An annotated statement of cash flows for Sara Lee Corporation is shown below.

a. From Sara Lee's statement of cash flows, determine the free cash flow for the fiscal years ended 2003 and 2004. Assume 60% of the acquisition of property, plant, and equipment is used to maintain productive capacity, while the remaining 40% adds to productive capacity. Round to the nearest dollar.
b. Determine the free cash flow as a percent of sales for both years. The sales were $19,566 and $18,291 for fiscal years 2004 and 2003, respectively (in millions). Round the percent to one decimal place.
c. Interpret yourresults.

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Sara Lee Corporation Statement of Cash Flows For the Years Ended July 3, 2004 and June 28, 2003 Fiscal Year 2004 2,042 Fiscal Year 2003 $1,824 (annotated, in millions) Net cash from operating activities Investment activities: (530) Purchases of property and equipment Acquisitions of businesses and investments Dispositions of businesses and investments Other 137 209 184) (746) (10) 82 (674) Net cash used in investment activities Financing activities: 139 (350) Issuances of common stock Purchases of common stock Redemption of preferred stock Borrowings of long-term debt Repayments of long-term debt Short-term borrowings (repayments), net Payments of dividends Other (305) (250) 1,773 (995) (395) (497) 65 (1,288) 15 (714) 35 $(2,162) (304) 942 S 638 Net cash (used in) from financing activities (Decrease) increase in cash and equivalents Cash and equivalents at beginning of year Cash and equivalents at end of year $(506) 644 298 942