Sara Lee Reports Earnings for Second Quarter of Fiscal 2006

-- Diluted earnings per share for the second quarter were $.57, helped by a gain on the disposition of the direct selling business

-- Corporate unit volumes increased 1% in the second quarter, primarily driven by volume growth in the North American retail meat and foodservice business segments

-- Significant progress made on all three pillars of the transformation: organizing the business around consumers and customers, achieving operational efficiency and focusing the portfolio

Sara Lee Corporation (NYSE:SLE) today announced that net sales forthe second quarter of fiscal 2006, ending Dec. 31, 2005, were $4.45billion compared to $4.51 billion in the prior year's second quarter,a decrease of 1%. During the second quarter, sales and unit volumesgrew in four out of the eight business segments, specifically NorthAmerican retail meats, North American retail bakery, Sara LeeFoodservice and international beverage.

Diluted earnings per share (EPS) were $.57 for the second quarterof fiscal 2006, compared to $.41 for the year-ago period. A gain onthe divestiture of the direct selling business and a related taxbenefit increased fiscal 2006 second quarter diluted EPS by $.28 and$.07 per share, respectively. However, charges related to theimplementation of the company's transformation plan and business exitactivities reduced second quarter diluted EPS by $.08 per share.Operating results also were negatively impacted by various otherfactors including unfavorable foreign currency exchange rates, highercommodity, packaging and energy costs, and lower unit volumes atseveral businesses. Despite these factors, the North American retailmeats, international bakery and branded apparel business segmentsreported higher operating segment income in the second quarter.
Impact of Significant Items on
Diluted Earnings per Share Second Quarter Six Months
----------------------------
2006 2005 2006 2005
----------------------------
Diluted earnings per share, as reported $.57 $.41 $.65 $.85
============================
Increase / (decrease) in EPS from:
Impairment charges - - (.22) -
Transformation costs (.04) - (.06) -
Exit activities (.04) - (.06) -
Accelerated depreciation (.01) (.01) (.02) (.02)
Gain / (loss) on business dispositions (.01) .01 .01 .01
Change in vacation policy .01 - .01 -
Sale of businesses .28 - .28 -
Tax benefit from direct selling
transaction .07 - .07 -
Dutch tax rate change - .03 - .03
Curtailment gain - .01 - .02
----------------------------
Total impact of significant items(a) $.26 $.04 $- $.04
============================

(a) Amounts are rounded and may not add to the total.

"In the second quarter, we delivered results that were consistentwith our forecasts. Earnings per share were influenced by severalsignificant items, but our underlying results actually exceeded ourguidance for the period," said Brenda C. Barnes, chairman and chiefexecutive officer of Sara Lee Corporation.

"We believe our transformation initiatives are beginning to havean impact, particularly for the Sara Lee Food & Beverage and Sara LeeFoodservice businesses, which delivered substantially better resultsin the second quarter than in the first. I am encouraged that thesebusinesses are showing an upward trend. We have been especiallypleased with the success of the Sara Lee fresh bread brand, whichbecame the U.S. market leader in the fresh bakery category during thequarter," added Barnes. "At Sara Lee International, household and bodycare is facing some challenges and we are taking appropriate actionsto improve performance. Our international beverage business continuedto see commodity cost pressure that hampered results. European meatsresults were lower due to the impact of currency and higher spendingon media advertising and promotions, while international bakerydelivered a much improved quarter, returning to more typical bottomline growth.

"Overall, the transformation is proceeding as we anticipated andwe are now beginning to see the benefits of the multitude of changesthat we have made over the past year," concluded Barnes.

Total media advertising and promotion (MAP) spending forcontinuing operations decreased 3% in the second quarter, primarilybecause of lower spending behind retail meat and branded apparelbrands in the United States, the weaker euro compared to the year-agoperiod and a shift to driving the business through strategic pricingactions and other marketing activities such as coupons that are notcaptured in MAP spending.

The consolidated unit volumes for the corporation increased 1%during the second quarter of fiscal 2006, driven by unit volume growthin four out of eight business segments, specifically North Americanretail meats, North American retail bakery, Sara Lee Foodservice andinternational beverage.

Transformation Plan Update - Second Quarter Fiscal 2006

In February 2005, Sara Lee embarked on a bold, multi-year,strategic plan to transform the company and tighten its focus on thefood, beverage, and household and body care categories. Thetransformation plan is designed to dramatically improve Sara Lee'sperformance and better position the company for long-term growth. Theplan is built upon three pillars and a second quarter update for eachpillar follows.

Pillar 1: Organize the business around consumers, customers andgeographic markets

The new organization design for the two continuing North Americanbusinesses - Sara Lee Food & Beverage and Sara Lee Foodservice - wascompleted, while the redesign of the corporate functions Procurement,Information Systems and Process Improvement to Excellence (PIE) iswell underway. Since the beginning of fiscal 2006, Sara Lee has hiredmore than 500 new employees in the United States. The plan forrelocating the management of the new North American organization to asingle headquarters in Downers Grove, Ill., is on track for completionin the fall of 2006. Sara Lee International continues to move forwardwith the consolidation of its local offices into one centralizedlocation per country or region, supported by a shared servicesorganization for back-office functions. The international businessalso made progress with its planned workforce reduction.

Pillar 2: Achieve operational efficiency to fund growth

During the second quarter, the company made significant progresswith the implementation of operational efficiency initiatives such ascentralized procurement, common information technology (IT) systemsand the PIE program. The new global procurement organization isdeveloping cost reduction initiatives focused on - among otheractivities - commodities, packaging and indirect spending. The globalinformation systems group reached an important milestone with theon-time and on-budget upgrade of the bakery SAP system to the mostcurrent SAP release without any business interruptions. This ITplatform will ultimately support all of North America. And, the PIEteam advanced its four process improvement projects - innovation,pricing/trade spending, sales and operations planning, and businessplanning - by mapping and designing process flows.

Pillar 3: Focus the portfolio

To date, Sara Lee has made significant progress toward itsportfolio transformation. In the second quarter, the company completedthe sale of its direct selling business and its U.S. retail coffeebusiness, excluding Senseo. In November, the company announced that ithad reached an agreement to sell its European nuts and snacks businessto PepsiCo for EUR 130 million; the transaction is expected to closein the fourth quarter of fiscal 2006. Preparations for the spin-off toshareholders of the Branded Apparel, Americas/Asia business, under thename Hanesbrands Inc., are on track for completion in the June -September, 2006 timeframe. In January 2006, after the close of thesecond quarter, Sara Lee announced that it had signed an agreement toacquire Butter-Krust Baking, a Sunbury, Pa.-based, privately held,fresh bakery business, for approximately $72 million. This acquisitionwill enable Sara Lee to expand its mid-Atlantic distribution coverageto better serve its customers and to reach more than 20 millionadditional consumers, increasing its U.S. market coverage from justover 70% to nearly 80% of the country. The transaction is subject toregulatory approvals and other customary closing conditions. Finally,the sale of the branded apparel business in Europe to an affiliate ofSun Capital Partners, Inc., is expected to close in the near future.Sara Lee's branded apparel U.K. operation, Sara Lee Courtaulds, whichmanufactures private-label clothing for retailers, is not part of thistransaction.

Separately, the company currently is evaluating options tomaximize shareholder value relative to its European meats business,and no longer expects to complete a sale in the third quarter offiscal 2006, as previously announced. Regardless of decisions aboutthe business, the company remains dedicated to its capital structurecommitments, including buying back $2 billion of stock over the nextseveral years, reducing debt by at least $1.5 billion and paying adividend of $.79 per share for fiscal 2006. The company also continuesto expect total after-tax proceeds from all dispositions to exceed $3billion with more than half coming from the dividend from the spin-offof Branded Apparel, Americas/Asia.

Year-to-Date Financial Highlights

For the first six months of fiscal 2006, ending Dec. 31, 2005,Sara Lee reported net sales of $8.64 billion, down 1% over the sameperiod a year ago. Diluted EPS for the first half of fiscal 2006 were$.65, compared to $.85 for the year-ago period. Net cash flow fromoperating activities was approximately $850 million for the first sixmonths of fiscal 2006, compared to approximately $800 million in thecomparable period last year. Total MAP spending decreased 2% comparedto the first half of fiscal 2005 and corporate unit volumes decreased1% in the six month period year over year.

Business Performance Review

In the second quarter of fiscal 2006, the U.K. branded apparelprivate-label division has been reported as a discontinued operation.Prior year amounts have been restated to conform with the currentyear's earnings presentation.

Sara Lee Food & Beverage

The Sara Lee Food & Beverage business is the company's NorthAmerican retail food group, comprising the retail meats and retailbakery segments, the latter including the Senseo single-serve coffeeinnovation.

North American Retail Meats

Net sales in the North American retail meats segment were up 4% to$672 million on the strength of an 8% increase in unit volumes, drivenby new product success and strategic pricing actions. Sales increaseddespite the negative sales impact of the disposition of two brands inthe prior year.

Reported operating segment income for the second quarter was $50million, an increase of $1 million or 1%, which included a $20 millionnet decrease related to transformation charges, exit activities andother significant items as described in the attached Operating Resultsby Business Segment schedule. The remaining operating segment incomeincrease of $21 million, or 46%, was primarily due to higher unitvolumes, favorable sales mix and lower commodity costs, partiallyoffset by significantly higher energy costs and the impact ofstrategic pricing actions. During the quarter, dollar-share gains wererecorded in six of the eight retail packaged meat categories in whichSara Lee competes, primarily resulting from improved marketingexecution and the success of strategic pricing actions. Sales of JimmyDean Skillets, Breakfast Sandwiches and Breakfast Sausage drovedouble-digit sales growth for the brand, while sales of the HillshireFarm brand grew on the strength of Smoked Sausage and Deli SelectUltra Thin lunchmeats performance.

For the six months ending Dec. 31, 2005, North American retailmeats reported net sales of $1.29 billion, up 3% from $1.25 billion inthe year-ago period. Operating segment income for the first six monthsof fiscal 2006 was $67 million, compared to $73 million in thecorresponding period of fiscal 2005, with the decline resulting fromrestructuring charges, transformation costs and non-recurring gains onbusiness dispositions reported in the first half of fiscal 2005.

North American Retail Bakery (including Senseo coffee)

North American retail bakery posted a 3% increase in net sales to$463 million driven by overall unit volume growth and favorable salesmix in the U.S. fresh bakery business. Volume growth was driven bySara Lee fresh bread sales, partially offset by the exit of certainregional bread business in fiscal 2005. Operating segment incomedecreased by $6 million from a loss of $11 million to a loss of $17million. $10 million of the decrease related to transformationcharges, exit activities and other significant items described in theattached Operating Results by Business Segment schedule. The remainingoperating segment income increase of $4 million, or 31%, was primarilydue to increased unit volumes, improved productivity and certain priceincreases, which were partially offset by higher energy and laborcosts and increased MAP spending on Senseo.

The Sara Lee fresh bakery brand, which was primarily a small WestCoast bagel business four years ago, has rapidly surpassed competitorsin the U.S. fresh bakery category. During the second quarter, Sara Leebecame the leading fresh bakery brand in America with a 5.7% share ofthe market in the combined packaged bread, buns, rolls, bagels andEnglish muffins category according to Information Resources, Inc.share data. Sara Lee Soft & Smooth whole-grain white bread, which waslaunched only six months ago, has been the best-selling fresh breadstock keeping unit (SKU) in the United States since its launch, andthe product was selected as one of BusinessWeek's best new products of2005. At the end of the quarter, the Sara Lee brand launched its firstproducts in the sweet breakfast breads and English muffins segments,expanding its portfolio of products that use a blend of whole-grainand refined-grain flour to preserve great taste and offer nutritionalbenefits.

Unit volumes and sales for Senseo single-serve coffee podsincreased significantly compared to last year's second quarter. Duringthe 2005 holiday season, Sara Lee's business partner PhilipsElectronics sold 229,000 Senseo coffee machines in the United States,bringing the total number of machines in U.S. homes to more than630,000.

For the six months ending Dec. 31, 2005, North American retailbakery reported net sales of $923 million, up from $920 million in theyear-ago period. An operating segment loss of $21 million was reportedfor the first six months of fiscal 2006, compared to a loss of $2million in the corresponding period of fiscal 2005, with the declineresulting primarily from restructuring charges, transformation costsand a non-recurring curtailment gain in the first half of fiscal 2005.

For the second quarter, net sales for the Sara Lee Food & Beveragebusiness, on an aggregate basis, increased 3% to $1.14 billion.Quarterly profits were $33 million, down 11% from the prior year. Forthe first half of fiscal 2006, Sara Lee Food & Beverage reported a netsales increase of 2% to $2.21 billion and profits of $46 millioncompared to $71 million in the year-ago period.

Sara Lee Foodservice

The Sara Lee Foodservice business is a leading supplier of coffee,meats and bakery solutions to a broad base of foodservice operatorsacross North America.

Sara Lee Foodservice unit volumes increased 5% during the secondquarter, primarily due to strong volumes for refrigerated dough, hotdogs, corn dogs, cooked breakfast sausages and lunchmeats. Liquidcoffee concentrate unit volumes increased by double-digits in thesecond quarter, but this was more than offset by volume declines inthe traditional roast and ground coffee business.

For the second quarter of fiscal 2006, Sara Lee Foodservicereported net sales of $609 million, an increase of 5% from $580million in the second quarter of fiscal 2005. Sales grew as a resultof increased overall unit volumes and higher coffee prices, partiallyoffset by an unfavorable sales mix. Operating segment income for thesecond quarter of fiscal 2006 was $56 million, compared to $62 millionfor the corresponding period a year ago. Operating segment income inthe quarter was negatively impacted by transformation costs, anon-recurring curtailment gain in the prior year's period andincreased energy costs.

During the quarter, Sara Lee Foodservice made progress on theopportunity to cross-sell its meats, bakery and coffee products toexisting customers that previously only had bought products from oneor two of the three categories. Strong volumes for BK Joe, BurgerKing's new coffee concept based on Sara Lee's proprietary liquidcoffee concentrate, was another success of the segment's customerfocus initiatives.

For the six months ending Dec. 31, 2005, Sara Lee Foodservicereported net sales of $1.15 billion, up 2% from $1.12 billion in theprior year's first half. Operating segment income for the first sixmonths of fiscal 2006 was $72 million, a decrease of 32% compared to$105 million for the same period in fiscal 2005, primarily because oflower profits in the roast and ground coffee business, higher selling,general and administrative (SG&A) expenses, transformation costs and acomparison to a non-recurring curtailment gain in first half of fiscal2005.

Sara Lee International

The Sara Lee International business comprises internationalbeverage, European meats, international bakery and the globalhousehold and body care segment. Results for the European meatsbusiness, which were formerly included in international beverage, arenow included in Sara Lee International as a separate business segment.

International Beverage

International beverage unit volumes were up 1% in the secondquarter of fiscal 2006, particularly driven by volume growth inBrazil, the Netherlands and Germany. Net sales in the internationalbeverage segment increased 1% to $598 million in the second quarter.Reported operating segment income decreased $47 million or 42%, ofwhich $42 million of the decrease related to transformation charges,exit activities and other significant items as described in theattached Operating Results by Business Segment schedule. The remainingoperating segment income decrease of $5 million, or 5%, was primarilydue to higher commodity costs and a challenging retail environment inEurope.

For the first half of fiscal 2006, international beverage saleswere $1.12 billion, up 2% from $1.10 billion in the year-ago period.Operating segment income for the first six months of fiscal 2006 was$126 million, compared to $210 million in the corresponding period offiscal 2005, or a decrease of 40%, resulting primarily from lowermargins, lower first quarter unit volumes, transformation costs andunfavorable foreign currency exchange rates.

European Meats

Unit volumes in the European meats segment were down 1% in thesecond quarter, primarily due to weakness in France. Net sales for theEuropean meats segment decreased 8% to $285 million in the secondquarter due to unfavorable foreign currency exchange rates andslightly lower unit volumes. Operating segment income was $21 millionin the second quarter of fiscal 2006, compared to $31 million in theyear-ago period, the decline was primarily due to unfavorable foreigncurrency effects, restructuring costs and higher MAP spending, thelatter particularly in France behind the Aoste brand.

For the six months ending Dec. 31, 2005, European meats reportednet sales of $569 million, down 3% from $588 million in the year-agoperiod. Operating segment income for the first six months of fiscal2006 was $51 million, compared to $64 million in the first half offiscal 2005, with the 20% decline resulting primarily fromrestructuring charges, higher MAP spending and unfavorable foreigncurrency exchange rates.

International Bakery

Unit volumes in the international bakery segment were flat in thesecond quarter as unit volume growth in the European refrigerateddough business was offset by lower unit volumes for the fresh bakerybusiness in Spain and frozen bakery in Australia. Net sales for theinternational bakery segment decreased 5% to $190 million in thesecond quarter due primarily to unfavorable foreign currency exchangerates. Operating segment income was $21 million in the second quarterof fiscal 2006, compared to $20 million in the year-ago period. Theincrease of 3% was mainly due to procurement savings and highermargins that more than offset unfavorable foreign currency effects.

For the six months ending Dec. 31, 2005, international bakeryreported net sales of $382 million, down 1% from $387 million in theyear-ago period. Operating segment income for the first six months offiscal 2006 was $33 million, compared to $41 million in the first halfof fiscal 2005, with the 20% decline resulting primarily fromrestructuring charges, higher MAP spending and unfavorable foreigncurrency exchange rates.

Household and Body Care

Unit volumes in the household and body care segment's four corecategories declined 2% in the second quarter, as higher unit volumesfor body care, shoe care and insecticides were more than offset bylower unit volumes for air care, the latter particularly in Europe. Inthe body care category, the Sanex brand continued to perform well,driven by new products such as Sanex Excel, a concentrated deodorantspray, and Sanex Vitality, a body care line for women. However, growthfor the Sanex brand could not fully offset sales softness in some ofthe other bath and shower brands, particularly Radox in the UnitedKingdom and Duschdas in Germany. After a challenging first quarter,sales rebounded for Kiwi shoe care products, particularly in theUnited States, driving sales growth in the shoe care category. Strongsales in India and Malaysia drove sales growth in the insecticidescategory. Air care unit volumes and sales continued to decline,particularly in Europe where the Ambi Pur brand is facing tough pricecompetition. The company continues to focus on new product developmentand product re-launches to reverse the trend.

The lower overall unit volume, combined with lower selling pricesand unfavorable foreign currency exchange rates, translated into lowernet sales for household and body care in the second quarter, down 8%to $451 million. Reported operating segment income declined $46million, or 57% in the second quarter of fiscal 2006, of which $28million of the decrease related to transformation charges, exitactivities and other significant items as described in the attachedOperating Results by Business Segment schedule. The remainingoperating segment income decrease of $18 million, or 29%, wasprimarily due to lower unit volumes and margins, especially in aircare.

For the first six months of fiscal 2006, household and body caresales were $897 million, down 6% from $953 million in the year-agoperiod. Operating segment income for the first half of fiscal 2006 was$115 million, compared to $149 million in the corresponding period offiscal 2005, or a decrease of 23%, resulting primarily from lower unitvolumes and margins, transformation costs and unfavorable foreigncurrency exchange rates.

On a combined basis, net sales for the Sara Lee Internationalbusiness were down 4% to $1.52 billion in the second quarter of fiscal2006, while profits were down 42% to $142 million. Year-to-date, SaraLee International net sales were $2.97 billion, down 2%, and profitswere down 30% to $325 million.

Branded Apparel

Branded Apparel markets a portfolio of apparel brands in theouterwear (e.g., T-shirts, casualwear and activewear), innerwear(e.g., underwear, socks and intimate apparel) and hosiery categoriessold primarily in the Americas/Asia. The Branded Apparel business iscurrently preparing to be spun off from Sara Lee between June andSeptember, 2006, under the new corporate name Hanesbrands Inc.

For the second quarter of fiscal 2006, Branded Apparel reportednet sales of $1.18 billion, down 5% compared to the same period lastyear. This decrease was largely driven by overall volume declines of3%, primarily due to planned exits of certain low-margin fleece andsleepwear businesses and continued weakness in the hosiery category.Sales volumes were strong for Hanes men's and boy's underwear and C9by Champion athleticwear.

Operating segment income for the second quarter of fiscal 2006 was$169 million, compared to $154 million for the second quarter offiscal 2005, up 10%. Improved inventory management, lower SG&Aexpenses and favorable cotton costs more than offset the effects oflower unit volumes and pricing pressure during the quarter.

Year-to-date, Branded Apparel reported net sales of $2.32 billion,down 6% from $2.46 billion in the prior year's first half. Operatingsegment income for the first six months of fiscal 2006 was $291million, a decrease of 3% compared to $300 million for the same periodin fiscal 2005.

Net Interest Expense, General Corporate Expenses, Tax Rate andShare Repurchase

Net interest expense was $57 million for the second quarter offiscal 2006, an increase of $11 million compared to the year-agoperiod, resulting from higher net average interest rates. Generalcorporate expenses were $80 million in the second quarter, compared to$74 million in the comparable period of the prior year. The effectivetax rate for continuing operations was 19.2% for the second quarter offiscal 2006, compared to 12.7% in last year's second quarter. Duringthe second quarter of fiscal 2006, the company did not repurchase anyshares of its common stock. Approximately 87 million shares remainauthorized by the board of directors for repurchase.

Outlook

Sara Lee's management currently expects diluted EPS for the thirdquarter of fiscal 2006 to fall within a range of $.21 to $.26,compared to $.24 in the year-ago period. The third quarter guidancedoes not include any results for discontinued operations, gains orlosses on dispositions or any charges associated with thetransformation that may be recognized during the quarter.

Full-year fiscal 2006 diluted EPS for the corporation are expectedto be in a range of $1.17 to $1.27, compared to $.90 in fiscal 2005,which was negatively impacted by $.55 per share in net charges relatedto significant items. The current full-year guidance includes onlythose significant items reported in the first and second quarters offiscal 2006 (including impairment charges, exit activities,transformation costs and gains on business dispositions), and they hadno net impact on EPS. It does not include any results for discontinuedoperations, transformation related charges, gains or losses frombusiness dispositions, or further impairment charges that may occur insubsequent quarters.

The company expects to complete its $1 billion share repurchaseplan either at the end of fiscal 2006 or early in fiscal 2007. Therepurchase will likely occur after the spin-off of Branded Apparel,Americas/Asia and will provide better economic value for the companypost-spin. There are no benefits from the additional share repurchasein the EPS guidance for fiscal 2006. The company expects to repurchaseanother $1 billion of stock in the early years of the transformation.

For the third quarter of fiscal 2006, operating segment income isexpected to increase compared to last year's third quarter in five ofthe eight business segments: North American retail meats and retailbakery, foodservice, international bakery and Branded Apparel,Americas/Asia. The company currently expects base businessprofitability to improve over the course of the fiscal year for eachof its business segments with the exception of European Meats andHousehold and Body Care.

Webcast

Sara Lee Corporation's review of second quarter results for fiscal2006 will be broadcast live via the Internet today at 9 a.m. CST.During the webcast, the company will discuss second quarter resultsand provide an outlook for the third quarter and full fiscal year. Thelive webcast can be accessed at www.saralee.com and is anticipated toconclude by 10 a.m. CST. For people who are unable to listen to thewebcast live, the earnings review will be available two hoursfollowing the completion of the webcast in the Investors section ofthe Sara Lee corporate Web site until Wednesday, Aug. 2, 2006.

Forward-looking Statements

This news release contains forward-looking statements regardingSara Lee's business prospects, costs and operating results, includingstatements contained under the heading "Outlook," and the timing andexpected net proceeds from planned business divestitures. In addition,from time to time, in oral statements and written reports, thecorporation discusses its expectations regarding the corporation'sfuture performance by making forward-looking statements preceded byterms such as "expects," "likely" or "believes." These forward-lookingstatements are based on currently available competitive, financial andeconomic data and management's views and assumptions regarding futureevents. Such forward-looking statements are inherently uncertain, andinvestors must recognize that actual results may differ from thoseexpressed or implied in the forward-looking statements. Consequently,the corporation wishes to caution readers not to place undue relianceon any forward-looking statements. Among the factors that could causeSara Lee's actual results to differ from such forward-lookingstatements are factors relating to:

-- Sara Lee's relationship with its customers, such as (i) a significant change in Sara Lee's business with any of its major customers, such as Wal-Mart, the corporation's largest customer, including changes in the level of inventory these customers maintain; and (ii) credit and other business risks associated with customers operating in a highly competitive retail environment;

-- The consumer marketplace, such as (iii) significant competition, including advertising, promotional and price competition, and changes in consumer demand for Sara Lee's products; (iv) fluctuations in the availability and cost of raw materials, Sara Lee's ability to increase product prices in response and the impact on Sara Lee's profitability; (v) the impact of various food safety issues on sales and profitability of Sara Lee products; and (vi) inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance;

-- Sara Lee's transformation plan, such as (vii) Sara Lee's ability to complete planned business dispositions, and the timing and terms of such transactions; (viii) Sara Lee's ability to obtain a favorable tax ruling, and any other required regulatory approvals, on the proposed spin-off of its Branded Apparel, Americas/Asia business; (ix) Sara Lee's ability to effectively integrate its remaining businesses into the contemplated new business structure, including Sara Lee's ability to transition customers to different Bakery brands, transition to common information systems and processes and manage plant capacity and workforce reductions; (x) Sara Lee's ability to generate the anticipated efficiencies and savings from the transformation plan; and (xi) the impact of the transformation plan on Sara Lee's relationships with its employees, its major customers and vendors and Sara Lee's cost of funds;

-- Sara Lee's international operations, such as (xii) 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; and (xiii) Sara Lee's ability to continue to source production and conduct manufacturing and selling operations in various countries due to changing business conditions, political environments, import quotas and the financial condition of suppliers; and

-- Previous business decisions, such as (xiv) Sara Lee's ability to achieve planned cash flows from capital expenditures and acquisitions, particularly Earthgrains, and the impact of changing interest rates and the cost of capital on the discounted value of those planned cash flows; (xv) credit ratings issued by the three major credit rating agencies and the impact these ratings have on Sara Lee's cost to borrow funds; (xvi) the settlement of a number of ongoing reviews of Sara Lee's income tax filing positions in various jurisdictions and inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which Sara Lee transacts business; and (xvii) the continued legality of tobacco products in the Netherlands, Germany and Belgium.

In addition, the corporation's results also may be affected bygeneral factors, such as economic conditions, political developments,interest and inflation rates, accounting standards, taxes, and lawsand regulations in markets where the corporation competes. We haveprovided additional information in our Form 10-K for fiscal 2005,which readers are encouraged to review, concerning factors that couldcause actual results to differ materially from those in theforward-looking statements. Sara Lee undertakes no obligation topublicly update any forward-looking statements, whether as a result ofnew information, future events or otherwise.

Company Description

Sara Lee Corporation (www.saralee.com) is a Chicago-based globalmanufacturer and marketer of high-quality, brand-name products forconsumers throughout the world. In February 2005, the company beganexecuting a bold and ambitious multi-year plan to transform Sara Leeinto a company focused on its food, beverage, and household and bodycare businesses around the world. As part of its transformation plan,Sara Lee will drive growth in its key categories via such strongbrands as Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Kiwi,Sanex, Senseo and its namesake, Sara Lee.
Consolidated Statements of Income Sara Lee Corporation (NYSE)
---------------------------

(In millions, except per share amounts)
----------------------------------------------------------------------

Second Quarter Ended
----------------------------------
December 31, January 1, Percent
2005 2005 Change
------------ ------------ --------

Continuing operations
Net sales $4,448 $4,512 (1.4)%
------------ ------------

Cost of sales 2,813 2,852
Selling, general and
administrative expenses 1,281 1,270
Charges for (income from) exit
activities and business
dispositions 58 (10)
Contingent sale proceeds - -
Interest expense 76 71
Interest income (19) (25)
------------ ------------
4,209 4,158
------------ ------------

Income from continuing operations
before income taxes 239 354 (32.8)
Income taxes 46 45
------------ ------------
Income from continuing operations 193 309 (37.8)
------------ ------------
Income (loss) from discontinued
operations, net of tax 30 17
Gain on sale of Discontinued
Operations, net of tax 215 -
------------ ------------

Net income $438 $326 34.4
============ ============

Income from continuing operations
per common share
Basic $0.25 $0.39 (35.9)
============ ============
Diluted $0.25 $0.39 (35.9)
============ ============

Net income per common share
Basic $0.58 $0.41 41.5
============ ============
Diluted $0.57 $0.41 39.0
============ ============

Average shares outstanding
Basic 761 788
============ ============
Diluted 765 795
============ ============


Six Months Ended
----------------------------------
December 31, January 1, Percent
2005 2005 Change
------------ ------------ --------

Continuing operations
Net sales $8,640 $8,763 (1.4)%
------------ ------------

Cost of sales 5,504 5,541
Selling, general and
administrative expenses 2,534 2,488
Charges for (income from) exit
activities and business
dispositions 57 (16)
Contingent sale proceeds (114) (117)
Interest expense 150 137
Interest income (40) (51)
------------ ------------
8,091 7,982
------------ ------------

Income from continuing operations
before income taxes 549 781 (29.8)
Income taxes 111 128
------------ ------------
Income from continuing operations 438 653 (32.9)
------------ ------------
Income (loss) from discontinued
operations, net of tax (148) 25
Gain on sale of Discontinued
Operations, net of tax 215 -
------------ ------------

Net income $505 $678 (25.6)
============ ============

Income from continuing operations
per common share
Basic $0.57 $0.83 (31.3)
============ ============
Diluted $0.56 $0.82 (31.7)
============ ============

Net income per common share
Basic $0.65 $0.86 (24.4)
============ ============
Diluted $0.65 $0.85 (23.5)
============ ============

Average shares outstanding
Basic 771 790
============ ============
Diluted 775 796
============ ============

Please see the corporation's quarterly report on Form 10-Q which will
be filed with the Securities and Exchange Commission for further
information and details regarding the corporation's reported results.



Operating Results by Industry Segment Sara Lee Corporation (NYSE)
---------------------------

(In millions) Second Quarter Ended
----------------------------------------------------------------------

Sales
-------------------------
December 31, January 1, Percent
2005 2005 Change
------------ ------------ --------
North American Retail Meats $672 $650 3.5%
North American Retail Bakery 463 449 3.1
Foodservice 609 580 4.9
International Beverage 598 592 0.8
European Meats 285 311 (8.2)
International Bakery 190 200 (4.8)
Household & Body Care 451 491 (8.0)
Branded Apparel 1,182 1,241 (4.8)
------------ ------------ --------
Total sales and operating segment
income 4,450 4,514 (1.4)
Intersegment sales (2) (2) (50.9)
Amortization of identifiable
intangibles -- -- --
General corporate expenses -- -- --
Contingent sale proceeds -- -- --
------------ ------------ --------
Total net sales and operating
income 4,448 4,512 (1.4)
Net interest expense -- -- --
------------ ------------ --------
Net sales and income from
continuing operations
before income taxes $4,448 $4,512 (1.4)%
============ ============ ========


Income from Continuing
Operations Before
Income Taxes
-------------------------
December 31, January 1, Percent
2005 2005 Change
------------ ------------ --------
North American Retail Meats $50 $49 1.1%
North American Retail Bakery (17) (11) (41.0)
Foodservice 56 62 (9.4)
International Beverage 64 111 (42.4)
European Meats 21 31 (32.2)
International Bakery 21 20 3.4
Household & Body Care 36 82 (57.5)
Branded Apparel 169 154 9.7
------------ ------------ --------
Total sales and operating segment
income 400 498 (19.9)
Intersegment sales -- -- --
Amortization of identifiable
intangibles (24) (24) 1.7
General corporate expenses (80) (74) (8.6)
Contingent sale proceeds -- -- --
------------ ------------ --------
Total net sales and operating
income 296 400 (26.3)
Net interest expense (57) (46) (24.5)
------------ ------------ --------
Net sales and income from
continuing operations
before income taxes $239 $354 (32.8)%
============ ============ ========


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

Sales
-------------------------
December 31, January 1, Percent
2005 2005 Change
------------ ------------ --------
North American Retail Meats $1,287 $1,246 3.3%
North American Retail Bakery 923 920 0.3
Foodservice 1,145 1,118 2.4
International Beverage 1,123 1,096 2.4
European Meats 569 588 (3.2)
International Bakery 382 387 (1.3)
Household & Body Care 897 953 (5.8)
Branded Apparel 2,319 2,459 (5.7)
------------ ------------ --------
Total sales and operating segment
income 8,645 8,767 (1.4)
Intersegment sales (5) (4) (48.0)
Amortization of identifiable
intangibles -- -- --
General corporate expenses -- -- --
Contingent sale proceeds -- -- --
------------ ------------ --------
Total net sales and operating
income 8,640 8,763 (1.4)
Net interest expense -- -- --
------------ ------------ --------
Net sales and income from
continuing operations
before income taxes $8,640 $8,763 (1.4)%
============ ============ ========


Income from Continuing
Operations Before
Income Taxes
-------------------------
December 31, January 1, Percent
2005 2005 Change
------------ ------------ --------
North American Retail Meats $67 $73 (8.5)%
North American Retail Bakery (21) (2) NM
Foodservice 72 105 (31.9)
International Beverage 126 210 (40.1)
European Meats 51 64 (20.4)
International Bakery 33 41 (19.8)
Household & Body Care 115 149 (22.9)
Branded Apparel 291 300 (3.0)
------------ ------------ --------
Total sales and operating segment
income 734 940 (22.0)
Intersegment sales -- -- --
Amortization of identifiable
intangibles (48) (54) 11.3
General corporate expenses (141) (136) (4.0)
Contingent sale proceeds 114 117 (2.3)
------------ ------------ --------
Total net sales and operating
income 659 867 (24.1)
Net interest expense (110) (86) (27.7)
------------ ------------ --------
Net sales and income from
continuing operations
before income taxes $549 $781 (29.8)%
============ ============ ========

Please see the corporation's quarterly report on Form 10-Q which will
be filed with the Securities and Exchange Commission for further
information and details regarding the corporation's reported results.



Consolidated Balance Sheets Sara Lee Corporation (NYSE)
---------------------------

(In millions)
----------------------------------------------------------------------
December 31, July 2,
2005 2005
------------ ------------
ASSETS
Cash and equivalents $1,955 $538
Trade accounts receivable 1,746 1,798
Inventories 2,184 2,284
Other current assets 482 336
Assets of discontinued operations held for
sale 580 860
------------ ------------

Total current assets 6,947 5,816

Other noncurrent assets 129 117
Deferred tax asset 391 303
Property, net 2,992 3,030
Trademarks and other identifiable
intangibles, net 1,490 1,574
Goodwill 3,142 3,154
Assets of discontinued operations held for
sale 52 429
------------ ------------

$15,143 $14,423
============ ============

LIABILITIES AND EQUITY
Notes payable $1,378 $239
Accounts payable 1,244 1,255
Accrued liabilities 2,817 2,507
Current maturities of long-term debt 599 381
Liabilities of discontinued operations held
for sale 386 591
------------ ------------

Total current liabilities 6,424 4,973

Long-term debt 3,736 4,114
Pension obligation 858 858
Other liabilities 1,373 1,354
Liabilities of discontinued operations held
for sale 119 124
Minority interest in subsidiaries 68 62
Common stockholders' equity 2,565 2,938
------------ ------------

$15,143 $14,423
============ ============

Please see the corporation's quarterly report on Form 10-Q which will
be filed with the Securities and Exchange Commission for further
information and details regarding the corporation's reported results.




Sara Lee Corporation
Operating Results by Business Segment
(in millions)

Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
North American Retail Meats

Net Sales $672 $650 $22 3.5%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $(3) $3
Dispositions - 22 (22)
--------- -------- -------
Total $- $19 $(19)
========= ======== =======

Operating segment income $50 $49 $1 1.1%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Exit activities and business
dispositions $(6) $5 $(11)
Transformation charges (8) - (8)
Accelerated depreciation (1) - (1)
Change in vacation policy 3 - 3
Dispositions - 3 (3)
--------- -------- -------
Total $(12) $8 $(20)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
North American Retail Meats

Net Sales $1,287 $1,246 $41 3.3%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $(7) $7
Dispositions - 43 (43)
--------- -------- -------
Total $- $36 $(36)
========= ======== =======

Operating segment income $67 $73 $(6) (8.5)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Exit activities and business
dispositions $(10) $5 $(15)
Transformation charges (13) - (13)
Accelerated depreciation (2) - (2)
Change in vacation policy 3 - 3
Dispositions - 5 (5)
--------- -------- -------
Total $(22) $10 $(32)
========= ======== =======

----------------------------------------------------------------------


Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
North American Retail Bakery

Net Sales $463 $449 $14 3.1%
--------- ========= ======== ======= =======

Operating segment income $(17) $(11) $(6) (41.0)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Exit activities and business
dispositions $(1) $1 $(2)
Transformation charges (6) - (6)
Accelerated depreciation (1) - (1)
Change in vacation policy 3 - 3
Benefit plan curtailment gain - 4 (4)
--------- -------- -------
Total $(5) $5 $(10)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
North American Retail Bakery

Net Sales $923 $920 $3 0.3%
--------- ========= ======== ======= =======

Operating segment income $(21) $(2) $(19) NM
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Exit activities and business
dispositions $(2) $1 $(3)
Transformation charges (10) - (10)
Accelerated depreciation (5) (4) (1)
Change in vacation policy 3 - 3
Benefit plan curtailment gain - 12 (12)
--------- -------- -------
Total $(14) $9 $(23)
========= ======== =======

----------------------------------------------------------------------


Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
Total Sara Lee Food & Beverage
Business

Net Sales $1,135 $1,099 $36 3.3%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $(3) $3
Dispositions - 22 (22)
--------- -------- -------
Total $- $19 $(19)
========= ======== =======

Operating segment income $33 $38 $(5) (11.0)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Exit activities and business
dispositions $(7) $6 $(13)
Transformation charges (14) - (14)
Accelerated depreciation (2) - (2)
Change in vacation policy 6 - 6
Dispositions - 3 (3)
Benefit plan curtailment gain - 4 (4)
--------- -------- -------
Total $(17) $13 $(30)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
Total Sara Lee Food & Beverage
Business

Net Sales $2,210 $2,166 $44 2.0%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $(7) $7
Dispositions - 43 (43)
--------- -------- -------
Total $- $36 $(36)
========= ======== =======

Operating segment income $46 $71 $(25) (34.6)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Exit activities and business
dispositions $(12) $6 $(18)
Transformation charges (23) - (23)
Accelerated depreciation (7) (4) (3)
Change in vacation policy 6 - 6
Dispositions - 5 (5)
Benefit plan curtailment gain - 12 (12)
--------- -------- -------
Total $(36) $19 $(55)
========= ======== =======



Sara Lee Corporation
Operating Results by Business Segment
(in millions)

Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
Sara Lee Foodservice

Net Sales $609 $580 $29 4.9%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $- $-
Dispositions - 1 (1)
--------- -------- -------
Total $- $1 $(1)
========= ======== =======

Operating segment income $56 $62 $(6) (9.4)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $- $-
Transformation charges (2) - (2)
Accelerated depreciation (1) (3) 2
Benefit plan curtailment gain - 5 (5)
Dispositions - 1 (1)
Change in vacation policy 4 - 4
Hurricane losses (2) - (2)
--------- -------- -------
Total $(1) $3 $(4)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
Sara Lee Foodservice

Net Sales $1,145 $1,118 $27 2.4%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $(1) $1
Dispositions - 2 (2)
--------- -------- -------
Total $- $1 $(1)
========= ======== =======

Operating segment income $72 $105 $(33) (31.9)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $- $-
Transformation charges (4) - (4)
Accelerated depreciation (2) (7) 5
Benefit plan curtailment gain - 14 (14)
Dispositions - 1 (1)
Change in vacation policy 4 - 4
Hurricane losses (5) - (5)
--------- -------- -------
Total $(7) $8 $(15)
========= ======== =======



Sara Lee Corporation
Operating Results by Business Segment
(in millions)

Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
International Beverage

Net Sales $598 $592 $6 0.8%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $30 $(30)
========= ======== =======
Operating segment income $64 $111 $(47) (42.4)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $8 $(8)
Exit activities and business
dispositions (29) - (29)
Accelerated depreciation (3) - (3)
Transformation charges (2) - (2)
--------- -------- -------
Total $(34) $8 $(42)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
International Beverage

Net Sales $1,123 $1,096 $27 2.4%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $15 $(15)
========= ======== =======
Operating segment income $126 $210 $(84) (40.1)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $7 $(7)
Exit activities and business
dispositions (45) - (45)
Accelerated depreciation (3) - (3)
Transformation charges (4) - (4)
--------- -------- -------
Total $(52) $7 $(59)
========= ======== =======

----------------------------------------------------------------------

Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
European Meats

Net Sales $285 $311 $(26) (8.2)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $25 $(25)
========= ======== =======

Operating segment income $21 $31 $(10) (32.2)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $3 $(3)
Exit activities and business
dispositions (3) - (3)
Transformation charges - - -
--------- -------- -------
Total $(3) $3 $(6)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
European Meats

Net Sales $569 $588 $(19) (3.2)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $26 $(26)
========= ======== =======

Operating segment income $51 $64 $(13) (20.4)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $3 $(3)
Exit activities and business
dispositions (3) - (3)
Transformation charges (1) - (1)
--------- -------- -------
Total $(4) $3 $(7)
========= ======== =======

----------------------------------------------------------------------

Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
International Bakery

Net Sales $190 $200 $(10) (4.8)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $14 $(14)
========= ======== =======

Operating segment income $21 $20 $1 3.4%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $1 $(1)
Exit activities and business
dispositions - - -
Transformation charges (1) - (1)
--------- -------- -------
Total $(1) $1 $(2)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
International Bakery

Net Sales $382 $387 $(5) (1.3)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $13 $(13)
========= ======== =======

Operating segment income $33 $41 $(8) (19.8)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $1 $(1)
Exit activities and business
dispositions (5) - (5)
Transformation charges (1) - (1)
--------- -------- -------
Total $(6) $1 $(7)
========= ======== =======

----------------------------------------------------------------------



Sara Lee Corporation
Operating Results by Business Segment
(in millions)

Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
Household & Body Care

Net Sales $451 $491 $(40) (8.0)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $28 $(28)
Dispositions - 3 (3)
--------- -------- -------
Total $- $31 $(31)
========= ======== =======

Operating segment income $36 $82 $(46) (57.5)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $4 $(4)
Exit activities and business
dispositions (6) 14 (20)
Accelerated depreciation (5) (3) (2)
Transformation charges (2) - (2)
Dispositions - - -
--------- -------- -------
Total $(13) $15 $(28)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
Household & Body Care

Net Sales $897 $953 $(56) (5.8)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $27 $(27)
Dispositions - 6 (6)
--------- -------- -------
Total $- $33 $(33)
========= ======== =======

Operating segment income $115 $149 $(34) (22.9)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $4 $(4)
Exit activities and business
dispositions 20 14 6
Accelerated depreciation (9) (6) (3)
Transformation charges (4) - (4)
Dispositions - 2 (2)
--------- -------- -------
Total $7 $14 $(7)
========= ======== =======

----------------------------------------------------------------------

Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
Total Sara Lee International
Business

Net Sales $1,524 $1,594 $(70) (4.3)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $97 $(97)
Dispositions - 3 (3)
--------- -------- -------
Total $- $100 $(100)
========= ======== =======

Operating segment income $142 $244 $(102) (42.5)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $16 $(16)
Exit activities and business
dispositions (38) 14 (52)
Accelerated depreciation (8) (3) (5)
Transformation charges (5) - (5)
Dispositions - - -
--------- -------- -------
Total $(51) $27 $(78)
========= ======== =======

Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
Total Sara Lee International
Business

Net Sales $2,971 $3,024 $(53) (1.8)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $81 $(81)
Dispositions - 6 (6)
--------- -------- -------
Total $- $87 $(87)
========= ======== =======

Operating segment income $325 $464 $(139) (30.1)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $15 $(15)
Exit activities and business
dispositions (33) 14 (47)
Accelerated depreciation (12) (6) (6)
Transformation charges (10) - (10)
Dispositions - 2 (2)
--------- -------- -------
Total $(55) $25 $(80)
========= ======== =======

----------------------------------------------------------------------

Dollar Percent
Second Quarter Change Change
------------------ ---------------
2006 2005
--------- --------
Branded Apparel

Net Sales $1,182 $1,241 $(59) (4.8)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $(1) $1
Acquisitions 14 24 (10)
--------- -------- -------
Total $14 $23 $(9)
========= ======== =======

Operating segment income $169 $154 $15 9.7%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $1 $(1)
Exit activities and business
dispositions - 2 (2)
Restructuring charges (1) - (1)
Acquisitions 1 - 1
--------- -------- -------
Total $- $3 $(3)
========= ======== =======


Dollar Percent
Second Quarter YTD Change Change
------------------ ---------------
2006 2005
--------- --------
Branded Apparel

Net Sales $2,319 $2,459 $(140) (5.7)%
--------- ========= ======== ======= =======
Increase/(decrease) in net sales
from:
Changes in foreign currency
exchange rates $- $(6) $6
Acquisitions 20 24 (4)
--------- -------- -------
Total $20 $18 $2
========= ======== =======

Operating segment income $291 $300 $(9) (3.0)%
------------------------ ========= ======== ======= =======
Increase/(decrease) in operating
segment income from:
Changes in foreign currency
exchange rates $- $- $-
Exit activities and business
dispositions - 8 (8)
Restructuring charges (1) - (1)
Acquisitions 1 - 1
--------- -------- -------
Total $- $8 $(8)
========= ======== =======



Second Quarter Fiscal 2006 Unit Volume Overview
-----------------------------------------------


Unit volume changes versus Fiscal 2005

Second Quarter Six Months
Fiscal 2006 Fiscal 2006
--------------- ---------------


Sara Lee Corporation 1% (1)%


Sara Lee Food & Beverage 4% 1%

North American Retail Meats 8% 6%
North American Retail
Bakery (incl. Senseo) 1% (2)%


Sara Lee Foodservice 5% 3%


Sara Lee International 0% (4)%

International Beverage
(roast and ground coffee) 1% (7)%
European Meats (1)% 1%
International Bakery 0% 0%
Global Household & Body
Care (four core
categories) (2)% (3)%


Branded Apparel(a) (3)% (3)%



(a) Excludes unit volume impacts from the European branded apparel
businesses, which have been reported as discontinued operations.



Brand Segmentation Strategy Update
Fiscal 2006 - Six Months Year-to-Date

Sales by Segment
($ in millions)

Positive/(Negative)
% Change Effect of Currency
Six Months vs. Rate Changes(a)
FY 2006 FY 2005(a) (percentage points)
-------------------------------------------------

Strategic Investment $1,814 9% (1) pts.
Support and Grow 2,164 (5) -
Sustain 1,700 (3) (2)
Manage for Cash 1,512 (8) (1)
-------------------------------------------------
Total Retail 7,190 (2) (1)
Foodservice/Other 1,450 2 (1)
-------------------------------------------------
Total $8,640 (1)% - pts.
=================================================


Strategic Investment Brand Sales
($ in millions)
Positive/(Negative)
% Change Effect of Currency
Six Months vs. Rate Changes(a)
FY 2006 FY 2005(a) (percentage points)
-------------------------------------------------
Sara Lee $452 19% - pt.
Ball Park 119 4 -
Hillshire Farm 342 13 -
Jimmy Dean 232 15 -
Senseo 163 7 (5)
Ambi Pur 170 (16) (2)
Champion 258 9 (1)
Just My Size 78 1 -
-------------------------------------------------
Total $1,814 9% (1) pts.
=================================================


Retail Sales and MAP Spending - Percent to Total Retail

Six Months Sales Six Months MAP
FY 2006 FY 2005 FY 2006 FY 2005
----------------------------------------
Strategic Investment 25% 23% 37% 38%
Support and Grow 30 31 37 36
Sustain 24 24 17 18
Manage for Cash 21 22 9 8
----------------------------------------
Total Retail 100% 100% 100% 100%
========================================


(a) In order to calculate the % change in sales on a constant currency
basis, the reported % change vs. Fiscal Year 2005 should be
increased by the negative currency rate changes and decreased by
the positive currency rate changes.