10-K405

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

/x/	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended July 1, 2000
	OR
/ /	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission file number 001-03344

Sara Lee Corporation
(Exact name of registrant as specified in its charter)

Maryland (State of incorporation)	36-2089049 (I.R.S. Employer Identification No.)
Three First National Plaza
Chicago, Illinois	60602-4260
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number including area code: (312) 726-2600

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value per share	The Chicago Stock Exchange The New York Stock Exchange The Pacific Exchange Amsterdam Stock Exchange The Bourse (Paris) The Swiss Exchange The Stock Exchange (London)
Preferred Stock Purchase Rights	The Chicago Stock Exchange The New York Stock Exchange The Pacific Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE

   Indicate by check mark whether the registrant (1) has filed all required reports 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. /x/ Yes  / / No

   Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /x/

   As of September 1, 2000, the aggregate market value of the voting and non-voting common equity (based upon the closing price per share of Common Stock on the New York Stock Exchange on such date) held by non-affiliates of the registrant was approximately $15.8 billion.

   On September 1, 2000, the registrant had outstanding 840,397,128 shares of common stock, par value $.01 per share, which is the registrant's only class of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the Company's Proxy Statement, dated September 20, 2000, are incorporated by reference into Items 10-13 of Part III.

PART I

Item 1. Business.

(a) GENERAL DEVELOPMENT OF BUSINESS

    Sara Lee Corporation ("Sara Lee" or the "corporation") is a global manufacturer and marketer of high-quality, brand-name products for consumers throughout the world. Sara Lee has operations in more than 40 countries and markets branded consumer products in over 170 countries. The corporation was organized in Baltimore, Maryland in 1939 as the C.D. Kenny Company and adopted its current name in 1985.

    Sara Lee's primary purpose is to create long-term shareholder value. To further its purpose, on May 30, 2000 the corporation announced plans to reshape its business by focusing on a smaller number of global-branded consumer packaged goods businesses. Sara Lee's reshaping plans reaffirm its focus of marketing repeat purchase, non-durable, branded packaged products. The reshaping also narrows the corporation's focus to three major global businesses — Food and Beverage, Intimates and Underwear, and Household Products. Sara Lee's mission is to continue to build leadership brands in each of these three global businesses and to own the number one or number two brand in each category in which it competes. To implement its reshaping plans, Sara Lee intends to divest businesses that do not fit within its narrowed business focus or that may be more valuable apart from Sara Lee. The corporation also intends to look for opportunities to acquire companies that enhance its three major global businesses.

    In connection with its reshaping, Sara Lee announced its intent to divest four businesses: PYA/Monarch, Coach, its Champion business and the International Fabrics business of Courtalds Textiles. On August 16, 2000, Sara Lee signed an agreement to sell PYA/Monarch, its foodservice division, for approximately $1.6 billion in cash. The sale is expected to close during the second quarter of fiscal 2001. In June 2000, Coach filed a registration statement to effect an initial public offering of approximately 19% of its common stock, which offering is expected to be completed by the end of calendar year 2000. Following the offering, Sara Lee will continue to own approximately 81% of Coach. Although no decision has been reached by Sara Lee regarding the form or timing of a transaction to dispose of its interest in Coach, Sara Lee expects to distribute its 81% interest in Coach, within 12 months after Coach completes its initial public offering, by offering Sara Lee stockholders the opportunity to exchange their Sara Lee common stock for Coach common stock. The decision to distribute the Coach shares is subject to market conditions and various other factors, and no assurances can be given that Sara Lee ultimately will complete a distribution of its Coach shares within this 12-month time frame. Sara Lee is in the initial stages of evaluating alternatives for the disposition of Champion, and no decision has been made as to the form or timing of a transaction to dispose of this business. Currently, Sara Lee anticipates that it will complete the sale of the International Fabrics business of Courtalds by the end of fiscal 2001.

    Sara Lee also has acquired several businesses that strengthen or extend Sara Lee's brands within its three major global businesses. In fiscal 2000, the corporation acquired Courtalds Textiles, which is the United Kingdom's largest producer of intimate apparel and underwear. Sara Lee strengthened its presence in Latin America through the acquisition of Sol y Oro, a leading branded intimate apparel and men's underwear company in Argentina. In addition, Sara Lee made an equity investment in Johnsonville Sausage Company, a leading manufacturer of premium fresh sausage products in the United States. In early fiscal 2001, Sara Lee acquired the Zorba brand, which holds the leading position in men's and boys' underwear in Brazil, and União, one of the largest coffee retailers in Brazil.

    During fiscal 2000, Sara Lee continued to repurchase shares of its common stock. In 1997, Sara Lee initially announced plans to repurchase $3 billion of its common stock over a three-year period, which purchases were completed by December 1999. In January 2000, Sara Lee's Board of Directors increased by 50 million shares the number of shares the corporation was authorized to repurchase. From January to July 2000, Sara Lee repurchased a total of $793 million of its common stock under the authorized program.

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    Sara Lee also completed a transition in its senior management ranks. C. Steven McMillan, who has held various positions in Sara Lee since 1974, succeeded John H. Bryan as Chief Executive Officer. Mr. Bryan will continue to serve as Chairman of the Board of Directors until his retirement in October 2001. In November 1999, Sara Lee appointed Cary D. McMillan as its Chief Financial and Administrative Officer. He was also elected to the corporation's Board of Directors in January 2000. Mr. Steve McMillan and Mr. Cary McMillan are not related.

    Fiscal year 1999 was a 53-week year, while fiscal years 2000 and 1998 contained only 52 weeks.

Sara Lee Food and Beverage

    Food and Beverage's primary focus is refrigerated and frozen foods and hot beverages. Sara Lee's Food and Beverage segment is comprised of Sara Lee Packaged Meats, Sara Lee Bakery, Coffee and Tea and Foodservice. In fiscal 2000, Sara Lee's Packaged Meats and Bakery businesses reported sales of $5.1 billion, a decrease of 3% from the prior year. Operating income for these divisions, excluding unusual items, decreased 22% to $370 million. Coffee and Tea reported fiscal year 2000 sales of $2.8 billion, an increase of 8% over the prior year. Operating income for Coffee and Tea, excluding unusual items, increased 9% to $472 million in fiscal year 2000, and its base business unit volumes increased 1% over fiscal 1999. As noted above, in August 2000 Sara Lee signed an agreement to sell its foodservice business.

    Sara Lee Packaged Meats is the world's largest processed meats company and markets branded products in the United States, Mexico and Europe. With global sales of $4.1 billion in fiscal 2000, Sara Lee Packaged Meats is a leader in the $28.8 billion U.S. packaged meats industry, as well as in Mexico and Europe. Sales and profits of the Packaged Meats business were adversely affected in fiscal 2000 by significantly higher costs for hogs, which is the division's primary raw material. Operating results also were adversely affected by business disruptions that resulted from making food safety enhancements and the start-up of three new manufacturing facilities. Since Sara Lee's voluntary recall of certain brands of hot dogs and other packaged meat products in fiscal 1999, the corporation has made significant investments in food safety technology and also has established standards and protocols for production and testing that exceed federal and industry guidelines, expanded its employee training and implemented new product labeling.

    In response to strong consumer demand for variety, superb taste and convenience, Sara Lee Packaged Meats continued to develop flavorful, easy-to-prepare meat products. Jimmy Dean Foods, which holds a leading share of the breakfast sausage category, launched new sausage link flavors, such as smokehouse, maple and hot 'n sweet. Ball Park introduced Ball Park Cheese Singles, which features individually wrapped hot dogs inside a large package. State Fair Foods, one of the largest producers of corn dogs in the U.S., continued to focus on developing breakfast products, such as Pancake 'n Sausage on a Stick. Hillshire Farms extended its successful Deli Select lunch meats to include thicker, family-size slices, more flavors and easy-open, reusable zip-lock packaging.

    Sara Lee Bakery maintained its position as the leading frozen-baked goods brand in the United States, Australia and the United Kingdom. Sara Lee Bakery's fiscal 2000 sales of $1.0 billion were comparable to the prior year, while base business volumes for global bakery units fell 9% compared to fiscal 1999 levels. Sara Lee Bakery markets its products worldwide through multiple channels of distribution, including retail, bakery-deli and foodservice. In fiscal 2000, approximately 35% of total Sara Lee Bakery sales were generated outside the United States. Consolidation in the retail sector, intense competition among bakery manufacturers and increased consumer demand for great-tasting, innovative and convenient products were the greatest influences on Sara Lee Bakery's fiscal 2000 results. Although the U.S. retail bakery sector remained strong in fiscal 2000, these gains were offset by lower European operating results. Sara Lee Bakery Europe experienced lower sales and operating income in fiscal 2000 as a result of over-capacity in the retail frozen foods category caused by a declining demand for frozen baked goods; growing competition from private label brands; Sara Lee's closure of a plant in France, which

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impacted production efficiency; and the conversion to new inventory control systems for the foodservice bakery operations in the United Kingdom, which caused temporary business interruptions.

    Sara Lee Bakery responded by focusing on improving its cost structure, correcting systems difficulties, introducing new products and continuing to expand into new channels of distribution, such as club and convenience stores. Sara Lee Bakery introduced new products in the United States that expanded the Sara Lee brand into the hand-held meal category, giving Sara Lee a greater presence in the frozen food aisle. During fiscal 2000, Sara Lee completed construction of a new Sara Lee Branded Food research and development facility in Chicago. This new facility enables the research and development teams of Sara Lee Bakery and Sara Lee deli meats to work more closely with the corporation's sales and marketing teams to develop innovative new products and tailor existing product offerings to fulfill the specific needs of trade customers. In addition, Sara Lee's national account approach to foodservice sales enables the corporation to leverage the Sara Lee brand and provide customers with one contact for Sara Lee Bakery and Sara Lee Packaged Meat products.

    Sara Lee Coffee and Tea's sales for fiscal 2000 were $2.8 billion and its operating income was $472 million. These results strengthened Sara Lee's leadership position in the $34.5 billion worldwide coffee market. At the end of fiscal 2000, Sara Lee held the number-three position in the worldwide roast and ground coffee category. Coffee and Tea benefited from gains in its base business, as well as strategic acquisitions of several businesses in North America, which were partially offset by lower coffee prices and the strength of the U.S. dollar compared to the euro. In fiscal 2000, Sara Lee acquired Chock full o'Nuts, a U.S. roaster, packer and marketer of coffee, and Nestlé's North American brands MJB, Hills Bros. and Chase & Sanborn, which have strong regional brand positions. In early fiscal 2001, Sara Lee acquired União, Brazil's leading coffee company. Sara Lee believes that its leadership strength is attributable to well-known coffee brands, including its flagship Douwe Egberts, Maison du Café, Marcilla, Merrild and Café do Ponto, and its recently acquired União brands Pilão and Caboclo.

    During fiscal 2000, Sara Lee Coffee and Tea continued to hold leading positions in the U.S. out-of-home coffee category. Coffee and Tea's out-of-home business provides coffee, tea, juices and equipment to foodservice customers, such as restaurants, schools, businesses and hospitals, in 48 countries. Sara Lee's Douwe Egberts Coffee Systems holds leadership positions in the out-of-home coffee category in the Netherlands, Belgium and Denmark and also holds strong positions in Hungary, Spain, Australia, Canada, Germany and Austria. Its Cafitesse system, Sara Lee's proprietary coffee system that uses a liquid coffee concentrate, has made it a worldwide market leader in liquid coffee systems. Sara Lee also sells coffee and tea in retail stores and over the Internet. At the end of fiscal 2000, Sara Lee owned 24 coffee stores in Belgium, the Netherlands and the United Kingdom, operating under the Jacqmotte brand name. In addition, Superior Coffee launched an on-line coffee shop (www.superiorcoffeeshop.com), and Douwe Egberts launched an online gift shop.

    Growth in Sara Lee's tea business was driven mainly by the introduction of new products and flavors, especially in the premium-priced, specialty tea segment. Sara Lee continues to hold leading positions in several segments of the European tea market with its Pickwick, Hornimans and Sir Morton brands. Superior Coffee also markets an iced tea brand, Paradise, in the U.S. foodservice market. During fiscal 2000, Douwe Egberts launched a range of new products in response to the popularity of green tea and herbal tea.

    Sara Lee Coffee and Tea intends to expand into new geographic markets, primarily by acquiring leading local companies and recognized brands. Sara Lee's acquisition of União in Brazil and its acquisition of North American brands MJB, Hills Bros. and Chase & Sanborn are examples of this strategy. Through its Douwe Egberts Global Network, Sara Lee also has initiated ventures with independent sales agents in countries where Sara Lee does not yet have a presence. By the end of fiscal 2000, Douwe Egberts Global Network marketed coffee systems such as Cafitesse in 43 countries.

    Sara Lee's Foodservice business, PYA/Monarch, maintained its position as the leading foodservice distributor in the southeastern United States and the fourth-largest full-line foodservice company in the

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nation. During fiscal 2000, PYA/Monarch enjoyed strong sales and profit growth as it continued to focus on broadline sales, as well as lowering the cost of production and improved operating efficiency. On August 16, 2000, Sara Lee signed an agreement to sell PYA/Monarch for approximately $1.6 billion in cash. The sale is expected to close in the second quarter of fiscal 2001.

Intimates and Underwear

    In fiscal 2000, Sara Lee began reshaping its apparel business to narrow the range of its products to branded, packaged, non-fashion "innerwear" apparel. This business, which has been renamed Intimates and Underwear, markets a portfolio of apparel brands in the intimates, underwear and legwear product categories. The Dim, Hanes and Just My Size megabrands cross every category, while the Playtex, Wonderbra, Bali and L'eggs brands cover products for specific market segments. In fiscal 2000, Intimates and Underwear reported sales of $7.6 billion, an increase of 2% from the prior year. Operating income increased 9% to $844 million in fiscal 2000 and base business unit volumes grew 6%.

    Of the top 10 brands in the U.S. intimate apparel market, as measured by consumer awareness, Sara Lee holds Playtex (ranked first), Wonderbra (ranked third), Hanes Her Way (ranked fourth), Just My Size (ranked fifth) and Bali (ranked sixth). In the $4.7 billion U.S. bra category, Sara Lee holds the leading category share, measured by dollar sales, with its Playtex, Bali, Hanes Her Way, Just My Size, Wonderbra, Lovable, Barelythere and Ralph Lauren brands. Sara Lee also holds leading category shares in the shapewear and panties categories. In the underwear business, Sara Lee continued to build the Hanes and Hanes Her Way megabrand, which generated worldwide sales of $2.3 billion in fiscal 2000. Sara Lee Hosiery introduced various new products in fiscal 2000 and captured 48% of the $2 billion U.S. sheer hosiery category, on a dollar sales basis.

    To achieve this growth, Sara Lee Intimates introduced innovative updates of its core brands and extended familiar brands into new product categories. In fiscal 2000, new products accounted for 20% of total intimate apparel sales. L'eggs Intimates was introduced to leverage the consumer base and brand recognition of the L'eggs pantyhose brand into the panty category. Playtex introduced several new products under its 18 Hour and Cross Your Heart lines to meet consumer demands for increased comfort and a more natural look. Building on its successful Silken Lace line, Bali launched a new line of luxury products under the name Silken Luxury, and Bali plans to launch Body Physics, an extensive line of products with unique features in fabric and comfort, in fiscal 2001. Hanes Hosiery introduced four new product segments in fiscal 2000 under its Silk Reflections brand, the largest hosiery brand in department stores. With increased consumer interest in the bare-leg look, Sara Lee introduced Bare L'eggs and Just My Size Naturally Bare. L'eggs introduced Little L'eggs (for girls aged 2-8) in fiscal 2000 to satisfy the unique tastes of younger consumers, and will introduce Girls L'eggs (for girls aged 8-14) in fiscal 2001.

    Sara Lee also made significant investments towards producing seamless knitted bras and panties, the fastest growing category in the intimate apparel market. Barelythere, which was launched nationally as a stand-alone brand, introduced seamless shapewear (undergarments constructed for control) in fiscal 2000. Barelythere bras now represent 50% of the brand's dollar volume. The Ralph Lauren brand also introduced seamless products, which now comprise over 20% of its total sales. The corporation plans to introduce Hanes Her Way seamless shapewear in the mass market in fiscal 2001. Following its success in the U.S. market for seamless intimates products, Sara Lee is introducing these products in Europe under such brand names as Princessa Unno in Spain and Dim Absolu and Issensia in France. Sara Lee's acquisition of Courtalds Textiles, with its Embody brand of seamless products, further strengthens the corporation's portfolio of seamless apparel.

    To enable its brands to maintain their leadership positions, Sara Lee emphasizes the creative marketing of new products in all its core categories. In fiscal 2000, Sara Lee successfully launched its "Be You" advertising campaign to unite Hanes and Hanes Her Way products. The new Flower Power line of girls panties incorporates popular current trends, such as tie-dye, camouflage and Hawaiian patterns, to attract

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fashion-conscious children. Sara Lee plans to continue to build its successful children's character underwear business with the introduction in fall 2000 of products related to the release of Disney's "102 Dalmatians" film.

    Sara Lee acquired several businesses in fiscal 2000 that expand its global Intimates and Underwear business. The corporation acquired Courtalds Textiles, which is the United Kingdom's largest producer of intimate apparel and underwear. Courtalds has annual sales of approximately $800 million from continuing businesses, markets brand names such as Gossard, Berlei and Aristoc, and is a leading supplier of private-label apparel throughout the United Kingdom. In May 2000, Sara Lee acquired Sol y Oro, a leading intimates and underwear brand in Argentina. In early fiscal 2001, Sara Lee completed the acquisition of the Zorba brand, which holds the leading position in men's and boys' underwear in Brazil. Sara Lee believes that these acquisitions will further expand its position in the growing Latin American market.

    Sara Lee's Activewear business continued to build its branded basic knit apparel (fleece, T-shirts and sport shirts) by focusing on ongoing product improvements, consistent brand communications and lowering production costs. In fiscal 2000, the Hanes and Hanes Her Way megabrand remained the leading national activewear brand in the mass market. Hanes Printables continues to be a leader in the wholesale embellished sportswear market. Its key products — T-shirts, sweatshirts and sportshirts — are sold under the Hanes, Hanes Her Way, Beefy-T, Stedman by Hanes and Outer Banks brands.

    As part of its plans to reshape the corporation's apparel business around basic, non-fashion, packaged innerwear products, Sara Lee announced in May 2000 that it would divest its Coach, Champion and International Fabrics businesses. Coach is a designer, producer and marketer of high-quality modern American classic accessories, such as handbags, business cases and wallets. In June 2000, Coach filed a registration statement to effect an initial public offering of approximately 19% of its common stock, which offering is expected to be completed by the end of calendar year 2000. Following the offering, Sara Lee will continue to own approximately 81% of Coach. Although no decision has been reached by Sara Lee regarding a transaction to dispose of its interest in Coach, Sara Lee expects to distribute its shares of Coach, within 12 months after Coach completes its initial public offering, by offering Sara Lee stockholders the opportunity to exchange Sara Lee common stock for Coach common stock. Sara Lee's decision to distribute its Coach shares is subject to market conditions and various other factors, and no assurance can be given that Sara Lee ultimately will complete a distribution of its Coach shares with such 12-month time frame or regarding the form of such transaction.

    Sara Lee also has announced its plans to sell its Champion business and the International Fabrics business of Courtalds Textiles. Champion is a leading global manufacturer and marketer of high-quality athletic apparel. Sara Lee is in the initial stages of evaluating alternatives for the disposition of Champion, and no decision has been made as to the form or timing of a transaction to dispose of this business. Currently, Sara Lee anticipates that it will complete the sale of the International Fabrics business of Courtalds by the end of fiscal 2001.

Household Products

    Household Products is Sara Lee's most global line of business and includes Sara Lee's leading household and body care products as well as its Direct Selling division. In fiscal 2000, Household Products reported sales of $2.2 billion, an increase of 3% from the prior year. Operating income for fiscal 2000 was $355 million, an increase of 8% from the prior year. Base-business unit sales for Household Products' four core product categories — shoe care, body care, insecticides and air fresheners — grew 10% from the prior year.

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    Sara Lee Household Products markets branded products in more than 170 countries, which makes it the corporation's most international business, as well as one of its fastest-growing. Household Products' fiscal 2000 results are attributable to its consistent focus on its four core product categories, innovation, creative marketing and low-cost production. At the end of fiscal 2000, Sara Lee was the leading worldwide shoe care marketer, a leader in the $5 billion European bath and shower product market and one of the leading producers of branded air fresheners and insecticides. Kiwi branded shoe care products are marketed in 170 countries, and Sara Lee continues to introduce new Kiwi products to maintain its brand strength. In fiscal 2000, Sara Lee launched Kiwi Instant Wax Shine, a self-shining shoe care product in a unique ergonomic package. Sara Lee markets its body care products under the Sanex, Duschdas, Badedas, Radox, Delial and Monsavon brands. In the air freshener and insecticide businesses, sales were increased by introducing new uses for existing products and expanding into new markets. Ambi-Pur Car was introduced in several European countries, expanding the use of air fresheners from the home to the car. In the insecticides business, Sara Lee introduced the first long-lasting, electrical anti-fly diffusers in Spain, Belgium, France and Portugal under the Bloom, Vapona, Catch and Dum Dum brand names.

    Sara Lee's Direct Selling businesses distribute cosmetics, fragrances, jewelry, toiletries, apparel products and nutritional supplements directly to consumers in 17 markets. Fiscal 2000 sales grew in virtually all of the 17 markets in which Direct Selling operates, largely due to the expansion of its independent distributor network. Sara Lee has an independent sales force of more than 700,000 people, which makes it the seventh-largest direct seller worldwide. Additionally, the use of new technology enabled the Direct Selling businesses to accept and deliver orders to consumers more easily and quickly. In fiscal 2001, Direct Selling plans to expand further in North and South America and Asia.

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

    Sara Lee's businesses are classified into four industry segments: Sara Lee Foods, Beverage, Household Products, and Intimates and Underwear. The financial information about Sara Lee's industry segments can be found on page F-27 of this Report.

(c) NARRATIVE DESCRIPTION OF BUSINESS

Sara Lee Food and Beverage

    Sara Lee Packaged Meats processes and sells pork, poultry and beef products to supermarkets, warehouse clubs, national chains and institutions throughout the United States, Europe and Mexico. Sara Lee believes it is one of the largest processed meats companies in the world. Sales are transacted through Sara Lee's own sales force, brokers and institutional buyers. Some of the more prominent brands in the United States within this category include Ball Park, Best's Kosher, Bryan, Hillshire Farm, Hygrade, Jimmy Dean, Kahn's, State Fair, Sara Lee and Galileo. Sara Lee's more prominent European brands include Aoste, Justin Bridou and Cochonou in France, Stegeman in the Netherlands, Argal in Spain and Nobre in Portugal. Sara Lee has a 49.9% interest in AXA Alimentos, S.A. de C.V. AXA Alimentos owns Kir Alimentos S. de R.L. de C.V. and Zwanenberg de Mexico, S.A. de C.V., which are leading processed meats companies in Mexico. Sara Lee also holds an equity investment in Johnsonville Sausage Company, a leading manufacturer of premium fresh sausage products in the United States.

    The products offered by this line of business include smoked sausage, bacon, hot dogs, breakfast sausage, breakfast sandwiches, premium deli and luncheon meats, ham, turkey, and packaged lunch combinations. The ingredients — pork, turkey and beef — are purchased by Sara Lee from a variety of sources. The prices of these raw materials fluctuate, depending primarily on supply and demand. Prices for hogs, which are a primary raw material for Sara Lee's packaged meat products, increased significantly in fiscal 2000. Because of the range of sources from which these raw materials are available, Sara Lee believes that it will continue to have access to adequate supplies.

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    The Packaged Meats business is highly competitive, with an emphasis on product quality, price, advertising and promotion, and customer service. Sara Lee's competitors include international, national, regional and local companies. Sara Lee Packaged Meats has accounted for 10% or more of Sara Lee's consolidated revenues during the past three fiscal years.

    Most of Sara Lee's Packaged Meats operations are regulated by the U.S. Department of Agriculture, whose focus is the quality, sanitation and safety of meat products, and to a lesser extent by state and local government agencies. Sara Lee's Packaged Meats operations in Europe and Mexico are regulated by local authorities.

    Sara Lee Bakery produces a wide variety of fresh and frozen baked and specialty items. Its core products are frozen and fresh pies, cheesecakes, pound cakes and specialty breads and bagels. These products are sold through supermarkets, foodservice distributors, bakery-deli and direct channels throughout the United States, United Kingdom, France, Mexico, Australia and numerous Asia-Pacific countries. Sales are transacted through Sara Lee's sales force and independent wholesalers and distributors. The key ingredients for these products — butter, milk, sugar, fruits, eggs and flour — are purchased from suppliers at prices that are subject to such influences as supply and demand, weather, and government price controls. Because of the number of sources from which such raw materials are generally available, Sara Lee believes it will continue to have access to adequate supplies.

    Competition in this business is strong, with a large number of participants. Sara Lee seeks to maintain and enhance a leading position in the industry through superior quality and value, marketing efforts that are designed to reinforce and build brand recognition, and through superior customer service.

    In the United States, Sara Lee Bakery products are subject to regulation by the Food and Drug Administration, the federal agency charged with, among other things, enforcing laws pertaining to food processing, content and labeling, and to a lesser extent, by state and local government agencies.

    Sara Lee Coffee and Tea held the number three category position at the end of fiscal year 2000 in worldwide roast and ground coffee. It has a significant presence in such countries as the Netherlands, Belgium, France, Denmark, Spain and Australia, and has established positions in Central and Eastern Europe and South America through acquisitions and expanded sales efforts. While Douwe Egberts is its European flagship brand, its other premium European coffee brands include Maison du Café, Marcilla and Merrild in Europe, and Café do Ponto, Pilão and Caboclo in South America. Sara Lee's Pickwick brand is an important brand in the European tea market. Other tea brands include Hornimans and Sueños de Oro in Spain and the Paradise iced tea brand in the United States foodservice market.

    This is a very competitive business with the other participants consisting primarily of other large multi-national companies. Sara Lee seeks to maintain a competitive advantage by offering its customers superior quality and value.

    Sara Lee is also a significant competitor in the out-of-home coffee service business. Its Douwe Egberts Coffee Systems business provides coffee and dispensing equipment in Europe, while its Superior Coffee business provides similar products and services in the United States.

    The significant cost item in the production of coffee products is the price of green coffee, which varies depending on such factors as weather (which affects the quality and quantity of available supplies), consumer demand, the political climate in the producing nations, unilateral pricing policies of producing nations, speculation on the commodities market, and the relative valuations and fluctuations of the currencies of producer versus consumer countries. These factors also generally affect Sara Lee's competitors. In fiscal 1998, green coffee prices rose substantially, while in fiscal 1999 and fiscal 2000, green coffee prices declined. Sara Lee anticipates that green coffee prices will continue to be affected by uncertainties over the availability of future supplies. Sara Lee mitigates the effect of fluctuating green coffee prices through careful inventory management and hedging strategies.

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    The Coffee and Tea business also manufactures rice products under the Lassie brand in the Netherlands and snack and nut products under the Duyvis, Felix and Bénénuts brands in the Netherlands, Belgium and France.

    The Coffee and Tea business has accounted for 10% or more of Sara Lee's consolidated revenues during the past three fiscal years.

    Sara Lee Foodservice is conducted principally under the PYA/Monarch name. PYA/Monarch is the leading foodservice distributor in the southeastern United States and is the fourth largest full-line foodservice company in the United States. This business distributes dry, refrigerated and frozen foods, paper supplies and foodservice equipment to institutional and commercial foodservice customers.

    The institutional foodservice distribution industry is highly competitive, with price and service being the major means by which Sara Lee Foodservice competes. This line of business generates lower margins on sales dollars than Sara Lee's other businesses. The operating results of this business are reflected in Sara Lee's consolidated financial statements as a discontinued operation.

Intimates and Underwear

    The Intimates and Underwear line of business markets a portfolio of apparel brands in the intimates, underwear and legwear product categories. Bras, panties and shapewear are marketed under such labels as Bali, Hanes Her Way, Playtex, Wonderbra and Daisyfresh in North America, and Playtex and Dim in Europe. Sara Lee is the leader in the North American intimates category.

    Distribution channels for intimate apparel range from department and specialty stores for such premium brands as Bali, and some Playtex products, to warehouse clubs and mass-merchandise outlets for some of the value-priced brands. Sales are effected through Sara Lee's sales force.

    The intimate apparel market is very competitive with products relying on brand recognition, quality, price and loyalty. Sara Lee competes by offering superior value, making use of low-cost sourcing, marketing activities and utilizing its megabranding strategy. The megabrands strategy entails marketing various products through common packaging, promotion and advertising. The intimate apparel business has accounted for 10% or more of Sara Lee's consolidated revenues during each of the past three fiscal years.

    Sara Lee's underwear and legwear business sources, manufactures and distributes men's, women's and children's underwear, hosiery and activewear (T-shirts, fleecewear and other jersey products for casualwear) in North America, South and Central America, Europe and the Asia-Pacific countries. These products are sold through Sara Lee's sales force to department stores, mass merchandisers, discount chains and the screen-print trade. Principal brands in the underwear category include Champion, Hanes, Hanes Her Way and Rinbros in North America, and Abanderado, Princesa, Champion, Hanes and Dim in Europe. Sara Lee believes that it is the leader in both the women's and girls' panties category in the United States, and in the heavily branded category of men's and boys' underwear in the United States, and has the leading position in men's and boys' underwear in Mexico.

    Activewear is marketed under Sara Lee's Hanes and Champion lines. In addition to targeting the public activewear market, Champion also markets authentic uniforms and practicewear for professional and amateur athletic teams, including such organizations as the National Basketball Association, the National Football League and a number of major university sports teams.

    The principal raw material in this product category is cotton. Sara Lee currently believes there is an adequate supply of cotton from a variety of sources. There are also numerous manufacturing sources for these products.

    Sara Lee is the leader in the hosiery category in North America, Western Europe, Australia, New Zealand and South Africa. It also continues to establish operations in various Asia-Pacific countries,

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placing it in a strategic position to capitalize on developing markets in that area. Sara Lee's products consist of a wide variety of branded, packaged consumer products, including pantyhose, stockings, combination panty and pantyhose garments, tights, knee-highs and socks, many of which are available in both sheer and opaque styles. These products are sold in the United States under such brand names as Hanes, L'eggs, Donna Karan and DKNY (the last two being licensed), and abroad under such labels as Dim, Pretty Polly, Elbeo, Nur Die, Bellinda, Filodoro and Philippe Matignon.

    Sara Lee hosiery and legwear products are sold by Sara Lee's sales force in channels ranging from department and specialty stores (for premium brands such as Hanes, Donna Karan and DKNY in the United States, and Dim outside the United States), to supermarkets, warehouse clubs, discount chains and convenience stores for brands like L'eggs and some Dim products aimed at the price-conscious consumer. Hosiery also is distributed through catalog sales and Sara Lee stores. The hosiery and legwear business has accounted for 10% or more of Sara Lee's consolidated revenues during each of the past three fiscal years.

    The hosiery business is very competitive in both the United States and Europe and worldwide demand for hosiery products has declined over the last three years. In the United States, Sara Lee's major competitors are other hosiery companies, and the primary methods of competition are quality, value, function, and, with respect to L'eggs products, service and distribution. In Europe, where most of Sara Lee's competitors are small companies who compete in the unbranded sector of the market, the primary focus is on quality.

    Raw materials — nylon, spandex, and cotton — and manufacturing sources for the products in this category are readily available to Sara Lee.

Household Products

    Household Products is composed of four primary core categories: shoe care — led by a worldwide line of Kiwi products; body care items — led by the Sanex brand, but also including Duschdas, Badedas and Monsavon and baby care products sold under the Zwitsal, Fissan and Proderm names; insecticides — sold internationally under the Catch, Bloom, Vapona and Ridsect brand names; and air fresheners — led by the Ambi-Pur brand. Zendium and Prodent oral care products, and Biotex and Neutral specialty detergents are also important categories for Sara Lee. Body care items and insecticides are marketed principally in Europe as well as into the Asia-Pacific and Latin America markets. These products are sold through a variety of retail channels including supermarkets. These are very competitive businesses. Sara Lee seeks to maintain a competitive advantage by offering its customers superior quality and value.

    Sara Lee Direct Selling distributes a wide range of products — cosmetics, fragrances, jewelry, toiletries, apparel and nutritional supplements — through a network of independent sales representatives. The Direct Selling division has an independent sales force of more than 700,000 representatives, which makes it the seventh-largest direct seller worldwide. Sara Lee Direct Selling includes the Nutrimetics business in Australia, the House of Fuller business in Mexico, the House of Sara Lee businesses in Indonesia and the Philippines, and the Avroy Shlain business in South Africa. Sara Lee also operates direct selling organizations in Japan, China and Uruguay. While this segment is very fragmented, Sara Lee believes it has an important position in many product lines in those countries in which it competes.

Trademarks

    Sara Lee is the owner of over 30,000 trademark registrations and applications in over 179 countries. Sara Lee's trademarks are among its most valuable assets as it pursues its strategy of building brands globally.

Customers

    None of Sara Lee's business segments or lines of business depends on a single customer or a small number of customers, the loss of which would have a material adverse effect on Sara Lee's consolidated

9

results of operations, financial position or cash flows. Sara Lee considers major mass retailers and supermarket chains in both the United States and Europe to be significant customers across one or more product categories, and it has developed specific approaches to working with these individual customers.

Seasonality

    Sara Lee Foods experiences some seasonality. Sara Lee Packaged Meats' sales tend to be higher in the fourth fiscal quarter due to increased demand associated with the onset of the outdoor barbecuing season and various holidays. Sara Lee Bakery generally experiences increased demand for its products during the second fiscal quarter, driven principally by holiday buying. Intimates and Underwear generally experience increased demand during the second fiscal quarter as a result of "back to school" purchases. The European hosiery business is somewhat seasonal in nature, unlike the United States hosiery business, and tends to experience a reduced demand in the summer months.

Environmental Matters

    Sara Lee is subject to a number of federal, state and local statutes, rules, regulations and ordinances in the United States and other countries relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment ("Environmental Laws").

    While Sara Lee expects to make capital and other expenditures in compliance with Environmental Laws, it does not anticipate that such compliance will have a material adverse effect on its consolidated results of operations, financial position or cash flows. Sara Lee has an ongoing program to monitor compliance with Environmental Laws and is continually examining its methods of operation and product packaging to reduce its use of natural resources.

Employees

    Sara Lee has approximately 154,000 employees worldwide.

(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

    Sara Lee's foreign operations are conducted primarily through wholly or partially owned subsidiaries incorporated outside the United States. Sara Lee's principal foreign subsidiary is Sara Lee/DE N.V., a Netherlands limited liability company headquartered in Utrecht, the Netherlands ("Sara Lee/DE"). Sara Lee indirectly owns a 100% interest in Sara Lee/DE, 41% in the form of voting shares and 59% in the form of depository receipts issued by the independent Stichting Administratiekantoor Douwe Egberts Sara Lee. Sara Lee/DE has responsibility for managing the Coffee and Tea and Household Products divisions of Sara Lee, as well as Sara Lee's foreign bakery operations.

    The foreign operations of Sara Lee's Packaged Meats line of business are conducted through Sara Lee Meats Europe B.V., the Aoste Group and Imperial Meat Products N.V., Nobre and Argal, while the foreign operations of Sara Lee Bakery are conducted through Kitchens of Sara Lee U.K. Ltd., Sara Lee Bakery (Australia) Pty Ltd. and Brossard France S.A.

    Coffee and Tea's operations are conducted by a number of subsidiaries, principally European, including Sara Lee/DE, Douwe Egberts Nederland B.V., Douwe Egberts France S.A., Douwe Egberts España S.A., Merrild Kaffe A/S, Douwe Egberts N.V., Compack Douwe Egberts Kft., Harris/DE Pty. Ltd., Balirny Douwe Egberts A.S. and Douwe Egberts Coffee Systems Nederland B.V.

    Household Products' operations are conducted by subsidiaries in over forty countries, principally Sara Lee/DE, Kiwi Brands Pty. Ltd., Kiwi France S.N.C., Kortman Intradal B.V., A/S Blumoller, Sara Lee/ DE España S.A., Sara Lee Household and Body Care U.K. Ltd., Sara Lee/DE Italy S.p.A., and Sara Lee/DE Deutschland GmbH and House of Fuller S.A. de C.V.

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    Intimates and Underwear includes numerous foreign businesses, including Dim S.A., Grupo Sans, a division of Sara Lee/DE España S.A., Sara Lee Personal Products, S.p.A., Sara Lee Personal Products (Australia) Pty. Ltd., Pretty Polly, a division of Sara Lee UK Holdings Ltd., Sara Lee Personal Products GmbH, the Filodoro Group, Sara Lee Hosiery, S.A. de C.V., Rinbros, S.A. de C.V., Courtaulds Textiles, Sol y Oro Group and Maglificio Bellia S.p.A.

    The financial information about foreign and domestic operations can be found on page F-29 of this Report.

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Item 2. Properties.

    Sara Lee operates 313 food processing and consumer product manufacturing plants, each containing more than 20,000 square feet in building area, in 26 states and 40 foreign countries. Sara Lee owns 233 and leases 82 of these plants. It also operates 162 warehouses containing more than 20,000 square feet in building area in 20 states and 25 foreign countries. Of these warehouses, 74 are owned and 88 are leased. The following table identifies the plants and warehouses presently owned or leased by Sara Lee that contain at least 250,000 square feet in building area.

Industry Segment and Division or Subsidiary	Location	Approximate Building Area in Square Feet
Food and Beverage
Aoste	Aoste, France	746,000
Aoste	Maclas, France	387,000
Aoste	Peyrolles, France	374,000
Aoste	St. Symphorien, France	303,000
Bill Mar Foods	Zeeland, Michigan	577,000
Bryan Foods, Inc.	West Point, Mississippi	800,000
Duyvis Trade	Zaandam, Netherlands	367,000
Hillshire Farm & Kahn's	Alexandria, Kentucky	325,000
Hillshire Farm & Kahn's	Cincinnati, Ohio	563,000
Hillshire Farm & Kahn's	New London, Wisconsin	565,000
Kitchens of Sara Lee U.K. Ltd.	East Yorkshire, United Kingdom	318,000
Koninklijke Douwe Egberts B.V.	Joure, the Netherlands	1,094,000
Koninklijke Douwe Egberts B.V.	Utrecht, the Netherlands	577,000
Koninklijke Douwe Egberts B.V.	Zaandam, the Netherlands	367,000
Meester	Wijhe, Netherlands	394,000
PYA/Monarch, Inc.	Charlotte, North Carolina	415,000
PYA/Monarch, Inc.	Bloomington, Indiana	321,000
PYA/Monarch, Inc.	Lexington, South Carolina	364,000
PYA/Monarch, Inc.	Montgomery, Alabama	374,000
Sara Lee Bakery	New Hampton, Iowa	294,000
Sara Lee Bakery	Tarboro, North Carolina	420,000
Sara Lee Bakery	Traverse City, Michigan	295,000
Sara Lee Bakeries U.K. Ltd.	Bridlington, England	318,000
Sara Lee Processed Meats Europe	Rio Maior, Portugal	348,000
Sara Lee Meats Europe B.V.	Miralcamp, Spain	260,000
Seitz Foods	St. Joseph, Missouri	305,000
Superior Coffee	Houston, Texas	331,000
Intimates and Underwear
Canadelle Limited Partnership	Montreal, Canada	289,000
Champion Products, Inc.	Laurel Hill, North Carolina	368,000
Champion Products, Inc.	Dunn, North Carolina	289,000
Champion Products, Inc.	Chihuahua, Mexico	429,000
Coach, Inc.	Jacksonville, Florida	560,000	*
Courtalds Textiles	Hyde, England	648,000
Courtalds Textiles	Nottingham, England	416,000
Dim, S.A.	Autun, France	328,000
Filodoro Calze SpA	Casalmoro, Italy	343,000
Filodoro Calze SpA	Casalmoro, Italy	251,000

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JE Morgan Main	Tamaqua, Pennsylvania	481,000
L'eggs Products	Clarksville, Arkansas	337,000
L'eggs Products	Rockingham, North Carolina	440,000
Playtex Apparel, Inc.	Dover, Delaware	345,000
Sara Lee Direct	Rural Hall, North Carolina	699,000	*
Sara Lee Hosiery	East Rockingham, North Carolina	330,000	*
Sara Lee Hosiery	Winston-Salem, North Carolina	770,000
Sara Lee Hosiery	Darlington, South Carolina	287,000
Sara Lee Intimates	Kings Mountain, North Carolina	420,000
Sara Lee Knit Products	Jacksonville, Florida	1,592,000	*
Sara Lee Knit Products	Martinsville, Virginia	704,000	*
Sara Lee Knit Products	Rural Hall, North Carolina	986,000
Sara Lee Knit Products	Winston-Salem, North Carolina	568,000
Sara Lee Knit Products	Winston-Salem, North Carolina	395,000
Sara Lee Knit Products-Europe	Gent, Belgium	1,041,000	*
Sara Lee Knit Products-Europe	Campogalliano, Italy	301,000	*
Sara Lee Sock Company	Kernersville, North Carolina	340,000
Vatter GmbH	Rheine, Germany	549,000	*
Household Products
Bama Polska	Polska, Poland	261,000
Cruz Verde Legrain Benelux	Santiago, Spain	284,000	*
Household & Body Care Philippines	Trias Cavite, Philippines	556,000
Kiwi Brands Pty. Ltd.	Clayton, Australia	313,000
Sara Lee/DE Germany	Dusseldorf, Germany	333,000	*
Sara Lee Household & Body Care U.K. Limited	Slough, England	318,000

*

These facilities are leased; the remainder are owned by Sara Lee.

Item 3. Legal Proceedings.

    On December 22, 1998, Sara Lee announced the recall of specific production lots of packaged meat products produced at the corporation's Zeeland, Michigan facility between July 1, 1998 and the date of the recall. This action was taken as a result of concerns that the specified products may contain listeria bacteria that can pose a health hazard. The Center for Disease Control and Prevention ("CDC") has conducted an investigation into these concerns. On May 27, 1999 the CDC issued a public report linking the consumption of packaged meat products from the Zeeland, Michigan facility, which allegedly contained listeria, to 21 fatalities (15 adult deaths and 6 miscarriages) and approximately 100 illnesses in total. Sara Lee is cooperating with pending government investigations into the matters alleged by the CDC. Several lawsuits, including individual and class actions, have been filed against the corporation. A majority of the matters have been resolved and nine lawsuits, two involving deaths, remain pending. Although the outcome of the pending litigation cannot be determined with certainty, Sara Lee believes that the pending litigation and expected claims should not have a material adverse effect on the corporation's consolidated results of operations, financial position or cash flows.

    Sara Lee is a party to various pending legal proceedings and claims. Some of the proceedings and claims against Sara Lee are for alleged environmental contamination, and arise under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA" or "Superfund"). CERCLA imposes liability, regardless of fault, on certain classes of parties that are considered to be

13

responsible for contamination at a site. Although any one party can be held responsible for all the costs of investigation and cleanup, those costs are usually allocated among parties based on a variety of factors, such as the amount of waste each contributed to the site. Although the outcome of the pending legal proceedings, including Superfund claims, cannot be determined with certainty, Sara Lee believes that the final outcomes should not have a material adverse effect on the corporation's consolidated results of operations, financial position or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders.

    Not Applicable.

PART II

Item 5. Market for Sara Lee's Common Equity and Related Stockholder Matters.

    Sara Lee's securities are traded on the exchanges listed on the cover page of this Form 10-K Report. As of September 1, 2000, Sara Lee had approximately 82,500 holders of record of its common stock. Information about the high and low sales prices for each full quarterly period and the amount of cash dividends declared on Sara Lee's common stock during the past three fiscal years is set forth on page F-30 of this Report.

Item 6. Selected Financial Data.

    Financial information for Sara Lee for the eleven fiscal years ended July 1, 2000, is set forth on pages F-2 and F-3 of this Report. Such information should be read in conjunction with the Consolidated Financial Statements and related Notes to Financial Statements on pages F-4 through F-30 of this Report.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

    This discussion and analysis of the corporation's results of operations, financial position and risk management activities should be read in conjunction with the General Development of Business on pages 1 through 6, the Narrative Description of Business on pages 6 through 9 and the Consolidated Financial Statements and related notes thereto contained on pages F-4 through F-30 of this report. The corporation's fiscal year ends on the Saturday closest to June 30. Fiscal years 2000 and 1998 were 52-week years, and fiscal 1999 was a 53-week year. Unless otherwise stated, references to years relate to fiscal years.

    In August 2000, the corporation entered into an agreement to sell PYA/Monarch ("PYA"). PYA distributes food and related products to restaurants and other foodservice establishments in the United States, and constitutes a business segment of the corporation. The operating results of this segment are recognized as a discontinued operation in the consolidated financial statements. The sale transaction is expected to close during the second quarter of 2001, at which time a gain is anticipated.

Results of operations — 2000 compared with 1999

    Continuing operations    Net sales increased 1.4% to $17.5 billion in 2000 from $17.3 billion in 1999. Businesses acquired net of businesses sold subsequent to the start of 1999 increased net sales by 4.7%. The strengthening during the year of the U.S. dollar in relation to foreign currencies had the effect of reducing reported sales by 3.4%. The strength of the U.S. dollar in relation to most European currencies, including those of several European Union member countries whose currency exchange rates were previously fixed with the euro, was offset in part by the strength in the currencies of Japan, Mexico, Canada and Indonesia. Since 1999 was a 53-week year, prior-year results reflect the impact of an additional week of reported sales. On a comparable basis, excluding the impact of acquisitions, dispositions, foreign currency exchange rate changes and the 53rd week included in the fourth quarter of 1999, sales increased 1.9% over the prior year. Comparable sales growth in Household Products and Intimates and Underwear contributed to this

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increase; Sara Lee Foods and Beverage reported sales declines of 0.5% and 0.4%, respectively, on a comparable basis.

    The gross profit margin was 42.3% in 2000 compared with 42.8% in 1999. Higher gross profit margins in Sara Lee's Beverage and Household Products segments, which were favorably impacted by improved sales volumes during the year, were offset by lower gross profit margins in Sara Lee Foods. Intimates and Underwear gross profit margins were down slightly from the prior year as well. The gross profit margin decline in Sara Lee Foods resulted from lower unit volumes in both the Packaged Meats and Bakery operations, and increased costs in the Packaged Meats business caused by significantly higher commodity costs and the continuing effects during much of the year from the December 1998 product recall.

    Selling, general and administrative expenses decreased 1.3% from the prior year, or 0.8% when measured on a percentage of sales basis. The lower level of selling, general and administrative expenses in 2000 was attributable to continuing benefits from completed restructuring actions, lower corporate and administrative overhead, and reduced levels of advertising and promotion spending.

    On December 22, 1998, the corporation announced that it was recalling specific production lots of hot dogs and other packaged meat products that could contain Listeria bacteria. The estimated cost of this action was recognized in the second quarter of 1999 and reduced 1999 income from continuing operations before income taxes, income from continuing operations and income from continuing operations per diluted common share by $76 million, $50 million and $.05 per share, respectively. The recall charge recognized the costs associated with the return and destruction of affected products sold through retail grocery stores and selected foodservice channels in the United States, the destruction of affected inventory in the corporation's Zeeland, Michigan facility and liabilities incurred as a result of these actions.

    In the first quarter of 1999, as part of its ongoing restructuring program, the corporation disposed of certain assets related primarily to its international tobacco operations. The corporation received cash proceeds of $386 million in connection with the sale and recognized a pretax gain of $137 million, which increased 1999 income from continuing operations by $97 million or $.10 per common share on a diluted basis.

    Excluding the 1999 product recall charge and gain on sale of the corporation's tobacco business, operating income (income from continuing operations before income taxes, interest, corporate unallocated expenses, and amortization of goodwill and trademarks) increased $31 million or 1.5% in 2000. Businesses acquired net of businesses sold subsequent to the start of 1999 increased operating income by 2.2%. The strengthening of the U.S. dollar relative to foreign currencies had the effect of reducing operating income by 3.2%. Prior-year results reflect the impact of an additional week in the fourth quarter of 1999. Thus, on a comparable basis, excluding the impact of business acquisitions, dispositions, changes in foreign currency exchange rates and last year's 53rd week, operating income increased 4.4%, reflecting improvements on a comparable basis in all business segments except Sara Lee Foods, which declined significantly in relation to the prior year.

    Net interest expense increased to $176 million in 2000 compared with $141 million in 1999. This increase was the result of higher average outstanding debt levels required to support acquisitions and the corporation's share repurchase activities during the year. Unallocated corporate expenses, which are costs not directly attributable to specific business segment operations, decreased to $127 million principally as a result of decreased corporate office administration costs and lower expenses associated with incentive compensation and benefit plans.

    The following comparisons exclude the 1999 product recall charge and tobacco sale gain. Income from continuing operations before income taxes of $1.6 billion increased 3.8% during 2000. The effective tax rate decreased from 28.2% to 26.1% of pretax income from continuing operations resulting primarily from increased earnings in certain foreign jurisdictions with lower tax rates. Income from continuing operations increased 6.9% to $1.2 billion, while income from continuing operations per diluted share increased 11.4%

15

to $1.27 per share. Diluted earnings per share increased at a rate in excess of income from continuing operations because of fewer average shares and exercisable stock options outstanding during the year. Including the product recall charge and tobacco sale gain, income from continuing operations and related diluted earnings per share increased 2.4% and 6.7%, respectively.

    Discontinued operations    Net sales of the PYA foodservice segment were $2,903 million in 2000 and $2,742 million in 1999, an increase of 5.9%. Pretax income of this segment increased 5.7% from $101 million in 1999 to $107 million in 2000. Income from the discontinued PYA operation increased 5.5% from $60 million in 1999 to $64 million in 2000.

    Consolidated net income    Excluding the impact of unusual items, net income increased 6.9% from $1,144 million in 1999 to $1,222 million in 2000, while diluted earnings per share increased 10.7% to $1.34. Diluted earnings per share increased at a rate in excess of net income because of fewer average shares and exercisable stock options outstanding during the year. Including the impact of unusual items, net income increased 2.6% in 2000 while diluted earnings per share increased 6.3%.

Results of operations — 1999 compared with 1998

    Continuing operations    Net sales declined 0.9% to $17.3 billion in 1999. The effect on reported sales of businesses sold net of businesses acquired subsequent to the start of 1998 was approximately 0.3%. The overall strengthening of the U.S. dollar relative to foreign currencies during the year had the effect of reducing reported sales by approximately 0.6%. Declines in the currencies of Mexico, Australia, South Africa and Canada, as well as certain Asian countries, offset the overall strength of currencies in Europe in relation to the U.S. dollar. On a comparable basis, excluding the impact of acquisitions, dispositions and foreign currency changes, sales were essentially unchanged from the prior year. Comparable sales improvements in Household Products and Intimates and Underwear were offset by declines in Sara Lee Foods and Beverage.

    The gross profit margin was 42.8% in 1999 compared with 41.9% in 1998, reflecting improved gross margins in the Sara Lee Foods, Beverage and Household Products segments. Intimates and Underwear gross profit margins were down slightly from the prior year. The impact of lower commodity costs, as well as manufacturing efficiencies associated with ongoing restructuring and corporate-wide cost containment programs, improved gross profit margins.

    Selling, general and administrative expenses increased 2.2% over the prior year. This increase was due to a 2.0% increase in total advertising and promotion expenditures, as well as the impact of inflation on personnel and distribution-related costs. Partially offsetting these increases were benefits associated with ongoing restructuring and corporate-wide cost containment programs.

    In the second quarter of 1998, the corporation provided for the cost of restructuring its worldwide operations. The planned restructuring activities included the disposition of 116 manufacturing and distribution facilities — 86 of which were owned and 30 of which were leased. The restructuring provision reduced 1998 income from continuing operations before income taxes by $2,038 million and income from continuing operations by $1,624 million, or $1.68 per common share on a diluted basis. Business segment operating results in 1998 included charges for restructuring as follows (in millions): Sara Lee Foods — $208; Beverage — $71; Household Products — $185; and Intimates and Underwear — $1,574.

    Actions planned under the restructuring program have been completed. As a result of these actions, operating costs were lowered by $197 million in 2000, $148 million in 1999 and $61 million in 1998. These savings were the result of lower plant overhead, lower long-lived asset amortization and manufacturing efficiencies resulting from the restructuring actions.

    Operating income (income from continuing operations before income taxes, interest, corporate unallocated expenses, and amortization of goodwill and trademarks), excluding the 1999 product recall charge and gain on sale of the corporation's international tobacco operations, and the 1998 restructuring

16

charge, was essentially unchanged in relation to the prior year. Businesses sold net of businesses acquired subsequent to the start of 1998 decreased operating income by 0.9%. The overall strengthening of the U.S. dollar relative to foreign currencies had the effect of reducing operating income by 0.7%. Thus, excluding the impact of business acquisitions, dispositions and changes in foreign currency exchange rates, operating income increased 1.6%, reflecting improvements on a comparable basis in Sara Lee Foods and Household Products.

    Net interest expense decreased to $141 million in 1999 compared with $176 million in 1998. The lower level of net interest expense was due to strong operating cash flows in 1999 and the fourth quarter of 1998, as well as proceeds received from the sale of businesses and assets. Unallocated corporate expenses, which are costs not directly attributable to specific business segment operations, increased to $197 million principally as a result of increased corporate office administration costs and higher minority interest expense.

    The following comparisons exclude the 1999 product recall charge and tobacco sale gain, and the 1998 restructuring charge. Income from continuing operations before income taxes increased 0.1% to $1.5 billion during 1999. The effective tax rate decreased from 30.4% to 28.2% of pretax income from continuing operations, resulting primarily from increased earnings in certain foreign jurisdictions that had lower tax rates. Income from continuing operations increased 3.2% to $1.1 billion, while income from continuing operations per diluted share increased 8.6% to $1.14 per share. Earnings per share increased at a rate in excess of net income because of fewer average shares outstanding during the year. Preferred dividends also declined during the year as a result of the redemption of the remaining auction preferred shares during the first quarter of 1998. Including the product recall charge and tobacco sale gain, income from continuing operations and related diluted earnings per share were $1.1 billion and $1.19 per share, respectively.

    Discontinued operations  Net sales of the PYA foodservice segment increased 6.1% from $2,585 million in 1998 to $2,742 million in 1999. Pretax income of this segment increased 11.1% from $89 million in 1998 to $101 million in 1999. Income from the discontinued PYA operation increased 12.7% from $52 million in 1998 to $60 million in 1999.

    Consolidated net income  Excluding the impact of unusual items, net income increased 3.7% from $1,102 million in 1998 to $1,144 million in 1999, while diluted earnings per share increased 9.0% to $1.21. Including the impact of unusual items in 1999, net income and diluted earnings per share were $1,191 million and $1.26, respectively, as compared with a 1998 loss of $523 million and a related loss per share on a diluted basis of $.57.

    Operating results by continuing business segment — 2000 compared with 1999  The following discussion comparing 2000 business segment performance with 1999 excludes the prior-year product recall charge and gain on sale of the international tobacco operations noted previously.

    During 2000, the corporation announced the appointments of a new chief executive officer and a new chief financial officer. As a result of these changes, the primary measurement of business performance was changed. Operating performance is now evaluated and reported based upon the pretax income of each business before the impact of goodwill and trademark amortization and interest expense. Previously, the corporation measured and reported business performance including goodwill and trademark amortization, and allocated interest expense and income tax expense to its business components.

    Net sales in the Sara Lee Foods segment declined 3.1% in 2000, largely due to unit volume declines in both the Packaged Meats and Bakery operations. Sales were negatively affected during much of the year by the impact of the business disruption caused by the December 1998 recall of certain packaged meat products produced at the corporation's plant in Zeeland, Michigan. Excluding the impact of acquisitions, dispositions, changes in foreign currencies, and the 53rd week in 1999, segment sales decreased 0.5%. Packaged Meats unit volumes were down 5% excluding acquisitions and the impact of the 53rd week in 1999, reflecting declines in both the U.S. and European markets. Worldwide unit sales for Sara Lee Bakery

17

declined 9%, as the impact of the 53rd week in 1999 was offset by acquisitions during the year. Volume declines in the U.S. bakery-deli category coupled with declines in Europe contributed to the unit sales decrease during the year. Including acquisitions, Packaged Meats unit volumes declined 5%.

    Operating income in the Sara Lee Foods segment declined 21.7% during the year. This decline reflects higher costs in the packaged meats businesses caused by significantly higher commodity costs, the continuing effects during much of the year from the December 1998 product recall and the profit impacts of lower sales volumes in both the Packaged Meats and Bakery operations. On a comparable basis, excluding the impact of acquisitions, dispositions, changes in foreign currencies and last year's 53rd week, segment operating income declined 19.6%.

    Net sales in Sara Lee's Beverage segment increased 7.6%. Businesses acquired subsequent to the start of the prior fiscal year contributed significantly to segment results, increasing reported sales in 2000 by 17.1%. The strengthening of the U.S. dollar in relation to key European currencies decreased reported sales by 7.3%. On a comparable basis, excluding the impact of acquisitions, currency exchange rate changes and the 53rd week in 1999, sales decreased 0.4%. Net sales were negatively impacted by significantly lower commodity coffee costs in 2000, which resulted in lower prices to customers during much of the year. Excluding acquisitions and the 1999 53rd week impact, unit volumes for roasted coffee and coffee concentrates, the segment's primary business, increased 1%, as consumers reacted favorably to product offerings and lower coffee prices. Unit volumes grew 26% including sales contributed from recently acquired businesses.

    Operating income for the Beverage segment increased 9.0%, reflecting the profit impact of higher segment sales volumes and the benefits from lower commodity costs during the year. Changes in foreign currency exchange rates had the effect of reducing operating income in the Beverage segment by 7.8%. Excluding the impact of acquisitions, changes in foreign currencies and the impact of the 53rd week in 1999, operating income increased 11.0%.

    Net sales and operating income in the Household Products segment increased 2.8% and 8.3%, respectively. The strengthening of the U.S. dollar in relation to foreign currencies, particularly in Europe, reduced reported sales and operating income by 5.8% and 5.4%, respectively. Sales and operating income contributed from recently completed acquisitions largely offset the impact of last year's 53rd week. As a result, excluding the impact of acquisitions, dispositions, changes in foreign currencies and the 53rd week in 1999, Household Products segment sales and operating income increased 8.9% and 14.3%, respectively. Excluding acquisitions and the 53rd week impact, unit volumes for this segment's four core categories — shoe care, body care, insecticides and air fresheners — increased 10%. Unit volumes contributed from acquisitions made during the year offset the impact of last year's 53rd week.

    Intimates and Underwear net sales improved 2.1%, while operating income increased 8.7% to $844 million. Excluding the impact of acquisitions, dispositions, changes in foreign currencies and last year's 53rd week, sales increased 2.7% and operating income increased 11.2%. Unit volumes for Worldwide Legwear declined 4%, combining a 6% increase in sock unit sales with an 8% decline in sheer hosiery volumes, reflecting the continuing decline in the global sheer hosiery market. Unaffected by acquisitions during the year, sock unit volumes increased 8% and sheer hosiery unit sales declined 6%, excluding the impact of last year's 53rd week. Worldwide Knit Products unit sales improved 6%, including unit gains of 9% in the underwear and 6% in the activewear categories. On a comparable basis, excluding acquisitions and the 1999 53rd week impact, Knit Products unit volumes increased 8%. Intimate Apparel unit sales increased 6%, with strength in both the United States and Europe. Excluding the impact of acquisitions and last year's 53rd week, unit sales improved 8%. The Coach accessories business reported improved unit volumes, sales and operating income during the year, reflecting growth in both the direct-to-consumer and wholesale channels. Intimates and Underwear segment operating income was favorably impacted during the year by the restructuring program initiated in 1998.

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    Operating results by continuing business segment — 1999 compared with 1998  The following discussion comparing 1999 business segment performance with 1998 excludes the 1999 product recall charge and gain on sale of the international tobacco operations, and the 1998 restructuring charge noted previously.

    Net sales in the Sara Lee Foods segment declined in 1999 by 3.5% as lower processed meats commodity costs resulted in lower prices to customers. Sales were also negatively affected by the business disruption resulting from the recall of packaged meat products produced at the corporation's plant in Zeeland, Michigan, and the temporary closure of that plant. Excluding the impact of the business disruption related to the product recall and temporary plant closure, and the impact of acquisitions, dispositions and changes in foreign currencies, segment sales increased by 0.2%. Excluding acquisitions, Packaged Meats unit volumes were down 1%, but gained 4% excluding the impact of the product recall, with particular strength in the fresh sausage, smoked sausage and breakfast sausage product lines. Worldwide unit sales for Sara Lee Bakery, excluding acquisitions, were flat, as gains in the growing bakery-deli and fresh baked segments were offset by declines at retail. Including acquisitions, Packaged Meats unit volumes were flat and Bakery volumes increased 3%.

    Operating income for Sara Lee Foods increased 1.4%. Excluding the impact of the business disruption related to the product recall and temporary plant closure, and the impact of acquisitions, dispositions and changes in foreign currencies, segment operating income increased 16.3%. Operating results benefited from improved gross margins related to lower commodity costs, an improved sales mix and benefits associated with the restructuring program.

    Net sales in the Beverage segment declined 6.4%. Excluding the results of the international tobacco operations disposed of earlier in the year and acquisitions made subsequent to the start of 1998, sales decreased 1.8%. The strengthening of most European currencies versus the U.S. dollar increased reported sales by 0.3%. Thus, on a comparable basis, sales decreased 2.1%. Net sales were negatively impacted by significantly lower commodity coffee costs in 1999, which resulted in decreased consumer prices during much of the year. Excluding acquisitions, unit volumes for roasted coffee and coffee concentrates, the segment's primary business, increased 6% as consumers reacted favorably to product introductions and lower coffee prices. Unit volumes grew 20% including sales contributed from recently acquired businesses.

    Operating income for the Beverage segment declined 4.6%, reflecting the impact of the divestment of the international tobacco operations in the first quarter of 1999. Changes in foreign currency exchange rates had the effect of improving operating income of the segment by 0.9%. Excluding the impact of acquisitions, dispositions and changes in foreign currencies, operating income increased 0.3%.

    Net sales and operating income in the Household Products segment increased 4.6% and 8.6%, respectively. The weakening of foreign currencies relative to the U.S. dollar, particularly in Mexico, South Africa, Australia and certain Asian countries, reduced reported sales and operating income by 3.6% and 4.1%, respectively. Excluding the impact of acquisitions, dispositions and changes in foreign currencies, Household Products sales and operating income increased 7.8% and 11.2%, respectively. Excluding acquisitions, unit volumes for this segment's four core categories — shoe care, body care, insecticides and air fresheners — grew 10%. Unit volumes for these four categories grew 13% including acquisitions.

    Intimates and Underwear net sales improved 1.7%, while operating income declined 1.5%. Excluding the impact of acquisitions, dispositions and changes in foreign currencies, sales increased 1.7% and operating income decreased 0.6%. Unit volumes for Worldwide Legwear declined 1%, combining a 10% increase in sock unit sales with a 4% decline in sheer hosiery volumes, which reflects the continuing decline in the global sheer hosiery market. Worldwide Knit Products unit sales improved 6%, including unit gains of 6% in the underwear and 4% in the activewear categories. Unit volume declines at the corporation's Champion division were due primarily to continuing difficult market conditions. The Champion results reduced the overall unit sales gain in the activewear category and contributed to the segment's operating income decline. Intimate Apparel unit sales increased 13%, with strength in both the United States and Europe. The Coach accessories business had slightly lower sales in 1999, due principally to unit volume

19

declines, but reported improvements in operating income from the prior year. Intimates and Underwear operating income was favorably impacted by the restructuring program initiated in 1998.

Financial position

    Net cash provided from operating activities was $1.5 billion in 2000, $1.6 billion in 1999 and $1.9 billion in 1998. The net reduction in operating cash flows in 2000 was primarily the result of increased receivable and inventory levels in comparison with the prior year, which offset cash generated by improved earnings during the year. In 1999, lower year-end inventory levels and improved earnings in relation to the prior year contributed to the strong reported operating cash flows.

    As of July 1, 2000 and July 3, 1999, the corporation's current liabilities exceeded current assets by $785 million and $682 million, respectively. These working capital deficits result from the corporation's emphasis on the management of trade receivables, payables and inventories, as well as the decision to finance a portion of its capital needs with short-term debt. Subsequent to year-end, the corporation refinanced a portion of its outstanding notes payable through the issuance of approximately $840 million in fixed and index-linked-floating-rate, euro-denominated medium-term notes. The corporation has numerous credit facilities available, including ongoing revolving credit agreements totaling $1,820 million as of July 1, 2000, which management considers sufficient to satisfy its operating requirements.

    Net cash used in investment activities was $1,296 million in 2000, $192 million in 1999 and $275 million in 1998. The increase in cash used for investment activities in 2000 is the result of a $621 million increase in cash expenditures for purchases of businesses and property and equipment, and lower proceeds from the disposition of businesses and assets versus the prior year. The corporation received $570 million of cash from the disposition of businesses and investments, and sale of assets in 1999, relating primarily to the sale during the first quarter of the international tobacco business, which resulted in the receipt of $386 million of cash proceeds, and sales of assets as part of the ongoing program to reduce the level of assets deployed in the business. Cash expenditures for purchases of businesses and capital expenditures declined $98 million in 1999 from the prior year.

    During 2000, the corporation acquired several companies and made certain equity method investments for an aggregate purchase price of $1 billion, which consisted of $743 million in cash and $257 million in stock. The principal acquisitions were Chock full o'Nuts Corporation, a roaster, packer and marketer of coffee in the United States; the North American coffee business of Nestlé S.A., which includes the roast and ground coffee products sold under the Hills Bros., MJB and Chase & Sanborn brands; Outer Banks Inc., a manufacturer, marketer and distributor of knitted sport shirts; and Courtaulds Textiles plc, a European producer, marketer and distributor of private-label and branded apparel and textiles based in the United Kingdom. The corporation also acquired a minority interest in Johnsonville Sausage, a domestic manufacturer and marketer of fresh meat products.

    During 1999, the corporation acquired several companies for an aggregate purchase price of $234 million in cash and $9 million in common stock. The principal acquisitions were Continental Coffee, a domestic manufacturer, marketer and distributor of roasted and ground coffee, and Monsavon, a European marketer and distributor of personal body care products.

    In 1998, the corporation announced plans to repurchase $3 billion of its common stock over a three-year period. A total of $1.5 billion of common stock was repurchased in 1998; $1.3 billion was repurchased in 1999; and $239 million was repurchased during the first six months of 2000, thereby completing the repurchase plan. On January 27, 2000, the corporation's board of directors voted to increase the number of shares authorized for repurchase by 50 million shares, increasing the total number of shares of common stock authorized for repurchase to more than 70 million. In the last six months of 2000, a total of $793 million of common stock was repurchased by the corporation, bringing the total amount repurchased during the year to $1,032 million. During 2000, $1,245 million of net cash was received from long- and short-term borrowings, while in the 1999 and 1998 comparable periods, net cash

20

of $187 million and $411 million, respectively, was received. Cash dividends increased to $485 million in 2000, compared with $464 million in 1999 and $447 million in 1998.

Subsequent events and future actions

    In May 2000, the corporation announced that it was initiating a program that would ultimately lead to the disposition of certain businesses, including the Coach accessories business; PYA/Monarch, a domestic foodservice distributor; Champion, a manufacturer and marketer of athletic apparel; and International Fabrics, a manufacturer of component parts used in the production of intimate apparel and underwear. In June 2000, the corporation initiated steps to complete the initial public offerings of up to 19.9% of the shares of Coach and PYA/Monarch.

    In August 2000, the corporation announced that it had entered into an agreement to sell PYA/Monarch. This transaction is expected to close in the second quarter of 2001, at which time the corporation anticipates receiving cash proceeds of $1.57 billion from the buyer and recognizing a gain on the disposition of this business. The net assets of the PYA/Monarch business were $328 million at July 1, 2000 and have been classified as Net Assets of Businesses Held for Sale in the Consolidated Balance Sheets. The proceeds received from this transaction may be used for a variety of purposes including the repurchase of shares, the reduction of debt levels or the acquisition of businesses.

    The corporation is currently pursuing the initial public offering of Coach, and no decision has been reached regarding the form or timing of a transaction to dispose of the remaining ownership interest in this company. Management is currently in the initial stages of evaluating alternatives for the disposition of Champion, and no decision has been made as to the form or timing of a transaction to dispose of this business. At the present time, the corporation anticipates that it will dispose of the International Fabrics business in 2001. The net assets of this business have been classified in the Consolidated Balance Sheets in the caption Net Assets of Businesses Held for Sale.

Euro

    On January 1, 1999, 11 of the 15 member countries of the European Union established fixed conversion rates between their existing currencies (legacy currencies) and one new common currency — the euro. The euro then began trading on currency exchanges and began to be used in certain business transactions. The transition period for the introduction of the euro occurs through June 2002. Beginning January 2002, new euro-denominated bills and coins will be issued. Simultaneously, legacy currencies will begin to be withdrawn from circulation with the completion of the withdrawal scheduled no later than June 30, 2002. Because of the significant concentration of sales and operating profits generated in the European Union, the corporation has established plans to identify and address risks arising from the conversion to the new currency. These risks include, but are not limited to, converting information technology systems to handle the new currency, evaluating the competitive impact of one common currency due to, among other things, increased cross-border price transparency, evaluating the corporation's exposure to currency exchange risks during and following the transition period to the euro and determining the impact on the corporation's processes for preparing and maintaining accounting and taxation records.

    The cost of the corporation's program to address the euro conversion is not expected to be material. However, while the corporation believes it is taking appropriate steps to mitigate risks associated with the euro conversion, uncertainties exist concerning the effects the euro currency may have on the corporation's customers, suppliers and marketplaces in which the corporation operates. In addition, substantial uncertainty exists with respect to the impact of the conversion to the euro on the economies of the member states of the European Union. Accordingly, there can be no assurance that the conversion and transition to the euro will not materially adversely impact the corporation's results of operations or its relationships with

21

customers, suppliers or others. Additionally, there can be no assurance that the euro conversion issues of other entities will not have a material adverse impact on the corporation's results of operations.

New accounting pronouncements

    In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes new accounting and reporting standards for derivative instruments. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities — Deferral of the Effective Date of FASB Statement No. 133," and in June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities — An Amendment of FASB Statement No. 133."

    These rules require that all derivative instruments be reported in the consolidated financial statements at fair value. Changes in the fair value of derivatives are to be recorded each period in earnings or other comprehensive income, depending on whether the derivative is designated and effective as part of a hedged transaction, and on the type of hedge transaction. Gains or losses on derivative instruments reported in other comprehensive income must be reclassified as earnings in the period in which earnings are affected by the underlying hedged item, and the ineffective portion of all hedges must be recognized in earnings in the current period. These new standards may result in additional volatility in reported earnings, other comprehensive income and accumulated other comprehensive income.

    These rules become effective for the corporation on July 2, 2000. The corporation will record the effect of the transition to these new accounting requirements as a change in accounting in the first quarter of 2001. The effect of this change in accounting will not be material to the corporation's results of operations and financial position.

    In May 2000, the Emerging Issues Task Force (EITF) of the FASB announced that it had reached a conclusion on Issue 00-14, "Accounting for Certain Sales Incentives." Issue 00-14 establishes requirements for the recognition and presentation in financial statements of sales incentives such as discounts, coupons and rebates. The EITF conclusions on this issue become effective for the corporation in 2001. Because of the timing of the release of these conclusions, management has not fully assessed their effect on the results of operations and financial position of the corporation. However, it is likely that the adoption of this statement will result in the reclassification of certain costs within the captions of the consolidated income statements. At this time, management does not believe that the adoption of this statement would modify reported pretax earnings or net income presented in these statements.

    In July 2000, the EITF of the FASB announced that it had reached a conclusion on Issue 00-10, "Accounting for Shipping and Handling Fees and Costs." Issue 00-10 requires that all amounts billed to customers in sale transactions related to shipping and handling represent revenues earned for the goods provided and should be classified as such. This conclusion becomes effective for the corporation in 2001. Upon adoption of the consensus, comparative financial statements for prior periods must comply with the classification guidelines of this issue. At this time, management does not believe that the adoption of this statement would modify reported revenue, gross margin, pretax earnings or net income presented in these statements.

Forward-looking information

    From time to time, in oral statements and written reports, the corporation discusses its expectations regarding future performance by making certain "forward-looking statements." For example, such forward-looking statements are contained in this Management's Discussion and Analysis. These forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and actual results may differ materially from those expressed or implied herein. Consequently,

22

the corporation wishes to caution readers not to place undue reliance on any forward-looking statements. Among the factors that could impact the corporation's ability to achieve its stated goals are the following: (i) impacts on reported earnings from fluctuations in foreign currency exchange rates — particularly the euro — given the corporation's significant concentration of business in Western Europe; (ii) significant competitive activity, including advertising, promotional and price competition, and changes in consumer demand for the corporation's products; (iii) inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance; (iv) the corporation's ability to successfully integrate acquisitions into its existing operations and the availability of new acquisitions, joint ventures and alliance opportunities that build stockholder value; (v) the financial impact of the corporation's decision to dispose of certain non-core business units; (vi) fluctuations in the cost and availability of various raw materials; (vii) the effect on future revenues and expenses of the corporation's December 1998 voluntary recall of certain packaged meat products and the governmental investigations and litigation arising therefrom; and (viii) the corporation's ability to realize forecasted savings, as well as improvements in productivity and efficiency from its business reshaping, restructuring and other programs. In addition, the corporation's 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 affecting the corporation in markets where it competes.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Risk management

    The corporation is exposed to market risk from changes in interest rates, foreign exchange rates and commodity prices. To modify the risk from these interest rate, foreign currency exchange rate and commodity price fluctuations, the corporation enters into various hedging transactions that have been authorized pursuant to the corporation's policies and procedures. The corporation does not use financial instruments for trading purposes and is not a party to any leveraged derivatives.

    Foreign exchange   The corporation uses primarily foreign currency forward and option contracts to hedge its exposure from adverse changes in foreign exchange rates. The corporation's exposure to foreign exchange rates exists primarily with the European euro, Mexican peso, Canadian dollar and British pound against the U.S. dollar. Hedging is accomplished through the use of financial instruments as the gain or loss on the hedging instrument offsets the gain or loss on an asset, liability or a basis adjustment to a firm commitment. Hedging of anticipated transactions is accomplished with financial instruments as the gain or loss on the hedge occurs on or near the maturity date of the anticipated transactions.

    Interest rates   The corporation uses interest rate swaps to modify its exposure to interest rate movements and to reduce borrowing costs. The corporation's net exposure to interest rate risk consists of floating-rate instruments that are benchmarked to U.S. and European short-term money market interest rates. Interest rate risk management is accomplished through the use of swaps to create synthetic debt instruments.

    Commodities   The corporation is a purchaser of certain commodities such as beef, pork, coffee, wheat, corn, butter, soybean and corn oils, and sugar. The corporation generally buys these commodities based upon market prices that are established with the vendor as part of the purchase process. The corporation does not use significant levels of commodity financial instruments to hedge commodity prices due to a high correlation between the commodity cost and the ultimate selling price of the corporation's products.

    Risk management activities   The corporation maintains risk management control systems to monitor the foreign exchange, interest rate and commodity risks, and the corporation's offsetting hedge positions. The risk management control system uses analytical techniques including market value, sensitivity analysis and value at risk estimations.

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    Value at risk   The value at risk estimations are intended to measure the maximum amount the corporation could lose from adverse market movements in interest rates and foreign exchange rates, given a specified confidence level, over a given period of time. Loss is defined in the value at risk estimation as fair-market value loss. As a result, foreign exchange gains or losses that are charged directly to translation adjustments in common stockholders' equity are included in this estimate. The value at risk estimation utilizes historical interest rates and foreign exchange rates from the past year to estimate the volatility and correlation of these rates in the future. The model uses the variance-covariance statistical modeling technique and includes all interest-rate sensitive debt and swaps, foreign exchange hedges and their corresponding underlying exposures. The estimated value at risk amounts shown below represent the potential loss the corporation could incur from adverse changes in either interest rates or foreign exchange rates for a one-day period. The average value at risk represents the simple average of the quarterly amounts for the past year. These amounts are not significant compared with the equity, historical earnings trend or daily change in market capitalization of the corporation.

	Amounts		Average		Time Interval	Confidence Level
Value at risk amounts
(dollars in millions)
Interest rates	$	4.5	$	5.7	1 day	95	%
Foreign exchange		6.7		6.3	1 day	95

    Sensitivity analysis   For commodity derivative instruments held, the corporation utilizes a sensitivity analysis technique to evaluate the effect that changes in the market value of commodities will have on the corporation's commodity derivative instruments. This analysis includes the commodity derivative instruments and, thereby, does not consider the underlying exposure. At year-end, the potential change in fair value of commodity derivative instruments, assuming a 10% change in the underlying commodity price, was $1.5 million. This amount is not significant compared with the earnings and equity of the corporation.

Item 8. Financial Statements and Supplementary Data.

    The consolidated Financial Statements and related Notes to Financial Statements of Sara Lee identified in the Index to Financial Statements appearing under Item 14, Exhibits, Financial Statement Schedules and Reports on Form 8-K, are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

    Not Applicable.

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PART III

Item 10. Directors and Executive Officers of Sara Lee.

    The following is a list of all current executive officers of Sara Lee Corporation.

Name	Age at October 26, 2000	Offices and Positions Held	First Elected an Officer
John H. Bryan	64	Chairman of the Board	3/28/74
C. Steven McMillan	54	President, Chief Executive Officer and Director	3/31/83
Cary D. McMillan	42	Executive Vice President, Chief Financial and Administrative Officer and Director	11/10/99
Frank L. Meysman	48	Executive Vice President and Director	6/26/92
Paul J. Lustig	50	Executive Vice President	7/1/93
James R. Carlson	58	Senior Vice President	1/29/88
Gary C. Grom	53	Senior Vice President — Human Resources	10/25/90
Roderick A. Palmore	48	Senior Vice President, General Counsel and Secretary	3/28/96
Mark J. McCarville	54	Senior Vice President — Corporate Development	6/24/82

    There are no family relationships between any of the above-named executive officers.

    Each of the executive officers listed above has served Sara Lee or its subsidiaries in various executive capacities for the past five years except Roderick A. Palmore and Cary D. McMillan. Before joining Sara Lee in 1996, Mr. Palmore was a partner in the Chicago office of the law firm of Sonnenschein, Nath & Rosenthal. Before joining Sara Lee in 1999, Mr. Cary McMillan was a partner of the international accounting firm of Arthur Andersen LLP, most recently serving as the managing partner of its Chicago office.

    For information with respect to the directors of Sara Lee, see "Election of Directors" contained in the Proxy Statement, which is incorporated herein by reference.

Item 11. Executive Compensation.

    The information set forth in the Proxy Statement under the captions "Director Compensation" and "Executive Compensation" is incorporated herein by reference; provided, however, that the Report of the Compensation and Employee Benefits Committee on Executive Compensation and the Performance Graph contained in the Proxy Statement are not incorporated herein by this reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

    (a) The information set forth in the Proxy Statement under the caption "Sara Lee Stock Ownership by Certain Beneficial Owners" is incorporated herein by reference.

    (b) Security ownership by management as contained in the Proxy Statement under the caption "Sara Lee Stock Ownership by Directors and Executive Officers" is incorporated herein by reference.

    (c) There are no arrangements known to Sara Lee the operation of which may at a subsequent date result in a change in control of Sara Lee.

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Item 13. Certain Relationships and Related Transactions.

    The information set forth in the Proxy Statement under the captions "Compensation Committee Interlocks and Insider Participation" and "Employment and Consulting Agreements" is incorporated herein by reference.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

		Page
(a) 1.  Financial Statements
	Report of Independent Public Accountants	F-1
	Consolidated Statements of Income — Years ended June 27, 1998, July 3, 1999 and July 1, 2000	F-4
	Consolidated Balance Sheets — June 27, 1998, July 3, 1999 and July 1, 2000	F-5
	Consolidated Statements of Common Stockholders' Equity — For the period June 28, 1997 to July 1, 2000	F-7
	Consolidated Statements of Cash Flows — Years ended June 27, 1998, July 3, 1999 and July 1, 2000	F-8
	Notes to Financial Statements	F-9
2. Financial Statement Schedules
Report of Independent Public Accountants		F-31
Schedule II - Valuation and Qualifying Accounts		F-32
3. Exhibits

		Incorporation by Reference
(3a)1.	Charter	Exhibit 4.1 to Registration Statement No. 33-35760 on Form S-8 dated July 6, 1990, Exhibit 4.2 to Registration Statement No. 33-37575 on Form S-8 dated November 1, 1990 and Exhibit 3(a) to Report on Form 10-K for Fiscal Year ended July 2, 1994.
2.	Articles of Amendment to Charter	Exhibit 3(a)2 to Report on Form 10-K for Fiscal Year ended July 3, 1999
3.	Articles Supplementary	Exhibit 3(a)3 to Report on Form 10-K for Fiscal Year ended July 3, 1999
(3b)	Bylaws

26

(4)	Stockholder Rights Agreement, dated as of March 26, 1998 between Sara Lee Corporation and First Chicago Trust Company of New York, as rights agent.	Exhibit 4.1 to Report on Form 8-K dated May 15, 1998
Sara Lee, by signing this Report, agrees to furnish the Securities and Exchange Commission, upon its request, a copy of any instrument which defines the rights of holders of long-term debt of Sara Lee and all of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed, and which authorizes a total amount of securities not in excess of 10% of the total assets of Sara Lee and its subsidiaries on a consolidated basis.
(10)	*1. 1979 Stock Option Plan, as amended	Exhibit 10(1) to Report on Form 10-K for Fiscal Year ended July 1, 1995
	*2. 1981 Stock Option Plan, as amended	Exhibit 10(11) to Report on Form 10-K for Fiscal Year ended July 1, 1989
	*3. 1988 Non-Qualified Stock Option Plan, as amended	Exhibit 10(3) to Report on Form 10-K for Fiscal Year ended July 1, 1995
	*4. 1989 Incentive Stock Plan, as amended	Exhibit 10(4) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*5. Supplemental Benefit Plan, as amended	Exhibit 10(5) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*6. Performance-Based Annual Incentive Plan	Exhibit A to Proxy Statement dated September 20, 1995
	*7. 1995 Long-Term Incentive Stock Plan, as amended	Exhibit 10(16) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*8. 1995 Non-Employee Director Stock Plan, as amended	Exhibit 10(8) to Report on Form 10-K for Fiscal Year ended July 3, 1999
	*9. 1998 Long-Term Incentive Stock Plan	Exhibit A to Proxy Statement dated September 21, 1998
	*10. 1999 Non-Employee Director Stock Plan	Exhibit A to Proxy Statement dated September 20, 1999
	*11. Non-Qualified Deferred Compensation Plan for Outside Directors, as amended	Exhibit 10(19) to Report on Form 10-K for Fiscal Year ended June 27, 1999
	*12. Executive Deferred Compensation Plan	Exhibit 10(12) to Report on Form 10-K for Fiscal Year ended July 3, 1999
	*13. Second Amendment to Executive Deferred Compensation Plan
	*14. FY 1998-00 Long Term Performance Incentive Plan	Exhibit 10(22) to Report on Form 10-K for Fiscal Year ended June 27, 1998
	*15. FY 1999-01 Long Term Performance Incentive Plan	Exhibit 10(15) to Report on Form 10-K for Fiscal Year ended July 3, 1999
	*16. Non-Qualified Estate Builder Deferred Compensation Plan	Exhibit 10(17) to Report on Form 10-K for Fiscal Year ended June 29, 1985

27

	*17. Severance Policy for Corporate Officers, as amended	Exhibit 10(23) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*18. Employment Agreement, dated January 1, 1996, between Sara Lee Corporation and Frank L. Meysman	Exhibit 10(24) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*19. Employment Agreement, dated January 1, 1996, between Sara Lee/DE N.V. and Frank L. Meysman and attachments (translated from Dutch)	Exhibit 10(25) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*20. Restricted Share Unit Agreement dated April 29, 1998 between Sara Lee Corporation and Frank L. Meysman	Exhibit 10(27) to Report on Form 10-K for Fiscal Year ended June 27, 1998
	*21. Consulting and Retirement Agreement dated February 25, 2000 between Sara Lee Corporation and John H. Bryan
	*22. Employment Transition Agreement dated July 17, 2000 between Sara Lee Corporation and Judith A. Sprieser
	*23. Consulting and Retirement Agreement dated March 15, 2000 between Sara Lee Corporation and James R. Carlson
(12)	1. Computation of Ratio of Earnings to Fixed Charges
	2. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements
(21)	List of Subsidiaries
(23)	Consent of Arthur Andersen LLP
(24)	Powers of Attorney
(27)	Financial Data Schedules

*Management compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.

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SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Sara Lee Corporation has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

September 27, 2000

SARA LEE CORPORATION
By:	/s/ RODERICK A. PALMORESenior Vice President, General Counsel and Secretary

    Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of Sara Lee Corporation and in the capacities indicated on September 27, 2000.

Signature	Capacity
/s/ JOHN H. BRYAN John H. Bryan	Chairman of the Board
/s/ C. STEVEN MCMILLAN C. Steven McMillan	President, Chief Executive Officer and Director
/s/ FRANK L. MEYSMAN Frank L. Meysman	Executive Vice President and Director
/s/ CARY D. MCMILLAN Cary D. McMillan	Executive Vice President, Chief Financial and Administrative Officer and Director
/s/ WAYNE R. SZYPULSKI Wayne R. Szypulski	Vice President and Controller
* Paul A. Allaire	Director
* Frans H.J.J. Andriessen	Director
* Duane L. Burnham	Director

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* Charles W. Coker	Director
* James S. Crown	Director
* Willie D. Davis	Director
* Vernon E. Jordan, Jr.	Director
* James L. Ketelsen	Director
* Hans B. van Liemt	Director
* Joan D. Manley	Director
* Rozanne L. Ridgway	Director
* Richard L. Thomas	Director
* John D. Zeglis	Director

*

By Roderick A. Palmore as Attorney-in-Fact pursuant to Powers of Attorney executed by the directors listed above, which Powers of Attorney have been filed with the Securities and Exchange Commission.

By: /s/ RODERICK A. PALMORE Roderick A. Palmore
As Attorney-in-Fact

30

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders,
  SARA LEE CORPORATION:

    We have audited the accompanying consolidated balance sheets of SARA LEE CORPORATION (a Maryland corporation) AND SUBSIDIARIES as of July 1, 2000, July 3, 1999, and June 27, 1998, and the related consolidated statements of income, common stockholders' equity, and cash flows for each of the three years in the period ended July 1, 2000. These consolidated financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sara Lee Corporation and Subsidiaries as of July 1, 2000, July 3, 1999, and June 27, 1998, and the results of their operations and their cash flows for each of the three years in the period ended July 1, 2000, in conformity with accounting principles generally accepted in the United States.

/s/  ARTHUR ANDERSEN LLP

Chicago, Illinois
July 28, 2000

    (except with respect to the matter discussed in the subsequent event note, as to which the date is August 16, 2000)

F-1

Sara Lee Corporation and Subsidiaries

FINANCIAL SUMMARY
(dollars in millions except per share data)

			Compound Growth Rate				Years ended
			5 Years		10 Years		July 1, 2000			July 3, 1999(1,4)
Results of operations
Continuing operations
	Net sales		2.2	%	5.5	%	$	17,511		$	17,270
	Operating income (loss)		3.9		7.7			2,041			2,071
	Income (loss) before income taxes		6.2		8.8			1,567			1,570
	Income (loss)		8.5		10.0			1,158			1,131
	Effective tax rate		—		—			26.1	%		28.0	%
	Income (loss) per common share
		Basic	10.9		11.0			1.31			1.24
		Diluted	11.1		11.2			1.27			1.19
Net income (loss)			8.7		10.0			1,222			1,191
Net income (loss) per common share
	Basic		11.2		11.1			1.38			1.31
	Diluted		11.1		11.0			1.34			1.26
Financial position
Total assets			(1.1	)%	4.4	%	$	11,611		$	10,292
Total debt			12.5		9.7			4,683			3,344
Operating cash flow to average total debt(6)			—		—			34.1	%		43.4	%
Return on invested capita1(7)			—		—			24.2	%		21.3	%
Per common share(8)
Dividends(9)			9.6	%	10.1	%	$	.53		$	.49
Book value at year-end			(18.7	)	(5.2	)		1.46			1.43
Market value at year-end			6.3		10.2			19.31			22.50
Shares used in the determination of net income per share
	Basic (in millions)		(1.7	)	(0.4	)		875			903
	Diluted (in millions)		(1.7	)	(0.5	)		912			944
Other information
Cash flow—Net cash from operating activities			2.3	%	10.2	%	$	1,540		$	1,603
Depreciation			(1.1	)	4.4			402			352
Amortization of intangibles
—Goodwill			5.6		9.6			157			142
—Trademarks and other			(1.7	)	9.2			43			39
Capital expenditures			6.2		0.9			647			535
Media advertising expense			(1.5	)	2.2			391			414
Total advertising and promotion expense			3.6		7.0			1,997			2,010
Common stockholders of record			—		—			82,600			83,300
Number of employees			—		—			154,200			133,900

(1)

In 1999, the gain on the sale of the tobacco business of $137 net of the product recall charge of $76 had the following impacts on continuing operations—income before income taxes and income increased $61 and $47, respectively. Net income increased $47 as a result of these items.

(2)

In 1998, a restructuring provision had the following impacts on continuing operations—operating income and income before income taxes were reduced by $2,038 and income was reduced by $1,624. Net income was reduced by $1,625 as a result of the restructuring.

(3)

In 1994, a restructuring provision had the following impacts on continuing operations—operating income and income before income taxes were reduced by $732 and income was reduced by $495. Net income was reduced by $495 as a result of the restructuring. In addition, in 1994, the cumulative effect of adopting a mandated change in the method of accounting for income taxes reduced net income by $35.

The Notes to Financial Statements should be read in conjunction with the Financial Summary.

F-2

			Years ended
			June 27, 1998(2)			June 28, 1997			June 29, 1996			July 1, 1995			July 2, 1994(3)			July 3, 1993(4)			June 27, 1992(5)			June 29, 1991			June 30, 1990
Results of operations
Continuing operations
	Net sales		$	17,426		$	17,361		$	16,424		$	15,735		$	14,038		$	13,204		$	11,958		$	11,019		$	10,273
	Operating income (loss)			(28	)		1,990			1,875			1,688			718			1,393			1,278			1,141			973
	Income (loss) before income taxes			(531	)		1,401			1,304			1,161			342			1,044			1,174			801			672
	Income (loss)			(575	)		960			873			770			171			682			766			519			446
	Effective tax rate			8.2	%		31.5	%		33.0	%		33.7	%		40.0	%		34.7	%		34.8	%		35.3	%		33.6	%
	Income (loss) per common share
		Basic		(.63	)		.97			.88			.78			.19			.68			.78			.52			.46
		Diluted		(.63	)		.94			.85			.75			.19			.66			.75			.51			.44
Net income (loss)				(523	)		1,009			916			804			199			704			761			535			470
Net income (loss) per common share
	Basic			(.57	)		1.02			.92			.81			.18			.71			.78			.54			.48
	Diluted			(.57	)		.99			.89			.79			.18			.68			.75			.53			.47
Financial position
Total assets			$	10,784		$	12,775		$	12,421		$	12,284		$	11,524		$	10,764		$	9,907		$	8,042		$	7,557
Total debt				3,061			2,663			2,295			2,596			2,859			2,433			1,777			1,767			1,859
Operating cash flow to average total debt(6)				56.8	%		49.3	%		41.4	%		40.6	%		25.8	%		31.7	%		42.1	%		37.3	%		25.6	%
Return on invested capita1(7)				17.5	%		16.0	%		15.0	%		14.6	%		12.6	%		12.7	%		13.3	%		13.8	%		14.3	%
Per common share(8)
Dividends(9)			$	.45		$	.41		$	.37		$	.34		$	.31		$	.28		$	.31		$	.23		$	.20
Book value at year-end				1.97			4.46			4.45			4.10			3.46			3.66			3.53			2.74			2.49
Market value at year-end				28.31			21.03			16.25			14.25			10.31			12.13			12.41			10.09			7.28
Shares used in the determination of net income per share
	Basic (in millions)			939			959			963			955			955			963			941			921			914
	Diluted (in millions)			939			1,004			1,007			996			997			1,011			992			971			959
Other information
Cash flow
	—Net cash from operating activities		$	1,935		$	1,552		$	1,304		$	1,373		$	839		$	850		$	976		$	875		$	582
Depreciation				409			470			442			425			406			376			347			294			260
Amortization of intangibles
	—Goodwill			144			155			128			119			107			101			89			71			63
	—Trademarks and other			42			38			47			47			48			36			27			19			18
Capital expenditures				474			547			542			480			628			728			509			522			595
Media advertising expense				401			414			444			422			371			392			325			288			313
Total advertising and promotion expense				1,970			1,936			1,837			1,674			1,497			1,454			1,294			1,066			1,012
Common stockholders of record				85,100			88,800			91,300			93,400			95,600			88,100			75,400			69,400			64,800
Number of employees				134,800			137,100			131,500			145,500			143,400			136,000			125,700			110,800			104,600

(4)

53-week year.

(5)

Fiscal 1992 income from continuing operations before income taxes includes a $412 gain on sale of business offset by a $153 restructuring provision. These transactions increased net income by $140.

(6)

Average total debt includes total balance sheet debt, imputed lease liabilities and auction preferred stock.

(7)

Excludes unusual items.

(8)

Restated for the 2-for-1 stock splits in fiscal 1999, 1993 and 1990.

(9)

Fiscal 1992 includes a $.06 special dividend.

The Notes to Financial Statements should be read in conjunction with the Financial Summary.

F-3

Sara Lee Corporation and Subsidiairies
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions except per share data)

		Years ended
		July 1, 2000			July 3, 1999			June 27, 1998
Net sales		$	17,511		$	17,270		$	17,426
Cost of sales			10,100			9,879			10,128
Selling, general and administrative expenses			5,668			5,741			5,615
Interest expense			252			237			224
Interest income			(76	)		(96	)		(48	)
Unusual items
	Product recall		—			76			—
	Gain on sale of business		—			(137	)		—
	Restructuring charge		—			—			2,038
			15,944			15,700			17,957
Income (loss) from continuing operations before income taxes			1,567			1,570			(531	)
Income taxes			409			439			44
Income (loss) from continuing operations			1,158			1,131			(575	)
Income from discontinued operations, net of income taxes			64			60			52
Net income (loss)		$	1,222		$	1,191		$	(523	)
Income (loss) from continuing operations per share of common stock
	Basic	$	1.31		$	1.24		$	(.63	)
	Diluted	$	1.27		$	1.19		$	(.63	)
Net income (loss) per share of common stock
	Basic	$	1.38		$	1.31		$	(.57	)
	Diluted	$	1.34		$	1.26		$	(.57	)

The accompanying Notes to Financial Statements are an integral part of these statements.

F-4

Sara Lee Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(dollars in millions except share data)

		July 1, 2000		July 3, 1999		June 27, 1998
Assets
Cash and equivalents		$	314	$	279	$	273
Trade accounts receivable, less allowances of $195 in 2000, $193 in 1999 and $196 in 1998			1,764		1,611		1,676
Inventories
	Finished goods		1,941		1,602		1,706
	Work in process		529		470		443
	Materials and supplies		481		463		630
			2,951		2,535		2,779
Other current assets			382		294		240
Net assets of businesses held for sale			563		315		329
Total current assets			5,974		5,034		5,297
Trademarks and other assets			697		533		501
Property
	Land		99		94		118
	Buildings and improvements		1,745		1,613		1,741
	Machinery and equipment		3,188		2,756		2,656
	Construction in progress		330		260		182
			5,362		4,723		4,697
	Accumulated depreciation		3,043		2,699		2,753
Property, net			2,319		2,024		1,944
Intangible assets, net			2,621		2,701		3,042
		$	11,611	$	10,292	$	10,784

The accompanying Notes to Financial Statements are an integral part of these balance sheets.

F-5

Sara Lee Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(dollars in millions except share data)

			July 1, 2000			July 3, 1999			June 27, 1998
Liabilities and stockholders' equity
Notes payable			$	2,054		$	1,116		$	570
Accounts payable				1,762			1,645			1,854
Accrued liabilities
	Payroll and employee benefits			928			779			657
	Advertising and promotion			421			386			337
	Taxes other than payroll and income			104			89			220
	Income taxes			55			45			159
	Other			1,054			1,320			1,498
Current maturities of long-term debt				381			336			221
Total current liabilities				6,759			5,716			5,516
Long-term debt				2,248			1,892			2,270
Deferred income taxes				148			71			34
Other liabilities				581			701			538
Minority interest in subsidiaries				616			613			560
Preferred stock (authorized 13,500,000 shares; no par value)
	ESOP convertible: Issued and outstanding — 3,481,017 shares in 2000, 3,654,073 shares in 1999 and 4,208,297 shares in 1998			252			265			305
	Unearned deferred compensation			(227	)		(232	)		(255	)
Common stockholders' equity
	Common stock: (authorized 1,200,000,000 shares; $.01 par value)
		Issued and outstanding — 846,330,749 shares in 2000, 883,782,525 shares in 1999 and 460,664,857 shares in 1998		8			9			614
	Capital surplus			—			508			—
	Retained earnings			2,393			1,760			2,036
	Accumulated other comprehensive loss			(1,146	)		(1,006	)		(784	)
	Unearned restricted stock issued for future services			(21	)		(5	)		(50	)
Total common stockholders' equity				1,234			1,266			1,816
			$	11,611		$	10,292		$	10,784

The accompanying Notes to Financial Statements are an integral part of these balance sheets.

F-6

Sara Lee Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
(dollars in millions)

		Total			Common Stock			Capital Surplus			Retained Earnings			Unearned Restricted Stock			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)
Balances at June 28, 1997		$	4,280		$	640		$	—		$	4,274		$	(16	)	$	(618	)
Net loss			(523	)		—			—			(523	)		—			—		$	(523	)
Translation adjustments, net of tax of $19			(166	)		—			—			—			—			(166	)		(166	)
Comprehensive loss																				$	(689	)
Cash dividends			(447	)		—			—			(447	)		—			—
Stock issuances
	Business acquisitions		10			—			10			—			—			—
	Stock option and benefit plans		86			8			78			—			—			—
	Restricted stock, less amortization of $42		34			1			67			—			(34	)		—
Tax benefit related to incentive stock options			20			—			20			—			—			—
Reacquired shares			(1,500	)		(36	)		(186	)		(1,278	)		—			—
ESOP tax benefit			10			—			—			10			—			—
ESOP share redemption			9			1			8			—			—			—
Other			3			—			3			—			—			—
Balances at June 27, 1998			1,816			614			—			2,036			(50	)		(784	)
Net income			1,191			—			—			1,191			—			—		$	1,191
Translation adjustments, net of tax of $(51)			(161	)		—			—			—			—			(161	)		(161	)
Unrealized gains on securities, net of tax			1			—			—			—			—			1			1
Minimum pension liability, net of tax of $32			(62	)		—			—			—			—			(62	)		(62	)
Comprehensive income																				$	969
Cash dividends			(464	)		—			—			(464	)		—			—
Stock issuances (cancelations)
	Business acquisitions		9			—			9			—			—			—
	Stock option and benefit plans		111			4			107			—			—			—
	Restricted stock, less amortization of $28		(15	)		—			(60	)		—			45			—
Tax benefit related to incentive stock options			66			—			66			—			—			—
Reacquired shares			(1,279	)		(13	)		(864	)		(402	)		—			—
Two-for-one stock split			—			609			—			(609	)		—			—
Par value change			—			(1,208	)		1,208			—			—			—
ESOP tax benefit			8			—			—			8			—			—
ESOP share redemption			40			3			37			—			—			—
Other			5			—			5			—			—			—
Balances at July 3, 1999			1,266			9			508			1,760			(5	)		(1,006	)
Net income			1,222			—			—			1,222			—			—		$	1,222
Translation adjustments, net of tax of $(75)			(181	)		—			—			—			—			(181	)		(181	)
Unrealized losses on securities, net of tax			(1	)		—			—			—			—			(1	)		(1	)
Minimum pension liability, net of tax of $(22)			42			—			—			—			—			42			42
Comprehensive income																				$	1,082
Cash dividends			(485	)		—			—			(485	)		—			—
Stock issuances (cancelations)
	Business acquisitions		257			—			257			—			—			—
	Stock option and benefit plans		84			—			84			—			—			—
	Restricted stock, less amortization of $26		(28	)		—			(12	)		—			(16	)		—
Tax benefit related to incentive stock options			65			—			65			—			—			—
Reacquired shares			(1,032	)		(1	)		(919	)		(112	)		—			—
ESOP tax benefit			8			—			—			8			—			—
ESOP share redemption			13			—			13			—			—			—
Other			4			—			4			—			—			—
Balances at July 1, 2000		$	1,234		$	8		$	—		$	2,393		$	(21	)	$	(1,146	)

The accompanying Notes to Financial Statements are an integral part of these statements.

F-7

Sara Lee Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)

			Years ended
			July 1, 2000			July 3, 1999			June 27, 1998
Operating activities
Income (loss) from continuing operations			$	1,158		$	1,131		$	(575	)
Adjustments for noncash charges included in income (loss) from continuing operations
	Depreciation			402			352			409
	Amortization of intangibles			200			181			186
	Product recall charge			—			76			—
	Gain on sale of business			—			(137	)		—
	Restructuring charge			—			—			2,038
	Increase (decrease) in deferred taxes			48			29			(405	)
	Other noncash credits, net			(38	)		(35	)		(6	)
	Changes in current assets and liabilities, net of businesses acquired and sold
		(Increase) decrease in trade accounts receivable		(116	)		(21	)		21
		(Increase) decrease in inventories		(152	)		112			(21	)
		(Increase) decrease in other current assets		(47	)		(60	)		41
		(Decrease) increase in accounts payable		(56	)		(50	)		12
		Increase (decrease) in accrued liabilities		57			(29	)		180
	Net cash from operating activities—continuing operations			1,456			1,549			1,880
	Operating cash flows from discontinued operations			84			54			55
	Net cash from operating activities			1,540			1,603			1,935
Investment activities
Purchases of property and equipment				(647	)		(535	)		(474	)
Acquisitions of businesses and investments				(743	)		(234	)		(393	)
Dispositions of investments and businesses				21			412			451
Sales of property				64			158			140
Other				9			7			1
	Net cash used in investment activities			(1,296	)		(192	)		(275	)
Financing activities
Issuances of common stock				84			111			86
Purchases of common stock				(1,032	)		(1,279	)		(1,500	)
Redemption of preferred stock				—			—			(200	)
Issuance of equity securities by subsidiary				—			50			—
Borrowings of long-term debt				725			20			594
Repayments of long-term debt				(502	)		(284	)		(296	)
Short-term borrowings, net				1,022			451			113
Payments of dividends				(485	)		(464	)		(447	)
	Net cash used in financing activities			(188	)		(1,395	)		(1,650	)
Effect of changes in foreign exchange rates on cash				(21	)		(10	)		(9	)
Increase in cash and equivalents				35			6			1
Cash and equivalents at beginning of year				279			273			272
Cash and equivalents at end of year			$	314		$	279		$	273

The accompanying Notes to Financial Statements are an integral part of these statements.

F-8

Sara Lee Corporation and Subsidiaries

NOTES TO FINANCIAL STATEMENTS

(dollars in millions except per share data)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Preparation of financial statements

    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain prior-year amounts have been reclassified to conform with the current-year presentation. These reclassifications had no impact on previously reported results of operations or total stockholders' equity.

Consolidation

    The consolidated financial statements include all majority-owned subsidiaries. All significant intercompany transactions of consolidated subsidiaries are eliminated. Acquisitions recorded as purchases are included in the consolidated statement of income from the date of acquisition.

Fiscal year

    The corporation's fiscal year ends on the Saturday closest to June 30. Fiscal years 2000 and 1998 were 52-week years, and fiscal 1999 was a 53-week year. Unless otherwise stated, references to years relate to fiscal years.

Foreign operations

    Foreign currency-denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective balance sheet dates. Translation adjustments resulting from fluctuations in exchange rates are recorded as a separate component of other comprehensive income within common stockholders' equity. Income and expense items are translated at the average exchange rates during the respective periods.

Inventory valuation

    Inventories are valued at the lower of cost (in 2000, approximately 10% at last-in, first-out [LIFO] and the remainder at first-in, first-out [FIFO]) or market. Inventories recorded at LIFO were approximately $12 at July 1, 2000 and $1 at July 3, 1999 and June 27, 1998 lower than if they had been valued at FIFO. Inventory cost includes material and conversion costs.

Property

    Property is stated at cost, and depreciation is computed principally using the straight-line method at annual rates of 2% to 20% for buildings and improvements, and 4% to 33% for machinery and equipment. Additions and improvements that substantially extend the useful life of a particular asset and interest costs incurred during the construction period of major properties are capitalized. Repairs and maintenance costs are charged to expense. Upon sale or disposition, the cost and related accumulated depreciation of the asset are removed from the accounts.

F-9

Intangible assets

    The excess of cost over the fair market value of tangible net assets and identifiable intangibles of acquired businesses is amortized on a straight-line basis over the periods of expected benefit, which range from 10 years to 40 years. Accumulated amortization of intangible assets amounted to $983 at July 1, 2000, $890 at July 3, 1999 and $838 at June 27, 1998.

Long-lived assets

    Long-lived assets primarily include property, identifiable intangible assets and goodwill. Long-lived assets being retained for use are periodically reviewed for impairment by comparing the carrying value of the assets with their estimated future undiscounted cash flows. If it is determined that an impairment loss has occurred, the loss is recognized during the period incurred. An impairment loss is calculated as the difference between the carrying value of the assets and the present value of estimated future net cash flows or comparable market values, giving consideration to recent operating performance.

    Long-lived assets that are to be disposed are reported at the lower of carrying value or fair value less costs to sell. Reductions in carrying value are recognized in the period in which management commits to a plan to dispose of the assets.

Financial instruments

    The corporation uses financial instruments to manage its exposure to movements in interest rates, foreign exchange rates and commodity prices. The use of these financial instruments modifies the exposure of these risks with the intent to reduce the risk to the corporation. The corporation does not use financial instruments for trading purposes, nor is it a party to leveraged derivatives.

Financing transactions

    Non-U.S. dollar financing transactions are generally effective as hedges of long-term investments in the corresponding currency. Foreign currency gains or losses on the hedges of long-term investments are recorded in the translation adjustments component of common stockholders' equity with the offset recorded as an adjustment to the non-U.S. dollar financing liability.

Interest rate agreements

    Interest rate exchange agreements, defined as swaps, and caps and floors, are effective at creating synthetic instruments and thereby modifying the corporation's interest rate exposures. The corporation enters into interest rate exchange agreements to create synthetic instruments. Net interest is accrued as either interest receivable or payable with the offset recorded in interest expense. Any premium paid is amortized over the life of the agreement.

Forward exchange contracts

    The corporation uses primarily short-term forward exchange contracts for hedging purposes to reduce the effects of adverse foreign exchange rate movements. The contracts that effectively meet the risk reduction and correlation criteria, as measured on a currency-by-currency basis, are accounted for using hedge accounting. Under this method, the change in fair value of forward contracts that hedge firm commitments is deferred and recognized as part of the related foreign currency transactions as they occur. Firm commitments include the purchases of inventory, capitalized assets or expenses of the corporation.

F-10

The change in fair value of any forward contract that is not effective as a hedge of the firm commitment is included in selling, general and administrative expenses and other accrued liabilities.

    Forward contracts that hedge the currency exposure on nonpermanent intercompany loans are also accounted for using hedge accounting if the contract meets the risk reduction and correlation criteria, as measured on a currency-by-currency basis. Under hedge accounting, these contracts are valued at current spot rates on a monthly basis, and the change in value is recognized currently and included, along with any amortization of forward points over the life of the contract, in selling, general and administrative expenses. Any foreign exchange gain or loss on the underlying intercompany loan is also included in selling, general and administrative expenses. Changes in the value of forward contracts related to anticipated purchases and sales are marked to market through selling, general and administrative expenses on a monthly basis.

    If, subsequent to entering into a hedge transaction with forward contracts, the underlying transaction is no longer likely to occur, the hedge position is removed and any gain or loss is included in selling, general and administrative expenses.

Foreign exchange option contracts

    The corporation uses foreign exchange option contracts to reduce the effects of adverse foreign exchange rate movements. The option premiums paid are recorded as other assets and amortized over the life of the contract. Gains on purchased options that effectively meet the risk reduction criteria are accounted for under hedge accounting. Under this method, gains and losses are deferred and recorded in the period in which the underlying anticipated transaction occurs. The gain on any contract that is not effective as a hedge of an anticipated or firm commitment transaction is included in selling, general and administrative expenses.

Commodities

    The corporation uses commodity futures and purchased options for hedging purposes to reduce the effect of changing commodity prices. The contracts that effectively meet the risk reduction and correlation criteria, as measured on a commodity-by-commodity basis, are recorded using hedge accounting. Effectiveness is measured based upon high correlation between commodity gains and losses on the futures contract and those on the firm commitment. Under hedge accounting, the gain or loss on the hedge is deferred and recorded as a component of the underlying inventory purchase. Gains and losses on hedges that are terminated prior to the execution of the inventory purchase are recorded in inventory until the inventory is sold.

Advertising

    Advertising costs, which include media advertising and production costs, are expensed in the period the advertising first takes place.

Stock-based compensation

    Employee stock options are accounted for under the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25). APB No. 25 requires the use of the intrinsic value method, which measures compensation cost as the excess, if any, of the quoted market price of the stock at grant over the amount an employee must pay to acquire the stock. The corporation makes pro forma disclosures of net earnings and earnings per share as if the fair value-based

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method of accounting had been applied as required by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123).

Income taxes

    Income taxes are provided on income reported in the financial statements, regardless of when such taxes are payable. U.S. income taxes are provided on undistributed earnings of foreign subsidiaries that are intended to be remitted to the corporation. If the permanently reinvested earnings of foreign subsidiaries were remitted, the U.S. income taxes due under current tax law would not be material.

COMMON STOCK

    Changes in outstanding common shares for the past three years were:

		2000		1999		1998
		(shares in thousands)
Beginning balances		883,783		460,665		480,277
Stock issuances (cancelations):
	Stock option and benefit plans	5,467		6,431		6,008
	Business acquisitions	10,209		257		176
	Restricted stock plans	(152	)	(2,431	)	833
Two-for-one stock split		—		456,628		—
Stock purchased		(54,714	)	(40,582	)	(27,174	)
ESOP share redemption		1,615		2,694		462
Other		123		121		83
Ending balances		846,331		883,783		460,665

    Effective December 1, 1998, the corporation declared a two-for-one stock split in the form of a 100% stock dividend. Common stock dividends and dividend per share amounts declared were $465 and $.53 in 2000, $444 and $.49 in 1999, and $423 and $.45 in 1998, respectively.

    In October 1998, the stockholders of the corporation approved an amendment to the corporation's charter to reduce the par value of each share of common stock from $1.33 to $.01.

STOCK-BASED COMPENSATION

    The corporation has various stock option, employee stock purchase and stock award plans.

Stock options

    The exercise price of each stock option equals 100% of the market price of the corporation's stock on the date of grant and generally has a maximum term of 10 years. Options generally vest ratably over three years. During 1998, the corporation instituted a broad-based stock option incentive program that granted approximately 10 million options to essentially all full-time employees.

    Under certain stock option plans, an active employee may receive a replacement stock option equal to the number of shares surrendered upon a stock-for-stock exercise. The exercise price of the replacement option is 100% of the market value at the date of exercise of the original option, and the replacement

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option will remain exercisable for the remaining term of the original option. Replacement stock options generally vest six months from the grant date.

    The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and the following weighted average assumptions:

	2000	1999	1998
Expected lives	4.3 years	3.2 years	3.6 years
Risk-free interest rate	6.2%	5.1%	6.0%
Expected volatility	28.6%	25.0%	22.4%
Dividend yield	2.6%	1.9%	2.0%

    A summary of the changes in stock options outstanding under the corporation's option plans during the years ended July 1, 2000, July 3, 1999 and June 27, 1998 is presented below:

		Shares		Weighted Average Exercise Price
		(shares in thousands)
Outstanding at June 28, 1997		38,502		$	14.57
	Granted	42,282			22.30
	Exercised	(18,176	)		15.17
	Canceled/Expired	(1,510	)		18.68
Outstanding at June 27, 1998		61,098			19.64
	Granted	17,172			25.56
	Exercised	(13,085	)		17.63
	Canceled/Expired	(2,982	)		21.71
Outstanding at July 3, 1999		62,203			21.52
	Granted	37,780			18.24
	Exercised	(4,639	)		16.76
	Canceled/Expired	(5,739	)		22.82
Outstanding at July 1, 2000		89,605		$	20.32

    The following table summarizes information about stock options outstanding at July 1, 2000:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding at July 1, 2000	Weighted Average Remaining Contractual Life (Yrs.)	Weighted Average Exercise Price		Number Exercisable at July 1, 2000	Weighted Average Exercise Price
	(shares in thousands)
$ 6.47-$16.03	29,756	8.4	$	15.19	8,161	$	14.46
16.04- 22.63	26,984	3.9		20.27	16,658		20.38
22.64- 31.60	32,865	7.1		25.00	16,113		26.82
$ 6.47-$31.60	89,605	6.5	$	20.32	40,932	$	21.73

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    At July 3, 1999 and June 27, 1998, the number of options exercisable were 31,283 and 21,985, respectively, with weighted average exercise prices of $21.50 and $18.52, respectively. Options available for future grant at the end of 2000, 1999 and 1998 were 46,945, 49,937 and 29,695, respectively. The weighted average fair value of individual options granted during 2000, 1999 and 1998 was $3.95, $4.68 and $4.28, respectively.

Employee stock purchase plan (ESPP)

    The ESPP permits full-time employees to purchase a limited number of shares of the corporation's common stock at 85% of market value. Under the plan, the corporation sold 2,711,644, 2,275,606 and 2,303,112 shares to employees in 2000, 1999 and 1998, respectively. Pro forma compensation expense is calculated for the fair value of the employees' purchase rights using the Black-Scholes model. Assumptions include an expected life of ¹/4 of a year and weighted average risk-free interest rates of 5.4%, 4.6% and 5.2% in 2000, 1999 and 1998, respectively. Other underlying assumptions are consistent with those used for the corporation's stock option plans described above.

    Under APB No. 25, no compensation cost is recognized for stock options and replacement stock options under the various stock-based compensation plans and shares purchased under the ESPP. Had compensation cost for the corporation's grants for stock-based compensation been determined consistent with SFAS No. 123, the pro forma net income (loss) and per share net income (loss) for 2000, 1999 and 1998 would have been as follows:

	2000		1999		1998
Net income (loss)	$	1,139	$	1,118	$	(599	)
Net income (loss) per share—basic		1.29		1.23		(.65	)
Net income (loss) per share—diluted		1.25		1.19		(.65	)

    The effects of applying SFAS 123 in this pro forma disclosure are not indicative of future amounts. SFAS 123 does not apply to awards prior to 1996, and additional awards in future years are anticipated.

Stock unit awards

    Stock unit awards are restricted and subject to forfeiture until the corporation achieves certain financial goals. Performance goals typically extend over three years. All restricted stock unit awards entitle the participant to dividends that are escrowed until the participant receives the shares. The fair value of stock unit awards is accrued over the performance goal period.

PREFERRED STOCK

    The convertible preferred stock sold to the corporation's Employee Stock Ownership Plan (ESOP) is redeemable at the option of the corporation at any time after December 15, 2001. Each share is currently convertible into eight shares of the corporation's common stock and is entitled to 10.264 votes. This stock has a 7.5% annual dividend rate, payable semiannually, and has a liquidation value of $72.50 plus accrued but unpaid dividends. ESOP dividends and dividend per share amounts declared were $20 and $5.4375 per share in 2000, $20 and $5.4375 per share in 1999 and $23 and $5.4375 per share in 1998, respectively. The purchase of the preferred stock by the ESOP was funded with notes guaranteed by the corporation. The loan is included in long-term debt and is offset in the corporation's Consolidated Balance Sheets under the caption Unearned Deferred Compensation. Each year, the corporation makes contributions that, with the

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dividends on the preferred stock held by the ESOP, are used to pay loan interest and principal. Shares are allocated to participants based upon the ratio of the current year's debt service to the sum of the total principal and interest payments over the life of the loan. Plan expense is recognized in accordance with methods prescribed by the Financial Accounting Standards Board.

    During 1999, the ESOP extended its debt service through a loan program from the corporation. As a result of this program, the allocation of preferred shares and the related recognition of compensation expense has been extended up to 2030. The ESOP loan reflected in long-term debt was not affected by this action.

    ESOP-related expenses amounted to $17 in 2000, less than $1 in 1999 and $16 in 1998. Payments to the ESOP were $48 in 2000 and $45 in both 1999 and 1998. Principal and interest payments by the ESOP totaled $33 and $15 in 2000, $27 and $18 in 1999 and $23 and $22 in 1998, respectively.

    The corporation has a Preferred Stock Purchase Rights Plan. The Rights are exercisable 10 days after certain events involving the acquisition of 15% or more of the corporation's outstanding common stock or the commencement of a tender or exchange offer for at least 15% of the common stock. Upon the occurrence of such an event, each Right, unless redeemed by the board of directors, entitles the holder to receive, upon exercise and payment of the exercise price, common stock with a value equal to twice the exercise price of the Right. The initial exercise price of a Right is $215, subject to adjustment. There are 6,000,000 shares of preferred stock reserved for issuance upon exercise of the Rights.

    During 1998, the corporation redeemed the remaining non- voting auction preferred stock. The shares were redeemed at face value, and no gain or loss was recognized. Auction preferred stock dividends and per share amounts declared were $1 and $458.00 per share in 1998.

MINORITY INTEREST IN SUBSIDIARIES

    Minority interest in subsidiaries consists primarily of preferred equity securities issued by subsidiaries of the corporation. No gain or loss was recognized as a result of the issuance of these securities, and the corporation owned substantially all of the voting equity of the subsidiaries both before and after the transactions.

    Minority interest in subsidiaries includes $295 of preferred equity securities issued by a wholly owned foreign subsidiary of the corporation. The securities provide a rate of return based upon specified inter-bank borrowing rates. The securities are redeemable in 2004 in exchange for common shares of the issuer, which may then be put to the corporation for preferred stock. The subsidiary may call the securities at any time.

    Minority interest in subsidiaries also includes preferred equity securities issued by a domestic subsidiary of the corporation. The amount of these securities was $250 for 2000 and 1999 and $200 for 1998. The securities provide the holder a rate of return based upon a specified inter-bank borrowing rate, are redeemable in 2005 and may be called at any time by the subsidiary. The subsidiary has the option of redeeming the securities with either cash, debt or equity of the corporation.

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EARNINGS PER SHARE

    Net income per share — basic is computed by dividing income available to common stockholders 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 or other contracts to issue common stock were exercised or converted into common stock. Effective December 1, 1998, the corporation declared a two-for-one stock split in the form of a 100% stock dividend. Prior periods have been restated to reflect this split.

    The following is a reconciliation of net income to net income per share — basic and diluted for the years ended July 1, 2000, July 3, 1999 and June 27, 1998:

	2000			1999			1998
	(shares in millions)
Income (loss) from continuing operations	$	1,158		$	1,131		$	(575	)
Income from discontinued operations, net of income taxes		64			60			52
Net income (loss)		1,222			1,191			(523	)
Less dividends on preferred stocks, net of tax benefits		(12	)		(12	)		(14	)
Income (loss) applicable to common stockholders — basic		1,210			1,179			(537	)
Adjustment for assumed conversion of ESOP shares		9			8			—
Income (loss) applicable to common stockholders — diluted	$	1,219		$	1,187		$	(537	)
Average shares outstanding — basic		875			903			939
Dilutive effect of stock option and stock award plans		9			12			—
Dilutive effect of ESOP plan		28			29			—
Diluted shares outstanding		912			944			939
Income (loss) from continuing operations per share — basic	$	1.31		$	1.24		$	(.63	)
Income from discontinued operations per share — basic	$	.07		$	.07		$	.06
Net income (loss) per share — basic	$	1.38		$	1.31		$	(.57	)
Income (loss) from continuing operations per share — diluted	$	1.27		$	1.19		$	(.63	)
Income from discontinued operations per share — diluted	$	.07		$	.06		$	.06
Net income (loss) per share — diluted	$	1.34		$	1.26		$	(.57	)

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LONG-TERM DEBT

		Interest Rate Range		Maturity	2000		1999		1998
U.S. dollar obligations:
	ESOP debt	5.73-8.18	%	2004	$	165	$	197	$	253
	Notes and debentures	5.25-8.37		2001-2008		1,179		1,206		1,271
	Revenue bonds	4.80-6.75		2002-2024		50		60		60
	Zero coupon notes	10.00-14.25		2014-2015		24		22		19
	Various other obligations					10		13		4
						1,428		1,498		1,607
Foreign currency obligations:
	European euro	4.63-5.00		2001-2005		991		574		710
	British pound	6.86-6.90		2007-2009		100		—		—
	Swiss franc	—		—		—		81		83
	Various other obligations					110		75		91
						1,201		730		884
	Total long-term debt					2,629		2,228		2,491
	Less current maturities					381		336		221
					$	2,248	$	1,892	$	2,270

    The ESOP debt is guaranteed by the corporation.

    The zero coupon notes are net of unamortized discounts of $100 in 2000, $102 in 1999 and $105 in 1998. Principal payments of $19 and $105 are due in 2014 and 2015, respectively.

    Payments required on long-term debt during the years ending in 2001 through 2005 are $381, $446, $215, $385 and $602, respectively.

    The corporation made cash interest payments of $249, $242 and $219 in 2000, 1999 and 1998, respectively.

    Rental expense under operating leases was $204 in 2000, $201 in 1999 and $198 in 1998. Future minimum annual fixed rentals required during the years ending in 2001 through 2005 under noncancelable operating leases having an original term of more than one year are $114, $99, $90, $69 and $55, respectively. The aggregate obligation subsequent to 2005 is $147.

F-17

CREDIT FACILITIES

    The corporation has numerous credit facilities available, including ongoing revolving credit agreements totaling $1,820 that had a weighted average annual fee of 0.06% as of July 1, 2000. In addition, another revolving credit agreement of $500 was outstanding at July 1, 2000. This agreement had a weighted average annual fee of 0.05% and expires October 13, 2000. These agreements support commercial paper borrowings. Selected data on the corporation's short-term obligations follow:

	2000			1999			1998
Maximum period-end borrowings	$	2,726		$	1,844		$	1,895
Average borrowings during the year		2,102			1,473			1,482
Weighted average interest rate during the year		4.9	%		4.3	%		4.7	%
Weighted average interest rate at year-end		6.1			4.8			5.5

CONTINGENCIES

    The corporation is a party to several pending legal proceedings and claims, and environmental actions by governmental agencies. Although the outcome of such items cannot be determined with certainty, the corporation's general counsel and management are of the opinion that the final outcome of these matters should not have a material effect on the corporation's results of operations or financial position.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Interest rate and currency swaps

    To manage interest rate and foreign exchange risk and to lower its cost of borrowing, the corporation has entered into interest rate and currency swaps. The currency swaps effectively hedge long-term European euro-denominated investments and intercompany loans. The weighted average maturities of interest rate and currency swaps as of July 1, 2000 were 3.0 years and 2.1 years, respectively.

		Weighted Average Interest Rates(2)
	Notional Principal(1)	Receive		Pay
Interest rate swaps
2000	Receive variable — pay fixed	$	385	5.9	%	5.4	%
	Receive fixed — pay variable		100	7.1		6.6
1999	Receive variable — pay fixed		516	4.0		4.5
1998	Receive variable — pay fixed		199	4.4		4.7
Currency swaps
2000	Receive variable — pay variable	$	9	6.6	%	4.1	%
1999	Receive fixed — pay fixed		360	6.1		3.4
1998	Receive fixed — pay fixed		259	6.4		3.9

(1)

The notional principal is the amount used for the calculation of interest payments that are exchanged over the life of the swap transaction and is equal to the amount of foreign currency or dollar principal exchanged at maturity.

(2)

The weighted average interest rates are as of the respective balance sheet dates.

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Forward exchange contracts

    The corporation uses forward exchange contracts to reduce the effect of fluctuating foreign currencies on short-term foreign currency-denominated intercompany transactions, firm third-party product sourcing commitments and other known foreign currency exposures.

    The following table summarizes by major currency the contractual amounts of the corporation's forward exchange contracts in U.S. dollars. The bought amounts represent the net U.S. dollar equivalent of commitments to purchase foreign currencies, and the sold amounts represent the net U.S. dollar equivalent of commitments to sell foreign currencies. The foreign currency amounts have been translated into a U.S. dollar-equivalent value using the exchange rate at the reporting date. Forward exchange contracts mature at the anticipated cash requirement date of the hedged transaction, generally within one year.

	Bought (Sold)
Foreign Currency	2000(1)			1999(1)			1998
European euro	$	297		$	(665	)	$	—
French franc		—			—			121
Italian lira		—			—			(424	)
Spanish peseta		—			—			(57	)
Dutch guilder		—			—			(659	)
British pound		(115	)		(123	)		(38	)
Other		(122	)		(328	)		(226	)

(1)

Forward contracts denominated in European legacy currencies have been translated into European euros.

    At July 1, 2000, the deferred unrealized gains and losses on forward exchange contracts were not material to the financial position of the corporation.

Foreign exchange option contracts

    The corporation uses foreign exchange option contracts to reduce exchange rate fluctuations on anticipated purchase transactions. At July 1, 2000, the notional value of foreign exchange option contracts to sell euros, in U.S. dollars, was $260.

Concentrations of credit risk

    A large number of major international financial institutions are counterparties to the corporation's financial instruments. The corporation enters into financial instrument agreements only with those counterparties meeting very stringent credit standards, limiting the amount of agreements or contracts it enters into with any one party and, where legally available, executing master netting agreements. These positions are continuously monitored. While the corporation may be exposed to credit losses in the event of nonperformance by these counterparties, it does not anticipate material losses, because of these control procedures.

F-19

    Trade accounts receivable due from highly leveraged customers were $62 at July 1, 2000, $58 at July 3, 1999 and $72 at June 27, 1998. The financial position of these businesses has been considered in determining allowances for doubtful accounts.

Guarantees

    The corporation had third-party guarantees outstanding, aggregating approximately $14 at July 1, 2000, $17 at July 3, 1999 and $30 at June 27, 1998. These guarantees relate primarily to financial arrangements to support various suppliers of the corporation and are secured by the inventory and fixed assets of suppliers.

Fair values

    The carrying amounts of cash and equivalents, trade receivables, notes payable and accounts payable approximated fair value as of July 1, 2000, July 3, 1999 and June 27, 1998. The fair values of the remaining financial instruments recognized on the Consolidated Balance Sheets of the corporation at the respective year-ends were:

	2000		1999		1998
Long-term debt, including current portion	$	2,654	$	2,315	$	2,593
ESOP convertible preferred stock		514		694		972

    The fair value of the corporation's long-term debt, including the current portion, is estimated using discounted cash flows based on the corporation's current incremental borrowing rates for similar types of borrowing arrangements. The fair value of the ESOP preferred stock is based upon the contracted conversion into the corporation's common stock.

    The fair value of the corporation's interest rate swaps, currency swaps and forward exchange contracts approximates their carrying value in the financial statements as of July 1, 2000, July 3, 1999 and June 27, 1998. The fair value of these instruments was not material to the financial position of the corporation.

UNUSUAL ITEMS

    On December 22, 1998, the corporation announced that it was recalling specific production lots of hot dogs and other packaged meat products that could contain Listeria bacteria. The estimated cost of this action was recognized in the second quarter of 1999 and reduced 1999 income from continuing operations before income taxes, income from continuing operations and income from continuing operations per common share — diluted by $76, $50 and $.05 per share, respectively. The recall charge recognized the estimated costs associated with the return and destruction of affected products sold through retail grocery stores and selected foodservice channels in the United States, the destruction of affected inventory in the corporation's Zeeland, Michigan facility, and liabilities incurred as a result of these actions. Substantially all of the product and inventory subject to the recall was subsequently destroyed. The actual costs of the inventory destroyed and related disposition costs were consistent with prior estimates.

    In the first quarter of 1999, as part of its ongoing restructuring program, the corporation disposed of certain assets related primarily to its international tobacco operations. The corporation received cash proceeds of $386 in connection with the sale, and recognized a pretax gain of $137, which increased 1999 income from continuing operations by $97, or $.10 per common share on a diluted basis.

F-20

    In the second quarter of 1998, the corporation provided for the cost of restructuring its worldwide operations. A total of 116 manufacturing and distribution facilities were targeted for closure under the plan. The restructuring provision reduced the results of continuing operations as follows: income before income taxes, income and earnings per share on a diluted basis by $2,038, $1,624 and $1.68 per share, respectively. Of the total pretax charge for restructuring, $1,728 related to anticipated losses associated with the disposal of long-lived assets. The remainder of the charge consisted of $218 for pension and social costs associated with the facility disposals; $47 for anticipated costs to close and dispose of idled facilities; and $45 for anticipated losses on the disposal of certain equity and cost method investments. Actions planned under this restructuring program have been completed.

ACQUISITIONS AND DIVESTMENTS

    During 2000, the corporation acquired several businesses and certain equity method investments for an aggregate purchase price of $1 billion, consisting of $743 of cash and $257 of common stock. The principal acquisitions were Chock full o'Nuts Corporation, a domestic roaster, packer and marketer of coffee; the North American coffee business of Nestlé S.A., which includes the Hills Bros., MJB and Chase & Sanborn brands; Outer Banks Inc., a manufacturer, marketer and distributor of knitted sport shirts; and Courtaulds Textiles plc, a European producer, marketer and distributor of private-label and branded apparel products and textiles. The corporation also acquired a minority interest in Johnsonville Sausage, a domestic manufacturer and marketer of fresh meat products.

    In May 2000, the corporation announced that it was initiating a program that would ultimately lead to the disposition of certain businesses, including the Coach accessories business; PYA/Monarch, a domestic foodservice distributor; Champion, a manufacturer and marketer of athletic apparel; and International Fabrics, a manufacturer of component parts used in the production of intimate apparel and underwear. In June 2000, the corporation initiated steps to complete initial public offerings of up to 19.9% of the shares of Coach and PYA/Monarch. In August 2000, the corporation announced that it had entered into an agreement to sell PYA/Monarch; this transaction is more fully described in the subsequent event note to the financial statements. The corporation is currently pursuing the initial public offering of Coach, and no decision has been reached regarding the form or timing of a transaction to dispose of the remaining ownership interest in that company. Management is currently evaluating alternatives for the disposition of Champion, and no decision has been made as to the form or timing of a transaction to dispose of this business. At the present time, the corporation anticipates that it will dispose of the International Fabrics business in 2001. The net assets of this business have been classified in the Consolidated Balance Sheets in the caption Net Assets of Businesses Held for Sale.

    During 1999, the corporation acquired several companies for an aggregate purchase price of $234 in cash and $9 of common stock. The principal acquisitions were Continental Coffee, a domestic manufacturer, marketer and distributor of roasted and ground coffee; and Monsavon, a European marketer and distributor of personal body care products. The corporation also disposed of certain assets of its international cut tobacco operations, Douwe Egberts Van Nelle Tobacco, for $386 in cash.

    During 1998, the corporation acquired several companies for an aggregate purchase price of $393 in cash and $10 of common stock. The principal acquisitions were Nutrimetics International Holding Pty. Ltd., an Australian manufacturer and direct marketer of skin care products and toiletries; Café do Ponto, S.A., a Brazilian manufacturer and retailer of roasted and ground coffee; and Hornimans, a tea and sweetener distributor in Spain. The corporation also divested the production facilities and related working capital of its yarn and textile manufacturing business. A loss was recognized on the disposition of the

F-21

manufacturing facilities in connection with the 1998 restructuring, and the related working capital was sold for its net book value.

SUBSEQUENT EVENT

    In August 2000, the corporation entered into an agreement to sell its PYA/Monarch foodservice distribution business. The operating results of this business segment have been treated as a discontinued operation in the accompanying consolidated financial statements. Sales of the discontinued business were $2,903 in 2000, $2,742 in 1999 and $2,585 in 1998. Income tax expense of $43, $41 and $37 in 2000, 1999 and 1998, respectively, is attributable to the pretax earnings of the discontinued operation.

    The sale transaction is expected to close in the second quarter of 2001, at which time the corporation anticipates receiving cash proceeds of $1.57 billion from the buyer. The net assets of the PYA/Monarch business were $328 at July 1, 2000, $315 at July 3, 1999 and $329 at June 27, 1998. These amounts are presented in the Consolidated Balance Sheets as part of Net Assets of Businesses Held for Sale.

RETIREMENT PLANS

    The corporation has noncontributory defined benefit plans covering certain of its domestic employees. The benefits under these plans are based primarily on years of service and compensation levels. The plans are funded in conformity with the requirements of applicable government regulations. The plans' assets consist principally of marketable equity securities, and corporate and government debt securities.

    The corporation's foreign subsidiaries have plans for employees consistent with local practices.

    The components of the defined benefit plan expenses were:

			2000			1999			1998
Components of defined benefit net periodic benefit cost:
	Service cost		$	85		$	87		$	63
	Interest cost			134			139			124
	Expected return on assets			(183	)		(193	)		(156	)
	Amortization of:
		Net initial asset		(3	)		(4	)		(4	)
		Prior service cost		9			7			6
		Net actuarial loss		6			8			2
Net periodic benefit cost			$	48		$	44		$	35

F-22

    The funded status of defined benefit plans at the respective year-ends was:

		2000			1999			1998
Projected benefit obligation:
	Beginning of year	$	2,326		$	2,297		$	1,786
	Service cost		85			87			63
	Interest cost		134			139			124
	Plan amendments		6			15			45
	Acquisitions/dispositions		619			(43	)		(35	)
	Benefits paid		(104	)		(99	)		(95	)
	Participant contributions		2			1			1
	Actuarial (gain) loss		(45	)		(17	)		440
	Foreign exchange		(95	)		(54	)		(32	)
	End of year	$	2,928		$	2,326		$	2,297
Fair value of plan assets:
	Beginning of year	$	2,238		$	2,306		$	1,956
	Actual return on plan assets		248			96			464
	Employer contributions		24			22			47
	Participant contributions		2			1			1
	Benefits paid		(104	)		(99	)		(95	)
	Acquisitions/dispositions		708			(31	)		(25	)
	Foreign exchange		(109	)		(57	)		(42	)
	End of year	$	3,007		$	2,238		$	2,306
Funded status		$	79		$	(88	)	$	9
Unrecognized:
	Prior service cost		70			77			99
	Net actuarial loss		50			173			85
	Net initial liability (asset)		2			(1	)		(4	)
Prepaid benefit cost recognized		$	201		$	161		$	189
Amounts recognized on the Consolidated Balance Sheets:
	Other noncurrent assets	$	171		$	199		$	189
	Noncurrent benefit liability		—			(132	)		—
	Accumulated other comprehensive income		30			94			—
Prepaid benefit cost recognized		$	201		$	161		$	189

    Net pension expense is determined using assumptions as of the beginning of each year. Funded status is determined using assumptions as of the end of each year. The weighted average assumptions at the respective year-ends were:

	2000		1999		1998
Discount rate	6.2	%	5.9	%	6.0	%
Rate of compensation increase	4.9		4.7		4.7
Long-term rate of return on plan assets	8.2		8.4		8.1

F-23

    The corporation provides health care and life insurance benefits to certain retired employees, their covered dependents and beneficiaries. Generally, employees who have attained age 55 and who have rendered 10 years of service are eligible for these postretirement benefits. Certain retirees are required to contribute to plans in order to maintain coverage. The components of the expense for these plans were:

		2000		1999		1998
Components of defined benefit net periodic benefit cost:
	Service cost	$	6	$	6	$	5
	Interest cost		12		13		12
	Net amortization and deferral		1		2		—
Net periodic benefit cost		$	19	$	21	$	17

    The funded status of postretirement benefit plans at the respective year-ends was:

		2000			1999			1998
Accumulated postretirement benefit obligation:
	Beginning of year	$	196		$	204		$	178
	Service cost		6			6			5
	Interest cost		12			13			12
	Net benefit paid		(14	)		(12	)		(13	)
	Acquisitions/dispositions		—			—			(6	)
	Actuarial (gain) loss		(17	)		(13	)		29
	Foreign exchange		(2	)		(2	)		(1	)
	End of year	$	181		$	196		$	204
Fair value of plan assets		$	2		$	2		$	2
Funded status		$	(179	)	$	(194	)	$	(202	)
Unrecognized:
	Prior service cost		(2	)		(2	)		(2	)
	Net actuarial (gain) loss		(26	)		(7	)		9
	Net initial asset		(5	)		(4	)		(3	)
Net accrued benefit liability recognized on the Consolidated Balance Sheets		$	(212	)	$	(207	)	$	(198	)
Weighted average discount rate			6.5	%		6.3	%		6.3	%

    The assumed health care cost trend rate is 9% for 2000, decreasing to 7% by the year 2002 and remaining at that level thereafter. These trend rates reflect the corporation's prior experience and management's expectation that future rates will decline. Assumed health care cost trend rates impact the amounts reported for health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One Percentage Point Increase		One Percentage Point Decrease
Effect on total service and interest components	$	2	$	(2	)
Effect on postretirement benefit obligation		14		(12	)

F-24

INCOME TAXES

    The provisions for income taxes computed by applying the U.S. statutory rate to income before taxes as reconciled to the actual provisions were:

		2000					1999					1998
		Amount			Percent		Amount			Percent		Amount			Percent
Income (loss) from continuing operations before provision for income taxes:
	United States	$	975		62.2	%	$	679		43.3	%	$	(1,179	)	(222.1)	%
	Foreign		592		37.8			891		56.7			648		122.1
		$	1,567		100.0	%	$	1,570		100.0	%	$	(531	)	(100.0)	%
Tax expense (benefit) at U.S. statutory rate		$	548		35.0	%	$	550		35.0	%	$	(186	)	(35.0)	%
State taxes, net of federal benefit			16		1.0			12		0.8			5		0.9
Difference between U.S. and foreign rates			(77	)	(4.9	)		(106	)	(6.7	)		(76	)	(14.3	)
Nondeductible amortization			50		3.2			48		3.0			349		65.7
Other, net			(128	)	(8.2	)		(65	)	(4.1	)		(48	)	(9.1	)
Taxes at effective worldwide tax rates		$	409		26.1	%	$	439		28.0	%	$	44		8.2%

    Current and deferred tax provisions (benefits) were:

	2000				1999					1998
	Current		Deferred		Current		Deferred			Current		Deferred
United States	$	99	$	36	$	117	$	46		$	111	$	(286	)
Foreign		241		8		237		20			329		(118	)
State		21		4		56		(37	)		9		(1	)
	$	361	$	48	$	410	$	29		$	449	$	(405	)

    Following are the components of the deferred tax (benefits) provisions occurring as a result of transactions being reported in different years for financial and tax reporting:

	2000			1999			1998
Depreciation	$	(39	)	$	(73	)	$	(6	)
Inventory valuation methods		(23	)		(27	)		6
Nondeductible reserves		17			101			(405	)
Other, net		93			28			—
	$	48		$	29		$	(405	)
Cash payments for income taxes	$	245		$	321		$	288

F-25

    The deferred tax (assets) liabilities at the respective year-end were as follows:

		2000			1999			1998
Deferred tax (assets) liabilities:
	Restructuring reserves	$	(11	)	$	(22	)	$	(55	)
	Reserves not deductible until paid		(400	)		(419	)		(361	)
	Pension, postretirement and other employee benefits		(56	)		(85	)		(7	)
	Net operating loss and other tax carryforwards		(37	)		(15	)		(12	)
	Property, plant and equipment		(55	)		4			(3	)
	Other		87			(5	)		(133	)
Net deferred tax (assets)		$	(472	)	$	(542	)	$	(571	)

F-26

BUSINESS SEGMENT INFORMATION

    The corporation's business segments are described under Item 1—Business on pages 1 through 11. During fiscal 2000, the corporation announced the appointments of a new chief executive officer and a new chief financial officer. As a result of these changes, the primary measurement of business performance was changed. Operating performance is now evaluated and reported based upon the pretax income of each business before the impact of goodwill and trademark amortization and interest expense. Previously, the corporation measured and reported business performance including goodwill and trademark amortization and allocated interest expense and income tax expense to its business components. Prior-year business segment amounts have been restated to conform to the current-year presentation.

		2000			1999(2)			1998
Sales(1)
Sara Lee Foods		$	5,088		$	5,249		$	5,441
Beverage			2,827			2,627			2,806
Household Products			2,154			2,095			2,003
Intimates and Underwear			7,598			7,440			7,317
			17,667			17,411			17,567
Intersegment			(156	)		(141	)		(141	)
	Total	$	17,511		$	17,270		$	17,426
Operating income (loss)(5)
Sara Lee Foods		$	370		$	397	(3)	$	258
Beverage			472			570	(4)		384
Household Products			355			328			117
Intimates and Underwear			844			776			(787	)
	Total operating companies income (loss)		2,041			2,071			(28	)
Amortization of goodwill and trademarks			(171	)		(163	)		(157	)
General corporate expenses			(127	)		(197	)		(170	)
	Total operating income (loss)		1,743			1,711			(355	)
Net interest expense			(176	)		(141	)		(176	)
	Income (loss) from continuing operations before income taxes	$	1,567		$	1,570		$	(531	)

F-27

		2000		1999(2)		1998
Assets
Sara Lee Foods		$	2,310	$	2,173	$	2,157
Beverage			1,967		1,187		1,434
Household Products			1,464		1,839		2,053
Intimates and Underwear			4,902		4,642		4,627
			10,643		9,841		10,271
Other(6,7)			968		451		513
	Total assets	$	11,611	$	10,292	$	10,784
Depreciation
Sara Lee Foods		$	119	$	98	$	109
Beverage			81		69		62
Household Products			31		31		38
Intimates and Underwear			154		141		182
			385		339		391
Other			17		13		18
	Total depreciation	$	402	$	352	$	409
Additions to long-lived assets
Sara Lee Foods		$	316	$	193	$	257
Beverage			399		171		187
Household Products			76		129		328
Intimates and Underwear			386		231		169
			1,177		724		941
Other			18		2		3
	Total additions to long-lived assets	$	1,195	$	726	$	944

(1)

Includes sales between segments. Such sales are at transfer prices that are equivalent to market value.

(2)

53-week year.

(3)

Includes the product recall charge which reduced operating income by $76.

(4)

Includes the gain on sale of the tobacco operations which increased operating income by $137.

(5)

Includes provisions for restructuring reported in the 1998 Consolidated Statement of Income as follows: Sara Lee Foods $208; Beverage $71; Household Products $185; and Intimates and Underwear $1,574.

(6)

Principally cash and equivalents, certain fixed assets and certain other noncurrent assets.

(7)

Includes net assets of businesses held for sale of $563 in 2000, $315 in 1999 and $329 in 1998.

F-28

GEOGRAPHIC AREA INFORMATION

	United States		France		Netherlands		Other		Total
2000
Sales	$	9,979	$	1,534	$	1,021	$	4,977	$	17,511
Long-lived assets		2,796		472		876		1,076		5,220
1999
Sales	$	9,413	$	1,681	$	1,069	$	5,107	$	17,270
Long-lived assets		2,230		515		1,043		1,215		5,003
1998
Sales	$	9,264	$	1,724	$	1,311	$	5,127	$	17,426
Long-lived assets		2,170		500		1,246		1,349		5,265

F-29

QUARTERLY FINANCIAL DATA
(unaudited)

			Quarter
			First			Second			Third		Fourth
2000
Continuing operations:
	Net sales		$	4,239		$	4,634		$	4,175	$	4,463
	Gross profit			1,784			2,018			1,768		1,841
	Income			241			375			249		293
	Income per common share — basic			.27			.42			.28		.33
	Income per common share — diluted			.26			.40			.27		.33
Net income				258			389			262		313
Per common share:
	Net income — basic			.29			.44			.30		.36
	Net income — diluted			.28			.42			.29		.35
	Cash dividends declared			.125			.135			.135		.135
	Market price	— high		24.44			27.50			22.00		19.44
		— low		21.19			21.06			13.38		14.56
		— close		22.94			22.06			18.00		19.31
1999
Continuing operations:
	Net sales		$	4,192		$	4,626		$	4,011	$	4,441
	Gross profit			1,742			2,011			1,746		1,892
	Income			324	(2)		308	(3)		233		266
	Income per common share — basic			.35	(2)		.34	(3)		.25		.30
	Income per common share — diluted			.34	(2)		.32	(3)		.24		.29
Net income				338	(2)		322	(3)		245		286
Per common share(1):
	Net income — basic			.37	(2)		.35	(3)		.27		.32
	Net income — diluted			.35	(2)		.34	(3)		.26		.31
	Cash dividends declared			.115			.125			.125		.125
	Market price	— high		29.59			30.81			29.88		26.31
		— low		22.16			26.13			23.50		21.50
		— close		27.25			29.50			26.13		22.50
1998
Continuing operations:
	Net sales		$	4,260		$	4,656		$	4,089	$	4,421
	Gross profit			1,725			1,929			1,737		1,907
	Income (loss)			211			(1,289	)(4)		217		286
	Income (loss) per common share — basic			.22			(1.37	)(4)		.23		.31
	Income (loss) per common share — diluted			.21			(1.37	)(4)		.22		.29
Net income (loss)				225			(1,278	)(5)		227		303
Per common share(1):
	Net income (loss) — basic			.23			(1.36	)(5)		.24		.33
	Net income (loss) — diluted			.22			(1.36	)(5)		.23		.31
	Cash dividends declared			.105			.115			.115		.115
	Market price	— high		26.13			28.50			31.16		31.81
		— low		19.50			23.75			26.59		28.22
		— close		25.66			28.28			30.94		28.31

(1)

Restated for the 2-for-1 stock split in 1999.

(2)

Includes gain on sale of business of $97, or $.11 per share—basic, $.10 per share—diluted.

(3)

Includes product recall charge of $50, or $.06 per share—basic, $.05 per share—diluted.

(4)

Includes provision for restructuring of $1,624, or $1.72 per share—basic, $1.70 per share—diluted.

(5)

Includes provision for restructuring of $1,625, or $1.72 per share—basic, $1.70 per share—diluted.

F-30

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Management
  of SARA LEE CORPORATION:

    We have audited in accordance with generally accepted auditing standards, the consolidated financial statements of Sara Lee Corporation included in this Form 10-K, and have issued our report thereon dated July 28, 2000 (except with respect to the matter discussed in the subsequent event note, as to which the date is August 16, 2000). Our audit was made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The supplemental Schedule II is the responsibility of the Corporation's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. This supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP

Chicago, Illinois
July 28, 2000

(except with respect to the matter discussed
in the subsequent event note, as to which
the date is August 16, 2000)

F-31

SCHEDULE II
Sara Lee Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended June 27, 1998, July 3, 1999 and July 1, 2000

			Balance at Beginning of Year		Provision Charged to Costs and Expenses		Write-offs (1)/ Allowances Taken			Other Additions (Deductions)			Balance at End of Year
For the Year Ended June 27, 1998:
	Allowances for bad debts		$	121	$	33	$	(27	)	$	—		$	127
	Other receivables allowances			73		86		(83	)		(7	)		69
		Total	$	194	$	119	$	(110	)	$	(7	)	$	196
For the Year Ended July 3, 1999:
	Allowances for bad debts		$	127	$	37	$	(39	)	$	(5	)	$	120
	Other receivables allowances(2)			69		131		(123	)		(4	)		73
		Total	$	196	$	168	$	(162	)	$	(9	)	$	193
For the Year Ended July 1, 2000:
	Allowances for bad debts		$	120	$	31	$	(41	)	$	(5	)	$	105
	Other receivables allowances			73		69		(65	)		13			90
		Total	$	193	$	100	$	(106	)	$	8		$	195

(1)

Net of collections on accounts previously written off.

(2)

Includes a $37 million provision and subsequent write-off of receivables associated with the return and destruction of meat products subject to a product recall.

F-32

EXHIBIT INDEX

		Incorporation by Reference
3.  Exhibits
(3a)1.	Charter	Exhibit 4.1 to Registration Statement No. 33-35760 on Form S-8 dated July 6, 1990, Exhibit 4.2 to Registration Statement No. 33-37575 on Form S-8 dated November 1, 1990 and Exhibit 3(a) to Report on Form 10-K for Fiscal Year ended July 2, 1994
2.	Articles of Amendment to Charter	Exhibit 3(a)2 to Report on Form 10-K for Fiscal Year ended July 3, 1999
3.	Articles Supplementary	Exhibit 3(a) to Report on Form 10-K for Fiscal Year ended July 3, 1999
(3b)	Bylaws
(4)	Stockholder Rights Agreement, dated as of March 26, 1998 between Sara Lee Corporation and First Chicago Trust Company of New York, as rights agent.	Exhibit 4.1 to Report on Form 8-K dated May 15, 1998
Sara Lee, by signing this Report, agrees to furnish the Securities and Exchange Commission, upon its request, a copy of any instrument which defines the rights of holders of long-term debt of Sara Lee and all of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed, and which authorizes a total amount of securities not in excess of 10% of the total assets of Sara Lee and its subsidiaries on a consolidated basis.
(10)	*1. 1979 Stock Option Plan, as amended	Exhibit 10(1) to Report on Form 10-K for Fiscal Year ended July 1, 1995
	*2. 1981 Stock Option Plan, as amended	Exhibit 10(11) to Report on Form 10-K for Fiscal Year ended July 1, 1989
	*3. 1988 Non-Qualified Stock Option Plan, as amended	Exhibit 10(3) to Report on Form 10-K for Fiscal Year ended July 1, 1995
	*4. 1989 Incentive Stock Plan, as amended	Exhibit 10(4) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*5. Supplemental Benefit Plan, as amended	Exhibit 10(5) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*6. Performance-Based Annual Incentive Plan	Exhibit A to Proxy Statement dated September 20, 1995
	*7. 1995 Long-Term Incentive Stock Plan, as amended	Exhibit 10(16) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*8. 1995 Non-Employee Director Stock Plan, as amended	Exhibit 10(8) to Report on Form 10-K for Fiscal Year ended July 3, 1999
	*9. 1998 Long-Term Incentive Stock Plan	Exhibit A to Proxy Statement dated September 21, 1998
	*10. 1999 Non-Employee Director Stock Plan	Exhibit A to Proxy Statement dated September 20, 1999

	*11. Non-Qualified Deferred Compensation Plan for Outside Directors, as amended	Exhibit 10(19) to Report on Form 10-K for Fiscal Year ended June 27, 1999
	*12. Executive Deferred Compensation Plan	Exhibit 10(12) to Report on Form 10-K for Fiscal Year ended July 3, 1999
	*13. Second Amendment to Executive Deferred Compensation Plan
	*14. FY 1998-00 Long Term Performance Incentive Plan	Exhibit 10(22) to Report on Form 10-K for Fiscal Year ended June 27, 1998
	*15. FY 1999-01 Long Term Performance Incentive Plan	Exhibit 10(15) to Report on Form 10-K for Fiscal Year ended July 3, 1999
	*16. Non-Qualified Estate Builder Deferred Compensation Plan	Exhibit 10(17) to Report on Form 10-K for Fiscal Year ended June 29, 1985
	*17. Severance Policy for Corporate Officers, as amended	Exhibit 10(23) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*18. Employment Agreement, dated January 1, 1996, between Sara Lee Corporation and Frank L. Meysman	Exhibit 10(24) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*19. Employment Agreement, dated January 1, 1996, between Sara Lee/DE N.V. and Frank L. Meysman and attachments (translated from Dutch)	Exhibit 10(25) to Report on Form 10-K for Fiscal Year ended June 28, 1997
	*20. Restricted Share Unit Agreement dated April 29, 1998 between Sara Lee Corporation and Frank L. Meysman	Exhibit 10(27) to Report on Form 10-K for Fiscal Year ended June 27, 1998
	*21. Consulting and Retirement Agreement dated February 25, 2000 between Sara Lee Corporation and John H. Bryan
	*22. Employment Transition Agreement dated July 17, 2000 between Sara Lee Corporation and Judith A. Sprieser
	*23. Consulting and Retirement Agreement dated March 15, 2000 between Sara Lee Corporation and James R. Carlson
(12)	1. Computation of Ratio of Earnings to Fixed Charges
	2. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements
(21)	List of Subsidiaries
(23)	Consent of Arthur Andersen LLP

(24)	Powers of Attorney
(27)	Financial Data Schedules

*Management compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.

(c)    Reports on Form 8-K

    Sara Lee filed a Current Report on Form 8-K with the Securities and Exchange Commission on May 30, 2000 to disclose under Item 5 of the Report a press release issued by the company on May 30, 2000.

QuickLinks

DOCUMENTS INCORPORATED BY REFERENCE
(a) GENERAL DEVELOPMENT OF BUSINESS
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
(c) NARRATIVE DESCRIPTION OF BUSINESS
Trademarks
Customers
Seasonality
Environmental Matters
Employees
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
SIGNATURES
Sara Lee Corporation and Subsidiairies CONSOLIDATED STATEMENTS OF INCOME (dollars in millions except per share data)
Sara Lee Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (dollars in millions except share data)
Sara Lee Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (dollars in millions except share data)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMMON STOCK
STOCK-BASED COMPENSATION
PREFERRED STOCK
MINORITY INTEREST IN SUBSIDIARIES
EARNINGS PER SHARE
LONG-TERM DEBT
CREDIT FACILITIES
CONTINGENCIES
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
UNUSUAL ITEMS
ACQUISITIONS AND DIVESTMENTS
SUBSEQUENT EVENT
RETIREMENT PLANS
INCOME TAXES
BUSINESS SEGMENT INFORMATION
GEOGRAPHIC AREA INFORMATION
QUARTERLY FINANCIAL DATA (unaudited)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
SCHEDULE II Sara Lee Corporation and Subsidiaries VALUATION AND QUALIFYING ACCOUNTS For the Years Ended June 27, 1998, July 3, 1999 and July 1, 2000
EXHIBIT INDEX

EX-3.(B)

                                                                    EXHIBIT 3(b)




                              SARA LEE CORPORATION

                                     BYLAWS,
                          AS AMENDED ON APRIL 27, 2000



                                TABLE OF CONTENTS




                                                                                                         PAGE
                                                                                                      
ARTICLE I -- Meetings of Stockholders.................................................................      1

     Section 1 -- Annual Meeting......................................................................      1

     Section 2 -- Special Meetings....................................................................      1

     Section 3 -- Place of Meetings...................................................................      3

     Section 4 -- Notice of Meeting...................................................................      3

     Section 5 -- Record Date.........................................................................      4

     Section 6 -- Quorum..............................................................................      4

     Section 7 -- Organization........................................................................      4

     Section 8 -- Voting..............................................................................      5

     Section 9 -- Voting of Stock by Certain Holders..................................................      5

     Section 10 -- Nominations and Proposals by Stockholders .........................................      5

ARTICLE II -- Board of Directors......................................................................      8

     Section 1 -- Function and Number of Directors....................................................      8

     Section 2 -- Election............................................................................      8

     Section 3 -- Chairman............................................................................      8

     Section 4 -- Vacancies...........................................................................      8

     Section 5 -- Annual Meeting......................................................................      8

     Section 6 -- Regular Meetings....................................................................      8

     Section 7 -- Special Meetings....................................................................      8



     Section 8 -- Emergency Meetings..................................................................      9

     Section 9 -- Notice .............................................................................      9

     Section 10 -- Quorum; Voting.....................................................................      9

     Section 11 -- Informal Actions...................................................................      9

     Section 12 -- Participation in Meetings by Conference Telephone..................................      9

     Section 13 -- Compensation.......................................................................      9

     Section 14 -- Ratification.......................................................................     10

ARTICLE III -- Committees of the Board of Directors...................................................     10

     Section 1 -- Standing Committees and Membership..................................................     10

     Section 2 -- Selection; Term; Removal............................................................     10

     Section 3 -- Meetings; Quorum; Minutes...........................................................     10

     Section 4 -- Authority of Committees.............................................................     11

     Section 5 -- Executive Committee.................................................................     11

     Section 6 -- Other Committees....................................................................     11

ARTICLE IV -- Officers................................................................................     11

     Section 1 -- Officers............................................................................     11

     Section 2 -- Election and Qualification..........................................................     12

     Section 3 -- The Chairman of the Board...........................................................     12

     Section 4 -- The President.......................................................................     12

     Section 5 -- The Vice Chairman and Vice Presidents...............................................     12

     Section 6 -- Chief Financial Officer. ...........................................................     12

     Section 7 -- General Counsel.....................................................................     12


                                     - ii -


     Section 8 -- Secretary...........................................................................     13

     Section 9 -- Treasurer...........................................................................     13

     Section 10 -- Controller.........................................................................     13

     Section 11 -- Assistant Secretaries and Assistant Treasurers.....................................     13

ARTICLE V -- Indemnification and Advance of Expenses for Directors
     and Officers.....................................................................................     14

     Section 1 -- Right to Indemnification............................................................     14

     Section 2 - Change in Control....................................................................     15

     Section 3 - Time for Payment Enforcement.........................................................     15

     Section 4 -- General.............................................................................     15

     Section 5 -- Effective Time......................................................................     16

     Section 6 -- Further Action......................................................................     16

ARTICLE VI -- Fiscal Year and Dividends...............................................................     16

     Section 1 -- Fiscal Year.........................................................................     16

     Section 2 -- Dividends...........................................................................     16

ARTICLE VII -- Auditors...............................................................................     16

ARTICLE VIII -- Corporate Documents...................................................................     16

     Section 1 -- Execution of Negotiable Instruments.................................................     16

     Section 2 -- Execution of Other Documents........................................................     17

ARTICLE IX -- Seal....................................................................................     17

     Section 1 -- Contents............................................................................     17

     Section 2 -- Affixing Seal.......................................................................     18


                                     - iii -


ARTICLE X -- Stock....................................................................................     18

     Section 1 -- Execution of Stock Certificates.....................................................     18

     Section 2 -- Transfers...........................................................................     18

     Section 3 -- Registration........................................................................     18

     Section 4 -- Record Date.........................................................................     18

     Section 5 -- Recognition of Holder...............................................................     19

     Section 6 -- Replacement Certificates............................................................     19

ARTICLE XI -- Waiver of Notice........................................................................     19

ARTICLE XII - Making, Altering or Repealing Bylaws....................................................     19

     Section 1 -- Power Vested in Board of Directors..................................................     19

     Section 2 -- Scope of Bylaws.....................................................................     19



                                     - iv -


                                    ARTICLE I
                            MEETINGS OF STOCKHOLDERS

     SECTION 1. ANNUAL MEETING. An annual meeting of the stockholders of the
Corporation for the election of directors and the transaction of any other
business as may properly come before the meeting shall be held on the last
Thursday in October in each year at a time fixed by the Board of Directors (or
if such day is a legal holiday, then on the next succeeding business day which
is not a holiday) or on any other business day set by the Board of Directors
during the 31-day period beginning with the 15th day before the last Thursday in
October. Any business of the Corporation may be transacted at any such annual
meeting without being specifically designated in the notice of such meeting,
except such business as is specifically required by the Maryland General
Corporation Law (the "MGCL") to be stated in such notice.

     SECTION 2. SPECIAL MEETINGS. (a) GENERAL. The Board of Directors, the
Chairman of the Board of Directors or the President may call a special meeting
of the stockholders. Subject to subsection (b) of this Section 2, a special
meeting of stockholders shall also be called by the Secretary of the Corporation
upon the written request of the stockholders entitled to cast not less than a
majority of all the votes entitled to be cast at such meeting.

     (b)  STOCKHOLDER REQUESTED SPECIAL MEETINGS.

     (1)  Any stockholder of record seeking to have stockholders request a
special meeting shall, by sending written notice to the Secretary (the "Record
Date Request Notice") by registered mail, return receipt requested, request the
Board of Directors to fix a record date to determine the stockholders entitled
to request a special meeting (the "Request Record Date"). The Record Date
Request Notice shall set forth the purpose of the meeting and the matters
proposed to be acted on at it, shall be signed by one or more stockholders of
record as of the date of signature (or their duly authorized agents), shall bear
the date of signature of each such stockholder (or duly authorized agent) and
shall set forth all information relating to each such stockholder that must be
disclosed in solicitations of proxies for election of directors in an election
contest (even if an election contest is not involved), or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Rule 14a-11 thereunder. Upon
receiving the Record Date Request Notice, the Board of Directors may fix a
Request Record Date. The Request Record Date shall not precede and shall not be
more than 10 days after the close of business on the date on which the
resolution fixing the Request Record Date is adopted by the Board of Directors.
If the Board of Directors, within 10 days after the date on which a valid Record
Date Request Notice is received, fails to adopt a resolution fixing the Request
Record Date and make a public announcement of such Request Record Date, the
Request Record Date shall be the close of business on the 10th day after the
first date on which the Record Date Request Notice is received by the Secretary.

          (2)  In order for any stockholder to request a special meeting, one or
more written requests for a special meeting signed by stockholders of record (or
their duly authorized agents)



as of the Request Record Date entitled to cast not less than a majority (the
"Special Meeting Percentage") of all of the votes entitled to be cast at such
meeting (the "Special Meeting Request") shall be delivered to the Secretary. In
addition, the Special Meeting Request shall set forth the purpose of the meeting
and the matters proposed to be acted on at it (which shall be limited to the
matters set forth in the Record Date Request Notice received by the Secretary),
shall bear the date of signature of each such stockholder (or duly authorized
agent) signing the Special Meeting Request, shall set forth the name and
address, as they appear in the Corporation's stock ledger, of each stockholder
signing such request (or on whose behalf the Special Meeting Request is signed)
and the class and number of shares of stock of the Corporation which are owned
of record and beneficially by each such stockholder, shall be sent to the
Secretary by registered mail, return receipt requested, and shall be received by
the Secretary within 60 days after the Request Record Date. Any requesting
stockholder may revoke his, her or its request for a special meeting at any time
by written revocation delivered to the Secretary.

          (3)  The Secretary shall inform the requesting stockholders of the
reasonably estimated cost of preparing and mailing the notice of meeting
(including the Corporation's proxy materials). The Secretary shall not be
required to call a special meeting upon stockholder request and such meeting
shall not be held unless, in addition to the documents required by paragraph (2)
of this Section 2(b), the Secretary receives payment of such reasonably
estimated cost prior to the mailing of any notice of the meeting.

          (4)  Except as provided in the next sentence, any special meeting
shall be held at such date and time as may be designated by the Chairman of the
Board of Directors, Board of Directors or President, whoever has called the
meeting. In the case of any special meeting called by the Secretary upon the
request of stockholders (a "Stockholder Requested Meeting"), such meeting shall
be held at such date and time as may be designated by the Board of Directors;
PROVIDED, however, that the date of any Stockholder Requested Meeting shall be
not more than 90 days after the record date for such meeting (the "Meeting
Record Date"); and PROVIDED FURTHER that if the Board of Directors fails to
designate, within 10 days after the date that a valid Special Meeting Request is
actually received by the Secretary (the "Delivery Date"), a date and time for a
Stockholder Requested Meeting, then such meeting shall be held at 2:00 p.m.
local time on the 90th day after the Meeting Record Date or, if such 90th day is
not a Business Day (as defined below), on the first preceding Business Day; and
PROVIDED FURTHER that in the event that the Board of Directors fails to
designate a place for a Stockholder Requested Meeting within 10 days after the
Delivery Date, then such meeting shall be held at the principal executive office
of the Corporation. In fixing a date for any special meeting, the Chairman of
the Board of Directors, Board of Directors or the President, whoever has called
the meeting, may consider such factors as he, she or it deems relevant within
the good faith exercise of business judgment, including, without limitation, the
nature of the matters to be considered, the facts and circumstances surrounding
any request for meeting and any plan of the Board of Directors to call an annual
meeting or a special meeting. In the case of any Stockholder Requested Meeting,
if the Board of Directors fails to fix a Meeting Record Date that is a date
within 30 days after the Delivery Date,


                                     - 2 -


then the close of business on the 30th day after the Delivery Date shall be the
Meeting Record Date.

          (5)  If at any time as a result of written revocations of requests for
the special meeting, stockholders of record (or their duly authorized agents) as
of the Request Record Date entitled to cast less than the Special Meeting
Percentage shall have delivered and not revoked requests for a special meeting,
the Secretary may refrain from mailing the notice of the meeting or, if the
notice of the meeting has been mailed, the Secretary may revoke the notice of
the meeting at any time before 10 days before the meeting if the Secretary has
first sent to all other requesting stockholders written notice of such
revocation and of the intention to revoke the notice of the meeting. Any request
for a special meeting received after a revocation by the Secretary of a notice
of a meeting shall be considered a request for a new special meeting.

          (6)  The Chairman of the Board of Directors, the President or the
Board of Directors may appoint regionally or nationally recognized independent
inspectors of elections to act as the agent of the Corporation for the purpose
of promptly performing a ministerial review of the validity of any purported
Special Meeting Request received by the Secretary. For the purpose of permitting
the inspectors to perform such review, no such purported request shall be deemed
to have been received by the Secretary until the earlier of (i) five Business
Days after receipt by the Secretary of such purported request and (ii) such date
as the independent inspectors certify to the Corporation that the valid requests
received by the Secretary represent at least a majority of the issued and
outstanding shares of stock that would be entitled to vote at such meeting.
Nothing contained in this paragraph (6) shall in any way be construed to suggest
or imply that the Corporation or any stockholder shall not be entitled to
contest the validity of any request, whether during or after such five Business
Day period, or to take any other action (including, without limitation, the
commencement, prosecution or defense of any litigation with respect thereto, and
the seeking of injunctive relief in such litigation).

          (7)  For purposes of these Bylaws, "Business Day" shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions in the
State of Illinois are authorized or obligated by law or executive order to
close.

     SECTION 3. PLACE OF MEETINGS. Except as otherwise provided in Section
2(b)(4) of this Article I, all meetings of the stockholders shall be held at
such place as set by the Board of Directors.

     SECTION 4. NOTICE OF MEETING. Not less than 10 days nor more than 90 days
before the date of each stockholders' meeting, the Secretary shall give, to each
stockholder entitled to vote at the meeting and to each other stockholder
entitled to notice of the meeting, written notice stating the time and place of
the meeting and, in the case of a special meeting or if otherwise required by
the MGCL, the purpose for which the meeting is called, either by mail, by
presenting it to the stockholder personally, by leaving it at the stockholder's
residence or usual place of business or by transmitting the notice to the
stockholder in any other manner permitted by


                                     - 3 -


Maryland law. If mailed, such notice shall be deemed to be given when deposited
in the United States mail, postage thereon prepaid, addressed to the stockholder
at the stockholder's address as it appears on the records of the Corporation.
Pursuant to Section 7 of this Article I, a meeting of stockholders convened on
the date for which it was called may be adjourned from time to time and place to
place without further notice to a date not more than 120 days after the original
record date.

     SECTION 5. RECORD DATE. Except as provided in Section 2(b)(4) of this
Article I, the record date for the determination of the stockholders entitled to
notice of and to vote at any meeting of stockholders and for other purposes
shall be the date fixed by the Board of Directors pursuant to Article X, Section
4 of these Bylaws.

     SECTION 6. QUORUM. At any meeting of stockholders, the presence in person
or by proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum.

     SECTION 7. ORGANIZATION OF MEETING. At every meeting of stockholders, the
Chairman of the Board, if there be one, shall serve as chairman of the meeting
and conduct the meeting or, in the case of a vacancy in the office or absence of
the Chairman of the Board, one of the following officers present shall serve as
chairman of the meeting and conduct the meeting in the order stated: the
President, the Vice Chairman of the Board, if there be one or, if there be more
than one, the Vice Chairmen in order of seniority, the Executive Vice Presidents
in their order of seniority, or, in the absence of such officers, a chairman
chosen by the stockholders entitled to cast a majority of the votes which all
stockholders present in person or by proxy are entitled to cast, shall serve as
chairman. The Secretary, or, in the Secretary's absence, an Assistant Secretary,
or in the absence of both the Secretary and Assistant Secretaries, a person
appointed by the chairman of the meeting shall serve as secretary of the
meeting. In the event that the Secretary presides at a meeting of the
stockholders, an Assistant Secretary shall record the minutes of the meeting.
The order of business and all other matters of procedure at any meeting of
stockholders shall be determined by the chairman of the meeting. The chairman of
the meeting may prescribe such rules, regulations and procedures and take such
action as, in the discretion of such chairman, are appropriate for the proper
conduct of the meeting, including, without limitation, (a) restricting admission
to the time set for the commencement of the meeting; (b) limiting attendance at
the meeting to stockholders of record of the Corporation entitled to vote at the
meeting, their duly authorized proxies or other such persons as the chairman of
the meeting may determine; (c) limiting participation at the meeting on any
matter to stockholders of record of the Corporation entitled to vote on such
matter, their duly authorized proxies or other such persons as the chairman of
the meeting may determine; (d) limiting the time allotted to questions or
comments by participants; (e) maintaining order and security at the meeting; (f)
removing any stockholder who refuses to comply with meeting procedures, rules or
guidelines as established by the chairman of the meeting; and (g) recessing or
adjourning the meeting to a later date, time and place announced at the meeting
by the chairman. Unless otherwise determined by the chairman of the meeting,
meetings of stockholders shall not be


                                     - 4 -


required to be held in accordance with the rules of parliamentary procedure.

     SECTION 8. VOTING. Except as otherwise provided by the MGCL or the charter
of the Corporation (the "Charter"), at all meetings of the stockholders, each
stockholder entitled to vote at such meeting shall be entitled to (a) one vote
upon each matter submitted to a vote at such meeting for each share of common
stock of the Corporation owned of record by such stockholder and (b) such voting
rights, if any, as are provided in the Charter with respect to any series of
preferred stock of the Corporation owned of record by such stockholder. A
stockholder may vote the shares of stock owned of record by such stockholder
either in person or by proxy. Every proxy shall be executed and dated by the
stockholder of record or the duly authorized agent of such stockholder in any
manner authorized by law. Each proxy shall be filed with the Secretary of the
Corporation at or prior to the meeting. No proxy shall be valid more than 11
months after its date, unless otherwise provided in the proxy. A majority of all
the votes cast at any meeting of stockholders at which a quorum is present shall
be sufficient to approve any matter which may properly come before the meeting,
unless the MGCL, or the Charter provides otherwise.

     SECTION 9. VOTING OF STOCK BY CERTAIN HOLDERS. Notwithstanding any other
provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland
General Corporation Law (or any successor statute) shall not apply to any
acquisition by any person of shares of stock of the Corporation. This section
may be repealed, in whole or in part, at any time, whether before or after an
acquisition of control shares and, upon such repeal, may, to the extent provided
by any successor bylaw, apply to any prior or subsequent control share
acquisition.

     SECTION 10. NOMINATIONS AND PROPOSALS BY STOCKHOLDERS.

          (a)  ANNUAL MEETINGS OF STOCKHOLDERS.

          (1)  Nominations of persons for election to the Board of Directors and
the proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (i) pursuant to the Corporation's notice of
meeting, (ii) by or at the direction of the Board of Directors or (iii) by any
stockholder of the Corporation who was a stockholder of record both at the time
of giving of notice provided for in this Section 10(a) and at the time of the
annual meeting, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 10(a).

          (2)  For nominations for election to the Board of Directors or other
business to be properly brought before an annual meeting by a stockholder
pursuant to clause (iii) of paragraph (a)(1) of this Section 10, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation and such other business must otherwise be a proper matter for action
by the stockholders. To be timely, a stockholder's notice must be delivered to
the Secretary at the principal executive office of the Corporation by not later
than the close of business on the 90th day prior to the first anniversary of the
date of mailing of the notice for the preceding year's annual meeting nor
earlier than the close of business on the 120th day prior to the


                                     - 5 -


first anniversary of the date of mailing of the notice for the preceding year's
annual meeting; provided, however, that in the event that the date of mailing of
the notice for the annual meeting is advanced or delayed by more than 30 days
from the anniversary of the date of mailing of the notice for the preceding
year's annual meeting, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the 120th day prior to the
date of mailing of the notice for such annual meeting and not later than the
close of business on the later of the 90th day prior to the date of mailing of
the notice for such annual meeting or the tenth day following the day on which
public announcement of the date of mailing of the notice for such meeting is
first made by the Corporation. In no event shall the public announcement of a
postponement of the mailing of the notice for such annual meeting or of an
adjournment or postponement of an annual meeting to a later date or time
commence a new time period for the giving of a stockholder's notice as described
above. A stockholder's notice to be proper must set forth (i) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director (A) the name, age, business address and residence address of such
person, (B) the class and number of shares of stock of the Corporation that are
beneficially owned or owned of record by such person and (C) all other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest (even
if an election contest is not involved), or is otherwise required, in each case
pursuant to Regulation 14A (or any successor provision) under the Exchange Act
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (ii) as to any other
business that the stockholder proposes to bring before the meeting, a
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any interest in such
business of such stockholder (including any anticipated benefit to the
stockholder therefrom) and of each beneficial owner, if any, on whose behalf the
proposal is made; and (iii) as to the stockholder giving the notice and each
beneficial owner, if any, on whose behalf the nomination or proposal is made,
(x) the name and address of such stockholder, as they appear on the
Corporation's stock ledger, and a current name and address, if different, and of
such beneficial owner, and (y) the class and number of shares of each class of
stock of the Corporation which are owned beneficially and of record by such
stockholder and owned beneficially by such beneficial owner.

          (3)  Notwithstanding anything in this subsection (a) of this Section
10 to the contrary, in the event the number of directors to be elected to the
Board of Directors is increased, and there is no public announcement of such
action or specifying the size of the increased Board of Directors at least 100
days prior to the first anniversary of the date of mailing of the notice for
preceding year's annual meeting, a stockholder's notice required by this Section
10(a) shall also be considered timely, but only with respect to nominees for any
new positions created by such increase, if the notice is delivered to the
Secretary at the principal executive office of the Corporation not later than
the close of business on the tenth day immediately following the day on which
such public announcement is first made by the Corporation.

          (b)  SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the


                                     - 6 -


Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected (i) pursuant to the Corporation's notice of meeting,
(ii) by or at the direction of the Board of Directors or (iii) provided that the
Board of Directors has determined that directors shall be elected at such
special meeting, by any stockholder of the Corporation who is a stockholder of
record both at the time of giving of notice provided for in this Section 10(b)
and at the time of the special meeting, who is entitled to vote at the meeting
and who complied with the notice procedures set forth in this Section 10(b). In
the event the Corporation calls a special meeting of stockholders for the
purpose of electing one or more directors to the Board of Directors, any such
stockholder may nominate a person or persons (as the case may be) for election
to such position as specified in the Corporation's notice of meeting, if the
stockholder's notice required by paragraph (a)(2) of this Section 10 shall be
delivered to the Secretary at the principal executive office of the Corporation
not earlier than the close of business on the 120th day prior to such special
meeting and not later than the close of business on the later of the 90th day
prior to such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and the nominees
proposed by the Board of Directors to be elected at such meeting. In no event
shall the public announcement of a postponement or adjournment of a special
meeting to a later date or time commence a new time period for the giving of a
stockholder's notice as described above.

          (c)  GENERAL.

          (1)  Only such persons who are nominated in accordance with the
procedures set forth in this Section 10 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 10. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made or proposed, as the case may be, in accordance with the
procedures set forth in this Section 10 and, if any proposed nomination or
business is not in compliance with this Section 10, to declare that such
defective nomination or proposal be disregarded.

          (2)  For purposes of this Section 10, (a) the "date of mailing of the
notice" shall mean the date of the proxy statement for the solicitation of
proxies for election of directors and (b) "public announcement" shall mean
disclosure (i) in a press release either transmitted to the principal securities
exchange on which shares of the Corporation's common stock are traded or
reported by a recognized news service or (ii) in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to the
Exchange Act.

          (3)  Notwithstanding the foregoing provisions of this Section 10, a
stockholder shall also comply with all applicable requirements of state law and
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 10. Nothing in this Section 10 shall be deemed
to affect any right of a stockholder to request inclusion of


                                     - 7 -


proposals in, nor the right of the Corporation to omit a proposal from, the
Corporation's proxy statement pursuant to Rule 14a-8 (or any successor
provision) under the Exchange Act.


                                   ARTICLE II
                               BOARD OF DIRECTORS

     SECTION 1. FUNCTION AND NUMBER OF DIRECTORS. The business and affairs of
the Corporation shall be managed under the direction of a Board of Directors.
The majority of the Board of Directors may, from time to time, fix or alter the
number of directors; provided, however, that the number of directors comprising
the Board of Directors shall be no less than three or more than 25. The tenure
of office of any director shall not be affected by any alteration in the number
of directors. Any director may resign at any time upon written notice to the
Chairman or the Secretary.

     SECTION 2. ELECTION. The directors shall be elected at the annual meeting
of the stockholders and shall hold office until the next annual meeting of the
stockholders and until their successors are elected and qualify.

     SECTION 3. CHAIRMAN. The Chairman of the Board of Directors shall preside
at all meetings of the Board of Directors, and, in his or her absence, the Vice
Chairman or, if there be more than one, the Vice Chairmen in order of seniority,
and, in absence of any such Vice Chairman, a director designated by the Board of
Directors.

     SECTION 4. VACANCIES. If for any reason any or all the directors cease to
be directors, such event shall not terminate the Corporation or affect these
Bylaws or the powers of the remaining directors hereunder (even if fewer than
three directors remain). Except as may be provided by the Board of Directors in
setting the terms of any class or series of preferred stock, any vacancy on the
Board of Directors may be filled only by a majority of the remaining directors,
even if the remaining directors do not constitute a quorum. Any director elected
to fill a vacancy shall serve for the remainder of the full term of the
directorship in which the vacancy occurred and until a successor is elected and
qualifies.

     SECTION 5. ANNUAL MEETING. An annual meeting of the Board of Directors
shall be held at the same place and on the same day as and immediately before or
after the annual meeting of stockholders for the purpose of electing the
officers of the Corporation, the appointment of the committees of the Board of
Directors and for the transaction of any other business.

     SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such places and times as may be fixed from time to time by the
Board of Directors, without call or notice.

     SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called


                                     - 8 -


by the Chairman of the Board, any Vice Chairman or the President, upon their own
motions, or by the Secretary upon the written request of a majority of the
directors. At least two days' written notice shall be given of all special
meetings.

     SECTION 8. EMERGENCY MEETINGS. Emergency meetings of the Board of Directors
may be called at any time by the Chairman of the Board after notice by personal
delivery or by telephone, facsimile transmission or courier to each director at
his or her business or residence address. At least four hours' notice shall be
given of all emergency meetings. The quorum for an emergency meeting shall be
three-quarters of all of the directors.

     SECTION 9. NOTICE. Notice of any special meeting of the Board of Directors
shall be delivered personally or by telephone, facsimile transmission, United
States mail or courier to each director at his or her business or residence
address. Notice of any special meeting by personal delivery, by telephone or a
facsimile transmission shall be given at least two days prior to the meeting.
Notice of any special meeting by mail shall be given at least five days prior to
the meeting and shall be deemed to be given when deposited in the United States
mail properly addressed, with postage thereon prepaid. Telephone notice shall be
deemed to be given when the director is personally given such notice in a
telephone call to which he or she is a party. Facsimile transmission notice
shall be deemed to be given upon completion of the transmission of the message
to the number given to the Corporation by the director and receipt of a
completed answer-back indicating receipt. Neither the business to be transacted
at, nor the purpose of, any meeting of the Board of Directors need be stated in
the notice, unless specifically required by statute or these Bylaws.

     SECTION 10. QUORUM; VOTING. At any and all regular and special meetings of
the Board of Directors, one-third of the duly elected and qualified directors
shall constitute a quorum, unless there are only three directors, in which case
two directors shall constitute a quorum; but if at any meeting of the Board of
Directors there be less than a quorum present, the directors at the meeting may,
without further notice, adjourn the same, from time to time, for a period not
exceeding 10 days at any one time, until a quorum is in attendance. The action
of a majority of the directors present at a meeting at which a quorum is present
is the action of the Board of Directors.

     SECTION 11. INFORMAL ACTIONS. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all the
members of the Board of Directors or such committee, as the case may be, and
filed with the minutes of proceedings of the Board of Directors or such
committee.

     SECTION 12. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of
the Board of Directors or of any committee thereof may participate in a meeting
of the Board of Directors or any committee by means of conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other. Such participation shall


                                     - 9 -


constitute presence in person at such meeting.

     SECTION 13. COMPENSATION. Directors shall be paid such compensation,
including retainers and fees for attendance at meetings of the Board of
Directors and its committees, as shall be determined from time to time by the
vote of the Board of Directors. No compensation for service as a director shall
be paid to officers or employees of the Corporation or any subsidiary of the
Corporation.

     SECTION 14. RATIFICATION. Any transaction questioned in any stockholders'
derivative proceeding on the ground of lack of authority, defective or irregular
execution, adverse interest of director, officer or stockholder, non-disclosure,
miscomputation, or the application of improper principles or practices of
accounting may be ratified before or after judgment, by the Board of Directors
(excluding any director who is a party to such proceeding) or by the
stockholders if less than a quorum of directors is qualified; and, if so
ratified, shall have the same force and effect as if the questioned transaction
had been originally duly authorized, and said ratification shall be binding upon
the Corporation and its stockholders and shall constitute a bar to any claim or
execution of any judgment in respect of such questioned transaction.

                                   ARTICLE III
                      COMMITTEES OF THE BOARD OF DIRECTORS

     SECTION 1. STANDING COMMITTEES AND MEMBERSHIP. The standing committees of
the Board of Directors shall be the Executive Committee, Finance Committee,
Audit Committee, Compensation and Employee Benefits Committee, Board Affairs and
Corporate Governance Committee and Employee and Public Responsibility Committee.
Subject to these Bylaws, the number of members of each committee shall be fixed
by the Board of Directors from time to time by resolution. The members of each
such committee shall be elected by the Board of Directors from among the members
of the Board of Directors; provided, however, that in the absence of a member or
members at a meeting of a standing committee, the members present at any meeting
of such committee (whether a quorum is present) may appoint directors who are
not members of such committee to act in the place or places of such absent
member or members in order to constitute a quorum at such meeting. A director
may concurrently serve on more than one of such committees. Only a director who
is not a current or former employee of the Corporation or any subsidiary or
affiliate thereof (an "Independent Director") shall be eligible to serve as a
member of the Audit Committee or the Compensation and Employee Benefits
Committee.

     SECTION 2. SELECTION; TERM; REMOVAL. The members of each of the standing
committees of the Board of Directors and the chairperson thereof shall be
elected at the regular annual meeting of the Board of Directors and shall hold
office until the next such regular annual meeting of the Board of Directors and
until their respective successors are elected and qualified; provided, however,
that vacancies during the year on any standing committee shall be filled by the
Board of Directors.


                                     - 10 -


     SECTION 3. MEETINGS; QUORUM; MINUTES. Each standing committee of the Board
of Directors shall from time to time meet at such time and place as shall be
directed by the chairperson of each committee and, in his or her absence, by the
Chairman of the Board of Directors, or in his or her absence, by the President.
A majority of all the members of each such committee (including directors
appointed to act at any meeting of the a standing committee in the place of
absent members thereof as provided in Section 1 above) shall constitute a quorum
for that committee meeting and the action of such quorum shall be taken as the
action of the committee. Each committee shall keep minutes of its proceedings
and actions and shall submit a report thereof at the next regular meeting of the
Board of Directors. The Executive Committee and Finance Committee can only act
upon the vote of a majority of all members of each such committee.

     SECTION 4. AUTHORITY OF COMMITTEES. No committee shall have the authority
to perform any act which may not be delegated to a committee under the MGCL. If
the Board of Directors has given general authorization for the issuance of stock
providing for or establishing a method or procedure for determining the maximum
number of shares to be issued, a committee of the Board, in accordance with that
general authorization or any stock option or other plan or program adopted by
the Board, may fix the terms of stock subject to classification or
reclassification and the terms on which any stock may be issued, including all
terms and conditions required or permitted to be established or authorized by
the Board of Directors under Sections 2-203 and 2-204 of the MGCL. The Board of
Directors shall have the power at any time to change the members of any
committee so designated, to fill vacancies or to dissolve any such committee.

     SECTION 5. EXECUTIVE COMMITTEE. The Executive Committee shall consist of
not less than three directors and shall perform such duties and exercise such
powers as may be directed or delegated by the Board of Directors. Between
meetings of the Board of Directors, the Executive Committee may exercise any and
all powers of the Board of Directors in the management of the business and
affairs of the Corporation with the same effect as if exercised by the Board of
Directors, and the exercise of such powers shall be conclusive of the fact that
the Executive Committee had full authority to exercise such powers, subject,
however, to the limitations of authority specifically set forth in Section 4 of
this Article III of these Bylaws.

     SECTION 6. OTHER COMMITTEES. The powers and duties of committees other than
the Executive Committee shall be determined from time to time by the Board of
Directors.

                                   ARTICLE IV
                                    OFFICERS

     SECTION 1. OFFICERS. The officers of the Corporation shall include the
Chairman of the Board of Directors, President, such Vice Chairmen of the Board
of Directors, Executive Vice Presidents, Senior Vice Presidents and Vice
Presidents, as the Board of Directors shall from time to time elect, Chief
Financial Officer, General Counsel, Secretary, Treasurer and Controller and such
Assistant Secretaries and Assistant Treasurers or other officers as the Chairman
or the


                                     - 11 -


Board of Directors shall from time to time, appoint or elect with such powers
and duties as the Chairman or the Board may deem necessary or appropriate. In
addition, the Chairman of the Board, the President or the Vice Chairman of the
Board may appoint as officers of the Corporation employees with executive
authority within an operating division of the Corporation and may designate for
such officers titles that appropriately reflect their positions and
responsibilities.

     SECTION 2. ELECTION AND QUALIFICATION. Except as otherwise provided herein,
the officers shall be elected by, and shall hold office at the pleasure of, the
Board of Directors. None of the officers, except the Chairman of the Board and
any Vice Chairman need be members of the Board of Directors. Any two of the
offices set forth in Section 1 of this Article IV may, at the discretion of the
Board of Directors, be held by the same person, except that a person may not
serve concurrently as both the President and a Vice President of the Corporation
and the Chairman of the Board may hold only the additional office of President.

     SECTION 3. THE CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation and, subject
to the direction of the Board of Directors and to the committees of the Board of
Directors, shall have general charge of the management of the business and
affairs of the Corporation, unless another individual is designated by the Board
of Directors as Chief Executive Officer of the Corporation. The Chairman shall
preside at all meetings of the stockholders and of the Board of Directors.

     SECTION 4. THE PRESIDENT. The President shall perform such duties as may be
assigned to him or her by the Board of Directors or the Chairman of the Board.

     SECTION 5. THE VICE CHAIRMAN OF THE BOARD AND VICE PRESIDENTS. Each Vice
Chairman, Executive Vice President, Senior Vice President or Vice President
shall perform such duties and have such authority as shall be assigned to him or
her by the Chairman of the Board, subject to the approval of the Board of
Directors. In the absence of the Chairman of the Board, the Vice Chairman, or if
there be more than one, the Vice Chairmen in order of seniority, shall become
the acting Chairman of the Board and, while retaining his or her duties as Vice
Chairman, shall assume the duties of the Chairman of the Board, unless the Board
of Directors shall otherwise determine.

     SECTION 6. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall have
general supervision of all financial matters relating to the Corporation
(including its subsidiaries and affiliates), including the raising of capital,
financial risk management and review of the Corporation's financial condition.
The Chief Financial Officer shall perform such other duties and have such
authority as may be assigned to her or him by the Board of Directors, the
Chairman of the Board or the President.

     SECTION 7. GENERAL COUNSEL. The General Counsel shall have general
supervision of all legal matters relating to the Corporation (including its
subsidiaries and affiliates), including


                                     - 12 -


litigation by and against the Corporation, preparation of documents relating to
transactions to which the Corporation is a party, advice to the Board of
Directors and management concerning legal issues affecting the Corporation and
retention of counsel to represent the Corporation. The General Counsel shall
perform such other duties and have such authority as may be assigned to her or
him by the Board of Directors, the Chairman of the Board or the President.

     SECTION 8. SECRETARY. The Secretary shall issue or cause to be issued
notices for all meetings of the stockholders or Board of Directors and its
committees, shall keep minutes of such meetings and shall have charge of the
seal and corporate books and records. The Secretary shall supervise all matters
relating to the Securities and Exchange Commission and the stock exchanges on
which the securities of the Corporation are listed. The Secretary shall perform
such other duties as pertain to his or her office as the Chairman of the Board
may direct. In the absence of the Secretary from any meetings of the
stockholders or Board of Directors, the record of the proceedings shall be kept
and authenticated by such person as may be appointed for that purpose by the
chairman of the meeting.

     SECTION 9. TREASURER. The Treasurer shall have charge and custody of the
funds, securities and other valuable effects of the Corporation (including its
subsidiaries and affiliates) and shall keep full and accurate accounts of all
receipts and disbursements. The Treasurer shall deposit all moneys to the credit
of the Corporation in such banks or depositories as he or she shall designate
subject to the control of the Board of Directors or the Finance Committee. The
Treasurer shall cause disbursement of the funds of the Corporation as may be
required in the conduct of business. Whenever required to do so, the Treasurer
shall render an account of all his or her transactions as Treasurer of the
Corporation.

     SECTION 10. CONTROLLER. The Controller shall be the Chief Accounting
Officer of the Corporation and shall be responsible for maintenance of the
financial records and the internal accounting systems of the Corporation
(including its subsidiaries and affiliates) and for the conduct and surveillance
of general corporate accounting procedures. The Controller shall supervise the
preparation of the Corporation's financial statements and other financial
reports and statistics as required by management and governmental agencies and
shall perform such other duties as the Chief Financial Officer of the
Corporation or the Board of Directors may from time to time prescribe.

     SECTION 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant
Secretaries and Assistant Treasurers shall perform such duties as the Board of
Directors or the Secretary or Treasurer, respectively, may from time to time
prescribe or require. In the absence or disability of the Secretary or
Treasurer, the Assistant Secretaries or Assistant Treasurers, as the case may
be, shall, in the order of their seniority or as otherwise directed by the Board
of Directors, perform the duties and have the powers of the Secretary and
Treasurer, respectively. The Board of Directors may, in its discretion, confer
upon any Assistant Secretary or Assistant Treasurer any power of the Secretary
or Treasurer, respectively, to be exercised jointly with or independently of the
Secretary or Treasurer, respectively, as the Board of Directors may from


                                     - 13 -


time to time determine.

                                    ARTICLE V
                     INDEMNIFICATION AND ADVANCE OF EXPENSES
                           FOR DIRECTORS AND OFFICERS

     SECTION 1. RIGHT TO INDEMNIFICATION. To the maximum extent permitted by
Maryland law in effect from time to time, the Corporation shall indemnify and,
without requiring a preliminary determination of the ultimate entitlement to
indemnification, shall pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (a) any individual who is a present or former
director or officer of the Corporation or a subsidiary thereof and who is made a
party to the proceeding by reason of his or her service in that capacity or (b)
any individual who, while a director or officer of the Corporation and at the
request of the Corporation, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and who is made
a party to the proceeding by reason of his or her service in that capacity. The
Corporation may, with the approval of its Board of Directors, provide such
indemnification and advance for expenses to a person who served a predecessor of
the Corporation in any of the capacities described in (a) or (b) above and to
any employee or agent of the Corporation or a predecessor of the Corporation.

     SECTION 2. CHANGE IN CONTROL. In the event of a change in control of the
Corporation, any person claiming a right to be indemnified or to an advance of
expenses by the Corporation may have his right to be indemnified or to an
advance of expenses and the extent of indemnification and advance of expenses to
which he is entitled determined by independent legal counsel selected by a
committee composed of all of the continuing directors, or in the event there are
no continuing directors, by independent legal counsel selected by the person
claiming indemnification or advance of expenses, with the approval of the chief
executive officer of the Corporation, which approval will not be unreasonably
withheld. As used in this section, "continuing director" shall mean a director
who was a member of the Board of Directors prior to the change in control and
who is not an Acquiring Person (as such term is defined in the Rights Agreement,
dated March 26, 1998, between the Corporation and First Chicago Trust Company of
New York, Rights Agent, as amended), and is not and was not an affiliate or
associate of an Acquiring Person or a representative or nominee of an Acquiring
Person or of any such affiliate or associate. As used in this Article V, "change
in control" shall mean any change in the Board of Directors of the Corporation,
resulting in continuing directors constituting less than a majority of the Board
of Directors.

     SECTION 3. TIME FOR PAYMENT ENFORCEMENT. Any indemnification, or payment of
expenses in advance of the final disposition of any proceeding, shall be made
promptly, and in any event within 60 days, upon the written request of the
director or officer entitled to indemnification (the "Indemnified Party"). The
right to indemnification and advance of expenses hereunder shall be enforceable
by the Indemnified Party in any court of competent


                                     - 14 -


jurisdiction, if (i) the Corporation denies such request, in whole or in part,
or (ii) no disposition thereof is made within 60 days. The Indemnified Party's
costs and expenses incurred in connection with successfully establishing his or
her right to indemnification, in whole or in part, in any such action shall also
be indemnified by the Corporation.

     SECTION 4. GENERAL. The indemnification and advance of expenses provided by
this Article V (a) shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advance of expenses may be entitled under any
law (common or statutory), or any agreement, vote of stockholders or
disinterested directors or other provision that is not contrary to law, both as
to action in his or her official capacity and as to action in another capacity
while holding office or while employed by or acting as agent for the
Corporation, (b) shall continue in respect of all events occurring while a
person was a director or officer after such person has ceased to be a director
or officer (including after a change in control of the Corporation), and (c)
shall inure to the benefit of the estate, heirs, executors and administrators of
such person. All rights to indemnification and advance of expenses hereunder
shall be deemed to be a contract between the Corporation and each director or
officer of the Corporation who serves or served in such capacity at any time
while this Article V is in effect.

     SECTION 5. EFFECTIVE TIME. This Article V shall be effective from and after
the date of its adoption and shall apply to all proceedings arising prior to or
after such date, regardless of whether relating to facts or circumstances
occurring prior to or after such date. Neither the amendment nor repeal of this
Article, nor the adoption or amendment of any other provision of the Charter or
Bylaws inconsistent with this Article, shall apply to or affect in any respect
the applicability of this Article with respect to any act or failure to act
which occurred prior to such amendment, repeal or adoption.

     SECTION 6. FURTHER ACTION. The Board of Directors may take such action as
is necessary to carry out the provisions of this Article V and is expressly
empowered to adopt, approve and amend from time to time such resolutions or
contracts implementing such provisions or such further arrangements for
indemnification or advance for expenses as may be permitted by law.


                                   ARTICLE VI
                            FISCAL YEAR AND DIVIDENDS

     SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall end on the
Saturday nearest to June 30 of each year and commence on the next day.

     SECTION 2. DIVIDENDS. The Board of Directors from time to time may
authorize and declare, in accordance with the provisions and limitations of the
MGCL and of the Charter, dividends on the shares of the Corporation in cash,
property or stock of the Corporation.


                                     - 15 -


                                   ARTICLE VII
                                    AUDITORS

     At its first meeting of each new fiscal year, the Board of Directors shall
appoint a firm of independent certified public accountants to serve for such
fiscal year for the purposes of examining the consolidated financial statements
of the Corporation and issuing an auditors' report thereon. Such appointment
shall be subject to the ratification by the stockholders, to be voted upon at
the next annual meeting of stockholders.

                                  ARTICLE VIII
                               CORPORATE DOCUMENTS

     SECTION 1. EXECUTION OF NEGOTIABLE INSTRUMENTS. All checks, drafts, notes
and other negotiable instruments relating to the Corporation or any division of
the Corporation shall be reviewed and executed in accordance with the
requirements set forth from time to time by the Chairman of the Board.

     SECTION 2. EXECUTION OF OTHER DOCUMENTS. (a) IN GENERAL. Any contract,
conveyance, lease, power of attorney and other agreement or document not in the
ordinary course of business of the Corporation shall be signed by any one of the
Chairman of the Board, the President, an Executive Vice President, a Senior Vice
President or a Vice President. However, the Board of Directors may provide
otherwise and, in certain circumstances set forth by the Board of Directors, the
Finance Committee and the Audit Committee may provide otherwise. Subject to
Section 2(b) of this Article VIII, Section 1 of this Article VIII and any
policies of the Corporation, any contract, conveyance, lease, power of attorney
or other agreement or document in the ordinary course of business may be signed
by (i) any employee authorized by any policy of the Corporation in effect at the
time the document is executed or (ii) any officer.

          (b)  TRANSACTION PRINCIPALLY INVOLVING DIVISIONS. The chairman or
president of a division of the Corporation (as appointed by the Board of
Directors or the Chairman of the Board of the Corporation) may sign any
contract, conveyance, lease, power of attorney or other agreement or document
principally involving the division of which he or she is chairman or president.
An executive vice president, a senior vice president or a vice president of a
division of the Corporation (as appointed by the Board of Directors or the
Chairman of the Board of the Corporation or the chairman or president of the
division) may sign any contract, conveyance, lease, power of attorney or other
agreement or document principally involving the division of which he or she is
an executive vice president, senior vice president or vice president. If no such
officers are appointed for a division, its managing director or general manager
or other person exercising principal supervisory authority for the business and
affairs of the division may sign such contract, conveyance, lease, power of
attorney or other agreement or document.

          (c)  CONSTRUCTION AND INTERPRETATION. Nothing in this Section 2 of
this Article VIII may be construed or interpreted to limit the authority of the
Chairman of the Board under


                                     - 16 -


Section 1 of this Article VIII.

          (d)  EXECUTION IN MULTIPLE CAPACITIES. No officer shall execute,
acknowledge or verify any instrument or document on behalf of the Corporation in
more than one capacity, if such instrument or document is required by law or by
these Bylaws to be executed, acknowledged or verified by two or more officers.

                                   ARTICLE IX
                                      SEAL

     SECTION 1. CONTENTS. The seal of the Corporation shall be circular in form
and include the words "SARA LEE CORPORATION - MARYLAND - 1941" inscribed
thereon. The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof.

     SECTION 2. AFFIXING SEAL. Whenever the Corporation is permitted or required
to affix its seal to a document, it shall be sufficient to meet the requirements
of any law, rule or regulation relating to a seal to place the word "(SEAL)"
adjacent to the signature of the person authorized to execute the document on
behalf of the Corporation.

                                    ARTICLE X
                                      STOCK

     SECTION 1. EXECUTION OF STOCK CERTIFICATES. Certificates representing
shares of stock shall be issued in such form as may be approved by the Board of
Directors and shall be signed by the Chairman of the Board, the President or a
Vice President and countersigned by the Secretary, an Assistant Secretary or the
Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation;
provided, however, that stock certificates may be issued bearing the facsimile
signatures of such officers and the facsimile seal of the Corporation whenever
the stock represented thereby is to be transferred and registered by or through
a transfer agent and registrar. A certificate is valid and may be issued whether
or not the officer whose facsimile signature appears on the certificate is still
an officer at the time of issuance. Stock certificates shall be issued,
transferred and canceled in accordance with such rules and regulations as the
Board of Directors, the Chairman of the Board or President shall prescribe.

     SECTION 2. TRANSFERS. All transfers of stock shall be made on the books of
the Corporation, by the holder of the shares, in person or by his or her
attorney, on surrender of certificates to the Corporation, duly endorsed, for a
like number of shares.

     SECTION 3. REGISTRATION. The Board of Directors shall have power and
authority to make all such rules and regulations as it may deem expedient
concerning the issuance and registration of certificates of stock, including the
appointment from time to time of transfer agents and registrars. An original or
duplicate stock ledger containing the names and addresses of all stockholders
and the number of shares of each class held by each stockholder shall be
maintained


                                     - 17 -


by the transfer agent or agents of the Corporation, if any, and otherwise at the
principal business office of the Corporation.

     SECTION 4. RECORD DATE. The Board of Directors shall have authority from
time to time to fix a date of not less than 10 days and not more than 90 days
preceding the date of any meeting of stockholders, any dividend payment date, or
any date for the allotment of rights, as a record date for the determination of
stockholders who are entitled to notice of or to vote at such meeting, or
entitled to receive such dividend or rights, as the case may be. Only
stockholders of record on such date shall be entitled to notice of or to vote at
such meeting, or to receive such dividend or rights, as the case may be;
provided, however, that unless the Board of Directors shall fix such date, such
record date for determining the stockholders entitled to notice of and to vote
at such meeting, or entitled to receive such dividend or rights, as the case may
be, shall be the 30th day before the date of such stockholders' meeting or the
date of such dividend payment or allotment of rights.

     SECTION 5. RECOGNITION OF HOLDER. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the MGCL.

     SECTION 6. REPLACEMENT CERTIFICATES. Any officer designated by the Board of
Directors or the Executive Committee may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, destroyed,
stolen or mutilated, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, destroyed, stolen or mutilated.
Any officer designated by the Board of Directors or Executive Committee, when
authorizing such issue of a new certificate or certificates, may, in his or her
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, destroyed, stolen or mutilated certificate or certificates,
or his or her legal representative, to give the Corporation a bond in such sums
as it may direct as indemnity against any claim that may be made against the
Corporation.

                                   ARTICLE XI
                                WAIVER OF NOTICE

     Whenever any notice of the time, place or purpose of any meeting of
stockholders, Board of Directors or committee of the Board of Directors is
required to be given under the MGCL, the Charter or these Bylaws, a waiver
thereof in writing, signed by the person entitled to such notice and filed with
the records of the meeting, whether before or after the holding thereof, or
actual attendance at the meeting in person or, in the case of stockholders only,
a duly executed and delivered proxy, shall satisfy any requirement for notice to
such person.


                                     - 18 -


                                   ARTICLE XII
                      MAKING, ALTERING OR REPEALING BYLAWS

     SECTION 1. POWER VESTED IN BOARD OF DIRECTORS. The Board of Directors shall
have the exclusive power and right to make, alter or repeal any or all Bylaws of
the Corporation at any time or from time to time.

     SECTION 2. SCOPE OF BYLAWS. The Bylaws may contain any provision not
inconsistent with the MGCL or the Charter for the regulation and management of
the affairs of the Corporation.




                                     - 19 -

EX-10.13

                                                                   EXHIBIT 10.13

                              SARA LEE CORPORATION

                               SECOND AMENDMENT OF
                      EXECUTIVE DEFERRED COMPENSATION PLAN

          WHEREAS, Sara Lee Corporation (the "Company") maintains the Sara Lee
Corporation Executive Deferred Compensation Plan (the "Plan"); and

          WHEREAS, amendment of the Plan is now considered desirable;

          NOW, THEREFORE, by virtue of the power reserved to the Company and the
Compensation and Employee Benefits Committee of the Board of Directors of the
Company (the "Committee") by Section 8 of the Plan, the Plan be and is hereby
amended in the following particulars:

          1.   Effective as of August 26, 1998, by (a) re-numbering Sections 4,
5, 6, 7, and 8 of the Plan respectively as Sections 3, 4, 5, 6, and 7 thereof
and (b) re-numbering all appropriate subsections of the Plan and
cross-references contained in the Plan to reflect this change.

          2.   Effective as of May 31, 2000, by adding the following Section
2.4 immediately after Section 2.3 of the Plan:

          "2.4 TRANSFERS. With the consent of the Committee and subject to such
     limits and in accordance with such rules as the Committee may establish in
     its sole discretion, a Participant who is employed by a subsidiary of the
     Company may elect to transfer his entire Deferral Account to a similar
     deferred compensation plan maintained by such subsidiary; provided, that no
     portion of a Participant's Deferral Account that is attributable to a
     Deferral, the Distribution Date for which has or will have occurred before
     the scheduled transfer date, may be transferred under this provision."

          3.   Effective as of August 26, 1998, by adding the following sentence
immediately after the fourth sentence of subsection 3.2(a) of the Plan:

     "In the event of any stock dividend, stock split, combination or exchange
     of securities, merger, consolidation, recapitalization, spin-off or other
     distribution (other than normal cash dividends) of any or all of the assets
     of the Company to stockholders, or any other similar change or event,



     such proportionate adjustments, if any, as the Committee in its discretion
     may deem appropriate to reflect such change or event shall be made with
     respect to the number of common stock equivalents credited to a
     Participant's Deferral Account."

          4.   Effective as of August 26, 1998, by adding the words "or
affiliate" immediately after the word "subsidiary" where the latter appears in
Section 6 of the Plan.

          IN WITNESS WHEREOF, the Company has caused this amendment to be
executed by a duly authorized member of the Committee this 28th day of June,
2000.

                                   SARA LEE CORPORATION

                                   By: /s/ Gary Grom




                                       2

EX-10.21

                                                                   EXHIBIT 10.21


                       CONSULTING AND RETIREMENT AGREEMENT


     Sara Lee Corporation (the "Company") and John H. Bryan ("Executive") enter
into this Consulting and Retirement Agreement (this "Agreement") on the 25th day
of February, 2000 (the "Effective Date").

                            I N T R O D U C T I O N:
                            ------------------------

     The Executive is the Chairman of the Board of Directors and Chief Executive
Officer of the Company;

     The Executive has advised the Company that he intends to step down as
Chairman of the Board of Directors of the Company on October 5, 2001, when he
attains the age of sixty-five, and that he intends to retire as an employee of
the Company on December 31, 2001.

     The Company desires to retain the Executive as a director and consultant
following Executive's retirement.

     NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, the Executive and the Company agree as follows:

     1.   RETIREMENT TRANSITION AND SUCCESSION PLANNING. Executive agrees to
continue in his current position as Chairman of the Board of Directors and Chief
Executive Officer until June 30, 2000. Upon the election of a successor Chief
Executive Officer, effective July 1, 2000, the Executive will relinquish his
duties as Chief Executive Officer. From July 1, 2000 through October 5, 2001
(the date of Executive's 65th birthday), Executive agrees to continue to serve,
if re-elected, as Chairman of the Board of Directors of the Company, provided he
is then able to carry out the duties and responsibilities of Chairman. On
October 5, 2001, Executive intends to relinquish his duties as Chairman of the
Board of Directors. Executive agrees to continue to serve as a director of the
Company after October 5, 2001, as provided in Section 2(a). From and after
October 5, 2001, Executive shall have the honorary title of Chairman Emeritus.
Executive plans to retire as an employee of the Company on December 31, 2001.
For purposes of this Agreement, December 31, 2001 shall be the Executive's
Retirement Date. At his Retirement Date, Executive's employment with the Company
shall conclude.

     2.   CONTINUING BOARD SERVICE.

     (a)  Executive has been advised by the Board Affairs and Corporate
Governance Committee of the Company's Board of Directors (the "Committee") that
the Committee presently intends to nominate the Executive for re-election as a
director of the Company. During the Consulting Period (as defined in Section 6)
Executive consents to be named by the Committee as a candidate for election to
the Board of Directors and, if elected, to serve as a director of the Company,
provided he is then able to carry out the duties and responsibilities of a
director. Following Executive's Retirement Date, Executive shall be compensated
for his services as a director of the Company in the same manner as other
non-employee directors of the Company.


                                       1


     (b)  Executive has been advised by the Supervisory Board of the Company's
subsidiary, Sara Lee/DE, N.V., that the Supervisory Board intends to nominate
Executive for re-election as a member of the Supervisory Board. During the
Consulting Period, Executive agrees to serve as a member of the Supervisory
Board of Sara Lee/DE, N.V., if elected, and provided he is then able to carry
out the duties and responsibilities of a Supervisory Board member. On and prior
to the Retirement Date, Executive shall not be compensated for his services as a
Supervisory Board member. Following Executive's Retirement Date, Executive shall
be compensated in the same manner as other Supervisory Board members who are not
employees of the Company.

     3.   COMPENSATION PRIOR TO THE RETIREMENT DATE.

     (a)  The Executive shall continue to receive his current compensation and
benefits through the Retirement Date.

     (b)  Executive shall be eligible to receive Executive's full bonus earned
under the Short-Term (Annual) Bonus Plan of the Company for the Company's fiscal
years 2000 and 2001 and a pro-rated bonus (50%) for the Company's fiscal year
2002. The actual bonuses shall be determined by the Compensation and Employee
Benefits Committee of the Board of Directors. Executive shall not participate in
any annual bonus plan of the Company for any fiscal year after 2002.

     (c)  Executive shall continue to participate in the Company's qualified and
supplemental non-qualified retirement plans through the Retirement Date.

     (d)  Subject to the determination of the Compensation and Employee Benefits
Committee of the Company's Board of Directors, Executive shall be eligible for
full awards under the Company's Long-Term Performance Incentive Plans ("LTPIP"),
for the fiscal years 1998-2000 and 1999-2001 and a pro rated award (30/36ths)
for the fiscal years 2000-2002. Executive shall not be entitled to any other
award under the LTPIP.

     4.   STOCK OPTIONS. Except for the grant of replacement stock options (upon
the exercise of an existing stock option) in accordance with the terms of the
Company's stock option plans, Executive shall not be granted any new stock
options after the Effective Date. From the Effective Date until the Retirement
Date, Executive's options shall continue to vest and to be exercisable in
accordance with their terms. Commencing on January 1, 2002, Executive shall be
treated as a retired participant under the Company's stock option plans. As a
retired participant, Executive's then outstanding stock options will continue to
vest and may be exercised until the earlier of (i) the expiration date of the
option or (ii) December 31, 2006; provided, however, that notwithstanding the
foregoing, the Executive may exercise the option granted on January 27, 2000
until the expiration date of the option. Prior to January 1, 2002, Executive is
eligible to be issued replacement stock options upon exercise of any employee
stock options held by him. Commencing on January 1, 2002, except as provided
below, Executive will not be eligible to be issued replacement stock options
upon the exercise of any stock option held by him. Notwithstanding the
foregoing, commencing on January 1, 2002 and prior to June 30, 2003, Executive
may designate one exercise date on which he may exercise any portion or all of
the one-third of his option granted on August 26, 1999 that will vest on August
26, 2002, one exercise date on which he may exercise


                                       2


any portion or all of the one-third of his option granted on January 27, 2000
that will vest on January 27, 2002, and one exercise date on which he may
exercise any portion or all of the one-third of his option granted on January
27, 2000 that will vest on January 27, 2003 and, in each case, Executive will be
eligible to be issued replacement stock options in connection with such
exercises. Nothing herein shall be deemed to prevent Executive from exercising
options at any time after January 1, 2002.

     5.   INSURANCE. Executive shall continue to participate in the Company's
travel accident, personal accident, accidental death and dismemberment
insurance, health and short and long-term disability insurance plans until the
Retirement Date. Commencing on January 1, 2002, it is anticipated that Executive
will elect Medigap Option J for supplemental health coverage.

     6.   CONSULTING SERVICES FOLLOWING THE RETIREMENT DATE. Commencing on
January 1, 2002 and ending on June 30, 2009 (the "Consulting Period"), Executive
agrees to make available to the Company, Executive's services, experience and
knowledge with respect to the Company and to undertake any other assignments and
projects which the Company may specify. Without limiting the foregoing,
Executive agrees, at the request of the Company's Chief Executive Officer, to
(i) consult on the Company's strategic initiatives; (ii) consult on operational
and financial matters; (iii) consult on acquisitions and divestitures; (iv)
represent the Company at industry, trade, civic, charitable and cultural
functions; and (v) serve as the Company's representative on various charitable
and civic organizations. The Company and the Executive agree that from January
1, 2002 through December 31, 2005, Executive will not be required to spend more
than 25% of his working time on consulting activities for the Company and from
January 1, 2006 through June 30, 2009, Executive will not be required to spend
more than 15% of his working time on consulting activities for the Company.
During the Consulting Period, the Company will provide Executive with air
transportation service commensurate with the service he presently receives for
company-related business travel by the Executive. Executive will reimburse the
Company for the costs incurred by the Company for any personal use by the
Executive of such air transportation service. In consideration for the
Executive's consulting services, Executive shall be paid $500,000 per annum in
equal monthly installments ($250,000 for the services rendered in calendar year
2009). Nothing contained in this Section 6 shall be deemed to create an
employment relationship between the Company and Executive. In providing such
consulting services, Executive shall be an independent contractor and shall not
have the authority to bind the Company with respect to any matter. The Company
shall reimburse Executive for all out-of-pocket expenses reasonably and
necessarily incurred in the performance of such consulting services, provided
the Company's policies of documentation and approval are satisfied. All expenses
incurred shall be reviewed and approved by the Company's Internal Audit
Department.

     7.   OTHER BENEFITS.

     (a)  OFFICE. Following the Retirement Date and through December 31, 2011,
the Company will provide the Executive with suitable office facilities (which
facilities will not be contiguous to the Company's executive offices) and two
administrative assistants.

     (b)  AUTOMOBILE. Following the Retirement Date and through December 31,
2008, the Company will continue to provide Executive with an automobile and
driver commensurate with the automobile transportation service he presently
receives.


                                       3


     8.   RECEIPT OF OTHER COMPENSATION. Executive acknowledges that, other than
as specifically set forth in this Agreement, following the Retirement Date, he
will not be due any compensation (except for amounts unpaid and owing for
Executive's employment with the Company and its affiliates prior to the
Retirement Date) from the Company or any of its affiliates, and after the
Retirement Date, except as provided herein, he will not be eligible to
participate, except as a retired employee, in any of the compensation or benefit
plans of the Company or any of its affiliates. Executive will be entitled to
receive benefits, which are vested and accrued prior to the Retirement Date,
pursuant to the employee benefit plans of the Company. The Company shall
promptly reimburse Executive for business expenses incurred in the ordinary
course of Executive's employment on or before the Retirement Date, but not
previously reimbursed, provided the Company's policies of documentation and
approval are satisfied.

     9.   NON-SOLICITATION AND NON-COMPETITION. In consideration for receiving
the payments contained in this Agreement, Executive agrees that, during the
Consulting Period, the Executive:

     (a)  will not, without the prior written consent of the Company, alone, or
in association with others, solicit on behalf of Executive, or any other person,
firm, corporation or entity, any employee of the Company, or any of its
operating divisions, subsidiaries or affiliates, for employment with a Competing
Business (as defined below) and;

     (b)  will not, without the prior written consent of the Chief Executive
Officer of the Company, directly or indirectly, engage or invest in, counsel or
advise or be employed by any Competing Business. Notwithstanding the foregoing,
Executive shall be entitled to (i) own not more than four and nine-tenths
percent (4.9%) of any publicly held entity that is a Competing Business and (ii)
be an investor in any mutual fund or diversified investment company. For
purposes of this Agreement, a "Competing Business" shall mean any person, firm,
corporation or entity engaged in, or conducting business, which is the same as,
or competing with, the businesses being conducted by the Company or any of its
subsidiaries, divisions or affiliates.

     10.  CONFIDENTIALITY. At all times hereafter, Executive will maintain the
confidentiality of all information in whatever form concerning the Company or
any of its affiliates relating to its or their businesses, customers, finances,
strategic or other plans, marketing, employees, trade practices, trade secrets,
know-how or other matters which are not generally known outside the Company, and
Executive will not, directly or indirectly, make any disclosure thereof to
anyone, or make any use thereof, on his own behalf or on behalf of any third
party, unless specifically requested by or agreed to in writing by the Chief
Executive Officer of the Company, except to the extent that such information (i)
becomes a matter of public record or is published in a newspaper, magazine or
other periodical or on other media available to the general public, other than
as a result of any act or omission of Executive, (ii) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency, provided that Executive gives prompt notice of such
requirement to the Company to enable to the Company to seek an appropriate
protective order, or (iii) is necessary to perform properly Executive's duties
under this Agreement. Executive will promptly after the Retirement Date return
to the Company all Company property then in his possession, except for property
or materials relating to, or necessary for, the performance of his duties under
this Agreement.


                                       4


     11.  BREACH OF AGREEMENT. Executive and the Company acknowledge and agree
that the Company will or would suffer irreparable injury in the event of a
breach or violation or threatened breach or violation of the provisions set
forth in Section 9 or 10 and agree that in event of actual or threatened breach
or violation of such provisions the Company shall be entitled to seek injunctive
relief in the federal or state courts located in Illinois to prohibit any such
violation or breach or threatened violation or breach, without necessity of
posting any bond or security and such right to seek injunctive relief shall be
in addition to any other right available under this Agreement. If the Company
pursues a claim for actual damages for a breach of Section 9 or 10 by Executive,
and is successful on the merits, any award will first be offset by any monies
remaining owed to the Executive under this Agreement.

     12.  RELEASE. In consideration for certain payments and benefits to be made
following the Retirement Date pursuant to this Agreement, following the
Retirement Date, Executive agrees to deliver to the Company a signed release in
the form attached hereto as Exhibit A (the "Release"). Unless and until
Executive delivers the Release to the Company, the Company shall have no
obligation to make such payments under this Agreement.

     13.  INDEMNIFICATION.

     (a)  The Company agrees that the limitation of liability now existing in
favor of Executive contained in Article Thirteenth of the Company's Charter and
all rights to indemnification now existing in favor of Executive contained in
Article V of the Company's By-laws, in each case as in effect on the date
hereof, shall not be amended in any manner that would adversely affect the
rights of Executive, unless such amendment is required by law. To the extent
permitted by the laws of the State of Maryland, such indemnification shall be
mandatory and not permissive and the Company shall advance all fees, costs and
expenses in connection with such indemnification.

     (b)  Pursuant to the rights to indemnification referred to in Section 13(a)
hereof, the Company agrees to indemnify and hold harmless Executive and his
legal representatives and successors to the fullest extent permitted by the laws
of the State of Maryland with respect to any claim arising at any time out of
any event, action or omission related to or in connection with Executive having
been a director, officer or employee of, or consultant to, the Company or having
served as a director or officer of another corporation or other organization at
the request of the Company. This indemnification shall continue in full force
and effect for a period of not less than the duration of all statutes of
limitations applicable to such matters (or in the case of events, actions or
omissions giving rise to matters of which Executive has promptly notified the
Company of a claim hereunder and which have not been resolved prior to the
expiration of such period, until such matters are finally resolved). Without
limiting the foregoing, the Company shall periodically advance all expenses
(including reasonable attorneys' and paralegals' fees and other costs and
expenses) as incurred with respect to the foregoing to the fullest extent
permitted by the laws of the State of Maryland, and Executive shall be defended
by the counsel of his choice. Executive shall not unreasonably withhold his
consent to the settlement of any claim for monetary damages for which he is
entitled to be fully indemnified hereunder. From and after the Effective Date,
and so long as the Executive is a director of the Company, the Company shall
maintain in effect the policies of directors' and officers' liability insurance
to the extent currently maintained by the Company, together with errors and
omissions coverage or other equivalent or more comprehensive liability coverage,
all to the extent that such coverage


                                       5


is available at reasonable commercial rates, and Executive shall be covered by
such policies for acts and omissions as a director or officer of the Company in
accordance with their respective terms to the maximum extent of coverage
available for any director or officer of the Company. The Company shall pay any
deductible amount under such policies of insurance to the extent that the
Company may legally do so.

     14.  DEATH OR TOTAL DISABILITY.

     (a)  In the event of Executive's death or total disability prior to the
Retirement Date, Executive's designated beneficiary or his estate, in the event
of Executive's death, or Executive, in the event of his total disability, shall
be entitled to all benefits payable to a deceased or disabled corporate officer
of the Company under the Company's compensation, benefit and retirement plans
and Executive's then outstanding stock options will be exercisable in accordance
with their terms.

     (b)  In the event of Executive's death following the Retirement Date and
during the Consulting Period, (i) the consulting payments provided for in
Section 6 and the other benefits provided for in Sections 7(a) and 7(b) shall
cease as of the date of death and (ii) Executive's then outstanding stock
options will be exercisable by Executive's designated beneficiary in accordance
with their terms.

     (c)  In the event of Executive's total disability following the Retirement
Date and during the Consulting Period, (i) the consulting payments provided for
in Section 6 and the other benefits provided for in Sections 7(a) and 7(b) shall
cease on the date which is two years following the date on which Executive
became totally disabled and (ii) Executive's then outstanding stock options will
be exercisable in accordance with their terms.

     15.  TAX REPORTING. Executive acknowledges and agrees that for each
calendar year commencing on January 1, 2002, the Company shall provide Executive
with the applicable Form 1099 for Federal income tax purposes to reflect the
consulting payments paid to Executive pursuant to Section 6 of this agreement,
and such similar forms required under state or local tax laws, and shall cause a
copy of the same to be filed with the Internal Revenue Service. These form(s)
shall report the amount paid by the Company to Executive during the Consulting
Period pursuant to the terms of the Agreement. Executive shall be solely
responsible for paying all appropriate federal, state and local income taxes
with respect to such amounts.

     16.  SEVERABILITY OF PROVISIONS. In the event that any one or more of the
provisions of this Agreement is held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions will not
in any way be affected or impaired thereby. Moreover, if any one or more of the
provisions contained in this Agreement are held to be excessively broad as to
duration, scope, activity or subject, such provisions will be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.

     17.  NON-ASSIGNABILITY. The rights and benefits under this Agreement are
personal to Executive and such rights and benefits shall not be subject to
assignment, alienation or transfer, except to the extent such rights and
benefits are lawfully available to the estate or beneficiaries of Executive upon
death.


                                       6


     18.  ENTIRE AGREEMENT. This Agreement sets forth all the terms and
conditions with respect to the compensation, remuneration of payments and
benefits due Executive from the Company and supersedes and replaces any and all
other agreements or understandings Executive may have had with respect thereto.
It may not be modified or amended except in writing and signed by both Executive
and an authorized representative of the Company.

     19.  NOTICE. Any notice to be given to the Executive or the Company shall
be in writing and shall be deemed given when delivered personally or when mailed
by certified mail, return receipt requested, addressed as follows:

                         To Executive at:

                         P.O. Box 800
                         Lake Bluff, Illinois 60044




                         To the Company at:

                         Sara Lee Corporation
                         Three Bank One Plaza
                         70 West Madison Street
                         Chicago, Illinois  60602-4260
                         Attention:  General Counsel



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

EXECUTIVE                          SARA LEE CORPORATION


/s/ John H. Bryan                  By:  /s/ Gary C. Grom
- ----------------------------            -----------------------------
John H. Bryan                           Gary C. Grom
                                        Senior Vice President - Human Resources


                                       7


                                    EXHIBIT A

                                     RELEASE


     Sara Lee Corporation (the "Company") and John H. Bryan ("Executive") enter
into this Release (this "Release") on the 31st day of December, 2001.


                               W I T N E S S E T H
                               -------------------

     WHEREAS, the Company and Executive are parties to a Consulting and
Retirement Agreement dated February 1, 2000 (the "Agreement");

     WHEREAS, as a condition for the receipt of certain benefits to be paid
following the date of this Release (the "Benefits") under the Agreement,
Executive has agreed to execute this Release.

     NOW THEREFORE, in consideration of the covenants and mutual promises herein
contained, it is agreed as follows:

     (a)  Executive on behalf of himself, his heirs, executors, administrators
and assigns, does hereby knowingly and voluntarily release, acquit and forever
discharge the Company and any affiliates, legal representatives, successors,
assigns and past, present and future directors and officers (collectively, the
"Released Parties") from and against any and all charges, complaints, claims,
cross-claims, third-party claims, counterclaims, contribution claims,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, debts and expenses of
any nature whatsoever, known or unknown, suspected or unsuspected, foreseen or
unforeseen, matured or unmatured, which, at any time up to and including the
date thereof, exist, have existed, or may arise out of Executive's employment
with the Company or its affiliates and the conclusion thereof, which Executive,
or any of his heirs, executors, administrators and assigns and affiliates and
agents ever had, now has or at any time hereafter may have, own or hold against
any of the Released Parties. Executive acknowledges that in exchange for this
release, the Company is providing Executive with the Benefits which exceed what
Executive would have been given without this Release. By executing this Release,
Executive is waiving all claims against the Released Parties arising under
federal, state and local labor and antidiscrimination laws and any other
restriction on the right to terminate employment, including, without limitation,
Title VII of the Civil Rights Act of 1964, as amended, the Americans with
Disabilities Act of 1990, as amended, and the Illinois Human Rights Act, as
amended. Executive represents and warrants that he has not filed or initiated
any legal or equitable proceeding, or any proceeding involving a private right
of action, against any of the Released Parties and that no such proceedings have
been initiated against any of the Released Parties on his behalf regarding any
of the claims released herein. Executive will not cause or encourage any lawsuit
or any action involving a private right to be maintained or instituted against
any of the Released Parties, and he will not participate in any manner in any
such proceedings against any of the Released Parties, regarding any of the
claims released herein, except as required by law. Nothing herein shall release
any party from any obligation under the Agreement.



     (b)  EXECUTIVE SPECIFICALLY WAIVES AND RELEASES THE RELEASED PARTIES FROM
ALL CLAIMS EXECUTIVE MAY HAVE AS OF THE DATE EXECUTIVE SIGNS THIS RELEASE
REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, AS AMENDED, 29 U.S.C. Section 621 ("ADEA"). EXECUTIVE FURTHER
AGREES: (A) THAT EXECUTIVE'S WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND
VOLUNTARY AND IN COMPLIANCE WITH THE OLDER WORKER'S BENEFIT PROTECTION ACT OF
1990; (B) THAT EXECUTIVE UNDERSTANDS THE TERMS OF THIS RELEASE; (C) THAT CERTAIN
BENEFITS CALLED FOR IN THE AGREEMENT TO BE PAID FOLLOWING THE DATE OF THIS
RELEASE WOULD NOT BE PROVIDED TO ANY EXECUTIVE TERMINATING HIS OR HER EMPLOYMENT
WITH THE COMPANY WHO DID NOT SIGN A RELEASE SIMILAR TO THIS RELEASE, THAT SUCH
BENEFITS WOULD NOT HAVE BEEN PROVIDED HAD EXECUTIVE NOT SIGNED THIS RELEASE, AND
THAT SUCH BENEFITS ARE IN EXCHANGE FOR THE SIGNING OF THIS RELEASE; (D) THAT
EXECUTIVE HAS BEEN ADVISED IN WRITING BY THE COMPANY TO CONSULT WITH AN ATTORNEY
PRIOR TO EXECUTING THIS RELEASE; (E) THAT THE COMPANY HAS GIVEN EXECUTIVE A
PERIOD OF AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH TO CONSIDER THIS RELEASE;
(F) THAT EXECUTIVE REALIZES THAT FOLLOWING EXECUTIVE'S EXECUTION OF THIS
RELEASE, EXECUTIVE HAS SEVEN (7) DAYS IN WHICH TO REVOKE THIS RELEASE BY WRITTEN
NOTICE TO THE UNDERSIGNED, AND (G) THAT THIS RELEASE SHALL BE VOID AND OF NO
FORCE AND EFFECT IF EXECUTIVE CHOOSES TO SO REVOKE, AND IF EXECUTIVE CHOOSES NOT
TO SO REVOKE, THAT THIS RELEASE THEN BECOMES EFFECTIVE AND ENFORCEABLE.

     (c)  To the maximum extent permitted by law, Executive covenants not to sue
or to institute or cause to be instituted any action in any federal, state, or
local agency or court against any of the Released Parties regarding any of the
claims released in this Release. Notwithstanding the foregoing, nothing herein
shall prevent Executive or any of the Released Parties from instituting any
action required to enforce the terms of the Agreement and this Release. In
addition, nothing herein shall be construed to prevent Executive from enforcing
any rights Executive may have under the Employee Retirement Income Security Act
of 1974.



SARA LEE CORPORATION                         EXECUTIVE


By:
    ------------------------------           -----------------------------
Name:                                        John H. Bryan
      ----------------------------
Title:
        --------------------------

EX-10.22

                                                                   EXHIBIT 10.22

                         EMPLOYMENT TRANSITION AGREEMENT

     Judith A. Sprieser has resigned her employment with Sara Lee Corporation
and all appointments she holds with Sara Lee and its affiliates, effective as of
the end of business on July 17, 2000 so as to become the Chief Executive Officer
of Transora, Inc., f/k/a eCPG.net, on July 18, 2000. To provide for a smooth and
orderly transition from Sara Lee to her new position, Ms. Sprieser and Sara Lee
agree to the following:

     1.   SALARY AND BENEFITS. Ms. Sprieser shall be paid her base salary and
receive her other compensation and benefits, including her medical benefits,
through August 31, 2000. During the transition, Ms. Sprieser will make herself
reasonably available to assist Sara Lee with the transition. Ms. Sprieser will
be entitled to receive all benefits which are vested and accrued prior to August
31, 2000 pursuant to the employee benefit plans of Sara Lee.

     2.   BONUSES. Ms. Sprieser shall receive her bonus under the Short-Term
(Annual) Bonus Plan of the Company for the 2000 fiscal year. For purposes of
calculating the bonus, Sara Lee will use the company's actual financial or other
quantitative performance criteria to determine Ms. Sprieser's bonus. With
respect to the discretionary, non-quantitative component of her bonus, Sara Lee
will calculate the bonus at 90% of the maximum. Subject to the determination of
the Compensation and Employee Benefits Committee of the Board of Directors of
Sara Lee, Ms. Sprieser shall be eligible for her long-term bonus under Sara
Lee's Long-Term Performance Incentive Plan ("LTPTIP") for the fiscal years
1998-2000. The bonus shall be calculated in a manner consistent with the
methodology used to calculate awards for other similarly situated executives in
the LTPIP. Ms. Sprieser will not be eligible to receive a short-term bonus for
the 2001 fiscal year or entitled to any other award under the LTPIP.

     3.   STOCK OPTIONS. Ms. Sprieser's existing stock options will remain
exercisable and shall continue to vest until August 31, 2001. Sara Lee waives
any requirement imposed on Ms. Sprieser under a stock option grant or any other
agreement that she repay stock option gains upon her departure from Sara Lee.
The shares issued upon exercise of such options shall be free of any contractual
restrictions, including restrictions related to repurchase, cancellation or
restriction on termination of employment.

     4.   UNIVERSAL LIFE INSURANCE. Sara Lee agrees to fully fund Ms. Sprieser's
universal life insurance policy so as to provide a $1,575,000.00 death benefit
until Ms. Sprieser's 55th birthday and thereafter a $525,000.00 death benefit.

     5.   AUTOMOBILE. Sara Lee shall make arrangements to purchase the
automobile currently leased for Ms. Sprieser and transfer title, effective
August 31, 2000, to the automobile to her at no cost and free of any
encumbrances.

     6.   NON-SOLICITATION. Ms. Sprieser agrees that, prior to August 31, 2001,
she will not, without the prior written consent of Sara Lee's Senior Vice
President-Human Resources, employ or solicit for employment, on her behalf or on
behalf of any other person or firm, including Transora, any A, B, C or D level
executive employee of Sara Lee or its operating divisions, subsidiaries or
affiliates.



     7.   CONFIDENTIALITY. At all times hereafter, Ms. Sprieser will maintain
the confidentiality of all information in whatever form concerning Sara Lee or
any of its operating divisions, subsidiaries or affiliates relating to its or
their businesses, customers, finances, strategic or other plans, marketing,
employees, trade practices, trade secrets, know-how or other matters which are
not generally known outside Sara Lee, and she will not, directly or indirectly,
make any disclosure thereof to anyone, or make any use thereof, on her own
behalf or on behalf of any third party, unless specifically requested by or
agreed to in writing by Sara Lee.


Agreed this 17th day of July 2000.



SARA LEE CORPORATION


By: /s/ Gary C. Grom                              /s/ Judith A. Sprieser
    -----------------------------------           ------------------------------
    Gary C. Grom                                  Judith A. Sprieser
    Senior Vice President-Human Resources




                                     - 2 -

EX-10.23

                                                                   EXHIBIT 10.23

                       CONSULTING AND RETIREMENT AGREEMENT


     Sara Lee Corporation (the "Company") and James R. Carlson ("Executive")
enter into this Consulting and Retirement Agreement (this "Agreement") on the
15th day of March, 2000 (the "Effective Date").

                              W I T N E S S E T H:
                              --------------------

     WHEREAS, Executive is employed by the Company as a Senior Vice President;

     WHEREAS, Executive and the Company desire to enter into an agreement
relating to Executive's retirement.

     NOW, THEREFORE, in consideration of the covenants and mutual promises
herein contained, it is agreed as follows:

     1.   RETIREMENT DATE. The Company and the Executive each have the
unilateral right, upon 90 days written notice to the other party, to designate
Executive's retirement date, provided however, that in no event shall his
retirement date be later than March 13, 2004 (the "Retirement Date"). The
Company or the Executive may designate the Retirement Date by delivering a
written notice in the form attached hereto as Exhibit A to the other party.
Until the Retirement Date, Executive shall continue as an employee and Senior
Vice President of the Company. At his Retirement Date, Executive shall resign
his employment and all appointments he holds with the Company and its
affiliates. Executive understands and agrees that his employment with the
Company will conclude on the close of business on the Retirement Date.

     2.   SALARY CONTINUATION PAYMENTS.

     (a)  The Company agrees to continue to pay Executive, commencing on the day
following the Retirement Date and ending on the earlier of (i) March 13, 2004 or
(ii) the date which is 24 months following the Retirement Date (the "Salary
Continuation Period"), Executive's then current base salary (but not less than
$41,667.00 per month) in equal monthly installments in accordance with the
Company's normal payroll practices (collectively, the "Salary Continuation
Payments"), less all applicable withholding taxes and other customary payroll
deductions. The Salary Continuation Payments will commence on the first payroll
date following the Retirement Date. Executive and Company agree that if the
Retirement Date is on or before March 13, 2002, the Executive shall receive 24
months of Salary Continuation Payments. To the extent the Retirement Date occurs
after March 13, 2002, then Executive shall receive less than 24 months of Salary
Continuation Payments.

     (b)  In the event of the Executive's death during the Salary Continuation
Period, the Salary Continuation Payments, the Short-Term Bonus referred to in
Paragraph 4, and any awards under the LTPIP referred to in Subparagraph 6(b),
shall be payable to Executive's designated beneficiary or, if none, to his
estate and, except to the extent benefits contemplated by this Agreement are
provided by their terms to be paid to Executive's heirs and beneficiaries, the
Company shall have no further obligations to Executive's beneficiaries under
this Agreement.



     (c)  The Salary Continuation Payments shall cease if the Executive becomes
reemployed by the Company or any enterprise in which the Company owns a
controlling interest.

     3.   RECEIPT OF OTHER COMPENSATION. Executive acknowledges and agrees that,
other than as specifically set forth in this Agreement, following the Retirement
Date, he is not and will not be due any compensation, including, but not limited
to, compensation for unpaid salary (except for amounts unpaid and owing for
Executive's employment with the Company and its affiliates prior to the
Retirement Date), unpaid bonus, severance and accrued or unused vacation time or
vacation pay from the Company or any of its affiliates, and as of and after the
Retirement Date, except as provided herein, he will not be eligible to
participate, except as a retired employee, in any of the compensation or benefit
plans of the Company or any of its affiliates, including, without limitation,
the Company's Consolidated Pension and Retirement Plan, Employee Stock Ownership
Plan ("ESOP"), 401(k) Supplemental Savings Plan, stock purchase plan, travel
accident insurance, personal accident insurance, accidental death and
dismemberment insurance and short-term and long-term disability insurance.
Executive will be entitled to receive benefits, which are vested and accrued
prior to the Retirement Date, pursuant to the employee benefit plans of the
Company. The Company shall promptly reimburse Executive for business expenses
incurred in the ordinary course of Executive's employment on or before the
Retirement Date, but not previously reimbursed, provided the Company's policies
of documentation and approval are satisfied.

     4.   SHORT-TERM BONUS. Executive shall receive a pro rata portion (based on
the number of months elapsed in the fiscal year in which his Retirement Date
occurs) of Executive's bonus earned under the Short-Term (Annual) Bonus Plan of
the Company for the fiscal year in which the Retirement Date occurs. For
example, if Executive's Retirement Date is December 31, 2001, then Executive
shall receive 6/12 of Executive's earned bonus for the fiscal year 2002. For
purposes of calculating the bonus in the year in which the Retirement Date
occurs, the Company will use Executive's actual financial or other quantitative
performance criteria to determine Executive's bonus. With respect to any
discretionary, non-quantitative component of the bonus, the Company will assume
a superior level of performance by the Executive. The bonus payment provided for
in this Paragraph 4 shall be in lieu of, not in addition to, all bonuses payable
to the Executive and shall be paid to Executive on the same date or dates on
which active participants under such bonus plan are paid bonuses for the
applicable bonus periods. The bonus payment, if any, made by the Company shall
be reduced by applicable withholding and other customary payroll deductions.
Executive shall not be entitled to participate in any annual bonus plan of the
Company for any fiscal year ending after the fiscal year in which the Retirement
Date occurs.

     5.   SUPPLEMENTAL NON-QUALIFIED ESOP AND RETIREMENT PLAN BENEFITS. For
purposes of determining the amount of Executive's supplemental pension benefit
under the Sara Lee Corporation Supplemental Benefit Plan ("Supplemental Plan")
and Executive's eligibility for such supplemental pension, the Salary
Continuation Period shall be considered as vesting and benefit service and
Executive's Salary Continuation Payments (and any bonus paid pursuant to Section
4) shall be considered compensation. In addition, for purposes of determining
the amount of Executive's supplemental ESOP benefit under the Supplemental Plan,
the Salary


                                       2


Continuation Period shall be considered as vesting service and Executive's
Salary Continuation Payments shall be considered compensation.

     6.   STOCK OPTIONS AND LTPIP.

     (a)  Executive shall not be granted any and shall not be entitled to
receive any new stock options after the Retirement Date. Executive's existing
stock options as of the Retirement Date will continue to vest during the Salary
Continuation Period in accordance with their vesting schedules. Following the
end of the Salary Continuation Period, Executive shall be treated as a retired
participant under the Company's stock option plans. As a retired participant,
Executive's then outstanding stock options will continue to vest and may be
exercised until the earlier of (i) the expiration date of the option or (ii)
five years following the date on which the Salary Continuation Period ends;
provided, however, that with respect to any options granted in August, 2000 or
thereafter, such options may be exercised at any time prior to the expiration
date of the option. From and after the Retirement Date, Executive shall not be
eligible to be issued replacement stock options upon exercise of any options
held by him. Notwithstanding anything contained in this Section 6, if, at any
time prior to the date of exercise of any stock option, Executive engages in:
(i) conduct for which either criminal or civil penalties against Executive may
be sought, (ii) conduct that would constitute a breach of this Agreement under
Paragraphs 11, 12 or 13; (iii) violation of the Company's Global Business
Standards; or (iv) breaching any agreement by and between Executive and the
Company, then the Executive's unexercised Stock Options shall terminate
effective the date on which Executive enters into such activity.

     (b)  Subject to the determination of the Compensation and Employee Benefits
Committee of the Company's Board of Directors (the "Committee"), Executive shall
be entitled to PRO RATA awards under the Company's Long-Term Performance
Incentive Plans ("LTPIP"), subject to the terms of the LTPIP, including, without
limitation, the requirement that Executive have at least 18 months of service
during any 36 months period covered by the LTPIP to qualify for a pro rata award
under the LTPIP. The awards shall be calculated in a manner consistent with the
methodology used to calculate awards generally for other similar situated
participants in the LTPIP. The Company shall recommend to the Committee that
Executive receive an award under the LTPIP. Executive shall not be entitled to
any other award under the LTPIP.

     7.   HEALTH INSURANCE CONTINUATION, UNIVERSAL LIFE. Beginning on the
Retirement Date, Executive may elect to participate in the Sara Lee Corporation
Retiree Medical Plan available to the Executive Benefit Group of the Company 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 Executive
unless he elects such coverage within thirty (30) days following the Retirement
Date. The premium charged Executive for such retiree medical coverage may be
different from the premium charged an active employee of the Company for similar
coverage. The Company further agrees to continue to fund the individual
universal life insurance policy provided to Executive by the Company under the
Company's Executive Life Insurance Plan in accordance with the terms and
conditions of such plan, as such plan is in effect from time to time.

     8.   AUTOMOBILE. Following his Retirement Date, Executive may continue to
use the automobile provided to him by the Company in accordance with the terms
of the Company's


                                       3


leased automobile policy until the earlier of (i) the end of the Salary
Continuation Period, (ii) the date on which he accepts full-time employment with
another employer or (iii) the end of the lease term and provided further that
the Company shall only be responsible for the lease payments and insurance;
Executive shall be responsible for all other operating expenses, including all
fuel and maintenance expenses related to the automobile. Executive shall have
the option to purchase the automobile at any time during the term of this
Agreement or upon the termination of this Agreement. In the event the Executive
elects to purchase the automobile, the purchase price shall be determined in
accordance with the Company's then current policy. During the term of the lease,
the Company shall continue to insure or provide insurance (including collision,
comprehensive and liability) for the automobile.

     9.   OTHER BENEFITS.

     (a)  Executive will be entitled to fulfillment of any matching grant
obligations under the Company's Matching Grants Program with respect to
commitments made by Executive prior to the Retirement Date.

     (b)  Executive shall continue to participate in the Estate Builder Plan of
the Company after the Retirement Date. The interest credited to Executive's
account under the plan after the Retirement Date shall be credited at the target
rate set forth in the plan, as such plan is in effect from time to time, and the
funds in Executive's account shall be paid to Executive in accordance with the
terms and conditions of the plan and the Estate Builder Agreement between
Executive Employee and the Company, as such plan and agreement are in effect
from time to time.

     10.  CONSULTING SERVICES AND REIMBURSEMENT OF EXPENSES. Following the
Retirement Date, Executive agrees to make available to Company, during the
Salary Continuation Period, at mutually agreeable times, Executive's services,
experience and knowledge with respect to the operations, practices and policies
of Sara Lee Foods and Sara Lee Foodservice. Nothing contained in this Section 10
shall be deemed to create an employment relationship between the Company and
Executive. In providing such consulting services, Executive shall be an
independent contractor and shall not have the authority to bind the Company with
respect to any matter. During the Salary Continuation Period, the Company shall
reimburse Executive for all out-of-pocket expenses reasonably and necessarily
incurred in the performance of such consulting services, provided that such
expenses are incurred at the request of the Company. Reimbursement shall be made
against the submission by Executive of signed itemized expense reports in
accordance with the travel and business expense reimbursement policies of the
Company in effect from time to time. The Company's sole remedy for breach of
this Section 10 shall be an action for specific performance. The Company may not
set off any amounts due to Executive hereunder in the event Executive fails to
render consulting services.

     11.  NON-SOLICITATION AND NON-COMPETITION. In consideration for receiving
the payments contained in this Agreement following the Retirement Date,
Executive agrees that, during the Salary Continuation Period, the Executive:

     (a)  will not, without the prior written consent of the Company, alone, or
in association with others, solicit on behalf of Executive, or any other person,
firm, corporation or entity, any employee of the Company, or any of its
operating divisions, subsidiaries or affiliates,


                                       4


for employment with a Competing Business (as defined below). For purposes of
this Agreement and to avoid any ambiguity, the Company and Executive agree that
it will be presumed that Executive solicited an employee of the Company if such
employee commences work with a Competing Business within one (1) year after
Executive becomes employed by, an investor of or affiliated with such Competing
Business; and

     (b)  will not, without the prior written consent of the Company, directly
or indirectly, engage or invest in, counsel or advise or be employed by any
Competing Business. Notwithstanding the foregoing, Executive shall be entitled
to own not more than four and nine-tenths percent (4.9%) of any publicly held
entity that is a Competing Business. For purposes of this Agreement, a
"Competing Business" shall mean the twenty largest entities (whether person,
partnership, limited liability company, corporation or other entity), as
measured by total revenues, engaged in foodservice distribution, meat
manufacturing and distribution and bakery manufacturing and distribution.
Attached hereto as Schedule 1 is a list of the twenty largest entities in each
of the three business categories as of the date of this Agreement. Executive
understands and agrees that the composition of the twenty largest competitors
for each of the three lines of business may change over time and that the
Company's determination of the twenty largest competitors (using publicly
available information) shall be dispositive for purposes of this Agreement.

     12.  CONFIDENTIALITY. At all times hereafter, Executive will maintain the
confidentiality of all information in whatever form concerning the Company or
any of its affiliates relating to its or their businesses, customers, finances,
strategic or other plans, marketing, employees, trade practices, trade secrets,
know-how or other matters which are not generally known outside the Company, and
Executive will not, directly or indirectly, make any disclosure thereof to
anyone, or make any use thereof, on his own behalf or on behalf of any third
party, unless specifically requested by or agreed to in writing by an executive
officer of the Company. Executive will promptly after the Retirement Date return
to the Company all reports, files, memoranda, records, computer equipment and
software, credit cards, cardkey passes, door and file keys, computer access
codes or disks and instructional manuals, and other physical or personal
property which he received or prepared or helped prepare in connection with his
employment with the Company, its subsidiaries and affiliates, and Executive will
not retain any copies, duplicates, reproductions or excerpts thereof.

     13.  NON-DISPARAGEMENT. At all times hereafter, Executive will not
disparage or criticize, orally or in writing, the business, products, policies,
decisions, directors, officers or employees of the Company or any of its
operating divisions, subsidiaries or affiliates to any person.

     14.  BREACH OF AGREEMENT.

     (a)  In the event of any dispute under this Agreement, the party who has
the claim under this Agreement shall give the other party written notice, and
except in the case of a breach of this Agreement which is not susceptible to
being cured (such as the disclosure of confidential information), ten calendar
days in which to cure.


                                       5


     (b)  In the event of a breach of this Agreement, including, but not limited
to Paragraphs 11, 12 and 13 by Executive (i) the Company shall have the right to
immediately discontinue any remaining Salary Continuation Payments and other
obligations of the Company to Executive during the remaining Salary Continuation
Period but excluding any obligation to provide vested and accrued pension
benefits under any qualified Company pension plan and any payments due Executive
under any deferred compensation plan of the Company, and (ii) the Salary
Continuation Period shall thereupon cease.

     (c)  If the Company pursues a claim for actual damages for a breach of
Paragraphs 11, 12, or 13 by Executive, any award will first be offset by any
monies remaining owed to the Executive under this Agreement.

     (d)  Executive and the Company acknowledge and agree that the Company will
or would suffer irreparable injury in the event of a breach or violation or
threatened breach or violation of the provisions set forth in Paragraphs 11, 12
or 13 and agree that in event of actual or threatened breach or violation of
such provisions the Company shall be awarded injunctive relief in the federal or
state courts located in Illinois to prohibit any such violation or breach or
threatened violation or breach, without necessity of posting any bond or
security and such right to injunctive relief shall be in addition to any other
right available under this Agreement.

     15.  RELEASE.

     (a)  In consideration for the payments and other benefits contained in this
Agreement, Executive agrees to deliver to Company, no later than 22 days
following written notice of the Retirement Date by either party, a release in
the form attached hereto as Exhibit B (the "Release"). Unless and until
Executive delivers the duly executed Release to the Company, the Company shall
have no obligation to make any payments required under this Agreement.

     (b)  Executive on behalf of himself, his heirs, executors, administrators
and assigns, does hereby knowingly and voluntarily release, acquit and forever
discharge the Company and any affiliates, legal representatives, successors,
assigns and past, present and future directors, officers, employees, trustees
and shareholders (collectively, the "Released Parties") from and against any and
all charges, complaints, claims, cross-claims, third-party claims,
counterclaims, contribution claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses of any nature whatsoever, known or
unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured,
which, at any time up to and including the date thereof, exists, have existed,
or may arise from any matter whatsoever occurring, including, but not limited
to, any claims arising out of or in any way related to Executive's employment
with the Company or its affiliates and the conclusion thereof, which Executive,
or any of his heirs, executors, administrators and assigns and affiliates and
agents ever had, now has or at any time hereafter may have, own or hold against
any of the Released Parties. Executive acknowledges that in exchange for this
release, the Company is providing Executive with a total consideration,
financial or otherwise, which exceeds what Executive would have been given
without the release. By executing this Agreement, Executive is waiving all
claims against the Released Parties arising under federal, state and local labor
and antidiscrimination laws and any other restriction on the right to terminate
employment, including, without limitation, Title VII of the Civil Rights Act of
1964,


                                       6


as amended, the Americans with Disabilities Act of 1990, as amended, and the
Illinois Human Rights Act, as amended. Executive represents and warrants that he
has not filed or initiated any legal or equitable proceeding, or any proceeding
involving a private right of action, against any of the Released Parties and
that no such proceedings have been initiated against any of the Released Parties
on his behalf. Executive will not cause or encourage any lawsuit or any action
involving a private right to be maintained or instituted against any of the
Released Parties, and he will not participate in any manner in any such
proceedings against any of the Released Parties, except as required by law.
Nothing herein shall release any party from any obligation under this Agreement.

     (c)  EXECUTIVE SPECIFICALLY WAIVES AND RELEASES THE RELEASED PARTIES FROM
ALL CLAIMS EXECUTIVE MAY HAVE AS OF THE DATE EXECUTIVE SIGNS THIS AGREEMENT
REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, AS AMENDED, 29 U.S.C. Section 621 ("ADEA"). EXECUTIVE FURTHER
AGREES: (A) THAT EXECUTIVE'S WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND
VOLUNTARY AND IN COMPLIANCE WITH THE OLDER WORKER'S BENEFIT PROTECTION ACT OF
1990; (B) THAT EXECUTIVE UNDERSTANDS THE TERMS OF THIS RELEASE; (C) THAT THE
SALARY CONTINUATION PAYMENTS AND OTHER BENEFITS CALLED FOR IN THIS AGREEMENT
WOULD NOT BE PROVIDED TO ANY EXECUTIVE TERMINATING HIS OR HER EMPLOYMENT WITH
THE COMPANY WHO DID NOT SIGN A RELEASE SIMILAR TO THIS RELEASE, THAT SUCH
PAYMENTS AND BENEFITS WOULD NOT HAVE BEEN PROVIDED HAD EXECUTIVE NOT SIGNED THIS
RELEASE, AND THAT THE PAYMENTS AND BENEFITS ARE IN EXCHANGE FOR THE SIGNING OF
THIS RELEASE; (D) THAT EXECUTIVE HAS BEEN ADVISED IN WRITING BY THE COMPANY TO
CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE; (E) THAT THE COMPANY
HAS GIVEN EXECUTIVE A PERIOD OF AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH TO
CONSIDER THIS RELEASE; (F) THAT EXECUTIVE REALIZES THAT FOLLOWING EXECUTIVE'S
EXECUTION OF THIS RELEASE, EXECUTIVE HAS SEVEN (7) DAYS IN WHICH TO REVOKE THIS
RELEASE BY WRITTEN NOTICE TO THE UNDERSIGNED, AND (G) THAT THIS ENTIRE AGREEMENT
SHALL BE VOID AND OF NO FORCE AND EFFECT IF EXECUTIVE CHOOSES TO SO REVOKE, AND
IF EXECUTIVE CHOOSES NOT TO SO REVOKE, THAT THIS AGREEMENT AND RELEASE THEN
BECOME EFFECTIVE AND ENFORCEABLE.

     (d)  To the maximum extent permitted by law, Executive covenants not to sue
or to institute or cause to be instituted any action in any federal, state, or
local agency or court against any of the Released Parties, including, but not
limited to, any of the claims released in this Agreement. Notwithstanding the
foregoing, nothing herein shall prevent Executive or any of the Released Parties
from instituting any action required to enforce the terms of the Agreement and
this Release. In addition, noting herein shall be construed to prevent Executive
from enforcing any rights Executive may have under the Employee Retirement
Income Security Act of 1974.

     16.  EXECUTIVE'S UNDERSTANDING. Executive acknowledges by signing this
Agreement that Executive has read and understands this document, that Executive
has conferred with or had opportunity to confer with Executive's attorney
regarding the terms and meaning of this


                                       7


Agreement, that Executive has had sufficient time to consider the terms provided
for in this Agreement, that no representatives or inducements have been made to
Executive except as set forth in this Agreement, and that Executive has signed
the same KNOWINGLY AND VOLUNTARILY.

     17.  NON-RELIANCE. Executive represents to the Company and the Company
represents to Executive that in executing this Agreement they do not rely and
have not relied upon any representation or statement not set forth herein made
by the other or by any of the other's agents, representatives or attorneys with
regard to the subject matter, basis or effect of this Agreement or otherwise.

     18.  SEVERABILITY OF PROVISIONS. In the event that any one or more of the
provisions of this Agreement is held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions will not
in any way be affected or impaired thereby. Moreover, if any one or more of the
provisions contained in this Agreement are held to be excessively broad as to
duration, scope, activity or subject, such provisions will be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.

     19.  NON-ADMISSION OF LIABILITY. Executive agrees that neither this
Agreement nor the performance by the parties hereunder constitutes an admission
by any of the Released Parties of any violation of any federal, state, or local
law, regulation, common law, breach of any contract, or any other wrongdoing of
any type.

     20.  NON-ASSIGNABILITY. The rights and benefits under this Agreement are
personal to Executive and such rights and benefits shall not be subject to
assignment, alienation or transfer, except to the extent such rights and
benefits are lawfully available to the estate or beneficiaries of Executive upon
death.

     21.  ENTIRE AGREEMENT. This Agreement sets forth all the terms and
conditions with respect to the compensation, remuneration of payments and
benefits due Executive from the Company and supersedes and replaces any and all
other agreements or understandings Executive may have had with respect thereto.
It may not be modified or amended except in writing and signed by both Executive
and an authorized representative of the Company.




                      [THIS SPACE INTENTIONALLY LEFT BLANK]


                                       8


     22.  NOTICE. Any notice to be given hereunder shall be in writing and shall
be deemed given when mailed by certified mail, return receipt requested,
addressed as follows:

               To Executive at:

               the address of Executive, in Illinois, as set forth in the
               payroll records of the Company



               To the Company at:

               Sara Lee Corporation
               Three First National Plaza
               Chicago, Illinois  60602-4260
               Attention:  General Counsel

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

EXECUTIVE                                    SARA LEE CORPORATION

/s/ James R. Carlson                         By:  /s/ Gary C. Grom
- ----------------------------------                ------------------------------
James R. Carlson                                  Name:  Gary C. Grom
                                                  Title: Senior Vice President -
                                                         Human Resources


                                       9


                                    EXHIBIT A


                         IF NOTICE GIVEN BY THE COMPANY

DATE



Mr. James R. Carlson
820 Crescent Boulevard
Glen Ellyn, IL  60137


Re:  Notice of Retirement Date

Dear Jim:

Sara Lee Corporation hereby notifies you that it has designated [insert date,
which date must be at least 90 days after the date of letter] as your Retirement
Date for purposes of Section 1 of the Consulting and Retirement Agreement dated
March __, 2000 by and between Sara Lee and you.

Sincerely,


SARA LEE CORPORATION

By:
    -------------------------



                                    EXHIBIT A

                        IF NOTICE GIVEN BY THE EXECUTIVE


DATE



Sara Lee Corporation
Three First National Plaza
Chicago, Illinois  60602
Attn:  General Counsel

Re:  Notice of Retirement Date

Dear ___________________:

I hereby notify Sara Lee Corporation that I have designated [insert date, which
date must be at least 90 days after the date of the letter] as my Retirement
Date for purposes of Section 1 of the Consulting and Retirement Agreement dated
March __, 2000 by and between Sara Lee and me.

Sincerely,




James R. Carlson



                                    EXHIBIT B

                                     RELEASE


     Sara Lee Corporation (the "Company") and James R. Carlson ("Executive")
enter into this Release (this "Release") on the __ day of ______________, ____.

                               W I T N E S S E T H
                               -------------------

     WHEREAS, the Company and Executive are parties to a Consulting and
Retirement Agreement (the "Agreement");

     WHEREAS, as a condition for the receipt of benefits (the "Benefits") under
the Agreement, Executive has agreed to execute this Release.

     NOW THEREFORE, in consideration of the covenants and mutual promises herein
contained, it is agreed as follows:

     (a)  Executive on behalf of himself, his heirs, executors, administrators
and assigns, does hereby knowingly and voluntarily release, acquit and forever
discharge the Company and any affiliates, legal representatives, successors,
assigns and past, present and future directors, officers, employees, trustees
and shareholders (collectively, the "Released Parties") from and against any and
all charges, complaints, claims, cross-claims, third-party claims,
counterclaims, contribution claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses of any nature whatsoever, known or
unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured,
which, at any time up to and including the date thereof, exists, have existed,
or may arise from any matter whatsoever occurring, including, but not limited
to, any claims arising out of or in any way related to Executive's employment
with the Company or its affiliates and the conclusion thereof, which Executive,
or any of his heirs, executors, administrators and assigns and affiliates and
agents ever had, now has or at any time hereafter may have, own or hold against
any of the Released Parties. Executive acknowledges that in exchange for this
release, the Company is providing Executive with the Benefits which exceed what
Executive would have been given without this Release. By executing this Release,
Executive is waiving all claims against the Released Parties arising under
federal, state and local labor and antidiscrimination laws and any other
restriction on the right to terminate employment, including, without limitation,
Title VII of the Civil Rights Act of 1964, as amended, the Americans with
Disabilities Act of 1990, as amended, and the Illinois Human Rights Act, as
amended. Executive represents and warrants that he has not filed or initiated
any legal or equitable proceeding, or any proceeding involving a private right
of action, against any of the Released Parties and that no such proceedings have
been initiated against any of the Released Parties on his behalf. Executive will
not cause or encourage any lawsuit or any action involving a private right to be
maintained or instituted against any of the Released Parties, and he will not
participate in any manner in any such proceedings against any of the Released
Parties, except as required by law. Nothing herein shall release any party from
any obligation under this Agreement.



     (b)  EXECUTIVE SPECIFICALLY WAIVES AND RELEASES THE RELEASED PARTIES FROM
ALL CLAIMS EXECUTIVE MAY HAVE AS OF THE DATE EXECUTIVE SIGNS THIS AGREEMENT
REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, AS AMENDED, 29 U.S.C. Section 621 ("ADEA"). EXECUTIVE FURTHER
AGREES: (A) THAT EXECUTIVE'S WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND
VOLUNTARY AND IN COMPLIANCE WITH THE OLDER WORKER'S BENEFIT PROTECTION ACT OF
1990; (B) THAT EXECUTIVE UNDERSTANDS THE TERMS OF THIS RELEASE; (C) THAT THE
BENEFITS CALLED FOR IN THIS AGREEMENT WOULD NOT BE PROVIDED TO ANY EXECUTIVE
TERMINATING HIS OR HER EMPLOYMENT WITH THE COMPANY WHO DID NOT SIGN A RELEASE
SIMILAR TO THIS RELEASE, THAT SUCH BENEFITS WOULD NOT HAVE BEEN PROVIDED HAD
EXECUTIVE NOT SIGNED THIS RELEASE, AND THAT THE BENEFITS ARE IN EXCHANGE FOR THE
SIGNING OF THIS RELEASE; (D) THAT EXECUTIVE HAS BEEN ADVISED IN WRITING BY THE
COMPANY TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE; (E) THAT
THE COMPANY HAS GIVEN EXECUTIVE A PERIOD OF AT LEAST TWENTY-ONE (21) DAYS WITHIN
WHICH TO CONSIDER THIS RELEASE; (F) THAT EXECUTIVE REALIZES THAT FOLLOWING
EXECUTIVE'S EXECUTION OF THIS RELEASE, EXECUTIVE HAS SEVEN (7) DAYS IN WHICH TO
REVOKE THIS RELEASE BY WRITTEN NOTICE TO THE UNDERSIGNED, AND (G) THAT THIS
RELEASE SHALL BE VOID AND OF NO FORCE AND EFFECT IF EXECUTIVE CHOOSES TO SO
REVOKE, AND IF EXECUTIVE CHOOSES NOT TO SO REVOKE, THAT THIS RELEASE THEN
BECOMES EFFECTIVE AND ENFORCEABLE.

     (c)  To the maximum extent permitted by law, Executive covenants not to sue
or to institute or cause to be instituted any action in any federal, state, or
local agency or court against any of the Released Parties, including, but not
limited to, any of the claims released in this Agreement. Notwithstanding the
foregoing, nothing herein shall prevent Executive or any of the Released Parties
from instituting any action required to enforce the terms of the Agreement and
this Release. In addition, noting herein shall be construed to prevent Executive
from enforcing any rights Executive may have under the Employee Retirement
Income Security Act of 1974.



SARA LEE CORPORATION                         EXECUTIVE


By:
     -----------------------------           -----------------------------------
Name:                                        James R. Carlson
      ----------------------------
Title:
        --------------------------

EX-12.(1)

                                                                    EXHIBIT 12.1

                      SARA LEE CORPORATION AND SUBSIDIARIES
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                           (in millions except ratios)



                                                                      July 1,     July 3,
                                                                       2000       1999 (1)
                                                                      ------      -------
                                                                            
Fixed charges:
     Interest expense                                                 $  252      $  237
     Interest portion of rental expense                                   63          62
                                                                      ------      ------

     Total fixed charges before capitalized interest                     315         299
     Capitalized interest                                                  9           3
                                                                      ------      ------

          Total fixed charges                                         $  324      $  302
                                                                      ======      ======


Earnings available for fixed charges:
     Income before income taxes continuing operations                 $1,567      $1,570
     Less undistributed income in minority owned companies                (8)         (6)
     Add minority interest in majority-owned subsidiaries                 35          31
     Add amortization of capitalized interest                             24          23
     Add fixed charges before capitalized interest                       315         299
                                                                      ------      ------

          Total earnings available for fixed charges                  $1,933      $1,917
                                                                      ======      ======

Ratio of earnings to fixed charges                                       6.0         6.3
                                                                      ======      ======


(1)  During the second quarter of fiscal 1999, the corporation recorded a
     pre-tax charge of $76 million in connection with the recall of certain of
     its meat products.

     During the first quarter of fiscal 1999, the corporation recorded a pre-tax
     gain of $137 million in connection with the sale of its tobacco business.

EX-12.(2)

                                                                    EXHIBIT 12.2

                      SARA LEE CORPORATION AND SUBSIDIARIES
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                    AND PREFERRED STOCK DIVIDEND REQUIREMENTS
                           (in millions except ratios)



                                                                      July 1,       July 3,
                                                                       2000         1999 (1)
                                                                      -------      -------
                                                                             
Fixed charges and preferred stock dividend requirements:
     Interest expense                                                 $   252      $   237
     Interest portion of rental expense                                    63           62
                                                                      -------      -------

     Total fixed charges before capitalized interest                      315          299
       and preferred stock dividend requirements
     Capitalized interest                                                   9            3
     Preferred stock dividend requirements (2)                             20           20
                                                                      -------      -------

          Total fixed charges and preferred stock
            dividend requirements                                     $   344      $   322
                                                                      =======      =======


Earnings available for fixed charges and preferred stock
  stock dividend requirements:
     Income before income taxes continuing operations                 $ 1,567      $ 1,570
     Less undistributed income in minority owned companies                 (8)          (6)
     Add minority interest in majority-owned subsidiaries                  35           31
     Add amortization of capitalized interest                              24           23
     Add fixed charges before capitalized interest and
       preferred stock dividend requirements                              315          299
                                                                      -------      -------

          Total earnings available for fixed charges and
            preferred stock dividend requirements                     $ 1,933      $ 1,917
                                                                      =======      =======


Ratio of earnings to fixed charges and preferred stock
  dividend requirements                                                   5.6          6.0
                                                                      =======      =======


(1)  During the second quarter of fiscal 1999, the corporation recorded a
     pre-tax charge of $76 million in connection with the recall of certain of
     its meat products.

     During the first quarter of fiscal 1999, the corporation recorded a pre-tax
     gain of $137 million in connection with the sale of its tobacco business.

(2)  Preferred stock dividends in the computation have been increased to an
     amount representing the pretax earnings that would have been required to
     cover such dividends.

EX-21

                                                                      EXHIBIT 21


                                 SUBSIDIARIES OF
                              SARA LEE CORPORATION

          The following is a list of active subsidiary corporations of the
Registrant. Subsidiaries which are inactive or exist solely to protect the
business names, but conduct no business, have been omitted; such omitted
subsidiaries considered in the aggregate do not constitute a significant
subsidiary.

                              DOMESTIC SUBSIDIARIES




NAME                                                                 PLACE OF INCORPORATION
- ----                                                                 ----------------------
                                                                  
ARP Corp.                                                            Delaware

Bali Foundations, Inc.                                               Delaware

Best Kosher Foods Corporation                                        Illinois

Bryan Foods, Inc.                                                    Delaware

Caribesock, Inc.                                                     Delaware

Caribetex, Inc.                                                      Delaware

Ceibena Del, Inc.                                                    Delaware

Champion Products Export Co.                                         Delaware

Champion Products Inc.                                               New York

Chock Full O'Nuts Corporation                                        New York

Coach Leatherware International, Inc.                                Delaware

Coach Stores Puerto Rico, Inc.                                       Delaware

Continental Coffee Products Company                                  Delaware

Cortez Del, Inc.                                                     Delaware

Crocker & Sprague, Inc.                                              Delaware

Courtaulds Textiles America, Inc.                                    Delaware

Courtaulds Textiles U.S., Inc.                                       Delaware

D. Canale Food Services, Inc.                                        Tennessee

DEA Leasing, L.L.C.                                                  Delaware




                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
DJW Incorporated                                                     Kentucky

Hanes Dominican Del, Inc.                                            Delaware

Hanes Menswear, Inc.                                                 Delaware

Hanes Puerto Rico, Inc.                                              Delaware

Haw River Realty, Inc.                                               Delaware

International Affiliates & Investment Inc.                           Delaware

J.E. Morgan Knitting Mills, Inc.                                     Pennsylvania

Kesterson Companies, Inc.                                            Tennessee

Kesterson Food Company, Inc.                                         Tennessee

Liberty Fabrics, Inc.                                                Delaware

Multifoods, Inc.                                                     New York

Net Apparel LLC                                                      Delaware

Nihon Sara Lee KK Corporation                                        Delaware

Nutri-metics International, Inc.                                     Delaware

Ozark Salad Company, Inc.                                            Delaware

Pattern Co. Inc.                                                     Delaware

Playtex Apparel, Inc.                                                Delaware

Playtex Dorado Corporation                                           Delaware

Playtex Marketing Corporation                                        Delaware

Project Java Holding Corp.                                           Delaware

PYA Holdings LLC                                                     Delaware

PYA/Monarch, Inc.                                                    Maryland

Quinn Coffee Company                                                 Montana



                                       2



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Quikava Inc.                                                         Massachusetts

Rice Hosiery Corporation                                             North Carolina

Richheimer Food Company                                              Illinois

R. Salad Realty Co., Inc.                                            New York

Sara Lee Business Services Corporation                               Maryland

Sara Lee Champion Europe Inc.                                        Delaware

Sara Lee Corporation Asia, Inc.                                      Delaware

Sara Lee Equity, L.L.C.                                              Delaware

Sara Lee French Funding Company L.L.C.                               Delaware

Sara Lee French Investment Company, Inc.                             Delaware

Sara Lee Fresh Inc.                                                  Delaware

Sara Lee Global Finance, Inc.                                        Delaware

Sara Lee International Corporation                                   Delaware

Sara Lee International Finance Corporation                           Delaware

Sara Lee International Funding Company L.L.C.                        Delaware

Sara Lee International Investment L.L.C.                             Delaware

Sara Lee Investments, Inc.                                           Delaware

Sara Lee Sock Company                                                Delaware

Sara Lee - Kiwi Holdings, Inc.                                       Delaware

Sara Lee U.K. Depositor L.L.C.                                       Delaware

Sara Lee U.K. Holdings, Inc.                                         Delaware

Sara Lee U.K. Leasing L.L.C.                                         Delaware

Saramar L.L.C.                                                       Delaware



                                       3



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
SCH Enterprises, L.L.C.                                              Delaware

Seamless Textiles, Inc.                                              Delaware

SL Outer Banks L.L.C.                                                Delaware

SLC Leasing (Nevada)-II, Inc.                                        Nevada

SLC Leasing (Wyoming), Inc.                                          Wyoming

SLE, Inc.                                                            Delaware

SLI Administrative Services Company, Inc.                            Delaware

SLKP Administrative Services Company, Inc.                           Delaware

SLKP Sales, Inc.                                                     Delaware

Smoky Hollow Foods, Inc.                                             Delaware

Southern Belle, Inc.                                                 Delaware

Southern Family Foods, L.L.C.                                        Delaware

Southern Meat Distribution Company                                   Delaware

Specialty Intimates Inc.                                             Delaware

State Fair Foods, Inc.                                               Texas

Sweet Sue Kitchens, Inc.                                             Alabama

The Harwood Companies, Inc.                                          Delaware

UPCR, Inc.                                                           Delaware

UPEL, Inc.                                                           Delaware

Wechsler Coffee Corporation                                          New York

                              FOREIGN SUBSIDIARIES

2476230 Nova Scotia Ltd.                                             Canada

3 DK Limited                                                         London



                                       4



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
A.P. Developments Limited                                            Zambia

AB Fenom                                                             Sweden

ABC Industrie S.A.                                                   France

Actonbarn Limited                                                    England

ADP Chemicals Limited                                                England & Wales

Agepal S.A.R.L.                                                      Luxemburg

Al Ponte Prosciutti S.R.L.                                           Italy

Allende Internacional, S. de R.L. de C.V.                            Mexico

Amira S.A.                                                           Netherlands

Aoste Argentina                                                      Argentina

Aoste Belgique B.V.                                                  Belgium

Aoste Espana S.A.                                                    Spain

Aoste Exporte                                                        France

Aoste Holding S.N.C.                                                 France

Aoste Management S.A.                                                France

Aoste Schinken GmbH                                                  Germany

Aoste                                                                France

Arosa, S.A. de C.V.                                                  Mexico

Ashe Consumer Products Limited                                       United Kingdom

Ashe Limited                                                         England

Ashe Limited                                                         England & Wales

Asia Foods II Limited                                                Mauritius

Avroy Shlain Cosmetics (Pty) Ltd.                                    South Africa

Axa Alimentos Comercial, S. de R.L. de C.V.                          Mexico

Axa Alimentos Operaciones, S. de R.L. de C.V.                        Mexico

Axa Alimentos Servicios Comerciales, S. de R.L. de C.V.              Mexico

Axa Alimentos, S. de R.L. de C.V.                                    Mexico

Bali Dominicana Inc.(Hanes Panama, Inc.) - Branch                    Dominican Republic

Balirny Douwe Egberts AS                                             Czech Republic

Ballograf Bic Austria Vertriebs Ges. mbh                             Austria


                                        5



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Bal-Mex S. de R.L. de C.V.                                           Mexico

Bama Polska                                                          Poland

Beleggingsmaatschappij Argona B.V.                                   Netherlands

Belgian Nur dic Textile Company S.A.                                 Belgium

Bellrise Fashions Limited                                            England

Berkshire International (S.A.) (Pty.) Ltd.                           South Africa

Berkshire International (Zimbabwe) (Pvt.) Ltd.                       Zimbabwe

Bima Cosmetics (Pty.) Ltd.                                           South Africa

Bobarmot Investments (Proprietary) Limited                           South Africa

Body Wear Mexicana S.A. De C.V.                                      Mexico

Boers Meat Products B.V.                                             Netherlands

Boers Vleeswaren B.V.                                                Netherlands

Bravo S.A                                                            Greece

Broderies Deschamps                                                  France

Brossard S.A.                                                        France

C.T. Compagerie SARL                                                 France

Cafe Do Ponto Do Brasil S.A.                                         Brazil

Cafes a la Crema J. Marcilla y Cafe Soley S.L.                       Spain

Caitlin Financial Corporation N.V.                                   Netherlands Antilles

Calixte Producteur                                                   France

Canadelle Holding Corporation Limited                                Canada

Canadelle L.P.                                                       Canada

Cape Hosiery Mills (Proprietary) Limited                             South Africa

Cartex Manufacturera, S.A.                                           Costa Rica

Casual Wear de Mexico, S.A. de C.V.                                  Mexico

Cavite Horizons Holdings, Inc.                                       Philippines

Caytex, Inc.                                                         Cayman Islands

Caywear, Inc.                                                        Cayman Islands



                                       6



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
CBI S.A.                                                             France

CH Laboratories (Sales) Ltd.                                         Ireland

CH Laboratories Pty. Ltd.                                            Australia

Champion Athletics, Ltd.                                             Hong Kong

Champion France S.A.                                                 France

Champion GmbH                                                        Germany

Champion Products, S. de R.L. de C.V.                                Mexico

Champion UK Limited                                                  England

Charcuterie des Hautes Terres S.A.                                   France

Charter de Mexico, S.A. de C.V.                                      Mexico

Christy GmbH                                                         Germany

Claremont Garments (Holdings) PLC                                    England

Claremont Garments (Midlands) Limited                                England

Claremont Garments (South) Limited                                   England

Claremont Garments Limited                                           England

Claremont Maroc S.A.                                                 Morocco

Coabem                                                               Brazil

Coach (U.K) Limited                                                  England

Coach Europe Services S.r.l.                                         Italy

Cochonou                                                             France

CODEF Financial Services CV                                          Netherlands

Coffee Times B.V.                                                    Netherlands

Coffenco International GmbH                                          Germany

Cofico N.V.                                                          Netherlands Antilles

Collins & Aikman Automotive Fabrics Limited                          England

Columbus Swimwear Limited                                            England

Comercial izadora Intercontinental S.A.                              Argentina

Compack Douwe Egberts Rt.                                            Hungary

Compania Aricar S.R.L.                                               Argentina

Confecciones Champion, S.de R.L. de C.V.                             Mexico



                                       7



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Confecciones de El Pedregal Inc.                                     El Salvador

Confecciones de Monclova, S. de R.L. de C.V.                         Mexico

Confecciones de Monterrey, S. de R.L. de C.V.                        Mexico

Confecciones de Nueva Rosita, S. de R. L. de C.V.                    Mexico

Confecciones Sarthoise S.A.                                          France

Confeceiones Cuyo Souidad Anomina                                    Argentina

Confix S.r.l.                                                        Italy

Congelacion y Conservacion de Alimentos,                             Mexico
S. de R.L. de C.V.

Conoplex Insurance Company                                           Bermuda

Contex, S.A. de C.V.                                                 El Salvador

Corporacion H.M., S.A. de C.V.                                       Mexico

Cortez, S.A.                                                         Honduras

Cosmetic Manufacturers (Ireland) Ltd.                                Ireland

Cosmetic Manufacturers (NZ) Ltd.                                     New Zealand

Cosmetic Manufacturers Pty. Ltd.                                     Australia

Courtaulds Automotive Products                                       South Africa
(S.A.) (Proprietary) Limited

Courtaulds Clothing (HK) Sales Limited                               Hong Kong

Courtaulds Clothing (Shenzhen) Limited                               Hong Kong

Courtaulds Clothing Brands Limited                                   England & Wales

Courtaulds Clothing Lanka (Private) Limited                          Sri Lanka

Courtaulds Lingerie (SA) (Pty) Limited                               South Africa

Courtaulds Outerwear Maroc S.A.                                      Morocco

Courtaulds Textiles (Holdings) Limited                               England

Courtaulds Textiles America Inc.                                     USA

Courtaulds Textiles Holding GmbH                                     Germany

Courtaulds Textiles Holding S.A.                                     France

Courtaulds Textiles Immobiler SNC                                    France



                                       8



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Courtaulds Textiles Investissements                                  France

Courtaulds Textiles Investment Limited                               England

Courtaulds Textiles Participations                                   France

Courtaulds Textiles PLC                                              England & Wales

Courtaulds Textiles Retail Limited                                   England

Courtaulds Textiles Services                                         France

Courtaulds Textiles US Inc                                           USA

Courtaulds Troyes Manufacturer SAS                                   France

Covesa N.V.                                                          Belgium

Cruz Verde Portugal - Productos de Consumo Lda.                      Portugal

D & H Cohen Limited                                                  Scotland

DE (Portugal) Produtos Almentares Lda                                Portugal

DE Coffee Care B.V.                                                  Netherlands

DE Espana S.A.                                                       Spain

DE Rusbrands                                                         Russia

DE Van Nelle Operating B.V.                                          Netherlands

DEA (Bermuda) Ltd.                                                   Bermuda

Decaf B.V.                                                           Netherlands

Decafkampon, B.V.                                                    Netherlands

Decem B.V.                                                           Netherlands

Decotrade A.G.                                                       Switzerland

DECS Global Network Mexicana, S.A. de C.V.                           Mexico

DECS International Mexico, S.A. de C.V.                              Mexico

DEF Finance S.N.C.                                                   France

DEF Holding S.N.C.                                                   France

Defacto B.V.                                                         Netherlands

Defacto Deutschland GmbH                                             Germany

Defico N.V.                                                          Netherlands Antilles

Defin C.V.                                                           Netherlands



                                       9



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Del Castillo Transportes Ltda.                                       Uruguay

Delta- Galil Industries Ltd.                                         Israel

Delta Socks Ltd.                                                     Israel

Delta Sporting Ltd.                                                  Israel

Delta Textile (France) S.A.R.L.                                      France

Delta Textile (London) Ltd.                                          United Kingdom

Delta Textile GmbH                                                   Germany

Delta Textile Management AG                                          Switzerland

Delta Textile Marketing Ltd.                                         Israel

Delta Textiles Spain                                                 Spain

Delta-Galil Luxembourg                                               Luxembourg

Delta-Galil Proprieties (1981) Ltd.                                  Israel

Desselles Textiles S.A.                                              France

Detrex Nederland B.V.                                                Netherlands

Difan S.A.M.                                                         Monaco

Dim Finance S.A.S.                                                   France

Dim Rosy Textiles, Incorporated                                      Canada

Dim S.A.                                                             France

Dim-Rosy A/S                                                         Denmark

Dim-Rosy AB                                                          Sweden

Dim-Rosy AG                                                          Switzerland

Dim-Rosy Benelux N.V.                                                Belgium

Dim-Rosy Portugal Lda                                                Portugal

Dim-Rosy S.p.A.                                                      Italy

Dim-Rosy, Inc.                                                       Canada

Dimtex S.A.                                                          France

DISA S.N.C. (DISA)                                                   France

Douwe Egberts (X) B.V.                                               Netherlands

Douwe Egberts (Y) B.V.                                               Netherlands

Douwe Egberts Coffee & Tea International B.V.                        Netherlands



                                       10



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Douwe Egberts Coffee Care B.V.                                       Netherlands

Douwe Egberts Coffee Systems France S.N.C.                           France

Douwe Egberts Coffee Systems International B.V.                      Netherlands

Douwe Egberts Coffee Systems Limited                                 United Kingdom

Douwe Egberts Coffee Systems Limited                                 Canada

Douwe Egberts Coffee Systems Limited                                 England & Wales

Douwe Egberts Coffee Systems Nederland B.V.                          Netherlands

Douwe Egberts Coffee Systems Operating B. V.                         Netherlands

Douwe Egberts Coffee Systems                                         Belgium

Douwe Egberts Coffee Treatment & Supply B.V.                         Netherlands

Douwe Egberts Diensten B.V.                                          Netherlands

Douwe Egberts Espana S.A.                                            Spain

Douwe Egberts France S.N.C.                                          France

Douwe Egberts Holdings B.V.                                          Netherlands

Douwe Egberts Hungary Trading (Douwe Egberts Compack Kft)            Hungary

Douwe Egberts Kaffee System Vertrieb GmbH                            Austria

Douwe Egberts Kaffee Systeme GmbH & Co., K.G.                        Germany

Douwe Egberts Kaffee Systeme GmbH                                    Germany

Douwe Egberts Limited (New Zealand)                                  New Zealand

Douwe Egberts Limited                                                Canada

Douwe Egberts N.V.                                                   Netherlands

Douwe Egberts Nederland B.V.                                         Netherlands

Douwe Egberts Pty. Limited                                           Australia

Douwe Egberts Sigma B.V.                                             Netherlands

Douwe Egberts Tau B.V.                                               Netherlands

Douwe Egberts UK Limited                                             England & Wales

Douwe Egberts Van Nelle Coffee Systems Nederland B.V.                Netherlands

Douwe Egberts Van Nelle Participations B.V.                          Netherlands

Douwe Egberts Van Nelle Tobacco Netherlands B.V.                     Netherlands

Droste Administratie Maatschappij B.V.                               Netherlands



                                       11



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Droste Inkoop Maatschappij B.V.                                      Netherlands

Duyvis B.V.                                                          Netherlands

Duyvis Production B.V.                                               Netherlands

Elbeo & Comandita                                                    Portugal

Elbeo Limited                                                        England & Wales

Elbeo Limited                                                        England & Wales

Elbeo-Meias e Confecgoes, Lda                                        Portugal

Elyna 2 Sarl                                                         France

Eri Feine Schuhpflege Vertriebs GmbH                                 Germany

Et G.Y. S.A.                                                         France

Euragral B.V.                                                        Netherlands

Fairwind GmbH                                                        Germany

Fashion Accessory (Philippines) Inc.                                 Philippines

Fihomij B.V.                                                         Netherlands

Filodoro Calze S.p.A.                                                Italy

Finco                                                                France

Findeggo B.V.                                                        Netherlands

Finnegans Famous Cakes Limited                                       England & Wales

Fontane del Ducca S.r.l.                                             Italy

Forsell Consumer AE Industrial and Commercial S.A.                   Greece

Franlouise SA                                                        Belgium

Fuller Brands B.V.                                                   Netherlands

Fuller do Brazil Lar e Beleza Ltda.                                  Brazil

Gabriel  & Co. Pty. Ltd.                                             Australia

Galler Iberica SA                                                    Spain

Galler Portuguesa Textais, Limitada                                  Portugal

Georges Rech Boutiques S.A.                                          France

GIE Alpina S.A.                                                      France



                                       12



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
GIE G-SEC                                                            France

Godrej HiCare                                                        India

Godrej Sara Lee Limited                                              India

Gossard (Holdings) Limited                                           England

Gossard Finland Oy                                                   Finland

Gossard GmbH                                                         Germany

Gossard Italia Srl                                                   Italy

Gossard S.A.S.                                                       France

Gossard Tekstil Sanayi Ve Ticaret Limited Sirketi                    Turkey

Gossard Tunisie SARL                                                 Tunisia

Gow Investments Pty Ltd.                                             Australia

Gromtex S.A.                                                         Tunisia

Group Imperial France SARL (France)                                  France

Grupo Alimentario Argel S.A.                                         Spain

Hanes (Europe) GmbH                                                  Germany

Hanes (UK) Limited                                                   England & Wales

Hanes Brasil Industria E Comercio Ltda.                              Brazil

Hanes Caribe Inc.                                                    Cayman Islands

Hanes Choloma, Ltd.                                                  Cayman Islands

Hanes de Centroamerica S.A.                                          Guatemala

Hanes de El Salvador, S.A. de C.V.                                   El Salvador

Hanes Dominican Inc.                                                 Cayman Islands

Hanes France S.A.                                                    France

Hanes Italia S.p.A.                                                  Italy

Hanes Panama, Inc.                                                   Panama

Hanes Printables Jamaica Ltd.                                        Jamaica

Hanes Tejidos Costa Rica S.A.                                        Costa Rica

Hanes U.K. Limited                                                   United Kingdom

Hanes Underwear Jamaica                                              Jamaica



                                       13



                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Harris/DE Pty Ltd                                                    Australia

Hesperia de Alimentacion S.A.                                        Spain

Hesperia Noroeste, S.A.                                              Spain

Hilton Bonds N.Z. (1991) Limited                                     New Zealand

Holding SL/DE Coffee & Tea Brazil Ltda.                              Brazil

Homcare Japan Div Nihon Kiwi KK                                      Japan

HomeSafe Products (M) Sdn Bhd                                        Malaysia

Hot Dog King, BV                                                     Netherlands

House of Fuller, Argentina S.A.                                      Argentina

House of Fuller, S.A. de C.V.                                        Mexico

Imperial Coordination Center N.V. (Belgium)                          Belgium

Imperial Holding N.V.                                                Belgium

Imperial Meat Products B.V.                                          Netherlands

Imperial Meat Products N.V.                                          Belgium

Inco Hellas AE                                                       Greece

Indumentaria Andina Sociedad Ancnina                                 Argentina

Industria Textilera del Este, ITE, S.A.                              Costa Rica

Industria Textileras de Este, S.A.                                   Costa Rica

Industrias Carnicas Navarras S.A.                                    Spain

Industrias de Carnes Nobre S.A.                                      Portugal

Industrias Internacionales de San Pedro, S. de R.L. de C.V.          Mexico

Industrias Mallorca S.A. de C.V.                                     Mexico

Industries Morocaines De Lingerie S.A. "Imalinge"                    Morocco

Inmobiliaria Meck-Mex, S.A. de C.V.                                  Mexico

Intec B.V.                                                           Netherlands

Inter Food Service Limited                                           England & Wales

Inter Food Service Ltd.                                              England & Wales

Internacional Manufacturera S.A. de C.V.                             Mexico

International Underwear Ltd.                                         Morocco

Intervend Automaker B.V.                                             Netherlands



                                       14


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
INTEX Dessous GmbH (Austria)                                         Austria

INTEX Dessous GmbH (Germany)                                         Germany

INTEX Textil-Vertriebsgesellschaft AG                                Switzerland

Isabella (Private) Ltd.                                              Sri Lanka

Italfil S.A.                                                         Spain

IVA Doo                                                              Croatia

J.E. Morgan de Honduras, S.A.                                        Honduras

Jacqmotte B.V.                                                       Netherlands

Jacqmotte Limited                                                    England & Wales

Jacqmotte N.V.                                                       Belgium

Jamlee Inc.                                                          Jamaica

Jamwear Ltd.                                                         Jamaica

Jareeporn Pranita Company Limited                                    Thailand

Jogbra Honduras S.A.                                                 Honduras

Justin Bridou SNC                                                    France

Kaffehuset Friele A/S                                                Norway

Kayser (South Africa) (Proprietary) Limited                          South Africa

Kayser Boudor Limited                                                England

Kir Alimentos, S. de R.L. de C.V.                                    Mexico

Kitchens of Sara Lee - UK Ltd.                                       England

Kiwi (EA) Limited                                                    England

Kiwi (EA) Limited                                                    England & Wales

Kiwi (Manufacturing) Sdn Bhd                                         Malaysia

Kiwi (Nigeria ) Limited                                              Nigeria

Kiwi (Thailand) Limited                                              Thailand

Kiwi Brands (Hong Kong) Ltd                                          Hong Kong

Kiwi Brands (Hong Kong) Ltd.                                         Hong Kong

Kiwi Brands (Malaysia) Sdn. Bhd                                      Malaysia

Kiwi Brands (N.Z.) Ltd.                                              New Zealand

Kiwi Brands (NZ) Ltd.                                                New Zealand



                                       15


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Kiwi Brands (Private) Limited                                        Zimbabwe

Kiwi Brands (Private) Limited                                        Zimbabwe

Kiwi Brands (Tianjin) Co. Ltd.                                       China

Kiwi Brands (Uganda) Limited                                         Uganda

Kiwi Brands Ltd. (Malawi)                                            Malawi

Kiwi Brands Ltd. (Zambia)                                            Zambia

Kiwi Brands Ltd.                                                     Kenya

Kiwi Brands Ltd.                                                     Kenya

Kiwi Brands Ltd.                                                     Malawi

Kiwi Brands Ltd.                                                     Zambia

Kiwi Brands Pty Ltd.                                                 Australia

Kiwi Brands Tianjin Co. ltd.                                         China

Kiwi Caribbean Limited                                               England & Wales

Kiwi Caribbean Ltd.                                                  United Kingdom

Kiwi European Holdings B.V.                                          Netherlands

Kiwi European Holdings B.V.                                          Netherlands

Kiwi Holdings Limited                                                England

Kiwi Holdings Limited                                                England & Wales

Kiwi Holdings Ltd.                                                   United Kingdom

Kiwi International Pte. Ltd.                                         Signapore

Kiwi International Pte. Ltd.                                         Singapore

Kiwi TTK Limited (India)                                             India

Kiwi United Taiwan Co. Ltd.                                          Taiwan

Kiwi United Taiwan Company Ltd.                                      Taiwan

Kjopmanskredit A/S                                                   Norway

Koninklijke Douwe Egberts B.V.                                       Netherlands

Kortman Intradal B.V.                                                Netherlands

KOSL et Cie SNC                                                      France

KRS S.A.                                                             Tunisia

Laguna Realty Corporation                                            Hong Kong



                                       16


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Lassie B.V.                                                          Netherlands

Laurentis B.V.                                                       Netherlands

Leiber Tunisie SARL                                                  Tunisia

Les Fines Tranches SNC                                               France

Les Salaisons Reunies SNC                                            France

Liabel S.p.A.                                                        Italy

Liberty Fabrics Inc                                                  USA

Lovable Benelux B.V.                                                 Netherlands

Lovable Design GmbH                                                  Germany

Lovable France SARL                                                  Italy

Lovable Italiana International Limited                               England

Lovable Italiana International Limited                               England

Lovable Italiana S.p.A.                                              Italy

Lovable Ltd.                                                         United Kingdom

Macanie (London) Limited                                             England

Madero Internacional, S. de R.L. de C.V.                             Mexico

Magellan Industries PLC                                              England

Magellan Management Limited                                          England

Maktonderzoekbureau Haped B.V.                                       Netherlands

Manifattura Filodoro S.r.l.                                          Italy

Manufacturera Ciebena, S.A.                                          Honduras

Manufacturera Cortez, S. de R.L.                                     Honduras

Manufacturera de Cartago, S.A. - Branch                              Costa Rica

Manufacturera de Cartago, S.A.                                       Costa Rica

Marander Assurantie Compagnie B.V.                                   Netherlands

Marcel Marie S.A.                                                    France

Marcilla Coffee Systems S.A.                                         Spain

Marketing-en Verkoopmaatschappij Stegeman B.V.                       Netherlands

Medeiros 3484 S.A.                                                   Argentina

Meester B.V.                                                         Netherlands



                                       17


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Meester C.V.                                                         Netherlands

Merrild Coffee Systems AB                                            Sweden

Merrild Kaffe A/S                                                    Denmark

Monclova Internacional, S. de R.L. de C.V.                           Mexico

Natal Textiles (Proprietary) Limited                                 South Africa

Natrena B.V.                                                         Netherlands

Naturcare Japan Ltd.                                                 Japan

New Way Packaged Products Limited                                    England & Wales

New Way Packaged Products Ltd.                                       England

Nicholabs (Pty.) Ltd.                                                South Africa

Nicholas Laboratories (E.A.) Limited                                 Kenya

Nistria B.V.                                                         Netherlands

Notable Industrias Colon S.A. de C.V.                                Mexico

Nutri-Metics (Brunei) Sdn Bhd International                          Brunei

Nutri-Metics France SNC                                              France

Nutri-Metics Holdings France SNC                                     France

Nutri-Metics International (Australia) Pty. Ltd. Trading             Australia

Nutri-Metics International (Australia) Pty. Ltd.                     Australia

Nutri-Metics International (Brunei) Sdn Bhd                          Brunei

Nutri-Metics International (Canada) Inc.                             Canada

Nutri-Metics International (Espana) S.A.                             Spain

Nutri-Metics International (France) SNC                              France

Nutri-Metics International (Greece) Inc.                             Greece

Nutri-Metics International (Guangzhou) Ltd.                          China

Nutri-Metics International (Hong Kong) Ltd.                          Hong Kong

Nutri-Metics International (Ireland) Ltd.                            Ireland

Nutri-Metics International (Mexico) SA de CV                         Mexico

Nutri-Metics International (NZ) Ltd.                                 New Zealand

Nutri-Metics International (Portugal) Lda.                           Portugal

Nutri-Metics International (Singapore) Pte Ltd.                      Singapore



                                       18


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Nutri-Metics International (Thailand) Ltd.                           Thailand

Nutri-Metics International (UK) Limited                              England & Wales

Nutri-Metics International (UK) Ltd.                                 United Kingdom

Nutri-Metics International Commercial Import-Export S.A.             Greece

Nutri-Metics Worldwide Malaysia Sdn Bhd                              Malaysia

Opus Chemical AB                                                     Sweden

Orion Gloves Ltd.                                                    Hong Kong

P. T. Kiiwi Brands Indonesia                                         Indonesia

P.T. Bina Impian Makmur                                              Indonesia

P.T. Kiwi Indonesia                                                  Indonesia

P.T. Premier Ventures Indonesia                                      Indonesia

P.T. Prodenta Indonesia, Tbk                                         Indonesia

P.T. Sara Lee Bakeri Niaga Indonesia                                 Indonesia

P.T. Sara Lee Bakery Indonesia                                       Indonesia

P.T. Sara Lee Bakery Niaga Indonesia                                 Indonesia

P.T. Sara Lee Indonesia                                              Indonesia

P.T. Suria Yozani                                                    Indonesia

PAMYC S.A. de C.V.                                                   Mexico

Pattern Company Inc.                                                 USA

Penn Asia Company Limited                                            Hong Kong

Penn China Limited                                                   Hong Kong

Penn Elastic GmbH                                                    Germany

Penn Elastic Srl                                                     Italy

Penn Fabrics (Hong Kong) Limited                                     Hong Kong

Penn Fabrics (Jiangsu) Company Limited                               Hong Kong

Penn Italia                                                          Italy

Penn Philippines Export Inc.                                         Hong Kong

Penn Philippines Inc.                                                Philippines

Penn Sedespa SA                                                      Spain

Pervez Industrial Corporation Limited                                Pakistan



                                       19


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Philippe Matignon S.A.                                               France

Pierre Yves Fshion                                                   Belgium

Pladus B.V.                                                          Netherlands

Playtex Dominicana SA                                                Dominican Republic

Playtex France S.A.                                                  France

Playtex Investments Europe S.A.                                      France

Playtex Limited                                                      England & Wales

Playtex Limited                                                      United Kingdom

Plustex B.V.                                                         Netherlands

Plustex S.A.                                                         Belgium

Pontual                                                              Brazil

Porta Blu S.r.l.                                                     Italy

Pretty Polly Pension Trustee Limited                                 England & Wales

Pretty Polly Pension Trustee Limited                                 England & Wales

Probemex, S.A. de C.V.                                               Mexico

Products Suppliers A.G.                                              Switzerland

PT Kiwi Distribution Company                                         Indonesia

PTX Tunisia S.A.                                                     Tunisia

PTX Tunsie                                                           Tunisia

Quesos la Caperucita, S.A. de C.V.                                   Mexico

Rinbros S.A. de C.V.                                                 Mexico

Robert Usher & Co., Limited                                          Ireland

Roger de Lyon Charcutier S.A.                                        France

Roger de Lyon SNC                                                    France

Roux Soignat S.A.                                                    France

S.M. Company Limited                                                 Ireland

S.N. Degoisey S.A.                                                   France

S.N. Fibers Ltd.                                                     Israel

Santora (Austria) GmbH                                               Austria

Sara Lee (Hong Kong) Limited Partnership                             Hong Kong



                                       20


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Sara Lee (Ireland) Limited                                           Ireland

Sara Lee (South Africa) (Pty.) Ltd.                                  South Africa

Sara Lee (UK Investments) Limited                                    England & Wales

Sara Lee (UK Investments) Limited                                    United Kingdom

Sara Lee Acquisition Limited                                         England & Wales

Sara Lee Apparel (Australasia) Pty Ltd.                              Australia

Sara Lee Apparel (NZ) Ltd.                                           New Zealand

Sara Lee Argentina S.A.                                              Argentina

Sara Lee Argentina S.A.                                              Argentina

Sara Lee Austria Gesellschaft mbH                                    Austria

Sara Lee Austria Gesellschaft mbH                                    Germany

Sara Lee Austria Gmbh                                                Austria

Sara Lee Bakeries UK Limited                                         England & Wales

Sara Lee Bakeries UK Limited                                         England & Wales

Sara Lee Bakery (Australia) Pty. Ltd.                                Australia

Sara Lee Bakery B.V.                                                 Netherlands

Sara Lee Bakery India Ltd.                                           India

Sara Lee Bakery India Private Limited                                India

Sara Lee Bakery Italy Srl                                            Italy

Sara Lee Bakery Malaysia Sdn Bhd                                     Malaysia

Sara Lee Bakery Sdn Bhd                                              Malaysia

Sara Lee Bakery Thailand Limited                                     Thailand

Sara Lee Branded Apparel Espana, S.L.                                Spain

Sara Lee Branded Apparel Hellas S.A.                                 Greece

Sara Lee Branded Apparel Italia S.p.A.                               Italy

Sara Lee Branded Apparel S.A.                                        France

Sara Lee Branded Apparel Sweden A.B.                                 Sweden

Sara Lee Brasil Ltda                                                 Brazil

Sara Lee Canada Holdings Limited                                     Canada

Sara Lee Charcuterie, S.A.                                           France



                                       21


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Sara Lee Chile S.A.                                                  Chile

Sara Lee Coffee & Tea (Australia) Pty Ltd.                           Australia

Sara Lee Coffee and Tea Food Processing, Packaging,
Sara Lee Columbia S.A.                                               Columbia

Sara Lee Comercial Limitada                                          Chile

Sara Lee Corporation Asia Limited                                    Hong Kong

Sara Lee de Costa Rica, S.A.                                         Costa Rica

Sara Lee Direct Marketing S.A.                                       France

Sara Lee Direct Marketing UK Ltd                                     United Kingdom

Sara Lee Employee Share Plan Pty Ltd.                                Australia

Sara Lee Europe Direct Marketing S.A.                                France

Sara Lee Finance Italy S.p.A.                                        Italy

Sara Lee Finance U.K.                                                England & Wales

Sara Lee Finance UK                                                  England & Wales

Sara Lee Food Holdings Pty. Ltd.                                     Australia

Sara Lee Foreign Sales Corporation                                   Barbados

Sara Lee France Finance S.A.                                         France

Sara Lee France SNC                                                  France

Sara Lee Garden Bakery Co. Ltd.                                      Hong Kong

Sara Lee Germany GmbH                                                Germany

Sara Lee H&BC Trustees Limited                                       England & Wales

Sara Lee Holding Corporation Limited                                 Canada

Sara Lee Holdings (NZ) Ltd.                                          New Zealand

Sara Lee Holdings S.A. of Participations                             Greece
Sara Lee Hellas Holdings

Sara Lee Hong Kong Limited                                           Hong Kong

Sara Lee Hosiery Canada Ltd.                                         Canada

Sara Lee Household & Body Care                                       Unknown

Sara Lee Household & Body Care (Australia) Pty Ltd.                  Australia

Sara Lee Household & Body Care (NZ) Ltd.                             New Zealand

Sara Lee Household & Body Care Belgium N.V. / S.A.                   Belgium



                                       22


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Sara Lee Household & Body Care France S.N.C.                         France

Sara Lee Household & Body Care Italy S.p.A.                          Italy

Sara Lee Household & Body Care Ltd.                                  United Kingdom

Sara Lee Household & Body Care Malawi Limited                        Malawi

Sara Lee Household & Body Care Netherland B.V.                       Netherlands

Sara Lee Household & Body Care Osterreich GmbH                       Austria

Sara Lee Household & Body Care Portugal                              Portugal

Sara Lee Household & Body Care Research B.V.                         Netherlands

Sara Lee Household & Body Care UK Limited                            England & Wales

Sara lee Household & Body Care Zambia Limited                        Zambia

Sara Lee Household & Personal Care Products S.A.                     Greece

Sara Lee Household and Body care Italy Spa                           Italy

Sara Lee Household and Body Care Poland Sp z.o.o.                    Poland

Sara Lee Hungary Coffee and Tea Trading L.L.C.                       Hungary

Sara Lee Hungary Kave es Tea Kft.                                    Hungary

Sara Lee Intimates de Villanueva S.A. - Partnership                  Honduras

Sara Lee Intimates El Salvado - Partnership                          El Salvador

Sara Lee Intimates El Salvador, S.A. de C.V.                         El Salvador

Sara Lee Intimates Villanueva S.A. de C.V.                           Honduras

Sara Lee Japan Ltd.                                                  Japan

Sara Lee Kave es Tea Rt.                                             Hungary

Sara Lee Knit Products Benelux N.V.                                  Belgium

Sara Lee Knit Products de Mexico, S. de R.L. de C.V.                 Mexico

Sara Lee Knit Products Europe N.V.                                   Belgium

Sara Lee Knit Products Mexico SA de CV                               Mexico

Sara Lee Maquiladora Holdings, S. de R.L. de C.V.                    Mexico

Sara Lee Meats Europe (Netherlands) B.V.                             Netherlands

Sara Lee Mexicana Holdings S de RI de CV                             Mexico

Sara Lee Mexicana Holdings, S. de R.L. de C.V.                       Mexico

Sara Lee Mexicana S.A. de C.V.                                       Mexico



                                       23


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Sara Lee Moda Femenina, S.A. de C.V.                                 Mexico

Sara Lee of Canada Holdings Limited Partnership                      Canada

Sara Lee of Canada Holdings Limited                                  Canada

Sara Lee of Canada Investments Company                               Canada

Sara Lee of Canada Limited Partnership                               Canada

Sara Lee of Canada Ltd.                                              Canada

Sara Lee Overseas Finance N.V.                                       Netherland Antilles

Sara Lee Personal Products (Fiji) Ltd.                               Fiji

Sara Lee Personal Products Colombia, S.A.                            Colombia

Sara Lee Personal Products Espana S.L.                               Spain

Sara Lee Personal Products GmbH                                      Germany

Sara Lee Personal Products Hellas, S.A.                              Greece

Sara Lee Personal Products Pty. Ltd.                                 Australia

Sara Lee Personal Products Sweden AB                                 Sweden

Sara Lee Personal Products Venezuela                                 Venezuela

Sara Lee Philippines Inc.                                            Philippines

Sara Lee Singapore Pte. Ltd.                                         Singapore

Sara Lee Slovakia, S.r.o.                                            Slovak Republic

Sara Lee Sock Mexico, S.A. de C.V.                                   Mexico

Sara Lee Sourcing Asia, Ltd.                                         Hong Kong

Sara Lee Southern Europe, S.L.                                       Spain

Sara Lee Taiwan Co., Ltd.                                            Taiwan

Sara Lee Trading Limited                                             Thailand

Sara Lee TTK Limited                                                 India

Sara Lee U.K. Leasing, L.L.C.                                        England & Wales

Sara Lee UK Holdings PLC                                             England & Wales

Sara Lee UK Holdings PLC                                             England & Wales

Sara Lee/DE (Deutschland) GmbH                                       Germany

Sara Lee/DE (Schweiz) AG                                             Switzerland

Sara Lee/DE Beheersmaatschappij B.V.                                 Netherlands



                                       24


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Sara Lee/DE Clearing B.V.                                            Netherlands

Sara Lee/DE Finance B.V.                                             Netherlands

Sara Lee/DE Financieringsmaatschappij B.V.                           Netherlands

Sara Lee/DE France SNC                                               France

Sara Lee/DE France                                                   France

Sara Lee/DE Holding GmbH                                             Germany

Sara Lee/DE Holdings (South Africa) (Pty) Limited                    South Africa

Sara Lee/DE N.V.                                                     Netherlands

Sara Lee/DE Osterreich GmbH                                          Austria

Sara Lee/DE Switzerland                                              Switzerland

Sara Lee/DE Trading (Antilles) N.V.                                  Netherlands

Sara Lee/DE Vermogensverwaltung GmbH                                 Germany

Sara Lee/DE Verwaltungs GmbH                                         Germany

Saramar Europe B.V.                                                  Netherlands

SATG Management Services (Proprietary) Limited                       South Africa

SBB S.A.                                                             France

SCI NOMACO                                                           France

SDP Rungis S.A.                                                      France

SEC S.A.                                                             France

SERRA Sarl                                                           France

Servicios Administrativos Sara Lee, S.A. de C.V.                     Mexico

Siamcona (Thailand) Ltd.                                             Thailand

Siamcona Ltd.                                                        Thailand

SLI Compania de Servicios Administrativos S.A.                       Costa Rica

Slimline (Private) Limited                                           Sri Lanka

SLKP Benelux N.V. - Hanes                                            Belgium

SLKP Benelux N.V.                                                    Belgium

SLKP Compania de Servicios Administrativos S.A.                      Costa Rica

SLKP Compania de Servicios                                           Costa Rica

SLKP Europe N.V. - Hanes                                             Belgium



                                       25


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
SLKP Europe N.V.                                                     Belgium

SLPP Hallas                                                          Greece

SLPP Taiwan                                                          Taiwan

Societe Bretone D'Andouilles et Andouillettes                        France

Societe de Boyauderies de Belley S.A.                                France

Societe De Lingerie Intrigue S.A. "Intrigue"                         Morocco

Societe Fashion Apparel S.A.                                         Morocco

Societe Georges Rech                                                 France

Societe Industrielle Chellah Confection S.A. "Chelco"                Morocco

Societi des Salaisons i.e. Balarod                                   France

Sol Y Oro B.H. S.A.C.I.E.I.                                          Argentina

Soluzioni Win Win S.P.A.                                             Italy

Spring City de Honduras, S.A.                                        Honduras

Stegeman Argal GmbH                                                  Germany

Stegeman B.V.                                                        Netherlands

Strozzi Vermogensverwaltung GmbH                                     Germany

Swiss Garde (Proprietary) Limited                                    South Africa

Swissguard (Pty.) Limited                                            South Africa

Taesa, S. de R.L. de C.V.                                            Mexico

Tana BV                                                              Netherlands

Tana Canada Incorporated                                             Canada

Tana Scandinavia A/S                                                 Denmark

Tana Schuhpflege AG                                                  Switzerland

Taylor Merrymade Limited                                             England

Telec A.G.                                                           Switzerland

Telec S.A.                                                           Switzerland

Temana International Limited                                         England & Wales

Temana International Limited                                         United Kingdom

Textile Tropicales Costa Rica                                        Costa Rica



                                       26


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Textiles Tropicales, S.A.                                            Costa Rica

Textiles Well                                                        France

Textrade                                                             Israel

The Hardwood Honduras Companies, S. de R.L. de C.V.                  Honduras

The Sara Lee Bakery (Australia) Pty. Ltd.                            Australia

Tomten A/S                                                           Norway

Tradi Charcuterie S.A.                                               France

Tradi France S.A.                                                    France

Trading Company limited by Shares                                    Hungary

Tricotbest B.V.                                                      Netherlands

Tricotbest Ceska Republica spol. SRO                                 Czech Republic

Tricotbest CSFR                                                      Czech Republic

Tricotbest GmbH                                                      Germany

Tricotbest Hungaria Kft.                                             Hungary

Tricotbest Polska sp. z.o.o.                                         Poland

Tricotbest Slovensko s.r.o.                                          Slovak Republic

Tuxan Schuhpflegemittel GmbH                                         Austria

UK Limited                                                           England & Wales

Underwear Ltd.                                                       Malta

Uninex S.A.                                                          Uruguay

Unitas Investments (Proprietary) Limited                             South Africa

Van Nelle Holding (Germany) GmbH                                     Germany

Sara Lee Textiles GmbH                                               Germany

Vatter Produktions GmbH                                              Germany

Vatter Services s.r.o.                                               Czech Republic

Vatter Slovensko spol. s.r.o.                                        Slovak Republic

Vermere                                                              France

Vleeswarenverwerkingsindustrie Boers N.V.                            Netherlands

Wijnhandel Jan van Goyen B.V.                                        Netherlands

Wilco Conserven B.V.                                                 Netherlands



                                       27


                                                                      EXHIBIT 21





NAME OF SUBSIDIARY                                                   PLACE OF INCORPORATION
- ------------------                                                   ----------------------
                                                                  
Wilkinson & Riddell (Holdings) Limited                               England

Zimbabwe Hosiery Company                                             Zimbabwe

Zwanenberg de Mexico, S.A. de C.V.                                   Mexico

Zwarti Kut BVBA                                                      Belgium





                                       28

EX-23

                                                                  Exhibit 23


                            ARTHUR ANDERSEN LLP

                 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of
our reports dated July 28, 2000 (except with respect to the matter discussed
in the subsequent event note, as to which the date is August 16, 2000)
included in this form 10-K, into the Company's previously filed Registration
Statement (File Nos. 33-35760, 33-57615, 33-60071, 33-64383, 33-63715,
33-63717, 33-59002, 33-49212, 33-33245, 33-33244, 333-17987, 333-18385,
333-41427, 333-71839, 333-71797, 333-91345 and 333-96173).

                                                 /s/ Arthur Andersen LLP
                                                 -----------------------------
                                                     Arthur Andersen LLP

Chicago, Illinois
September 28, 2000

EX-24

                                                                Exhibit 24


                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Paul A. Allaire
                                               --------------------------------
                                               Paul A. Allaire

Dated: September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for her and in her
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as she might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or her substitute, may lawfully do
or cause to be done by virtue herself.



                                               /s/ Rozanne L. Ridgway
                                               --------------------------------
                                               Rozanne L. Ridgway

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Duane L. Burnham
                                               --------------------------------
                                               Duane L. Burnham

Dated:  September 25, 2000



                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Frans H.J.J. Andriessen
                                               --------------------------------
                                               Frans H.J.J. Andriessen

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Charles W. Coker
                                               --------------------------------
                                               Charles W. Coker

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ James S. Crown
                                               --------------------------------
                                               James S. Crown

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Willie D. Davis
                                               --------------------------------
                                               Willie D. Davis

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Vernon E. Jordan, Jr.
                                               --------------------------------
                                               Vernon E. Jordan, Jr.

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ James L. Ketelsen
                                               --------------------------------
                                               James L. Ketelsen

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Hans B. van Liemt
                                               --------------------------------
                                               Hans B. van Liemt

Dated:  September 25, 2000





                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature appears
below constitutes and appoints Roderick A. Palmore and R. Henry Kleeman, each
of them, her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, to act for her and in her name, place and
stead, in any and all capabilities to sign the Annual Report on Form 10-K of
Sara Lee Corporation for the fiscal year ending July 1, 2000, and any and all
amendments thereto and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as she might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or her substitute, may lawfully do
or cause to be done by virtue herself.



                                          /s/ Joan D. Manley
                                          -----------------------------
                                          Joan D. Manley

Dated:  September 25, 2000



                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Richard L. Thomas
                                               --------------------------------
                                               Richard L. Thomas

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ John D. Zeglis
                                               --------------------------------
                                               John D. Zeglis

Dated:  September 25, 2000




                              POWER OF ATTORNEY


     KNOW ALL PERSONS BY THESE PRESENTS that the person whose signature
appears below constitutes and appoints Roderick A. Palmore and R. Henry
Kleeman, each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, to act for him and in his
name, place and stead, in any and all capabilities to sign the Annual Report
on Form 10-K of Sara Lee Corporation for the fiscal year ending July 1, 2000,
and any and all amendments thereto and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done by virtue himself.



                                               /s/ Frank L. Meysman
                                               --------------------------------
                                               Frank L. Meysman

Dated: September 25, 2000

EX-27

 


<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED BALANCE SHEET AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          JUL-01-2000
<PERIOD-END>                               JUL-01-2000
<CASH>                                             288
<SECURITIES>                                        26
<RECEIVABLES>                                    1,959
<ALLOWANCES>                                       195
<INVENTORY>                                      2,951
<CURRENT-ASSETS>                                 5,974
<PP&E>                                           5,362
<DEPRECIATION>                                   3,043
<TOTAL-ASSETS>                                  11,611
<CURRENT-LIABILITIES>                            6,759
<BONDS>                                              0
<PREFERRED-MANDATORY>                            2,248
<PREFERRED>                                         25
<COMMON>                                             8
<OTHER-SE>                                       1,226
<TOTAL-LIABILITY-AND-EQUITY>                    11,611
<SALES>                                         17,511
<TOTAL-REVENUES>                                17,511
<CGS>                                           10,100
<TOTAL-COSTS>                                   10,100
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                   100
<INTEREST-EXPENSE>                                 176
<INCOME-PRETAX>                                  1,567
<INCOME-TAX>                                       409
<INCOME-CONTINUING>                              1,158
<DISCONTINUED>                                      64
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     1,222
<EPS-BASIC>                                       1.38
<EPS-DILUTED>                                     1.34