Sara Lee Corporation today announced results for the first quarter of fiscal 2001 ended September 30, 2000.

All results are from continuing operations unless otherwise noted. Net sales were $4.5 billion, up 5% over the year-ago period; on a constant currency basis, sales grew 10%. Unit volumes grew 11% including acquisitions and fell 2% excluding acquisitions completed over the last 12 months. Operating income grew 3% to $451 million; on a constant currency basis, excluding the impact of the stronger dollar, operating income increased 10%. Diluted earnings per share were $.27, an increase of 4% compared with $.26 in the year-ago quarter. Diluted earnings per share including discontinued operations also increased 4% to $.29, versus $.28 in the first quarter of fiscal 2000.

"Sara Lee reported a strong quarter in spite of a challenging retail environment and difficult currency translation effects from the sharply weaker euro. Our ability to integrate acquisitions into our existing businesses led to a quarter with solid sales gains and earnings growth that met our forecasts," said C. Steven McMillan, president and chief executive officer of Sara Lee.

"During the quarter, we also made considerable progress relative to the reshaping plan we announced in May. We have agreed to sell PYA/Monarch, our foodservice distribution business, to Royal Ahold for $1.57 billion. The terms include a four-year supply agreement that will support the growth of our U.S. food and beverage businesses that sell to the foodservice channel. We also completed a 19% initial public offering of the premium accessories company, Coach, with the expectation that we will divest our remaining 81% position in the business over the next 12 months, assuming favorable market conditions. Just last week we completed the sale of the Georges Rech men's and women's luxury suits and casualwear business, acquired by Sara Lee as part of the Courtaulds Textiles purchase earlier this year. We continue to make progress on our remaining divestitures, and we will use proceeds to repurchase stock, reduce debt, make acquisitions and invest to support our strong brands and businesses."

    A performance review for each line of business follows (dollars in
millions):

SARA LEE FOODS
First Quarter Change
---------------------------- -----------
2001 2000

Sales $ 1,266 $ 1,220 4%
Operating Income 72 92 (22)%


Sara Lee Foods, which includes the company's global Packaged Meats and Bakery operations, posted a 4% increase in sales and a 22% decline in operating income in the first quarter. U.S. Packaged Meats enjoyed double-digit sales growth, reflecting volume gains in key categories, such as sausage and corn dogs. Increased retail prices, due to higher hog costs, also contributed to the revenue increase. Profit levels declined for Sara Lee Foods based on a combination of a weak performance from Sara Lee's bakery operations as well as short-term margin pressures from higher hog costs.

Global Packaged Meats unit volumes fell 1% in the first quarter while unit volumes including acquisitions increased 1%. Worldwide unit sales for Sara Lee Bakery fell 8%. Higher U.S. Bakery foodservice volumes and increased sales of new U.S. grocery products, including Sara Lee Bites and Sara Lee Calzone Creations, were more than offset by weakness at the Bakery's international operations.

BEVERAGE
First Quarter Change
---------------------------- ------------
2001 2000

Sales $ 712 $ 599 19%
Operating Income 111 107 4%


Sara Lee's Beverage line of business includes retail and foodservice coffee and tea sales in markets around the world. Sales grew 19% in the first quarter and operating income rose 4%. Excluding the impact of currency, as well as several coffee acquisitions completed over the last 12 months, sales for this line of business increased 2% and operating income rose 5%. Excluding acquisitions, unit sales of roasted coffee and coffee concentrate products increased 3% during the quarter, reflecting good unit increases in the company's fast-growing out-of-home business and particularly strong retail gains in France, Brazil and Denmark. Total unit sales, including volumes from the recent acquisitions of Chock full o'Nuts and Nestle's roast coffee operations in the United States, and Uniao in Brazil, grew 59%.

HOUSEHOLD PRODUCTS
First Quarter Change
---------------------------- ------------
2001 2000

Sales $ 472 $ 506 (7)%
Operating Income 66 66 1%


Household Products reported a 7% decline in sales and a 1% increase in operating income during the first quarter, including the effects of currency translation from the weak euro. More reflective of the business' ongoing strength, sales grew 2% and operating income increased 11% on a constant currency basis. Unit volumes for this segment's four core categories - shoe care, body care, insecticides and air fresheners - grew 1% versus an unusually strong 15% gain in last year's first quarter. Unit volumes were particularly strong in the air freshener business, led by new product offerings such as Ambi-Pur Flush, a two-in-one toilet bowl cleaner and air freshener that is currently sold in more than 30 countries. The product was recently introduced under the brand name Ambi-Pur LiquiFresh in the United States.

Sales from the company's Direct Selling efforts, conducted by 700,000 independent sales representatives who deliver branded toiletries, cosmetics and fragrances directly to consumers in 17 countries, rose 3% over the first quarter last year, and profits increased 4%.

INTIMATES AND UNDERWEAR
First Quarter Change
--------------------------- ------------
2001 2000

Sales $ 2,048 $ 1,949 5%
Operating Income 202 171 18%


Sara Lee's Intimates and Underwear line of business includes the company's global Legwear, Knit Products and Intimate Apparel operations. These businesses reported a 5% increase in sales and an 18% increase in operating income during the first quarter, reflecting the company's ability to improve base business profitability, particularly in Knit Products, and integrate acquisitions such as U.K. apparel manufacturer Courtaulds. Excluding acquisitions, Intimates and Underwear unit volumes fell 5% due to weak hosiery markets and difficult year-over-year comparisons in the company's Knit Products and Intimate Apparel businesses; including acquisitions, unit sales increased 3%.

Unit volumes for worldwide Intimate Apparel declined 3% compared with a 12% increase one year ago; unit sales increased 12% including acquisitions. The company retained its number-one position in the U.S. bra category with a dollar share of 33.7% for the 12-month period ended August 2000.

Worldwide Knit Products unit volumes fell 5% during the quarter, excluding acquisitions, compared with a 14% gain in the first quarter of fiscal 2000; including acquisitions completed over the last 12 months, unit sales were flat. Unit sales rose nicely in the company's U.S. screenprint operations and in the European underwear and activewear sectors. In the U.S. underwear category, Hanes and Hanes Her Way maintained their number-one positions in both the male and female underwear categories, with 12-month unit shares as of August 2000 of 37.2% and 38.3%, respectively.

Global Legwear unit sales fell 7% during the quarter, combining an 11% decline for sheer hosiery with a 1% decrease for socks; including acquisitions, global Legwear unit sales fell 3%. Legwear declines were a result of shrinking global hosiery markets. In the United States, the company retained its number-one position in the sheer hosiery category with a dollar share of 47.6% as of August 2000, while its leading unit share position in the sock segment increased by almost 1 point to 11.7%.

Net interest expense was $62 million for the quarter, compared with $35 million in the first quarter of last year. Interest expense increased as a result of higher debt levels to support acquisitions and share repurchase activities. In the first quarter, Sara Lee repurchased more than 13 million shares of its common stock for a total of $259 million. The company has almost 18 million shares remaining on its current repurchase authorization.

OUTLOOK

Sara Lee's management currently expects diluted earnings per share from total operations for the second quarter of fiscal 2001 to fall within the range of $.42 to $.44, compared with $.42 in the second quarter of fiscal 2000. Full fiscal year diluted earnings per share from total operations are expected to meet current expectations of $1.40, compared with $1.34 last year. Actual fiscal 2001 results will depend to a large extent on future euro-dollar exchange rates.

By line of business, management expects second quarter operating income performance for Sara Lee Foods to be similar to that of the first quarter, with significant improvement forecast for the second half. On a constant currency basis, operating income for the company's two most European-based businesses, Beverage and Household Products, should continue to show good gains. Given their significant exposure to the euro, however, reported operating income levels for these two businesses will depend on changes in year-over-year euro-dollar currency relationships. Operating income for Intimates and Underwear should be up in both the second quarter and the full year, with somewhat stronger results in the second half.

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.

Factors that could cause Sara Lee's actual results to differ materially from such forward-looking statements include the following: (i) impacts on reported earnings from fluctuations in foreign currency exchange rates -- particularly the euro -- given Sara Lee's significant concentration of business in Western Europe; (ii) significant competitive activity, including advertising, promotional and price competition, and changes in consumer demand for Sara Lee's products; (iii) inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance; (iv) Sara Lee'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 Sara Lee's decision to dispose of certain non-core business units; (vi) fluctuations in the cost and availability of various raw materials; (vii) Sara Lee's ability to complete the transactions anticipated in its business reshaping program.

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, 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 (www.saralee.com) is a global branded consumer packaged goods company with approximately $17.5 billion in annual revenues. Its leading brands include Sara Lee, Douwe Egberts, Hillshire Farm, Hanes and Playtex.

                                           Sara Lee Corporation (NYSE)
Consolidated Statements of Income


(in millions except per share amounts)
----------------------------------------------------------------------

First Quarter Ended
-------------------------------------------------
September 30, October 2,
2000 1999 Percent Change
--------------- --------------- --------------
Net sales $ 4,455 $ 4,239 5.1 %
--------------- ---------------

Cost of sales 2,600 2,455
Selling, general and
administrative expenses 1,489 1,423
Interest expense 82 54
Interest income (20) (19)
--------------- ---------------
4,151 3,913
--------------- ---------------

Income from continuing
operations before
income taxes 304 326 (7.0)
Income tax expense 66 85
--------------- ---------------

Income from continuing
operations 238 241 (1.7)
Income from discontinued
operations, net of
income taxes 16 17
--------------- ---------------

Net income $ 254 $ 258 (1.6)
=============== ===============

Income from continuing
operations per
common share
Basic $ 0.28 $ 0.27 3.7
=============== ===============
Diluted $ 0.27 $ 0.26 3.8
=============== ===============

Net income per
common share
Basic $ 0.30 $ 0.29 3.4
=============== ===============
Diluted $ 0.29 $ 0.28 3.6
=============== ===============

Average shares
outstanding
Basic 841 881
=============== ===============
Diluted 877 919
=============== ===============



Sara Lee Corporation (NYSE)
Operating Results by Industry Segment
(in millions) First Quarter Ended
----------------------------------------------------------------------
Sales
------------------------------------
September 30, October 2, Percent
2000 1999 Change
------------- ---------- -------
Food and Beverage:
Sara Lee Foods $ 1,266 $ 1,220 3.8%
Beverage 712 599 18.8
Household Products 472 506 (6.7)
Intimates and Underwear 2,048 1,949 5.1
------------- ---------- -------
Total sales and operating
companies income 4,498 4,274 5.2
Intersegment sales (43) (35) (20.8)
Amortization of goodwill
and trademarks -- -- --
General corporate expenses -- -- --
------------- ---------- -------
Total net sales and operating
income 4,455 4,239 5.1
Net interest expense -- -- --
------------- ---------- -------
Net sales and income from continuing
operations before income taxes $ 4,455 $ 4,239 5.1%
============= ========== =======


Operating Income
-----------------------------------
September 30, October 2, Percent
2000 1999 Change
------------- ---------- -------
Food and Beverage:
Sara Lee Foods $ 72 $ 92 (22.0)%
Beverage 111 107 3.9
Household Products 66 66 0.8
Intimates and Underwear 202 171 18.0
------------- ---------- -------
Total sales and operating
companies income 451 436 3.5
Intersegment sales -- -- --
Amortization of goodwill
and trademarks (46) (39) (17.9)
General corporate expenses (39) (36) (12.0)
------------- ---------- -------
Total net sales and operating
income 366 361 1.1
Net interest expense (62) (35) (75.4)
------------- ---------- -------
Net sales and income from continuing
operations before income taxes $ 304 $ 326 (7.0)%
============= ========== =======


Sara Lee Corporation (NYSE)

Consolidated Balance Sheets

(in millions)
----------------------------------------------------------------------
September 30, July 1, October 2,
2000 2000 1999
--------------- --------------- --------------
ASSETS
Cash and equivalents $ 225 $ 314 $ 169
Trade accounts
receivable 1,826 1,764 1,846
Inventories 2,999 2,951 2,629
Other current assets 392 382 302
Net assets of
businesses held
for sale 629 563 359
--------------- --------------- --------------

Total current assets 6,071 5,974 5,305

Trademarks and
other assets 655 697 540
Property, net 2,290 2,319 2,091
Intangible assets, net 2,717 2,621 2,748
--------------- --------------- --------------
$ 11,733 $ 11,611 $ 10,684
=============== =============== ==============


LIABILITIES AND EQUITY
Notes payable $ 2,104 $ 2,054 $ 1,268
Accounts payable 1,518 1,762 1,333
Accrued liabilities 2,470 2,562 2,643
Current maturities of
long-term debt 222 381 419
--------------- --------------- --------------

Total current
liabilities 6,314 6,759 5,663

Long-term debt 2,966 2,248 2,140
Deferred income taxes 208 148 77
Other liabilities 576 581 717
Minority interest in
subsidiaries 624 616 614
Preferred stock 19 25 26
Common stockholders'
equity 1,026 1,234 1,447
--------------- --------------- --------------
$ 11,733 $ 11,611 $ 10,684
=============== =============== ==============