-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fnyv6u9ZWX31XwJFBNgD9DSEVTzXgPpM31OLktnQARVsxivaW6u+adMeRRkcl24a AFwJ/OjQB4HLy4qV5Wev3g== 0000912057-97-003868.txt : 19970221 0000912057-97-003868.hdr.sgml : 19970221 ACCESSION NUMBER: 0000912057-97-003868 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970210 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEE SARA CORP CENTRAL INDEX KEY: 0000023666 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 362089049 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03344 FILM NUMBER: 97522502 BUSINESS ADDRESS: STREET 1: THREE FIRST NATIONAL PLAZA STREET 2: SUITE 4600 CITY: CHICAGO STATE: IL ZIP: 60602 BUSINESS PHONE: 3127262600 MAIL ADDRESS: STREET 1: THREE FIRST NATL PLZ STREET 2: SUITE 4600 CITY: CHICAGO STATE: IL ZIP: 60602 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED FOODS CORP DATE OF NAME CHANGE: 19850402 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED GROCERD CORP DATE OF NAME CHANGE: 19731220 10-Q 1 FORM 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 28, 1996 ------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-3344 ---------------------------------------------- Sara Lee Corporation ----------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 36-2089049 - ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Three First National Plaza, Suite 4600, Chicago, Illinois 60602-4260 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (312) 726-2600 ------------------------------------------------------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- On December 28, 1996, the Registrant had 481,033,460 outstanding shares of common stock $1.33 1/3 par value, which is the Registrant's only class of common stock. This document contains 22 pages. Page 1 SARA LEE CORPORATION AND SUBSIDIARIES INDEX PART I - FINANCIAL STATEMENTS - Preface 3 Condensed Consolidated Balance Sheets - At December 28, 1996 and June 29, 1996 4 Consolidated Statements of Income - For the thirteen and twenty-six weeks ended December 28, 1996 and December 30, 1995 5 Consolidated Statements of Common Stockholders' Equity - For the period July 1, 1995 to December 28, 1996 6 Consolidated Statements of Cash Flows - For the twenty-six weeks ended December 28, 1996 and December 30, 1995 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 8 PART II - ITEM 2. - CHANGES IN SECURITIES 12 ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURE 13 EXHIBIT 10.1 - Amendment to the 1995 Non-Employee Director Stock Plan 14 EXHIBIT 10.2 - Amendment to the 1995 Long-Term Incentive Stock Plan 15 EXHIBIT 10.3 - Amendment to the 1989 Incentive Stock Plan 16 EXHIBIT 10.4 - Amendment to the Supplemental Benefit Plan 17 EXHIBIT 11 - Computation of Net Income Per Common Share 18 EXHIBIT 12.1 - Computation of Ratio of Earnings to Fixed Charges 20 EXHIBIT 12.2 - Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements 21 EXHIBIT 27 - Financial Data Schedule 22 Page 2 PART I SARA LEE CORPORATION AND SUBSIDIARIES PREFACE The consolidated financial statements for the thirteen and twenty-six weeks ended December 28, 1996 and December 30, 1995 and the balance sheet as of December 28, 1996 included herein have not been examined by independent public accountants, but, in the opinion of Sara Lee Corporation ("Corporation"), all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at December 28, 1996 and the results of operations and the cash flows for the periods presented herein have been made. The results of operations for the thirteen and twenty-six weeks ended December 28, 1996 are not necessarily indicative of the operating results for the full fiscal year. The consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Although the Corporation believes that the disclosures made are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such regulations. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Corporation's Form 10-K for the year ended June 29, 1996. Page 3 SARA LEE CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets at December 28, 1996 and June 29, 1996 (in millions) Dec. 28, June 29, 1996 1996 ----------- ----------- ASSETS Cash and equivalents $ 276 $ 243 Trade accounts receivable, less allowances 1,962 1,728 Inventories: Finished goods 1,679 1,802 Work in process 471 381 Materials and supplies 621 624 ----------- ----------- 2,771 2,807 Other current assets 288 303 ----------- ----------- Total current assets 5,297 5,081 Trademarks and other assets 509 636 Property, net 3,120 3,007 Intangible assets 4,173 3,878 ----------- ----------- $ 13,099 $ 12,602 ----------- ----------- ----------- ----------- LIABILITIES AND EQUITY Notes payable $ 941 $ 319 Accounts payable 1,278 1,592 Accrued liabilities 2,667 2,596 Current maturities of long-term debt 134 135 ----------- ----------- Total current liabilities 5,020 4,642 Long-term debt 1,881 1,842 Deferred income taxes 342 333 Other liabilities 589 604 Minority interest in subsidiaries 524 523 Auction preferred stock 300 300 ESOP convertible preferred stock 318 324 Unearned deferred compensation (279) (286) Common stockholders' equity 4,404 4,320 ----------- ----------- $ 13,099 $ 12,602 ----------- ----------- ----------- ----------- Page 4 SARA LEE CORPORATION AND SUBSIDIARIES Consolidated Statements of Income For the Thirteen and Twenty-Six Weeks Ended December 28, 1996 and December 30, 1995 (in millions, except per share data)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED -------------------------- -------------------------- Dec. 28, Dec. 30, Dec. 28, Dec. 30, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Net Sales $ 5,269 $ 4,898 $ 10,155 $ 9,554 ----------- ----------- ----------- ----------- Cost of Sales 3,249 3,020 6,326 5,951 Selling, General and Administrative Expenses 1,509 1,403 2,972 2,799 Interest Expense 54 60 108 119 Interest Income (10) (14) (21) (26) ----------- ----------- ----------- ----------- 4,802 4,469 9,385 8,843 ----------- ----------- ----------- ----------- Income Before Income Taxes 467 429 770 711 Income Taxes 150 146 247 242 ----------- ----------- ----------- ----------- Net Income 317 283 523 469 Preferred Dividend Requirements, Net of Tax 6 7 13 14 ----------- ----------- ----------- ----------- Net Income Available for Common Stockholders $ 311 $ 276 $ 510 $ 455 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Income Per Common Share - Primary $ 0.64 $ 0.57 $ 1.05 $ 0.94 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Average Shares Outstanding 486 485 486 484 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Income Per Common Share - Fully Diluted $ 0.62 $ 0.55 $ 1.02 $ 0.91 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Average Shares Outstanding 504 504 505 503 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Cash Dividends Per Common Share $ 0.21 $ 0.19 $ 0.40 $ 0.36 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Page 5 SARA LEE CORPORATION AND SUBSIDIARIES Consolidated Statements of Common Stockholders' Equity For the Period July 1, 1995 to December 28, 1996 (in millions, except per share data)
UNEARNED COMMON CAPITAL RETAINED TRANSLATION RESTRICTED TOTAL STOCK SURPLUS EARNINGS ADJUSTMENTS STOCK ---------- ---------- ---------- ---------- ------------- ----------- Balances at July 1, 1995 $ 3,939 $ 640 $ 67 $ 3,252 $ 3 $ (23) Net income 469 -- -- 469 -- -- Cash dividends - Common ($.36 per share) (174) -- -- (174) -- -- Auction preferred ($2,172.67 per share) (6) -- -- (6) -- -- ESOP convertible preferred ($2.72 per share) (12) -- -- (12) -- -- Stock issuances - Business acquisition 55 3 52 -- -- -- Stock option and benefit plans 44 3 41 -- -- -- Restricted stock, less amortization of $7 7 1 16 -- -- (10) Reacquired shares (58) (3) (55) -- -- -- Translation adjustments (89) -- -- -- (89) -- ESOP tax benefit 5 -- -- 5 -- -- ESOP share redemption 4 -- 4 -- -- -- Other 15 1 14 (1) -- 1 ---------- ---------- ---------- ---------- ------------- ----------- Balances at December 30, 1995 4,199 645 139 3,533 (86) (32) Net income 447 -- -- 447 -- -- Cash dividends - Common ($.38 per share) (184) -- -- (184) -- -- Auction preferred ($2,046.33 per share) (7) -- -- (7) -- -- ESOP convertible preferred ($2.72 per share) (12) -- -- (12) -- -- Stock issuances - Stock option and benefit plans 49 3 46 -- -- -- Restricted stock, less amortization of $6 6 -- 1 -- -- 5 Reacquired shares (45) (1) (44) -- -- -- Translation adjustments (141) -- -- -- (141) -- ESOP tax benefit 5 -- -- 5 -- -- ESOP share redemption 3 -- 3 -- -- -- Other -- (1) (4) 1 -- 4 ---------- ---------- ---------- ---------- ------------- ----------- Balances at June 29, 1996 4,320 646 141 3,783 (227) (23) Net income 523 -- -- 523 -- -- Cash dividends - Common ($.40 per share) (193) -- -- (193) -- -- Auction preferred ($1,991.67 per share) (6) -- -- (6) -- -- ESOP convertible preferred ($2.72 per share) (12) -- -- (12) -- -- Stock issuances - Business acquisition 18 1 17 -- -- -- Stock option and benefit plans 42 3 39 -- -- -- Restricted stock, less amortization of $12 12 -- 9 -- -- 3 Reacquired shares (258) (9) (214) (35) -- -- Translation adjustments (56) -- -- -- (56) -- ESOP tax benefit 5 -- -- 5 -- -- ESOP share redemption 6 -- 6 -- -- -- Other 3 -- 2 -- -- 1 ---------- ---------- ---------- ---------- ------------- ----------- Balances at December 28, 1996 $ 4,404 $ 641 $ -- $ 4,065 $ (283) $ (19) ---------- ---------- ---------- ---------- ------------- ----------- ---------- ---------- ---------- ---------- ------------- -----------
Page 6 SARA LEE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWENTY-SIX WEEKS ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995 (IN MILLIONS) TWENTY-SIX WEEKS ENDED ---------------------- Dec. 28, Dec. 30, 1996 1995 ---------- ---------- OPERATING ACTIVITIES - Net income $ 523 $ 469 Adjustments for non-cash charges included in net income: Depreciation 246 224 Amortization of intangibles 95 86 Increase in deferred income taxes 6 42 Other (6) (2) Changes in current assets and liabilities, excluding businesses acquired and sold (381) (557) ---------- ---------- Net cash from operating activities 483 262 ---------- ---------- INVESTING ACTIVITIES - Purchases of property and equipment (233) (201) Acquisitions of businesses (540) (72) Dispositions of investment and business 114 -- Sales of property 32 21 Other 10 18 ---------- ---------- Net cash used in investing activities (617) (234) ---------- ---------- FINANCING ACTIVITIES - Issuances of common stock 42 44 Purchases of common stock (258) (58) Borrowings of long-term debt 155 297 Repayments of long-term debt (146) (159) Short-term borrowings, net 588 96 Payments of dividends (211) (192) ---------- ---------- Net cash from financing activities 170 28 ---------- ---------- Effect of changes in foreign exchange rates on cash (3) (7) ---------- ---------- Increase in cash and equivalents 33 49 Cash and equivalents at beginning of year 243 202 ---------- ---------- Cash and equivalents at end of quarter $ 276 $ 251 ---------- ---------- ---------- ---------- COMPONENTS OF THE CHANGES IN CURRENT ASSETS AND LIABILITIES: (Increase) in trade accounts receivable $ (115) $ (134) Decrease (increase) in inventories 180 (66) Decrease in other current assets 45 23 (Decrease) in accounts payable (452) (295) (Decrease) in accrued liabilities (39) (85) ---------- ---------- Changes in current assets and liabilities $ (381) $ (557) ---------- ---------- ---------- ---------- Page 7 SARA LEE CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following is a discussion of the results of operations for the second quarter and first half of fiscal 1997 compared to comparable periods of fiscal 1996 and a discussion of the changes in financial condition during the first half of fiscal 1997. RESULTS OF OPERATIONS COMPARISON OF SECOND QUARTER FISCAL 1997 TO SECOND QUARTER FISCAL 1996 Net sales by business segment in the second quarter of fiscal 1997 as compared to the second quarter of fiscal 1996 were as follows: Thirteen Weeks Ended ------------------------- Dec. 28, Dec. 30, Percent 1996 1995 Change ---------- ---------- --------- Packaged Meats and Bakery $ 2,036 $ 1,732 17.6 % Coffee and Grocery 731 782 (6.4) Household and Body Care 440 429 2.5 Personal Products 2,067 1,958 5.6 Intersegment sales (5) (3) NM ---------- ---------- --------- Net Sales $ 5,269 $ 4,898 7.6 % ---------- ---------- --------- ---------- ---------- --------- Businesses acquired net of businesses sold subsequent to the start of the second quarter of last fiscal year increased net sales by approximately 6.8 percentage points. The strengthening of the U.S. dollar relative to foreign currencies had the effect of reducing sales in the second quarter by approximately 1.4 percentage points. Thus, on a comparable basis, sales increased approximately 2.2%. The principal acquisitions in fiscal 1997 were Aoste, a European manufacturer of processed meat products, and Lovable Italiana S.p.A., an Italian intimate apparel company. Page 8 Cost of sales increased by $229 million or 7.6% and the gross profit margin of 38.3% was unchanged from the second quarter of fiscal 1996. Improved gross profit margins in the Coffee and Grocery and Household and Body Care segments offset lower gross profit margins in the Personal Products and Packaged Meats and Bakery segments. Selling, general and administrative expenses of $1.51 billion were $106 million or 7.6% higher than the second quarter of fiscal 1996. This increase was primarily due to acquisitions offset in part by the strengthening of the U.S. dollar relative to foreign currencies. Net interest declined from $46 million last year to $44 million in the current year primarily as a result of lower borrowing costs. The effective tax rate decreased from 34.0% to 32.0% of income before income taxes. The decrease is largely due to the impact of lower foreign taxes. Net income increased 12.1% to $317 million. Net income per share increased 12.3% to $.64 per share from the $.57 reported last year. COMPARISON OF FIRST HALF OF FISCAL 1997 TO FIRST HALF OF FISCAL 1996 Net sales by business segment in the first half of fiscal 1997 as compared to the first half of fiscal 1996 were as follows: Twenty-Six Weeks Ended ------------------------- Dec. 28, Dec. 30, Percent 1996 1995 Change ---------- ---------- --------- Packaged Meats and Bakery $ 3,924 $ 3,345 17.3 % Coffee and Grocery 1,405 1,507 (6.8) Household and Body Care 871 860 1.3 Personal Products 3,965 3,847 3.1 Intersegment sales (10) (5) NM ---------- ---------- --------- Net Sales $ 10,155 $ 9,554 6.3 % ---------- ---------- --------- ---------- ---------- --------- Businesses acquired net of businesses sold subsequent to the start of fiscal 1996 increased net sales by approximately 6.0 percentage points. The strengthening of the U.S. dollar relative to foreign currencies had the effect of reducing sales in fiscal 1997 by approximately 1.4 percentage points. Thus, on a comparable basis, net sales increased approximately 1.7%. Page 9 Cost of sales increased by $375 million or 6.3% and the gross profit margin of 37.7% was unchanged from the first half of fiscal 1996. Improved gross profit margins in the Coffee and Grocery and Household and Body Care segments offset lower gross profit margins in the Personal Products and Packaged Meats and Bakery segments. Selling, general and administrative expenses of $2.97 billion were $173 million or 6.2% higher than the first half of fiscal 1996. This increase was primarily due to acquisitions offset in part by the strengthening of the U.S. dollar relative to foreign currencies. Net interest declined from $93 million to $87 million in the current year primarily as a result of lower borrowing costs. The effective tax rate decreased from 34.0% to 32.0% of income before income taxes. The decrease is largely due to the impact of lower foreign taxes. Net income increased 11.6% to $523 million. Net income per share increased 11.7% to $1.05 per share from the $.94 reported last year. FINANCIAL CONDITION During the first half of fiscal 1997, net cash from operating activities was $483 million as compared to $262 million in the first half of fiscal 1996. The $221 million improvement in operating cash flows was primarily due to lower working capital requirements than in the first half of fiscal 1996. Net cash expended for investing activities was $617 million in the first half of fiscal 1997 as compared to $234 million in the first half of fiscal 1996. The increase is primarily due to higher cash expenditures for business acquisitions, offset in part by cash proceeds from the disposition of an equity investment and business. On October 31, 1996, the Corporation's board of directors authorized the repurchase of up to 20 million shares of the Corporation's outstanding common stock. This amount was in addition to 12 million shares which remained from previous repurchase authorizations. During the first half of fiscal 1997, the Corporation repurchased 7.2 million shares of its outstanding common stock for $258 million. It is anticipated that future share repurchases will be funded from internal sources of cash. During the first half of fiscal 1997, cash and equivalents increased by $33 million while net borrowings produced a cash inflow of $597 million. The increased borrowing level is primarily attributable to business acquisitions. Page 10 RESTRUCTURING As of September 28, 1996, the Corporation had completed the plant closure and employee severance actions defined in the fiscal 1994 restructuring plan. Actions taken as part of the restructuring plan lowered operating costs by $102 million in the first half of fiscal 1997; however, a significant portion of this benefit has been used for business building and profit improvement initiatives. The Corporation expects the restructuring plan to generate increased savings in subsequent quarters growing to an annual savings of approximately $250 million in 1998. Savings from the planned actions will be used for business building and profit improvement initiatives. Page 11 PART II ITEM 2. - CHANGES IN SECURITIES (c) On October 11, 16, 22, 24, and 29, 1996, the Corporation issued 398, 492, 213, 232 and 1,129 shares of its common stock, respectively, upon exercises of employee stock options to 5 employees of the Corporation and its subsidiaries for approximately $46,000 in cash in reliance on Section 4(2) of the Securities Act of 1933. ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) PAGE NUMBER OR EXHIBIT INCORPORATED HEREIN NUMBER DESCRIPTION BY REFERENCE TO - -------- --------------------------------------- ------------------- 10.1 Amendment to the 1995 Non-Employee Director Stock Plan 14 10.2 Amendment to the 1995 Long-Term Incentive Stock Plan 15 10.3 Amendment to the 1989 Incentive Stock Plan 16 10.4 Amendment to the Supplemental Benefit Plan 17 11 Computation of Net Income Per Common Share 18 12.1 Computation of Ratio of Earnings to Fixed Charges 20 12.2 Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements 21 27 Financial Data Schedule 22 (b) Reports on Form 8-K No reports on Form 8-K have been filed by the Registrant during the quarter for which this report is filed. Page 12 S I G N A T U R E Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SARA LEE CORPORATION (Registrant) By: /s/ Wayne R. Szypulski ------------------------------- Wayne R. Szypulski Vice President and Controller DATE: February 10, 1997 Page 13 EX-10.1 2 EXHIBIT 10.1 SARA LEE CORPORATION AND SUBSIDIARIES EXHIBIT 10.1 AMENDMENT TO THE 1995 NON-EMPLOYEE DIRECTOR STOCK PLAN The 1995 Non-Employee Director Stock Plan was amended as follows: Article IX: 9.1 GRANT OF OPTIONS OR SHARES. On the first day of November of each year, Options or Shares, or a combination thereof, shall be granted to each Non-Employee Director who, at least ten business days prior thereto, files with the Committee or its designee a written election to receive Options or Shares, or a combination thereof, in lieu of all or a portion of such Non-Employee Director's Annual Retainer. In the event a Non-Employee Director does not file a written election in accordance with the preceding sentence, Options or Shares, or a combination thereof, shall be granted to such Non-Employee Director on the tenth business day (the "Effective Date") after the date such Non-Employee Director files with the Committee or its designee a written election to receive Options or Shares, or a combination thereof, in lieu of all or a portion of such Non-Employee Director's Annual Retainer; provided, however, that such election may apply only to the portion of such Non-Employee Director's Annual Retainer determined by multiplying such Non-Employee Director's Annual Retainer by a fraction, the numerator of which is the number of days from and including the Effective Date to and including the last day of the period for which such Annual Retainer would otherwise be payable, and the denominator of which is 365 or 366, as the case may be. An election pursuant to the first sentence of this Section 9.1 shall be irrevocable on and after the tenth business day prior to the date of grant of the Options or Shares, as the case may be. An election pursuant to the second sentence of this Section 9.1 shall be irrevocable. Article XI: The Board may amend the Plan from time to time or terminate the Plan at any time; provided, however, that no action authorized by this Article shall adversely change the terms and conditions of an outstanding Option without the Optionee's consent. Page 14 EX-10.2 3 EXHIBIT 10.2 SARA LEE CORPORATION AND SUBSIDIARIES EXHIBIT 10.2 AMENDMENT TO THE 1995 LONG-TERM INCENTIVE STOCK PLAN The 1995 Long-Term Incentive Stock Plan was amended as follows: The definition of the term "Committee" in Article II of the 1995 Long-Term Incentive Stock Plan was amended to delete the reference to "disinterested directors" and substitute in lieu thereof "Non-Employee Directors". Page 15 EX-10.3 4 EXHIBIT 10.3 SARA LEE CORPORATION AND SUBSIDIARIES EXHIBIT 10.3 AMENDMENT TO THE 1989 INCENTIVE STOCK PLAN The 1989 Incentive Stock Plan was amended as follows: Section 3.1 of the 1989 Incentive Stock Plan was amended by deleting the reference to "disinterested directors" and substituting in lieu thereof "Non- Employee Directors". Page 16 EX-10.4 5 EXHIBIT 10.4 SARA LEE CORPORATION AND SUBSIDIARIES EXHIBIT 10.4 AMENDMENT TO THE SUPPLEMENTAL BENEFIT PLAN The Sara Lee Corporation Supplemental Benefit Plan was amended as follows: 2.2(a) ESOP. If the Participant is covered only by the ESOP, the Participant's accrued Supplemental Benefit as of any date shall consist of the aggregate Employer contributions that would have been made to the ESOP on behalf of the Participant for each plan year prior to such date but which were not contributed because of the limitations of Sections 401(a)(17) or 415 of the Code, with such aggregate contributions adjusted upward or downward to reflect the investment experience under the ESOP, provided that for plan years of the ESOP ending prior to January 1, 1997, the Employer contribution that shall be considered to have been foregone in any plan year of the ESOP shall not, for purposes of this Plan, exceed 1.75 percent of that portion of the Participant's compensation (as determined under the ESOP) for that plan year in excess of the Code Section 401(a)(17) limit for that year. Page 17 EX-11 6 EXHIBIT 11 SARA LEE CORPORATION AND SUBSIDIARIES COMPUTATION OF NET INCOME PER COMMON SHARE EXHIBIT 11 (in millions except per share data)
FOR THE PERIODS ENDED DECEMBER 28, 1996 -------------------------------------------------------------- PRIMARY FULLY DILUTED --------------------------- -------------------------- Thirteen Twenty-Six Thirteen Twenty-Six Weeks Weeks Weeks Weeks ----------- ----------- ----------- ----------- EARNINGS: Net income $ 317 $ 523 $ 317 $ 523 Less: Dividends on Preferred Stocks, net of tax benefits (6) (13) (3) (6) Adjustment attributable to conversion of ESOP Convertible Preferred Stock -- -- (1) (3) ----------- ----------- ----------- ----------- Net Income Available for Common Stockholders $ 311 $ 510 $ 313 $ 514 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- SHARES: Weighted Average Shares Outstanding 480 481 480 481 Add: Common Stock Equivalents - Stock options 4 3 4 4 ESOP Convertible Preferred Stock -- -- 18 18 Restricted stock and other 2 2 2 2 ----------- ----------- ----------- ----------- Adjusted Weighted Average Shares Outstanding 486 486 504 505 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- NET INCOME PER COMMON SHARE $ 0.64 $ 1.05 $ 0.62 $ 1.02 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Page 18 SARA LEE CORPORATION AND SUBSIDIARIES COMPUTATION OF NET INCOME PER COMMON SHARE EXHIBIT 11 (in millions except per share data) (Continued)
FOR THE PERIODS ENDED DECEMBER 30, 1995 -------------------------------------------------------------- PRIMARY FULLY DILUTED --------------------------- -------------------------- Thirteen Twenty-Six Thirteen Twenty-Six Weeks Weeks Weeks Weeks ----------- ----------- ----------- ------------ EARNINGS: Net income $ 283 $ 469 $ 283 $ 469 Less: Dividends on Preferred Stocks, net of tax benefits (7) (14) (3) (7) Adjustment attributable to conversion of ESOP Convertible Preferred Stock -- -- (2) (3) ----------- ----------- ----------- ----------- Net Income Available for Common Stockholders $ 276 $ 455 $ 278 $ 459 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- SHARES: Weighted Average Shares Outstanding 481 481 481 481 Add: Common Stock Equivalents - Stock options 2 2 3 3 ESOP Convertible Preferred Stock -- -- 18 18 Restricted stock and other 2 1 2 1 ----------- ----------- ----------- ----------- Adjusted Weighted Average Shares Outstanding 485 484 504 503 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- NET INCOME PER COMMON SHARE $ 0.57 $ 0.94 $ 0.55 $ 0.91 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Page 19 EX-12.1 7 EXHIBIT 12.1 SARA LEE CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1 (in millions except ratios) Twenty-Six Weeks Ended ------------------------- Dec. 28, Dec. 30, 1996 1995 ----------- ----------- Fixed charges: Interest expense $ 108 $ 119 Interest portion of rental expense 33 36 ----------- ----------- Total fixed charges before capitalized interest 141 155 Capitalized interest 5 6 ----------- ----------- Total fixed charges $ 146 $ 161 ----------- ----------- ----------- ----------- Earnings available for fixed charges: Income before income taxes $ 770 $ 711 Less undistributed income in minority owned companies (4) (3) Add minority interest in majority-owned subsidiaries 15 19 Add amortization of capitalized interest 12 11 Add fixed charges before capitalized interest 141 155 ----------- ----------- Total earnings available for fixed charges $ 934 $ 893 ----------- ----------- ----------- ----------- Ratio of earnings to fixed charges 6.4 5.5 ----------- ----------- ----------- ----------- Page 20 EX-12.2 8 EXHIBIT 12.2 SARA LEE CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.2 AND PREFERRED STOCK DIVIDEND REQUIREMENTS (in millions except ratios)
Twenty-Six Weeks Ended -------------------------- Dec. 28, Dec. 30, 1996 1995 ----------- ----------- Fixed charges and preferred stock dividend requirements: Interest expense $ 108 $ 119 Interest portion of rental expense 33 36 ----------- ----------- Total fixed charges before capitalized interest and preferred stock dividend requirements 141 155 Capitalized interest 5 6 Preferred stock dividend requirements (1) 21 22 ----------- ----------- Total fixed charges and preferred stock dividend requirements $ 167 $ 183 ----------- ----------- ----------- ----------- Earnings available for fixed charges and preferred stock dividend requirements: Income before income taxes $ 770 $ 711 Less undistributed income in minority owned companies (4) (3) Add minority interest in majority-owned subsidiaries 15 19 Add amortization of capitalized interest 12 11 Add fixed charges before capitalized interest and preferred stock dividend requirements 141 155 ----------- ----------- Total earnings available for fixed charges and preferred stock dividend requirements $ 934 $ 893 ----------- ----------- ----------- ----------- Ratio of earnings to fixed charges and preferred stock dividend requirements 5.6 4.9 ----------- ----------- ----------- -----------
(1) Preferred stock dividends in the computation have been increased to an amount representing the pretax earnings that would have been required to cover such dividends. Page 21 EX-27 9 FINANCIAL DATA SCHEDULE
5 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. 6-MOS JUN-28-1997 JUN-30-1996 DEC-28-1996 264 12 2,203 241 2,771 5,297 6,300 3,180 13,099 5,020 1,881 0 339 641 3,763 13,099 10,155 10,155 6,326 6,326 0 92 87 770 247 523 0 0 0 523 1.05 1.02
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