Sara Lee Corporation yesterday announced results for the fourth quarter and fiscal year 2001 ended June 30, 2001. All results exclude unusual items unless otherwise noted.


Company
Snapshot
Report:

Sara Lee Bakeries UK Ltd


For the fiscal year, Sara Lee reported revenues of $17.7 billion, up 1%, and diluted earnings per share from total operations of $1.36, compared to $1.34 in fiscal 2000, an increase of 1%. In the fourth quarter, reported revenues fell 5% versus last year to $4.2 billion, and diluted earning per share from total operations increased 6% to $.37 from $.35.

In May 2000, Sara Lee Corporation announced a Reshaping Program to focus the company's operations on three business segments - Food and Beverage, Intimates and Underwear, and Household Products - and a number of non-core business units were sold or exited during fiscal 2001 in conjunction with this program. Excluding these divested businesses from both fiscal 2000 and fiscal 2001, sales from ongoing operations increased 4% in fiscal 2001 to $16.8 billion and operating income fell slightly, down 2%, to just under $2 billion. Unit volumes from ongoing operations increased 8% with acquisitions and fell 1% excluding acquisitions. For the fourth quarter, sales from ongoing operations were flat and operating income fell slightly, down 1%. Unit volumes from ongoing operations increased 3% with acquisitions and fell 2% excluding acquisitions. Contributions to sales and operating income from acquisitions for both the fourth quarter and the full year were significantly offset by the negative impact of a stronger dollar.

"Sara Lee completed an important transition year in fiscal 2001. In the 13 months since we announced our reshaping plans, we have successfully divested 12 non-core operations resulting in proceeds of nearly $3 billion, and our business portfolio today is significantly more focused and considerably better poised for growth," said C. Steven McMillan, president and CEO of Sara Lee Corporation. "We also began a significant reorganization within several of our business units, including U.S. Meats and European Apparel, to improve our ability to compete effectively in the current business environment."

"Looking ahead, fiscal 2002 will be a year of investment for Sara Lee, and we've taken an important step with our agreement to purchase The Earthgrains Company, Sara Lee's largest acquisition to date. The combination of our powerful Sara Lee brand with Earthgrains' state-of-the-art direct store distribution system will allow us to build a large and growing bakery business on a national scale," McMillan added. "For our base businesses, we intend to continue investing aggressively in our systems and infrastructure to create a more efficient and potent organization, and we will significantly increase marketing for our largest brands. Total marketing spending for our company is expected to rise at least 8% in fiscal 2002, with our strongest brand franchises receiving the majority of the additional funds."

Unusual Items

Sara Lee's results for the quarter and year ended June 30, 2001 were affected by a number of unusual items related to the ongoing reshaping program announced in May 2000. That plan includes the divestiture of non-core operations that do not fit with the company's strategy to establish leading branded positions in Food and Beverage, Intimates and Underwear, and Household Products, and the restructuring of a number of defined business activities. The unusual items recognized in the fiscal 2001 financial statements follow.

In December 2000, the company sold PYA/Monarch, its foodservice distribution business, and received cash proceeds of nearly $1.6 billion. The disposition resulted in a gain before income taxes of $1.1 billion, and an after-tax gain of $638 million, or $.75 per share on a diluted basis for the full year. PYA/Monarch constituted a reportable segment of the company, and this gain and the business have been recognized as a discontinued operation in the corporation's financial statements.

Coach, a designer, producer and marketer of handbags and accessories, was disposed of in a tax-free transaction that resulted in a gain of $967 million, or $1.13 per share on a diluted basis for the full year. Of the total gain, $105 million was recognized in the second quarter of the year when an initial public offering of 19.5% of the Coach shares was completed. Cash proceeds of $122 million were received as a result of the IPO. In April 2001, the company received 41.4 million shares of Sara Lee stock in exchange for its remaining 80.5% ownership interest in Coach and recognized a gain of $862 million.

During the year, actions were taken to dispose of 17 non-core business operations. The pre-tax impact, the after-tax impact on net income and the impact on diluted earnings per share for fiscal 2001 were $341 million, $352 million and $.41, respectively. At the end of fiscal 2001, 10 of those business dispositions had been completed and the remainder are expected to close in the first half of fiscal 2002. The transactions completed include the disposition of two European Bakery operations, the Argal meat business in Spain, the Australasian Intimates and Underwear business, the Champion Europe operations and certain components of the Courtaulds operation. The transactions targeted for closure in fiscal 2002 primarily consist of several off-strategy European Intimates and Underwear operations. In the fourth quarter of fiscal 2001, the pre-tax impact, the after-tax impact and the impact on diluted earnings per share of these actions were $130 million, $124 million and $.15 per share, respectively.

Business reorganization actions initiated during the year resulted in a pre-tax charge of $213 million, and an after-tax charge of $148 million, or $.17 of diluted earnings per share for the year. $124 million of the pre-tax charge relates to severance and other employee benefit costs associated with the elimination of 13,200 positions; $61 million relates to the exit of various owned and leased facilities; and substantially all of the remaining portion of the charge are costs related to the exit of certain licensed products produced by the corporation. During the fourth quarter, the pre-tax business reorganization charge was $92 million, and the after-tax charge was $64 million, or $.08 per share on a diluted basis.

After reflecting these unusual items, including the gain on the disposition of the Coach business, and the gain from the sale of the foodservice business, fourth quarter and full year net income is $973 million and $2.3 billion, respectively - resulting in quarter and full year diluted earnings per share of $1.19 and $2.65, respectively.

Performance Review

A performance review for each line of business follows. Unit volumes reflect ongoing operations and exclude acquisitions unless otherwise noted.

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SARA LEE FOODS

                     Fourth Quarter  Change      Fiscal Year   Change
                    ---------------- -------  ---------------- -------
                      2001     2000             2001    2000

Sales               $  1,247 $ 1,291   (3.3)% $  5,081 $ 5,088   (0.1)%
Operating Income    $    104 $    73   42.0 % $    363 $   370   (2.0)%

Sara Lee Foods includes the company's worldwide packaged meats and bakery businesses. While reported figures are shown above, on an ongoing operations basis - excluding divested operations from both fiscal 2000 and fiscal 2001 - these businesses produced a 1% increase in sales in the fourth quarter and a 3% sales gain for fiscal 2001. Operating income from ongoing operations rose 20% in the fourth quarter, but fell 5% for the year. In the fourth quarter, both the meat and bakery businesses enjoyed double-digit operating income gains; the meat business benefited from increased sales of higher margin products, lower commodity prices in the United States and cost savings relating to ongoing supply chain improvement initiatives, while the bakery operations enjoyed increased operating efficiencies and an improved product mix.

Unit volumes for worldwide packaged meats declined 2% in the fourth quarter and fell 1% for the full year. During both periods, increased sales of branded meat products in the United States were offset by weak unit volumes in Europe resulting from higher commodity costs and animal safety concerns.

New product development efforts in Sara Lee's meat business continued to focus on convenience and added value during fiscal 2001. New products introduced during the year included Jimmy Dean meat snacks, Jimmy Dean Fresh Taste. Fast! breakfast sausages and Ball Park Kosher hot dogs in the United States and sliced meat items from Stegeman in Europe. Marketing spending to support key brands and new products increased 6% during the quarter and rose 13% for the full year

Fourth-quarter global bakery units fell 9% while units declined 2% for fiscal 2001, as the company continued to exit lower margin product lines. During the year, the bakery added Sara Lee Brownie Bites to its successful Cheesecake Bites offerings.

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BEVERAGE

                     Fourth Quarter  Change     Fiscal Year    Change
                    ---------------- -------  ---------------- -------
                      2001     2000             2001     2000

Sales               $    674 $   714   (5.7)% $  2,889 $ 2,827    2.2 %
Operating Income    $    120 $   115    4.5 % $   485  $   472    2.8 %

Sara Lee's Beverage business was unaffected by divestitures in fiscal 2001, so reported results, shown in the table above, also reflect ongoing operations. While acquisitions contributed to increased sales and profits in fiscal 2001, the stronger dollar negatively affected reported results. Excluding both of these factors, base business Beverage sales decreased 6% in the fourth quarter, with operating income up 6%; on the same basis, full year sales were down 3% while operating income grew 4%. Significantly lower global market coffee costs and modest unit volume declines led to lower dollar sales for this business, while operating income and margins benefited from the low commodity costs as well as improved operating efficiencies and increased sales of higher-margin products.

From a market perspective, the company maintained its leading retail position in several major European roasted coffee markets, including the Netherlands, Belgium, Spain, Denmark, the United Kingdom and Hungary. Product innovation is important for this business, and Sara Lee/Douwe Egberts successfully launched an innovative in-home coffee concept in the Netherlands called Senseo, which uses proprietary filter packets, filled with Douwe Egberts coffee, to quickly brew one or two cups of high quality coffee. The company also held its number-one position in the large Brazilian coffee market. In the United States, the company continued to consolidate its retail position behind four well-known regional brands - Chock full o'Nuts, Hills Bros., MJB and Chase & Sanborn. Sara Lee also continued to strengthen its leading U.S. foodservice coffee position through expanded distribution of its proprietary Cafitesse coffee system.

Unit sales for roasted coffee and coffee concentrates, including acquisitions in Brazil and the United States, rose 22% for the fourth quarter and increased 30% for the year. Excluding the impact of acquisitions, unit sales fell 1% in the fourth quarter and 2% for the full year.

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HOUSEHOLD PRODUCTS

                     Fourth Quarter  Change     Fiscal Year    Change
                    ---------------- -------  ---------------- -------
                      2001     2000             2001     2000

Sales               $    583 $   591   (1.5)% $  2,088 $ 2,154   (3.1)%
Operating Income    $    113 $   112    0.7 % $    345 $   355   (2.9)%

Sara Lee's Household Products - the company's most global line of business - includes traditional household and personal care items as well as the company's Direct Selling operations. The Household Products business was unaffected by divestitures in fiscal 2001, so reported results, shown in the table above, also reflect ongoing operations. There were no acquisitions relating to this line of business in fiscal 2001, but currency did have a major negative impact on reported results; on a local-currency basis, fourth-quarter sales grew 6%, with operating income up 9%, while full-year sales and operating income both increased 6%.

More than 80% of the sales from the company's household and personal care operations came from four core categories in fiscal 2001. Total unit volume for these categories - shoe care, body care, insecticides and air fresheners - grew 4% for both the quarter and the full year. The air freshener business, in particular, posted double-digit unit gains in both periods, reflecting the success of product introductions in new markets, including Sara Lee's entry into the U.S. air freshener market with Ambi-Pur LiquiFresh, a two-in-one toilet bowl cleaner and air freshener. In addition, Sara Lee continued the expansion of its Sanex body care brand, with introductions in Australia and Malaysia. The company currently markets Sanex in more than 30 countries.

For the year, sales for the Direct Selling operations within Household Products rose on the strength of improved business in a number of developing nations in Latin America and Asia plus continued growth at Fuller Mexico.

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INTIMATES AND UNDERWEAR

                     Fourth Quarter  Change      Fiscal Year   Change
                    ---------------- -------  ---------------- -------
                      2001     2000             2001     2000

Sales               $  1,725 $ 1,910   (9.6)% $  7,767 $ 7,598    2.2 %
Operating Income    $    195 $   226  (13.9)% $    844 $   844    0.0 %

Sara Lee's Intimates and Underwear line of business includes the company's global Intimate Apparel, Knit Products, and Legwear operations. While reported results are shown above, on an ongoing operations basis - which excludes divested businesses from both fiscal 2000 and fiscal 2001 - sales for this line of business fell 1% in the fourth quarter and rose 5% for the fiscal year. Operating income from ongoing operations fell 12% for the quarter and was down 4% for the year.

On a geographic basis, operating income during both the fourth quarter and the full year was especially strong in Europe, benefiting from systems and reorganization efforts, new product introductions and the successful integration of core operations from the U.K. apparel company Courtaulds. By product line, the company's global intimate apparel operations reported double-digit operating income gains in the fourth quarter, with higher profits in both the United States and Europe, and the fast-growing U.S. sock business continued its exceptional growth record. These strong results, however, were more than offset by weakness in global sheer hosiery markets and lower U.S. knit product profits due to aggressive competitive activity, weak retail sales and lower consumer demand.

Overall, unit volumes for global Intimates and Underwear declined 3% in the quarter and fell 1% for the full year.

By product category, global Knit Products unit sales declined 6% in the fourth quarter and fell 2% for the full year, primarily reflecting strong price and promotional competition in the United States for both the underwear and screenprint operations. Increased marketing support behind its key Hanes and Hanes Her Way brands, however, allowed Sara Lee to maintain its leading position in the men's and boys' underwear segment over the most recent 12-month period with a 36.4% share; in the women's and girls' segment, Sara Lee's leading share grew by over two points to 35.8%. In Europe, the company maintained its leading men's and women's underwear positions in Spain and Italy as a result of continued product innovation.

Global Intimate Apparel unit volumes rose 1% in the quarter and increased 2% for the full year, as strong results from the Bali brand balanced a difficult year for Playtex, particularly in the department store channel. In the United States, Sara Lee maintained its leading position in the bra category with a 27.1% dollar share, and the company continues to hold leading market positions in France, Italy and the United Kingdom.

Legwear unit volumes were flat for the fourth quarter and down 4% for the full year, as lower sheer hosiery volumes were offset by increased sock unit sales in both periods. From a market perspective, Sara Lee increased its leading unit share of the total U.S. sock market by over three points to 15.8% for the most recent 12-month period. Over the same period, Sara Lee maintained its leading position in the U.S. sheer hosiery category with a dollar share of 52.7%.

Corporate Items

For the corporation, goodwill and trademark amortization of $49 million in the fourth quarter and $191 million for the full year compares with $44 million and $171 million in the same periods last year. Net interest expense was $31 million for the quarter and $180 million for the fiscal year compared with $56 million and $176 million, respectively, for the year-ago period. The lower interest costs for the fourth quarter reflect the company's decision to reduce debt levels using cash proceeds from divestitures made during the year.

In the fourth quarter, Sara Lee Corporation repurchased almost 7 million shares of its common stock for a total of $133 million. For the full year, Sara Lee bought back 31 million shares for a total of $643 million. In addition to repurchasing its shares, the company also received 41.4 million shares in an exchange offer that led to the divestiture of Coach. The company currently has approximately 24 million shares remaining in its repurchase authorization.

Outlook

A number of factors, in addition to on-going results, are likely to impact Sara Lee's diluted earnings per share in fiscal 2002, including the timing of the completion of the Earthgrains acquisition and the adoption of new accounting rules for amortization of goodwill and intangibles. In addition to the base business guidance detailed below, Sara Lee's management currently expects the Earthgrains acquisition to dilute reported earnings per share by about $.03 in the first twelve months, and the new accounting rules to add approximately $.08 to full-year reported earnings per share.

Excluding these two items, Sara Lee's management currently expects diluted earnings per share for fiscal 2002 to fall within the range of $1.25 to $1.35, compared with $1.36 in fiscal 2001. For the first quarter, excluding the impact of the Earthgrains acquisition and the adoption of new accounting rules, diluted earnings per share are expected to fall within the range of $.21 to $.24, compared with $.29 in the first quarter of fiscal 2001. Actual results will also depend to a large extent on both future euro-dollar exchange rates and U.S. retail market conditions for the company's Intimates and Underwear business.

By line of business, management expects first-quarter and full-year operating income for Sara Lee Foods to increase versus year-ago periods. Reported operating income for Beverage and for Household Products, the company's two most European-based lines of business, will depend, to some extent, on the euro-dollar exchange rate. In local currency terms, first quarter Beverage profits may decline, reflecting continued investment spending in this business, while full-year results should be flat. Household Products' local currency profits should increase during both the first quarter and for the full year. Operating income for Intimates and Underwear is expected to decline in both the first quarter and for the full year due to continued weakness in the U.S. retail environment and on-going competitive pricing pressures.

Forward-looking statements

This news release contains certain forward-looking statements concerning Sara Lee's operations, economic performance and financial condition. 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 investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Consequently, the corporation wishes to caution readers not to place undue reliance on any forward-looking statements. We have provided additional information in our Form 10-K for fiscal year 2000 and Forms 10-Q for the first, second and third quarters of fiscal 2001, which readers are encouraged to review, concerning factors that could cause actual results to differ materially from those in the forward-looking statements.

Sara Lee Corporation is a global consumer packaged goods company with approximately $17.7 billion in annual revenues. Its leading brands include Sara Lee, Douwe Egberts, Hillshire Farm, Hanes and Playtex.

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                                           Sara Lee Corporation (NYSE)
Consolidated Statements of Income
(in millions except per share amounts)
----------------------------------------------------------------------
                      Fourth Quarter Ended      Twelve Months Ended
                    ------------------------  ------------------------
                    June 30, July 1, Percent  June 30, July 1, Percent
                      2001    2000   Change     2001    2000   Change
                    -------- ------- -------  -------- ------- ------

Net sales           $  4,227 $ 4,463  (5.3)%  $ 17,747 $17,511  1.3 %
                    -------- -------          -------- -------
Cost of sales          2,435   2,622            10,264  10,100
Cost of sales -
 product line exit         2      --                26      --
Selling, general and
 administrative
 expenses              1,391   1,389             5,865   5,668
Interest expense          59      77               270     252
Interest income          (28)    (21)              (90)    (76)

Unusual Items -
Business reshaping:
  Gain on disposal
   of Coach business    (862)     --              (967)     --
  Business dispositions
   and other charges     220      --               528      --
                    -------- -------          -------- -------
                       3,217   4,067            15,896  15,944
                    -------- -------          -------- -------
Income from continuing
 operations before
 income taxes          1,010     396     NM      1,851   1,567   18.1
Income taxes              37     103               248     409
                    -------- -------          -------- -------
Income from
 continuing operations   973     293     NM      1,603   1,158   38.4
Income from
 discontinued operations,
 net of income taxes      --      20                25      64
Gain on disposal of
 discontinued operations,
 net of income taxes      --      --               638      --
                    -------- -------          -------- -------
Net income          $    973 $   313     NM   $  2,266 $ 1,222   85.5
                    ======== =======          ======== =======
Income from continuing
 operations per common share
  Basic             $   1.24 $  0.33     NM   $   1.94 $  1.31   48.1
                    ======== =======          ======== =======
  Diluted           $   1.19 $  0.33     NM   $   1.87 $  1.27   47.2
                    ======== =======          ======== =======

Net income per common share
  Basic             $   1.24 $  0.36     NM   $   2.75 $  1.38   99.3
                    ======== =======          ======== =======
  Diluted           $   1.19 $  0.35     NM   $   2.65 $  1.34   97.8
                    ======== =======          ======== =======

Average shares outstanding
  Basic                  785     858              819      875
                    ======== =======          ======== =======
  Diluted                819     895              854      912
                    ======== =======          ======== =======



                                           Sara Lee Corporation (NYSE)
Operating Results by Industry Segment
Unusual Items not Allocated to Industry Segments
(in millions)                     Fourth Quarter Ended
----------------------------------------------------------------------
                             Sales                Operating Income
                    ------------------------  ------------------------
                    June 30, July 1, Percent  June 30, July 1, Percent
                      2001    2000   Change    2001     2000   Change
                    -------- ------- -------  -------- ------- -------

Food and Beverage:
  Sara Lee Foods    $  1,247 $ 1,291   (3.3)% $    104 $    73   42.0 %
  Beverage               674     714   (5.7)       120     115    4.5

Household  Products      583     591   (1.5)       113     112    0.7

Intimates and
 Underwear             1,725   1,910   (9.6)       195     226  (13.9)
                    -------- ------- -------  -------- ------- -------
  Total sales and
   operating
   companies income    4,229   4,506   (6.1)       532     526    1.0

Intersegment sales        (2)    (43)  95.7         --      --     --

Amortization of
 goodwill and trademarks  --      --      --       (49)    (44)  (9.1)

General
 corporate expenses       --      --      --       (82)    (30)    NM

Gain on disposal
 of Coach business (2)    --      --      --       862      --     NM

Business dispositions
 and other charges (3)(4) --      --      --      (222)     --     NM
                    -------- ------- -------  -------- ------- ------
Total net sales
 and operating income  4,227   4,463   (5.3)     1,041     452     NM

Net interest expense      --      --      --       (31)    (56)  44.6
                    -------- ------- -------  -------- ------- ------
Net sales and income
 from continuing
 operations before
 income taxes       $  4,227 $ 4,463   (5.3)% $  1,010 $   396     NM %
                    ======== ======= =======  ======== ======= ======


                                  Twelve Months Ended
----------------------------------------------------------------------
                             Sales                Operating Income
                    ------------------------  ------------------------
                    June 30, July 1, Percent  June 30, July 1, Percent
                      2001     2000  Change     2001    2000   Change
                    -------- ------- -------  -------- ------- ------

Food and Beverage:
  Sara Lee Foods    $  5,081 $ 5,088   (0.1)% $    363 $   370   (2.0)%
  Beverage             2,889   2,827    2.2        485     472    2.8

Household Products     2,088   2,154   (3.1)       345     355   (2.9)

Intimates
 and Underwear         7,767   7,598    2.2        844     844     --
                    -------- ------- -------  -------- ------- ------
  Total sales and
   operating
   companies income   17,825  17,667    0.9      2,037   2,041   (0.2)

Intersegment sales       (78)  (156)   50.0         --      --     --

Amortization of
 goodwill and trademarks  --      --      --      (191)   (171) (11.2)

General
 corporate expenses       --      --      --      (228)   (127) (78.7)

Gain on disposal of
 Coach business (2)       --      --      --       967      --     NM

Business dispositions
 and other charges (3)(4) --      --      --      (554)     --     NM
                    -------- ------- -------  -------- ------- ------
Total net sales
 and operating income 17,747  17,511    1.3      2,031   1,743   16.6

Net interest expense      --      --      --      (180)   (176)  (2.8)
                    -------- ------- -------  -------- ------- ------
Net sales and income
 from continuing
 operations before
 income taxes       $ 17,747 $17,511    1.3 % $  1,851 $ 1,567   18.1 %
                    ======== ======= =======  ======== ======= ======

See accompanying notes to financial statements for information
regarding the unusual items.



                                           Sara Lee Corporation (NYSE)
Operating Results by Industry Segment
Unusual Items Allocated to Industry Segments
(in millions)                     Fourth Quarter Ended
----------------------------------------------------------------------
                             Sales                Operating Income
                    ------------------------  ------------------------
                    June 30, July 1, Percent  June 30, July 1, Percent
                      2001    2000   Change     2001    2000   Change
                    -------- ------- -------  -------- ------- -------
Food and Beverage:
  Sara Lee Foods    $  1,247 $ 1,291   (3.3)% $     84 $    73   15.0 %
  Beverage               674     714   (5.7)       114     115   (1.3)

Household  Products      583     591   (1.5)       113     112    0.6

Intimates
 and Underwear         1,725   1,910   (9.6)       864     226     NM
                    -------- ------- -------  -------- ------- -------
  Total sales
   and operating
   companies income    4,229   4,506   (6.1)     1,175     526     NM

Intersegment sales       (2)    (43)   95.7         --      --      --

Amortization of
 goodwill and trademarks  --      --     --        (49)    (44)  (9.1)

General
 corporate expenses       --      --     --        (85)    (30)    NM
                    -------- ------- -------  -------- ------- -------
Total net sales
 and operating income  4,227   4,463   (5.3)     1,041     452     NM

Net interest expense      --      --     --        (31)    (56)  44.6
                    -------- ------- -------  -------- ------- -------

Net sales and income
 from continuing
 operations before
 income taxes       $  4,227 $ 4,463   (5.3)% $  1,010 $   396     NM %
                    ======== ======= =======  ======== ======= =======


                                  Twelve Months Ended
----------------------------------------------------------------------
                             Sales                Operating Income
                    ------------------------  ------------------------
                    June 30, July 1, Percent  June 30, July 1, Percent
                      2001    2000   Change     2001    2000   Change
                    -------- ------- -------  -------- ------- -------
Food and Beverage:
  Sara Lee Foods    $  5,081 $ 5,088   (0.1)% $    234 $   370  (36.8)%
  Beverage             2,889   2,827    2.2        477     472    0.9

Household  Products    2,088   2,154   (3.1)       342     355   (3.8)

Intimates
 and Underwear         7,767   7,598    2.2      1,400     844   66.0
                    -------- ------- -------  -------- ------- -------
  Total sales
   and operating
   companies income   17,825  17,667    0.9      2,453   2,041   20.1

Intersegment sales       (78)   (156)  50.0         --      --     --

Amortization of
 goodwill and trademarks  --      --     --       (191)   (171) (11.2)

General
 corporate expenses       --      --     --       (231)   (127) (80.9)
                    -------- ------- -------  -------- ------- -------
Total net sales and
 operating income     17,747  17,511    1.3      2,031   1,743   16.6

Net interest expense      --      --     --       (180)   (176)  (2.8)
                    -------- ------- -------  -------- ------- -------
Net sales and income
 from continuing
 operations before
 income taxes       $ 17,747 $17,511    1.3 % $  1,851 $ 1,567   18.1 %
                    ======== ======= =======  ======== ======= =======

See accompanying notes to financial statements for information
regarding the unusual items.


Notes To Financial Statements

1.  In December 2000, the corporation sold PYA/Monarch, its
    foodservice distribution business, and received cash proceeds of
    $1.6 billion. The disposition resulted in a gain before income
    taxes of $1.1 billion, and an after-tax gain of $638 million, or
    $.75 per share on a diluted basis for the full year. PYA/Monarch
    constituted a reportable segment of the corporation and this gain
    has been recognized as a discontinued operation in the
    corporation's financial statements.

2.  Coach, a designer, producer and marketer of handbags and
    accessories, was disposed of in a tax-free transaction that
    resulted in a gain of $967 million, or $1.13 per share on a
    diluted basis for the full year. Of the total gain, $105 was
    recognized in the second quarter of the year when an initial
    public offering of 19.5% of the Coach shares was completed. Cash
    proceeds of $122 million were received as a result of the IPO. In
    April 2001, the corporation received 41.4 million shares of Sara
    Lee stock in exchange for its remaining 80.5% ownership interest
    in Coach and recognized a gain of $862 million.

3.  During the year actions were taken to dispose of 17 non-core
    business operations. The pre-tax impact, the after-tax impact on
    net income and the impact on diluted earnings per share for fiscal
    2001 were $341 million, $352 million and $.41 respectively. At the
    end of fiscal 2001, 10 of those business dispositions had been
    completed and the remainder are expected to close in the first
    half of fiscal 2002. The transactions completed include the
    disposition of two European Bakery operations, the Argal meat
    business in Spain, the Australasian Intimates and Underwear
    business, the Champion Europe operations and certain components of
    the Courtaulds operation. The transactions targeted for closure in
    2002 primarily consist of a number of off-strategy European
    Intimates and Underwear operations. In the fourth quarter of
    fiscal 2001, the pre-tax impact, the after-tax impact and the
    impact on diluted earnings per share of these actions were $130
    million, $124 million and $.15 per share, respectively.

4.  Business reorganization actions initiated during the year resulted
    in a pre-tax charge of $213 million and an after-tax charge of
    $148 million, or $.17 per share on a diluted basis for the year.
    $124 million of the pre-tax charge relates to severance and other
    employee benefit costs associated with the elimination of 13,200
    positions; $61 million relates to the exit of various owned and
    leased facilities; and substantially all of the remaining portion
    of the charge are costs related to the exit of certain licensed
    products produced by the corporation. During the fourth quarter
    the pre-tax business reorganization charge was $92 million and the
    after-tax charge was $64 million or $.08 per share on a diluted
    basis.

 


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