Sara Lee Corporation Announces Capital Structure for Hanesbrands Inc. Spin-off; Spin-off to generate $2.4 billion in proceeds for Sara Lee; company to reach key transformation milestone

Business Wire, July 20, 2006

CHICAGO -- Sara Lee Corporation (NYSE:SLE) announced today that its board of directors has approved the capital structure for the planned tax-free spin-off of its apparel business into a separate, publicly traded company called Hanesbrands Inc.

Hanesbrands will borrow $2.6 billion to establish the enterprise as a stand-alone, independent company. In connection with the spin-off, Sara Lee will receive a one-time payment of $2.4 billion from Hanesbrands.

"Following the spin-off of the apparel business, Sara Lee shareholders will own stock in two great companies - Sara Lee and Hanesbrands - each of which will have a tighter business focus with improved prospects for growth and value creation," said Brenda C. Barnes, chairman and chief executive officer, Sara Lee Corporation. "With the capital structure for Hanesbrands established, we reach another milestone in our long-range plan to transform Sara Lee into a more disciplined, high-performing company."

Sara Lee will distribute to its stockholders, on a pro rata and tax-free basis, all of the outstanding shares of Hanesbrands common stock, with the distribution ratio to be determined shortly before the spin-off occurs. Following the spin-off, Hanesbrands and Sara Lee will be two independent companies, with neither retaining any ownership interest in the other. Sara Lee anticipates completing the spin-off of Hanesbrands in early September, subject to market conditions and regulatory approvals. The company expects to announce a mid-to late-August record date for the spin-off in a future press release.

Forward-looking Statements

This news release contains forward-looking statements regarding the amount of borrowings Hanesbrands will incur and the proceeds Sara Lee expects to receive upon completion of the spin-off, and statements preceded by terms such as "plans," "anticipates" 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 actual results may differ from those expressed or implied in the forward-looking statements.

Factors that could cause actual results to differ from such forward-looking statements include (i) consummation of the spin-off is subject to the satisfaction of a number of conditions, including the Form 10 Registration Statement for Hanesbrands common stock being declared effective by the SEC, Hanesbrands common stock being accepted for listing on the New York Stock Exchange, and Sara Lee's receipt of a private letter ruling from the IRS or an opinion of counsel to the effect that the spin-off will qualify as a tax-free distribution for U.S. federal income tax purposes; and (ii) the amount and type of borrowings Hanesbrands will incur, and the amount of proceeds that Sara Lee will receive upon completion of the spin-off, will depend upon conditions in the financing markets. In addition, these transactions also may be affected by general factors, such as economic conditions, political developments, and interest and inflation rates.

Hanesbrands Inc. Profile

Hanesbrands Inc., which is anticipated to become a public company in early September, 2006, following its spin-off from Sara Lee Corporation, is a consumer goods company with a portfolio of leading apparel brands, including Hanes, Champion, Playtex, Bali, Just My Size, barely there and Wonderbra. The company designs, manufactures, sources and markets apparel essentials, including T-shirts, bras, panties, men's and children's underwear, socks, hosiery, casualwear and activewear. Fiscal 2005 net revenues were $4.7 billion.

Sara Lee Corporation 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.