Sara Lee Corporation Provides Update on Sale of Its European Meats Business; Negotiating Sale of European Meats Business with Smithfield Foods, Inc.; Consultation with Employee Representatives from Appropriate Works Councils to Begin.

CHICAGO -- Sara Lee Corporation (NYSE:SLE) announced today that it has entered into an exclusive negotiation period regarding the sale of its European meats business with Smithfield Foods, Inc., the world's largest pork processor and hog producer. As the parties continue their discussions, Sara Lee will consult with employee representatives from the appropriate works councils regarding the potential sale.

"The intended sale of the European meats business is the latest example of simplifying our portfolio as we transform Sara Lee into a world-class, integrated operating company," said Brenda C. Barnes, chairman and chief executive officer of Sara Lee Corporation. "We look forward to collaborating with the works councils and employee representatives associated with this business."

Headquartered in Hoofddorp, the Netherlands, Sara Lee's European meats business had $1.1 billion in sales in fiscal 2005 and holds its largest positions in France, Benelux and Portugal with popular brands such as Aoste, Justin Bridou, Cochonou and Nobre. The organization employs approximately 4,500 people.

Based in Smithfield, Va., Smithfield Foods' collection of brands includes Smithfield, Smithfield Lean Generation, John Morrell, Gwaltney, Patrick Cudahy, Krakus and Stefano's. Outside the United States, Smithfield owns subsidiaries in France, Poland, Romania and the United Kingdom, and operates joint ventures in Mexico and China. Smithfield employs more than 51,000 people worldwide.

"Regardless of whether we sell this business, we remain confident in our ability to generate in excess of $3 billion in after-tax proceeds from divesting non-core businesses, including the planned spin-off of our Branded Apparel, Americas/Asia business later this year," added Barnes.

Impairment Charges

At the end of March 2006 the corporation concluded that the European Meats operation was to be classified as held for sale and reported as a discontinued operation beginning in the quarter ended on April 1, 2006. The anticipated selling price of this business declined as compared to non binding offers previously received. In April 2006, the corporation assessed the implied fair value of the goodwill in this business under the provisions of Statement of Financial Accounting Standards No. 142 in connection with the corporation's preparation and review of financial statements for its fiscal quarter ended April 1, 2006. The determination of the implied fair value of the goodwill in this business involves a number of estimates, including an assessment of the fair value of the property and intangible assets of the business. As a result of this evaluation, the corporation expects to recognize a $125 million goodwill impairment in its financial statements for the quarter ending April 1, 2006. No tax benefit will be recognized on this charge. Any adjustment to the estimated loss based on the completion of the measurement of the impairment and the probable sale of this business will be recognized in subsequent reporting periods.

Forward-looking Statements 

This news release contains forward-looking statements regarding the proposed sale of the company's meats business in Europe, the amount of the impairment charge expected to be recognized by the company in the third quarter of fiscal 2006 and statements preceded by terms such as "intends," "approximates" or "expects." These forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Consequently, Sara Lee wishes to caution readers not to place undue reliance on any forward-looking statements.

Factors that could cause actual results to differ from such forward-looking statements include (i) Sara Lee has not signed a definitive sales agreement regarding the sale of its European meats business, and the execution of a definitive sales agreement is subject to the company's consultation with works councils associated with the European meats business and the negotiation of a definitive agreement with the prospective purchaser; (ii) consummation of the transaction will be subject to the satisfaction of the terms and conditions contained in any definitive sales agreement that is executed; and (iii) the amount of the impairment charge recognized in the fiscal 2006 fourth quarter will depend upon the terms of any definitive sale agreement, the company's investment in the European meats business at the time of the sale and the amount of cash the company receives at closing.

In addition, Sara Lee's actual results may also be affected by general factors, such as economic conditions, political developments, and interest and inflation rates. We have provided additional information in Sara Lee's Form 10-K for fiscal 2005, 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 undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Company Profile

Sara Lee Corporation (www.saralee.com) is a Chicago-based global manufacturer and marketer of high-quality, brand-name products for consumers throughout the world. In February 2005, the company began executing a bold and ambitious multi-year plan to transform Sara Lee into a company focused on its food, beverage, and household and body care businesses around the world. As part of its transformation plan, Sara Lee will drive growth in its key categories via such strong brands as Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Kiwi, Sanex, Senseo and its namesake, Sara Lee.