-------- -------- --------- ---------
4,347 4,159 13,732 13,002
-------- -------- --------- ---------
Income Before Income Taxes 302 284 1,072 995
Income Taxes 96 96 343 338
-------- -------- --------- ---------
Net Income 206 188 729 657
Preferred Dividend Requirements, Net of Tax 7 7 20 21
-------- -------- --------- ---------
Net Income Available for Common Stockholders $ 199 $ 181 $ 709 $ 636
-------- -------- --------- ---------
-------- -------- --------- ---------
Net Income Per Common Share - Primary $ 0.41 $ 0.37 $ 1.46 $ 1.31
-------- -------- --------- ---------
-------- -------- --------- ---------
Average Shares Outstanding 484 487 485 485
-------- -------- --------- ---------
-------- -------- --------- ---------
Net Income Per Common Share - Fully Diluted $ 0.40 $ 0.36 $ 1.42 $ 1.27
-------- -------- --------- ---------
-------- -------- --------- ---------
Average Shares Outstanding 502 505 504 504
-------- -------- --------- ---------
-------- -------- --------- ---------
Cash Dividends Per Common Share $ 0.21 $ 0.19 $ 0.61 $ 0.55
-------- -------- --------- ---------
-------- -------- --------- ---------
</TABLE>
See accompanying Note to Consolidated Financial Statements
Page 5
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
FOR THE PERIOD JULY 1, 1995 TO MARCH 29, 1997
(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 1, 1995 $ 3,939 $ 640 $ 67 $ 3,252 $ 3 $ (23)
Net income 657 -- -- 657 -- --
Cash dividends -
Common ($.55 per share) (265) -- -- (265) -- --
Auction preferred
($3,222.00 per share) (10) -- -- (10) -- --
ESOP convertible preferred
($4.08 per share) (18) -- -- (18) -- --
Stock issuances -
Business acquisition 55 3 52 -- -- --
Stock option and benefit plans 75 5 70 -- -- --
Restricted stock, less
amortization of $11 11 1 17 -- -- (7)
Reacquired shares (58) (3) (55) -- -- --
Translation adjustments (168) -- -- -- (168) --
ESOP tax benefit 7 -- -- 7 -- --
ESOP share redemption 4 -- 4 -- -- --
Other 15 1 12 (1) -- 3
-------- ------ ------- -------- ----------- ----------
Balances at March 30, 1996 4,244 647 167 3,622 (165) (27)
Net income 259 -- -- 259 -- --
Cash dividends -
Common ($.19 per share) (93) -- -- (93) -- --
Auction preferred
($997.00 per share) (3) -- -- (3) -- --
ESOP convertible preferred
($1.36 per share) (6) -- -- (6) -- --
Stock issuances -
Stock option and benefit plans 18 1 17 -- -- --
Restricted stock, less
amortization of $2 2 -- -- -- -- 2
Reacquired shares (45) (1) (44) -- -- --
Translation adjustments (62) -- -- -- (62) --
ESOP tax benefit 3 -- -- 3 -- --
ESOP share redemption 3 -- 3 -- -- --
Other -- (1) (2) 1 -- 2
-------- ------ ------- -------- ----------- ----------
Balances at June 29, 1996 4,320 646 141 3,783 (227) (23)
Net income 729 -- -- 729 -- --
Cash dividends -
Common ($.61 per share) (294) -- -- (294) -- --
Auction preferred
($2,981.00 per share) (9) -- -- (9) -- --
ESOP convertible preferred
($4.08 per share) (18) -- -- (18) -- --
Stock issuances -
Business acquisition 18 1 17 -- -- --
Stock option and benefit plans 71 5 66 -- -- --
Restricted stock, less
amortization of $ 18 18 -- 13 -- -- 5
Reacquired shares (338) (12) (245) (81) -- --
Translation adjustments (274) -- -- -- (274) --
ESOP tax benefit 7 -- -- 7 -- --
ESOP share redemption 6 -- 6 -- -- --
Other 3 -- 2 -- -- 1
-------- ------ ------- -------- ----------- ----------
Balances at March 29, 1997 $ 4,239 $ 640 $ -- $ 4,117 $ (501) $ (17)
-------- ------ ------- -------- ----------- ----------
-------- ------ ------- -------- ----------- ----------
</TABLE>
See accompanying Note to Consolidated Financial Statements Page 6
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED MARCH 29, 1997 AND MARCH 30, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
------------------------
March 29, March 30,
1997 1996
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES -
Net income $ 729 $ 657
Adjustments for non-cash charges included in net income:
Depreciation 367 340
Amortization of intangibles 143 132
Increase in deferred income taxes 13 33
Other (30) (32)
Changes in current assets and liabilities, excluding
businesses acquired and sold (477) (686)
--------- ---------
Net cash from operating activities 745 444
--------- ---------
INVESTING ACTIVITIES -
Purchases of property and equipment (350) (328)
Acquisitions of businesses (594) (72)
Dispositions of investment and business 114 --
Sales of property 40 27
Other 11 35
--------- ---------
Net cash used in investing activities (779) (338)
--------- ---------
FINANCING ACTIVITIES -
Issuances of common stock 71 75
Purchases of common stock (338) (58)
Borrowings of long-term debt 353 351
Repayments of long-term debt (224) (283)
Short-term borrowings, net 492 77
Payments of dividends (321) (293)
--------- ---------
Net cash from (used in) financing activities 33 (131)
--------- ---------
Effect of changes in foreign exchange rates on cash (12) (10)
--------- ---------
Decrease in cash and equivalents (13) (35)
Cash and equivalents at beginning of year 243 202
--------- ---------
Cash and equivalents at end of quarter $ 230 $ 167
--------- ---------
--------- ---------
COMPONENTS OF THE CHANGES IN CURRENT ASSETS
AND LIABILITIES:
(Increase) in trade accounts receivable $ (175) $ (229)
Decrease (increase) in inventories 42 (144)
Decrease (increase) in other current assets 26 (13)
(Decrease) in accounts payable (362) (275)
(Decrease) in accrued liabilities (8) (25)
--------- ---------
Changes in current assets and liabilities $ (477) $ (686)
--------- ---------
--------- ---------
</TABLE>
See accompanying Note to Consolidated Financial Statements
Page 7
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
-------------------------------------
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------
1. In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128)
which will become effective for the Corporation in the second quarter of
fiscal 1998. When adopted, SFAS 128 will replace the presentation of
primary earnings per share (EPS) with a presentation of basic EPS. Basic
EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS, which reflects the potential
dilution that could occur if securities or other contracts to issue
common stock were exercised or converted, will also need to be disclosed
under SFAS 128. The basic and diluted EPS amounts of the Corporation are
as follows:
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------- -----------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
--------- --------- --------- ----------
Basic EPS $0.42 $0.37 $1.48 $1.32
----- ----- ----- -----
Diluted EPS $0.40 $0.36 $1.42 $1.28
----- ----- ----- -----
The Corporation will be required to restate all prior periods when
SFAS 128 becomes effective.
Page 8
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
-------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
-------------------------------------------------------------
AND FINANCIAL CONDITION
-----------------------
The following is a discussion of the results of operations for the third quarter
and first nine months of fiscal 1997 compared to comparable periods of fiscal
1996 and a discussion of the changes in financial condition during the first
nine months of fiscal 1997.
RESULTS OF OPERATIONS
Comparison of Third Quarter Fiscal 1997 to Third Quarter Fiscal 1996
- --------------------------------------------------------------------
Operating results by business segment in the third quarter of fiscal 1997 as
compared to the third quarter of fiscal 1996 were as follows:
THIRTEEN WEEKS ENDED
-----------------------------------------
Sales Operating Income
------------------- -------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
-------- -------- -------- --------
Packaged Meats and Bakery $1,788 $1,536 $ 99 $ 89
Coffee & Grocery 684 694 99 102
Household and Body Care 448 464 49 46
Personal Products 1,732 1,751 158 142
------ ------ ---- ----
Total sales and operating income 4,652 4,445 405 379
Intersegment sales (3) (2) -- --
Interest, net -- -- (39) (39)
Unallocated corporate expense -- -- (64) (56)
------ ------ ---- ----
Net sales and pre-tax income $4,649 $4,443 $302 $284
------ ------ ---- ----
------ ------ ---- ----
Consolidated net sales increased 4.6% in the third quarter. Businesses
acquired net of businesses sold subsequent to the start of the third quarter
of last fiscal year increased net sales by approximately 5.7 percentage
points. The strengthening of the U.S. dollar relative to foreign currencies
had the effect of reducing sales by approximately 3.3 percentage points.
Thus, on a comparable basis sales increased 2.2%. Operating income increased
6.7% in the quarter as a result of business acquisitions and profit increases
in the Personal Products and Household and Body Care segments offset by
slightly lower profit margins in other businesses. Excluding the impact of
business acquisitions, dispositions and changes in foreign currencies,
operating income increased 9.1%. Net interest expense was approximately the
same as the prior year and unallocated corporate expenses increased by $8
million. Pre-tax income increased 6.5%.
Page 9
<PAGE>
The effective tax rate decreased from 34.0% to 32.0% of pre-tax income. This
decrease is largely due to lower foreign taxes. Net income increased 9.7%
while primary earnings per share increased 10.8%. Earnings per share
increased at a rate in excess of net income because there were fewer shares
outstanding during the period.
Net sales and operating income in the Packaged Meats and Bakery segment
increased 16.4% and 11.2%, respectively. The increase in the net sales and
profits was largely due to the acquisition of the French processed meats
company Aoste. Excluding the impact of acquisitions and changes in foreign
currencies, Packaged Meats and Bakery sales and operating income increased
approximately 4.0%. Excluding acquisitions, unit volumes for the worldwide
Packaged Meats businesses fell 1% and Bakery volumes were unchanged during
the quarter. Foodservice units rose 6% during the quarter.
Coffee and Grocery sales declined 1.3% while operating income declined 2.1%
as a stronger dollar relative to European currencies negatively impacted
translated results for this line of business. Sales and operating income
were negatively impacted by over 9.0 percentage points as a result of the
stronger dollar. Unit volumes for roasted coffee, excluding acquisitions,
were up 11% as higher green coffee prices caused retailers and consumers to
increase their purchases in anticipation of rising consumer coffee prices.
Net sales in the Household and Body Care segment declined 3.4% while operating
income increased 5.1%. Operating results benefited from increased profitability
in the core Household and Body Care product categories, which include shoe care,
body care and insecticides, and higher sales from direct selling operations.
Reported sales and operating income for this line of business were negatively
impacted by approximately 6.0 percentage points as a result of the strengthening
of the U.S. dollar in relation to foreign currencies.
Personal Products sales declined 1.1 % while operating income increased
10.9%. The improvement in segment profitability was primarily attributable to
incremental savings from the 1994 restructuring and lower LIFO inventory
provisions. The impact of the stronger U.S. dollar negatively impacted sales
and operating income of this segment by approximately 2.0 percentage points.
Unit volumes for worldwide sheer hosiery were flat while Knit Products
increased 7% and Intimate Apparel unit volumes improved 2%.
Page 10
<PAGE>
COMPARISON OF FIRST NINE MONTHS OF FISCAL 1997 TO FIRST NINE MONTHS OF FISCAL
- -----------------------------------------------------------------------------
1996
- ----
Operating results by business segment for the first nine months of fiscal 1997
as compared to the first nine months of fiscal 1996 were as follows:
THIRTY-NINE WEEKS ENDED
----------------------------------------
SALES OPERATING INCOME
------------------- ------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
-------- -------- -------- --------
Packaged Meats and Bakery $ 5,712 $ 4,881 $ 342 $ 301
Coffee & Grocery 2,089 2,201 339 330
Household and Body Care 1,319 1,324 143 134
Personal Products 5,697 5,598 546 527
------ ------ ----- -------
Total sales and operating income 14,817 14,004 1,370 1,292
Intersegment sales (13) (7) -- --
Interest, net -- -- (126) (132)
Unallocated corporate expense -- -- (172) (165)
------ ------ ----- -------
Net sales and pre-tax income $14,804 $13,997 $1,072 $ 995
------ ------ ----- -------
------ ------ ----- -------
Consolidated net sales increased 5.8% for the nine months ended March 29,
1997. Businesses acquired net of businesses sold subsequent to the start of
fiscal 1996 increased net sales by 6.0 percentage points. The strengthening
of the U.S. dollar relative to foreign currencies had the effect of reducing
sales by approximately 2.0 percentage points. Thus on a comparable basis
sales increased 1.8%. Operating income increased 6.1% for the first nine
months of fiscal 1997 as a result of business acquisitions and improved
profit margins in the Coffee and Grocery, Household and Body Care, and
Personal Products business segments. Excluding the impact of business
acquisitions, dispositions, and changes in foreign currencies, operating
income increased 5.7%. Net interest expense for the nine months ended March
29, 1997 was 5.0% lower than the prior year. Unallocated corporate expense
increased 4.8% over the prior year. Pre-tax income for the nine month period
increased 7.8%.
The effective tax rate was 32.0% in the first nine months of fiscal 1997 as
compared to 34.0% in the first nine months of fiscal 1996. The decrease is
largely due to the impact of lower foreign taxes. Net income increased 11.0% to
$729 million while net income per share increased 11.5% to $1.46 from $1.31 last
year. The higher percentage increase in earnings per share compared to net
income is attributable to lower preferred dividends.
Net sales and operating income in the Packaged Meats and Bakery segment
increased 17.0% and 13.7%, respectively, largely due to the acquisition of
the French processed meat company Aoste. Excluding the impact of
acquisitions and changes in foreign currencies, Packaged Meats and Bakery
sales and operating income increased approximately 4.0%. Packaged Meats unit
volumes declined 1%, Bakery unit volumes declined 5% and Foodservice unit
volumes increased 3%.
Page 11
<PAGE>
Coffee and Grocery sales declined 5.1% while operating income increased 3.0%.
Operating margins for the first nine months of fiscal 1997 improved as a
result of lower coffee costs, improved operating efficiencies, increased
sales of higher-margin products and a 5% increase in unit volume. Sales and
operating income were negatively impacted by over 5.6 percentage points as a
result of the strengthening of the U.S. dollar in relation to foreign
currencies.
Net sales in the Household and Body Care segment declined 0.4% while operating
income increased 6.4% for the first nine months of fiscal 1997. Operating
margins improved as a result of improved profitability in the core Household and
Body Care product categories, which include shoe care, body care and
insecticides. Reported sales and operating income in this segment were
negatively impacted by approximately 4.5 percentage points as a result of the
strengthening of the U.S. dollar in relation to foreign currencies.
For the first nine months of the fiscal year, Personal Products sales and
operating income increased 1.8% and 3.6%, respectively. The improvement in
segment profitability was primarily attributable to incremental savings from
the 1994 restructuring and lower LIFO inventory provisions. The impact of
the stronger U.S. dollar negatively impacted sales and operating income of
this segment by approximately 1.0 percentage point. For the first nine
months, worldwide legwear unit sales were flat, combining a 2% decline in
sheer hosiery units and an 8% increase in sock unit sales. Worldwide Knit
Products unit sales were up 9% while Intimate Apparel volumes declined 1%.
FINANCIAL CONDITION
During the first nine months of fiscal 1997, net cash from operating activities
was $745 million as compared to $444 million in the comparable period in fiscal
1996. The $301 million improvement in operating cash flows was primarily due to
lower working capital requirements and higher operating income.
Net cash expended for investing activities was $779 million in the first nine
months of fiscal 1997 as compared to $338 million in fiscal 1996. The increase
is primarily due to higher cash expenditures for business acquisitions, offset
in part by cash proceeds from the disposition of an equity investment and
business.
On October 31, 1996, the Corporation's board of directors authorized the
repurchase of up to 20 million shares of the Corporation's outstanding common
stock. This amount was in addition to 12 million shares which remained from
previous repurchase authorizations. During the first nine months of fiscal
1997, the Corporation repurchased 9.3 million shares of its outstanding common
stock for $338 million. It is anticipated that future share repurchases will be
funded from internal sources of cash.
During the first nine months of fiscal 1997, net borrowings produced a cash
inflow of $621 million. The increased borrowing level is primarily attributable
to business acquisitions.
Page 12
<PAGE>
RESTRUCTURING
As of September 28, 1996, the Corporation had completed the plant closure and
employee severance actions defined in the fiscal 1994 restructuring plan.
Actions taken as part of the restructuring plan lowered operating costs by $152
million in the first nine months of fiscal 1997; 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
increased savings in subsequent quarters growing to an annual savings of
approximately $250 million in 1998. Savings from the planned actions will be
used for business building and profit improvement initiatives.
Page 13
<PAGE>
PART II
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
PAGE NUMBER OR
EXHIBIT INCORPORATED HEREIN
NUMBER DESCRIPTION BY REFERENCE TO
------ ----------- -------------------
11 Computation of Net Income Per
Common Share 16
12.1 Computation of Ratio of Earnings to
Fixed Charges 18
12.2 Computation of Ratio of Earnings to
Fixed Charges and Preferred Stock
Dividend Requirements 19
27 Financial Data Schedule 20
(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 14
<PAGE>
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: May 13, 1997
Page 15
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE EXHIBIT 11
(in millions except per share data)
<TABLE>
<CAPTION>
FOR THE PERIODS ENDED MARCH 29, 1997
---------------------------------------------
PRIMARY FULLY DILUTED
--------------------- ---------------------
Thirteen Thirty-Nine Thirteen Thirty-Nine
Weeks Weeks Weeks Weeks
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income $ 206 $ 729 $ 206 $ 729
Less: Dividends on Preferred Stocks,
net of tax benefits (7) (20) (3) (9)
Adjustment attributable to conversion of
ESOP Convertible Preferred Stock -- -- (2) (4)
---- ---- ---- ----
Net Income Available for Common Stockholders $ 199 $ 709 $ 201 $ 716
---- ---- ---- ----
---- ---- ---- ----
SHARES:
Weighted Average Shares Outstanding 478 480 478 480
Add: Common Stock Equivalents -
Stock options 4 3 4 4
ESOP Convertible Preferred Stock -- -- 18 18
Restricted stock and other 2 2 2 2
---- ---- ---- ----
Adjusted Weighted Average Shares Outstanding 484 485 502 504
---- ---- ---- ----
---- ---- ---- ----
NET INCOME PER COMMON SHARE $0.41 $1.46 $0.40 $1.42
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
Page 16
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
-----------------------------------------
COMPUTATION OF NET INCOME PER COMMON SHARE EXHIBIT 11
-----------------------------------------
(in millions except per share data) (Continued)
<TABLE>
<CAPTION>
FOR THE PERIODS ENDED MARCH 30, 1996
---------------------------------------------
PRIMARY FULLY DILUTED
--------------------- ---------------------
Thirteen Thirty-Nine Thirteen Thirty-Nine
Weeks Weeks Weeks Weeks
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
EARNINGS:
Net income $ 188 $ 657 $ 188 $ 657
Less: Dividends on Preferred Stocks,
net of tax benefits (7) (21) (3) (10)
Adjustment attributable to conversion of
ESOP Convertible Preferred Stock -- -- (2) (5)
---- ---- ---- ----
Net Income Available for Common Stockholders $ 181 $ 636 $ 183 $ 642
---- ---- ---- ----
---- ---- ---- ----
SHARES:
Weighted Average Shares Outstanding 482 481 482 481
Add: Common Stock Equivalents -
Stock options 3 2 3 3
ESOP Convertible Preferred Stock -- -- 18 18
Restricted stock and other 2 2 2 2
---- ---- ---- ----
Adjusted Weighted Average Shares Outstanding 487 485 505 504
---- ---- ---- ----
---- ---- ---- ----
NET INCOME PER COMMON SHARE $0.37 $1.31 $0.36 $1.27
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
Page 17
<PAGE>
SARA LEE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1
(IN MILLIONS EXCEPT RATIOS)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
-----------------------------------
March 29, March 30,
1997 1996
---------- ----------
<S> <C> <C>
Fixed charges:
Interest expense $ 156 $ 175
Interest portion of rental expense 49 52
---------- ----------
Total fixed charges before capitalized interest 205 227
Capitalized interest 9 9
---------- ----------
Total fixed charges $ 214 $ 236
---------- ----------
---------- ----------
Earnings available for fixed charges:
Income before income taxes $ 1,072 $ 995
Less undistributed income in minority owned companies (5) (3)
Add minority interest in majority-owned subsidiaries 23 29
Add amortization of capitalized interest 17 17
Add fixed charges before capitalized interest 205 227
---------- ----------
Total earnings available for fixed charges $ 1,312 $ 1,265
---------- ----------
---------- ----------
Ratio of earnings to fixed charges 6.1 5.4
---------- ----------
---------- ----------
</TABLE>
Page 18
<PAGE>
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>
Thirty-Nine Weeks Ended
-----------------------------------
March 29, March 30,
1997 1996
---------- ----------
<S> <C> <C>
Fixed charges and preferred stock dividend requirements:
Interest expense $ 156 $ 175
Interest portion of rental expense 49 52
---------- ----------
Total fixed charges before capitalized interest
and preferred stock dividend requirements 205 227
Capitalized interest 9 9
Preferred stock dividend requirements (1) 31 33
---------- ----------
Total fixed charges and preferred stock
dividend requirements $ 245 $ 269
---------- ----------
---------- ----------
Earnings available for fixed charges and preferred
stock dividend requirements:
Income before income taxes $ 1,072 $ 995
Less undistributed income in minority owned companies (5) (3)
Add minority interest in majority-owned subsidiaries 23 29
Add amortization of capitalized interest 17 17
Add fixed charges before capitalized interest and
preferred stock dividend requirements 205 227
---------- ----------
Total earnings available for fixed charges and
preferred stock dividend requirements $ 1,312 $ 1,265
---------- ----------
---------- ----------
Ratio of earnings to fixed charges and preferred stock
dividend requirements 5.4 4.7
---------- ----------
---------- ----------
</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.
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS 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> 9-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> MAR-29-1997
<CASH> 218
<SECURITIES> 12
<RECEIVABLES> 2,156
<ALLOWANCES> 212
<INVENTORY> 2,830
<CURRENT-ASSETS> 5,305
<PP&E> 6,268
<DEPRECIATION> 3,235
<TOTAL-ASSETS> 12,904
<CURRENT-LIABILITIES> 4,962
<BONDS> 1,943
0
339
<COMMON> 640
<OTHER-SE> 3,599
<TOTAL-LIABILITY-AND-EQUITY> 12,904
<SALES> 14,804
<TOTAL-REVENUES> 14,804
<CGS> 9,218
<TOTAL-COSTS> 9,218
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 122
<INTEREST-EXPENSE> 126
<INCOME-PRETAX> 1,072
<INCOME-TAX> 343
<INCOME-CONTINUING> 729
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 729
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 1.42
</TABLE>
