Sara Lee Corporation today announced results for the second quarter of fiscal 2001 ended December 30, 2000. All results are from continuing operations and exclude unusual items unless otherwise noted. Net sales were $4.8 billion, up 3% over the year-ago period; on a constant currency basis, sales rose 9%. Unit volumes grew 8% including acquisitions and were flat excluding acquisitions completed over the last 12 months.

Reported operating income fell 1% to $609 million; on a constant currency basis, excluding the impact of the stronger dollar, operating income increased 4%. Diluted earnings per share were $.42, compared with $.40 in the year-ago quarter, an increase of 5%. Diluted earnings per share including discontinued operations were $.43, versus $.42 in the second quarter of fiscal 2000.

For the first six months of fiscal 2001, net sales were $9.2 billion, up 4% over the same period a year ago; revenues increased 9% on a constant currency basis. Unit volumes rose 9% including acquisitions, and declined 2% from base business operations. Reported operating income rose 1%, and increased 6% excluding the impact of a stronger dollar.

Diluted earnings per share were $.69 versus $.67 for the first half of fiscal 2000, up 3%. Diluted earnings per share including discontinued operations were $.72 versus $.70, also up 3%.

“Sara Lee reported a solid sales gain and met earnings expectations in our second quarter, despite a weak euro and a challenging retail environment,” said C. Steven McMillan, president and chief executive officer of Sara Lee. “The soft retail environment has continued into January, and we expect this weakness to lead to lower profits for our Intimates and Underwear operations, causing us to lower our earnings expectations for the third quarter.

“We did make significant progress during our second quarter with our plans to reshape Sara Lee’s business portfolio by focusing our resources to grow a smaller number of core business positions. We completed the previously announced sale of PYA/Monarch, our foodservice distribution business, to Royal Ahold for $1.56 billion. We also completed a 19% initial public offering of the premium accessories company, Coach, and we reported significant after-tax gains for both of these transactions in our second-quarter results.

“As part of our ongoing reshaping program, this morning we announced our intention to sell additional businesses – non-core operations that do not fit with Sara Lee’s strategy to establish leading branded positions in Food And Beverage, Intimates and Underwear, and Household Products. Our second quarter results also included a charge for a restructuring program that will involve exiting a number of inefficient, high-cost activities around the world. We expect to realize pre-tax savings of $45 million to $50 million from this restructuring program by fiscal 2003.”

Unusual Items

The corporation’s results for the quarter and six months ended December 30, 2000, were impacted by three unusual items.

The company’s sale of PYA/Monarch, announced in August and completed in December 2000, resulted in an after-tax gain of $638 million, or $.73 per share on a diluted basis in the second quarter.

The initial public offering of Coach, part of the company’s Intimates and Underwear segment, resulted in a gain of $105 million, which increased second-quarter income from continuing operations before taxes by $105 million, or $.12 per share on a diluted basis.

In a separate release this morning, the company detailed plans to divest eight additional businesses, which will bring the total number of divestitures to 14 – representing sales of $4.5 billion – since the reshaping plan was announced in May 2000. The businesses include Champion Europe; Sara Lee Apparel Australasia; Sara Lee’s U.K bakery operations; Argal, a Spanish processed meats company; Brossard, the company’s French bakery business, as previously announced; Ozark Salad; and regional bakery operations in India and China.

As a result of these dispositions and additional restructuring activities, the company recognized a pre-tax charge of $344 million, which reduced second-quarter and year-to-date operating income per segment by: $210 million in Intimates and Underwear; $130 million in SARA LEE FOODS; $2 million in Beverage; and $2 million in Household Products. Approximately two-thirds of the charge represented anticipated loss on the dispositions of businesses and one-third represented the cost of exiting certain activities. The charge reduced net income by $317 million, or $.37 per share on a diluted basis for the second quarter and $.36 per share on a diluted basis for the first six months.

The net impact of all of these unusual items increased net income and earnings per share by $425 million and $.49, respectively, in the quarter and for the six months ended December 30, 2000.

Performance Review

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

SARA LEE FOODS
Second Quarter Change Six Months Change
————– —— ————— ——

2001 2000 2001 2000

Sales $1,376 $1,397 (2)% $2,642 $2,617 1%

Operating Income $ 114 $ 138 (17)% $ 186 $ 230 (19)%


Sara Lee Foods, which includes the company’s global Packaged Meats and Bakery operations, posted a 2% decline in sales and a 17% decline in operating income in the second quarter; through the first half, sales increased 1% and operating profits fell 19%.

Higher hog costs, which led to increased prices, and an improved product mix caused global Packaged Meat sales to rise slightly during the quarter, including a double-digit gain in Mexico and a mid single-digit increase in the United States. New product activity, including Jimmy Dean Fresh Taste Fast and Ball Park Cheese Singles, helped increase the company’s number-two U.S. retail category share to 15.9% over the most recent three months, the second consecutive three-month gain since September 1998. Operating profits for Packaged Meats were flat during the quarter, as gains in the United States and Mexico were offset by lower profits in Europe.

Global Packaged Meats unit volumes fell 1% in the second quarter, as double-digit unit gains in Mexico were offset by modest declines in the United States and Europe. Year to date, volumes were flat. Excluding acquisitions, units fell 2% in the quarter and declined 1% through the first half.

The company’s global bakery operations reported lower sales and profits during the second quarter, reflecting weak international results and increased spending behind new bakery products in the United States.

Worldwide unit sales for Sara Lee Bakery fell 9% for the quarter and first six months, with no impact from acquisitions. Increased sales of certain U.S. bakery products, including Sara Lee Fresh items such as Sara Lee Artisan-Style Breads in the fresh baked section, were more than offset by particularly strong declines in France and the United Kingdom, two businesses expected to be divested by the end of this fiscal year.

BEVERAGE
Second Quarter Change Six Months Change
————– —— ————— ——

2001 2000 2001 2000

Sales $ 779 $ 779 -% $1,491 $1,378 8%

Operating Income $ 131 $ 134 (2)% $ 242 $ 241 1%


Sara Lee’s Beverage line of business includes retail and foodservice coffee and tea sales in major markets around the world. Reported sales for the second quarter were flat, and operating income declined 2%; through the first half, reported sales grew 8% and operating income increased 1%. Reported results for this business were significantly affected by the stronger dollar. On a constant currency basis, sales and profits both increased 10% during the quarter, and 18% and 13%, respectively, through the first half, aided by an improved product mix and several important acquisitions completed over the last 12 months. The company retained its leading category positions in retail coffee in many major global markets including the Netherlands, Belgium, Spain, Denmark, the United Kingdom, Hungary and Brazil.

Unit volumes increased 24% during the quarter and grew 39% during the first half, including acquisitions. Units declined 6% during the quarter and fell 3% through the first half, excluding acquisitions, reflecting consumer dehoarding based on expectations of near-term price cuts.

HOUSEHOLD PRODUCTS
Second Quarter Change Six Months Change
————– —— ————— ——

2001 2000 2001 2000

Sales $ 500 $ 537 (7)% $ 972 $1,043 (7)%

Operating Income $ 86 $ 92 (7)% $ 152 $ 158 (4)%


Household Products reported a 7% decline in sales and operating income during the second quarter; through the first half, reported sales fell 7% and operating income fell 4%, including the impact of a stronger dollar. On a constant currency basis, sales rose 6% and operating income increased 5% during the quarter; sales and operating income rose 4% and 7%, respectively, during the first half. Unit volumes for this segment’s four core categories – shoe care, body care, insecticides and air fresheners – grew 4% in the second quarter and increased 2% for the first half, with no impact from acquisitions. The company’s global air freshener business continued to report particularly strong gains, led by new products such as Ambi Pur LiquiFresh, a unique combination toilet bowl cleaner and air freshener recently launched 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 in both the quarter and year to date.

INTIMATES AND UNDERWEAR
Second Quarter Change Six Months Change
————– —— ————— ——

2001 2000 2001 2000

Sales $2,134 $1,961 9% $4,182 $3,910 7%

Operating Income $ 278 $ 253 9% $ 480 $ 425 13%


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 9% increase in sales and a 9% increase in operating income during the second quarter, and a 7% increase in sales and a 13% increase in profits through the first half.

Sales gains were particularly strong in the company’s global Knits and Intimate Apparel operations, while the Legwear business contributed to profit gains. Coach, still 81% owned by Sara Lee, also contributed to the strong sales and profit gains for this line of business.

Unit volumes for global Intimates, Knit Products and Legwear increased 10% in the quarter and 7% through the first half. Excluding acquisitions, units increased 3% during the quarter and fell 1% through the first half.

Excluding acquisitions, unit volumes for worldwide Intimate Apparel increased 8% for the second quarter; unit sales increased 26% including sales from companies acquired over the last 12 months. Base business units increased in both North America and Europe, with double-digit gains in North America. The company retained its number-one position in the U.S. bra category with a dollar share of 34% for the 12-month period ended November 2000. For the first half, base business unit volumes rose 2%; including acquisitions, unit sales increased 18%.

Worldwide Knit Products base business unit volumes increased 4% during the quarter, and rose 7% including acquisitions. 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 November 2000 of 36.6% and 38.2%, respectively.

The company’s U.S. Activewear business reported particularly strong growth in the second quarter, benefiting from increased marketing spending and new products. In the United States, unit volumes for screenprint products increased 10%; Casualwear units, including those sold through mass merchandisers, increased more than 30%; and Champion brand unit sales rose 8%. Units also grew 10% in Europe, with gains in both underwear and activewear. In the first half, Knit Product volume declined 1% excluding acquisitions, but increased 4% including acquisitions.

Excluding acquisitions, global Legwear unit sales fell 3% during the quarter, as a strong 12% increase for socks was offset by a 9% decline for sheer hosiery. Including acquisitions, global Legwear unit sales rose 2%. In the United States, the company retained its number-one position in the sheer hosiery category with a dollar share of 48.3% as of November 2000, while its leading unit share position in the sock segment increased by more than 1 point to 16.3%. Through the first six months, base business legwear units fell 5%, and were flat including acquisitions.

Net interest expense was $50 million for the quarter and $112 million for the first half, compared with $41 million and $76 million, respectively, in the comparable periods a year ago. Interest expense increased as a result of higher debt levels to support acquisitions and share repurchase activities. In the second quarter, Sara Lee repurchased more than 10 million shares of its common stock for a total of $246 million. Through the first half, the company repurchased nearly 24 million shares for more than $500 million. The company has approximately 7 million shares remaining on its current repurchase authorization.

Outlook

Sara Lee’s management currently expects diluted earnings per share from total operations for the third quarter of fiscal 2001 to fall within the range of $.26 to $.29, compared with $.29 in the third quarter of fiscal 2000. Full fiscal year diluted earnings per share from total operations are projected to be $1.36 to $1.39, 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 third-quarter operating income performance for Sara Lee Foods to improve significantly, increasing by a double-digit rate over the third quarter last year. Operating income for Beverage and Household Products, the company’s two most European-based businesses, may decline somewhat due to the euro, while showing gains on a local currency basis. Given their significant exposure to the euro, 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 is likely to decline in the third quarter due to significant weakness in the current U.S. retail environment.

Forward-looking Statements

This news release contains certain forward-looking statements concerning Sara Lee’s operations, economic performance and financial condition, including without limitation the statements in the section entitled “Outlook” regarding the third quarter and full fiscal year 2001. 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; (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.

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, Kiwi, Hanes and Playtex.

                                           Sara Lee Corporation (NYSE)
—————————
Consolidated Statements of Income

(in millions except per share amounts)
———————————————————————-
Second Quarter Ended
————————————–
December 30, January 1, Percent
2000 2000 Change
————- ———– ——-

Net sales $ 4,757 $ 4,634 2.6 %
————- ———–

Cost of sales 2,718 2,616
Cost of sales –
non-recurring charge 24 —
Selling, general and
administrative expenses 1,525 1,468
Interest expense 69 60
Interest income (19) (19)
Unusual Items – Business reshaping:
Gain in connection with initial
public offering (105) —
Non-recurring charge 320 —
————- ———–
4,532 4,125
————- ———–

Income from continuing
operations before income taxes 225 509 (55.8)
Income taxes 74 134
————- ———–

Income from continuing operations 151 375 (59.6)
Income from discontinued operations,
net of income taxes 9 14
Gain on disposal of discontinued
operations, net of income taxes 638 —
————- ———–

Net income $ 798 $ 389 NM
============= ===========

Income from continuing operations
per common share
Basic $ 0.18 $ 0.42 (57.1)
============= ===========
Diluted $ 0.17 $ 0.40 (57.5)
============= ===========

Net income per common share
Basic $ 0.96 $ 0.44 NM
============= ===========
Diluted $ 0.92 $ 0.42 NM
============= ===========

Average shares outstanding
Basic 830 886
============= ===========
Diluted 869 924
============= ===========

Six Months Ended
————————————–
December 30, January 1, Percent
2000 2000 Change
————- ———– ——-

Net sales $ 9,212 $ 8,873 3.8 %
————- ———–

Cost of sales 5,318 5,071
Cost of sales –
non-recurring charge 24 —
Selling, general and
administrative expenses 3,014 2,891
Interest expense 151 114
Interest income (39) (38)
Unusual Items – Business reshaping:
Gain in connection with initial
public offering (105) —
Non-recurring charge 320 —
————- ———–
8,683 8,038
————- ———–

Income from continuing
operations before income taxes 529 835 (36.7)
Income taxes 140 219
————- ———–

Income from continuing operations 389 616 (36.9)
Income from discontinued operations,
net of income taxes 25 31
Gain on disposal of discontinued
operations, net of income taxes 638 —
————- ———–

Net income $ 1,052 $ 647 62.6
============= ===========

Income from continuing operations
per common share
Basic $ 0.46 $ 0.69 (33.3)
============= ===========
Diluted $ 0.44 $ 0.67 (34.3)
============= ===========

Net income per common share
Basic $ 1.25 $ 0.73 71.2
============= ===========
Diluted $ 1.20 $ 0.70 71.4
============= ===========

Average shares outstanding
Basic 836 884
============= ===========
Diluted 873 922
============= ===========

Sara Lee Corporation (NYSE)
—————————
Operating Results by Industry Segment
Unusual Items not Allocated to Industry Segments
(in millions) Second Quarter Ended
———————————————————————-
Sales
—————————–
December 30, January 1, Percent
2000 2000 Change
————- ———– ——-
Food and Beverage:
Sara Lee Foods $ 1,376 $ 1,397 (1.5)%

Beverage 779 779 —

Household Products 500 537 (6.9)

Intimates and Underwear 2,134 1,961 8.8
————- ———– ——-

Total sales and operating
companies income 4,789 4,674 2.5

Intersegment sales (32) (40) 18.4

Amortization of goodwill
and trademarks — — —

General corporate expenses — — —

Gain in connection with initial
public offering (1) — — —

Non-recurring charge (2) — — —
————- ———– ——-

Total net sales and
operating income 4,757 4,634 2.6

Net interest expense — — —

————- ———– ——-
Net sales and income from
continuing operations
before income taxes $ 4,757 $ 4,634 2.6 %
============= =========== =======

Operating Income
—————————–

December 30, January 1, Percent
2000 2000 Change
————- ———– ——-
Food and Beverage:
Sara Lee Foods $ 114 $ 138 (17.1)%

Beverage 131 134 (1.9)

Household Products 86 92 (7.3)

Intimates and Underwear 278 253 9.5
————- ———– ——-

Total sales and operating
companies income 609 617 (1.4)

Intersegment sales — — —

Amortization of goodwill
and trademarks (48) (43) (12.1)

General corporate expenses (47) (24) (79.3)

Gain in connection with initial
public offering (1) 105 — NM

Non-recurring charge (2) (344) — NM
————- ———– ——-

Total net sales and
operating income 275 550 (49.9)

Net interest expense (50) (41) (23.1)
————- ———– ——-

Net sales and income from
continuing operations
before income taxes $ 225 $ 509 (55.8)%
============= =========== =======

Six Months Ended
———————————————————————-

Sales
—————————–

December 30, January 1, Percent
2000 2000 Change
————- ———– ——-
Food and Beverage:
Sara Lee Foods $ 2,642 $ 2,617 1.0 %

Beverage 1,491 1,378 8.2

Household Products 972 1,043 (6.8)

4,182 3,910 7.0
————- ———– ——-

Total sales and operating
companies income 9,287 8,948 3.8

Intersegment sales (75) (75) 0.1

Amortization of goodwill and
trademarks — — —

General corporate expenses — — —

Gain in connection with initial
public offering — — —

Non-recurring charge — — —

————- ———– ——-
Total net sales and
operating income 9,212 8,873 3.8

Net interest expense — — —

————- ———– ——-
Net sales and income from
continuing operations
before income taxes $ 9,212 $ 8,873 3.8 %
============= =========== =======

Operating Income

—————————–
December 30, January 1, Percent
2000 2000 Change
————- ———– ——-
Food and Beverage:
Sara Lee Foods $ 186 $ 230 (19.1)%

Beverage 242 241 0.7

Household Products 152 158 (3.9)

480 425 12.9
————- ———– ——-
Total sales and operating
companies income 1,060 1,054 0.6

Intersegment sales — — —

Amortization of goodwill and
trademarks (94) (82) (14.9)

General corporate expenses (86) (61) (41.0)

Gain in connection with initial
public offering 105 — NM

Non-recurring charge (344) — NM
————- ———– ——-

Total net sales and
operating income 641 911 (29.7)

Net interest expense (112) (76) (47.6)
————- ———– ——-

Net sales and income from
continuing operations
before income taxes $ 529 $ 835 (36.7)%
============= =========== =======

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) Second Quarter Ended
———————————————————————-
Sales
—————————–

December 30, January 1, Percent
2000 2000 Change
————- ———– ——-
Food and Beverage:
Sara Lee Foods $ 1,376 $ 1,397 (1.5)%

Beverage 779 779 —

Household Products 500 537 (6.9)

Intimates and Underwear 2,134 1,961 8.8
————- ———– ——-

Total sales and operating
companies income 4,789 4,674 2.5

Intersegment sales (32) (40) 18.4

Amortization of goodwill
and trademarks — — —

General corporate expenses — — —

————- ———– ——-
Total net sales and
operating income 4,757 4,634 2.6

Net interest expense — — —
————- ———– ——-

Net sales and income from
continuing operations
before income taxes $ 4,757 $ 4,634 2.6 %
============= =========== =======

Operating Income
—————————–
December 30, January 1, Percent
2000 2000 Change
————- ———– ——-
Food and Beverage:
Sara Lee Foods $ (16) $ 138 NM %

Beverage 129 134 (3.6)

Household Products 84 92 (9.6)

Intimates and Underwear 173 253 (31.9)
————- ———– ——-

Total sales and operating
companies income 370 617 (40.2)

Intersegment sales — — —

Amortization of goodwill
and trademarks (48) (43) (12.1)

General corporate expenses (47) (24) (79.3)
————- ———– ——-

Total net sales and
operating income 275 550 (49.9)

Net interest expense (50) (41) (23.1)
————- ———– ——-

Net sales and income from
continuing operations
before income taxes $ 225 $ 509 (55.8)%
============= =========== =======

Six Months Ended
———————————————————————-

Sales
—————————–

December 30, January 1, Percent
2000 2000 Change
————- ———– ——-
Food and Beverage:
Sara Lee Foods $ 2,642 $ 2,617 1.0 %

Beverage 1,491 1,378 8.2

Household Products 972 1,043 (6.8)

Intimates and Underwear 4,182 3,910 7.0
————- ———– ——-

Total sales and operating
companies income 9,287 8,948 3.8

Intersegment sales (75) (75) 0.1

Amortization of goodwill
and trademarks — — —

General corporate expenses — — —
————- ———– ——-

Total net sales and
operating income 9,212 8,873 3.8

Net interest expense — — —
————- ———– ——-

Net sales and income from
continuing operations
before income taxes $ 9,212 $ 8,873 3.8 %
============= =========== =======

Operating Income
—————————–

December 30, January 1, Percent
2000 2000 Change
————- ———– ——-
Food and Beverage:
Sara Lee Foods $ 56 $ 230 (75.7)%

Beverage 240 241 (0.3)

Household Products 150 158 (5.3)

Intimates and Underwear 375 425 (11.8)
————- ———– ——-

Total sales and operating
companies income 821 1,054 (22.1)

Intersegment sales — — —

Amortization of goodwill
and trademarks (94) (82) (14.9)

General corporate expenses (86) (61) (41.0)
————- ———– ——-

Total net sales and
operating income 641 911 (29.7)

Net interest expense (112) (76) (47.6)
————- ———– ——-

Net sales and income from
continuing operations
before income taxes $ 529 $ 835 (36.7)%
============= =========== =======

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

Sara Lee Corporation (NYSE)
—————————
Consolidated Balance Sheets
(in millions)
———————————————————————-
December 30, July 1, January 1,
2000 2000 2000
———– ———- ———-
ASSETS
Cash and equivalents $ 735 $ 314 $ 303
Trade accounts receivable 1,812 1,764 1,874
Inventories 2,752 2,951 2,595
Other current assets 367 382 344
Net assets of businesses
held for sale 367 563 361
———– ———- ———-
Total current assets 6,033 5,974 5,477

Trademarks and other assets 685 697 575
Property, net 2,140 2,319 2,335
Intangible assets, net 2,674 2,621 2,811
———– ———- ———-
$ 11,532 $ 11,611 $ 11,198
=========== ========== ==========

LIABILITIES AND EQUITY
Notes payable $ 592 $ 2,054 $ 1,358
Accounts payable 1,405 1,762 1,423
Accrued liabilities 2,899 2,562 2,612
Current maturities of
long-term debt 283 381 319
———– ———- ———-
Total current liabilities 5,179 6,759 5,712

Long-term debt 3,145 2,248 2,232
Deferred income taxes 437 148 133
Other liabilities 582 581 741
Minority interest in subsidiaries 650 616 616
Preferred stock 22 25 29
Common stockholders’ equity 1,517 1,234 1,735
———– ———- ———-
$ 11,532 $ 11,611 $ 11,198
=========== ========== ==========

Notes to Financial Statements

1. In October 2000, the Corporation’s Coach subsidiary, which is
part of the Intimates and Underwear segment, completed an
initial public offering of 19.5% of its common stock resulting
in a gain of $105 million. The gain increased income from
continuing operations before income taxes by $105 million and
also increased diluted earnings per share by $.12 in the
quarter and the six months ended December 30, 2000.

2. In the second quarter of fiscal 2001, the Corporation’s
management approved actions that will result in the
disposition of certain businesses and the exit of various
activities. As a result of these decisions a $344 million
pre-tax charge was recognized — $233 million of this amount
is the anticipated loss on the disposition of the businesses
and $111 million of the charge is for the cost of exiting the
defined activities. The second quarter and year to date
operating income of the Corporation’s industry segments
includes the following charges: Intimates and Underwear —
$210 million; Sara Lee Foods — $130 million; Beverage — $2
million; and Household Products — $2 million. The charge
reduced second quarter and year to date net income by $317
million. The impact on diluted earnings per share was $.37 in
the quarter and $.36 for the six months ended December 30,
2000.

3. 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 financial
statements. In December 2000, the sale of this business was
finalized and the Corporation received cash proceeds of $1,559
million and recognized an after tax gain of $638 million. The
impact on diluted earnings per share was $.73 in the quarter
and the six months ended December 30, 2000. The tax provision
on this transaction was $488 million.