-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, W7O9XZgoBi38TkXqA+yLknPEm3yVbm2fh1M5o/6JUYVfZ0B+RfXCeSmSKq1LIVPQ zi+a08ByhwokY7UM7Va6TA== 0000040704-94-000004.txt : 19940114 0000040704-94-000004.hdr.sgml : 19940114 ACCESSION NUMBER: 0000040704-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19931128 FILED AS OF DATE: 19940111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MILLS INC CENTRAL INDEX KEY: 0000040704 STANDARD INDUSTRIAL CLASSIFICATION: 2040 IRS NUMBER: 410274440 STATE OF INCORPORATION: DE FISCAL YEAR END: 0525 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-01185 FILM NUMBER: 94500928 BUSINESS ADDRESS: STREET 1: NUMBER ONE GENERAL MILLS BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55426 BUSINESS PHONE: 6125402311 MAIL ADDRESS: STREET 1: P O BOX 1113 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 10-Q 1 SECOND QUARTER 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 28, 1993 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____ Commission file number: 1-1185 GENERAL MILLS, INC. (Exact name of registrant as specified in its charter) Delaware 41-0274440 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Number One General Mills Boulevard Minneapolis, MN 55426 (Mail: P.O. Box 1113) (Mail: 55440) (Address of principal executive offices) (Zip Code) (612) 540-2311 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ As of December 17, 1993, General Mills had 159,122,280 shares of its $.10 par value common stock outstanding (excluding 45,031,052 shares held in treasury). Part I. FINANCIAL INFORMATION Item 1. Financial Statements GENERAL MILLS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In Millions, Except per Share Data) Thirteen Weeks Ended Twenty-Six Weeks Ended November 28, November 29, November 28, November 29, 1993 1992 1993 1992 Sales $ 2,182.2 $2,096.9 $4,272.0 $4,116.5 Costs and Expenses: Cost of sales 1,127.1 1,080.3 2,205.2 2,122.6 Selling, general and administrative 729.5 708.3 1,370.0 1,344.5 Depreciation and amortization 72.5 65.5 143.9 129.4 Interest, net 23.4 17.1 50.1 33.6 Total Costs and Expense 1,952.5 1,871.2 3,769.2 3,630.1 Earnings before Taxes 229.7 225.7 502.8 486.4 Income Taxes 89.0 87.6 196.5 188.7 Earnings from Operations 140.7 138.1 306.3 297.7 Cumulative Effect to May 31, 1993 of Accounting Changes - - .2 - Net Earnings $140.7 $138.1 $ 306.5 $ 297.7 Earnings per Share: From operations $ .88 $ .85 $ 1.92 $ 1.82 Cumulative effect of accounting changes - - - - Net Earnings per Share $ .88 $ .85 $ 1.92 $ 1.82 Dividends per Share $ .47 $ .42 $ .94 $ .84 Average Number of Common Shares 159.1 163.6 159.5 163.7 See accompanying notes to consolidated condensed financial statements. GENERAL MILLS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In Millions) (Unaudited) (Unaudited) November 28, November 29, May 30, 1993 1992 1993 ASSETS Current Assets: Cash and cash equivalents $ 56.8 $ 55.5 $100.0 Receivables 391.4 368.4 287.4 Inventories: Valued primarily at FIFO 289.4 277.3 194.5 Valued at LIFO (FIFO value exceeds LIFO by $62.5, $71.0 and $60.3, respectively) 264.2 271.1 244.5 Prepaid expenses and other current assets 98.2 94.9 108.2 Deferred income taxes 149.3 152.1 142.3 Total Current Assets 1,249.3 1,219.3 1,076.9 Land, Buildings and Equipment, at Cost 4,455.6 4,024.1 4,239.5 Less accumulated depreciation (1,483.7) (1,276.3 (1,379.9) Net Land, Buildings and Equipment 2,971.9 2,747.9 2,859.6 Other Assets 774.8 711.8 714.3 Total Assets $4,996.0 $4,679.0 $4,650.8 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 698.1 $697.1 $617.0 Current portion of long-term debt 72.1 55.4 64.3 Notes payable 393.9 261.8 339.6 Accrued taxes 160.2 136.7 139.7 Other current liabilities 365.7 341.9 398.2 Total Current Liabilities 1,690.0 1,492.9 1,558.8 Long-term Debt 1,414.8 1,166.0 1,268.3 Deferred Income Taxes 243.1 238.8 262.0 Deferred Income Taxes - Tax Leases 193.9 198.5 195.6 Other Liabilities 183.9 192.5 147.6 Total Liabilities 3,725.7 3,288.7 3,432.3 Stockholders' Equity: Cumulative preference stock, none issued - - - Common stock, 204.2 shares issued 350.9 353.9 358.7 Retained earnings 2,442.3 2,211.1 2,284.5 Less common stock in treasury, at cost, shares of 45.1, 40.6 and 43.7, respectively (1,294.4) (958.2)(1,196.4) Unearned compensation and other (163.8) (169.2) (167.5) Cumulative foreign currency adjustment (64.7) (47.3) (60.8) Total Stockholders' Equity 1,270.3 1,390.3 1,218.5 Total Liabilities and Stockholders' Equity $4,996.0 $4,679.0 $4,650.8 See accompanying notes to consolidated condensed financial statements. GENERAL MILLS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In Millions) Twenty-Six Weeks Ended November 28, November 29, 1993 1992 Cash Flows - Operating Activities: Net Earnings $306.5 $297.7 Adjustments to reconcile earnings to cash flow: Depreciation and amortization 143.9 129.4 Deferred income taxes .1 3.7 Change in current assets and liabilities (149.6) (134.6) Other, net 8.4 1.5 Cash provided by continuing operations 309.3 297.7 Cash used by discontinued operations (2.7) (1.6) Net Cash Provided by Operating Activities 306.6 296.1 Cash Flows - Investment Activities: Purchases of land, buildings and equipment (273.4) (336.0) Investments in businesses, intangibles and affiliates, net of dividends (21.0) (20.1) Purchases of marketable investments (46.1) (3.4) Proceeds from sale of marketable investments 24.5 10.8 Other, net 5.3 7.0 Net Cash Used by Investment Activities (310.7) (341.7) Cash Flows - Financing Activities: Increase in notes payable 58.2 131.1 Issuance of long-term debt 202.4 298.4 Payment of long-term debt (51.6) (31.5) Cash flows for tax leases (5.6) (4.5) Common stock issued 10.5 16.3 Purchases of common stock for treasury (102.9) (171.7) Dividends paid (150.1) (137.5) Net Cash Provided (Used) by Financing Activities (39.1) 100.6 Increase (Decrease) in Cash and Cash Equivalents $(43.2) $55.0 See accompanying notes to consolidated condensed financial statements. GENERAL MILLS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) (1) Background These financial statements do not include certain information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the twenty-six weeks ended November 28, 1993 are not necessarily indicative of the results that may be expected for the fiscal year ending May 29, 1994. These statements should be read in conjunction with the financial statements and footnotes included in our annual report for the year ended May 30, 1993. The accounting policies used in preparing these financial statements are the same as those described in our annual report. (2) Statements of Cash Flows During the first six months of fiscal 1994, we paid $49.7 million for interest (net of amount capitalized) and $176.7 million for income taxes. (3) Accounting Changes In fiscal 1994, we adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The cumulative effect as of May 31, 1993 of changing to the liability method of accounting for deferred income taxes was an increase in net earnings of $17.5 million ($.11 per share). We also adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits." The cumulative effect as of May 31, 1993 of changing to the accrual basis for severance and disability costs was a decrease in net earnings of $17.3 million ($.11 per share). (4) Long-term Debt During the first six months of fiscal 1994, we issued $150.0 million of debt under our medium-term note program with maturities from 5 to 40 years and interest rates from 5.4% to 7.3%. (5) Stockholders' Equity We purchased 1.7 million shares of our common stock for $102.9 million in the open market during the first six months of fiscal 1994. (6) Investments in Affiliates During the first six months we made additional capital contributions and advances of $13.8 million to Cereal Partners Worldwide. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Fiscal 1994 capital expenditures are estimated to be approximately $600 million. During the first half, capital expenditures totaled $273.4 million. Our fixed-asset investment has decreased from recent peak levels, which included adding cereal capacity. Purchases of marketable investments were made to take advantage of interest rate spreads. Our short-term outside financing is obtained through private placement of commercial paper and bank notes. Our level of notes payable fluctuates based on cash flow needs. In the first half of fiscal 1994, $150.0 million of debt was issued under our medium-term note program. An additional $50.0 million of our notes payable was reclassified to long-term under our revolving credit agreement. RESULTS OF OPERATIONS Second quarter sales of $2,182.2 million grew 4 percent from the prior year. Consumer Foods' sales of $1,508.3 million were 2 percent higher than last year and sales for Restaurants of $673.9 million grew 8 percent. First half sales for Consumer Foods of $2,855.2 million grew 1 percent and Restaurants' sales grew 9 percent to $1,416.8 million. Second quarter earnings from operations of $140.7 million ($.88 per share) and cumulative earnings of $306.3 million ($1.92 per share) were up 2 percent and 3 percent, respectively, from $138.1 million ($.85 per share) and $297.7 million ($1.82 per share) reported for the same periods last year. Consumer Foods' operating profits were up 1 percent in the quarter and 3 percent in the half, with Betty Crocker Products and Yoplait each reporting strong profit growth in the quarter and cumulatively. Total domestic packaged foods unit volume grew 2 percent both in the quarter and six months. Big G cereal unit volume was down 5 percent in the quarter. Competitive promotional efforts were extraordinarily high in September, October and November. Big G's dollar market share was 29 percent for the quarter and retail pound volume was up 1 percent in a strong market. The company expects second half Big G cereal volume to be positively influenced by meeting any future promotional efforts made by competitors and by planned new product introductions. Consumer Foods profit results included significant planned expense related to building the company's major worldwide cereal joint venture with Nestle, S.A. CPW unit volume grew 25 percent through the first half, and the company continued to achieve share gains in virtually every market, including its newest markets of Germany and Mexico. The Snack Ventures Europe joint venture with PepsiCo Foods International showed a gain in operating profit in the second quarter despite weak economic conditions in most of its markets. Restaurants' operating profits rose 9 percent for the quarter and 10 percent for the first half, led by Red Lobster. Second quarter sales for Red Lobster's North American operations rose 4 percent. In the U.S., average unit sales grew 1 percent, reflecting good customer response to the company's signature Lobsterfest promotion. Sales for The Olive Garden's North American operations increased 14 percent in the quarter. Average unit sales in the U.S. declined 2 percent, primarily due to the continued impact of additional unit openings in established markets and the weak economy in California. During the quarter, Red Lobster opened 13 new restaurants and The Olive Garden added 20, for a combined total of 1,086 units in North America. China Coast opened its ninth unit during the quarter in Lakeland, Fla. and sixteen more units are planned in the second half in the Midwest, Southwest and Southeast. Interest expense increased by $6.3 million in the quarter, primarily due to borrowings associated with the company's ongoing share repurchase program. To date in fiscal 1994, the company has repurchased 1.7 million shares. As a result, average shares outstanding totaled 159.1 million in this year's second quarter, down 3 percent from last year's second quarter. The effect of the increase in the federal tax rate was partially offset by utilization of foreign tax credits. General Mills purchased the Colombo yogurt business from a U.S. subsidiary of Bongrain S.A. effective December 19, 1993. Colombo is a leading producer of soft frozen yogurt, as well as premium hard pack frozen yogurt, and has a strong refrigerated cup business in the Northeast. The transaction will not have any material effect on the earnings of the company. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. (a) The Annual Meeting of Stockholders was held on September 20, 1993. (b) All directors nominated were elected at the Annual Meeting. (c) For the election of directors, the results were as follows: H. Brewster Atwater For 131,871,415 Withheld 483,559 Richard M. Bressler For 131,885,499 Withheld 469,475 Livio D. DeSimone For 131,894,138 Withheld 460,836 William T. Esrey For 131,882,907 Withheld 472,067 Judith R. Hope For 131,655,785 Withheld 699,189 Joe R. Lee For 131,882,086 Withheld 472,888 Kenneth A. Macke For 131,885,258 Withheld 469,716 George Putnam For 131,884,489 Withheld 470,485 Michael D. Rose For 131,873,142 Withheld 481,832 Stephen W. Sanger For 131,888,556 Withheld 466,418 A. Michael Spence For 131,852,871 Withheld 502,103 Mark H. Willes For 131,798,805 Withheld 556,169 C. Angus Wurtele For 131,890,897 Withheld 464,077 On the ratification of the appointment of KPMG Peat Marwick as auditors for fiscal 1994 the results were as follows: For: 131,215,803 Against: 353,450 Abstain: 785,720 On the proposal to adopt the Stock Option and Long- Term Incentive Plan of 1993, the results were as follows: For: 108,949,159 Against: 7,373,360 Abstain: 1,287,906 Broker Non-Vote: 14,744,548 The stockholders' proposal requesting that the directors take action to adopt cumulative voting was rejected: For: 21,918,402 Against: 91,665,941 Abstain: 4,124,732 Broker Non-Vote: 14,645,898 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 11 Statement re Computation of Earnings per Share. Exhibit 12 Statement re Ratio of Earnings to Fixed Charges. (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the second quarter of fiscal 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENERAL MILLS, INC. (Registrant) Date January 10, 1994 /s/ C. L. Whitehill C. L. Whitehill Senior Vice President, General Counsel and Secretary Date January 10, 1994 /s/ K. L. Thome K. L. Thome Senior Vice President, Financial Operations EX-11 2 EXHIBIT 11 Exhibit 11 GENERAL MILLS, INC. COMPUTATION OF EARNINGS PER SHARE Twenty-Six Weeks Ended November 28, November 29, 1993 1992 Net Earnings, in millions $ 306.5 $ 297.7 Computation of Shares: Weighted average number of shares outstanding, excluding shares held in treasury (a) 159,486,662* 163,711,307 Shares resulting from the assumed exercise of certain stock options (b) 2,602,331* 3,582,929* Shares potentially issuable under compensation plans 41,106* 42,717* Total common shares and common share equivalents 162,130,099 167,336,953 Earnings per Share $ 1.92 $ 1.82 Notes to Exhibit 11: (a) Beginning balance of common stock is adjusted for changes in amount outstanding, weighted by the elapsed portion of the period during which the shares were outstanding. (b) Common share equivalents are computed by the "treasury stock" method. Share amounts represent the dilutive effect of outstanding stock options which have an option price below the average market price of our stock for the period concerned. * Common share equivalents are not material. As a result, earnings per share have been computed using the weighted average number of shares outstanding of 159,486,662 and 163,711,307 for the first six months of fiscal 1994 and 1993, respectively. EX-12 3 EXHIBIT 12 Exhibit 12 RATIO OF EARNINGS TO FIXED CHARGES Twenty-Six Weeks Ended Fiscal Year Ended November 28, November 29, May 30, May 31, May 26, May 27, May 28, 1993 1992 1993 1992 1991 1990 1989 Ratio of Earnings to Fixed Charges 7.57 9.04 7.79 8.58 7.82 7.66 7.73 For purposes of computing the ratio of earnings to fixed charges, earnings represent pretax income from continuing operations plus fixed charges (net of capitalized interest). Fixed charges represent interest (whether expensed or capitalized) and one-third (the proportion deemed representative of the interest factor) of rents of continuing operations. -----END PRIVACY-ENHANCED MESSAGE-----