10-Q

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 28, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-3344

The Hillshire Brands Company

(Exact name of registrant as specified in its charter)

Maryland	36-2089049
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
400 South Jefferson Street, Chicago, Illinois	60607
(Address of principal executive offices)	(Zip Code)

(312) 614-6000

(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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “accelerated filer", "large accelerated filer", "smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

On September 28, 2013, the Registrant had 123,012,363 outstanding shares of common stock, par value $.01 per share.

1

The Hillshire Brands Company

INDEX

PART I -
ITEM 1 –	FINANCIAL STATEMENTS (Unaudited)
	Condensed Consolidated Balance Sheets—At September 28, 2013 and June 29, 2013	3
	Consolidated Statements of Income—For the Quarters ended September 28, 2013 and September 29, 2012	4
	Consolidated Statements of Comprehensive Income—For the Quarters ended September 28, 2013 and September 29, 2012	5
	Consolidated Statements of Equity—For the period June 30, 2012 to September 28, 2013	6
	Consolidated Statements of Cash Flows—For the Three Months ended September 28, 2013 and September 29, 2012	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2 –	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 4 –	CONTROLS AND PROCEDURES	31
PART II –
ITEM 1A –	RISK FACTORS	31
ITEM 2 –	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	31
ITEM 6 –	EXHIBITS	32
Signature		33

2

THE HILLSHIRE BRANDS COMPANY

Condensed Consolidated Balance Sheets at September 28, 2013 and June 29, 2013

(Unaudited)

In millions	September 28, 2013		June 29, 2013
Assets
Cash and equivalents	$	176	$	400
Short term investments	193		—
Trade accounts receivable, less allowances	223		219
Inventories
Finished goods	229		207
Work in process	17		15
Materials and supplies	81		91
	327		313
Current deferred income taxes	73		71
Income tax receivable	4		18
Other current assets	88		85
Total current assets	1,084		1,106
Property, net of accumulated depreciation of $1,205 and $1,185, respectively	809		818
Trademarks and other identifiable intangibles, net	136		121
Goodwill	371		348
Deferred income taxes	16		20
Other noncurrent assets	23		21
	$	2,439	$	2,434
Liabilities and Equity
Accounts payable	$	304	$	295
Accrued liabilities	349		357
Current maturities of long-term debt	111		19
Total current liabilities	764		671
Long-term debt	840		932
Pension obligation	116		119
Other liabilities	228		228
Contingencies and commitments (Note 10)
Equity
Hillshire Brands common stockholders’ equity	491		484
	$	2,439	$	2,434

See accompanying Notes to Condensed Consolidated Financial Statements.

3

THE HILLSHIRE BRANDS COMPANY

Consolidated Statements of Income

For the Quarter ended September 28, 2013 and September 29, 2012

(Unaudited)

	Three Months Ended
In millions, except per share data	September 28, 2013			September 29, 2012
Continuing Operations
Net sales	$	984		$	974
Cost of sales	719			680
Selling, general and administrative expenses	207			213
Net charges (gain) for exit activities, asset and business dispositions	3			(3		)
Operating income	55			84
Interest expense	13			11
Interest income	(2		)	(2		)
Income from continuing operations before income taxes	44			75
Income tax expense	15			26
Income from continuing operations	29			49
Discontinued operations
Income from discontinued operations, net of tax expense of nil and $1	—			2
Gain on sale of discontinued operations, net of tax expense of nil and $1	—			2
Net income from discontinued operations	—			4
Net income	29			53
Net income from continuing operations	29			49
Net income from discontinued operations	—			4
Net income	$	29		$	53
Earnings per share of common stock
Basic
Income from continuing operations	$	0.24		$	0.40
Net income	$	0.24		$	0.43
Average shares outstanding	123			122
Diluted
Income from continuing operations	$	0.23		$	0.40
Net income	$	0.23		$	0.43
Average shares outstanding	125			123
Cash dividends declared per share of common stock	$	0.175		$	0.125

See accompanying Notes to Condensed Consolidated Financial Statements.

4

THE HILLSHIRE BRANDS COMPANY

Consolidated Statements of Comprehensive Income

For the Quarter ended September 28, 2013 and September 29, 2012

(Unaudited)

	Quarter ended
In millions	September 28, 2013			September 29, 2012
Net income	$	29		$	53
Translation adjustments, net of tax	—			1
Net unrealized gain on qualifying cash flow hedges, net of tax	—			7
Pension/Postretirement activity, net of tax	(1		)	—
Comprehensive income	$	28		$	61

See accompanying Notes to Condensed Consolidated Financial Statements.

5

THE HILLSHIRE BRANDS COMPANY

Consolidated Statements of Equity

For the period June 30, 2012 to September 28, 2013

(Unaudited)

				Hillshire Brands Common Stockholders’ Equity
In millions	Total			Common Stock		Capital Surplus			Retained Earnings			Unearned Stock			Accumulated Other Comprehensive Income (Loss)
Balances at June 30, 2012	$	235		$	1	$	144		$	295		$	(61	)	$	(144	)
Net income	252			—		—			252			—			—
Translation adjustments, net of tax	(21		)	—		—			—			—			(21		)
Net unrealized loss on qualifying cash flow hedges, net of tax	(8		)	—		—			—			—			(8		)
Pension/Postretirement activity, net of tax	26			—		—			—			—			26
Dividends on common stock	(61		)	—		—			(61		)	—			—
Spin-off of international coffee and tea business	(3		)	—		—			(9		)	—			6
Stock issuances -
Restricted stock	3			—		3			—			—			—
Stock option and benefit plans	52			—		52			—			—			—
ESOP activity and other	9			—		1			—			8			—
Balances at June 29, 2013	484			1		200			477			(53		)	(141		)
Net income	29			—		—			29			—			—
Pension/Postretirement activity, net of tax	(1		)	—		—			—			—			(1		)
Dividends on common stock	(22		)	—		—			(22		)	—			—
Spin-off of international coffee and tea business	5			—		—			5			—			—
Stock issuances -
Restricted stock	3			—		3			—			—			—
Stock option and benefit plans	3			—		3			—			—			—
Share repurchases and retirements	(10		)	—		(10		)	—			—			—
Balance at September 28, 2013	$	491		$	1	$	196		$	489		$	(53	)	$	(142	)

See accompanying Notes to Condensed Consolidated Financial Statements.

6

THE HILLSHIRE BRANDS COMPANY

Consolidated Statements of Cash Flows

For the Quarter ended September 28, 2013 and September 29, 2012

(Unaudited)

	Quarter Ended
In millions	September 28, 2013			September 29, 2012
OPERATING ACTIVITIES -
Net income	$	29		$	53
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	33			39
Amortization	4			4
Net gain on business dispositions	—			(9		)
Pension contributions, net of income/expense	(2		)	(3		)
Increase (decrease) in deferred income taxes	(4		)	8
Other	7			—
Changes in current assets and liabilities, net of businesses acquired and sold:
Trade accounts receivable	(3		)	13
Inventories	(13		)	(40		)
Other current assets	(2		)	10
Accounts payable	1			(55		)
Accrued liabilities	(9		)	(31		)
Accrued taxes	18			16
Net cash from operating activities	59			5
INVESTING ACTIVITIES -
Purchases of property and equipment	(23		)	(35		)
Purchases of software and other intangibles	(2		)	(1		)
Acquisition of businesses	(35		)	—
Dispositions of businesses and investments	—			16
Cash from (used in) derivative transactions	(3		)	5
Cash used to invest in short-term investments	(193		)	—
Sales of assets	—			1
Net cash used in investing activities	(256		)	(14		)
FINANCING ACTIVITIES -
Issuances of common stock	2			27
Purchase of common stock	(10		)	—
Repayments of other debt and derivatives	(4		)	—
Payments of dividends	(15		)	—
Net cash from (used in) financing activities	(27		)	27
(Decrease) / Increase in cash and equivalents	(224		)	18
Cash and equivalents at beginning of year	400			235
Cash and equivalents at end of period	$	176		$	253
Supplemental Cash Flow Data:
Cash paid for restructuring actions	$	21		$	27
Cash contributions to pension plans	1			2
Cash paid for income taxes	—			4

See accompanying Notes to Condensed Consolidated Financial Statements.

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THE HILLSHIRE BRANDS COMPANY

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

The Hillshire Brands Company is a U.S.-based company that primarily focuses on meat and meat-centric food products. The company's principal product lines are branded packaged meat products and frozen bakery products. Sales are made in both the retail channel, to supermarkets, warehouse clubs and national chains, and the foodservice channel. References to “we”, “our”, “us”, “Hillshire Brands” and “the company” refer to The Hillshire Brands Company and its consolidated subsidiaries as a whole, unless the context otherwise requires. The company’s reportable segments are Retail and Foodservice/Other.

The consolidated financial statements for the first quarter endedSeptember 28, 2013 and September 29, 2012 have not been audited by an independent registered public accounting firm, but in the opinion of management, these financial statements include all normal and recurring adjustments necessary for a fair presentation of our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). The results of operations for the first quarter endedSeptember 28, 2013 are not necessarily indicative of the operating results to be expected for the full fiscal year.

The interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although management believes the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The preparation of the consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from these estimates. These unaudited interim consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended June 29, 2013 and other financial information filed with the SEC.

The company’s fiscal year ends on the Saturday closest to June 30. Fiscal 2014 ends on June 28, 2014. The first quarter of fiscal 2014 ended on September 28, 2013, and the first quarter of fiscal 2013 ended on September 29, 2012. Each of the quarters was a thirteen-week period. Fiscal 2014 and fiscal 2013 are both 52-week years. Unless otherwise stated, references to years relate to fiscal years.

The condensed consolidated balance sheet as of June 29, 2013 has been derived from the company’s audited financial statements included in our Annual Report on Form 10-K for the year ended June 29, 2013. The Australian bakery business is presented as discontinued operations in the company’s consolidated income statements. See Note 5 – “Discontinued Operations” for additional information regarding this discontinued operation. Unless stated otherwise, any reference to income statement items in these financial statements refers to results from continuing operations.

2. Net Income Per Share

Net income per share - basic is computed by dividing income attributable to Hillshire Brands by the weighted average number of common shares outstanding for the period. Net income per share - diluted reflects the potential dilution that could occur if options and fixed awards to be issued under stock-based compensation arrangements were converted into common stock. For the quarter endedSeptember 28, 2013, options to purchase 0.2 million shares of the company’s common stock had exercise prices that were greater than the average market price of those shares during the respective reporting periods. For the quarter endedSeptember 29, 2012, options to purchase 3.2 million of the company’s common stock had exercise prices that were greater than the average market price of those shares during the respective reporting periods.

The average shares outstanding increased in the first quarter of 2014 as compared to the first quarter of 2013 as a result of stock issuances related to the exercise of stock options and the vesting of restricted stock units (RSUs). In the first quarter of 2014, the company repurchased 0.3 million shares at a cost of $10 million under an existing share repurchase program which authorized the company to repurchase $1.2 billion of common stock.

As of September 28, 2013, the remaining amount authorized for repurchase is approximately $1.2 billion of common stock under one of its existing share repurchase programs, plus 2.7 million shares of common stock that remain authorized for repurchase under the company's other share repurchase program.

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The following is a reconciliation of net income to net income per share – basic and diluted – for the first quarter of 2014 and 2013 (per share amounts are rounded and may not add to total):

Computation of Net Income per Common Share

(In millions, except per share data)

	Quarter ended
	September 28, 2013		September 29, 2012
Amounts attributable to Hillshire Brands
Income from continuing operations	$	29	$	49
Income from discontinued operations, net of tax	—		4
Net income	$	29	$	53
Average shares outstanding – Basic	123		122
Dilutive effect of stock option and award plans	2		1
Diluted shares outstanding	125		123
Earnings per common share—Basic
Income from continuing operations	$	0.24	$	0.40
Income from discontinued operations	—		0.03
Net income	$	0.24	$	0.43
Earnings per common share – Diluted
Income from continuing operations	$	0.23	$	0.40
Income from discontinued operations	—		0.03
Net income	$	0.23	$	0.43

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3. Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income (AOCI) by component for the quarters ended September 28, 2013 and September 29, 2012 are as follows:

Amounts in parentheses indicate debits.		Net Unrealized Gain (loss) on Qualifying Cash Flow Hedges				Pension/ Post-retirement Activity				Translation Adjustments		Total
Beginning Balance as of June 29, 2013		$	—			$	(142	)		$	1	$	(141	)
	Other comprehensive loss before reclassifications	(1		)		—				—		(1		)
	Amounts reclassified from accumulated other comprehensive income:
	Prior-service cost	—				(2		)	(b)	—		(2		)
	Actuarial loss	—				1			(b)	—		1
	Loss realized from derivatives	1			(a)	—				—		1
Net current-period other comprehensive income		—				(1		)		—		(1		)
Ending Balance as of September 28, 2013		$	—			$	(143	)		$	1	$	(142	)
Beginning Balance as of June 30, 2012		$	8			$	(168	)		$	16	$	(144	)
	Other comprehensive income before reclassifications	12				—				1		13
	Amounts reclassified from accumulated other comprehensive income:
	Prior-service cost	—				(2		)	(b)	—		(2		)
	Actuarial loss	—				1			(b)	—		1
	Gain realized from derivatives	(5		)	(a)	—				—		(5		)
	Tax benefit	—				1			(c)	—		1
Net current-period other comprehensive income		7				—				1		8
Ending Balance as of September 29, 2012		$	15			$	(168	)		$	17	$	(136	)

(a) Included as Cost of Sales in the Consolidated Statements of Income

(b) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Pension Plans and Other Postretirement Benefit Plan footnote for additional details)

(c) Included as Income tax expense in the Consolidated Statements of Income

4. Segment Information

The following is a general description of the company’s two business segments:

• Retail – sells a variety of packaged meat and frozen bakery products to retail customers in North America. It also includes gourmet artisanal sausage, salami and jerky products.

• Foodservice/Other – sells a variety of meats and bakery products to foodservice customers in North America such as broad-line foodservice distributors, restaurants, hospitals and other large institutions and includes commodity meat products.

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The following is a summary of net sales and operating income by business segment:

	Net Sales
	Three Months Ended
(In millions)	September 28, 2013			September 29, 2012
Retail	$	714		$	719
Foodservice/Other	270			255
Net sales	$	984		$	974
	Income from Continuing Operations Before Income Taxes
	Three Months Ended
(In millions)	September 28, 2013			September 29, 2012
Retail	$	60		$	84
Foodservice/Other	25			25
Total operating segment income	85			109
General corporate expense	(25		)	(31		)
Mark-to-market derivative gains	2			5
Amortization of intangibles	(1		)	(1		)
Significant items - business segments	(6		)	2
Total operating income	55			84
Net interest expense	(11		)	(9		)
Income from continuing operations before income taxes	$	44		$	75

5. Discontinued Operations

There has been no discontinued operation activity in the first quarter of 2014.

On December 19, 2012, the company signed an agreement to sell its Australian bakery business to McCain Foods Limited. The results of this business were previously reported as the Australian Bakery business segment. Also included in the transaction were the license rights to certain intellectual property used by the Australia bakery business in the Asia-Pacific region. In February 2013, the company completed the sale of its Australian Bakery business. Using foreign currency exchange rates on the date of the transaction, the company received cash proceeds of $85 million and reported an after tax gain on disposition of $42 million.

The results of the Australian bakery business are classified as discontinued operations and are presented as discontinued operations in the condensed consolidated statements of income for all periods presented. The disposition of the Australian bakery business was completed prior to the end of fiscal 2013, and, as such, there are no operating results or cash flows related to this discontinued operation in 2014.

The following is a summary of the operating results of the company’s discontinued operations for the first quarter of 2013:

	First Quarter 2013
(In millions)	Net Sales		Pretax Income		Net Income
Australian Bakery	$	37	$	3	$	2

The disposition of the businesses had been completed prior to the end of fiscal 2012. The gain on sale of discontinued operations reported in fiscal 2013 represents the impact of a final purchase price adjustment related to the North American fresh bakery disposition and gain related to the disposition of two manufacturing facilities related to the North American foodservice beverage operations. The following is a summary of the gain on sale of the company’s discontinued operations for the first quarter of 2013:

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	First Quarter 2013
(In millions)	Pretax Gain on Sale		Tax Expense			After Tax Gain
North American Fresh Bakery	$	1	$	—		$	1
North American Foodservice Beverage	2		(1		)	1
Total	$	3	$	(1	)	$	2

The cash flows related to the discontinued operations for the first quarter of 2013 are summarized in the table below:

	Quarter Ended
(In millions) – Increase / (Decrease)	September 29, 2012
Cash flow from operating activities	$	11
Cash flow from investing activities	7
Cash flow used in financing activities	(10		)
Increase in net cash of discontinued operations	8
Cash and cash equivalents at beginning of year	—
Cash and cash equivalents at end of period	$	8

The cash used in financing activities primarily represents the net transfers of cash with the corporate office. The net assets of the discontinued operations assumed that the cash of those businesses has been retained as a corporate asset.

6. Exit, Disposal and Other Restructuring Activities

The company has incurred exit, disposition and restructuring charges for initiatives designed to improve its operational performance and reduce cost. The nature of the costs incurred under these plans includes the following:

Exit Activities, Asset and Business Disposition Actions – These amounts primarily relate to:

• Employee termination costs

• Lease and contractual obligation exit costs

• Gains or losses on the disposition of assets or asset groupings that do not qualify as discontinued operations

Costs recognized in Cost of sales and Selling, general and administrative expenses – These primarily relate to:

• Expenses associated with the installation of information systems

• Consulting costs

• Costs associated with the renegotiation of contracts for services with outside third-party vendors as part of the spin-off of the international coffee and tea operations

These costs are recognized in Cost of sales or Selling, general and administrative expenses in the Consolidated Statements of Income as they do not qualify for treatment as an exit activity or asset and business disposition under the accounting rules for exit and disposal activities. However, management believes the disclosure of these charges provides the reader greater transparency to the total cost of the initiatives.

The following is a summary of the (income) expense associated with ongoing actions, which also highlights where the costs are reflected in the Consolidated Statements of Income:

	Quarter Ended
(In millions)	September 28, 2013		September 29, 2012
Cost of Sales	$	—	$	1
Selling, general and administrative expenses	14		8
Exit activities, asset and business dispositions	3		(3		)
Decrease in income from continuing operations before income taxes	17		6

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The impact of these actions on the company’s business segments and general corporate expense is summarized as follows:

	Quarter Ended
(In millions)	September 28, 2013		September 29, 2012
Retail	$	2	$	(3	)
Foodservice/Other	1		(2		)
Decrease (Increase) in operating segment income	3		(5		)
Increase in general corporate expenses	14		11
Total	$	17	$	6

The following table summarizes the activity for the first quarter of 2014 related to exit, disposal and restructuring related actions and the status of the related accruals as of September 28, 2013. The 2014 exit, disposal and restructuring related actions include recognized third party consulting costs related to cost saving and efficiency process and IT initiatives and recognized severance charges associated with planned employee terminations. The accrued amounts remaining represent the estimated cash expenditures necessary to satisfy remaining obligations and are expected to be paid in the next 12 months.

(In millions)	Employee termination and other benefits			IT and other costs			Non-cancellable leases/ Contractual obligations			Total
Accrued Costs as of June 29, 2013	$	10		$	5		$	23		$	38
Exit, disposal and other costs recognized during 2014	3			14			—			17
Cash payments	(3		)	(10		)	(8		)	(21		)
Accrued costs as of September 28, 2013	$	10		$	9		$	15		$	34

7. Financial Instruments

Investment Securities

In the first quarter of fiscal year 2014, the company purchased securities for investment purposes. Under the current investment policy, the company may invest in debt securities deemed to be investment grade at the time of purchase for general corporate purposes. The company determines the appropriate categorization of debt securities at the time of purchase and reevaluates such designation at each balance sheet date. The company typically categorizes all debt securities as available for sale, as the company has the intent to convert these investments into cash if and when needed. Classification of available-for-sale marketable securities as current or non-current is based on whether the conversion to cash is expected to be necessary for operations in the upcoming year, which is consistent with the security’s maturity date, if applicable.

Securities categorized as available for sale are stated at fair value, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss). The amortized cost, unrealized gains and losses, and fair market values of the company's investment securities available for sale at September 28, 2013 are summarized as follows:

	September 28, 2013
(In millions)	Amortized Cost		Unrealized Gain/(Loss)		Fair Market Value
Available-for-sale:(1)
Commercial Paper	$	158	$	—	$	158
Corporate Note	95		—		95
Total	$	253	$	—	$	253

(1) Categorized as level 1: Observable input such as quoted prices in active markets for identical assets or liabilities

Derivative Instruments

The company uses derivative financial instruments, including futures, options and swap contracts to manage its exposures to commodity prices and interest rate risks. The use of these derivative financial instruments modifies the exposure of these risks with the intent to reduce the risk or cost to the company. The company does not use derivatives for trading or speculative

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purposes and is not a party to leveraged derivatives. More information concerning accounting for financial instruments can be found in Note 2, Summary of Significant Accounting Policies in the company’s 2013 Annual Report.

Types of Derivative Instruments—

Interest Rate Swaps

The company previously had utilized interest rate swap derivatives to manage interest rate risk in order to maintain a targeted amount of both fixed-rate and floating-rate long-term debt and notes payable. Interest rate swap agreements that are effective at hedging the fair value of fixed-rate debt agreements are designated and accounted for as fair value hedges. The company has a fixed interest rate on virtually all of its long-term debt, and as of September 28, 2013, the company is not a party to any interest rate swap agreements.

Commodity Futures and Options Contracts

The company uses commodity futures and options to hedge a portion of its commodity price risk. The principal commodities hedged by the company include pork, beef, natural gas, diesel fuel, corn, wheat and other ingredients. The company does not use significant levels of commodity financial instruments to hedge commodity prices and primarily relies upon fixed rate supplier contracts to determine commodity pricing. In circumstances where commodity-derivative instruments are used, there is a high correlation between the commodity costs and the derivative instruments. For those instruments where the commodity instrument and underlying hedged item correlate between 80%-125%, the company accounts for those contracts as cash flow hedges. However, the majority of commodity derivative instruments are accounted for as mark-to-market hedges. The company only enters into futures and options contracts that are traded on established, well-recognized exchanges that offer high liquidity, transparent pricing, daily cash settlement and collateralization through margin requirements.

The notional values of the various derivative instruments used by the company are summarized in the following table:

NotionalValues (In millions)	September 28, 2013		June 29, 2013		Hedge Coverage (Number of months)
Commodity Contracts:
Commodity Future Contracts:(1)
Grains/Oilseed	$	46	$	34	7
Energy	$	26	$	29	11
Other commodities	$	9	$	20	5

(1) Commodity futures contracts are determined by the initial cost of the contract

Cash Flow Presentation

The cash receipts and payments from a derivative instrument are classified according to the nature of the instrument, when realized, generally in investing activities unless otherwise disclosed. However, cash flows from a derivative instrument that are accounted for as a fair value hedge or cash flow hedge are classified in the same category as the cash flows from the items being hedged provided the derivative does not include a financing element at inception. If a derivative instrument includes a financing element at inception, all cash inflows and outflows of the derivative instrument are considered cash flows from financing activities. If, for any reason, hedge accounting is discontinued, any remaining cash flows after that date will be classified consistent with mark-to-market instruments.

Contingent Features/Concentration of Credit Risk

All of the company’s derivative instruments are governed by International Swaps and Derivatives Association (ISDA) master agreements, requiring the company to maintain an investment grade credit rating from both Moody’s and Standard & Poor’s credit rating agencies. If the company’s credit rating were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate collateralization on the derivative instruments in net liability positions. There are no derivative instruments with credit-risk-related contingent features that are in a liability position as of September 28, 2013 and June 29, 2013.

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A large number of major international financial institutions are counterparties to the company’s financial instruments. The company enters into financial instrument agreements only with counterparties meeting very stringent credit standards (a credit rating of A-/A3 or better), limiting the amount of agreements or contracts it enters into with any one party and, where legally available, executing master netting agreements. The company regularly monitors these positions. While the company may be exposed to credit losses in the event of non-performance by individual counterparties of the entire group of counterparties, the company has not recognized any losses with these counterparties in the past and does not anticipate material losses in the future.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value must be categorized into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while level 3 generally requires significant management judgment. Assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement.

The carrying amounts of cash and equivalents, trade accounts receivables, accounts payable, derivative instruments and notes payable approximate fair values due to their short-term nature and are considered Level 1 based on the valuation inputs. The carrying value of derivative instruments approximate fair value but may be considered Level 1 or Level 2 based on the valuation inputs used (see balance sheet classification and fair value determination in the table presented later in this disclosure). The fair value of the company’s long-term debt (considered Level 2 based on the valuation inputs used), including the current portion, is estimated using discounted cash flows based on the company’s current incremental borrowing rates for similar types of borrowing arrangements. Marketable securities available for sale values are derived solely from level 1 inputs.

	September 28, 2013				June 29, 2013
(In millions)	Fair Value		Carrying Amount		Fair Value		Carrying Amount
Long-term debt, including current portion	$	978	$	951	$	981	$	951

Information related to our cash flow hedges, net investment hedges, fair value hedges and other derivatives not designated as hedging instruments for the quarters ended September 28, 2013 and September 29, 2012 is as follows:

	Foreign Exchange Contracts					Commodity Contracts						Total
	Quarter Ended					Quarter Ended						Quarter Ended
(In millions)	September 28, 2013		September 29, 2012			September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Cash Flow Derivatives:
Amount of gain (loss) recognized in other comprehensive income (OCI) (a)	$	—	$	—		$	(1	)	$	12		$	(1	)	$	12
Amount of gain (loss) reclassified from AOCI into earnings (a) (b)	—		—			(1		)	5			(1		)	5
Change in amount of gain (loss) expected to be reclassified into earnings during the next twelve months	—		—			(2		)	(11		)	(2		)	(11		)
Derivatives Not Designated as Hedging Instruments:
Amount of gain (loss) recognized in Cost of Sales	—		—			(1		)	4			(1		)	4
Amount of gain (loss) recognized in SG&A	—		(1		)	1			1			1			—

(a) Effective portion

(b) Gain (loss) reclassified from AOCI into earnings is reported in selling, general, and administrative (SG&A) expenses for foreign exchange contracts and in cost of sales for commodity contracts

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8. Pension and Other Postretirement Benefit Plans

The components of the net periodic benefit cost (benefit) for the pension and postretirement benefit plans for the quarter endedSeptember 28, 2013 and September 29, 2012 are as follows:

	Pension Plans
	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Service cost	$	2		$	3
Interest cost	19			18
Expected return on plan assets	(22		)	(23		)
Amortization of:
Net actuarial loss	1			1
Prior service cost	—			—
Settlement loss	—			—
Net periodic benefit cost (benefit)	$	—		$	(1	)

	Postretirement Benefit Plans
	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Service cost	$	—		$	—
Interest cost	1			1
Expected return on plan assets	—			—
Amortization of:
Net actuarial loss	—			—
Prior service cost	(2		)	(2		)
Settlement loss	—			—
Net periodic benefit cost (benefit)	$	(1	)	$	(1	)

The company contributed approximately $1 million and $2 million to its defined benefit pension plans related to continuing operations during the first quarter ended of 2014 and 2013, respectively. At the present time, the company expects to contribute approximately $5 million to $6 million of additional cash to its defined benefit pension plans in the remainder of 2014. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors including minimum funding requirements in the jurisdictions in which the company operates. As a result, the actual funding in 2014 may differ from the current estimate.

9. Income Taxes

The following table sets out the tax expense and the effective tax rate for the company from continuing operations:

	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Continuing operations
Income before income taxes	$	44		$	75
Income tax expense (benefit)	15			26
Effective tax rate	33.4		%	35.3		%

First Quarter 2014

In the first quarter of 2014, the company recognized tax expense of $15 million on pretax income from continuing operations of $44 million, or an effective tax rate of 33.4%. The tax expense and related effective tax rate on continuing operations were determined by applying a33.5% estimated annual effective tax rate to pretax earnings and then recognizing various discrete tax items, none of which were material individually or in the aggregate.

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First Quarter 2013

In the first quarter of 2013, the company recognized a tax expense of $26 million on pretax income from continuing operations of $75 million, or an effective tax rate of 35.3%.The tax expense and related effective tax rate on continuing operations was determined by applying a 35.3% estimated annual effective tax rate to pretax earnings.

Unrecognized Tax Benefits

Each quarter, the company makes a determination of the tax liability needed for unrecognized tax benefits that should be recorded in the financial statements. For tax benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by the taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The year-to-date net liability for unrecognized tax benefits as of September 28, 2013 is $65 million which is unchanged from June 29, 2013. At this time, the company estimates that it is reasonably possible that the liability for unrecognized tax benefits will decrease by $5 million to $30 million in the next twelve months from a variety of uncertain tax positions as a result of the completion of tax audits currently in process and the expiration of statutes of limitations.

The company’s tax returns are routinely audited by federal, state, and foreign tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service (IRS) has completed examinations of the company’s U.S. income tax returns through 2008. With few exceptions, the company is no longer subject to state and local income tax examinations by tax authorities for years prior to 2005.

10. Contingencies and Commitments

The company is a party to various pending legal proceedings, claims and environmental actions by government agencies. The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can reasonably be estimated. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information pertinent to the particular matter.

Aris – This is a consolidation of cases filed by individual complainants with the Republic of the Philippines, Department of Labor and Employment and the National Labor Relations Commission (NLRC) from 1998 through July 1999. The complaint alleges unfair labor practices due to the termination of manufacturing operations in the Philippines by Aris Philippines, Inc. (Aris), a former subsidiary of the company. The complaint names the company as a party defendant. In 2006, the arbitrator ruled against the company and awarded the plaintiffs approximately $80 million in damages and fees. This ruling was appealed by the company and subsequently set aside by the NLRC in December 2006. Both the complainants and the company have filed motions for reconsideration. The company continues to believe that the plaintiffs' claims are without merit; however, it is reasonably possible that this case will be ruled against the company and have a material adverse impact on the company's results of operations and cash flows. The company has initiated settlement discussions for this case and has established an accrual for the estimated settlement amount.

Multi-Employer Pension Plans – The company participates in one multi-employer pension plan (MEPP) that provided retirement benefits to certain employees covered by collective bargaining agreements. Participating employers in a MEPP are jointly responsible for any plan underfunding. MEPP contributions are established by the applicable collective bargaining agreements; however, the MEPPs may impose increased contribution rates and surcharges based on the funded status of the plan and the provisions of the Pension Protection Act of 2006 (PPA). The PPA imposes minimum funding requirements on the plans. Plans that fail to meet certain funding standards as defined by the PPA are categorized as being either in a critical or endangered status. We have received notice that the plan to which we contribute has been designated in critical status. The trustees of critical status multi-employer plans must adopt a rehabilitation or funding improvement plan designed to improve the plan's funding within a prescribed period of time. Rehabilitation and funding improvement plans may include increased employer contributions, reductions in benefits or a combination of the two. Unless otherwise agreed upon, any requirement to increase employer contributions will not take effect until the current collective bargaining agreements expire. However, a five percent surcharge for the initial critical year (increasing to ten percent for the following and subsequent years) is imposed on contributions to plans in critical status and remains in effect until the bargaining parties agree on modifications consistent with the rehabilitation plan adopted by the trustees. In addition, the failure of a plan to meet funding improvement targets provided in its rehabilitation or funding improvement plan could result in the imposition of an excise tax on contributing employers.

Under current law regarding multi-employer pension plans, a withdrawal or partial withdrawal from any plan that was underfunded would render us liable for our proportionate share of that underfunding. This potential unfunded pension liability

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also applies ratably to other contributing employers. Information regarding underfunding is generally not provided by plan administrators and trustees on a current basis and when provided, is difficult to independently validate. Any public information available relative to multi-employer pension plans may be dated as well. In the event of a withdrawal or partial withdrawal was to occur with respect to the MEPP to which the company makes contributions, the impact to our consolidated financial statements could be material. Withdrawal liability triggers could include the company's decision to close a plant or the dissolution of a collective bargaining unit.

The company's regularly scheduled contributions to MEPPs related to continuing operations are expected to be approximately $2 million in 2014, and totaled approximately $1 million in 2013.

Guarantees

The company is a party to a variety of agreements under which it may be obligated to indemnify a third party with respect to certain matters. Typically, these obligations arise as a result of contracts entered into by the company under which the company agrees to indemnify a third party against losses arising from a breach of representations and covenants related to matters such as title to assets sold, the collectibility of receivables, specified environmental matters, lease obligations assumed and certain tax matters. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the contract. These procedures allow the company to challenge the other party's claims. In addition, the company's obligations under these agreements may be limited in terms of time and/or amount, and in some cases the company may have recourse against third parties for certain payments made by the company. It is not possible to predict the maximum potential amount of future payments under certain agreements, due to the conditional nature of the company's obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company's business, financial condition or results of operations. The company believes that if it were to incur a loss in any of these matters, such loss would not have a material effect on the company's business, financial condition or results of operations.

The material guarantees for which the maximum potential amount of future payments can be determined, are as follows:

Contingent Lease Obligations – The company is contingently liable for leases on property operated by others. At September 28, 2013, the maximum potential amount of future payments the company could be required to make, if all of the current operators default on the rental arrangements, is $16 million. The minimum annual rentals under these leases are $7 million in 2014, $8 million in 2015 and $1 million in 2016. The largest components of these amounts relate to a number of retail store leases operated by Coach, Inc. Coach, Inc. is contractually obligated to provide the company, on an annual basis, with a standby letter of credit which, at a minimum, is equal to the next year's rental obligations. The letter of credit in place at the close of 2013 was $7 million. This obligation to provide a letter of credit expires when the company's contingent lease obligation is substantially extinguished. The company has not recognized a liability for the contingent obligation on the Coach, Inc. leases.

Contingent Debt Obligations and Other – The company has guaranteed the payment of certain third-party debt. The maximum potential amount of future payments that the company could be required to make, in the event that these third parties default on their debt obligations, is $16 million. At the present time, the company does not believe it is probable that any of these third parties will default on the amount subject to guarantee.

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ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following is management’s discussion and analysis of the results of operations for the first quarter of 2014 compared with the first quarter of 2013 and a discussion of the changes in financial condition and liquidity during the first quarter of 2014. Below is an outline of the analyses included herein:

• Business Overview

• Summary of Results

• Consolidated Results – First Quarter of 2014 Compared with First Quarter of 2013

• Operating Results by Business Segment

• Financial Condition

• Liquidity

• Non-GAAP Financial Measures Definitions

• Significant Accounting Policies and Critical Estimates

• Issued but not yet Effective Accounting Standards

• Forward-Looking Information

Business Overview

Our Business

Hillshire Brands is a manufacturer and marketer of high-quality, brand name food products. Sales are principally in the United States, where it is one of the leaders in meat-centric food solutions for the retail and foodservice markets. In the retail channel, the company sells a variety of packaged meat products that include hot dogs, corn dogs, breakfast sandwiches, sausages and lunchmeats as well as a variety of frozen baked products and specialty items including cakes and cheesecakes. These products are sold primarily to supermarkets, warehouse clubs and national chains. The company also sells a variety of meat and bakery products to foodservice customers.

The company's portfolio of brands includes Jimmy Dean, Ball Park, Hillshire Farm, State Fair, Sara Lee frozen bakery and Chef Pierre, as well as artisanal brands Aidells, Gallo Salame and Golden Island.

Strategy

The company is focused on delivering long-term value creation through strengthening the core of its business through brand building and innovation; leveraging its heritage brand equities to extend into new adjacent categories; fueling growth by driving operating efficiencies; and evaluating opportunities to acquire on-trend brands that align with its strategy for value creation.

Summary of Results

The business highlights include the following:

• Net sales for the first quarter of 2014 were $984 million, which was $10 million, or 1%, higher than the prior year. The increase in sales was driven by favorable mix and pricing initiatives which were partially offset by a slight decline in volume and increased spending in selected trade and slotting programs.

• Reported operating income for the first quarter of 2014 was $55 million, which was $29 million, or 35.2%, lower than the prior year. The net sales increase of $10 million was offset by a $39 million increase in cost of sales primarily driven by higher commodity costs. Adjusted operating income, which decreased $25 million, or 24.4%, was also negatively affected by unfavorable commodity costs which were partially offset by decreased SG&A spending. Investments in MAP decreased 13.4% in the quarter as spending was redeployed to other marketing initiatives.

• Diluted earnings per share from continuing operations for the first quarter decreased from $0.40in 2013 to$0.23 in 2014 primarily driven by the unfavorable effects of commodity costs partially offset by lower income tax expense. Adjusted EPS, which excludes the impact of significant items, decreased from $0.49in 2013 to $0.35 in 2014 due to the decline in operating income, excluding significant items, and a higher share count. Average diluted shares outstanding increased from 123 millionto125 million on a year-over-year basis due to the impact of the exercise of stock options and the vesting of restricted stock units.

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• Total cash flow from operating activities improved from a source of cash of $5 million in the first quarter of 2013 to $59 million for the first quarter of 2014. The most significant driver of the change was related to increased focus on working capital management.

Consolidated Results – First Quarter of 2014 Compared with First Quarter of 2013

The following table summarizes net sales and operating income for the first three months of 2014 and 2013 and certain items that affected the comparability of these amounts:

	Three Months ended
Total Company Performance(In millions)	September 28, 2013			September 29, 2012			Change			Percent Change
Net sales	$	984		$	974		$	10		1.0	%
Operating income	$	55		$	84		$	(29	)	(35.2	)%
Less: Impact of significant items on operating income	(21		)	(17		)	(4		)
Adjusted operating income	$	76		$	101		$	(25	)	(24.4	)%

Net Sales

Net sales increased by $10 million or 1.0% driven by commodity-driven pricing and favorable mix in the foodservice segment, which were partially offset by slight declines in volume, increased trade spending in selected categories and higher slotting expenses for new items.

The components of the percentage change in net sales as compared to the prior year are as follows:

First Three Months of 2014	Volumes		+	Price/Mix		+	Acquisitions		=	Net Sales Change
Net Sales Changes
Total Continuing Business	(0.3	)%		1.2	%		0.1	%		1.0	%

Operating Income

Operating income decreased by $29 million primarily driven by unfavorable commodity costs and higher slotting expenses partially offset by favorable mix and pricing. Adjusted operating income, which decreased $25 million, or 24.4%, was also negatively affected by unfavorable commodity costs which were partially offset by decreased SG&A spending.

Gross Margin

Gross margin dollars in the first three months of 2014 decreased $29 millionover the prior year due to higher commodity costs, which were only partially offset by pricing actions and a favorable shift in sales mix. The gross margin percent decreasedfrom30.2% in the first three months of 2013 to 27.0% in the first three months of 2014 primarily due to the impact of higher commodity costs.

Selling, General and Administrative Expenses

	Three Months ended
(In millions)	September 28, 2013			September 29, 2012			Change			Percent Change
SG&A expenses in the business segment results:
Media advertising and promotion	$	40		$	46		$	(6	)	(13.4	)%
Other	142			139			3			2.7	%
Total business segments	182			185			(3		)	(1.3	)%
General corporate expenses	25			28			(3		)	(11.7	)%
Mark-to-market derivative gains	(1		)	(1		)	—			(25.8	)%
Amortization of identifiable intangibles	1			1			—			—	%
Total SG&A Expenses	$	207		$	213		$	(6	)	(2.6	)%

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Selling, general and administrative expenses decreased by$6 million, or 2.6%. Measured as a percent of sales, SG&A expenses declined slightly year over year from 21.8%to 21.1%.SG&A expenses in the business segments decreased $3 million, or 1.3%, primarily due to productivity gains in the procurement of MAP, and a shift of funds to slotting to support new item introduction. General corporate expenses were $3 million lower in 2014 primarily due to decreased restructuring costs.

Exit Activities and Other Significant Items

The reported results for the first three months of 2014 and 2013 reflect amounts recognized for actions associated with the company’s ongoing business improvement and cost reduction program and other exit and disposal actions. The amounts reported for exit activities, asset and business dispositions were charges of $3 million in the first three months of 2014 versusa gain of$3 million in the first three months of 2013. As discussed in Note 6 to the financial statements, “Exit, Disposal and Other Restructuring Activities,” the charges in 2014 relate to employee severance costs, while the gain in 2013 was primarily related to the disposition of manufacturing facilities that had been held for sale.

Net Interest Expense

Net interest expense increased from $9 million in the first three months of 2013 to $11 million in the first three months of 2014. The $2 million increase was primarily due to the decrease of capitalized interest.

Income Tax Expense

Note 9 to the Consolidated Financial Statements provides a detailed explanation of the determination of the interim tax provision. The following table sets out the tax expense and the effective tax rate for the company from continuing operations:

	Three Months
(In millions)	2014			2013
Continuing operations
Income before income taxes	$	44		$	75
Income tax expense (benefit)	15			26
Effective tax rate	33.4		%	35.3		%

In the first three months of 2014, the company recognized tax expense of$15 million on pretax income from continuing operations of $44 million, or an effective tax rate of 33.4%. The tax expense and related effective tax rate on continuing operations were determined by applying a33.5% estimated annual effective tax rate to pretax earnings and then recognizing various discrete tax items, none of which were material individually or in the aggregate.

In the first three months of 2013, the company recognized a tax expense of$26 millionon pretax income from continuing operations of $75 million, or an effective tax rate of 35.3%. The tax expense and related effective tax rate on continuing operations was determined by applying a 35.3% estimated annual effective tax rate to pretax earnings.

Income from Continuing Operations and Diluted Earnings per Share (EPS)

Income from continuing operations in the first three months of 2014 was $29 million as compared to $49 million in the prior year. The $20 million decrease in earnings was primarily due to increased commodity costs which were partially offset by increased net sales and a lower effective tax rate.

Diluted EPS from continuing operations decreased from $0.40 in the first three months of 2013 to $0.23 in the first three months of 2014 due to the decrease in operating income noted above. Adjusted EPS, which excludes the impact of significant items, decreased from $0.49 in 2013 to $0.35 in 2014. Diluted EPS in 2014 was negatively impacted by higher average shares outstanding. The average diluted shares outstanding increased from 123 million in 2013 to 125 million in 2014 due to the exercise of stock options and the vesting of RSUs.

Discontinued Operations

Income (loss) from discontinued operations – Discontinued operations reported no income in the first quarter of 2014 versus $2 millionin 2013. The results in 2013 related mainly to the Australian bakery operations, which were disposed of in February 2013.

Gain on sale of discontinued operations – In the first quarter of 2013 the company recognized a $2 million gain related to the final purchase adjustment for the North American fresh bakery disposition and the disposition of two manufacturing facilities related to the North American foodservice beverage operations.

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Net Income and Diluted Earnings per Share (EPS)

For the first three months of 2014, the company reported net income of $29 million versus net income of $53 million for the comparable period of the prior year. The $24 million, or 44.9%, decrease in net income was primarily driven by increased commodity costs and prior year income from discontinued operations as noted above.

Diluted EPS was $0.23 in the first three months of 2014 as compared to $0.43 per share in the first three months of 2013. Diluted EPS were impacted by higher average shares outstanding during the first three months of 2014, which resulted from the exercise of stock options and the vesting of RSUs.

Operating Results by Business Segment

Net sales and income before income taxes by business segment for 2014 and 2013 are as follows:

	Net Sales
	Three Months ended
(In millions)	September 28, 2013		September 29, 2012
Retail	$	714	$	719
Foodservice/Other	270		255
Total net sales	$	984	$	974

	Income from Continuing Operations Before Income Taxes
	Three Months ended
(In millions)	September 28, 2013			September 29, 2012
Retail	$	60		$	84
Foodservice/Other	25			25
Total operating segment income	85			109
General corporate expense	(25		)	(31		)
Mark-to-market derivative gains	2			5
Amortization of intangibles	(1		)	(1		)
Significant items - business segments	(6		)	2
Total operating income	55			84
Net interest expense	(11		)	(9		)
Income from continuing operations before income taxes	$	44		$	75

The following tables illustrate the components of the change in net sales versus the prior year for each business segment and the total company:

First Three Months of 2014	Volumes		+	Price/Mix		+	Acquisitions		=	Net Sales Change
Net Sales Changes
Retail	(0.6	)%		(0.2	)%		0.1	%		(0.7	)%
Foodservice/Other	0.3	%		5.4	%		—	%		5.7	%
Total Continuing Business	(0.3	)%		1.2	%		0.1	%		1.0	%

The following tables summarize the net sales and operating segment income for each of the business segments for 2014 and 2013 and certain items that affected the comparability of these amounts:

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Retail

	Three Months ended
(In millions)	September 28, 2013		September 29, 2012		Change			Percent Change
Net Sales	$	714	$	719	$	(5	)	(0.7	)%
Operating segment income	$	60	$	84	$	(24	)	(27.8	)%

Net sales decreased slightly versus the prior year as a favorable shift in sales mix was offset by declines in volume and increases in slotting and trade. Volume increases for Jimmy Dean breakfast sandwiches and Aidells were offset by volume declines for Ball Park hot dogs, Hillshire Farm lunchmeat, deli meats and frozen sweet goods. Higher trade spending, particularly in lunchmeat and corn dogs, reduced net sales growth by approximately 1.2%.

Operating segment income decreased by $24 million, or 27.8%, due to the impact of higher commodity costs, higher slotting, and higher trade spending, partially offset by a favorable shift in sales mix and lower MAP investments.

Foodservice/Other

	Three Months ended
(In millions)	September 28, 2013		September 29, 2012		Change		Percent Change
Net sales	$	270	$	255	$	15	5.7	%
Operating segment income	$	25	$	25	$	—	(1.8	)%

Net sales increased by $15 million,or5.7%. The increase in net sales was due to pricing actions to cover commodity increases, higher prices for commodity turkey sales, a favorable shift in sales mix, and an increase in volume. Overall volumes were up 0.3% driven by increases in breakfast sausage, smoked sausage, corn dogs, and upscale desserts.

Operating segment income remained flat as commodity cost increases were largely offset by pricing actions and timing led to lower MAP investments.

Financial Condition

The Consolidated Statement of Cash Flows for the first quarter of 2013 includes amounts related to discontinued operations. See Note 5 – “Discontinued Operations” for additional information.

Cash received from (used in) Operating Activities

The cash from operating activities generated by continuing and discontinued operations is summarized in the following table:

	First Quarter ended
(In millions)	September 28, 2013		September 29, 2012
Cash from (used in) Operating Activities:
Continuing Operations	$	59	$	(6	)
Discontinued Operations	—		11
Total	$	59	$	5

The cash from operating activities increased by $54 million versus the prior year due primarily to favorable impact of improved working capital management, particularly with respect to inventory and accounts payable, slightly offset by lower income. In 2013, $11 million of cash was generated by discontinued operations related to the Australian bakery operations.

Cash received from (used in) Investing Activities

The cash used by investing activities was $256 million in the first quarter of 2014 as compared to a use of cash of $14 million in 2013. The year-over-year change was primarily due to a $193 millionincrease in the cash used to purchase short-term commercial paper and corporate note investments and $35 million used for the acquisition of our Golden Island jerky business.

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Cash received from (used in) Financing Activities

Net cash used by financing activities in 2014 was $27 million versus cash proceeds of $27 million in the prior year. The year-over-year change was primarily due to a decrease in stock issuances of approximately $25 million, a $15 million increase in dividend payments and $10 million of purchases of common stock.

Liquidity

Cash and Equivalents

The company had cash and cash equivalents, defined as highly liquid investments with a maturity of three months or less at the time of purchase, on the balance sheet at September 28, 2013 of $176 million. The decrease of $224 million from the balance at June 29, 2013 was primarily due to the purchase of short-term investments as well as the acquisition of the Golden Island jerky business.

Credit Facility and Credit Ratings

The company has a $750 million credit facility that expires in June 2017. The credit facility has an annual fee of 0.15% as of September 28, 2013 and pricing under this facility is based on the company’s current credit rating. At September 28, 2013, the company did not have any borrowings outstanding under this facility, but it did have approximately $37 million of letters of credit outstanding under this credit facility at an annual interest rate of 1.1%. The facility does not mature or terminate upon a credit rating downgrade. In addition, in the first quarter of 2014, the company entered into a $65 million uncommitted bilateral letter of credit facility agreement. Under the terms of the agreement, there is no annual fee for the facility and the company is subject to an annual interest rate of 0.85% on issuances.   As of September 28, 2013, the company had letters of credit totaling $20 million outstanding under this facility.

The company’s debt agreements and credit facility contain customary representations, warranties and events of default, as well as affirmative, negative and financial covenants with which the company is in compliance as of September 28, 2013. One financial covenant includes a requirement to maintain an interest coverage ratio of not less than 2.0 to 1.0. The interest coverage ratio is based on the ratio of EBIT to consolidated net interest expense with consolidated EBIT equal to net income plus interest expense, income tax expense, and extraordinary or non-recurring non-cash charges and gains. For the twelve months ended September 28, 2013, the company’s interest coverage ratio was 8.0 to 1.0.

The financial covenants also include a requirement to maintain a leverage ratio of not more than 3.50 to 1.00. The leverage ratio is based on the ratio of consolidated total indebtedness to an adjusted consolidated EBITDA. For the twelve months ended September 28, 2013, the leverage ratio was 2.2 to 1.0.

The company maintains investment grade credit ratings by Standard & Poor’s, Moody’s Investors Service and FitchRatings, as of September 28, 2013 are shown in the table below. These ratings remain unchanged from the previous year end.

	Senior Unsecured Obligations	Short-term Borrowings	Outlook
Standard & Poor’s	BBB	A-2	Stable
Moody’s	Baa2	P-2	Stable
FitchRatings	BBB	F-2	Stable

Changes in the company’s credit ratings may result in changes in the company’s borrowing costs. The company’s current short-term credit rating allows it to participate in a commercial paper market that has a number of potential investors and a historically high degree of liquidity. A downgrade of the company’s short-term credit rating would place the company in a commercial paper market that would contain significantly less market liquidity than it currently operates in with a rating of “A-2,” “P-2,” or “F-2.” This would reduce the amount of commercial paper the company could issue and raise its commercial paper borrowing cost and would require immediate payment or the posting of collateral on the derivative instruments in net liability positions in accordance with ISDA rules. See Note 7, “Financial Instruments” for more information. To the extent that the company’s operating requirements were to exceed its ability to issue commercial paper following a downgrade of its short-term credit rating, the company has the ability to use our available credit facility to satisfy operating requirements, if necessary.

Debt

The company’s total long-term debt of $951 million at September 28, 2013 remained virtually unchanged from the previous year end balance of $951 million. The company’s total long-term debt is due to be repaid as follows: $16 million in the

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remainder of 2014, $96 million in 2015, $400 million in 2016, nil in 2017 and 2018, $1 million in 2019 and $438 million thereafter. Debt obligations are expected to be satisfied with cash on hand or the issuance of new debt.

From time to time, the company opportunistically may repurchase or retire its outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the company’s liquidity requirements, contractual restrictions and other factors. The amounts involved could be material.

Including the impact of swaps that are effective hedges and convert the economic characteristics of the debt, the company’s long-term debt is virtually all fixed-rate debt as of September 28, 2013 and June 29, 2013. The company monitors the interest rate environments in the geographic regions in which it operates and modifies the components of its debt portfolio as necessary to manage interest rate and foreign currency risks.

Leases

The company has numerous operating leases for manufacturing facilities, warehouses, office space, vehicles, machinery and equipment. Operating lease obligations for continuing operations are scheduled to be paid as follows: $7 million in the remainder 2014, $8 million in 2015, $1 million in 2016, and nil thereafter. The company is contingently liable for certain long-term leases on property operated by others. These leased properties relate to certain businesses that have been sold. The company continues to be liable for the remaining terms of the leases on these properties in the event that the owners of the businesses are unable to satisfy the lease liability. The minimum annual rentals under these leases are as follows: $16 million in the remainder of 2014, $17 million in 2015, $13 million in 2016, $10 million in 2017, $9 million in 2018, $9 million in 2019, and $68 million thereafter.

The company has various funding obligations and certain contingent guaranty obligations that are outlined below.

Pension Plans

The funded status of the company’s defined benefit pension plans is defined as the amount by which the projected benefit obligation exceeds the plan assets. For continuing operations, the plans were 92% funded, or underfunded by $123 million, as of the end of 2013. Further information on the company’s pension plans is contained in Note 8 to these Consolidated Financial Statements. The company anticipates recognizing income of approximately $2 million in continuing operations for its defined benefit pension plans in 2014.

The company contributed approximately $1 million in the first quarter of 2014 to these defined benefit pension plans. The company anticipates that it will make approximately $6 million to $7 million of cash contributions for the entire fiscal year. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors. As a result, actual funding in 2014 may be materially different from the current estimate. The Significant Accounting Policies section and Note 16 to the Consolidated Financial Statements – “Defined Benefit Pension Plans,” that are included in the company’s 2013 Annual Report on Form 10-K, provide a more complete description of the measurement date, assumptions, funded status, expected benefit payments and funding policies related to these defined benefit plans.

The company participates in one multi-employer pension plan (MEPP) that provided retirement benefits to certain employees covered by collective bargaining agreements. Participating employers in a MEPP are jointly responsible for any plan underfunding. MEPP contributions are established by the applicable collective bargaining agreements; however, the MEPPs may impose increased contribution rates and surcharges based on the funded status of the plan and the provisions of the Pension Protection Act of 2006 (PPA). The PPA imposes minimum funding requirements on the plans. Plans that fail to meet certain funding standards as defined by the PPA are categorized as being either in a critical or endangered status. We have received notice that the plan to which we contribute has been designated in critical status. The trustees of critical status multi-employer plans must adopt a rehabilitation or funding improvement plan designed to improve the plan's funding within a prescribed period of time. Rehabilitation and funding improvement plans may include increased employer contributions, reductions in benefits or a combination of the two. Unless otherwise agreed upon, any requirement to increase employer contributions will not take effect until the current collective bargaining agreements expire. However, a five percent surcharge for the initial critical year (increasing to ten percent for the following and subsequent years) is imposed on contributions to plans in critical status and remains in effect until the bargaining parties agree on modifications consistent with the rehabilitation plan adopted by the trustees. In addition, the failure of a plan to meet funding improvement targets provided in its rehabilitation or funding improvement plan could result in the imposition of an excise tax on contributing employers.

Under current law regarding multi-employer pension plans, a withdrawal or partial withdrawal from any plan that was underfunded would render us liable for our proportionate share of that underfunding. This potential unfunded pension liability

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also applies ratably to other contributing employers. Information regarding underfunding is generally not provided by plan administrators and trustees on a current basis and when provided, is difficult to independently validate. Any public information available relative to multi-employer pension plans may be dated as well. In the event of a withdrawal or partial withdrawal was to occur with respect to the MEPP to which the company makes contributions, the impact to our consolidated financial statements could be material. Withdrawal liability triggers could include the company's decision to close a plant or the dissolution of a collective bargaining unit.

The company's regularly scheduled contributions to MEPPs related to continuing operations are expected to be $2 million in 2014 and totaled approximately $1 million in 2013.

Restructuring Action Liabilities

The company has recognized amounts for various restructuring charges. At September 28, 2013, the company had recognized cumulative liabilities of approximately $35 million that relate primarily to future severance and other lease and contractual payments. These amounts will be paid when the obligation becomes due, and the company expects a significant portion of these amounts will be paid over the next twelve months.

Cost Savings Initiatives

In June 2012, the company announced that it expected to deliver $100 million of savings between 2013 and 2015. At that time, initiatives to deliver $65 million of savings had been identified. The company has now identified the remaining $35 million of cost savings, as well as approximately $45 million of additional savings through 2016. The cost savings are expected to result from improved revenue management, supply chain and support processes. The company expects to recognize cash charges of approximately $80 million to $100 million between 2014 and 2016. Non-cash charges may also be recognized as the initiatives are implemented. The company expects to recognize approximately $50 million of cash charges in 2014 related to these new cost savings initiatives. When fully implemented, these initiatives are expected to deliver ongoing annual savings of $80 million.

Guarantees

The company is a party to a variety of agreements under which it may be obligated to indemnify a third party with respect to certain matters. Typically, these obligations arise as a result of contracts entered into by the company, under which the company agrees to indemnify a third party against losses arising from a breach of representations and covenants related to such matters as title to assets sold, the collectability of receivables, specified environmental matters, lease obligations assumed and certain tax matters. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the contract. These procedures allow the company to challenge the other party’s claims. In addition, the company’s obligations under these agreements may be limited in terms of time and/or amount, and in some cases the company may have recourse against third parties for certain payments made by the company. It is not possible to predict the maximum potential amount of future payments under certain of these agreements, due to the conditional nature of the company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company’s business, financial condition or results of operations. The company believes that if it were to incur a loss in any of these matters, such loss would not have a material effect on the company’s business, financial condition or results of operations.

The material guarantees for which the maximum potential amount of future payments can be determined include the company’s contingent liability on leases on property operated by others and the company’s guarantees of certain third-party debt. These debt guarantees require the company to make payments under specific debt arrangements in the event that the third parties default on their debt obligations. The maximum potential amount of future payments that the company could be required to make in the event that these third parties default on their debt obligations is approximately $16 million. At the present time, the company does not believe it is probable that any of these third parties will default on the amount subject to guarantee.

Challenges and Risks

As a consumer products company, we face certain risks and challenges that impact our business and financial performance. The risks and challenges described below have impacted our performance and are likely to impact our future results as well.

The food and consumer products businesses are highly competitive. In many product categories, we compete not only with widely advertised branded products, but also with private label products that are generally sold at lower prices. As a result, from time to time, we may need to reduce the prices for some of our products to respond to competitive pressures. Economic uncertainty may result in increased pressure to reduce the prices for some of our products, limit our ability to increase or maintain prices or lead to a continued shift toward private label products. Any reduction in prices or our inability to increase

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prices when raw material costs increase could negatively impact profit margins and the overall profitability of our reporting units, which could potentially trigger a goodwill impairment.

Commodity prices directly impact our business because of their effect on the cost of raw materials used to make our products and the cost of inputs to manufacture, package and ship our products. Many of the commodities we use, including pork, beef, poultry, packaging, energy, cheese, fruit, seasoning blends, flour and sugar have experienced price volatility due to factors beyond our control. The company’s objective is to offset commodity price increases with pricing actions over time and to offset any operating cost increases with continuous improvement savings. During the first nine months of fiscal 2013, commodity costs, excluding mark-to-market derivative gains/losses, decreased over the prior year. The company continues to forecast material input cost inflation through the remainder of the first half of fiscal 2014. The company now expects this trend to continue throughout the second half of the year.

Interest Rate and Commodity Risks

To mitigate the risk from interest rate and commodity price fluctuations, the company may enter into various hedging transactions that have been authorized pursuant to the company's policies and procedures. The company does not use financial instruments for trading purposes and is not a party to any leveraged derivatives.

Interest Rates—As of September 28, 2013, the company has no significant exposure to changing interest rates on our long-term debt because the interest rates are fixed on virtually 100% of the company’s long-term debt. Market risk for fixed-rate long-term debt is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates, which would result in a maximum potential decrease in the fair value of debt of approximately $6 million. The underlying fair values of our long-term debt were estimated based on quoted market prices or on the current rates offered for debt with similar maturities.

The company has interest rate risk associated with its pension and post-retirement benefit obligations. Changes in interest rates impact the liabilities associated with these benefit plans as well as the amount of income or expense recognized for these plans. Declines in the value of the plan assets could diminish the funded status of the pension plans and potentially increase the requirements to make cash contributions to these plans. See Note 16 and 17 to the Consolidated Financial Statements in the company’s 2013 Annual Report for additional information.

Commodities - The company is a purchaser of certain commodities such as beef, pork, chicken, packaging, fruit, seasoning blends, flour, corn, corn syrup, soybean and corn oils, butter, sugar, natural gas and diesel fuel. We also raise turkeys and contract with turkey growers to meet our raw material requirements for whole birds and processed turkey products. Our costs for turkey are affected by the cost and supply of feed grains, including corn and soybean meal. Commodities are subject to price risk due to factors such as fluctuations in the commodity market, the availability of supply, severe weather, consumer or industrial demand and changes in governmental and international trade, alternative energy and agricultural programs. Where possible, the company attempts to reduce the market risk associated with these by entering into either physical forward contracts or derivative instruments. The company has policies governing the hedging instruments that can be used. In circumstances where commodity derivative instruments are used, there is a high correlation between the commodity costs and the derivative instrument.

For commodity derivative instruments held, the company uses a sensitivity analysis technique to evaluate the effect that a 10% change in the underlying commodity price would have on the market value of the company's commodity derivative instruments. The impact is not significant compared with the earnings and equity of the company.

(In millions)	First quarter 2014		Year ended 2013
Effect of a 10% change in Market Price:
Grains & Oilseeds	$	4	$	3
Energy	3		3
Other Commodities	1		2

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Non-GAAP Financial Measures Definitions

Non-GAAP Measures

The following is an explanation of the non-GAAP financial measures presented in this quarterly report. It also adjusts for the impact of an additional week in those fiscal years that include a 53rd week. Results for businesses acquired are included from the date of acquisition onward. Adjusted EPS excludes from diluted EPS for continuing operations the impact of significant items and the 53rd week.

Significant Items Affecting Comparability

The reported results for 2014 and 2013 reflect amounts recognized for restructuring actions and other significant amounts that impact comparability.

Significant items are income or charges (and related tax impact) that management believes have had a significant impact on the earnings of the applicable business segment or on the total company for the period in which the item is recognized, are not indicative of the company's core operating results and affect the comparability of underlying results from period to period. Significant items may include, but are not limited to: charges for exit activities; various restructuring programs; spin-off related costs; impairment charges; pension partial withdrawal liability charges; benefit plan curtailment gains and losses; tax charges on deemed repatriated earnings; tax costs and benefits resulting from the disposition of a business; impact of tax law changes; changes in tax valuation allowances; and favorable or unfavorable resolution of open tax matters based on the finalization of tax authority examinations or the expiration of statutes of limitations.

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The impact of significant items on net income and diluted earnings per share is summarized below:

	Quarter Ended September 28, 2013									Quarter Ended September 29, 2012
(In millions, except per share data)	Pretax Impact			Net Income (Loss) Attributable to Hillshire Brands(2)			Diluted EPS Impact(1)			Pretax Impact			Net Income (Loss) Attributable to Hillshire Brands(2)			Diluted EPS Impact(1)
Continuing operations:
Restructuring actions:
Severance/retention charges	$	(3	)	$	(2	)	$	(0.02	)	$	—		$	—		$	—
Lease & contractual obligation exit costs	—			—			—			(3		)	(2		)	(0.01		)
Consulting, advisory & other costs	(14		)	(9		)	(0.07		)	(8		)	(5		)	(0.04		)
Income from asset dispositions	—			—			—			5			3			0.03
Accelerated depreciation	(5		)	(3		)	(0.03		)	(11		)	(7		)	(0.06		)
Total restructuring actions	(22		)	(14		)	(0.11		)	(17		)	(11		)	(0.08		)
Reimbursed claim proceeds	2			1			0.01			—			—			—
Acquisition advisory & other costs	(1		)	(1		)	(0.01		)	—			—			—
Impact of significant items on income (loss) from continuing operations	(21		)	(14		)	(0.12		)	(17		)	(11		)	(0.09		)
Discontinued operations:
Consulting, advisory & other costs	—			—			—			(1		)	—			(0.01		)
Gain on sale of discontinued operations	—			—			—			3			2			0.02
Significant items impacting discontinued operations	—			—			—			2			2			0.01
Impact of significant items on net income (loss) attributable to Hillshire Brands	$	(21	)	$	(14	)	$	(0.12	)	$	(15	)	$	(9	)	$	(0.08	)
Impact of significant items on income (loss) from continuing operations before income taxes:
Cost of sales	$	(3	)							$	(3	)
Selling, general and administrative expenses	(15		)							(17		)
Exit and business dispositions	(3		)							3
Total	$	(21	)							$	(17	)
Diluted earnings per share – cont. operations:
As reported							$	0.23								$	0.40
Less: impact of significant items							(0.12		)							(0.09		)
Adjusted earnings per share							$	0.35								$	0.49

Notes:

(1) EPS amounts are rounded to the nearest $0.01 and may not add to the total.

(2) Taxes computed at applicable statutory rates.

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Significant Accounting Policies and Critical Estimates

The company’s significant accounting policies are discussed in the Notes to the Consolidated Financial Statements that are incorporated in the 2013 Annual Report on Form 10-K that is filed with the Securities and Exchange Commission. The accounting policies and estimates that can have a significant impact on the operating results, financial position and footnote disclosures of the company are described in the Financial Review in the company’s 2013 Annual Report on Form 10-K.

Issued but not yet Effective Accounting Standards

A summary of new accounting pronouncements issued, but not yet effective, which are relevant to the operations of the company are summarized below.

Presentation of Unrecognized Tax Benefits - In July 2013, the Financial Accounting Standards Board (FASB) issued an accounting standard to clarify the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists to address issues with diversity in practice. The standard states that, with limited exceptions, the unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset. While the standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, the company has historically presented such information in accordance with the newly issued guidance. As such, there will be no impact to the financial statements as a result of the issuance of this amendment.

Forward-Looking Information

This document contains forward-looking statements regarding Hillshire Brands' business prospects and future financial results and metrics. In addition, from time to time, in oral statements and written reports, the company discusses its expectations regarding the company's future performance by making forward-looking statements preceded by terms such as will, anticipates, intends, expects, likely or believes. These forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events and are inherently uncertain.

Investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements, and the company wishes to caution readers not to place undue reliance on any forward-looking statements. Among the factors that could cause Hillshire Brands' actual results to differ from such forward-looking statements are those described under Item 1A, Risk Factors in Hillshire Brands' most recent Annual Report on Form 10-K and other SEC Filings, as well as factors relating to:

•  The consumer marketplace, such as (i) intense competition, including advertising, promotional and price competition; (ii) changes in consumer behavior due to economic conditions, such as a shift in consumer demand toward private label; (iii) fluctuations in raw material costs, Hillshire Brands' ability to increase or maintain product prices in response to cost fluctuations and the impact on profitability; (iv) the impact of various food safety issues and regulations on sales and profitability of Hillshire Brands products; and (v) inherent risks in the marketplace associated with product innovations, including uncertainties related to execution and trade and consumer acceptance;

• Hillshire Brands' relationship with its customers, such as (i) a significant change in Hillshire Brands' business with any of its major customers, such as Wal-Mart, its largest customer; and (ii) credit and other business risks associated with customers operating in a highly competitive retail environment;

• Hillshire Brands' spin-off of its international coffee and tea business in June 2012, including potential tax liabilities and other indemnification obligations; and

• Other factors, such as (i) Hillshire Brands' ability to generate margin improvement through cost reduction and productivity improvement initiatives; (ii) Hillshire Brands' credit ratings, the impact of Hillshire Brands' capital plans on such credit ratings and the impact these ratings and changes in these ratings may have on Hillshire Brands' cost to borrow funds and access to capital/debt markets; and (iii) the settlement of a number of ongoing reviews of Hillshire Brands' income tax filing positions and inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which Hillshire Brands transacts business.

In addition, Hillshire Brands' results may also be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes and laws and regulations in markets where the company competes. Hillshire Brands undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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ITEM 4 – CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports the company files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the company’s management, including its Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives due to inherent limitations.

Hillshire Brands’ Chief Executive Officer and Chief Financial Officer, with assistance from other members of management, evaluated the effectiveness of Hillshire Brands’ disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d -15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”) and, based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of the Evaluation Date, the company’s disclosure controls and procedures were effective at the level of reasonable assurance.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended September 28, 2013, there were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II

ITEM 1A – RISK FACTORS

There have been no material changes from the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 29, 2013.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Repurchases of Equity Securities by the Issuer

Hillshire Brands has two stock repurchase programs under which it may repurchase shares of common stock in either open market or private transactions. As of September 28, 2013, under one of these programs, the company is authorized to repurchase up to $1.2 billion of its shares of common stock. Under the other program, the company is authorized to repurchase up to 2.7 million shares of its common stock. There is no expiration date for either program.

The following table outlines Hillshire Brands purchases of shares of its common stock during the first quarter of 2014.

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number  of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number  and Approximate Dollar Value of Shares that May Yet Be Purchased  Under the Plans or Programs
June 30, 2013 to Aug. 3, 2013	—	—		—	2,691,824	$ 1.2 billion
Aug. 4, 2013 to Aug. 31, 2013	100,000	$	32.53	100,000	2,691,824	$ 1.2 billion
Sept. 1, 2013 to Sept. 28, 2013	200,000	$	31.71	200,000	2,691,824	$ 1.2 billion
Total	300,000	$	31.98	300,000	2,691,824	$ 1.2 billion

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ITEM 6—EXHIBITS

Exhibit Number	Description
10.1	The Hillshire Brands Company Severance Plans for Corporate Officers, as restated on September 22, 2013 and effective as of June 26, 2013
10.2	Form of Amendment to Performance-Based Restricted Stock Unit Grant Notice and Agreement
10.3	Form of Amendment to Restricted Stock Unit Grant Notice and Agreement
10.4	Form of Amendment to Stock Option Grant Notice and Agreement
10.5	Form of Fiscal Years 2014-2016 Performance-Based Restricted Stock Grant Notice and Agreement
10.6	Form of Fiscal Years 2014-2016 Restricted Stock Unit Grant Notice and Agreement
10.7	Fiscal Year 2014 Annual Incentive Plan Program Description
31.1	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002
101.1	Sections of The Hillshire Brands Company Quarterly Report on Form 10-Q for the three months ended September 28, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii)Condensed Consolidated Statements of Comprehensive Income (iv) Condensed Consolidated Statements of Common Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; (vi) Notes to Consolidated Financial Statements; and (vii) document and entity information.

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SIGNATURE

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.

THE HILLSHIRE BRANDS COMPANY
	(Registrant)
By:	/s/ William J. Kelley Jr.
	William J. Kelley Jr.
	Senior Vice President, Controller and Chief Accounting Officer

DATE: October 31, 2013

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EX-10.1

Exhibit 10.1

THE HILLSHIRE BRANDS COMPANY

SEVERANCE PLANS FOR CORPORATE OFFICERS

(As restated effective as of June 26, 2013)

INTRODUCTION

This document sets forth the severance plans of The Hillshire Brands Company (the “Corporation”) governing:

(a) payments and benefits to be provided in the event of the involuntary termination of employment with the Corporation of an officer of the Corporation (excluding assistant secretaries, assistant treasurers and any other positions below the level of a Board of Directors-appointed Corporate Vice President) who was elected by the Board of Directors of the Corporation (“Officer” or “Terminated Officer”), as set forth in Article 2 below; and

(b) payments and benefits to be provided in the event of the termination of employment with the Corporation of an Officer under certain circumstances following a change in control of the Corporation, as set forth in Article 3 below.

ARTICLE 1
COMMON PROVISIONS

The following provisions shall apply to both the Involuntary Termination Plan (Article 2 below) and the Change in Control Plan (Article 3 below):

1.2 Definitions

Whenever used in the Involuntary Termination Plan or the Change in Control Plan, capitalized terms used but not otherwise defined herein shall have the meanings set forth below:

(a) “Board” means the Board of Directors of the Corporation.

(b) “Committee” means the Compensation and Employee Benefits Committee of the Board, a subcommittee thereof, or such other committee as may be appointed by the Board.

(c) “Code” means the United States Internal Revenue Code of 1986, as amended, and any successors thereto.

(d) “Corporation” means The Hillshire Brands Company and any successor thereto.

(e) “Effective Date” of both the Involuntary Termination Plan and the Change in Control Plan as described herein means June 30, 2006, as amended from time to time, with amendments to the plans being effective as specified in the respective amendatory instrument.

Page 1 of 25

1.3 Employment Status

Except as may be provided under any other agreement between an Officer and the Corporation, the employment of such Officer by the Corporation is “at will,” and may be terminated by either such Officer or the Corporation at any time, subject to applicable law.

1.4 Severability

In the event any provision of either the Involuntary Termination Plan or the Change in Control Plan shall be held illegal or invalid for any reason, the illegality or invalidity of such provision shall not affect the remaining parts of such plan, and such plan shall be construed and enforced as if the illegal or invalid provisions had not been included. Further, the captions of the plans are not part of the provisions thereof and shall have no force and effect.

1.5 Compliance with Section 409A

Notwithstanding anything in these plans to the contrary, the Corporation further intends that to the extent the plans provide a severance pay benefit that constitutes a deferral of compensation as determined in accordance with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively, “Section 409A”), each provision in these plans shall be interpreted to comply with the requirements of Section 409A and any provision that would conflict with such requirements shall not be valid or enforceable.

ARTICLE 2
INVOLUNTARY TERMINATION PLAN

2.1 Introduction

This plan (the “Involuntary Termination Plan”) has been established by the Corporation to govern payments and benefits to be made in the event of the involuntary termination of employment with the Corporation of an Officer on or after the Effective Date. The Involuntary Termination Plan does not govern severance payments and benefits to be made in the event of a Qualifying Termination (as such term is defined in Article 3 below), which matters are instead governed by the Change in Control Plan (Article 3 below). Notwithstanding anything to the contrary elsewhere in the Involuntary Termination Plan, the Involuntary Termination Plan does not apply to an otherwise eligible employee of the Corporation who is a party to an authorized written agreement with the Corporation that contains any provision for severance pay or benefits, except as may be expressly provided in such agreement.

2.2 Statement of General Purpose

It is intended by the Corporation that an Officer whose employment with the Corporation has been involuntarily terminated under the circumstances described herein be entitled to specified severance pay and benefits as set forth in this Involuntary Termination Plan, and subject to the terms of a separation agreement between the Corporation and the Officer entered into in connection with the termination of employment (“Separation Agreement”). This Involuntary Termination Plan duly recognizes the circumstances of termination and years of service with the Corporation as factors to be considered in the determination of the amount of severance to be paid to a Terminated Officer.

Page 2 of 25

2.3 Definitions

Whenever used in the Involuntary Termination Plan, capitalized terms used but not otherwise defined herein shall have the meanings set forth below:

(a) “Base and Bonus Compensation” means one-twelfth (1/12) of the sum of (i) the annual salary in effect for the Officer immediately prior to the Officer’s termination and (ii) 75% of the Officer’s target annual incentive as defined under the annual incentive plan of the Corporation (the “Annual Incentive Plan”) for the year in which the termination occurs.

(b) “Cause” shall mean a determination by the Corporation that the Officer has willfully engaged in conduct materially injurious to the Corporation or has committed a crime involving dishonesty, moral turpitude or other disreputable behavior, including, but not limited to, a violation of the Corporation’s Global Business Standards.

(c) “Disability” shall mean a determination by the Corporation under the Corporation’s applicable long term disability plan that the Officer is disabled.

(d) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended and any successors thereto.

(e) “Retirement” shall mean a termination on or after the Officer’s normal retirement age (as defined in the applicable Retirement Plan) following which the Terminated Officer is eligible for retirement benefits under such Retirement Plan.

(f) “Retirement Plan” means The Hillshire Brands Company Salaried Pension Plan or any other qualified retirement plan of the Corporation, other than a 401(k) plan.

(g) “Termination Date” means the date of the Officer’s termination of employment with the Corporation and its Controlled Group Members by reason of resignation or discharge, which shall be interpreted consistent with the definition of “separation from service” in Code Section 409A(a)(2)(A)(i) and any IRS guidance issued thereunder. For purposes of this definition, “Controlled Group Member” means the Corporation and any affiliated or related corporation which is a member of a controlled group of corporations (within the meaning of Section 1563(a) of the Code) which includes the Corporation or any trade or business (whether or not incorporated), which is under common control with the Corporation (within the meaning of Section 414(c) of the Code).

2.4Eligibility for Severance

(a) Eligible Terminations. Subject to Section 2.4(b), an Officer may be eligible for severance payments and benefits pursuant to this Involuntary Termination Plan only if his or her employment with the Corporation terminates under one of the following circumstances:

(i) the Officer’s employment is terminated involuntarily due to an organizational restructuring which results in the elimination of the Officer’s position or function;

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(ii) the Officer’s principle business location changes by a distance of 50 miles or more from the Officer’s current business location and the Officer does not agree to continue employment with the Corporation; or

(iii) the Officer terminates his or her employment at the direction of the Corporation.

(b) Ineligible Terminations. Notwithstanding Section 2.4(a), an Officer shall not be eligible for any severance payments or benefits pursuant to this Involuntary Termination Plan if his or her employment with the Corporation terminates under any of the following circumstances:

(i) a termination for Cause;

(ii) a termination due to Disability;

(iii) a termination due to death;

(iv) a termination due to Retirement;

(v) a voluntary termination of employment by the Officer other than at the direction of the Corporation;

(vi) a termination of employment of the Officer following which, within a reasonable period of time, the Officer is offered and accepts new employment with the Corporation;

(vii) the transfer of the Officer’s employment to a different division or operation of the Corporation with the consent of the Officer;

(viii) the divestiture by the Corporation of the division or operation that employs the Officer or to which at least 80% of the Officer’s time is dedicated and the continuance of employment by the new or acquiring entity on substantially the same financial terms and conditions as in effect immediately prior to such disposition or on such other terms and conditions as are agreed to by the Officer;

(ix) a termination of employment of the Officer under circumstances which entitle the Officer to receiveseverance payments or benefits pursuant to the terms of the Change in Control Plan (Article 3 below) or another plan or agreement which is or has been established or entered into by the Corporation or assumed by the Corporation in an acquisition, merger or similar transaction (including without limitation a change-in-control plan or agreement with a company which is acquired by the Corporation); or

(x) any other termination of employment under circumstances not described in Section 2.4(a).

(c) Characterization of Termination. The characterization of an Officer’s termination under this Involuntary Termination Plan shall be made by the Corporation’s Chief Human Resources Officer (regardless of any change in the title of that office as long as the

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duties are not materially changed or reduced), or such other person or committee designated by the Committee, which determination shall be final and binding (subject, however, to Section 2.10(c) below).

2.5 Severance Benefits Payable

(a) Severance Pay. An Officer terminated under circumstances described in Section 2.4(a), and not described in Section 2.4(b), shall receive the following benefit (“Severance Pay”):

(xi) continued payment of the Officer’s Base and Bonus Compensation (the “Base and Bonus Portion of Severance”), over the number of months (the “Severance Period”) determined by multiplying:

(A) the number of the Officer’s full years of employment with the Corporation (including periods of employment with a predecessor employer, the business of which was acquired by the Corporation), by

(B) three months if the Officer is an Executive Vice President or an officer senior thereto; two months if the Officer is a Senior Vice President; or one month if the Officer is a Vice President;

provided, however, in no event shall the Severance Period be less than twelve months or more than twenty-four months from the Officer’s Termination Date;

(xii) a pro-rata amount (from the first day of the current fiscal year of the Corporation to the Officer’s Termination Date) of:

(A) the annual incentive, if any, payable under the Annual Incentive Plan in effect with respect to the fiscal year in which the Termination Date occurs, using actual results, financial or non-financial, if applicable (the “Annual Incentive Portion of Severance”); and

(B) the long-term incentive award, if any, payable under any long-term incentive program of the Corporation in which the Terminated Officer was a participant immediately prior to such Officer’s Termination Date, if such long-term incentive award relates, in whole or in part, to the period prior to the Termination Date (the “Long-Term Incentive Portion of Severance”), with the pro-rata amount calculated pursuant to the terms and conditions approved by the Committee at the time the award was granted and applicable to such long-term incentive program or award.

(xiii) a lump sum cash amount equal to the Officer’s unpaid base salary and accrued and unused vacation through the Officer’s Termination Date.

(b) Health Coverage. Beginning at the Termination Date, a Terminated Officer shall be eligible to elect COBRA continuation coverage under the group health plan (medical, dental and vision) available to similarly situated officers of the Corporation provided

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the Terminated Officer was enrolled in the group health insurance plan on the day prior to the Termination Date. If a Terminated Officer eligible for severance under Section 2.5(a) elects COBRA continuation coverage, the Corporation will subsidize the premium for such continuation coverage during the shorter of: (i) three months, or (ii) the Severance Period, so that the amount of such premium payable by such Terminated Officer shall equal the amount payable by an active Officer of the Corporation for comparable coverage. The period during which a Terminated Officer shall be charged active Officer rates for COBRA coverage shall be known as the ‘subsidized period. The premium charged for COBRA continuation coverage after the end of the subsidized period shall be entirely at the Terminated Officer’s expense and may be different from the premium charged during the subsidized period. A terminated Officer’s subsidized period shall count toward the period for which the Corporation must offer COBRA coverage to the Terminated Officer. The Terminated Officer’s COBRA continuation coverage shall terminate in accordance with the COBRA continuation of coverage provisions under the Corporation’s group health plan. If the Terminated Officer is eligible for early retirement under the terms of a Retirement Plan (or would become eligible if the Severance Period is considered as employment), then in lieu of COBRA continuation coverage under the group medical plan, the Terminated Officer may elect to participate in The Hillshire Brands Company Retiree Health Benefit Plan available to the Officers of the Corporation after the Termination Date in accordance with the terms and conditions of the plan in effect from time to time; provided, that such coverage shall not be available to the Terminated Officer unless he or she elects such coverage within thirty (30) days following the Termination Date. The premium charged the Terminated Officer for such retiree medical coverage may be different from the premium charged an active Officer of the Corporation for similar coverage.

(c) Participation In Other Plans. Except as otherwise provided herein or in the applicable plan, participation in all other plans of the Corporation available to similarly situated Officers of the Corporation, including but not limited to, qualified pension plans, stock purchase plans, 401(k) plans and ESOPs, personal accident insurance, travel accident insurance, short and long term disability insurance and accidental death and dismemberment insurance, shall cease on the Officer’s Termination Date. Any non-qualified 401(k)/ ESOP benefits will be provided to a Terminated Officer eligible for severance through The Hillshire Brands Company Supplemental Executive Retirement Plan by treating the Severance Period as a period of employment with the Corporation. Effective April 30, 2010, the pension portion of The Hillshire Brands Company Supplemental Executive Retirement Plan was frozen and no additional pension benefits shall accrue nor shall additional compensation be taken into consideration under the pension portion of The Hillshire Brands Company Supplemental Executive Retirement Plan after that date. If the Terminated Officer is eligible for “retirement” as defined under the terms of the Executive Life Insurance Plan (the “Life Plan”) or becomes eligible for retirement during the Severance Period, then the Corporation will continue to make employer contributions as required under the terms of the Life Plan. If the Terminated Officer is not eligible for retirement and will not become eligible during the Severance Period, then the Corporation’s obligations under the Life Plan will end at the Terminated Officer’s termination date, no additional employer contributions will be made and the Terminated Officer may exercise all available options under the terms of

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the life insurance policy. Any long-term incentive awards such Terminated Officer received prior to the Termination Date shall vest or be forfeited pursuant to the terms of the long-term incentive grant agreements. Any stock option awards that vest prior to the end of the Severance Period must be exercised by the Terminated Officer within the applicable period specified in the stock option plan and stock option grant agreements. A Terminated Officer’s automobile allowance under the Corporation’s Executive Car Allowance Program will end on the Termination Date. A Terminated Officer shall not be eligible for reimbursement of club memberships and expenses incurred, or for participation in the Corporation’s Matching Grant Program, after the Termination Date. A Terminated Officer who was an Executive Vice President or a Senior Vice President shall be entitled to continued financial planning assistance provided by the Corporation through the Severance Period. Notwithstanding the foregoing, to the extent that any financial planning assistance or any other reimbursements are subject to Section 409A (i.e., because it is provided more than 2-½ months after the end of the Corporation’s or the Terminated Officer’s taxable year containing the Termination Date and it exceeds the amount specified in Section 402(g) of the Code), then (i) such reimbursements shall be payable by the Corporation on or before the last day of the Terminated Officer’s taxable year following the taxable year in which the expense was incurred; (ii) the expenses paid by the Corporation during any taxable year of the Terminated Officer will not affect the expenses paid by the Corporation in another taxable year; and (iii) the right to reimbursement shall not be subject to liquidation or exchange for another benefit. The Corporation shall, at its sole cost and expense, provide the Officer with outplacement services with the person or entity of the Executive’s choosing from among the Corporation’s preferred outplacement providers suitable to the Officer’s position for a period of 1 year or, if earlier, until the first acceptance by the Officer of an offer of employment.

(d) Foreign Officers. If the Terminated Officer is domiciled outside of the United States on the Termination Date, at the discretion of the Committee, the Terminated Officer shall receive the severance benefits required to be paid pursuant to the laws of the country in which the Terminated Officer is domiciled on the Termination Date in lieu of the benefits under paragraphs (a) through (c) above.

2.6 Mode of Payment of Severance

Subject to the requirements of Section 2.8 of this Involuntary Termination Plan, the Base and Bonus Compensation Portion of Severance shall be paid in equal installments accordance with the Corporation’s Corporate Officer pay schedule and as provided in the Separation Agreement; provided however, that all payments of deferred compensation, as such term is defined in Treas. Reg. §1.409A-1(b), and not otherwise excluded from such definition, such as short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or separation pay due to involuntary separation pursuant to Treas. Reg. §1.409A-i(b)(9)(iii), shall commence to be paid on the first payroll after the 60^th calendar day following termination of employment. Notwithstanding any provision herein to the contrary, all Severance Pay shall be paid within twenty-four (24) months of the Termination Date. Subject to the requirements of Section 2.8, the Annual Incentive Portion of Severance, if any, shall be paid to the Terminated Officer in cash on the same date the active participants under the Annual Incentive Plan are paid and the Long-Term Incentive Portion of Severance, if any, shall be paid to the Terminated Officer in accordance with the terms of the applicable long term incentive plan.

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Notwithstanding the foregoing, if a Terminated Officer is a “specified employee” (as defined in The Hillshire Brands Company Key Employee Guide), the following rules shall apply:

(a) For purposes of applying the exception to Section 409A for short-term deferrals, each installment shall be treated as a separate “payment” for purposes of Section 409A. Accordingly, any portion of the Severance Pay benefit paid (i) within 2-½ months of the end of the Corporation’s taxable year containing the Termination Date, or (ii) within 2-½ months of the Terminated Officer’s taxable year containing the Termination Date shall be exempt from Section 409A and shall be paid in accordance with the first paragraph of this Section 2.6.

(b) To the extent benefits are not exempt from Section 409A under subparagraph (a) above, if the Terminated Officer’s Severance Pay benefit otherwise payable in the first six months following the Termination Date is equal to or less than the lesser of the amounts described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and (2), such Severance Pay benefit shall be exempt from Section 409A and shall be paid in accordance with the first paragraph of this Section 2.6.

(c) Only to the extent a portion of the Terminated Officer’s Severance Pay benefit is not exempt from Section 409A pursuant to subparagraphs (a) and (b) above, then, any such remaining Severance Pay benefit will not be paid to the Terminated Officer until the first payroll date of the seventh month following the Termination Date. Any deferred payments will be paid in a lump sum and shall be equal to the portion of the Severance Pay benefit that exceeds the Section 409A limit, adjusted for interest calculated at the then-prevailing prime commercial lending rate published by the Wall Street Journal. Thereafter, the remainder of a Terminated Officer’s Severance Pay benefit shall be payable in installments according to the Corporation’s Corporate Officer pay schedule.

All payments hereunder shall be reduced by such amount as the Corporation may be required under all applicable federal, state, local or other laws or regulations to withhold or pay over with respect to such payment.

2.7 Termination of Benefits

All rights to receive or continue to receive Severance Pay and benefits pursuant to this Involuntary Termination Plan shall cease on the earliest of:

(a) the date the Terminated Officer breaches any of the covenants in the Separation Agreement, as defined in Section 2.8, including without limitation any noncompetition, nonsolicitation, confidentiality or nondisparagement covenants contained therein; and

(b) the date the Terminated Officer becomes reemployed by the Corporation.

2.8 Separation Agreement

No benefits under this Involuntary Termination Plan shall be payable to any Terminated Officer until the Terminated Officer and the Corporation have executed, and not revoked, a Separation Agreement (in substantially the form approved by the Committee, with such revisions or modifications as shall be deemed necessary or appropriate by the Chief Human Resources Officer (regardless of any

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change in the title of that office as long as the duties are not materially changed or reduced) within the time set forth in the Separation Agreement, and the payment of benefits under this Involuntary Termination Plan shall be subject to the terms and conditions of such Separation Agreement. In the event the Separation Agreement is not executed within the time set forth in the Separation Agreement, all benefits under this Involuntary Termination Plan shall be forfeited.

2.9 Death of Terminated Officer

In the event that the Terminated Officer shall die prior to the payment in full of (a) the Base and Bonus Compensation Portion of Severance, (b) the Annual Incentive Portion of Severance, if any, or (c) the Long-Term Incentive Portion of Severance, if any, then the Terminated Officer’s estate or beneficiary, whichever is applicable, shall be paid the remaining payments of such benefits. Such payments shall not affect or reduce any other death benefits that the Terminated Officer’s estate or beneficiary shall be entitled to receive under other plans of the Corporation.

2.10 Administration of Plan

(a) General. Except as specifically provided herein, the Involuntary Termination Plan shall be administered by the Committee. The Committee may delegate any administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval and payment of severance benefits, to designated individuals or committees. The Committee shall be the “administrator” and a “named fiduciary” under the Involuntary Termination Plan for purposes of ERISA.

(b) Interpretations and Variations. The Committee shall have the duty and authority to interpret and construe, in its sole discretion, the terms of the Involuntary Termination Plan in regard to all questions of eligibility, the status and rights of Officers, distributees and other persons under the Involuntary Termination Plan, and the manner, time and amount of any payment under the Involuntary Termination Plan. The Committee or its representative shall decide any issues arising under this Involuntary Termination Plan, and the decision of the Committee shall be binding and conclusive on the Terminated Officer and the Corporation. Any variations from the Involuntary Termination Plan may only be made by the Committee in its sole discretion.

(c) Claims Procedure. Any Terminated Officer who believes that he or she is entitled to receive severance benefits under the Involuntary Termination Plan may file a claim in writing with the Corporation. No later than ninety (90) days after the receipt of the claim, the Corporation shall either allow or deny the claim in writing, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than one hundred eighty (180) days after receipt of the claim. A denial of a claim, in whole or in part, shall be written in a manner calculated to be understood by the claimant and shall include:

(i) the specific reason or reasons for the denial;

(ii) specific reference to pertinent Involuntary Termination Plan provisions on which the denial is based;

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(iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(iv) an explanation of the claim review procedure.

A claimant whose claim is denied (or his or her duly authorized representative) may within 60 days after receipt of the denial of his or her claim:

(x) request a review upon written application to The Hillshire Brands Company ERISA Appeal Committee (“ERISA Appeal Committee”);

(y) review pertinent documents; and

(z) submit issues and comments in writing.

The ERISA Appeal Committee shall notify the claimant of its decision on review within sixty (60) days after receipt of a request for review unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of a request for review. Notice of the decision on review shall be in writing. The ERISA Appeal Committee’s decision on review shall be final and binding on any claimant or any successor in interest. If a Terminated Officer subsequently wishes to file a claim against the Involuntary Termination Plan, any legal action must be filed within ninety (90) days of the ERISA Appeal Committee’s final decision. No action at law or in equity shall be brought to recover benefits under the Involuntary Termination Plan until the appeal rights described herein have been exercised and the Involuntary Termination Plan benefits requested in such appeal have been denied in whole or in part.

2.11 Miscellaneous

(a) Amendment or Termination. Notwithstanding anything herein to the contrary, the Committee may amend, modify or terminate the Involuntary Termination Plan at any time, which action may be effective prospectively or retroactively, as determined by the Committee; provided, however, that no amendment, modification or termination shall deprive any Terminated Officer of any payment or benefit payable pursuant to the terms of a Separation Agreement between the Corporation and such Terminated Officer, except as required by applicable law. Any amendment or termination of the Involuntary Termination Plan shall comply with the restrictions of Code Section 409A to the extent applicable. Specifically, no amendment or termination of the Involuntary Termination Plan may accelerate a scheduled payment unless permitted by Treasury Regulations Section 1.409A-3(j)(4).

(b) Governing Law. This Involuntary Termination Plan shall be construed and enforced in accordance with ERISA and the Code and the laws of the State of Illinois (without regard to any states’ conflict of laws principles) to the extent such laws are not preempted by ERISA or the Code.

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(c) Successors and Assigns. This Involuntary Termination Plan shall be binding upon and inure to the benefit of the Corporation and its successors and assigns and shall be binding upon and inure to the benefit of a Terminated Officer and his or her legal representatives, heirs and assigns. No rights, obligations or liabilities of a Terminated Officer hereunder shall be assignable without the prior written consent of the Corporation.

ARTICLE 3
CHANGE IN CONTROL PLAN

3.1 Statement of General Purpose

It is intended by the Corporation that Officers shall be entitled to receive specified Change in Control Benefits upon termination of employment under certain circumstances following a Change in Control. The objectives of this plan (the “Change in Control Plan”) are to:

(a) assure the Corporation of continuity of management in the event of an actual, possible or threatened Change in Control of the Corporation;

(b) induce Officers to remain in the employ of the Corporation; and

(c) attract and retain well-qualified executives.

3.2 Establishment and Term

This Change in Control Plan will commence on the Effective Date and will continue in effect thereafter, subject to amendment or termination by the Committee in accordance with Section 3.11(e) below.

3.3 Definitions

Whenever used in this Change in Control Plan, capitalized terms used but not otherwise defined herein shall have the meanings set forth below:

(d) “Base And Bonus Compensation” means (i) the annual salary in effect for an Officer immediately prior to the Change in Control (or, if greater, any annual salary in effect for such Officer at any time after the Change in Control) plus (ii) such Officer’s target annual incentive (as defined in the Annual Incentive Plan) for the year in which the Change in Control occurs (including any deferred amounts).

(e) “Beneficiary” means, with respect to an Officer, the persons or entities designated or deemed designated by such Officer pursuant to Section 3.11(c).

(f) “Cause” shall have the meaning set forth in Section 2.3 above.

(g) “Change in Control” shall occur:

(i) upon the acquisition by any individual, entity or group, including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”), of beneficial ownership (as defined in Rule 13d‑3 promulgated under

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the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding capital stock of the Corporation that by its terms may be voted on all matters submitted to stockholders of the Corporation generally (such capital stock, “Voting Stock”); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Corporation (excluding any acquisition resulting from the exercise of a conversion or exchange privilege in respect of outstanding convertible or exchangeable securities unless such outstanding convertible or exchangeable securities were acquired directly from the Corporation), (B) any acquisition by the Corporation, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation, or (D) any acquisition by any corporation pursuant to a reorganization, merger or consolidation involving the Corporation, if, immediately after such reorganization, merger or consolidation, each of the conditions described in clauses (A), (B) and (C) of subsection (ii) below shall be satisfied; and providedfurther that, for purposes of clause (B) above, if (1) any Person (other than the Corporation or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation) shall become the beneficial owner of 20% or more of the Voting Stock by reason of an acquisition by the Corporation and (2) such Person shall, after such acquisition by the Corporation, become the beneficial owner of any additional shares of the Voting Stock and such beneficial ownership is publicly announced, then such additional beneficial ownership shall constitute a Change in Control; or

(ii) upon the consummation of a reorganization, merger or consolidation of the Corporation, or a sale, lease, exchange or other transfer of all or substantially all of the assets of the Corporation; excluding, however, any such reorganization, merger, consolidation, sale, lease, exchange or other transfer with respect to which, immediately after consummation of such transaction, (A) all or substantially all of the beneficial owners of the Voting Stock of the Corporation outstanding immediately prior to such transaction continue to beneficially own, directly or indirectly (either by remaining outstanding or by being converted into voting securities of the entity resulting from such transaction), more than 50% of the combined voting power of the voting securities of the entity resulting from such transaction (including, without limitation, the Corporation or an entity which as a result of such transaction owns the Corporation or all or substantially all of the assets of the Corporation, directly or indirectly) (the “Resulting Entity”) outstanding immediately after such transaction, in substantially the same proportions relative to each other as their ownership immediately prior to such transaction, and (B) no Person (other than any Person that beneficially owned, immediately prior to such reorganization, merger, consolidation, sale, lease, exchange or other transfer, directly or indirectly, Voting Stock representing 20% or more of the combined voting power of the Corporation’s then outstanding securities) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding

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securities of the Resulting Entity, and (C) at least a majority of the members of the board of directors of the entity resulting from such transaction were Continuing Directors of the Corporation at the time of the execution of the initial agreement or action of the Board authorizing such reorganization, merger, consolidation, sale, lease, exchange or other transfer; or

(iii) upon the consummation of a plan of complete liquidation or dissolution of the Corporation; or

(iv) when those individuals who, immediately after the 2005 annual meeting of stockholders of the Corporation, constitute the Board (the “Continuing Directors”) cease for any reason to constitute at least a majority of such Board; provided, however, that any individual who becomes a director of the Corporation subsequent to the 2005 annual meeting of stockholders of the Corporation whose election, or nomination for election by the Corporation’s stockholders, was approved by the vote of at least a majority of the Continuing Directors then comprising the Board (or by the nominating committee of the Board, if such committee is comprised of Continuing Directors and has such authority) shall be deemed to have been a Continuing Director; and providedfurther, that no individual shall be deemed to be a Continuing Director if such individual initially was elected as a director of the Corporation as a result of (A) an actual or threatened solicitation by a Person (other than the Board) made for the purpose of opposing a solicitation by the Board with respect to the election or removal of directors, or (B) any other actual or threatened solicitation of proxies or consents by or on behalf of any Person (other than the Board).

(h) “Change in Control Benefits” means the payment of severance compensation and benefits as provided in Section 3.4.

(i) “Disability” has the meaning set forth in Section 2.3 above.

(j) “Effective Date of Termination” means the date on which a Qualifying Termination occurs which triggers the payment of Change in Control Benefits hereunder. For the avoidance of doubt, the determination of the date of the resignation or discharge giving rise to the Qualifying Termination shall be made consistent with the definition of “separation from service” in Code Section 409A(a)(2)(A)(i) and any IRS guidance issued thereunder.

(k) “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

(l) “Good Reason” means the occurrence of any one or more of the following (without the Officer’s written consent):

(i) any failure to elect or reelect or otherwise to maintain the Officer in the office or the position, or a substantially equivalent office or position, of or with the Corporation which the Officer held immediately prior to a Change in Control, or the removal of the Officer as a director of the Corporation (or any successor thereto) if the Officer shall have been a director of the Corporation immediately prior to the Change in Control;

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(ii) the assignment to the Officer of duties materially inconsistent with the Officer’s authorities, duties, responsibilities or status, a materially adverse change in the Officer’s reporting relationship, or any other action which results in a materialdiminution in the Officer’s authorities, duties, responsibilities, status or reporting relationship from those in effect immediately prior to the Change in Control;

(iii) the Corporation’s requiring the Officer to be based at an office location which is at least fifty (50) miles from his or her current office location, or the Corporation’s requiring the Officer to travel on business to a substantially greater degree than required prior to the Change in Control;

(iv) a material reduction in the Officer’s annual base salary as in effect immediately prior to the Change in Control (or, if greater, any annual base salary in effect for such Officer at any time after the Change in Control);

(v) a material reduction in the Officer’s level of participation in any of the Corporation’s annual and/or long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices or arrangements in which the Officer participates from the levels in place immediately prior to the Change in Control;

(vi) the failure by the Corporation to obtain a satisfactory agreement from any successor to the Corporation to assume and agree to perform this Change in Control Plan;

(vii) any termination of the Officer’s employment by the Corporation that is not effected pursuant to a Notice of Termination; and

(viii) any action or event described in clause (i), (ii), (iii), (iv) or (v) above taken by the Corporation prior to the Change in Control at the request of the other party to the Change in Control transaction or otherwise in contemplation of the closing of the Change in Control transaction.

The existence of Good Reason shall not be affected by an Officer’s temporary incapacity due to physical or mental illness not constituting a Disability. An Officer’s Retirement shall constitute a waiver of his or her rights with respect to any circumstance constituting Good Reason. An Officer’s continued employment shall not constitute a waiver of his or her rights with respect to any circumstances which may constitute Good Reason; provided, however, that an Officer may not rely on any particular action or event described in clause (i) through (viii) above as a basis for terminating his or her employment for Good Reason unless he or she delivers a Notice of Termination based on that action or event within 90 days after its occurrence and the Corporation has failed to correct the circumstances cited by the Officer as constituting Good Reason within 30 days of receiving the Notice of Termination.

Any determination by the Chief Executive Officer that he has Good Reason to terminate his employment shall be binding on the Corporation, unless he or she is at the time serving as the Chief Executive Officer of, and reports directly to the board of directors

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(or equivalent governing body) of, the ultimate parent of the corporate group which includes the Corporation (or its successor) following the Change in Control.

(m) “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Change in Control Plan relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of an Officer’s employment under the provision so indicated.

(n) “Qualifying Termination” means either of the following events:

(i) any termination of an Officer’s employment by the Corporation for reasons other than for Cause within six (6) months preceding or within two (2) years following a Change in Control (regardless of whether or not a Notice of Termination is delivered to such Officer by the Corporation); or

(ii) a voluntary termination by an Officer for Good Reason within two (2) years following a Change in Control pursuant to a Notice of Termination delivered to the Corporation by such Officer.

(o) “Retirement” has the meaning set forth in Section 2.3 above.

3.4 Change in Control Benefits

(e) Right to Change in Control Benefits. Each Officer shall be entitled to receive from the Corporation the Change in Control Benefits, as described in Section 3.4(b), if (i) there has been a Change in Control and (ii) a Qualifying Termination of such Officer has occurred. Notwithstanding the foregoing, an Officer shall not be entitled to Change in Control Benefits if he or she is terminated for Cause, or if his or her employment with the Corporation ends due to death, Disability or Retirement or due to a voluntary termination of employment by such Officer without Good Reason.

(f) Description of Change in Control Benefits.

(v) Change in Control Benefits. In the event an Officer becomes entitled to receive Change in Control Benefits, as provided in Section 3.4(a), the Corporation shall pay to such Officer and provide such Officer with the following:

(A) A cash amount equal to either (1) 2-½ times Base and Bonus Compensation in the case of the Chief Executive Officer or any Executive Vice President or (2) 2 times Base and Bonus Compensation for any other Officer.

(B) A cash amount equal to the pro-rata amount (from the first day of the current fiscal year of the Corporation to the Officer’s Effective Date of Termination) of the annual incentive, if any, payable under the annual incentive plan of the Corporation in effect with respect to the fiscal year in which the termination occurs using actual financial or other quantitative bonus objectives and assuming a “target” level of

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performance with respect to any Individual Objectives portion of such incentive.

(C) A cash amount equal to such Officer’s prorated long term incentive (as determined in accordance with Section 2.5(a)(ii)(B)).

(D) A lump sum cash amount equal to such Officer’s unpaid base salary and unused and accrued vacation through the Effective Date of Termination.

(E) If the aggregate benefits accrued by the Officer as of the Effective Date of Termination under the savings and retirement plans sponsored by the Corporation are not fully vested pursuant to the terms of the applicable plan, the difference between the benefits the Officer is entitled to receive under such plans and the benefits he would have received had he been fully vested will be provided to the Officer under The Hillshire Brands Company Supplemental Executive Retirement Plan. In addition, for purposes of determining the Officer’s 401(k)/ESOP benefits under The Hillshire Brands Company Supplemental Executive Retirement Plan and the Officer’s right to post-retirement medical benefits under The Hillshire Brands Company Retiree Health Benefit Plan, the Officer shall be assumed to have continued in employment following the Effective Date of Termination for 2-½ years in the case of the Chief Executive Officer or any Executive Vice President or 2 years in the case of any other Officer (i.e., 2-½ or 2 additional years of age and service credits shall be added) subject, in each such case, to the maximum service periods under The Hillshire Brands Company Supplemental Executive Retirement Plan and/or The Hillshire Brands Company Retiree Health Benefit Plan, as applicable. Effective April 30, 2010, the pension portion of The Hillshire Brands Company Supplemental Executive Retirement Plan was frozen and no additional pension benefits shall accrue nor additional compensation be taken into consideration under The Hillshire Brands Company Supplemental Executive Retirement Plan after that date. However, the Officer will not be eligible to begin receiving any retirement benefits under any such plans until the later of (1) the third anniversary of the Effective Date of Termination in the case of the Chief Executive Officer or any Executive Vice President or the second anniversary of the Effective Date of Termination in the case of any other Officer or (2) the date he or she would otherwise be eligible to begin receiving benefits under such plans; provided that this sentence shall only apply to the extent such change in time of payment is permitted under Section 409A pursuant to an exception or similar provision thereof.

(F) A continuation of the health insurance, dental, vision and executive life insurance, available to similarly situated Officers on the Effective Date of Termination for a period of either (1) 2-½ years after the Effective Date of Termination in the case of the Chief Executive Officer or any Executive Vice President or (2) 2 years after the Effective Date of

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Termination in the case of any other Officer. These benefits shall be provided to such Officer at the same premium cost, and at the same coverage level, as in effect as of such Officer’s Effective Date of Termination. However, in the event the premium cost and/or level of coverage shall change for all employees with respect to supplemental benefits, the cost and/or coverage level, likewise, shall change for such Officer in a corresponding manner. In the event the 2-½- or 2- year period (as appropriate) exceeds the period during which the Officer is eligible for COBRA continuation of his or her health insurance coverage, the Corporation shall pay the subsidy during the COBRA period and then shall pay the remainder of the subsidy to the Officer in a lump sum payment in the month following the month in which the maximum eligible COBRA period is exhausted. Personal accident insurance, travel accident insurance and accidental death and dismemberment insurance coverages shall continue for the period above only to the extent permitted under the terms of the plans or policies. The continuation of all coverages described in this clause (i)(F) shall be discontinued prior to the end of the 2-½- or 2- year period (as appropriate) in the event such Officer has available substantially similar coverages at a comparable cost from a subsequent employer, as determined by the Committee. The Corporation shall provide the continuation of health, dental and vision coverage pursuant to this clause (F) by paying monthly taxable reimbursements to the Officer during the applicable COBRA period in an amount equal to the portion of the monthly premium paid by the Officer for such coverage that would have been subsidized by the Corporation if the Officer had continued to be actively employed during such period; provided, however, that, in order to be eligible for reimbursement payments from the Corporation hereunder, the Officer and his qualified beneficiaries must elect in a timely manner to continue coverage under the Corporation’s health, dental and vision plans under COBRA.

(G) In the case of the Chief Executive Officer, any Executive Vice President or any Senior Vice President, the Officer shall also continue to receive financial planning and counseling services consistent with past practice at the Corporation’s sole cost and expense during such 2-½- or 2- year period (as applicable). Notwithstanding the foregoing, to the extent that any financial planning assistance or any other reimbursements are subject to Section 409A (i.e., because it is provided more than 2-½ months after the end of the Corporation’s or the Terminated Officer’s taxable year containing the Termination Date and it exceeds the amount specified in Section 402(g) of the Code) then (1) such reimbursements shall be payable by the Corporation on or before the last day of the Officer’s taxable year following the taxable year in which the expense was incurred; (2) the expenses paid by the Corporation during any taxable year of the Officer will not affect the expenses paid by the

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Corporation in another taxable year; and (3) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.

(H) The Officer’s car allowance provided to him or her by the Corporation in accordance with the terms of the Corporation’s Executive Car Allowance Program will end on the Termination Date.

(I) Equity Awards.

(1) Stock Options. If an Officer has a Qualifying Termination, each outstanding stock option held by such Officer (“Option” or “Options”) shall automatically vest and become exercisable upon such Qualifying Termination; provided, however, that if the transaction giving rise to the Change in Control is an offer to purchase all of the Corporation’s outstanding voting stock for cash (“Cash Transaction”), or if the Officer experiences a Qualifying Termination within six (6) months preceding a Change in Control, then each such Option shall automatically vest and become exercisable immediately prior to the Change in Control. For purposes of each of the Officer’s Options that is exercisable on the Effective Date of Termination, the Officer’s termination of employment shall be disregarded, and each such Option shall continue to be exercisable as though the Officer’s employment had continued through the last day on which such Option would be exercisable in the absence of such employment termination.

(2) Restricted Stock Units and Restricted Stock. If an Officer has a Qualifying Termination, all restrictions and forfeiture conditions on all restricted stock units (“RSUs”) and restricted stock held by such Officer shall automatically lapse upon such Qualifying Termination; provided, however, that if the transaction giving rise to the Change in Control is a Cash Transaction, or if the Officer experiences a Qualifying Termination within six (6) months preceding a Change in Control, then the restrictions and forfeiture conditions on the RSUs and restricted stock shall lapse immediately prior to the Change in Control. Except as provided in clause (4) of this Section 3.4(b)(i)(I), such RSUs and restricted stock shall be settled or paid within ten (10) business days after the date such restrictions and forfeiture conditions lapse or, if the transaction giving rise to the Change in Control is a Cash Transaction, in the same manner and at the same time as cash consideration is paid to holders of shares of outstanding common stock of the Corporation.

(3) Performance-Based Restricted Stock Units. As of the date of a Change in Control, the performance criteria under each performance-based restricted stock unit (“PSU” or “PSUs”)

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award held by such Officer shall be deemed to have been met and the Officer shall be deemed to have earned a fixed number of PSUs equal to 100% of the stated number of PSUs in each such award (the “Target PSUs”). If the Officer has a Qualifying Termination, all remaining restrictions and forfeiture conditions on the Target PSUs shall automatically lapse upon such Qualifying Termination; provided, however, that if the transaction giving rise to the Change in Control is a Cash Transaction, or if the Officer experiences a Qualifying Termination within six (6) months preceding a Change in Control, then all of the restrictions and forfeiture conditions on the Target PSUs shall lapse immediately prior to the Change in Control. Except as provided in clause (4) of this Section 3.4(b)(i)(I), such PSUs shall be settled or paid within ten (10) business days after the date such restrictions and forfeiture conditions lapse or, if the transaction giving rise to the Change in Control is a Cash Transaction, in the same manner and at the same time as cash consideration is paid to holders of shares of outstanding common stock of the Corporation.

(4) Retirement Vesting. With respect to any Officer who is eligible for retirement vesting pursuant to the terms of an RSU and/or PSU award agreement upon a Qualifying Termination, or if the Officer could have become eligible for such retirement vesting prior to the date such RSUs and/or PSUs were scheduled to vest (a “Retirement-Eligible Officer”), such vested RSUs and/or PSUs shall be earned and/or vested in accordance with clause (2) or (3) of this Section 3.4(b)(i)(I), as the case may be, but shall be paid in accordance with the terms of the award agreement disregarding the Change in Control; provided, however: (1) to the extent the RSUs and/or PSUs are paid earlier in accordance with Section 409A of the Code following the termination of the RSUs and/or PSUs (and all other deferred compensation plans with which the RSUs and/or PSUs are aggregated) upon a “change in control event,” within the meaning of Section 409A of the Code (a “409A CIC”), and (2) with respect to any RSU or PSU award granted to a Retirement-Eligible Officer on or after June 26, 2013, if such Retirement-Eligible Officer becomes eligible for retirement vesting due to a retirement within two (2) years following a 409A CIC, such vested RSUs and/or PSUs shall be paid pursuant to clause (2) or (3) of this Section 3.4(b)(i)(I), as if such retirement were a Qualifying Termination.

(J) This Section 3.4(b)(i) shall be applicable notwithstanding any conflicting or contrary term of any plan, arrangement or agreement.

(vi) Outplacement Services. The Corporation shall, at its sole cost and expense, provide the Officer with outplacement services with the person or entity of the

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Executive’s choosing from among the Corporation’s preferred outplacement providers suitable to the Officer’s position for a period of 1 year or, if earlier, until the first acceptance by the Officer of an offer of employment.

(g) Termination for Disability. Following a Change in Control, if an Officer’s employment is terminated due to Disability, such Officer shall receive his or her base salary through the Effective Date of Termination, at which time such Officer’s benefits shall be determined in accordance with the Corporation’s disability, retirement, insurance and other applicable plans and programs then in effect. If such Officer’s employment is terminated due to Disability, such Officer shall not be entitled to Change in Control Benefits.

(h) Termination for Retirement or Death. Following a Change in Control, if an Officer’s employment is terminated by reason of his Retirement or death, such Officer’s benefits shall be determined in accordance with the Corporation’s retirement, survivor’s benefits, insurance, and other applicable programs of the Corporation then in effect. In the event such Officer’s employment is terminated by reason of his or her Retirement or death, such Officer shall not be entitled to Change in Control Benefits.

(i) Termination for Cause, or Other Than for Good Reason or Retirement. Following a Change in Control, if an Officer’s employment is terminated either (i) by the Corporation for Cause, or (ii) by such Officer (other than for Retirement or Good Reason), the Corporation shall pay such Officer his full base salary and accrued vacation through the Effective Date of Termination, at the rate then in effect, plus all other amounts to which such Officer is entitled under any compensation plans of the Corporation, at the time such payments are due, and the Corporation shall have no further obligations to such Officer under this Change in Control Plan.

(j) Deferred Compensation. All amounts previously deferred by or accrued to the benefit of the Officer under any nonqualified deferred compensation plan sponsored by the Corporation (including, without limitation, any vested amounts deferred under incentive plans), together with any accrued earnings thereon, shall be paid in accordance with the terms of such plan.

(k) Notice of Termination. Any termination of employment by (i) the Corporation or (ii) by an Officer for Good Reason shall be communicated by a Notice of Termination.

3.5 Form and timing for Change in Control Benefits

(d) Form and Timing of Change in Control Benefits. Subject to Section 3.6 below, (i) the Change in Control Benefit described in Section 3.4(b)(i)(A) of this Article shall be paid in a lump sum payment within 30 days after the later to occur of (A) the Effective Date of Termination or (B) the date of the Change in Control and (ii) the Change in Control Benefits described in Sections 3.4(b)(i)(B) and (C) of this Article shall be paid in accordance with Section 2.6 above. For the avoidance of doubt, (1) the Change in Control Benefit described in Section 3.4(b)(i)(B) shall be considered the “Annual Incentive Portion of Severance” and (2) the Change in Control Benefit described in Section 3.4(b)(i)(C) shall be considered the “Long-Term Incentive Portion of

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Severance.” In the event that the Officer shall die prior to the payment in full of any Change in Control Benefits described in Sections 3.4(b)(i)(A), (B) and (C) of this Article, then the Officer’s estate or beneficiary, whichever is applicable, shall be paid the remaining payments of such benefits. Such payments shall not affect or reduce any other death benefits that the Officer’s estate or beneficiary shall be entitled to receive under other plans of the Corporation. If the Officer’s Qualifying Termination occurs prior to the date of a Change in Control, then the lump sum Change in Control Benefit described in Section 3.4(b)(i)(A) of this Article shall be reduced by the amount, if any, of the Base and Bonus Portion of Severance received by the Officer pursuant to Section 2.5 during the period after the Qualifying Termination and before the Change in Control. For purposes of complying with Section 409A of the Code, (x) to the extent that an Officer becomes entitled to the Change in Control Benefit described in Section 3.4(b)(i)(A) of this Article due to a termination of employment that occurs in 2013, the portion of such Change in Control Benefit, if any, that is considered deferred compensation that is subject to Section 409A of the Code shall continue to be paid at the same time or times that such portion of the Change in Control Benefit would have been paid under the terms of the Plan in effect prior to June 26, 2013 and (y) if the 30-day period following the Effective Date of Termination begins in one calendar year and ends in the subsequent calendar year, the Change in Control Benefit payable upon the Effective Date of Termination shall be paid in the subsequent calendar year.

(e) Withholding of Taxes. The Corporation shall be entitled to withhold from any amounts payable under this Change in Control Plan all taxes as legally shall be required (including, without limitation, any United States federal taxes and any other state, city or local taxes).

3.6 Reduction in Total Payments

(c) Reduction to Maximize After-Tax Benefits. In the event that an Officer becomes entitled to Change in Control Benefits or any other payment or benefit under this Change in Control Plan, or under any other agreement with or plan or policy of the Corporation (in the aggregate, “Total Payments”), if all or any part of the Total Payments will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed) and reducing the Total Payments would result in greater Change in Control Benefits (after taking into consideration the payment of all income and excise taxes that would be owing as the result of the Total Payments) the Corporation shall reduce the Total Payments by the amount necessary to maximize the Change in Control Benefits for such Officer determined on an after-tax basis in the following order: (i) any cash severance or other cash amount payable to the Officer hereunder, and (ii) any continued benefit valued as a “parachute payment” for purposes of Section 280G of the Code.

For purposes of determining the amount of an Officer’s Change in Control Benefits on an after-tax basis, the Officer shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Total Payments are to be made, and state and local income taxes at the highest marginal rate of taxation in the state and locality of such Officer’s residence on the Effective Date of

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Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(d) Subsequent Recalculation. In the event the Internal Revenue Service adjusts any item included in the Corporation’s computations under Section 3.6(a) of this Article so that such Officer did not receive the full net benefit intended under the provisions of this Section 3.6, the Corporation shall reimburse such Officer by the end of the calendar year following the year of such adjustment for the full amount necessary to make such Officer whole, plus a market rate of interest, as determined by the Committee.

3.7 The Corporation’s Payment Obligation

(a) Payment Obligation Absolute. The Corporation’s obligation to make the payments and the arrangements provided for herein shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other right which the Corporation may have against such Officer or anyone else. All amounts payable by the Corporation hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Corporation shall be final, and the Corporation shall not seek to recover all or any part of such payment from such Officer or from whomsoever may be entitled thereto, for any reason except as provided in Section 3.6(b) above.

No Officer shall be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Change in Control Plan, and the obtaining of any such other employment shall in no event result in any reduction of the Corporation’s obligations to make the payments and arrangements required to be made under this Change in Control Plan, except to the extent provided in Section 3.4(b)(i)(F).

(b) Contractual Right to Benefits. This Change in Control Plan establishes and vests in each of the Officers a contractual right to the benefits to which he or she is entitled hereunder. However, nothing herein contained shall require or be deemed to prohibit the Corporation to segregate, earmark or otherwise set aside any funds or other assets, in trust or otherwise, to provide for any payments to be made or required hereunder.

3.8 Separation Agreement

No benefits under this Change in Control Plan shall be payable to any Terminated Officer until the Terminated Officer and the Corporation have executed, and not revoked, a Separation Agreement (in substantially the form approved by the Committee or its Chairman, with such revisions or modifications as it or they shall deem necessary or appropriate) within the time required by law and set forth in the Separation Agreement, and the payment of benefits under this Change in Control Plan shall be subject to the terms and conditions of such Separation Agreement. In the event that the Separation Agreement is not executed within the time required by law and set forth in the Separation Agreement, all benefits under this Agreement shall be forfeited.

3.9 Legal Remedies

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(d) Payment of Legal Fees. To the extent permitted by law, the Corporation shall pay all reasonable legal fees, costs of litigation or arbitration, prejudgment or pre-award interest, and other expenses incurred in good faith by an Officer as a result of the Corporation’s refusal to provide Change in Control Benefits, or as a result of the Corporation’s contesting the validity, enforceability or interpretation of this Change in Control Plan, or as a result of any conflict (including conflicts related to the calculation of payments) between the Corporation and such Officer. For the avoidance of doubt, the extent that any reimbursements for fees, costs, interest and other expenses described in the immediately preceding sentence (or any other provision of the Plan) are subject to Section 409A, then (i) any reimbursements shall be payable by the Corporation on or before the last day of the Officer’s taxable year following the taxable year in which the fees, costs, interest and other expenses were incurred; (ii) the fees, costs, interest and other expenses paid by the Corporation during any taxable year of the Officer will not affect the fees, costs, interest and other expenses paid by the Corporation in another taxable year; and (iii) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.

(e) Arbitration. Except to the extent a Terminated Officer files a claim under Section 3.10(c) below, any dispute or controversy arising under or in connection with this Change in Control Plan shall be settled by arbitration, conducted before a panel of 3 arbitrators sitting in a location selected by the Officer involved in such dispute or controversy within 50 miles from the location of his or her employment with the Corporation, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction. All expenses of such arbitration, including the fees and expenses of the counsel for such Officer, shall be borne by the Corporation.

3.10 Administration of Plan

(d) General. Except as specifically provided herein, the Change in Control Plan shall be administered by the Committee. The Committee may delegate any administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval and payment of severance benefits, to designated individuals or committees. The Committee shall be the “administrator” and a “named fiduciary” under the Change in Control Plan for purposes of ERISA.

(e) Interpretations And Variations. The Committee shall have the duty and authority to interpret and construe, in its sole discretion, the terms of the Change in Control Plan in regard to all questions of eligibility, the status and rights of Officers, distributees and other persons under the Change in Control Plan, and the manner, time and amount of any payment under the Change in Control Plan. The Committee or its representative shall decide any issues arising under this Change in Control Plan, and the decision of the Committee shall be binding and conclusive on the Terminated Officer and the Corporation. Any variations from the Change in Control Plan may only be made by the Committee in its sole discretion.

(f) Claims Procedure. Any Terminated Officer who believes that he or she is entitled to receive severance benefits under the Change in Control Plan may, but is not required to,

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file a claim in writing with the Corporation. In the event a Terminated Officer files such a claim, the claims procedure outlined in Section 2.10(c) above shall apply and Section 3.9(b) above shall not apply until such claim procedure has been exhausted.

3.11 Miscellaneous

(a) Successors to the Corporation. The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) of all or substantially all of the business and/or assets of the Corporation to expressly assume and agree to perform the Corporation’s obligations under this Change in Control Plan in the same manner and to the same extent that the Corporation would be required to perform them if no such succession had taken place. The date on which any such succession becomes effective shall be deemed to be the date of the Change in Control.

(b) Assignment by an Officer. This Change in Control Plan shall inure to the benefit of and be enforceable by each Officer’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If an Officer dies while any amount would still be payable to him or her hereunder had he or she continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Change in Control Plan to such Officer’s Beneficiary. If such Officer has not named a Beneficiary, then such amounts shall be paid to such Officer’s devisee, legatee or other designee, or if there is no such designee, to such Officer’s estate.

(c) Beneficiaries. An Officer may designate one or more persons or entities as the primary and/or contingent Beneficiaries of any Change in Control Benefits owing to such Officer under this Change in Control Plan. Such designation must be in the form of a signed writing reasonably acceptable to the Committee. Such Officer may make or change such designations at any time.

(d) Governing Law. This Plan shall be construed and enforced in accordance with ERISA and the Code and the laws of the State of Illinois (without regard to any states’ conflict of laws principles) to the extent such laws are not preempted by ERISA or the Code.

(e) Modification. No provision of this Change in Control Plan may be amended, terminated or waived unless such amendment, termination or waiver is agreed to in writing and signed by each Officer entitled to Change in Control Benefits hereunder and by an authorized member of the Committee, or by the respective parties’ legal representatives and successors. Notwithstanding the foregoing, the Committee shall have the right to amend or terminate this Change in Control Plan unilaterally in order to comply with applicable law. In addition, the Committee shall have the right to amend or terminate this Change in Control Plan unilaterally for any reason by delivering written notice to each of the officers entitled to benefits hereunder; provided, that any such amendment, or termination shall only become effective upon the first anniversary of the delivery of such notice to the Officers or such later date as the Committee may specify in such notice (such first anniversary or later date being referred to as the “Applicable Date”). Notwithstanding the preceding sentence, no such unilateral

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amendment or termination shall become effective if a Change in Control occurs before the Applicable Date.

(f) No Duplication. An Officer who receives the Change in Control Benefits specified in Article 3 shall not be entitled to receive payments or benefits under the Involuntary Termination Plan set forth in Article 2 above.

(g) Termination. This Change in Control Plan shall automatically terminate two years after the occurrence of a Change in Control.

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EX-10.2

Amendment to Performance-Based Restricted Stock Unit Grant Notice And Agreement

June 26, 2013

Page 1 of 1

Exhibit 10.2

FORM OF AMENDMENT TO
PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT NOTICE AND AGREEMENT

WHEREAS, pursuant to the terms of each Performance-Based Restricted Stock Unit Grant Notice and Agreement between The Hillshire Brands Company (the “Company”) and each Participant outstanding as of June 26, 2013 under the Company’s 2002 Long-Term Incentive Stock Plan or 2012 Long-Term Incentive Stock Plan (each, an “Agreement”), the Compensation and Employee Benefits Committee of the Board of Directors of the Company (the “Committee”) has reserved the right to amend the terms of such Agreement; provided that an amendment that impairs the rights of the holder of such award is subject to the holder’s consent; and

WHEREAS, the Committee has authorized the amendment of each of the Agreements to provide for accelerated vesting of the award in certain circumstances upon or following a change of control and to clarify the treatment of the award upon a change of control.

NOW, THEREFORE, effective as of June 26, 2013, each Agreement is hereby amended by inserting a new section immediately following the section of the Agreement entitled “Involuntary Termination, Voluntary Termination and Non-Severance Event Termination” (numbering the new section and renumbering all subsequent sections, and all references thereto, accordingly), which new section shall read as follows:

“[#].    Change of Control.

(a) Satisfaction of Performance Conditions. As of the date of a Change of Control, the performance criteria under the Award shall be deemed to have been met and your Earned PSUs shall be deemed equal to 100% of the number of PSUs stated in Section 1 of this Agreement; provided, however, if the number of PSUs that have become earned under an Award is established prior to the date of a Change of Control (including a determination that no PSUs were earned under the Award), then such number of PSUs shall not be affected by a subsequent Change of Control.

(b)Acceleration of Vesting. If you have a Qualifying Termination as defined below, all restrictions and forfeiture conditions on the Earned PSUs, determined in accordance with subsection (a) above, shall automatically lapse upon your Qualifying Termination; provided, however, that if the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash or if you have a Qualifying Termination within six (6) months preceding a Change of Control, then the restrictions and forfeiture conditions on the PSUs shall lapse immediately prior to the Change of Control. Such PSUs shall be settled or paid within ten (10) business days after the date such restrictions and forfeiture conditions lapse unless the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash, in which case such PSUs shall be settled or paid in the same manner and at the same time as cash consideration is paid to holders of shares of outstanding common stock of the Corporation. Notwithstanding the foregoing, if you are or could become eligible for retirement vesting pursuant to this Agreement prior to the PSU Vesting Date, your vested PSUs shall be paid in accordance with the retirement vesting provisions of this Agreement disregarding the Change of Control (or such earlier date as may be permitted under Section 409A of the Code).

(c) Definition of Cause. For purposes of this Agreement, ‘Cause’ shall mean a determination by the Company that you have willfully engaged in conduct materially injurious to the Company or have committed a crime involving dishonesty, moral turpitude or other disreputable behavior, including, but not limited to, a violation of the Company’s Global Business Standards.

(d)Definition of Change of Control. For purposes of this Agreement, ‘Change of Control’ shall have the meaning set forth in the Plan.

(e) Definition of Good Reason. For purposes of this Agreement, ‘Good Reason’ shall have the meaning set forth in the Company’s Severance Plans for Corporate Officers, if you are a participant therein, or otherwise, ‘Good Reason’ shall mean any of the following actions, if taken without your written consent: (i) a material diminution in your base salary; (ii) a material diminution in your authority, duties or responsibilities; (iii) a requirement by the Company that you move your place of employment more than 50 miles from your place of employment prior to such move; or (iv) a material breach by the Company of any material agreement between the Company and you. Your employment with the

Amendment to Performance-Based Restricted Stock Unit Grant Notice And Agreement

June 26, 2013

Page 2 of 2

Company may be terminated for Good Reason only if: (A) you provide written notice to the Company of the occurrence of the Good Reason event (as described above) within 90 days after you have knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which you believe constitute Good Reason, (B) the Company fails to correct the circumstances constituting ‘Good Reason’ within 30 days after such notice, and (C) you resign within 120 days after the initial existence of such circumstances.

(f) Definition of Qualifying Termination. For purposes of this Agreement, a ‘Qualifying Termination’ shall mean either of the following events: (i)    any termination of your employment by the Company for reasons other than Cause within six (6) months preceding or within two (2) years following a Change of Control; or (ii) a voluntary termination by you for Good Reason within two (2) years following a Change of Control pursuant to a written notice of termination that you deliver to the Company.”

EX-10.3

Exhibit 10.3

FORM OF AMENDMENT TO
RESTRICTED STOCK UNIT GRANT NOTICE AND AGREEMENT

WHEREAS, pursuant to the terms of each Restricted Stock Unit Grant Notice and Agreement between The Hillshire Brands Company (the “Company”) and each Participant outstanding as of August 22, 2013 under the Company’s 1998 Long-Term Incentive Stock Plan or 2012 Long-Term Incentive Stock Plan (each, an “Agreement”), the Compensation and Employee Benefits Committee of the Board of Directors of the Company (the “Committee”) has reserved the right to amend the terms of such Agreement; provided that an amendment that impairs the rights of the holder of such award is subject to the holder’s consent; and

WHEREAS, the Committee has authorized the amendment of each of the Agreements to provide for accelerated vesting of the award in certain circumstances upon or following a change of control.

NOW, THEREFORE, effective as of August 22, 2013, each Agreement is hereby amended by inserting a new section immediately following the section of the Agreement entitled “Involuntary Termination, Voluntary Termination and Non-Severance Event Termination” (numbering the new section and renumbering all subsequent sections, and all references thereto, accordingly), which new section shall read as follows:

“[#].    Change of Control.

(a)Acceleration of Vesting. If you have a Qualifying Termination as defined below, all restrictions and forfeiture conditions on the RSUs shall automatically lapse upon your Qualifying Termination; provided, however, that if the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash or if you have a Qualifying Termination within six (6) months preceding a Change of Control, then the restrictions and forfeiture conditions on the RSUs shall lapse immediately prior to the Change of Control. Such RSUs shall be settled or paid within ten (10) business days after the date such restrictions and forfeiture conditions lapse unless the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash, in which case such RSUs shall be settled or paid in the same manner and at the same time as cash consideration is paid to holders of shares of outstanding common stock of the Corporation. Notwithstanding the foregoing, if you are or could become eligible for retirement vesting pursuant to this Agreement prior to the end of the Vesting Period, your vested RSUs shall be paid in accordance with the retirement vesting provisions of this Agreement disregarding the Change of Control (or such earlier date as may be permitted under Section 409A of the Code).

(b) Definition of Cause. For purposes of this Agreement, ‘Cause’ shall mean a determination by the Company that you have willfully engaged in conduct materially injurious to the Company or have committed a crime involving dishonesty, moral turpitude or other disreputable behavior, including, but not limited to, a violation of the Company’s Global Business Standards.

(c)Definition of Change of Control. For purposes of this Agreement, ‘Change of Control’ shall have the meaning set forth in the Plan or, in the case of awards granted under the 1998 Long-Term Incentive Stock Plan, the meaning set forth in the Company’s 2012 Long-Term Incentive Stock Plan.

(d) Definition of Good Reason. For purposes of this Agreement, ‘Good Reason’ shall have the meaning set forth in the Company’s Severance Plans for Corporate Officers, if you are a participant therein, or otherwise, ‘Good Reason’ shall mean any of the following actions, if taken without your written consent: (i) a material diminution in your base salary; (ii) a material diminution in your authority, duties or responsibilities; (iii) a requirement by the Company that you move your place of employment more than 50 miles from your place of employment prior to such move; or (iv) a material breach by the Company of any material agreement between the Company and you. Your employment with the Company may be terminated for Good Reason only if: (A) you provide written notice to the Company of the occurrence of the Good Reason event (as described above) within 90 days after you have knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which you believe constitute Good Reason, (B) the Company fails to correct the circumstances constituting ‘Good Reason’ within 30 days after such notice, and (C) you resign within 120 days after the initial existence of such circumstances.

(e) Definition of Qualifying Termination. For purposes of this Agreement, a ‘Qualifying Termination’ shall mean either of the following events: (i) any termination of your employment by the Company for reasons other than Cause within six (6) months preceding or within two (2) years following a Change of Control; or (ii) a voluntary termination by you for Good Reason within two (2) years following a Change of Control pursuant to a written notice of termination that you deliver to the Company.”

EX-10.4

Exhibit 10.4

FORM OF AMENDMENT TO
STOCK OPTION GRANT NOTICE AND AGREEMENT

WHEREAS, pursuant to the terms of each Stock Option Grant Notice and Agreement between The Hillshire Brands Company (the “Company”) and each Participant outstanding as of June 26, 2013 under the Company’s 1998 Long-Term Incentive Stock Plan or 2012 Long-Term Incentive Stock Plan (each, an “Agreement”), the Compensation and Employee Benefits Committee of the Board of Directors of the Company (the “Committee”) has reserved the right to amend the terms of such Agreement; provided that an amendment that impairs the rights of the holder of such award is subject to the holder’s consent; and

WHEREAS, the Committee has authorized the amendment of each of the Agreements to provide for accelerated vesting of the award in certain circumstances upon or following a change of control.

NOW, THEREFORE, effective as of June 26, 2013, each Agreement is hereby amended by inserting a new section immediately following the section of the Agreement entitled “Involuntary Termination, Voluntary Termination and Non-Severance Event Termination” (numbering the new section and renumbering all subsequent sections, and all references thereto, accordingly), which new section shall read as follows:

“[#].    Change of Control.

(a)Acceleration of Vesting. If you have a Qualifying Termination, as defined below, the Option shall automatically vest and become exercisable upon such Qualifying Termination; provided, however, that if the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash or if you have a Qualifying Termination within six (6) months preceding a Change of Control, then your Option shall automatically vest and become exercisable immediately prior to the Change of Control. For purposes of Options that are exercisable on the date on which a Qualifying Termination occurs, your termination of employment shall be disregarded, and each such Option shall continue to be exercisable as though your employment had continued through the last day on which such Option would be exercisable in the absence of such employment termination.

(b) Definition of Cause. For purposes of this Agreement, ‘Cause’ shall mean a determination by the Company that you have willfully engaged in conduct materially injurious to the Company or have committed a crime involving dishonesty, moral turpitude or other disreputable behavior, including, but not limited to, a violation of the Company’s Global Business Standards.

(c)Definition of Change of Control. For purposes of this Agreement, ‘Change of Control’ shall have the meaning set forth in the Plan or, in the case of awards granted under the 1998 Long-Term Incentive Stock Plan, the meaning set forth in the Company’s 2012 Long-Term Incentive Stock Plan.

(d) Definition of Good Reason. For purposes of this Agreement, ‘Good Reason’ shall have the meaning set forth in the Company’s Severance Plans for Corporate Officers, if you are a participant therein, or otherwise, ‘Good Reason’ shall mean any of the following actions, if taken without your written consent: (i) a material diminution in your base salary; (ii) a material diminution in your authority, duties or responsibilities; (iii) a requirement by the Company that you move your place of employment more than 50 miles from your place of employment prior to such move; or (iv) a material breach by the Company of any material agreement between the Company and you. Your employment with the Company may be terminated for Good Reason only if: (A) you provide written notice to the Company of the occurrence of the Good Reason event (as described above) within 90 days after you have knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which you believe constitute Good Reason, (B) the Company fails to correct the circumstances constituting ‘Good Reason’ within 30 days after such notice, and (C) you resign within 120 days after the initial existence of such circumstances.

(e) Definition of Qualifying Termination. For purposes of this Agreement, a ‘Qualifying Termination’ shall mean either of the following events: (i) any termination of your employment by the Company for reasons other than Cause within six (6) months preceding or within two (2) years following a Change of

Control; or (ii) a voluntary termination by you for Good Reason within two (2) years following a Change of Control pursuant to a written notice of termination that you deliver to the Company.”

EX-10.5

Exhibit 10.5

THE HILLSHIRE BRANDS COMPANY

2012 LONG-TERM INCENTIVE STOCK PLAN

FORM OF PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT NOTICE AND AGREEMENT

[INSERT PARTICIPANT NAME]

This Performance-Based Restricted Stock Unit Grant Notice and Agreement (this “Agreement”), made as of August 30, 2013 (the “Award Date”), by and between The Hillshire Brands Company, a Maryland corporation (the “Company”), and you is evidence of an award made pursuant to The Hillshire Brands Company 2012 Long-Term Incentive Stock Plan (the “Plan”), which is incorporated into this Agreement by reference. A copy of the Plan has been provided to you and is also available from the Company’s Compensation Department. Capitalized terms used but not defined herein have the meanings specified in the Plan.

1.    Performance-Based Restricted Stock Unit Award. Subject to the restrictions, limitations, terms and conditions specified in the Plan and this Agreement, the Company hereby awards to you as of the Award Date a target award of:

______ Performance Stock Units (PSUs)

which are considered Stock Awards under the Plan (the “Award”). The vesting of the Award is based both upon the Company’s performance during fiscal years 2014 – 2016 (FY 2014-2016) (the “Performance Period”) and your continued service with the Company or any of its subsidiaries (collectively, the “Hillshire Companies”) from the Award Date through August 31, 2016 (the “Vesting Period”), subject in each case to the terms and conditions set forth in this Agreement. The actual number of PSUs ultimately released, if any, shall be determined as of the last day of the Vesting Period (the “PSU Vesting Date”). Except as otherwise provided in the Plan, the PSUs shall be settled in shares of common stock of the Company (“Shares”).

2.     Vesting of the Award.

(a) Performance-Based Criteria. A number of the PSUs subject to the Award that become earned (the “Earned PSUs”) following the end of the Performance Period shall be based: (1) Fifty percent (50%) on the Company’s FY 2014-2016 Relative Total Stockholder Return (as defined below) in accordance with the performance levels and payout percentages set forth in the table below labeled “rTSR Table;” and (2) Fifty percent (50%) on the Company’s FY 2014-2016 Earnings Per Share Cumulative Annual Growth Rate (as defined below) in accordance with the performance levels and payout percentages set forth in the table below labeled “Adjusted EPS CAGR Table;” provided that, subject to the remainder of this Agreement, the vesting of such Earned PSUs shall be contingent on you remaining continuously employed with the Hillshire Companies through the PSU Vesting Date. For the avoidance of doubt, your period of continuous employment for purposes of vesting excludes any severance period.

rTSR Table
Company % Percentile Rank(1)	% of PSUs Earned(2)
≥ 75th	150	%
50th	100	%
25th	50	%
< 25th	0	%

⁽¹⁾ Percentile rank includes the Company in the calculation of Relative Total Stockholder Return performance.

FY14-16 PSU Award

⁽²⁾ Payouts between payout levels will be determined by linear interpolation.

Adjusted EPS CAGR Table
Company Adjusted EPS CAGR		% of PSUs Earned(1)
≥ 12.0%		150	%
9.5	%	125	%
7.0	%	100	%
6.0	%	75	%
5.0	%	50	%
< 5.0%		0	%

⁽¹⁾ Payouts between payout levels will be determined by linear interpolation.

(b) Committee Discretion. Notwithstanding the attainment of the performance measures with respect to the Award or anything herein to the contrary, in all cases, the Compensation and Employee Benefits Committee of the Company’s Board of Directors (the “Committee”) shall have the sole and absolute discretion to reduce the amount of any payment with respect to any portion of the Award that would otherwise be made to any participant or to decide that no payment shall be made. The Company shall not distribute the Shares subject to the Award, unless and until the Committee has certified that the applicable performance measures have been satisfied, which certification shall occur as soon as practicable following the last day of the Performance Period.

(c) Definitions. For purposes of this paragraph 2, the terms below have the following meanings:

i. Adjusted EPS shall mean "adjusted diluted earnings per share," which is calculated by dividing the Company’s adjusted net income available to holders of Shares by the weighted average number of Shares outstanding, including dilutive stock options and any other convertible securities, if applicable. “Adjusted EPS” and “adjusted net income” exclude those significant items that are income or charges (and related tax impact) that management believes have had or are likely to have a significant impact on the earnings of the applicable business segment or on the total Company for the period in which the item is recognized, are not indicative of the Company’s core operating results and affect the comparability of underlying results from period to period.

ii. Adjusted Earnings Per Share Cumulative Annual Growth Rate (Adjusted EPS CAGR) means the "compound annual growth rate" of Adjusted EPS over the Performance Period, measured against the Adjusted EPS for the Reference Period. Adjusted EPS CAGR shall be calculated using the Adjusted EPS figures included in the Company’s public filings with the Securities and Exchange Commission.

iii. Final Average Stock Price means the average closing price of a share of common stock of a company, as reported on the principal national stock exchange on which such common stock is traded, for the 60 calendar days immediately preceding the last trading day of the Performance Period.

iv. Initial Average Stock Price means the average closing price of a share of common stock of a company, as reported on the principal national stock exchange on which such common stock is traded, for the 60 calendar days immediately following the first trading day of the Performance Period.

v. Peer Group means the following thirty-five (35) companies:

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FY14-16 PSU Award

Beam, Inc. (BEAM)	Kellogg Company (K)
Boston Beer Co. Inc. (SAM)	Lancaster Colony Corporation (LANC)
Boulder Brands, Inc. (BDBD)	McCormick & Company, Inc. (MKC)
Brown-Forman Corporation (BF-B)	Monster Beverage Corporation (MNST)
Campbell Soup Company (CPB)	National Beverage Corp. (FIZZ)
Chiquita Brands International Inc. (CQB)	Pilgrim’s Pride Corporation (PPC)
Church & Dwight Co. Inc. (CHD)	Sanderson Farms, Inc. (SAFM)
ConAgra Foods, Inc. (CAG)	Seneca Foods Corp. (SENEA)
Constellation Brands Inc. (STZ)	Smithfield Foods, Inc. (SFD)
Dean Foods Company (DF)	Snyder’s-Lance, Inc. (LNCE)
Dole Food Company Inc. (DOLE)	The Clorox Company (CLX)
Dr. Pepper Snapple Group, Inc. (DPS)	The Hain Celestial Group, Inc. (HAIN)
Energizer Holdings Inc. (ENR)	The Hershey Company (HSY)
Flowers Foods, Inc. (FLO)	The J.M. Smucker Company (SJM)
General Mills, Inc. (GIS)	The Whitewave Foods Company (WWAV)
Green Mountain Coffee Roasters, Inc. (GMCR)	Tootsie Roll Industries Inc. (TR)
Hormel Foods Corporation (HRL)	Treehouse Foods, Inc. (THS)
J&J Snack Foods Corp. (JJSF)

vi. Reference Period means the most recent fiscal year preceding the beginning of the Performance Period.

vii. Relative Total Stockholder Return (rTSR) means the Company’s Total Stockholder Return percentile rank compared to the Total Stockholder Return of the Peer Group over the Performance Period.

viii. Total Stockholder Return (TSR) means the cumulative rate of return on a share of common stock, as measured by dividing (A) the sum of the cumulative amount of dividends for the Performance Period, assuming dividend reinvestment, and the difference between the Initial Average Stock Price and the Final Average Stock Price by (B) the Initial Average Stock Price. TSR will only be calculated for a company in the Peer Group, and included in the rTSR determination, if such company is publicly-traded for the entire Performance Period.

3.    Acceptance of Terms and Conditions. By electronically acknowledging and accepting this Award, you agree to be bound by all of the terms and conditions contained in this Agreement, the Plan, the Non-Competition, Non-Solicitation and Confidentiality Agreement, and any and all conditions established by the Company in connection with Awards issued under the Plan, and understand that this Award neither confers any legal or equitable right (other than those rights constituting the Award itself) against the Company directly or indirectly, nor does it give rise to any cause of action at law or in equity against the Company. In order to vest in the Award described in this Agreement, you must have accepted the Award within 45 calendar days after receipt of this Agreement.

4.    Dividend Equivalents. Subject to the restrictions, limitations and conditions as described in the Plan, dividend equivalents payable on the PSUs will be credited (in cash, without interest) on your behalf at the time that dividends are otherwise paid to owners of the Company’s common stock. Dividend equivalents will be settled and paid at the same time as the vested PSUs are settled pursuant to the terms of this Agreement. The dividend equivalents credited in connection with the PSUs vest, and are subject to risk of forfeiture, based on the achievement of performance goals to the same extent as the PSUs to which such dividend equivalents have been credited.

5.    Distribution of the Award. If the distribution is subject to tax withholding, such taxes will be settled by withholding cash and/or a number of Shares with a market value equal to the minimum amount of such taxes. Any cash from dividend equivalents remaining after withholding taxes are paid will be paid in cash to

3

FY14-16 PSU Award

you. The net number of Shares to be distributed will be delivered to your electronic stock plan account on or as soon as practicable after the PSU Vesting Date (but in no event later than March 15^th of the first calendar year immediately following the PSU Vesting Date). If withholding of taxes is not required, none will be taken and the gross number of Shares and dividend equivalents will be distributed to you in accordance with this paragraph 5. You are personally responsible for the proper reporting and payment of all taxes related to the settlement of the Award.

6.    Death, Total Disability or Retirement. If you cease active employment (i.e., cease to be coded as active on the payroll system) with the Hillshire Companies, because of your death or because you become Totally Disabled (as defined under the appropriate long-term disability benefit plan of the Hillshire Companies, if applicable), the Award shall continue to vest after such termination based on the Company’s actual performance and any Earned PSUs shall be distributed to you or your estate at the same time as the Earned PSUs, if any, would have been distributed to you had you continued in active employment with the Hillshire Companies. In the case of your attaining age 55 or older and if you have at least 10 years of service with the Hillshire Companies when your employment terminates, or in the case of your attaining age 65, regardless of service, the Award will continue to vest after your termination based on the Company’s actual performance and any Earned PSUs shall be distributed to you at the same time the Earned PSUs, if any, would have been distributed to you had you continued in active employment with the Hillshire Companies. These provisions apply only to the Award under this Agreement; other awards may have different provisions.

7.    Involuntary Termination, Voluntary Termination and Non-Severance Event Termination. The following provisions apply only to the Award granted under this Agreement; other awards may have different provisions

(a)    Involuntary Termination. If your employment with the Hillshire Companies is terminated and you are eligible to receive severance benefits under The Hillshire Brands Company Severance Plans for Corporate Officers, the Severance Pay Plan, the Severance Pay Plan for Key Executives, the Severance Pay Plan for Certain Events or any other written severance plan of the Hillshire Companies (collectively, a “Severance Event Termination”), you will be eligible to receive a prorated distribution that is determined by multiplying the Earned PSUs covered by the Award by a fraction, the numerator of which is the number of months of your active service from Award Date through the date your employment terminates (not including the severance period), and the denominator of which is the number of months from Award Date through the PSU Vesting Date.

In the event that the division, business unit or business segment of the Hillshire Companies to which at least 80% of your time is dedicated or from which you are on leave of absence is sold, closed, spun off or otherwise divested and, as a result of such transaction, your employment with the Hillshire Companies is terminated, the Committee shall have discretion regarding the treatment of your Award upon the consummation of such transaction, which treatment may include without limitation acceleration of vesting and settlement of all or a portion of the Award or substitution of the Award.  The decision of the Committee regarding any such treatment shall be final, binding and conclusive. 

(b)Voluntary Termination and Non-Severance Event Termination. If your employment terminates for reasons other than those described above (i.e., you voluntarily terminate employment with the Hillshire Companies or your employment is terminated by the Hillshire Companies such that you are not eligible for severance pay under any of the severance plans of the Hillshire Companies), then the Award shall be canceled on the date your employment terminates, with no pro-rata vesting.

8.    Change of Control.

(a)Satisfaction of Performance Conditions. As of the date of a Change of Control, the performance criteria under the Award shall be deemed to have been met and your Earned PSUs shall be deemed equal to 100% of the number of PSUs stated in Section 1 of this Agreement.

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FY14-16 PSU Award

(b)    Acceleration of Vesting Prior to the PSU Vesting Date. If you have a Qualifying Termination, all restrictions and forfeiture conditions on the Earned PSUs, determined in accordance with subsection (a) above, shall automatically lapse upon your Qualifying Termination; provided, however, that if the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash or if you have a Qualifying Termination within six (6) months preceding a Change of Control, then the restrictions and forfeiture conditions on the PSUs shall lapse immediately prior to the Change of Control. Such PSUs shall be settled or paid within ten (10) business days after the date such restrictions and forfeiture conditions lapse unless the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash, in which case such PSUs shall be settled or paid in the same manner and at the same time as cash consideration is paid to holders of shares of outstanding common stock of the Corporation. Notwithstanding the foregoing, if you are or could become eligible for retirement vesting pursuant to Section 6 of this Agreement prior to the PSU Vesting Date, your PSUs shall be settled or paid upon your separation from service (if your separation from service occurs before the PSU Vesting Date), but only if your separation from service occurs within two (2) years following a “change in control event,” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and in all other circumstances your PSUs shall be settled or paid upon your PSU Vesting Date (or such earlier date as may be permitted under Section 409A of the Code).

(c)    Definition of Cause. For purposes of this Agreement, “Cause” shall mean a determination by the Company that you have willfully engaged in conduct materially injurious to the Company or have committed a crime involving dishonesty, moral turpitude or other disreputable behavior, including, but not limited to, a violation of the Company’s Global Business Standards.

(d)    Definition of Change of Control. For purposes of this Agreement, “Change of Control” shall have the meaning set forth in the Plan.

(e)    Definition of Good Reason. For purposes of this Agreement, “Good Reason” shall have the meaning set forth in the Company’s Severance Plans for Corporate Officers, if you are a participant therein, or otherwise, “Good Reason” shall mean any of the following actions, if taken without your written consent: (i) a material diminution in your base salary; (ii) a material diminution in your authority, duties or responsibilities; (iii) a requirement by the Company that you move your place of employment more than 50 miles from your place of employment prior to such move; or (iv) a material breach by the Company of any material agreement between the Company and you. Your employment with the Company may be terminated for Good Reason only if (A) you provide written notice to the Company of the occurrence of the Good Reason event (as described above) within 90 days after you have knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which you believe constitute Good Reason, (B) the Company fails to correct the circumstances constituting “Good Reason” within 30 days after such notice, and (C) you resign within 120 days after the initial existence of such circumstances.

(f)    Definition of Qualifying Termination. For purposes of this Agreement, a “Qualifying Termination” shall mean either of the following events:

i. any termination of your employment by the Company for reasons other than Cause within six (6) months preceding or within two (2) years following a Change of Control; or

ii. a voluntary termination by you for Good Reason within two (2) years following a Change of Control pursuant to a written notice of termination that you deliver to the Company.

9.    Non-Competition/Non-Solicitation/Confidentiality. As a condition to your receipt of this PSU grant, you must electronically accept a Non-Competition, Non-Solicitation and Confidentiality Agreement within 45 calendars days after receipt of this Agreement. Please carefully read the Non-Competition, Non-Solicitation and Confidentiality Agreement in its entirety and feel free to have your lawyer review it prior to accepting it.

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FY14-16 PSU Award

10. Adjustment of the Award. In the event of any change in the capital structure of the Company (including but not limited to a stock dividend, stock split, reverse stock split, combination or exchange of securities, merger, consolidation, recapitalization, spin-off, split off, liquidation or other distribution of any or all of the assets of the Company to stockholders, other than normal cash dividends) or any change in any rights attendant to any class of authorized securities of the Company (an “Adjustment Event”), the Committee shall make proportionate adjustments with respect to the number and class of securities subject to the Award and the performance measures set forth in paragraph 2 to reflect such Adjustment Event and to maintain the Award’s intrinsic and fair value; provided, that the Committee shall retain discretion with respect to how any such proportionate adjustments shall be made. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

11.Forfeiture/Adjustment.

(a) Misconduct/Restatement. Notwithstanding anything contained in this Agreement to the contrary, you may forfeit all or a portion of the Award and/or be required to repay the Company, or you may be entitled to a decreased or increased Award, upon the occurrence of any of the following events:

i. Misconduct. If you engage in any activity contrary or harmful to the interests of the Hillshire Companies, including but not limited to: (i) competing, directly or indirectly (either as owner, employee or agent), with any of the businesses of the Hillshire Companies, (ii) violating any policies of the Hillshire Companies, (iii) soliciting any present or future employees or customers of the Hillshire Companies to terminate such employment or business relationship(s) with the Hillshire Companies, (iv) disclosing or misusing any confidential information regarding the Hillshire Companies, or (v) participating in any activity not approved by the Board of Directors of the Company which could reasonably be foreseen as contributing to or resulting in a Change of Control of the Company (such activities to be collectively referred to as “wrongful conduct”), then (A) the Award, to the extent it remains restricted, shall terminate automatically on the date on which you first engaged in such wrongful conduct, and (B) if the wrongful conduct occurred within six months following the PSU Vesting Date, you shall pay to the Company in cash any financial gain you realized from the vesting of the PSU. For purposes of this paragraph 11, financial gain shall equal the Fair Market Value of the Shares on the PSU Vesting Date multiplied by the number of PSUs actually distributed pursuant to the Award, reduced by any taxes paid in countries other than the United States which taxes are not otherwise eligible for refund from the taxing authorities.

ii. Restatement of Financial Results. This paragraph 11(a)(ii) applies to you only if you are an “officer” of the Company, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, at the time you received this Award (“Officer Participant”). If you are an Officer Participant and you vest in an Award (including distributions of any deferred incentive awards, if applicable), which vesting was predicated upon the Company achieving certain financial results (the “Original Amount”), and within two years after the PSU Vesting Date, the Company restates its financial statements due to material noncompliance with financial reporting requirements under the securities laws (such restated financial statements, the “Restated Financials”), then the vested amount of the Award shall be recalculated based on the Restated Financials (the “Adjusted Amount”). If the Original Amount is greater than the Adjusted Amount, then on the date on which the Company files the Restated Financials with the Securities and Exchange Commission (“SEC”), any vested portion of this Award that has not yet been distributed automatically shall be reduced by an amount equal to (i) the Original Amount, less (ii) the Adjusted Amount. If the Adjusted Amount is greater than the Original Amount, then on the date on which the Company files the Restated Financials with the SEC, any vested amount that has not yet been distributed automatically shall be increased by an amount equal to (A) the Adjusted Amount, less (B) the Original Amount. If the incentive award already has been

6

FY14-16 PSU Award

distributed then, as soon as practicable after the date on which the Company files the Restated Financials with the SEC, (x) you shall pay to the Company, in cash, any financial gain you realized from the vesting of the incentive award that is attributable to the excess of the Original Amount over the Adjusted Amount, if the Original Amount is greater than the Adjusted Amount, or (y) the Company shall pay to you, in cash, an amount equal to the excess of the Adjusted Amount over the Original Amount, if the Adjusted Amount is greater than the Original Amount. No interest will be due to or paid by the Company or you to the other with respect to any such true up payment. The Committee may determine, in its discretion and based on the circumstances leading to the Company’s filing of Restated Financials with the SEC, that any recoupment or payment under this paragraph 11(a)(ii) is not practical and may elect to forego the application of this paragraph 11(a)(ii).

(b)    Clawback. The Award and the Shares delivered pursuant to this Agreement are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

(c)    Offset. By accepting this PSU, you consent to and authorize the Hillshire Companies to deduct from any amounts payable by the Hillshire Companies to you, any amounts you owe to the Company under this paragraph 11. This right of set-off is in addition to any other remedies the Company may have against you for breach of this Agreement or the Non-Competition, Non-Solicitation and Confidentiality Agreement electronically accepted by you pursuant to paragraph 9.

12.    Rights as a Stockholder. You will have no rights as a stockholder with respect to any of the PSUs subject to the Award until and unless you receive Shares following vesting of these PSUs.

13.    Conformity with the Plan. The Award is intended to conform in all respects with, and is subject to, all applicable provisions of the Plan. 

14.    Interpretations. Any dispute, disagreement or question which arises under, or as a result of, or in any way relates to the interpretation, construction or application of the Plan or this Agreement will be determined and resolved by the Committee or its delegate. Such determination or resolution by the Committee or its delegate will be final, binding and conclusive for all purposes.

15.    Employment Rights. Nothing in the Plan or this Agreement confers on you any right to continue in the employ of the Hillshire Companies or in any way affects the Hillshire Companies’ right to terminate your employment without prior notice any time for any reason.

16.    Consent to Transfer Personal Data. By accepting this Award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. You are not obliged to consent to such collection, use, processing and transfer of personal data. The Hillshire Companies hold certain personal information about you, that may include your name, home address and telephone number, fax number, email address, sex, beneficiary information, age, language skills, date of birth, social security number or other employee identification number, job title, employment or severance contract, current wage and benefit information, tax-related information, plan or benefit enrollment forms and elections, option or benefit statements, any shares of stock or directorships in the Company, details of all options or any other entitlements to shares of stock awarded, canceled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”). The Hillshire Companies will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and the Hillshire Companies may further transfer Data to any third parties assisting the Hillshire Companies in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. You authorize them to receive, possess, use, retain

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FY14-16 PSU Award

and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of stock acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting the Company.

17.    Miscellaneous.

(a)    Modification. The Award is documented by the minutes of the Committee and or as approved by the CEO for non-corporate officers, which records are the final determinant of the number of PSUs granted and the conditions of this grant. The Committee may amend or modify the Award in any manner to the extent that the Committee would have had the authority under the Plan initially to grant such PSUs, provided that no such amendment or modification shall impair your rights under this Agreement without your consent. Except as in accordance with the two immediately preceding sentences and paragraph 18, this Agreement may be amended, modified or supplemented only by an instrument in writing signed by both parties hereto.

(b)    Governing Law. All matters regarding or affecting the relationship of the Company and its stockholders shall be governed by the General Corporation Law of the State of Maryland. All other matters arising under this Agreement shall be governed by the internal laws of the State of Illinois, including matters of validity, construction and interpretation. You and the Company agree that all claims in respect of any action or proceeding arising out of or relating to this Agreement shall be heard or determined in any state or federal court sitting in Chicago, Illinois, and you agree to submit to the jurisdiction of such courts, to bring all such actions or proceedings in such courts and to waive any defense of inconvenient forum to such actions or proceedings. A final judgment in any action or proceeding so brought shall be conclusive and may be enforced in any manner provided by law.

(c)    Successors and Assigns. Except as otherwise provided herein, this Agreement will bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.

(d)    Severability. Whenever feasible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

(e)    Transferability. The Award is not transferable or assignable other than (i) by will or the laws of descent and distribution, (ii) pursuant to the beneficiary designation procedures approved by the Committee, or (iii) pursuant to an assignment or transfer without consideration to a Permitted Assignee under the Plan, if permitted by the Committee. Your interests in the PSUs are not subject to your debts or other obligations and, except as may be required by the tax withholding provisions of applicable law, may not be voluntarily sold, transferred, alienated, assigned or encumbered, except as provided in this paragraph.

18.    Amendment. Notwithstanding anything in the Plan or this Agreement to the contrary, the Award may be amended by the Company without the consent of you, including but not limited to modifications to any of the rights granted to you under the Award, at such time and in such manner as the Company may consider necessary or desirable to reflect changes in law.

19.    Section 409A. This Agreement is intended to be exempt from Section 409A of the Code pursuant the short-term deferrals exception described in Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent possible, and any Earned PSUs shall be distributed no later than the later of (1) the 15th day of the third month of the calendar year following the calendar year in which your right to the Earned PSUs ceased being subject to a substantial risk of forfeiture, and (2) the 15th day of the third month of the Company’s fiscal year following the Company’s fiscal year in which your right to the Earned PSUs ceased being subject to a

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FY14-16 PSU Award

substantial risk of forfeiture. Notwithstanding any other provision in this Agreement, if you are a “specified employee,” as defined in Section 409A of the Code, as of the date of your separation from service, then to the extent any amount payable to you (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon your separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of your separation from service, such payment shall be delayed until the earlier to occur of (a) the first business day following the six-month anniversary of the separation from service and (b) the date of your death.

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FY14-16 PSU Award

EX-10.6

Exhibit 10.6

THE HILLSHIRE BRANDS COMPANY

2012 LONG-TERM INCENTIVE STOCK PLAN

FORM OF RESTRICTED STOCK UNIT GRANT NOTICE AND AGREEMENT

[INSERT PARTICIPANT NAME]

This Restricted Stock Unit (RSU) Grant Notice and Agreement (this “Agreement”), made as of August 30, 2013 (the “Award Date”), by and between The Hillshire Brands Company, a Maryland corporation (the “Company”), and you is evidence of an award made pursuant to The Hillshire Brands Company 2012 Long-Term Incentive Stock Plan (the “Plan”), which is incorporated into this Agreement by reference. A copy of the Plan has been provided to you and is also available from the Company’s Compensation Department.Capitalized terms used but not defined herein have the meanings specified in the Plan.

1.    Restricted Stock Unit Award. Subject to the restrictions, limitations, terms and conditions specified in the Plan and this Agreement, the Company hereby awards to you as of the Award Date:

______ Restricted Stock Units (RSUs)

which are considered Stock Awards under the Plan (the “Award”). The vesting of the Award is based on your continued service with the Company or any of its subsidiaries (collectively, the “Hillshire Companies”) from the Award Date through August 31, 2016, subject to the terms and conditions set forth in this Agreement. The RSUs will vest 100% on August 31, 2016 (the “Vesting Date”), and shall be settled in shares of common stock of the Company (“Shares”). For the avoidance of doubt, your period of continuous employment for purposes of vesting excludes any severance period.

2.    Acceptance of Terms and Conditions. By electronically acknowledging and accepting this Award, you agree to be bound by all of the terms and conditions contained in this Agreement, the Plan, the Non-Competition, Non-Solicitation and Confidentiality Agreement, and any and all conditions established by the Company in connection with Awards issued under the Plan, and understand that this Award neither confers any legal or equitable right (other than those rights constituting the Award itself) against the Company directly or indirectly, nor does it give rise to any cause of action at law or in equity against the Company. In order to vest in the Award described in this Agreement, you must have accepted the Award within 45 calendar days after receipt of this Agreement.

3.    Dividend Equivalents. Subject to the restrictions, limitations and conditions as described in the Plan, dividend equivalents payable on the RSUs will be credited (in cash, without interest) on your behalf at the time that dividends are otherwise paid to owners of the Company’s common stock. Dividend equivalents will be settled and paid at the same time as the vested RSUs are settled pursuant to the terms of this Agreement.

4.    Distribution of the Award. If the distribution is subject to tax withholding, such taxes will be settled by withholding cash and/or a number of shares with a market value not less than the amount of such taxes. Any cash from dividend equivalents remaining after withholding taxes are paid will be paid in cash to you. The net number of shares of the Company to be distributed will be delivered to your electronic stock plan account on or as soon as practicable after the Vesting Date. If withholding of taxes is not required, none will be taken and the gross number of shares and dividend equivalents will be distributed to you in accordance with this paragraph 4. You are personally responsible for the proper reporting and payment of all taxes related to the settlement of the Award.

5.    Death, Total Disability or Retirement. If you cease active employment (i.e., cease to be coded as active on the payroll system) with the Hillshire Companies, because of your death or because you become Totally Disabled (as defined under the appropriate long-term disability benefit plan of the Hillshire Companies, if applicable), the Award shall vest immediately and be distributed to you or your estate as soon as

FY14-16 RSU Award

practical. In the case of your attaining age 55 or older and if you have at least 10 years of service with the Hillshire Companies when your employment terminates, or in the case of your attaining age 65, regardless of service, the Award will continue to vest after your termination. These provisions apply only to the Award under this Agreement; other awards may have different provisions.

6.    Involuntary Termination, Voluntary Termination and Non-Severance Event Termination. The following provisions apply only to the Award granted under this Agreement; other awards may have different provisions

(a)    Involuntary Termination. If your employment with the Hillshire Companies is terminated and you are eligible to receive severance benefits under The Hillshire Brands Company Severance Plans for Corporate Officers, the Severance Pay Plan, the Severance Pay Plan for Key Executives, the Severance Pay Plan for Certain Events or any other written severance plan of the Hillshire Companies (collectively, a “Severance Event Termination”), you will be eligible to receive a prorated portion of the non-vested shares determined by multiplying the number of shares subject to the Award by a fraction, the numerator of which is the number of complete months of your active service from Award Date through the date your employment terminates (not including the severance period), and the denominator of which is the number of months from Award Date through the Vesting Date.

In the event that the division, business unit or business segment of the Company to which at least 80% of your time is dedicated or from which you are on leave of absence is sold, closed, spun off or otherwise divested and, as a result of such transaction, your employment with the Hillshire Companies is terminated, the Committee shall have discretion regarding the treatment of your Award upon the consummation of such transaction, which treatment may include without limitation acceleration of vesting and settlement of all or a portion of the Award or substitution of the Award.  The decision of the Committee regarding any such treatment shall be final, binding and conclusive. 

(b)Voluntary Termination and Non-Severance Event Termination. If your employment terminates for reasons other than those described above (i.e., you voluntarily terminate employment with the Hillshire Companies or your employment is terminated by the Hillshire Companies such that you are not eligible for severance pay under any of the severance plans of the Hillshire Companies), then the Award shall be canceled on the date your employment terminates, with no pro-rata vesting.

7.    Change of Control.

(a)    Acceleration of Vesting Prior to the Vesting Date. If you have a Qualifying Termination, all restrictions and forfeiture conditions on the RSUs shall automatically lapse upon your Qualifying Termination; provided, however, that if the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash or if you have a Qualifying Termination within six (6) months preceding a Change of Control, then the restrictions and forfeiture conditions on the RSUs shall lapse immediately prior to the Change of Control. Such RSUs shall be settled or paid within ten (10) business days after the date such restrictions and forfeiture conditions lapse unless the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash, in which case such RSUs shall be settled or paid in the same manner and at the same time as cash consideration is paid to holders of shares of outstanding common stock of the Corporation. Notwithstanding the foregoing, if you are or could become eligible for retirement vesting pursuant to Section 5 of this Agreementprior to the Vesting Date, your RSUs shall be settled or paid upon your separation from service (if your separation from service occurs before the Vesting Date), but only if your separation from service occurs within two (2) years following a “change in control event,” within the meaning of Section 409A of the Code, and in all other circumstances your RSUs shall be settled or paid upon your Vesting Date (or such earlier date as may be permitted under Section 409A of the Code).

(b)    Definition of Cause. For purposes of this Agreement, “Cause” shall mean a determination by the Company that you have willfully engaged in conduct materially injurious to the Company

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FY 14-16 RSU Award

or have committed a crime involving dishonesty, moral turpitude or other disreputable behavior, including, but not limited to, a violation of the Company’s Global Business Standards.

(c)    Definition of Change of Control. For purposes of this Agreement, “Change of Control” shall have the meaning set forth in the Plan.

(d)    Definition of Good Reason. For purposes of this Agreement, “Good Reason” shall have the meaning set forth in the Company’s Severance Plans for Corporate Officers, if you are a participant therein, or otherwise, “Good Reason” shall mean any of the following actions, if taken without your written consent: (i) a material diminution in your base salary; (ii) a material diminution in your authority, duties or responsibilities; (iii) a requirement by the Company that you move your place of employment more than 50 miles from your place of employment prior to such move; or (iv) a material breach by the Company of any material agreement between the Company and you. Your employment with the Company may be terminated for Good Reason only if (A) you provide written notice to the Company of the occurrence of the Good Reason event (as described above) within 90 days after you have knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which you believe constitute Good Reason, (B) the Company fails to correct the circumstances constituting “Good Reason” within 30 days after such notice, and (C) you resign within 120 days after the initial existence of such circumstances.

(e)    Definition of Qualifying Termination. For purposes of this Agreement, a “Qualifying Termination” shall mean either of the following events:

(i) any termination of your employment by the Company for reasons other than Cause within six (6) months preceding or within two (2) years following a Change of Control; or

(ii) a voluntary termination by you for Good Reason within two (2) years following a Change of Control pursuant to a written notice of termination that you deliver to the Company.

8.    Non-Competition/Non-Solicitation/Confidentiality. As a condition to your receipt of this RSU grant, you must electronically accept a Non-Competition, Non-Solicitation and Confidentiality Agreement within 45 calendars days after receipt of this Agreement. Please carefully read the Non-Competition, Non-Solicitation and Confidentiality Agreement in its entirety and feel free to have your lawyer review it prior to accepting it.

9. Adjustment of the Award. In the event of any change in the capital structure of the Company (including but not limited to a stock dividend, stock split, reverse stock split, combination or exchange of securities, merger, consolidation, recapitalization, spin-off, split off, liquidation or other distribution of any or all of the assets of the Company to stockholders, other than normal cash dividends) or any change in any rights attendant to any class of authorized securities of the Company (an “Adjustment Event”), the Committee shall make proportionate adjustments with respect to the number and class of securities subject to the Award to reflect such Adjustment Event and to maintain the Award’s intrinsic and fair value; provided, that the Committee shall retain discretion with respect to how any such proportionate adjustments shall be made. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

10.Forfeiture/Adjustment.

(a) Misconduct. If you engage in any activity contrary or harmful to the interests of the Hillshire Companies, including but not limited to: (i) competing, directly or indirectly (either as owner, employee or agent), with any of the businesses of the Hillshire Companies, (ii) violating any policies of the Hillshire Companies, (iii) soliciting any present or future employees or customers of the Hillshire Companies to terminate such employment or business relationship(s) with the Hillshire Companies, (iv) disclosing or misusing any confidential information regarding the Hillshire Companies, or (v) participating in any activity not approved by

3

FY 14-16 RSU Award

the Board of Directors of the Company which could reasonably be foreseen as contributing to or resulting in a Change of Control of the Company (such activities to be collectively referred to as “wrongful conduct”), then (A) the Award, to the extent it remains restricted, shall terminate automatically on the date on which you first engaged in such wrongful conduct, and (B) if the wrongful conduct occurred within six months following the Vesting Date, you shall pay to the Company in cash any financial gain you realized from the vesting of the RSU. For purposes of this paragraph 10, financial gain shall equal the Fair Market Value of the Shares on the Vesting Date multiplied by the number of RSUs actually distributed pursuant to the Award, reduced by any taxes paid in countries other than the United States which taxes are not otherwise eligible for refund from the taxing authorities.

(b)    Clawback. The Award and the Shares delivered pursuant to this Agreement are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

(c)    Offset.By accepting this RSU, you consent to and authorize the Hillshire Companies to deduct from any amounts payable by the Hillshire Companies to you, any amounts you owe to the Company under this paragraph 10. This right of set-off is in addition to any other remedies the Company may have against you for breach of this Agreement or the Non-Competition, Non-Solicitation and Confidentiality Agreement electronically accepted by you pursuant to paragraph 8.

11.    Rights as a Stockholder. You will have no rights as a stockholder with respect to any of the RSUs subject to the Award until and unless you receive shares of the Company following vesting of these RSUs.

12.    Conformity with the Plan. The Award is intended to conform in all respects with, and is subject to, all applicable provisions of the Plan.

13.    Interpretations. Any dispute, disagreement or question which arises under, or as a result of, or in any way relates to the interpretation, construction or application of the Plan or this Agreement will be determined and resolved by the Committee or its delegate. Such determination or resolution by the Committee or its delegate will be final, binding and conclusive for all purposes.

14.    Employment Rights. Nothing in the Plan or this Agreement confers on you any right to continue in the employ of the Hillshire Companies or in any way affects the Hillshire Companies’ right to terminate your employment without prior notice any time for any reason.

15.    Consent to Transfer Personal Data. By accepting this Award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. You are not obliged to consent to such collection, use, processing and transfer of personal data. The Hillshire Companies hold certain personal information about you, that may include your name, home address and telephone number, fax number, email address, sex, beneficiary information, age, language skills, date of birth, social security number or other employee identification number, job title, employment or severance contract, current wage and benefit information, tax-related information, plan or benefit enrollment forms and elections, option or benefit statements, any shares of stock or directorships in the Company, details of all options or any other entitlements to shares of stock awarded, canceled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”). The Hillshire Companies will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and the Hillshire Companies may further transfer Data to any third parties assisting the Hillshire Companies in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other

4

FY 14-16 RSU Award

third party with whom you may elect to deposit any shares of stock acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting the Company.

16.    Miscellaneous.

(a)    Modification. The Award is documented by the minutes of the Committee and or as approved by the CEO for non-corporate officers, which records are the final determinant of the number of RSUs granted and the conditions of this grant. The Committee may amend or modify the Award in any manner to the extent that the Committee would have had the authority under the Plan initially to grant such RSUs, provided that no such amendment or modification shall impair your rights under this Agreement without your consent. Except as in accordance with the two immediately preceding sentences and paragraph 17, this Agreement may be amended, modified or supplemented only by an instrument in writing signed by both parties hereto.

(b)    Governing Law. All matters regarding or affecting the relationship of the Company and its stockholders shall be governed by the General Corporation Law of the State of Maryland. All other matters arising under this Agreement shall be governed by the internal laws of the State of Illinois, including matters of validity, construction and interpretation. You and the Company agree that all claims in respect of any action or proceeding arising out of or relating to this Agreement shall be heard or determined in any state or federal court sitting in Chicago, Illinois, and you agree to submit to the jurisdiction of such courts, to bring all such actions or proceedings in such courts and to waive any defense of inconvenient forum to such actions or proceedings. A final judgment in any action or proceeding so brought shall be conclusive and may be enforced in any manner provided by law.

(c)    Successors and Assigns. Except as otherwise provided herein, this Agreement will bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.

(d)    Severability. Whenever feasible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

(e)    Transferability. The Award is not transferable or assignable other than (i) by will or the laws of descent and distribution, (ii) pursuant to the beneficiary designation procedures approved by the Committee, or (iii) pursuant to an assignment or transfer without consideration to a Permitted Assignee under the Plan, if permitted by the Committee. Your interests in the RSUs are not subject to your debts or other obligations and, except as may be required by the tax withholding provisions of applicable law, may not be voluntarily sold, transferred, alienated, assigned or encumbered, except as provided in this paragraph.

17.    Amendment. Notwithstanding anything in the Plan or this Agreement to the contrary, the Award may be amended by the Company without the consent of you, including but not limited to modifications to any of the rights granted to you under the Award, at such time and in such manner as the Company may consider necessary or desirable to reflect changes in law.

18.    Section 409A. This Agreement is intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, pursuant the short-term deferrals exception described in Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent possible, and any vested RSUs shall be distributed no later than the later of (1) the 15th day of the third month of the calendar year following the calendar year in which your right to the vested RSUs ceased being subject to a substantial risk of forfeiture, and (2) the 15th day of the third month of the Company’s fiscal year following the Company’s fiscal year in which your right to the vested RSUs ceased being subject to a substantial risk of forfeiture. Notwithstanding any other provision in this Agreement, if you are a “specified employee,” as defined in Section 409A of the Code, as of the date of your separation from service, then to the extent any amount payable to you (i) constitutes the payment of nonqualified

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FY 14-16 RSU Award

deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon your separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of your separation from service, such payment shall be delayed until the earlier to occur of (a) the first business day following the six-month anniversary of the separation from service and (b) the date of your death.

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FY 14-16 RSU Award

EX-10.7

Exhibit 10.7

THE HILLSHIRE BRANDS COMPANYANNUAL INCENTIVE PLAN FOR
FISCAL YEAR 2014

The Hillshire Brands Company Annual Incentive Plan for Fiscal Year 2014 (the “FY14 AIP”) contains certain capitalized terms which have special meaning under the FY14 AIP. Such terms are defined when they first appear in the FY14 AIP or in Attachment 1.

Purpose

The objective of the FY14 AIP is to advance the interests of The Hillshire Brands Company (“Hillshire Brands” or the “Company”) by:

a) Rewarding financial performance of Hillshire Brands that contributes to increased stockholder value;

b) Measuring the effectiveness of Hillshire Brands operating performance, sales and capital management and marketing investments; and

c) Continuing to provide significant rewards to eligible employees of Hillshire Brands for exceptional performance.

Incentive Opportunity and Performance Objectives

Attachment 2 shows the FY14 AIP Target and Maximum bonus payout opportunities at the various salary bands. Notwithstanding the bonus opportunity levels set forth in Attachment 2, during the Incentive Plan Year, the Committee may, in its sole discretion, adjust the target payout levels applicable to certain Participants.

The following applies to the FY14 AIP generally:

• The performance measures for the Incentive Plan Year which have been approved by the Committee (the “Performance Measures”) are:

• Net Sales – 16.67% of target bonus opportunity

• Operating Income –16.67% of target bonus opportunity

• Average Working Capital – 16.66% of target bonus opportunity

• Market Share Increase – 10% of target bonus opportunity

• MAP Spend as a Percentage of Sales – 10% of target bonus opportunity

• Percentage of Net Sales from Innovation – 10% of target bonus opportunity

• Fuel Growth through Efficiency Savings – 10% of target bonus opportunity

• Gross Productivity Savings – 10% of target bonus opportunity

• The specific performance goals within the approved Performance Measures for the Incentive Plan Year which have been approved by the Committee (the “Performance Goals”) are

The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

described below under the section heading “Performance Goals and Incentive Award Payout Levels.”

• When expressed as a percentage of target bonus opportunity, the weighting of each Performance Measure is the same for each salary band, as may be applicable during the Incentive Plan Year. A summary of Performance Measures and the corresponding incentive opportunities for Participants are shown in Attachment 3.

• The maximum payout opportunity is 150% of target bonus opportunity, and threshold payout opportunity is 25% of target bonus opportunity.

Performance Period

All objectives are measured over the Incentive Plan Year, unless otherwise indicated by the Committee.

Performance Levels

Maximum – A high level of performance exceeding targeted performance and requiring “stretch” achievement of the Performance Goal beyond the Annual Operating Plan (“AOP”) level.

Midpoint – Midpoint level of performance equivalent to achievement at the AOP level.

Threshold – Performance that just achieves an acceptable level of results warranting incentive recognition.

2

The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

Performance Goals and Incentive Award Payout Levels

Measure	Weighting	Threshold (25%)	Target (100%)	Maximum (150%)
Net Sales	16.67%	(1)	(1)	(1)
Operating Income	16.67%	(1)	(1)	(1)
Average Working Capital	16.66%	(1)	(1)	(1)
Market Share Increase	10%	(1)	(1)	(1)
MAP Spend as a % of Sales	10%	(1)	(1)	(1)
% of Net Sales from Innovation	10%	(1)	(1)	(1)
Fuel Growth through Efficiency Savings	10%	(1)	(1)	(1)
Gross Productivity Savings	10%	(1)	(1)	(1)

(1) The specific performance goals for fiscal year 2014 were approved by the Committee and are contained in the minutes of the meeting at which the FY14 AIP was approved.

Attachment 4 graphically displays the payout curve for all eight Performance Goals. Straight-line interpolation is used for calculating results between performance levels.

Incentive Award Payments

Incentive award payments are distributed as soon as practicable after the Incentive Plan Year results have been reported by the Company and the individual awards requiring the review and approval of the Committee have been approved by the Committee. Except as otherwise provided in the FY14 AIP, a Participant must be an employee of Hillshire Brands on the incentive payment date in order to be eligible to receive any incentive award.

Administrative Provisions

The Committee and the Chief Executive Officer shall administer the FY14 AIP jointly and their determinations and decisions shall be final, conclusive and binding on all persons, and shall be given the maximum deference permitted by law. The Chief Human Resources Officer, or anyone serving in the equivalent position, and Chief Financial Officer of the Company will be responsible for the administrative procedures governing the FY14 AIP, including ensuring the existence of approved performance measures and specific performance goals and the presentation to the Committee for its approval at the end of the Incentive Plan Year of the performance results under the FY14 AIP. The following administrative procedures shall govern:

a) The Committee will approve individual incentive awards for all corporate officers, those executives in salary band Senior Vice President I and above. The Chief Executive Officer of the Company and his or her direct reports may approve all other incentive awards.

b) Any awards earned under the FY14 AIP will be paid in cash.

3

The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

c) An individual performance modifier from 0 to 150% will be applied to the incentive payment based on an employee’s performance rating.

d) In the Committee’s sole discretion, a newly hired employee who begins participation during the Incentive Plan Year may be eligible for a Pro-rated Incentive Award from the date of entry into the FY14 AIP. The newly hired employee should have been actively employed in a bonus-eligible role by the first working day of the last fiscal quarter of the Incentive Plan Year in order to receive consideration for a Pro-rated Incentive Award.

e) Employees promoted into an AIP-eligible position will become a Participant in the FY14 AIP for the current Incentive Plan Year effective with the date of the promotion and will be eligible to receive a Pro-rated Incentive Award.

f) If an employee transfers into an AIP-eligible role with more than one fiscal calendar quarter remaining in the Incentive Plan Year and meets the eligibility requirements as described in the FY14 AIP, the employee will become a Participant in the FY14 AIP for the current Incentive Plan Year effective with the date of the transfer and will be eligible to receive a Pro-rated Incentive Award. If an employee transfers into an AIP-eligible role with less than one fiscal calendar quarter remaining from another incentive plan (e.g., a sales incentive plan) in the Incentive Plan Year, the Participant is not eligible to participate in the FY14 AIP for the current Incentive Plan Year.

g) If a Participant transfers out of an AIP-eligible role with less than one fiscal calendar quarter remaining in the Incentive Plan Year to a role eligible for another incentive plan (e.g., the Hillshire Brands sales incentive plan), the Participant will remain a part of the FY14 AIP for the entire Incentive Plan Year and the incentive award payable to such Participant will not be pro-rated. If a Participant transfers out of an AIP-eligible role with more than one calendar quarter remaining in the Incentive Plan Year, the Participant will only be eligible to receive a Pro-rated Incentive Award based on their AIP-eligible earnings attributable to the time they were employed in the FY14 AIP-eligible role.

h) In the case of death, Disability or retirement during the Incentive Plan Year, a Participant or the Participant’s estate is eligible for a Pro-rated Incentive Award.

i) A Participant who is involuntarily terminated during the Incentive Plan Year and receives severance pay under a Hillshire Brands severance plan is eligible for a Pro-rated Incentive Award.

j) Unless otherwise approved by the Committee or the Chief Executive Officer of Hillshire Brands, as applicable, and subject in any case to subparagraph (k), any Participant who voluntarily terminates, or who is involuntarily terminated and does not receive severance pay, regardless of the Participant’s eligibility for retirement status, during the Incentive Plan Year will not be entitled to any incentive award attributable to the Incentive Plan Year.

k) In the event that the division, business unit or business segment of Hillshire Brands to which at least 80% of a Participant’s time is dedicated or from which the Participant is on leave of absence is sold, closed, spun off or otherwise divested and, as a result of such transaction, the Participant’s employment with Hillshire Brands is terminated, as of the closing date of such transaction the Participant will be entitled to a Pro-rated Incentive Award.

4

The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

l) Notwithstanding anything contained in the FY14 AIP to the contrary, a Participant may be entitled to receive either an increased or reduced incentive award payment, or no incentive award payment whatsoever, attributable to the Incentive Plan Year upon the occurrence of any of the following events:

1) If any Participant engages in any activity contrary or harmful to the interests of the Company, including but not limited to: (i) competing, directly or indirectly (either as owner, employee or agent), with any of the businesses of the Company, (ii) violating any Company policy, (iii) soliciting any present or future employees or customers of the Company to terminate such employment or business relationships(s) with the Company, (iv) disclosing or misusing any confidential information regarding the Company, or (v) participating in any activity not approved by the Board which could reasonably be foreseen as contributing to or resulting in a Change of Control of the Company (as defined in the Hillshire Brands 2012 Long-Term Incentive Stock Plan), then the Participant will not be entitled to any incentive award attributable to the Incentive Plan Year.

2) This paragraph (l)(2) applies only to those Participants who are “officers” of the Company, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934 during the Incentive Plan Year and who participate in any Hillshire Brands Executive Management Long-Term Incentive Program (each such Participant, an “Officer Participant”). If an Officer Participant receives an incentive award payment that was predicated upon the Company achieving certain Performance Measures (the “Original Payout”) and, within two years after the date of such Original Payout, the Company restates its financial statements due to material noncompliance with the financial reporting requirements under the securities laws (such restated financial statements, the “Restated Financials”), then the amount of the incentive award payment for such Officer Participant shall be recalculated based on the Restated Financials (such recalculated amount, the “Restated Amount”). If the Original Payout is greater than the Restated Amount, then the Company shall be entitled to recoup from such Officer Participant, and such Officer Participant shall pay to the Company, in cash, an amount equal to (i) the Original Payout, less (ii) the Restated Amount. If the Restated Amount is greater than the Original Payout, then the Company shall pay to the Officer Participant an amount equal to (x) the Restated Amount, less (y) the Original Payout. Any such payment or recoupment shall be due and payable within 90 days after the date on which the Company files the Restated Financials with the Securities and Exchange Commission. If an Officer Participant elected to defer part or all of their Original Payout pursuant to the Hillshire Brands Executive Deferred Compensation Plan, then the Officer Participant’s account under such Deferred Compensation Plan automatically shall be credited or charged so that the amount deferred in connection with such incentive award payment equals the Restated Amount. No interest will be due to or paid by the Company or the Officer Participant to the other with respect to any true up payment. Notwithstanding the foregoing, the Committee may determine, in its discretion and based on the circumstances leading to the filing of the Restated Financials, that recoupment or payment under this paragraph (l)(2) of the Restated Amount is not practical and may elect to forego the application of this paragraph (l)(2).

m) Performance results under the FY14 AIP will be measured in accordance with the Definitions in Attachment 1.

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Annual Incentive Plan for Fiscal Year 2014

n) Business and individual performance results and Eligible Earnings will be used to determine the incentive award payment.

o) Except as noted otherwise in the FY14 AIP, any Participant who is entitled to receive an award to the extent that Performance Goals are met must be actively employed on the date that incentive awards are distributed in order to receive payment.

p) Hillshire Brands reserves the right to offset against any incentive award payment owed by Hillshire Brands to a terminating or terminated Participant any amounts to which Hillshire Brands has a “claim of right.”

q) The terms of the FY14 AIP shall be construed and paid in such manner as to satisfy the short-term deferral exception to the application of Section 409A of the U.S. Internal Revenue Code of 1986, as amended from time to time (the “Code”), as set forth in Subsections (a)(4) and (b)(4) of Treasury Regulations Section 1.409A-1. In the event that any incentive award does not qualify for treatment as an exempt short-term deferral, it is intended that such amount will be paid in a manner that satisfies the requirements of Section 409A of the Code. The FY14 AIP shall be interpreted and construed accordingly

r) Nothing herein shall be construed as an agreement or commitment to employ any Participant or to employ a Participant for any fixed period of time or constitute a commitment by Hillshire Brands that any Participant will continue to receive an incentive award or will continue as a Participant in the FY14 AIP.

s) The Committee reserves the right to amend, modify, interpret or terminate the FY14 AIP or awards to be paid under the FY14 AIP, in whole or in part, at any time for any reason. Specifically, an individual’s target bonus opportunity may be modified during the Incentive Plan Year in the Committee’s discretion and the performance criteria may be adjusted by the Committee for extraordinary and similar items that prevent undue and/or unintended gain or loss.

t) The Committee may delegate certain administrative responsibilities to the Chief Executive Officer except for the following:

1) Any actions affecting the Chief Executive Officer, and other elected officers of Hillshire Brands, as applicable,

2) Approval of corporate Performance Goals and certification of performance results relative to such standards following the end of the Incentive Plan Year, and

3) Approval of any substantive changes or amendments to the FY14 AIP.

u) A Participant’s rights and interests under the FY14 AIP, including any amounts payable under the FY14 AIP, may not be assigned, pledged, or transferred, except in the event of the Participant's death when payment is made to the Participant’s estate.

v) The Company shall have the right to withhold from any incentive award, any federal, state or local income and/or payroll taxes required by law to be withheld and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy

6

The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

obligations for the payment of withholding taxes and other tax obligations relating to an incentive award.

w) Nothing contained in the FY14 AIP, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Participant, beneficiary or legal representative or any other person. To the extent that a person acquires a right to receive a payment under the FY14 AIP, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the FY14 AIP. The FY14 AIP is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA).

x) The FY14 AIP shall be construed, administered and enforced in accordance with the laws of Illinois without regard to conflicts of law.

y) In the event that any provision of the FY14 AIP shall be considered illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the FY14 AIP, but shall be fully severable, and the FY14 AIP shall be construed and enforced as if such illegal or invalid provision had never been contained therein.

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The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

Special Provisions Related to the Hillshire Brands Performance-Based Incentive Plan

Notwithstanding any provision of the FY14 AIP to the contrary, with respect to each Participant who is covered by the Hillshire Brands Performance-Based Incentive Plan (the “PBIP”), formerly the Sara Lee Corporation Performance-Based Incentive Plan, any incentive award under the FY14 AIP is:

• Intended to qualify as performance-based compensation deductible by the Company under the qualified performance-based compensation exception to Section 162(m) of the Code;

• Subject to all of the terms and conditions of the PBIP, which for such Participants is incorporated into the FY14 AIP by this reference, including (a) the dollar limit on awards of incentive compensation pursuant to the PBIP (the “PBIP Maximum”), which may reduce the incentive award that otherwise would have been payable to a Participant under the FY14 AIP if he or she was not covered by the PBIP, and (b) the Committee’s discretionary authority to reduce the amount of any incentive award below the PBIP Maximum; and

• The exclusive award of incentive compensation pursuant to the inter-related PBIP and FY14 AIP for the Incentive Plan Year.

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The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

Attachment 1

DEFINITIONS

a. Average Working Capital is a 13-point average of Core Working Capital as of the period-end for fiscal year 2013 Period 12 and the period-end balances for each of the twelve periods of fiscal year 2014.

b. Board means the Hillshire Brands Board of Directors, as constituted from time to time.

c. Brand Dollar Sales means sales dollars as tracked by IRI for Hillshire Brand’s Seven Key Brands sold through the tracked multioutlet channels which include grocery, drug, Target, K Mart, Wal-Mart, Sam’s Club, BJ’s Club stores, Dollar Stores and military commissaries.

d. Category Dollar Sales means sales dollars as tracked by IRI for Hillshire Brand’s Categories sold through the tracked multioutlet channels. The Categories are hot dogs, corn dogs, breakfast sausage, frozen protein breakfast, mainstream lunchmeat, smoked sausage and super premium smoked sausage.

e. Committee is the Compensation and Employee Benefits Committee or other committee appointed by the Board.

f. Core Working Capital means the Company’s net accounts receivable plus net inventories less accounts payable, excluding intercompany receivable and intercompany accounts.

g. Direct Lean Savings is defined asdecreases in procurement driven and business unit driven costs.

h. Disability means a Participant meets the conditions set forth in the definition of disability under the Hillshire Brands sponsored long term disability plan as determined by the Committee.

i. Eligible Earnings mean regular salary or wages paid to the Participant from June 30, 2013 through June 28, 2014. It does not include allowances, reimbursements, commissions, other incentives, severance, lump sums, awards, deferred compensation and compensation attributable to the exercise of stock options or other forms of long-term incentive compensation.

j. Fuel Growth through Efficiency Savings means obtaining operating income benefits by improving productivity, pricing and trade promotion effectiveness, and reducing general and administrative costs.

k. Gross Productivity Savings means obtaining operating income benefits through Plant Indirect Lean Savings, Direct Lean Savings, Logistics Lean Savings and Operating Leverage.

l. Incentive Plan Year is the Company’s fiscal year 2014 starting on June 30, 2013 and ending on June 28, 2014.

m. Innovation is defined as a new customer or consumer benefit that has a commercial impact.

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The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

n. IRI stands for Information Resources, Inc. which is a market research company which provides clients with consumer, shopper, and retail market intelligence and analysis focused on the consumer packaged goods industry.

o. Logistics Lean Savings means decreasing distribution costs.

p. MAP Spend as a Percentage of Sales means the marketing, advertising and promotional expenses for Hillshire Brands divided by Net Sales.

q. Market Share Increase means Brand Dollar Sales for one of the Seven Key Brands over the Category Dollar Sales for that brand for fiscal year 2014 less Brand Dollar Sales for that brand over the Category Dollar Sales for that brand for fiscal year 2013. This measure is applicable for Hillshire Brands’ Seven Key Brands.

r. Net Sales means that portion of the Company’s Adjusted Net Sales, as disclosed in the Company’s earnings press releases and filings with the SEC, as may be further adjusted by the Committee to (i) include or exclude the results of businesses acquired and/or divested during the measurement period, to the extent such results were included or excluded in the Company’s annual operating plan, (ii) adjust for currency exchange rates used in the Company’s annual operating plan, and/or (iii) prevent undue and/or unintended gain or loss.

s. Operating Leverage is defined as the spreading of fixed costs against pounds produced.

t. Operating Income means the Company's net sales minus: the cost of sales; selling, general and administrative expenses; net charges for exit activities, asset and business dispositions; and impairment charges.

u. Participant means individuals who are regularly employed by Hillshire Brands in salary bands Manager through Chief Executive Officer. Except as directed in writing by the Committee, the following individuals are not eligible to participate in the FY14 AIP in any manner: (i) employees of Aidells Sausage Company, Inc., Golden Island Jerky Company, Inc., or any other subsidiary of Hillshire Brands, and (ii) employees of Hillshire Brands in salary bands Manager through Senior Manager who are eligible for a sales incentive plan.

v. Percent of Sales from Innovation means the dollar value of Retail sales of products which resulted from Innovation divided by Net Sales.

w. Plant Indirect Lean Savings means obtaining positive material and operating variances at the Company’s manufacturing locations.

x. Pro-rated Incentive Award means an amount equal to the incentive award otherwise payable to the Participant for an Incentive Plan Year in which the Participant was actively employed by the Company for only a portion thereof, multiplied by a fraction, the numerator of which is the number of days the Participant worked during the Incentive Plan Year (i.e., was coded as active on the payroll system) and the denominator of which is the total number of days in the Incentive Plan Year. Any such pro-rated incentive award will be distributed at the same time as incentive awards are distributed to actively employed Participants.

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The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

y. Retail is defined as the segment of the Company’s business that sells a variety of packaged meat and frozen bakery products primarily to supermarkets, warehouse clubs and national chain customers in North America.

z. Seven Key Brands means Ball Park Hot Dogs, State Fair Corn Dogs, Jimmy Dean Breakfast Sausage, Jimmy Dean Frozen Breakfast, Hillshire Farm Lunchmeat, Hillshire Farm Smoked Sausage and Aidells Smoked Sausage.

aa. Significant Items mean those items that are reported by the Company in its annual report in the table entitled “Impact of Significant Items on Income from Continuing Operations, Net Income and Diluted Earnings Per Share” and that meet the Controller’s criteria for materiality and that are not indicative of our core operating results. Significant items vary each year and may include items such as charges for exit activities, impairment charges, tax costs and benefits resulting from the disposition of a business, gains or losses on the sale of discontinued operations and changes in tax valuation allowances.

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The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

Attachment 2

TARGETS AND MAXIMUMS

SalaryBands	Target %	Maximum %
CEO	100.00%	150.00%
SVPII	80.00%	120.00%
SVPI	70.00%	105.00%
VPII	55.00%	82.50%
VPI	55.00%	82.50%
DIR	35.00%	52.50%
SMGR	15.00%	22.50%
MGR	10.00%	15.00%

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The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

Attachment 3

PERFORMANCE MEASURES AND WEIGHTINGS

Performance Measures as a % of Target Annual Incentive Opportunity
Salary Band	Net Sales	Operating Income	Working Capital	Market Share Increase	MAP Spend as a % of Sales	% of Sales from Innovation	Fuel Growth via Efficiencies	Gross Productivity Savings	Target Annual Incentive Opportunity
	16.67%	16.67%	16.66%	10.00%	10.00%	10.00%	10.00%	10.00%	100.00%
Chief Executive Officer	16.67%	16.67%	16.66%	10.00%	10.00%	10.00%	10.00%	10.00%	100.00%
Senior Vice President II	13.34%	13.33%	13.33%	8.00%	8.00%	8.00%	8.00%	8.00%	80.00%
Senior Vice President I	11.67%	11.67%	11.66%	7.00%	7.00%	7.00%	7.00%	7.00%	70.00%
Vice President II	9.17%	9.17%	9.16%	5.50%	5.50%	5.50%	5.50%	5.50%	55.00%
Vice President I	9.17%	9.17%	9.16%	5.50%	5.50%	5.50%	5.50%	5.50%	55.00%
Director	5.84%	5.83%	5.83%	3.50%	3.50%	3.50%	3.50%	3.50%	35.00%
Senior Manager	2.50%	2.50%	2.50%	1.50%	1.50%	1.50%	1.50%	1.50%	15.00%
Manager	1.67%	1.67%	1.66%	1.00%	1.00%	1.00%	1.00%	1.00%	10.00%

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The Hillshire Brands Company

Annual Incentive Plan for Fiscal Year 2014

Attachment 4

PAYOUT CURVE FOR ALL PERFORMANCE MEASURES

14

EX-31.1

Exhibit 31.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sean M. Connolly, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Hillshire Brands Company for the fiscal quarter ended September 28, 2013;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: October 31, 2013

/s/ Sean M. Connolly

Sean M. Connolly

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Maria Henry, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Hillshire Brands Company for the fiscal quarter ended September 28, 2013;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: October 31, 2013

/s/ Maria Henry

Maria Henry

Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The Hillshire Brands Company (the “Company”) for the fiscal quarter ended September 28, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sean M. Connolly, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: October 31, 2013

/s/ Sean M. Connolly

Sean M. Connolly

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The Hillshire Brands Company (the “Company”) for the fiscal quarter ended September 28, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Maria Henry, Executive Vice President, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: October 31, 2013

/s/ Maria Henry

Maria Henry

Executive Vice President, Chief Financial Officer

XML

Income Taxes

3 Months Ended

Sep. 28, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table sets out the tax expense and the effective tax rate for the company from continuing operations:

	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Continuing operations
Income before income taxes	$	44		$	75
Income tax expense (benefit)	15			26
Effective tax rate	33.4		%	35.3		%

First Quarter 2014

In the first quarter of 2014, the company recognized tax expense of $15 million on pretax income from continuing operations of $44 million, or an effective tax rate of 33.4%. The tax expense and related effective tax rate on continuing operations were determined by applying a33.5% estimated annual effective tax rate to pretax earnings and then recognizing various discrete tax items, none of which were material individually or in the aggregate.

First Quarter 2013

In the first quarter of 2013, the company recognized a tax expense of $26 million on pretax income from continuing operations of $75 million, or an effective tax rate of 35.3%.The tax expense and related effective tax rate on continuing operations was determined by applying a 35.3% estimated annual effective tax rate to pretax earnings.

Unrecognized Tax Benefits

Each quarter, the company makes a determination of the tax liability needed for unrecognized tax benefits that should be recorded in the financial statements. For tax benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by the taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The year-to-date net liability for unrecognized tax benefits as of September 28, 2013 is $65 million which is unchanged from June 29, 2013. At this time, the company estimates that it is reasonably possible that the liability for unrecognized tax benefits will decrease by $5 million to $30 million in the next twelve months from a variety of uncertain tax positions as a result of the completion of tax audits currently in process and the expiration of statutes of limitations.

The company’s tax returns are routinely audited by federal, state, and foreign tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service (IRS) has completed examinations of the company’s U.S. income tax returns through 2008. With few exceptions, the company is no longer subject to state and local income tax examinations by tax authorities for years prior to 2005.

XML

Consolidated Statements of Income (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Continuing Operations
Net sales	$ 984	$ 974
Cost of sales	719	680
Selling, general and administrative expenses	207	213
Net charges for exit activities, asset and business dispositions	3	(3)
Operating income	55	84
Interest expense	13	11
Interest income	(2)	(2)
Income from continuing operations before income taxes	44	75
Income tax expense	15	26
Income from continuing operations	29	49
Discontinued operations
Income from discontinued operations, net of tax expense of nil and $1	0	2
Gain on sale of discontinued operations, net of tax expense of nil and $1	0	2
Net income from discontinued operations	0	4
Net income	29	53
Amounts attributable to Hillshire Brands:
Net income from continuing operations	29	49
Net income from discontinued operations	0	4
Net income	$ 29	$ 53
Earnings per share of common stock Basic
Income from continuing operations	$ 0.24	$ 0.40
Net income	$ 0.24	$ 0.43
Average shares outstanding	123	122
Diluted
Income from continuing operations	$ 0.23	$ 0.40
Net income	$ 0.23	$ 0.43
Average shares outstanding	125	123
Cash dividends declared per share of common stock	$ 0.175	$ 0.125

XML

Net Income (Loss) Per Share

3 Months Ended

Sep. 28, 2013

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

2. Net Income Per Share

Net income per share - basic is computed by dividing income attributable to Hillshire Brands by the weighted average number of common shares outstanding for the period. Net income per share - diluted reflects the potential dilution that could occur if options and fixed awards to be issued under stock-based compensation arrangements were converted into common stock. For the quarter endedSeptember 28, 2013, options to purchase 0.2 million shares of the company’s common stock had exercise prices that were greater than the average market price of those shares during the respective reporting periods. For the quarter endedSeptember 29, 2012, options to purchase 3.2 million of the company’s common stock had exercise prices that were greater than the average market price of those shares during the respective reporting periods.

The average shares outstanding increased in the first quarter of 2014 as compared to the first quarter of 2013 as a result of stock issuances related to the exercise of stock options and the vesting of restricted stock units (RSUs). In the first quarter of 2014, the company repurchased 0.3 million shares at a cost of $10 million under an existing share repurchase program which authorized the company to repurchase $1.2 billion of common stock.

As of September 28, 2013, the remaining amount authorized for repurchase is approximately $1.2 billion of common stock under one of its existing share repurchase programs, plus 2.7 million shares of common stock that remain authorized for repurchase under the company's other share repurchase program.

The following is a reconciliation of net income to net income per share – basic and diluted – for the first quarter of 2014 and 2013 (per share amounts are rounded and may not add to total):

Computation of Net Income per Common Share

(In millions, except per share data)

	Quarter ended
	September 28, 2013		September 29, 2012
Amounts attributable to Hillshire Brands
Income from continuing operations	$	29	$	49
Income from discontinued operations, net of tax	—		4
Net income	$	29	$	53
Average shares outstanding – Basic	123		122
Dilutive effect of stock option and award plans	2		1
Diluted shares outstanding	125		123
Earnings per common share—Basic
Income from continuing operations	$	0.24	$	0.40
Income from discontinued operations	—		0.03
Net income	$	0.24	$	0.43
Earnings per common share – Diluted
Income from continuing operations	$	0.23	$	0.40
Income from discontinued operations	—		0.03
Net income	$	0.23	$	0.43

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Pension and Other Postretirement Benefit Plans (Tables)

3 Months Ended

Sep. 28, 2013

Compensation and Retirement Disclosure [Abstract]

Components of Net Periodic Pension Cost

The components of the net periodic benefit cost (benefit) for the pension and postretirement benefit plans for the quarter endedSeptember 28, 2013 and September 29, 2012 are as follows:

	Pension Plans
	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Service cost	$	2		$	3
Interest cost	19			18
Expected return on plan assets	(22		)	(23		)
Amortization of:
Net actuarial loss	1			1
Prior service cost	—			—
Settlement loss	—			—
Net periodic benefit cost (benefit)	$	—		$	(1	)

	Postretirement Benefit Plans
	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Service cost	$	—		$	—
Interest cost	1			1
Expected return on plan assets	—			—
Amortization of:
Net actuarial loss	—			—
Prior service cost	(2		)	(2		)
Settlement loss	—			—
Net periodic benefit cost (benefit)	$	(1	)	$	(1	)

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Contingencies and Commitments

3 Months Ended

Sep. 28, 2013

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

Contingencies and Commitments

The company is a party to various pending legal proceedings, claims and environmental actions by government agencies. The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can reasonably be estimated. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information pertinent to the particular matter.

Aris – This is a consolidation of cases filed by individual complainants with the Republic of the Philippines, Department of Labor and Employment and the National Labor Relations Commission (NLRC) from 1998 through July 1999. The complaint alleges unfair labor practices due to the termination of manufacturing operations in the Philippines by Aris Philippines, Inc. (Aris), a former subsidiary of the company. The complaint names the company as a party defendant. In 2006, the arbitrator ruled against the company and awarded the plaintiffs approximately $80 million in damages and fees. This ruling was appealed by the company and subsequently set aside by the NLRC in December 2006. Both the complainants and the company have filed motions for reconsideration. The company continues to believe that the plaintiffs' claims are without merit; however, it is reasonably possible that this case will be ruled against the company and have a material adverse impact on the company's results of operations and cash flows. The company has initiated settlement discussions for this case and has established an accrual for the estimated settlement amount.

Multi-Employer Pension Plans – The company participates in one multi-employer pension plan (MEPP) that provided retirement benefits to certain employees covered by collective bargaining agreements. Participating employers in a MEPP are jointly responsible for any plan underfunding. MEPP contributions are established by the applicable collective bargaining agreements; however, the MEPPs may impose increased contribution rates and surcharges based on the funded status of the plan and the provisions of the Pension Protection Act of 2006 (PPA). The PPA imposes minimum funding requirements on the plans. Plans that fail to meet certain funding standards as defined by the PPA are categorized as being either in a critical or endangered status. We have received notice that the plan to which we contribute has been designated in critical status. The trustees of critical status multi-employer plans must adopt a rehabilitation or funding improvement plan designed to improve the plan's funding within a prescribed period of time. Rehabilitation and funding improvement plans may include increased employer contributions, reductions in benefits or a combination of the two. Unless otherwise agreed upon, any requirement to increase employer contributions will not take effect until the current collective bargaining agreements expire. However, a five percent surcharge for the initial critical year (increasing to ten percent for the following and subsequent years) is imposed on contributions to plans in critical status and remains in effect until the bargaining parties agree on modifications consistent with the rehabilitation plan adopted by the trustees. In addition, the failure of a plan to meet funding improvement targets provided in its rehabilitation or funding improvement plan could result in the imposition of an excise tax on contributing employers.

Under current law regarding multi-employer pension plans, a withdrawal or partial withdrawal from any plan that was underfunded would render us liable for our proportionate share of that underfunding. This potential unfunded pension liability also applies ratably to other contributing employers. Information regarding underfunding is generally not provided by plan administrators and trustees on a current basis and when provided, is difficult to independently validate. Any public information available relative to multi-employer pension plans may be dated as well. In the event of a withdrawal or partial withdrawal was to occur with respect to the MEPP to which the company makes contributions, the impact to our consolidated financial statements could be material. Withdrawal liability triggers could include the company's decision to close a plant or the dissolution of a collective bargaining unit.

The company's regularly scheduled contributions to MEPPs related to continuing operations are expected to be approximately $2 million in 2014, and totaled approximately $1 million in 2013.

Guarantees

The company is a party to a variety of agreements under which it may be obligated to indemnify a third party with respect to certain matters. Typically, these obligations arise as a result of contracts entered into by the company under which the company agrees to indemnify a third party against losses arising from a breach of representations and covenants related to matters such as title to assets sold, the collectibility of receivables, specified environmental matters, lease obligations assumed and certain tax matters. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the contract. These procedures allow the company to challenge the other party's claims. In addition, the company's obligations under these agreements may be limited in terms of time and/or amount, and in some cases the company may have recourse against third parties for certain payments made by the company. It is not possible to predict the maximum potential amount of future payments under certain agreements, due to the conditional nature of the company's obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company's business, financial condition or results of operations. The company believes that if it were to incur a loss in any of these matters, such loss would not have a material effect on the company's business, financial condition or results of operations.

The material guarantees for which the maximum potential amount of future payments can be determined, are as follows:

Contingent Lease Obligations – The company is contingently liable for leases on property operated by others. At September 28, 2013, the maximum potential amount of future payments the company could be required to make, if all of the current operators default on the rental arrangements, is $16 million. The minimum annual rentals under these leases are $7 million in 2014, $8 million in 2015 and $1 million in 2016. The largest components of these amounts relate to a number of retail store leases operated by Coach, Inc. Coach, Inc. is contractually obligated to provide the company, on an annual basis, with a standby letter of credit which, at a minimum, is equal to the next year's rental obligations. The letter of credit in place at the close of 2013 was $7 million. This obligation to provide a letter of credit expires when the company's contingent lease obligation is substantially extinguished. The company has not recognized a liability for the contingent obligation on the Coach, Inc. leases.

Contingent Debt Obligations and Other – The company has guaranteed the payment of certain third-party debt. The maximum potential amount of future payments that the company could be required to make, in the event that these third parties default on their debt obligations, is $16 million. At the present time, the company does not believe it is probable that any of these third parties will default on the amount subject to guarantee.

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Financial Instruments Available for Sale (Details) (USD $) In Millions, unless otherwise specified	Sep. 28, 2013
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	$ 253	[1]
Available-for-sale Securities, Gross Unrealized Gains	0	[1]
Available-for-sale Securities, Fair Value Disclosure	253	[1]
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	158	[1]
Available-for-sale Securities, Gross Unrealized Gains	0	[1]
Available-for-sale Securities, Fair Value Disclosure	158	[1]
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	95	[1]
Available-for-sale Securities, Gross Unrealized Gains	0	[1]
Available-for-sale Securities, Fair Value Disclosure	$ 95	[1]

[1] (1)Categorized as level 1: Observable input such as quoted prices in active markets for identical assets or liabilities

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Net IncomePer Share Net Income Per Share - Additional Information (Detail) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Quarterly Financial Information Disclosure [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0.2	3.2
Stock Repurchased and Retired During Period, Shares	0.3
Payments for Repurchase of Common Stock	$ 10,000,000	$ 0
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 1,200,000,000
Stock Repurchase Program, Number of Shares Authorized to be Repurchased	2.7

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Reconciliation Between Net Income Loss Per Share Basic And Diluted (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Earnings Per Share [Abstract]
Net income from continuing operations	$ 29	$ 49
Income from discontinued operations, net of tax	0	4
Average shares outstanding - Basic	123	122
Dilutive effect of stock option and award plans	2	1
Diluted shares outstanding	125	123
Income from continuing operations	$ 0.24	$ 0.40
Income (loss) from discontinued operations, per common share - Basic	$ 0.00	$ 0.03
Net income	$ 29	$ 53
Net income (loss), per common share - Basic	$ 0.24	$ 0.43
Income from continuing operations	$ 0.23	$ 0.40
Income (loss) from discontinued operations, per common share - Diluted	$ 0.00	$ 0.03
Net income (loss), per common share - Diluted	$ 0.23	$ 0.43

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Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Jun. 29, 2013
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 15	$ 26
Income before income taxes	44	75
Effective tax rate	33.40%	35.30%
Unrecognized tax benefit, more-likely-than-not being realized upon ultimate settlement	50.00%
Unrecognized tax benefits			65
Unrecognized tax benefits range of potential decrease in twelve months, lower limit	5
Unrecognized tax benefits range of potential decrease in twelve months, upper limit	$ 30

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Discontinued Operations - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Jun. 29, 2013 Australian Bakery
Gain (Loss) on Sale of Discontinued Operations
Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax			$ 85
Gain (loss) on sale of disc. operations, net of tax	$ 0	$ 2	$ 42

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Fair Value of Long Term Debt Including Current Portion (Detail) (USD $) In Millions, unless otherwise specified	Sep. 28, 2013	Jun. 29, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Fair Value of Long-term debt	$ 978	$ 981
Carrying Amount of Long-term debt	$ 951	$ 951

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Operating Results of Discontinued Operations (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Gain (Loss) on Sale of Discontinued Operations
Net Income (Loss)	$ 0	$ 2
Australian Bakery
Gain (Loss) on Sale of Discontinued Operations
Net Sales		37
Pretax Income (Loss)		3
Net Income (Loss)		$ 2

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Components of Periodic Benefit Cost Benefit for Pension and Postretirement Benefit Plans (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 2	$ 3
Interest cost	19	18
Expected return on plan assets	(22)	(23)
Amortization of net actuarial loss	1	1
Defined Benefit Plan, Amortization of Prior Service Cost (Credit)	0	0
Settlement loss	0	0
Net periodic benefit cost (benefit)	0	(1)
Other Postretirement Benefit Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	1	1
Expected return on plan assets	0	0
Amortization of net actuarial loss	0	0
Defined Benefit Plan, Amortization of Prior Service Cost (Credit)	(2)	(2)
Settlement loss	0	0
Net periodic benefit cost (benefit)	$ (1)	$ (1)

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Income Taxes (Tables)

3 Months Ended

Sep. 28, 2013

Income Tax Disclosure [Abstract]

Tax expense and Effective Tax Rate

The following table sets out the tax expense and the effective tax rate for the company from continuing operations:

	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Continuing operations
Income before income taxes	$	44		$	75
Income tax expense (benefit)	15			26
Effective tax rate	33.4		%	35.3		%

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Net income	$ 29	$ 53
Translation adjustments, net of tax	0	1
Net unrealized gain (loss) on qualifying cash flow hedges, net of tax	0	7
Pension/Postretirement activity, net of tax	(1)	0
Comprehensive income	$ 28	$ 61

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
OPERATING ACTIVITIES -
Net income	$ 29	$ 53
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	33	39
Amortization	4	4
Net (gain) loss on business dispositions	0	(9)
Pension contributions, net of expense	(2)	(3)
Increase in deferred income taxes	(4)	8
Other	7	0
Changes in current assets and liabilities, net of businesses acquired and sold
Trade accounts receivable	(3)	13
Inventories	(13)	(40)
Other current assets	(2)	10
Accounts payable	1	(55)
Accrued liabilities	(9)	(31)
Accrued taxes	18	16
Net cash received from (used in) operating activities	59	5
INVESTING ACTIVITIES -
Purchases of property and equipment	(23)	(35)
Purchases of software and other intangibles	(2)	(1)
Acquisition of businesses	(35)	0
Dispositions of businesses and investments	0	16
Cash received from derivative transactions	(3)	5
Payments for (Proceeds from) Investments	(193)	0
Sales of assets	0	1
Net cash received from (used in) investing activities	(256)	(14)
FINANCING ACTIVITIES -
Issuances of common stock	2	27
Payments for Repurchase of Common Stock	(10)	0
Repayments of other debt and derivatives	(4)	0
Payments of dividends	(15)	0
Net cash received from (used in) financing activities	(27)	27
Increase in cash and equivalents	(224)	18
Cash and equivalents at beginning of year	400	235
Cash and equivalents at end of period	176	253
Supplemental Cash Flow Data:
Cash paid for restructuring actions	21	27
Cash contributions to pension plans	1	2
Cash paid for income taxes	$ 0	$ 4

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Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Notes)

3 Months Ended

Sep. 28, 2013

Changes to Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income (AOCI) by component for the quarters ended September 28, 2013 and September 29, 2012 are as follows:

Amounts in parentheses indicate debits.		Net Unrealized Gain (loss) on Qualifying Cash Flow Hedges				Pension/ Post-retirement Activity				Translation Adjustments		Total
Beginning Balance as of June 29, 2013		$	—			$	(142	)		$	1	$	(141	)
	Other comprehensive loss before reclassifications	(1		)		—				—		(1		)
	Amounts reclassified from accumulated other comprehensive income:
	Prior-service cost	—				(2		)	(b)	—		(2		)
	Actuarial loss	—				1			(b)	—		1
	Loss realized from derivatives	1			(a)	—				—		1
Net current-period other comprehensive income		—				(1		)		—		(1		)
Ending Balance as of September 28, 2013		$	—			$	(143	)		$	1	$	(142	)
Beginning Balance as of June 30, 2012		$	8			$	(168	)		$	16	$	(144	)
	Other comprehensive income before reclassifications	12				—				1		13
	Amounts reclassified from accumulated other comprehensive income:
	Prior-service cost	—				(2		)	(b)	—		(2		)
	Actuarial loss	—				1			(b)	—		1
	Gain realized from derivatives	(5		)	(a)	—				—		(5		)
	Tax benefit	—				1			(c)	—		1
Net current-period other comprehensive income		7				—				1		8
Ending Balance as of September 29, 2012		$	15			$	(168	)		$	17	$	(136	)

(a) Included as Cost of Sales in the Consolidated Statements of Income

(b) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Pension Plans and Other Postretirement Benefit Plan footnote for additional details)

(c) Included as Income tax expense in the Consolidated Statements of Income

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Basis of Presentation

3 Months Ended

Sep. 28, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The Hillshire Brands Company is a U.S.-based company that primarily focuses on meat and meat-centric food products. The company's principal product lines are branded packaged meat products and frozen bakery products. Sales are made in both the retail channel, to supermarkets, warehouse clubs and national chains, and the foodservice channel. References to “we”, “our”, “us”, “Hillshire Brands” and “the company” refer to The Hillshire Brands Company and its consolidated subsidiaries as a whole, unless the context otherwise requires. The company’s reportable segments are Retail and Foodservice/Other.

The consolidated financial statements for the first quarter endedSeptember 28, 2013 and September 29, 2012 have not been audited by an independent registered public accounting firm, but in the opinion of management, these financial statements include all normal and recurring adjustments necessary for a fair presentation of our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). The results of operations for the first quarter endedSeptember 28, 2013 are not necessarily indicative of the operating results to be expected for the full fiscal year.

The interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although management believes the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The preparation of the consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from these estimates. These unaudited interim consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended June 29, 2013 and other financial information filed with the SEC.

The company’s fiscal year ends on the Saturday closest to June 30. Fiscal 2014 ends on June 28, 2014. The first quarter of fiscal 2014 ended on September 28, 2013, and the first quarter of fiscal 2013 ended on September 29, 2012. Each of the quarters was a thirteen-week period. Fiscal 2014 and fiscal 2013 are both 52-week years. Unless otherwise stated, references to years relate to fiscal years.

The condensed consolidated balance sheet as of June 29, 2013 has been derived from the company’s audited financial statements included in our Annual Report on Form 10-K for the year ended June 29, 2013. The Australian bakery business is presented as discontinued operations in the company’s consolidated income statements. See Note 5 – “Discontinued Operations” for additional information regarding this discontinued operation. Unless stated otherwise, any reference to income statement items in these financial statements refers to results from continuing operations.

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Information Relating to Cash Flow Hedges Net Investment Hedges Fair Value Hedges and Other Derivatives not Designated as Hedging Instruments (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013		Sep. 29, 2012
Derivative [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	$ 2		$ 5
Cash Flow Hedging
Derivative [Line Items]
Amount of gain (loss) recognized in OCI	(1)	[1]	12	[1]
Amount of gain (loss) reclassified from AOCI into earnings	(1)	[1],[2]	5	[1],[2]
Amount of gain (loss) expected to be reclassified into earnings during the next twelve months	(2)		(11)
Not Designated as Hedging Instrument | Cost of Sales
Derivative [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	(1)		4
Not Designated as Hedging Instrument | Selling, General and Administrative Expenses
Derivative [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	1		0
Foreign Exchange Contract | Cash Flow Hedging
Derivative [Line Items]
Amount of gain (loss) recognized in OCI	0	[1]	0	[1]
Amount of gain (loss) reclassified from AOCI into earnings	0	[1],[2]	0	[1],[2]
Amount of gain (loss) expected to be reclassified into earnings during the next twelve months	0		0
Foreign Exchange Contract | Not Designated as Hedging Instrument | Cost of Sales
Derivative [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	0		0
Foreign Exchange Contract | Not Designated as Hedging Instrument | Selling, General and Administrative Expenses
Derivative [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	0		(1)
Commodity Contract | Cash Flow Hedging
Derivative [Line Items]
Amount of gain (loss) recognized in OCI	(1)	[1]	12	[1]
Amount of gain (loss) reclassified from AOCI into earnings	(1)	[1],[2]	5	[1],[2]
Amount of gain (loss) expected to be reclassified into earnings during the next twelve months	(2)		(11)
Commodity Contract | Not Designated as Hedging Instrument | Cost of Sales
Derivative [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	(1)		4
Commodity Contract | Not Designated as Hedging Instrument | Selling, General and Administrative Expenses
Derivative [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	$ 1		$ 1

[1] (a) Effective portion

[2] (b) Gain (loss) reclassified from AOCI into earnings is reported in selling, general, and administrative (SG&A) expenses for foreign exchange contracts and in cost of sales for commodity contracts

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Accumulated Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013		Sep. 29, 2012
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Begining Balance	$ 0		$ 8
Other Comprehensive Income before reclassifications	(1)		12
Reclassification from AOCI, prior-service cost	0		0
Reclassification from AOCI, actuarial loss	0		0
Reclassification from AOCI, gain (loss) realized from derivatives	1	[1]	(5)	[1]
Tax Benefit			0
Other Comprehensive Income (Loss), Net of Tax	0		7
Accumulated Other Comprehensive Income (Loss), Ending Balance	0		15
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Begining Balance	(142)		(168)
Other Comprehensive Income before reclassifications	0		0
Reclassification from AOCI, prior-service cost	(2)	[2]	(2)	[2]
Reclassification from AOCI, actuarial loss	1	[2]	1	[2]
Reclassification from AOCI, gain (loss) realized from derivatives	0		0
Tax Benefit			1	[3]
Other Comprehensive Income (Loss), Net of Tax	(1)		0
Accumulated Other Comprehensive Income (Loss), Ending Balance	(143)		(168)
Accumulated Translation Adjustment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Begining Balance	1		16
Other Comprehensive Income before reclassifications	0		1
Reclassification from AOCI, prior-service cost	0		0
Reclassification from AOCI, actuarial loss	0		0
Reclassification from AOCI, gain (loss) realized from derivatives	0		0
Tax Benefit			0
Other Comprehensive Income (Loss), Net of Tax	0		1
Accumulated Other Comprehensive Income (Loss), Ending Balance	1		17
Total [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Begining Balance	(141)		(144)
Other Comprehensive Income before reclassifications	(1)		13
Reclassification from AOCI, prior-service cost	(2)		(2)
Reclassification from AOCI, actuarial loss	1		1
Reclassification from AOCI, gain (loss) realized from derivatives	1		(5)
Tax Benefit			1
Other Comprehensive Income (Loss), Net of Tax	(1)		8
Accumulated Other Comprehensive Income (Loss), Ending Balance	$ (142)		$ (136)

[1] (a) Included as Cost of Sales in the Consolidated Statements of Income

[2] (b) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Pension Plans and Other Postretirement Benefit Plan footnote for additional details)

[3] (c) Included as Income tax expense in the Consolidated Statements of Income

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Gain Loss on Sale of Discontinued Operations (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Gain (Loss) on Sale of Discontinued Operations
Tax Expense	$ 0	$ (1)
Gain (loss) on sale of disc. operations, net of tax	0	2
North American Fresh Bakery
Gain (Loss) on Sale of Discontinued Operations
Pretax Gain on Sale		1
Tax Expense		0
Gain (loss) on sale of disc. operations, net of tax		1
North American Foodservice Beverage
Gain (Loss) on Sale of Discontinued Operations
Pretax Gain on Sale		2
Tax Expense		(1)
Gain (loss) on sale of disc. operations, net of tax		1
Total Amount [Member]
Gain (Loss) on Sale of Discontinued Operations
Pretax Gain on Sale		3
Tax Expense		(1)
Gain (loss) on sale of disc. operations, net of tax		$ 2

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Twenty Fourteen Actions Net Charges for Exit Disposal and Transformation Actions and Related Reserve Status (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013
Restructuring Cost and Reserve [Line Items]
Accrued cost at period start	$ 38
Exit, disposal and other costs (income) recognized during 2014	17
Cash payments	(21)
Accrued cost at period end	34
Employee Termination And Other Benefits
Restructuring Cost and Reserve [Line Items]
Accrued cost at period start	10
Exit, disposal and other costs (income) recognized during 2014	3
Cash payments	(3)
Accrued cost at period end	10
It And Other Costs
Restructuring Cost and Reserve [Line Items]
Accrued cost at period start	5
Exit, disposal and other costs (income) recognized during 2014	14
Cash payments	(10)
Accrued cost at period end	9
Non-cancelable leases and contractual obligations
Restructuring Cost and Reserve [Line Items]
Accrued cost at period start	23
Exit, disposal and other costs (income) recognized during 2014	0
Cash payments	(8)
Accrued cost at period end	$ 15

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Tax Expense and Effective Tax Rate from Continuing Operations (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Income Tax Disclosure [Abstract]
Income before income taxes	$ 44	$ 75
Income tax expense (benefit)	$ 15	$ 26
Effective tax rate	33.40%	35.30%
Estimated Annual Effective Tax Rate For Continuing Operations	33.50%	35.30%

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, unless otherwise specified	Sep. 28, 2013	Jun. 29, 2013
Property, accumulated depreciation	$ 1,205	$ 1,185

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Exit, Disposal and Other Restructuring Activities

3 Months Ended

Sep. 28, 2013

Restructuring and Related Activities [Abstract]

Exit, Disposal and Other Restructuring Activities

Exit, Disposal and Other Restructuring Activities

The company has incurred exit, disposition and restructuring charges for initiatives designed to improve its operational performance and reduce cost. The nature of the costs incurred under these plans includes the following:

Exit Activities, Asset and Business Disposition Actions – These amounts primarily relate to:

• Employee termination costs

• Lease and contractual obligation exit costs

• Gains or losses on the disposition of assets or asset groupings that do not qualify as discontinued operations

Costs recognized in Cost of sales and Selling, general and administrative expenses – These primarily relate to:

• Expenses associated with the installation of information systems

• Consulting costs

• Costs associated with the renegotiation of contracts for services with outside third-party vendors as part of the spin-off of the international coffee and tea operations

These costs are recognized in Cost of sales or Selling, general and administrative expenses in the Consolidated Statements of Income as they do not qualify for treatment as an exit activity or asset and business disposition under the accounting rules for exit and disposal activities. However, management believes the disclosure of these charges provides the reader greater transparency to the total cost of the initiatives.

The following is a summary of the (income) expense associated with ongoing actions, which also highlights where the costs are reflected in the Consolidated Statements of Income:

	Quarter Ended
(In millions)	September 28, 2013		September 29, 2012
Cost of Sales	$	—	$	1
Selling, general and administrative expenses	14		8
Exit activities, asset and business dispositions	3		(3		)
Decrease in income from continuing operations before income taxes	17		6

The impact of these actions on the company’s business segments and general corporate expense is summarized as follows:

	Quarter Ended
(In millions)	September 28, 2013		September 29, 2012
Retail	$	2	$	(3	)
Foodservice/Other	1		(2		)
Decrease (Increase) in operating segment income	3		(5		)
Increase in general corporate expenses	14		11
Total	$	17	$	6

The following table summarizes the activity for the first quarter of 2014 related to exit, disposal and restructuring related actions and the status of the related accruals as of September 28, 2013. The 2014 exit, disposal and restructuring related actions include recognized third party consulting costs related to cost saving and efficiency process and IT initiatives and recognized severance charges associated with planned employee terminations. The accrued amounts remaining represent the estimated cash expenditures necessary to satisfy remaining obligations and are expected to be paid in the next 12 months.

(In millions)	Employee termination and other benefits			IT and other costs			Non-cancellable leases/ Contractual obligations			Total
Accrued Costs as of June 29, 2013	$	10		$	5		$	23		$	38
Exit, disposal and other costs recognized during 2014	3			14			—			17
Cash payments	(3		)	(10		)	(8		)	(21		)
Accrued costs as of September 28, 2013	$	10		$	9		$	15		$	34

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Consolidated Statements of Income (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Income (loss) from discontinued operations, tax expense (benefit)	$ 0	$ 1
Gain on sale of discontinued operations, tax expense	$ 0	$ 1

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Condensed Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Sep. 28, 2013	Jun. 29, 2013
Assets
Cash and equivalents	$ 176	$ 400
Available-for-sale Securities, Current	193	0
Trade accounts receivable, less allowances	223	219
Inventories
Finished goods	229	207
Work in process	17	15
Materials and supplies	81	91
Inventory, Net, Total	327	313
Current deferred income taxes	73	71
Income tax receivable	4	18
Other current assets	88	85
Total current assets	1,084	1,106
Property, net of accumulated depreciation of $1,205 and $1,185, respectively	809	818
Trademarks and other identifiable intangibles, net	136	121
Goodwill	371	348
Deferred income taxes	16	20
Other noncurrent assets	23	21
Assets, Total	2,439	2,434
Liabilities and Equity
Accounts payable	304	295
Accrued liabilities	349	357
Current maturities of long-term debt	111	19
Total current liabilities	764	671
Long-term debt	840	932
Pension obligation	116	119
Other liabilities	228	228
Contingencies and commitments (Note 10)
Equity
Hillshire Brands common stockholders’ equity	491	484
Liabilities and Equity, Total	$ 2,439	$ 2,434

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Net Sales and Operating Segment Income by Business Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total business segment sales	$ 984	$ 974
General and Administrative Expense	(25)	(31)
Derivative Instruments, Gain (Loss) Recognized in Income, Net	2	5
Amortization of Intangible Assets	(1)	(1)
Operating income	55	84
Net interest expense	(11)	(9)
Income from continuing operations before income taxes	44	75
North American Retail
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total business segment sales	714	719
Operating income	60	84
North American Foodservice
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total business segment sales	270	255
Operating income	25	25
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income	85	109
Significant items- business segments [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income	$ (6)	$ 2

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Financial Instruments (Tables)

3 Months Ended

Sep. 28, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Available for Sale [Table Text Block]

Securities categorized as available for sale are stated at fair value, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss). The amortized cost, unrealized gains and losses, and fair market values of the company's investment securities available for sale at September 28, 2013 are summarized as follows:

	September 28, 2013
(In millions)	Amortized Cost		Unrealized Gain/(Loss)		Fair Market Value
Available-for-sale:(1)
Commercial Paper	$	158	$	—	$	158
Corporate Note	95		—		95
Total	$	253	$	—	$	253

(1) Categorized as level 1: Observable input such as quoted prices in active markets for identical assets or liabilities

Aggregate Notional Dollar Amount Of Derivatives

The notional values of the various derivative instruments used by the company are summarized in the following table:

NotionalValues (In millions)	September 28, 2013		June 29, 2013		Hedge Coverage (Number of months)
Commodity Contracts:
Commodity Future Contracts:(1)
Grains/Oilseed	$	46	$	34	7
Energy	$	26	$	29	11
Other commodities	$	9	$	20	5

(1) Commodity futures contracts are determined by the initial cost of the contract

Fair Value Of The Long Term Debt Including The Current Portion

	September 28, 2013				June 29, 2013
(In millions)	Fair Value		Carrying Amount		Fair Value		Carrying Amount
Long-term debt, including current portion	$	978	$	951	$	981	$	951

Information Relating To Cash Flow Hedges Net Investment Hedges Fair Value Hedges And Other Derivatives Not Designated As Hedging Instruments [Text Block]

Information related to our cash flow hedges, net investment hedges, fair value hedges and other derivatives not designated as hedging instruments for the quarters ended September 28, 2013 and September 29, 2012 is as follows:

	Foreign Exchange Contracts					Commodity Contracts						Total
	Quarter Ended					Quarter Ended						Quarter Ended
(In millions)	September 28, 2013		September 29, 2012			September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Cash Flow Derivatives:
Amount of gain (loss) recognized in other comprehensive income (OCI) (a)	$	—	$	—		$	(1	)	$	12		$	(1	)	$	12
Amount of gain (loss) reclassified from AOCI into earnings (a) (b)	—		—			(1		)	5			(1		)	5
Change in amount of gain (loss) expected to be reclassified into earnings during the next twelve months	—		—			(2		)	(11		)	(2		)	(11		)
Derivatives Not Designated as Hedging Instruments:
Amount of gain (loss) recognized in Cost of Sales	—		—			(1		)	4			(1		)	4
Amount of gain (loss) recognized in SG&A	—		(1		)	1			1			1			—

(a) Effective portion

(b) Gain (loss) reclassified from AOCI into earnings is reported in selling, general, and administrative (SG&A) expenses for foreign exchange contracts and in cost of sales for commodity contracts

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Pension and Other Postretirement Benefit Plans Additional Detail (Details) (USD $)	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Defined Benefit Plan, Contributions by Employer	$ 1	$ 2
Minimum [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Defined Benefit Plan, Estimated Future Employer Contributions in Next Fiscal Year	5
Maximum [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Defined Benefit Plan, Estimated Future Employer Contributions in Next Fiscal Year	$ 6

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Notional Values of Derivative Instruments (Detail) (Commodity Future [Member], USD $)	3 Months Ended
	Sep. 28, 2013		Jun. 29, 2013
Grains/Oilseed
Derivative [Line Items]
Commodity Contracts, Notional Amount	$ 46,000,000	[1]	$ 34,000,000	[1]
Number Of Months Of Hedge Coverage	7	[1]
Energy
Derivative [Line Items]
Commodity Contracts, Notional Amount	26,000,000	[1]	29,000,000	[1]
Number Of Months Of Hedge Coverage	11	[1]
Other Commodities
Derivative [Line Items]
Commodity Contracts, Notional Amount	9,000,000	[1]	20,000,000	[1]
Number Of Months Of Hedge Coverage	$ 5	[1]

[1] (1) Commodity futures contracts are determined by the initial cost of the contract

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Summary of Exit Disposal and Restructuring Actions (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Restructuring Cost and Reserve [Line Items]
Selling, general and administrative expenses	$ 207	$ 213
Restructuring Charges [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods Sold	0	1
Selling, general and administrative expenses	14	8
Net charges for exit activities, asset and business dispositions	3	(3)
Decrease in income from continuing operations before income taxes	$ 17	$ 6

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Impact of Restructuring Actions on Corporate Business Segments and Unallocated Corporate Expenses (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Restructuring Cost and Reserve [Line Items]
(Increase) Decrease in operating segment income	$ 3	$ (5)
Increase in general corporate expenses	14	11
Total	17	6
North American Retail
Restructuring Cost and Reserve [Line Items]
(Increase) Decrease in operating segment income	2	(3)
North American Foodservice
Restructuring Cost and Reserve [Line Items]
(Increase) Decrease in operating segment income	$ 1	$ (2)

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Discontinued Operations

3 Months Ended

Sep. 28, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

There has been no discontinued operation activity in the first quarter of 2014.

On December 19, 2012, the company signed an agreement to sell its Australian bakery business to McCain Foods Limited. The results of this business were previously reported as the Australian Bakery business segment. Also included in the transaction were the license rights to certain intellectual property used by the Australia bakery business in the Asia-Pacific region. In February 2013, the company completed the sale of its Australian Bakery business. Using foreign currency exchange rates on the date of the transaction, the company received cash proceeds of $85 million and reported an after tax gain on disposition of $42 million.

The results of the Australian bakery business are classified as discontinued operations and are presented as discontinued operations in the condensed consolidated statements of income for all periods presented. The disposition of the Australian bakery business was completed prior to the end of fiscal 2013, and, as such, there are no operating results or cash flows related to this discontinued operation in 2014.

The following is a summary of the operating results of the company’s discontinued operations for the first quarter of 2013:

	First Quarter 2013
(In millions)	Net Sales		Pretax Income		Net Income
Australian Bakery	$	37	$	3	$	2

The disposition of the businesses had been completed prior to the end of fiscal 2012. The gain on sale of discontinued operations reported in fiscal 2013 represents the impact of a final purchase price adjustment related to the North American fresh bakery disposition and gain related to the disposition of two manufacturing facilities related to the North American foodservice beverage operations. The following is a summary of the gain on sale of the company’s discontinued operations for the first quarter of 2013:

	First Quarter 2013
(In millions)	Pretax Gain on Sale		Tax Expense			After Tax Gain
North American Fresh Bakery	$	1	$	—		$	1
North American Foodservice Beverage	2		(1		)	1
Total	$	3	$	(1	)	$	2

The cash flows related to the discontinued operations for the first quarter of 2013 are summarized in the table below:

	Quarter Ended
(In millions) – Increase / (Decrease)	September 29, 2012
Cash flow from operating activities	$	11
Cash flow from investing activities	7
Cash flow used in financing activities	(10		)
Increase in net cash of discontinued operations	8
Cash and cash equivalents at beginning of year	—
Cash and cash equivalents at end of period	$	8

The cash used in financing activities primarily represents the net transfers of cash with the corporate office. The net assets of the discontinued operations assumed that the cash of those businesses has been retained as a corporate asset.

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Segment Information - Additional Information (Detail)	3 Months Ended
	Sep. 28, 2013 Segment
Segment Reporting [Abstract]
Number of business segments	2

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Financial Instruments - Additional Information (Detail) (Cash Flow Hedging)	3 Months Ended
	Sep. 28, 2013
Cash Flow Hedging
Derivative [Line Items]
Minimum correlation rate of commodity instrument and underlying hedges	80.00%
Maximum correlation rate of commodity instrument and underlying hedges	125.00%

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Pension and Other Postretirement Benefit Plans

3 Months Ended

Sep. 28, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefit Plans

Pension and Other Postretirement Benefit Plans

The components of the net periodic benefit cost (benefit) for the pension and postretirement benefit plans for the quarter endedSeptember 28, 2013 and September 29, 2012 are as follows:

	Pension Plans
	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Service cost	$	2		$	3
Interest cost	19			18
Expected return on plan assets	(22		)	(23		)
Amortization of:
Net actuarial loss	1			1
Prior service cost	—			—
Settlement loss	—			—
Net periodic benefit cost (benefit)	$	—		$	(1	)

	Postretirement Benefit Plans
	Quarter Ended
(In millions)	September 28, 2013			September 29, 2012
Service cost	$	—		$	—
Interest cost	1			1
Expected return on plan assets	—			—
Amortization of:
Net actuarial loss	—			—
Prior service cost	(2		)	(2		)
Settlement loss	—			—
Net periodic benefit cost (benefit)	$	(1	)	$	(1	)

The company contributed approximately $1 million and $2 million to its defined benefit pension plans related to continuing operations during the first quarter ended of 2014 and 2013, respectively. At the present time, the company expects to contribute approximately $5 million to $6 million of additional cash to its defined benefit pension plans in the remainder of 2014. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors including minimum funding requirements in the jurisdictions in which the company operates. As a result, the actual funding in 2014 may differ from the current estimate.

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Segment Information

3 Months Ended

Sep. 28, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

The following is a general description of the company’s two business segments:

• Retail – sells a variety of packaged meat and frozen bakery products to retail customers in North America. It also includes gourmet artisanal sausage, salami and jerky products.

• Foodservice/Other – sells a variety of meats and bakery products to foodservice customers in North America such as broad-line foodservice distributors, restaurants, hospitals and other large institutions and includes commodity meat products.

The following is a summary of net sales and operating income by business segment:

	Net Sales
	Three Months Ended
(In millions)	September 28, 2013			September 29, 2012
Retail	$	714		$	719
Foodservice/Other	270			255
Net sales	$	984		$	974
	Income from Continuing Operations Before Income Taxes
	Three Months Ended
(In millions)	September 28, 2013			September 29, 2012
Retail	$	60		$	84
Foodservice/Other	25			25
Total operating segment income	85			109
General corporate expense	(25		)	(31		)
Mark-to-market derivative gains	2			5
Amortization of intangibles	(1		)	(1		)
Significant items - business segments	(6		)	2
Total operating income	55			84
Net interest expense	(11		)	(9		)
Income from continuing operations before income taxes	$	44		$	75

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Condensed Consolidated Statements of Equity (USD $) In Millions, unless otherwise specified	Total	Common Stock	Capital Surplus	Retained Earnings	Unearned Stock	Accumulated Other Comprehensive Income (Loss)
Begining Balances at Jun. 30, 2012	$ 235	$ 1	$ 144	$ 295	$ (61)	$ (144)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	252	0	0	252	0	0
Translation adjustments, net of tax	(21)	0	0	0	0	(21)
Net unrealized gain (loss) on qualifying cash flow hedges, net of tax	(8)	0	0	0	0	(8)
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax	26	0	0	0	0	26
Dividends on common stock	(61)	0	0	(61)	0	0
Spin-off of international coffee and tea business	(3)	0	0	(9)	0	6
Stock issuances - Restricted stock	3	0	3	0	0	0
Stock option and benefit plans	52	0	52	0	0	0
ESOP activity and other	9	0	1	0	8	0
Ending Balances at Jun. 29, 2013	484	1	200	477	(53)	(141)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	29	0	0	29	0	0
Translation adjustments, net of tax	0
Net unrealized gain (loss) on qualifying cash flow hedges, net of tax	0
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax	(1)	0	0	0	0	1
Dividends on common stock	(22)	0	0	(22)	0	0
Spin-off of international coffee and tea business	5	0	0	5	0	0
Stock issuances - Restricted stock	3	0	3	0	0	0
Stock option and benefit plans	3	0	3	0	0	0
Stock Repurchased During Period, Value	(10)	0	(10)	0	0	0
Ending Balances at Sep. 28, 2013	$ 491	$ 1	$ 196	$ 489	$ (53)	$ (142)

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Contingencies and Commitments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 28, 2014	Jun. 29, 2013	Jul. 01, 2006	Sep. 28, 2013
Commitments and Contingencies Disclosure [Abstract]
Loss related to litigation settlement			$ 80
Regular scheduled contributions to multi-employer pension plans	2	1
Capital Lease Obligations				16
Operating Leases, Future Minimum Payments Due				7
Operating Leases, Future Minimum Payments, Due in Two Years				8
Operating Leases, Future Minimum Payments, Due in Three Years				1
Letters of Credit Outstanding, Amount		7
Guarantor Obligations, Maximum Exposure, Undiscounted				$ 16

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Cash Flow Impacts of Discontinued Operations (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 29, 2012
Discontinued Operations and Disposal Groups [Abstract]
Cash flow from (used in) operating activities	$ 11
Cash flow from (used in) investing activities	7
Cash flow from (used in) financing activities	(10)
Increase in net cash of discontinued operations	8
Cash and cash equivalents at beginning of year	0
Cash and cash equivalents at end of period	$ 8

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Net Income (Loss) Per Share (Tables)

3 Months Ended

Sep. 28, 2013

Earnings Per Share [Abstract]

Reconciliation Between Net Income (Loss) Per Share - Basic And Diluted

The following is a reconciliation of net income to net income per share – basic and diluted – for the first quarter of 2014 and 2013 (per share amounts are rounded and may not add to total):

Computation of Net Income per Common Share

(In millions, except per share data)

	Quarter ended
	September 28, 2013		September 29, 2012
Amounts attributable to Hillshire Brands
Income from continuing operations	$	29	$	49
Income from discontinued operations, net of tax	—		4
Net income	$	29	$	53
Average shares outstanding – Basic	123		122
Dilutive effect of stock option and award plans	2		1
Diluted shares outstanding	125		123
Earnings per common share—Basic
Income from continuing operations	$	0.24	$	0.40
Income from discontinued operations	—		0.03
Net income	$	0.24	$	0.43
Earnings per common share – Diluted
Income from continuing operations	$	0.23	$	0.40
Income from discontinued operations	—		0.03
Net income	$	0.23	$	0.43

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Financial Instruments

3 Months Ended

Sep. 28, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

Financial Instruments

Investment Securities

In the first quarter of fiscal year 2014, the company purchased securities for investment purposes. Under the current investment policy, the company may invest in debt securities deemed to be investment grade at the time of purchase for general corporate purposes. The company determines the appropriate categorization of debt securities at the time of purchase and reevaluates such designation at each balance sheet date. The company typically categorizes all debt securities as available for sale, as the company has the intent to convert these investments into cash if and when needed. Classification of available-for-sale marketable securities as current or non-current is based on whether the conversion to cash is expected to be necessary for operations in the upcoming year, which is consistent with the security’s maturity date, if applicable.

Securities categorized as available for sale are stated at fair value, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss). The amortized cost, unrealized gains and losses, and fair market values of the company's investment securities available for sale at September 28, 2013 are summarized as follows:

	September 28, 2013
(In millions)	Amortized Cost		Unrealized Gain/(Loss)		Fair Market Value
Available-for-sale:(1)
Commercial Paper	$	158	$	—	$	158
Corporate Note	95		—		95
Total	$	253	$	—	$	253

(1) Categorized as level 1: Observable input such as quoted prices in active markets for identical assets or liabilities

Derivative Instruments

The company uses derivative financial instruments, including futures, options and swap contracts to manage its exposures to commodity prices and interest rate risks. The use of these derivative financial instruments modifies the exposure of these risks with the intent to reduce the risk or cost to the company. The company does not use derivatives for trading or speculative purposes and is not a party to leveraged derivatives. More information concerning accounting for financial instruments can be found in Note 2, Summary of Significant Accounting Policies in the company’s 2013 Annual Report.

Types of Derivative Instruments—

Interest Rate Swaps

The company previously had utilized interest rate swap derivatives to manage interest rate risk in order to maintain a targeted amount of both fixed-rate and floating-rate long-term debt and notes payable. Interest rate swap agreements that are effective at hedging the fair value of fixed-rate debt agreements are designated and accounted for as fair value hedges. The company has a fixed interest rate on virtually all of its long-term debt, and as of September 28, 2013, the company is not a party to any interest rate swap agreements.

Commodity Futures and Options Contracts

The company uses commodity futures and options to hedge a portion of its commodity price risk. The principal commodities hedged by the company include pork, beef, natural gas, diesel fuel, corn, wheat and other ingredients. The company does not use significant levels of commodity financial instruments to hedge commodity prices and primarily relies upon fixed rate supplier contracts to determine commodity pricing. In circumstances where commodity-derivative instruments are used, there is a high correlation between the commodity costs and the derivative instruments. For those instruments where the commodity instrument and underlying hedged item correlate between 80%-125%, the company accounts for those contracts as cash flow hedges. However, the majority of commodity derivative instruments are accounted for as mark-to-market hedges. The company only enters into futures and options contracts that are traded on established, well-recognized exchanges that offer high liquidity, transparent pricing, daily cash settlement and collateralization through margin requirements.

The notional values of the various derivative instruments used by the company are summarized in the following table:

NotionalValues (In millions)	September 28, 2013		June 29, 2013		Hedge Coverage (Number of months)
Commodity Contracts:
Commodity Future Contracts:(1)
Grains/Oilseed	$	46	$	34	7
Energy	$	26	$	29	11
Other commodities	$	9	$	20	5

(1) Commodity futures contracts are determined by the initial cost of the contract

Cash Flow Presentation

The cash receipts and payments from a derivative instrument are classified according to the nature of the instrument, when realized, generally in investing activities unless otherwise disclosed. However, cash flows from a derivative instrument that are accounted for as a fair value hedge or cash flow hedge are classified in the same category as the cash flows from the items being hedged provided the derivative does not include a financing element at inception. If a derivative instrument includes a financing element at inception, all cash inflows and outflows of the derivative instrument are considered cash flows from financing activities. If, for any reason, hedge accounting is discontinued, any remaining cash flows after that date will be classified consistent with mark-to-market instruments.

Contingent Features/Concentration of Credit Risk

All of the company’s derivative instruments are governed by International Swaps and Derivatives Association (ISDA) master agreements, requiring the company to maintain an investment grade credit rating from both Moody’s and Standard & Poor’s credit rating agencies. If the company’s credit rating were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate collateralization on the derivative instruments in net liability positions. There are no derivative instruments with credit-risk-related contingent features that are in a liability position as of September 28, 2013 and June 29, 2013.

A large number of major international financial institutions are counterparties to the company’s financial instruments. The company enters into financial instrument agreements only with counterparties meeting very stringent credit standards (a credit rating of A-/A3 or better), limiting the amount of agreements or contracts it enters into with any one party and, where legally available, executing master netting agreements. The company regularly monitors these positions. While the company may be exposed to credit losses in the event of non-performance by individual counterparties of the entire group of counterparties, the company has not recognized any losses with these counterparties in the past and does not anticipate material losses in the future.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value must be categorized into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while level 3 generally requires significant management judgment. Assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement.

The carrying amounts of cash and equivalents, trade accounts receivables, accounts payable, derivative instruments and notes payable approximate fair values due to their short-term nature and are considered Level 1 based on the valuation inputs. The carrying value of derivative instruments approximate fair value but may be considered Level 1 or Level 2 based on the valuation inputs used (see balance sheet classification and fair value determination in the table presented later in this disclosure). The fair value of the company’s long-term debt (considered Level 2 based on the valuation inputs used), including the current portion, is estimated using discounted cash flows based on the company’s current incremental borrowing rates for similar types of borrowing arrangements. Marketable securities available for sale values are derived solely from level 1 inputs.

	September 28, 2013				June 29, 2013
(In millions)	Fair Value		Carrying Amount		Fair Value		Carrying Amount
Long-term debt, including current portion	$	978	$	951	$	981	$	951

Information related to our cash flow hedges, net investment hedges, fair value hedges and other derivatives not designated as hedging instruments for the quarters ended September 28, 2013 and September 29, 2012 is as follows:

	Foreign Exchange Contracts					Commodity Contracts						Total
	Quarter Ended					Quarter Ended						Quarter Ended
(In millions)	September 28, 2013		September 29, 2012			September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Cash Flow Derivatives:
Amount of gain (loss) recognized in other comprehensive income (OCI) (a)	$	—	$	—		$	(1	)	$	12		$	(1	)	$	12
Amount of gain (loss) reclassified from AOCI into earnings (a) (b)	—		—			(1		)	5			(1		)	5
Change in amount of gain (loss) expected to be reclassified into earnings during the next twelve months	—		—			(2		)	(11		)	(2		)	(11		)
Derivatives Not Designated as Hedging Instruments:
Amount of gain (loss) recognized in Cost of Sales	—		—			(1		)	4			(1		)	4
Amount of gain (loss) recognized in SG&A	—		(1		)	1			1			1			—

(a) Effective portion

(b) Gain (loss) reclassified from AOCI into earnings is reported in selling, general, and administrative (SG&A) expenses for foreign exchange contracts and in cost of sales for commodity contracts

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Exit, Disposal and Other Restructuring Activities (Tables)

3 Months Ended

Sep. 28, 2013

Schedule of Restructuring and Related Costs [Table Text Block]

The following is a summary of the (income) expense associated with ongoing actions, which also highlights where the costs are reflected in the Consolidated Statements of Income:

	Quarter Ended
(In millions)	September 28, 2013		September 29, 2012
Cost of Sales	$	—	$	1
Selling, general and administrative expenses	14		8
Exit activities, asset and business dispositions	3		(3		)
Decrease in income from continuing operations before income taxes	17		6

Impact Of Restructuring Actions On Corporate Business Segments And Unallocated Corporate Expenses

The impact of these actions on the company’s business segments and general corporate expense is summarized as follows:

	Quarter Ended
(In millions)	September 28, 2013		September 29, 2012
Retail	$	2	$	(3	)
Foodservice/Other	1		(2		)
Decrease (Increase) in operating segment income	3		(5		)
Increase in general corporate expenses	14		11
Total	$	17	$	6

Net Charges For Exit Disposal And Transformation Actions And Related Reserve Status

The following table summarizes the activity for the first quarter of 2014 related to exit, disposal and restructuring related actions and the status of the related accruals as of September 28, 2013. The 2014 exit, disposal and restructuring related actions include recognized third party consulting costs related to cost saving and efficiency process and IT initiatives and recognized severance charges associated with planned employee terminations. The accrued amounts remaining represent the estimated cash expenditures necessary to satisfy remaining obligations and are expected to be paid in the next 12 months.

(In millions)	Employee termination and other benefits			IT and other costs			Non-cancellable leases/ Contractual obligations			Total
Accrued Costs as of June 29, 2013	$	10		$	5		$	23		$	38
Exit, disposal and other costs recognized during 2014	3			14			—			17
Cash payments	(3		)	(10		)	(8		)	(21		)
Accrued costs as of September 28, 2013	$	10		$	9		$	15		$	34

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Segment Information (Tables)

3 Months Ended

Sep. 28, 2013

Segment Reporting [Abstract]

Net Sales and Operating Segment Income by Business Segment

The following is a summary of net sales and operating income by business segment:

	Net Sales
	Three Months Ended
(In millions)	September 28, 2013			September 29, 2012
Retail	$	714		$	719
Foodservice/Other	270			255
Net sales	$	984		$	974
	Income from Continuing Operations Before Income Taxes
	Three Months Ended
(In millions)	September 28, 2013			September 29, 2012
Retail	$	60		$	84
Foodservice/Other	25			25
Total operating segment income	85			109
General corporate expense	(25		)	(31		)
Mark-to-market derivative gains	2			5
Amortization of intangibles	(1		)	(1		)
Significant items - business segments	(6		)	2
Total operating income	55			84
Net interest expense	(11		)	(9		)
Income from continuing operations before income taxes	$	44		$	75

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Document and Entity Information	3 Months Ended
	Sep. 28, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 28, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Trading Symbol	HSH
Entity Registrant Name	HILLSHIRE BRANDS CO
Entity Central Index Key	0000023666
Current Fiscal Year End Date	--06-28
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	123,012,363

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Discontinued Operations (Tables)

3 Months Ended

Sep. 28, 2013

Discontinued Operations and Disposal Groups [Abstract]

Operating Results Of Discontinued Operations

The following is a summary of the operating results of the company’s discontinued operations for the first quarter of 2013:

	First Quarter 2013
(In millions)	Net Sales		Pretax Income		Net Income
Australian Bakery	$	37	$	3	$	2

Gain (Loss) On Sale Of Discontinued Operations

The following is a summary of the gain on sale of the company’s discontinued operations for the first quarter of 2013:

	First Quarter 2013
(In millions)	Pretax Gain on Sale		Tax Expense			After Tax Gain
North American Fresh Bakery	$	1	$	—		$	1
North American Foodservice Beverage	2		(1		)	1
Total	$	3	$	(1	)	$	2

Cash Flow Impacts Of Discontinued Operations

The cash flows related to the discontinued operations for the first quarter of 2013 are summarized in the table below:

	Quarter Ended
(In millions) – Increase / (Decrease)	September 29, 2012
Cash flow from operating activities	$	11
Cash flow from investing activities	7
Cash flow used in financing activities	(10		)
Increase in net cash of discontinued operations	8
Cash and cash equivalents at beginning of year	—
Cash and cash equivalents at end of period	$	8